UNITED
STATES
 
 SECURITIES
AND EXCHANGE COMMISSION
 
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 /x/QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE QUARTERLY PERIOD ENDED APRIL 2, 2005.or/
      /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
      ____________.Commission
      File No. 0-25662**ANADIGICS,
      Inc.**(Exact
      name of registrant as specified in its charter)Delaware
    22-2582106(State
      or other jurisdiction of incorporation or organization)
    (I.R.S.
      Employer Identification No.)141
      Mt. Bethel Road, Warren, New Jersey
    07059(Address
      of principal executive offices)
    (Zip
      Code)(908)
      668-5000(Registrant's
      telephone number, including area code)
 
 
 Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [ X ] No [ ]
 
 Indicate
by check mark whether the Registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes [ X ] No [ ]
 
 
 The
number of shares outstanding of the Registrant’s common stock as of April 2,
2005 was 34,083,751.
 
  
  
 INDEX
 
 ANADIGICS,
Inc.
 
 
 PART
      I
    Financial
      InformationItem
      1.
    Financial
      Statements (unaudited)Condensed
      consolidated balance sheets - April 2, 2005 and December 31,
      2004.Condensed
      consolidated statements of operations and comprehensive loss - Three
      months ended April 2, 2005 and April 3, 2004.Condensed
      consolidated statements of cash flows - Three months ended April 2, 2005
      and April 3, 2004.Notes
      to condensed consolidated financial statements - April 2,
      2005.Item
      2.
    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.Item
      3.
    Quantitative
      and Qualitative Disclosures About Market RiskItem
      4.
    Controls
      and ProceduresPART
      II.
    Other
      InformationItem
      1.
    Legal
      ProceedingsItem
      5.
    Other
      InformationItem
      6.
    ExhibitsSignatures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  PART I -
FINANCIAL STATEMENTS
 
 ITEM
1.  FINANCIAL
STATEMENTS (UNAUDITED)
 
 ANADIGICS,
Inc.
 
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 (AMOUNTS
IN THOUSANDS, EXCEPT SHARE AMOUNTS)
 
 April
      2, 2005
    
    
    December
      31, 2004(unaudited)
    
    
    (Note
      1)ASSETSCurrent
      assets:Cash
      and cash equivalents
    
    
    $7,718
    
    
    $11,171Marketable
      securities
    
    
    69,950
    
    
    63,615Accounts
      receivable
    
    
    10,527
    
    
    10,770Inventories
    
    
    12,930
    
    
    14,436Prepaid
      expenses and other current assets
    
    
    4,839
    
    
    3,073Total
      current assets
    
    
    105,964
    
    
    103,065Marketable
      securities
    
    
    19,627
    
    
    29,265Property
      and equipment:Equipment and
      furniture
    
    
    133,340
    
    
    132,864Leasehold
      improvements
    
    
    38,762
    
    
    38,774Projects in
      process
    
    
    1,016
    
    
    1,341173,118
    
    
    172,979Less
      accumulated depreciation and amortization
    
    
    (132,925
    )
    
    (129,941
    )40,193
    
    
    43,038Goodwill
      and other intangibles, net of amortization
    
    
    6,248
    
    
    6,297Other
      assets
    
    
    3,878
    
    
    4,230Total
      assets
    
    
    $175,910
    
    
    $185,895LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
    
    
    $10,186
    
    
    $8,021Accrued
      liabilities
    
    
    3,981
    
    
    4,783Accrued
      restructuring costs
    
    
    308
    
    
    726Capital
      lease obligations
    
    
    12
    
    
    18Total
      current liabilities
    
    
    14,487
    
    
    13,548Long-term
      debt
    
    
    84,700
    
    
    84,700Other
      long-term liabilities
    
    
    3,056
    
    
    3,032Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $0.01 par value, 144,000,000 shares authorized, 34,083,751 and
      33,072,438 issued and outstanding at
      April 2, 2005
      and December 31, 2004
    
    
    341
    
    
    331Additional
      paid-in capital
    
    
    346,380
    
    
    343,594Deferred
      compensation
    
    
    (3,006
    )
    
    (861
    )Accumulated
      deficit
    
    
    (269,414
    )
    
    (257,963
    )Accumulated
      other comprehensive income
    
    
    (634
    )
    
    (486
    )Total
      stockholders’ equity
    
    
    73,667
    
    
    84,615Total
      liabilities and stockholders’ equity
    
    
    $175,910
    
    
    $185,895
 
 ****
 
 
 
 
 
 
 
 
 See
accompanying notes.
 
  
  ANADIGICS,
Inc.
 
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 (AMOUNTS
IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
 
 Three
      Months EndedApril
      2, 2005
    
    
    April
      3, 2004(unaudited)
    
    
    (unaudited)Net
      sales
    
    
    $21,773
    
    
    $21,195Cost
      of sales
    
    
    19,252
    
    
    19,175Gross
      profit
    
    
    2,521
    
    
    2,020Research
      and development expenses
    
    
    7,862
    
    
    8,902Selling
      and administrative expenses
    
    
    5,552
    
    
    5,790Restructuring
      and other charges
    
    
    (120
    )
    
    -Operating
      loss
    
    
    (10,773
    )
    
    (12,672
    )Interest
      income
    
    
    577
    
    
    659Interest
      expense
    
    
    (1,249
    )
    
    (940
    )Other
      (expense) income
    
    
    (6
    )
    
    201Net
      loss
    
    
    $(11,451
    )
    
    $(12,752
    )Basic
      and diluted loss per share
    
    
    $(0.34
    )
    
    $(0.40
    )Weighted
      average common and dilutive securities outstanding
    
    
    33,578,936
    
    
    31,657,899
 
 
 
 
 CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
 (AMOUNTS
IN THOUSANDS)
 
 Three
      months endedApril
      2, 2005
    
    
    April
      3, 2004(unaudited)
    
    
    (unaudited)Net
      loss
    
    
    $(11,451
    )
    
    $(12,752
    )Unrealized
      (loss) gain on marketable securities
    
    
    (127
    )
    
    15Foreign
      currency translation adjustment
    
    
    (21
    )
    
    (15
    )Reclassification
      adjustment:Net
      realized gain previously recognized in other comprehensive
      income
    
    
    -
    
    
    (19
    )Comprehensive
      loss
    
    
    $(11,599
    )
    
    $(12,771
    )
 
 
 
 
 
 
 
 
 See
accompanying notes.
 
  
  
 
 ANADIGICS,
Inc.
 
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 (AMOUNTS
IN THOUSANDS)
 
 Three
      months endedApril 2, 2005
    
    
    April
      3, 2004(unaudited)
    
    
    (unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
    
    
    $(11,451
    )
    
    $(12,752
    )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
    
    
    3,018
    
    
    4,330Amortization
    
    
    424
    
    
    359Stock
      based compensation
    
    
    647
    
    
    10Amortization of
      premium on marketable securities
    
    
    394
    
    
    607Changes
      in operating assets and liabilities:Accounts
      receivable
    
    
    243
    
    
    964Inventory
    
    
    1,506
    
    
    (2,123
    )Prepaid
      expenses and other assets
    
    
    (1,777
    )
    
    (1,950
    )Accounts
      payable
    
    
    2,165
    
    
    148Accrued
      liabilities and other liabilities
    
    
    (1,192
    )
    
    (1,643
    )Net
      cash used in operating activities
    
    
    (6,023
    )
    
    (12,050
    )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of plant and equipment
    
    
    (211
    )
    
    (505
    )Purchases
      of marketable securities
    
    
    (11,847
    )
    
    (13,731
    )Proceeds
      from sale of marketable securities
    
    
    14,630
    
    
    23,491Business
      acquisitions
    
    
    -
    
    
    (55
    )Net
      cash provided by investing activities
    
    
    2,572
    
    
    9,200CASH
      FLOWS FROM FINANCING ACTIVITIESPayment
      of capital lease obligations
    
    
    (6
    )
    
    (18
    )Issuance
      of common stock
    
    
    4
    
    
    1,012Net
      cash (used in) provided by financing activities
    
    
    (2
    )
    
    994Net
      decrease in cash and cash equivalents
    
    
    (3,453
    )
    
    (1,856
    )Cash
      and cash equivalents at beginning of period
    
    
    11,171
    
    
    18,525Cash
      and cash equivalents at end of period
    
    
    $7,718
    
    
    $16,669
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes.
 
  
  
 ANADIGICS,
Inc.
 
 NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - APRIL 2,
2005
 
 (AMOUNTS
IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
 
 1.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
  BASIS OF
PRESENTATION
  The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended April 2, 2005 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2005.
  The
condensed consolidated balance sheet at December 31, 2004 has been derived from
the audited financial statements at that date but does not include all the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company’s Annual Report on Form 10-K for the year ended December 31,
2004.
  The
condensed consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
  INCOME
TAXES
  The
Company maintains a full valuation allowance on its deferred tax assets.
Accordingly, the Company has not recorded a benefit for income
taxes.
  IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS
 
 In
November 2004, the Financial Accounting Standards Board issued Statement No. 151
(FAS 151), Inventory costs, an amendment of ARB No. 43, Chapter 4. FAS 151
clarifies that abnormal amounts of idle facility expense, freight, handling
costs and wasted materials should be recognized as current period charges. In
addition, FAS 151 requires that allocation of fixed production overhead to
inventory be based on the normal capacity of the production facilities. FAS 151
is effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. The Company currently believes that the adoption of FAS 151 will
not have a material impact on its consolidated financial
statements.
 
 In
December 2004, the Financial Accounting Standards Board issued Statement No.
123(R) (FAS 123R), Share-Based Payment, amending FAS 123 and requiring that all
share-based payments to employees be recognized in the financial statements.
Generally, the approach to accounting for share-based payments in FAS 123R is
similar to the approach described in FAS 123, however, pro forma footnote
disclosure will no longer be an alternative to financial statement recognition.
In April 2005, the SEC deferred the implementation date of FAS 123R. As a
result, the Company plans to adopt FAS 123R effective January 1, 2006 rather
than the initial implementation date of July 1, 2005, using the
modified-prospective transition method described in the statement. Under this
method, the Company will be required to recognize compensation expense over the
remaining vesting period for all awards that remain unvested as of January 1,
2006. As permitted by FAS 123, the Company currently accounts for share-based
payments to employees using APB 25's intrinsic value method and, as such,
generally recognized no compensation cost for employee stock options. The
Company believes based on the level of share-based payments previously granted
and unvested, that the adoption of FAS 123R will not have a material effect on
its financial position, results of operations or cashflows, however, the level
of future equity based compensation grants could have a material effect on
amounts recorded in our statement of operations.
  STOCK
BASED COMPENSATION
 
 As
permitted by FAS 123, the Company has elected to follow the intrinsic value
method under Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and related interpretations in accounting for its
employee stock option plans. Under APB 25, no compensation expense is recognized
at the time of option grant if the exercise price of the Company’s employee
stock option is fixed and equals or exceeds the fair market value of the
underlying common stock on the date of grant.
  The
following table illustrates the effect on net loss and loss per common share as
if the Company had applied the fair value method to measure stock-based
compensation, required under the disclosure provisions of FAS 123:
  
  
 Three
      months endedApril
      2, 2005
    
    
    April
      3, 2004Net
      loss, as reported
    
    
    $(11,451
    )
    
    $(12,752
    )Stock
      based compensation included in reported net loss
    
    
    647
    
    
    10Stock
      based compensation expense under fair value reporting
    
    
    (914
    )
    
    (1,658
    )Pro
      forma net loss
    
    
    $(11,718
    )
    
    $(14,400
    )Basic
      and diluted loss per share:As
      reported
    
    
    $(0.34
    )
    
    $(0.40
    )Pro
      forma
    
    
    $(0.35
    )
    
    $(0.45
    )
 
 On July
3, 2003, the Company announced a voluntary stock option exchange program for
employees and officers. Directors of the Company were not eligible for the
exchange program. Pursuant to the terms and conditions of the offer, which
expired on August 4, 2003, the Company accepted for cancellation options to
purchase 1,673,931 shares of common stock having a weighted average exercise
price of $19.49. On February 6, 2004, participating employees were issued
551,564 stock options, under this one for three-exchange program, for the
cancelled options. The new options have an exercise price equal to $7.27, which
represented the fair market value at the date of grant and are now fully
vested.
 
 On
December 22, 2004, the Company authorized an immediate vesting of eligible
employees’ unvested share options with an exercise price greater than $5.00 per
share. Directors were not eligible. In total, 1,772,289 options with an average
exercise price of $7.26 immediately vested and have an average remaining
contractual life of 9.1 years. The unamortized fair value associated with these
accelerated-vest shares in the amount of $2,654 amortized immediately. Had the
accelerated-vest program not occurred, the related-cost in the years ended
December 31, 2005, 2006 and 2007 would have included $1,846, $751 and $57,
respectively. In addition to its employee-retention value, the Company’s
decision to accelerate the vesting of these “out-of-the-money” options was based
upon the accounting of such costs moving from disclosure-only in 2004 to being
included in the Company’s statement of operations in 2005 based upon the
Company’s expected adoption of FAS 123R prior to its required adoption date
being deferred.
 
 On July
23, 2004, the Company granted 403,204 restricted shares under the 1995 and 1997
Long-Term Incentive Share Award plans (“Plans”). On the date of the grant, the
market price of the shares was $4.01. The value of the grant has been recorded
as deferred compensation, a component of Stockholders’ Equity and is being
amortized over the required one-year vest period. At April 2, 2005, 29,003
restricted shares have been forfeited under the conditions of the Plans. During
the first quarter of 2005, the Company has granted an additional 1,017,466
restricted shares under the 1995 Plan at an average market price of $2.77 and
carrying vesting periods of one or three years. At April 2, 2005, 11,113
restricted shares have been forfeited under the conditions of the
Plan.
 
 WARRANTY
  The
Company provides, by a current charge to income, an amount it estimates, by
examining historical returns and other information it deems critical, will be
needed to cover future warranty obligations for products sold during the year.
The accrued liability for warranty costs is included in Accrued liabilities in
the condensed consolidated balance sheets.  Warranty
reserve movements in the first quarter of 2005 included $48 in actual charges
and $5 reduction in the provision resulting in the balance of $154 at April 2,
2005. Warranty reserve movements in the first quarter of 2004 were $119 in
actual charges and $123 in additional provisions.
  RECLASSIFICATIONS
  Certain
prior year amounts have been reclassified to conform to the current year
presentation.
 
 2.
BUSINESS ACQUISITIONS
 
 On March
31, 2003, the Company acquired certain assets and liabilities of the WLAN power
amplifier business of RF Solutions (“RFS”). The RFS acquisition was a strategic
initiative that allows the Company to participate in the emerging and
fast-growing WLAN market with a depth of experienced design personnel and
cutting-edge products. The Company paid cash purchase consideration on March 31,
2003 of $2,800 and issued 747,280 shares effective March 31, 2004, valued at
$4,648 after RFS achieved certain revenue milestones. In addition, the Company
incurred $217 in acquisition-related costs.
 
 3.  INVENTORIES
  Inventories
are stated at the lower of cost (first-in, first-out method) or market.
Inventories consist of the following:
 
 April
      2, 2005
    
    
    December
      31, 2004Raw
      materials
    
    
    $4,331
    
    
    $3,510Work
      in process
    
    
    7,329
    
    
    9,026Finished
      goods
    
    
    4,261
    
    
    5,97415,921
    
    
    18,510Reserves
    
    
    (2,991
    )
    
    (4,074
    )Total
    
    
    $12,930
    
    
    $14,436
 
 
 4.  LOSS PER
SHARE
  The
reconciliation of shares used to calculate basic and diluted loss per share
consists of the following:
 
 Three
      months endedApril 2, 2005
    
    
    April
      3, 2004Weighted
      average common sharesoutstanding
      used to calculatebasic
      loss per share
    
    
    33,578,936
    
    
    31,657,899Net
      effect of dilutive securities based upon the treasury stock method using
      an average market price
    
    
    -*
    
    
    -*Weighted
      average common and dilutive securities outstandingused
      to calculate diluted lossper
      share
    
    
    33,578,936
    
    
    31,657,899
 
 * Any
dilution arising from the Company's outstanding stock options or shares
potentially issuable upon conversion of the Convertible notes are not included
as their effect is anti-
 dilutive.
 
 5.  REVENUE
SOURCES
  The
Company classifies its revenues based upon the end application of the product in
which its integrated circuits are used. Net sales by end application are
regularly reviewed by the chief operating decision maker and are as
follows:
 
 Three
      months endedApril
      2, 2005
    
    
    April
      3, 2004Broadband
    
    
    $11,232
    
    
    $9,918Wireless
    
    
    10,541
    
    
    11,277Total
    
    
    $21,773
    
    
    $21,195
 
 The
Company primarily sells to three geographic regions: Asia, U.S.A. and Canada,
and Other. The geographic region is determined by the destination of the shipped
product. Net sales to each of the three geographic regions are as
follows:
 
 Three
      months endedApril
      2, 2005
    
    
    April
      3, 2004Asia
    
    
    $12,205
    
    
    $12,217U.S.A.
      and Canada
    
    
    7,991
    
    
    7,395Other
    
    
    1,577
    
    
    1,583Total
    
    
    $21,773
    
    
    $21,195
 
 
 6.
RESTRUCTURING AND OTHER CHARGES
 
 During
the fourth quarter of 2003, the Company recorded restructuring and other charges
of $300 associated with obligations for certain redundant leasehold premises.
That obligation was settled during the first quarter of 2005 resulting in a
savings to the Company of $120. During the first quarter of 2005, the Company
recognized costs of $298 for lease-related restructuring costs in addition to
the aforementioned $120 adjustment. As of April 2, 2005, the accrued
restructuring balance of $308 relates to lease-related obligations.
 
 
 7.
LONG-TERM DEBT
 
 On
September 24, 2004, the Company issued $38,000 aggregate principal amount of 5%
Convertible Senior Notes (“2009 Notes”) due October 15, 2009. The 2009 Notes are
convertible into shares of the Company’s common stock at any time prior to their
maturity, at an initial conversion rate, subject to adjustment, of 200 shares
for each $1,000 principal amount, which is equivalent to a conversion price of
$5.00 per share. Interest on the 2009 Notes is payable semi-annually in arrears
on April 15 and October 15 of each year.
 
 On
November 27, 2001, the Company issued $100,000 aggregate principal amount of 5%
Convertible Senior Notes ("2006 Notes") due November 15, 2006. During the third
quarter of 2002, the Company repurchased and retired $33,300 principal amount of
the Convertible notes. In addition, in the third quarter of 2004 and concurrent
with the issuance of the 2009 Notes, the Company repurchased and retired $20,000
aggregate principal amount of the 2006 Notes for $19,758 in cash, inclusive of
accrued interest of $358. The Company recognized a gain of $327 on the
repurchase after adjusting for the write-off of a proportionate share of
unamortized offering costs.  The
$46,700 balance of 2006 Notes outstanding are convertible into shares of common
stock at any time prior to their maturity or prior redemption by the Company.
The notes are convertible into shares of common stock at a rate of 47.619 shares
for each $1,000 principal amount (convertible at a price of $21.00 per share),
subject to adjustment. Interest is payable semi-annually on May 15 and November
15 of each year.
 
  
  ANADIGICS,
Inc.
 
 ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 INTRODUCTION
  ANADIGICS,
Inc. (“we” or the "Company") was incorporated in Delaware in 1984. Our corporate
headquarters are located at 141 Mt. Bethel Road, Warren, New Jersey 07059, and
our telephone number at that address is 908-668-5000.
  We design
and manufacture radio frequency integrated circuit (RFIC) solutions for the
wireless and broadband communications markets. Our high frequency RFIC products
enable manufacturers of communications equipment to enhance overall system
performance and reduce manufacturing cost and time to market. Our products are
primarily included in cellular and personal communications service (PCS) phones
and base stations, wireless local area networks (WLANs), and cable television
infrastructure and set-top boxes. We offer a broad array of products including
amplifiers, switches, tuner integrated circuits, photodiodes and integrated RF
modules. These integrated circuits perform the transmit and receive functions
that are critical to the performance of wireless and broadband communication
systems.
  In the
wireless market, we focus on RFIC solutions for wireless communication handset
applications operating over various air interface standards, including Code
Division Multiple Access (CDMA), Global System for Mobile communication (GSM),
Wideband CDMA (WCDMA), General Packet Radio Service (GPRS) and Enhanced Data
rate for GSM Evolution (EDGE). In the broadband markets, our focus is on
applications for WLAN systems, cable television (CATV) subscriber products, CATV
infrastructure systems, and fiber optic communications systems. We believe we
have a competitive advantage in the markets we serve due to our design,
development and applications expertise, our superior compound semiconductor
technologies, our high-volume, low-cost state-of-the-art manufacturing processes
and expertise, and our strong working relationships with leading original
equipment manufacturers (OEMs), original design manufacturers (ODMs) and
reference design houses (collectively our “market customers”).
  We
design, develop and manufacture RFICs primarily using Gallium Arsenide (GaAs)
compound semiconductor substrates with various process technologies, Metal
Semiconductor Field Effect Transistors (MESFET), Pseudomorphic High Electron
Mobility Transistors (pHEMT), and Heterojunction Bipolar Transistors
(HBT).
  The
quality and reliability of our products results from a comprehensive design,
characterization, qualification, and robust manufacturing process. In addition
to the manufacturing facility and design team located at our corporate
headquarters in Warren, New Jersey, we operate a development center and
manufacturing facility in Camarillo, California and development centers in
Richardson, Texas; Atlanta, Georgia; Aalborg, Denmark; Taipei, Taiwan; Seoul,
Korea and Shanghai, China.
  Our
design and applications engineering staff is strategically active and engaged
with customers during all phases of design and production. This strategy helps
our customers streamline their design process and time to market, achieve
cost-effective and manufacturable designs, and ensure a smooth transition into
high-volume production.
  We have
two company-owned fabrication facilities (fabs): a state-of-the-art six-inch
diameter analog GaAs fab located at our corporate headquarters in Warren, New
Jersey, and a two-inch diameter indium phosphide (InP) fab located in Camarillo,
California. Our six-inch wafer fab allows us to produce, at a small incremental
cost, more than twice the RF die per wafer compared with a four-inch wafer,
still used by some of our competition. We believe our strong manufacturing
fabrication capability, combined with logistics expertise and innovative product
designs, allow us to quickly develop and manufacture products in line with
market and customer requirements.
 
 RESULTS
OF OPERATIONS
  The
following table sets forth unaudited consolidated statements of operations data
as a percent of net sales for the periods presented:
 
 Three
      months endedApril
      2, 2005
    
    April
      3, 2004Net
      sales
    
    
    100.0
    %
    
    100.0
    %Cost
      of sales
    
    
    88.4
    %
    
    90.5
    %Gross
      margin
    
    
    11.6
    %
    
    9.5
    %Research
      and development expenses
    
    
    36.1
    %
    
    42.0
    %Selling
      and administrative expenses
    
    
    25.5
    %
    
    27.3
    %Restructuring
      and other charges
    
    
    (0.5
    %)
    
    -Operating
      loss
    
    
    (49.5
    %)
    
    (59.8
    %)Interest
      income
    
    
    2.6
    %
    
    3.1
    %Interest
      expense
    
    
    (5.7
    %)
    
    (4.4
    %)Other
      (expense) income
    
    
    -
    
    
    0.9
    %Net
      loss
    
    
    (52.6
    %)
    
    (60.2
    %)
 
  
  FIRST
QUARTER 2005 (ENDED APRIL 2, 2005) COMPARED TO FIRST QUARTER 2004 (ENDED APRIL
3, 2004)
  NET
SALES. ****** Net sales
increased 2.7% during the first quarter of 2005 to $21.8 million from $21.2
million in the first quarter of 2004.
  Sales of
integrated circuits for Wireless applications decreased 6.5% during the first
quarter of 2005 to $10.5 million from $11.3 million in the first quarter of
2004. The Company experienced softer demand for its CDMA power amplifiers of
$3.1 million and base station power amplifiers of $0.6 million, which were
partially offset by increased demand for our GSM power amplifiers of $3.0
million.
  Sales of
integrated circuits for Broadband applications increased 13.2% during the first
quarter of 2005 to $11.2 million from $9.9 million in the first quarter of 2004.
The increase in sales was primarily due to an increase in demand for WLAN power
amplifiers.
  GROSS
MARGIN. Gross
margin during the first quarter of 2005 increased to 11.6% from 9.5% in the
first quarter of 2004. The increase in gross margin of $0.5 million in 2005 was
primarily due to the increase in demand for higher margin products sold into
Broadband applications, while a decrease in depreciation expense of $1.2 million
offset declines in average selling prices.
  RESEARCH
AND DEVELOPMENT. Company
sponsored research and development expense decreased 11.7% during the first
quarter of 2005 to $7.9 million from $8.9 million during the first quarter of
2004. The decrease was primarily attributable to decreased headcount and related
compensation cost.
  SELLING
AND ADMINISTRATIVE. Selling
and administrative expenses decreased 4.1% during the first quarter of 2005 to
$5.6 million from $5.8 million in the first quarter of 2004. The decrease in
selling and administrative expenses was primarily due to decreased headcount and
compensation expense within sales and marketing.
  RESTRUCTURING
AND OTHER CHARGES. During the first quarter of 2005, the Company settled an exit
obligation for certain redundant leasehold premises resulting in a savings of
$0.1 million against a previously recorded restructuring charge.
 
 INTEREST
INCOME. ****** Interest
income decreased 12.4% to $0.6 million during the first quarter of 2005 from
$0.7 million during the first quarter of 2004. The decrease of $0.1 million was
primarily due to lower invested funds.
 
 INTEREST
EXPENSE. Interest expense increased 32.9% to $1.2 million during the first
quarter of 2005 from $0.9 million during the first quarter of 2004. The interest
relates to the $46.7 million outstanding balance of our 5% Convertible Notes due
in 2006 (the “2006 Notes”) and the $38.0 million outstanding balance of our 5%
Convertible Notes due in 2009 (the “2009 Notes”).
 
 LIQUIDITY
AND CAPITAL RESOURCES
  As of
April 2, 2005, we had $7.7 million in cash and cash equivalents and $89.6
million in marketable securities. In addition, as of April 2, 2005, we had
outstanding $46.7 million aggregate principal amount of our 2006 Notes and $38.0
million aggregate principal amount of our 2009 Notes.
 
 Operating
activities used $6.0 million in cash during the three-month period ended April
2, 2005. Investing activities, consisting principally of net sales of marketable
securities of $2.8 million, provided $2.6 million of cash during the three month
period ended April 2, 2005.
 
 As of
April 2, 2005, we had purchase commitments of approximately $1.6
million.
 
 We
believe that our existing sources of capital, including our existing cash and
marketable securities, will be adequate to satisfy operational needs and
anticipated capital needs for the next twelve months as well as the repayment of
our 2006 Notes due in November, 2006. Our anticipated capital needs may include
acquisitions of complimentary businesses or technologies, or investments in
other companies or repurchases of our outstanding debt or equity. However, we
may elect to finance all or part of our future capital requirements through
additional equity or debt financing. There can be no assurance that such
additional financing would be available on satisfactory terms. Our ability to
pay principal and interest on our outstanding 2006 Notes due in November of 2006
and our outstanding 2009 Notes due in October of 2009, and our other debt and to
fund our planned capital expenditures depends on our future operating
performance.
 
 IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS
  In
November 2004, the Financial Accounting Standards Board issued Statement No. 151
(FAS 151), Inventory costs, an amendment of ARB No. 43, Chapter 4. FAS 151
clarifies that abnormal amounts of idle facility expense, freight, handling
costs and wasted materials should be recognized as current period charges. In
addition, FAS 151 requires that allocation of fixed production overhead to
inventory be based on the normal capacity of the production facilities. FAS 151
is effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. The Company currently believes that the adoption of FAS 151 will
not have a material impact on its consolidated financial
statements.
  In
December 2004, the Financial Accounting Standards Board issued Statement No.
123(R) (FAS 123R), Share-Based Payment, amending FAS 123 and requiring that all
share-based payments to employees be recognized in the financial statements.
Generally, the approach to accounting for share-based payments in FAS 123R is
similar to the approach described in FAS 123, however, pro forma footnote
disclosure will no longer be an alternative to financial statement recognition.
In April 2005, the SEC deferred the implementation date of FAS 123R. As a
result, the Company plans to adopt FAS 123R effective January 1, 2006 rather
than the initial implementation date of July 1, 2005, using the
modified-prospective transition method described in the statement. Under this
method, the Company will be required to recognize compensation expense over the
remaining vesting period for all awards that remain unvested as of January 1,
2006. As permitted by FAS 123, the Company currently accounts for share-based
payments to employees using APB 25's intrinsic value method and, as such,
generally recognized no compensation cost for employee stock options. The
Company believes based on the level of share-based payments previously granted
and unvested, that the adoption of FAS 123R will not have a material effect on
its financial position, results of operations or cashflows, however, the level
of future equity based compensation grants could have a material effect on
amounts recorded in our statement of operations.  On
December 22, 2004, the Company authorized an immediate vesting of eligible
employees’ unvested share options with an exercise price greater than $5.00 per
share. Directors were not eligible. In total, 1,772,289 options with an average
exercise price of $7.26 immediately vested and have an average remaining
contractual life of 9.1 years. The unamortized fair value associated with these
accelerated-vest shares of approximately $2.65 million amortized immediately. In
addition to its employee-retention value, the Company’s decision to accelerate
the vesting of these “out-of-the-money” options was based upon the accounting of
such costs moving from disclosure-only in 2004 to being included in the
Company’s statement of operations in 2005 based upon the Company’s expected
adoption of FAS 123R prior to its required adoption date being deferred.
 
 
 FORWARD-LOOKING
STATEMENTS
  This
quarterly report on Form 10-Q contains projections and other forward-looking
statements (as that term is defined in the Securities Exchange Act of 1934, as
amended). These projections and forward-looking statements reflect the Company’s
current views with respect to future events and financial performance and can
generally be identified as such because the context of the statement will
include words such as “believe”, “anticipate”, “expect”, or words of similar
import. Similarly, statements that describe our future plans, objectives,
estimates or goals are forward-looking statements. No assurances can be given,
however, that these events will occur or that these projections will be achieved
and actual results and developments could differ materially from those projected
as a result of certain factors. Important factors that could cause actual
results and developments to be materially different from those expressed or
implied by such projections and forward-looking statements include , but are
not limited to, the following risks which are described in greater detail in the
Company’s annual report on Form 10-K referred to below: (i) our history of
recent losses and expectation that we will continue to incur losses; (ii) our
decline in revenue and underutilized manufacturing capacity have adversely
affected our gross margins and profitability; (iii) our dependence on a small
number of customers; (iv) our need to keep pace with rapid product and process
development and technological changes as well as product cost reductions to be
competitive; (v) our products have experienced rapidly declining unit prices;
(vi) the manufacturing of our products could be delayed as a result of the
outsourcing of our test operations; (vii) the short life cycles of some of our
products may leave us with obsolete or excess inventories; (viii) we face
intense competition, which could result in a decrease in our products’ prices
and sales; (ix) we may not have sufficient cash flow to make payments on our
convertible senior unsecured notes and any other debt we may incur; (x) capital
required for our business may not be available when we need it; (xi) we may
pursue selective acquisitions and alliances which dilute the ownership of our
current shareholders and the management and integration of additional operations
may be expensive and divert management time; (xii) we may face interruptions in
our manufacturing processes; (xiii) provisions in our governing documents and
our shareholders rights agreement could discourage takeovers and prevent
shareholders from realizing an investment premium. The foregoing review of
important factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included herein
or detailed
from time to time in our reports filed with the Securities and Exchange
Commission, including the Company’s annual report on Form 10-K for the year
ended December 31, 2004. The Company undertakes no obligation to update publicly
or revise any forward-looking statement, whether as a result of new information,
future developments or otherwise .
 
 
 ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
Company's market risk has not changed significantly for the risks disclosed in
Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004.
 
 
 ITEM 4.
CONTROLS AND PROCEDURES ****
 
 Under the
supervision and with the participation of our management, including our Chief
Executive Officer, or CEO and Chief Financial Officer, or CFO, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
April 2, 2005. Based on that evaluation, our management, including our CEO and
CFO, concluded that our disclosure controls and procedures were effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
as specified within the SEC’s rules and forms.
 
 There was
no change in the Company’s internal control over financial reporting during the
Company’s last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
 
 Because
of their inherent limitations, disclosure controls and procedures and internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.
 
 
 
 
  
  ANADIGICS,
Inc.
 
 PART II -
OTHER INFORMATION
 
 ITEM  1.  LEGAL
PROCEEDINGS
 
 ANADIGICS
is a party to litigation arising in the ordinary course out of the operation of
our business. We believe that the ultimate resolution of such litigation should
not have a material adverse effect on our financial condition, results of
operations or liquidity.
 
 
 ITEM 5.
OTHER INFORMATION
 
 As
previously reported in the Company’s annual proxy statement on Schedule 14A, the
Board of Directors, on January 10, 2005, formed the Strategic Planning Committee
as an ad hoc committee of the Board to assist the Board in reviewing the
Company’s long-term strategic plan and objectives, propose acquisition or joint
venture candidates and possible divestitures, with a view toward enhancing
stockholder values. The committee members are Messrs. Solomon (Chair), Bachow,
McGuire, Rein and Strigl. Each Director receives $1,000 for each committee
meeting attended (with a cap of $2,500 per day, in the event such Director
serves on other committees of the Board) and reimbursement for ordinary expenses
incurred in connection with attendance at such meetings. The chairperson of the
ad hoc Strategic Planning Committee receives $25,000 per year.
 
 
 ITEM  6.  EXHIBITS
 
 31.1 Rule
13a-14(a)/15d-14(a) Certification of Bami Bastani, President and Chief Executive
Officer of ANADIGICS, Inc.
 
 31.2 Rule
13a-14(a)/15d-14(a) Certification of Thomas C. Shields, Senior Vice President
and Chief Financial Officer of ANADIGICS, Inc.
 
 32.1
Section 1350 Certification of Bami Bastani, President and Chief Executive
Officer of ANADIGICS, Inc.
 
 32.2
Section 1350 Certification of Thomas C. Shields, Senior Vice President and Chief
Financial Officer of ANADIGICS, Inc.
  
  SIGNATURES
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 ANADIGICS,
INC.
 
 
 By:
    /s/
      Thomas C. ShieldsThomas
      C. ShieldsSenior
      Vice PresidentAnd
      Chief Financial Officer
 
 
 Dated:
May 12, 2005
 
  Exhibit
31.1
 CERTIFICATION
 
 I, Bami
Bastani, certify that:
 
 1.
    I
      have reviewed this quarterly report on Form 10-Q of ANADIGICS,
      Inc.;
 
 2.
    Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;
 
 3.
    Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;
 
 4.
    The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      controls over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) for the registrant and
have:
 
 a)
    Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;
 
 b)
    Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;
 
 c)
    Evaluated
      the effectiveness of the registrant's disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and
 
 d)
    Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and
 
 5.
    The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of registrant’s board
      of directors (or persons performing the equivalent
    functions):
 
 a)
    All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant’s ability to record,
      process, summarize and report financial information;
and
 
 b)
    Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant’s internal control
      over financial reporting.
 
 Date:  May 12,
2005
 
 
 By:
    /s/
      Bami BastaniBami
      BastaniPresident
      and Chief
      Executive Officer
  
 Exhibit
31.2
 CERTIFICATION
 
 I, Thomas
C. Shields, certify that:
 
 1.
    I
      have reviewed this quarterly report on Form 10-Q of ANADIGICS,
      Inc.;
 
 2.
    Based
      on my knowledge, this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;
 
 3.
    Based
      on my knowledge, the financial statements, and other financial information
      included in this report, fairly present in all material respects the
      financial condition, results of operations and cash flows of the
      registrant as of, and for, the periods presented in this
      report;
 
 4.
    The
      registrant’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
      control over financial reporting (as defined in Exchange Act Rules
      13a-15(f) and 15d-15(f)) for the registrant and
have:
 
 a)
    Designed
      such disclosure controls and procedures, or caused such disclosure
      controls and procedures to be designed under our supervision, to ensure
      that material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;
 
 b)
    Designed
      such internal control over financial reporting, or caused such internal
      control over financial reporting to be designed under our supervision, to
      provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting
      principles;
 
 c)
    Evaluated
      the effectiveness of the registrant's disclosure controls and procedures
      and presented in this report our conclusions about the effectiveness of
      the disclosure controls and procedures, as of the end of the period
      covered by this report based on such evaluation;
and
 
 d)
    Disclosed
      in this report any change in the registrant’s internal control over
      financial reporting that occurred during the registrant’s most recent
      fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
      annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant’s internal control over financial
      reporting; and
 
 5.
    The
      registrant’s other certifying officer(s) and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant’s auditors and the audit committee of registrant’s board
      of directors (or persons performing the equivalent
    functions):
 
 a)
    All
      significant deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant’s ability to record,
      process, summarize and report financial information;
and
 
 b)
    Any
      fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant’s internal control
      over financial reporting.
 
 
 
 Date:  May 12,
2005
 
 By:
    /s/
      Thomas C. ShieldsThomas
      C. ShieldsSenior
      Vice Presidentand
      Chief Financial Officer
 
 
 
 Exhibit
32.1
 
 CERTIFICATION
 
 The
undersigned, Bami Bastani, President and Chief Executive Officer of ANADIGICS,
Inc. (the "Company") hereby certifies that the Quarterly Report of the Company
on Form 10-Q for the period ended April 2, 2005 fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that the information contained in such report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
 
 
 Dated:
May 12, 2005
 By:
    /s/
      Bami BastaniBami
      BastaniPresident
      andChief
      Executive Officer
 
  This
certification shall not be deemed to be “filed” for the purpose of Section 18 of
the Securities Exchange Act of 1934, as amended, and will not be incorporated by
reference into any registration statement filed under the Securities Act of
1933, as amended, unless specifically identified therein as being incorporated
by reference.
 
 A signed
original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written statement required
by Section 906, has been provided to ANADIGICS, Inc. and will be retained by
ANADIGICS, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.
 
 
 
 Exhibit
32.2
 
 CERTIFICATION
 
 The
undersigned, Thomas C. Shields, Senior Vice President and Chief Financial
Officer of ANADIGICS, Inc. (the "Company") hereby certifies that the Quarterly
Report of the Company on Form 10-Q for the period ended April 2, 2005 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in such report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
 
  Dated:
May 12, 2005
 By:
    /s/
      Thomas C. ShieldsThomas
      C. ShieldsSenior
      Vice Presidentand
      Chief Financial Officer
 
  This
certification shall not be deemed to be “filed” for the purpose of Section 18 of
the Securities Exchange Act of 1934, as amended, and will not be incorporated by
reference into any registration statement filed under the Securities Act of
1933, as amended, unless specifically identified therein as being incorporated
by reference.
 
 A signed
original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears
in typed form within the electronic version of this written statement required
by Section 906, has been provided to ANADIGICS, Inc. and will be retained by
ANADIGICS, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.