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 OCTOBER 3, 2009.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. 0-25662ANADIGICS,
      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 has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes [ ]
No [ ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (check one):


Large
accelerated filer [X] Accelerated filer [ ] Non-accelerated filer (Do not check
if a smaller reporting company) [ ] Smaller reporting company [ ]





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes [ ]  No [X]





The
number of shares outstanding of the Registrant’s common stock as of October 3,
2009 was 63,721,424 (excluding 114,574 shares held in treasury).











INDEX





ANADIGICS,
Inc.








PART
      I
            Financial
      InformationItem
      1.
            Financial
      Statements (unaudited)Condensed
      consolidated balance sheets – October 3, 2009 and December 31,
      2008Condensed
      consolidated statements of operations and comprehensive loss – Three and
      nine months ended October 3, 2009 and September 27,
2008Condensed
      consolidated statements of cash flows – Nine months ended October 3, 2009
      and September 27, 2008Notes
      to condensed consolidated financial statements – October 3,
      2009Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      OperationsItem
      3.
            Quantitative
      and Qualitative Disclosures About Market RiskItem
      4.
            Controls
      and ProceduresPART
      II.
            Other
      InformationItem
      1.
            Legal
      ProceedingsItem
      6.
            ExhibitsSignatures













































































PART I -
FINANCIAL INFORMATION





ITEM
1. FINANCIAL STATEMENTS





ANADIGICS,
Inc.





CONDENSED
CONSOLIDATED BALANCE SHEETS





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





October
      3, 2009
            
            
            December
      31, 2008(Unaudited)
            
            
            (Note
      1)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            115,025
            
            
            $
            123,552Marketable
      securities
            
            
            -
            
            
            
            13,340Accounts
      receivable, net
            
            
            23,224
            
            
            
            25,384Inventories
            
            
            21,465
            
            
            
            33,578Prepaid
      expenses and other current assets
            
            
            3,892
            
            
            
            3,121Total
      current assets
            
            
            163,606
            
            
            
            198,975Marketable
      securities
            
            
            8,410
            
            
            
            8,832Plant
      and equipment:Equipment
      and furniture
            
            
            211,085
            
            
            
            201,217Leasehold
      improvements
            
            
            44,684
            
            
            
            40,589Projects
      in process
            
            
            7,647
            
            
            
            18,940263,416
            
            
            
            260,746Less
      accumulated depreciation and amortization
            
            
            (177,375
            )
            
            
            (165,075
            )86,041
            
            
            
            95,671Other
      assets
            
            
            282
            
            
            
            299Total
      assets
            
            $
            258,339
            
            
            $
            303,777LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            12,758
            
            
            $
            18,267Accrued
      liabilities
            
            
            11,105
            
            
            
            13,203Accrued
      restructuring costs
            
            
            184
            
            
            
            1,165Convertible
      notes
            
            
            38,000
            
            
            
            38,000Total
      current liabilities
            
            
            62,047
            
            
            
            70,635Other
      long-term liabilities
            
            
            4,368
            
            
            
            3,134Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $0.01 par value, 144,000 shares authorized, 63,834 issued at
      October 3, 2009 and 63,424 issued at December 31, 2008
            
            
            638
            
            
            
            634Additional
      paid-in capital
            
            
            572,863
            
            
            
            563,468Accumulated
      deficit
            
            
            (383,067
            )
            
            
            (333,967
            )Accumulated
      other comprehensive income
            
            
            1,749
            
            
            
            131Treasury
      stock at cost: 115 shares at October 3, 2009 and 114 shares at December
      31, 2008
            
            
            (259
            )
            
            
            (258
            )Total
      stockholders’ equity
            
            
            191,924
            
            
            
            230,008Total
      liabilities and stockholders’ equity
            
            $
            258,339
            
            
            $
            303,777











See
      accompanying notes.











ANADIGICS,
Inc.





CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008(unaudited)
            
            
            (unaudited)
            
            
            (unaudited)
            
            
            (unaudited)Net
      sales
            
            $
            36,716
            
            
            $
            58,065
            
            
            $
            98,674
            
            
            $
            212,927Cost
      of sales
            
            
            32,246
            
            
            
            44,790
            
            
            
            90,194
            
            
            
            143,127Gross
      profit
            
            
            4,470
            
            
            
            13,275
            
            
            
            8,480
            
            
            
            69,800Research
      and development expenses
            
            
            11,025
            
            
            
            12,931
            
            
            
            33,026
            
            
            
            42,059Selling
      and administrative expenses
            
            
            6,315
            
            
            
            14,576
            
            
            
            20,085
            
            
            
            32,897Restructuring
      charge
            
            
            -
            
            
            
            -
            
            
            
            2,598
            
            
            
            -Operating
      loss
            
            
            (12,870
            )
            
            
            (14,232
            )
            
            
            (47,229
            )
            
            
            (5,156
            )Interest
      income
            
            
            184
            
            
            
            978
            
            
            
            1,030
            
            
            
            4,197Interest
      expense
            
            
            (584
            )
            
            
            (592
            )
            
            
            (1,766
            )
            
            
            (1,774
            )Other
      income (expense)
            
            
            89
            
            
            
            (1,622
            )
            
            
            (1,456
            )
            
            
            (2,758
            )Loss
      before income taxes
            
            
            (13,181
            )
            
            
            (15,468
            )
            
            
            (49,421
            )
            
            
            (5,491
            )Benefit
      from income taxes
            
            
            (321
            )
            
            
            -
            
            
            
            (321
            )
            
            
            -Net
      loss
            
            $
            (12,860
            )
            
            
            (15,468
            )
            
            $
            (49,100
            )
            
            
            (5,491
            )Basic
      loss per share
            
            $
            (0.21
            )
            
            $
            (0.26
            )
            
            $
            (0.79
            )
            
            $
            (0.09
            )Diluted
      loss per share
            
            $
            (0.21
            )
            
            $
            (0.26
            )
            
            $
            (0.79
            )
            
            $
            (0.09
            )Weighted
      average common shares outstanding used in computing loss per
      shareBasic
            
            
            62,617
            
            
            
            60,509
            
            
            
            62,189
            
            
            
            59,949Diluted
            
            
            62,617
            
            
            
            60,509
            
            
            
            62,189
            
            
            
            59,949







CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS





(AMOUNTS
IN THOUSANDS)








Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008(unaudited)
            
            
            (unaudited)
            
            
            (unaudited)
            
            
            (unaudited)Net
      loss
            
            $
            (12,860
            )
            
            $
            (15,468
            )
            
            $
            (49,100
            )
            
            $
            (5,491
            )Other
      comprehensive (loss) income:Unrealized
      gain (loss) on marketable securities
            
            
            524
            
            
            
            (86
            )
            
            
            1,695
            
            
            
            (1,410
            )Foreign
      currency translation adjustment
            
            
            4
            
            
            
            (8
            )
            
            
            (77
            )
            
            
            170Reclassification
      adjustment:Net
      recognized (gain) loss on marketable securities previously included in
      other comprehensive income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,434Comprehensive
      loss
            
            $
            (12,332
            )
            
            $
            (15,562
            )
            
            $
            (47,482
            )
            
            $
            (5,297
            )













See
      accompanying notes.









ANADIGICS,
Inc.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





(AMOUNTS
IN THOUSANDS)





Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008(unaudited)
            
            
            (unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
            
            $
            (49,100
            )
            
            $
            (5,491
            )Adjustments
      to reconcile net loss to net cash (used in) provided by operating
      activities:Depreciation
            
            
            13,539
            
            
            
            11,612Amortization
            
            
            349
            
            
            
            543Stock
      based compensation
            
            
            9,299
            
            
            
            15,271Amortization
      of premium (discount) on marketable securities
            
            
            12
            
            
            
            (98
            )Recognized
      marketable securities impairment and other
            
            
            1,530
            
            
            
            3,061Gain
      on disposal of equipment
            
            
            (68
            )
            
            
            (295
            )Equipment
      impairment charge
            
            
            -
            
            
            
            849Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            2,160
            
            
            
            9,139Inventories
            
            
            12,113
            
            
            
            (10,443
            )Prepaid
      expenses and other assets
            
            
            (1,103
            )
            
            
            (595
            )Accounts
      payable
            
            
            107
            
            
            
            (6,439
            )Accrued
      liabilities and other liabilities
            
            
            (1,922
            )
            
            
            5,876Net
      cash (used in) provided by operating activities
            
            
            (13,084
            )
            
            
            22,990CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of plant and equipment
            
            
            (9,519
            )
            
            
            (47,432
            )Proceeds
      from sale of equipment
            
            
            62
            
            
            
            209Purchases
      of marketable securities
            
            
            (15,201
            )
            
            
            (15,410
            )Proceeds
      from sale of marketable securities
            
            
            29,116
            
            
            
            109,358Net
      cash provided by investing activities
            
            
            4,458
            
            
            
            46,725CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of common stock
            
            
            100
            
            
            
            2,601Repurchase
      of common stock into treasury
            
            
            (1
            )
            
            
            -Net
      cash provided by financing activities
            
            
            99
            
            
            
            2,601Net
      (decrease) increase in cash and cash equivalents
            
            
            (8,527
            )
            
            
            72,316Cash
      and cash equivalents at beginning of period
            
            
            123,552
            
            
            
            57,786Cash
      and cash equivalents at end of period
            
            $
            115,025
            
            
            $
            130,102




See
      accompanying notes.





ANADIGICS,
Inc.





NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – OCTOBER 3,
2009





(AMOUNTS
IN THOUSANDS, EXCEPT 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 U.S. generally accepted accounting principles 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 U.S. generally accepted accounting
principles for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals and
adjustments) considered necessary for a fair presentation have been
included.  Operating results for the three and nine month period ended
October 3, 2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009.




The condensed
consolidated balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by U.S. generally accepted accounting
principles 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,
2008.




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.




The Company
has evaluated subsequent events through November 5, 2009, the filing date of
this Form 10-Q with the SEC, and determined that other than the repayment of the
$38,000 Convertible Notes discussed in Note 7 and the matters outlined in Note
11, there were no subsequent events to recognize or disclose in these unaudited
interim condensed consolidated financial statements.




IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In June 2009,
the Financial Accounting Standards Board (FASB) issued FAS 168, "The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles", which was primarily codified into Accounting Standards
Codification (ASC) 105 "Generally Accepted Accounting Standards". This standard
will become the single source of authoritative nongovernmental U.S. generally
accepted accounting principles.  All existing accounting standard
documents will be superseded and all other accounting literature not included in
the FASB Codification will be considered non-authoritative. This guidance is
effective for interim and annual periods ending after September 15, 2009. For
clarity, we have chosen to include the available Codification references in this
quarterly report in addition to pre-Codification accounting standard
references.  As the Codification is not intended to change the
existing accounting guidance, its adoption did not have an impact on the
Company’s consolidated financial statements.




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements and
Disclosures” (ASC 820), which defined fair value, established a framework for
measuring fair value in generally accepted accounting principles and expanded
disclosures about fair value measurements. ASC 820 was effective for fiscal
years beginning after November 15, 2007 and interim periods within those fiscal
years. In February 2008, the FASB issued FSP FAS 157-2 “Partial Deferral of the
Effective Date of Statement 157” (ASC 820-10-65-2), which delayed the effective
date for non-financial assets and liabilities that are not measured or disclosed
on a recurring basis to fiscal years beginning after November 15, 2008. The
adoption of ASC 820-10-65-2 as of January 1, 2009 did not have a material effect
on the Company’s consolidated financial statements for non-financial assets and
liabilities and any other assets and liabilities carried at fair
value.




In April
2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and
a Transaction Is Not Distressed” (ASC 820-10-65-4), which provides additional
guidance on factors to consider in estimating fair value when there has been a
significant decrease in market activity for a financial asset. ASC 820-10-65-4
was effective for interim and annual periods ending after June 15, 2009. This
new standard was effective beginning with the Company’s second quarter financial
reporting and did not have a material impact on its consolidated financial
statements.




In August
2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, “Measuring
Liabilities at Fair Value.” This ASU clarifies the application of certain
valuation techniques in circumstances in which a quoted price in an active
market for the identical liability is not available and clarifies that when
estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. The
guidance provided in this ASU became effective for the Company on October 4,
2009. The adoption of this standard effective October 4, 2009 did not have a
material impact on the Company’s consolidated financial statements.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations” (ASC 805), which changes how business acquisitions are
accounted.  ASC 805 requires the acquiring entity in a business combination
to recognize all (and only) the assets acquired and liabilities assumed in the
transaction and establishes the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities assumed in a business
combination.  Certain provisions of this standard will, among other things,
impact the determination of acquisition-date fair value of consideration paid in
a business combination (including contingent consideration); exclude transaction
costs from acquisition accounting; and change accounting practices for acquired
contingencies, acquisition-related restructuring costs, in-process research and
development, indemnification assets, and tax benefits.  ASC 805 was
effective for financial statements issued for fiscal years beginning after
December 15, 2008 and upon adoption did not have a material impact on the
Company’s consolidated financial statements. However it is expected to change
the Company’s accounting prospectively for future business combinations
consummated subsequently.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51”
(ASC 810), which changes the accounting for and reporting of noncontrolling
interests (formerly known as minority interests) in consolidated financial
statements. It was effective for financial statements issued for fiscal years
and interim periods beginning after December 15, 2008, with early adoption
prohibited. Upon implementation, prior periods will be recast for the changes
required by ASC 810. The adoption of this standard effective January 1, 2009 did
not have a material impact on the Company’s consolidated financial
statements.




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (ASC
815), which applies to all derivative instruments and related hedged items
accounted for under FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  ASC 815 requires that objectives
for using derivative instruments be disclosed in terms of underlying risk and
accounting designation. The fair value of derivative instruments and their gains
and losses will need to be presented in tabular format in order to present a
more complete picture of the effects of using derivative instruments. ASC 815
was effective for financial statements issued for fiscal years beginning after
November 15, 2008. The adoption of this standard effective January 1, 2009 did
not have a material impact on the Company’s consolidated financial
statements.




In May 2008,
the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)" (ASC 470-20), which requires the issuer of certain convertible
debt instruments that may be settled in cash (or other assets) on conversion to
separately account for the liability (debt) and equity (conversion option)
components of the instrument in a manner that reflects the issuer's
non-convertible debt borrowing rate. ASC 470-20 was effective for fiscal years
beginning after December 15, 2008 on a retroactive basis. The adoption of this
standard effective January 1, 2009 did not have a material impact on the
Company’s consolidated financial statements.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (primarily
covered within ASC 260-10), which clarifies that all outstanding unvested
share-based payment awards that contain rights to nonforfeitable dividends
participate in undistributed earnings with common shareholders. Awards of this
nature are considered participating securities and the two-class method of
computing basic and diluted earnings per share must be applied. ASC 260-10 was
effective for fiscal years beginning after December 15, 2008. The adoption of
this standard effective January 1, 2009 did not have a material impact on the
Company’s consolidated financial statements.




In April
2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (ASC 320-10-65-1), which changes the method
for determining whether an other-than-temporary impairment exists for debt
securities and the amount of the impairment to be recorded in earnings. ASC
320-10-65-1 was effective for interim and annual periods ending after June 15,
2009 and apply based upon the Company’s ability and intent to hold the security
to maturity or a recovery in valuation. The adoption of this standard did not
have an impact on the Company’s consolidated financial statements, as it is more
likely than not that the Company will sell the impaired debt securities prior to
a recovery in valuation.





In April
2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value
of Financial Instruments” (ASC 825-10-65-1), which requires fair value
disclosures in both interim as well as annual financial statements in order to
provide more timely information about the effects of current market conditions
on financial instruments. ASC 825-10-65-1 was effective for interim and annual
periods ending after June 15, 2009. This new standard was effective beginning
with the Company’s second quarter financial reporting and the additional
financial reporting disclosures are included herein.




In May 2009,
the FASB issued FASB Statement No. 165, “Subsequent Events” (ASC 855-10), which
establishes general standards of accounting and disclosure for events that occur
after the balance sheet date but before the financial statements are issued. ASC
855-10 was effective for interim and annual periods ending after June 15,
2009.  This new standard was effective beginning with the Company’s
second quarter financial reporting and did not have an impact on its
consolidated financial statements.




INCOME
TAXES




As more fully
discussed in Note 8, the Company recognized a tax benefit during the three
months ended October 3, 2009. The Company maintains a full valuation allowance
on its deferred tax assets.  We recognize interest and penalties
related to the underpayment of income taxes in income tax expense. No
unrecognized tax benefits, interest or penalties were accrued at October 3,
2009. The Company’s U.S. federal net operating losses have occurred since 1998
and as such, tax years subject to potential tax examination could apply from
that date because carrying-back net operating loss opens the relevant year to
audit.





WARRANTY




Based on the
examination of historical returns and other information it deems critical, the
Company estimates that a current charge to income will need to be provided in
order 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 nine months ended October 3, 2009 included $1,465 in
actual charges and $1,754 in provisions resulting in the balance of $934 at
October 3, 2009.  Warranty reserve movements in the nine months ended
September 27, 2008 included $604 in actual charges and an $870 increase in the
provision.




RECLASSIFICATIONS





Certain prior period amounts have been
reclassified to conform to the current presentation.








2. RESTRUCTURING
AND OTHER CHARGES




During the
fourth quarter of 2008, the Company recorded restructuring charges of $2,140
pertaining to severance and related benefits of workforce reductions undertaken
in that quarter.  The workforce reductions eliminated approximately
100 positions throughout the Company.




In the first
quarter of 2009, the Company implemented further workforce reductions, which
eliminated approximately 110 positions throughout the Company, resulting in a
charge of $2,598 for severance and related benefits.





Activity
and liability balances related to the restructuring were as
follows:





Workforce-related
            
            
            Other
            
            
            TotalDecember
      31, 2008 balance
            
            $
            1,065
            
            
            $
            100
            
            
            $
            1,165Additions
            
            
            2,598
            
            
            
            -
            
            
            
            2,598Deductions
            
            
            (3,479
            )
            
            
            (100
            )
            
            
            (3,579
            )October
      3, 2009 balance
            
            $
            184
            
            
            $
            -
            
            
            $
            184





In the three
months ended October 3, 2009, the Company recorded a charge within Cost of goods
sold in the amount of $3,879 in settlement of a commercial dispute with a
customer. The settlement, dated October 26, 2009, requires an initial payment of
$1,110 and six quarterly payments of $500 commencing March 2010.




In the three
months ended September 27, 2008 the Company recorded charges for certain
management separations, equipment purchase cancellation and impairment charges
and inventory reserve charges associated with reduced demand in the amounts of
$6,026, $1,860 and $849 and $1,210, respectively. Of the total $9,945
aforementioned charges, $4,216 related to Cost of sales and $5,729 related to
Selling and administrative expenses. The management separation charge primarily
arose from the resignation of our former chief executive officer, Dr. Bastani,
and included separation pay, accelerated vesting of equity awards and certain
other costs. During the quarter ended September 27, 2008, the Company cancelled
certain manufacturing equipment purchase obligations and recorded a charge
associated with these cancellations and in addition, certain surplus equipment
was identified for sale and adjusted to its fair value. The inventory reserve
charge was recorded after an abnormal decrease in demand for certain
products.




3. LOSS PER
SHARE




The
reconciliation of shares used to calculate basic and diluted loss per share
consists of the following:





Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008Weighted
      average common shares for basic loss per share
            
            
            62,617
            
            
            
            60,509
            
            
            
            62,189
            
            
            
            59,949Net
      effect of dilutive securities - based on treasury stock method using
      average market price
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Adjusted
      weighted average shares for diluted loss per share
            
            
            62,617
            
            
            
            60,509
            
            
            
            62,189
            
            
            
            59,949




For the three
and nine months ended October 3, 2009 and September 27, 2008, potential
additional dilution arising from any of the Company's outstanding stock options,
unvested restricted stock (shares or units), or shares potentially issuable upon
conversion of the Convertible notes are detailed below. Such potential dilution
was excluded as their effect was anti-dilutive.





Three
      and nine months endedOctober
      3, 2009
            
            
            September
      27, 2008Convertible
      notes
            
            
            7,600
            
            
            
            7,600Stock
      options
            
            
            5,389
            
            
            
            2,944Unvested
      restricted shares and units
            
            
            1,809
            
            
            
            2,895










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 as
follows:




Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008Broadband
            
            $
            10,269
            
            
            $
            28,799
            
            
            $
            27,655
            
            
            $
            83,097Wireless
            
            
            26,447
            
            
            
            29,266
            
            
            
            71,019
            
            
            
            129,830Total
            
            $
            36,716
            
            
            $
            58,065
            
            
            $
            98,674
            
            
            $
            212,927




The Company
primarily sells to four geographic regions: Asia, USA and Canada, Latin America
and Other. The geographic region is determined by the destination of the shipped
product. During the three months ended October 3, 2009, the Company identified
certain prior period sales that were classified by invoicing location rather
than the destination of the shipped product.  Certain prior period
information presented below has been recast to properly classify these sales
based on their shipped product destination.


Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008Asia
            
            $
            28,261
            
            
            $
            46,885
            
            
            $
            74,010
            
            
            $
            184,314USA
      and Canada
            
            
            2,094
            
            
            
            4,179
            
            
            
            5,264
            
            
            
            10,537Latin
      America
            
            
            4,405
            
            
            
            4,184
            
            
            
            13,185
            
            
            
            11,721Other
            
            
            1,956
            
            
            
            2,817
            
            
            
            6,215
            
            
            
            6,355Total
            
            $
            36,716
            
            
            $
            58,065
            
            
            $
            98,674
            
            
            $
            212,927




5. FAIR VALUE
AND MARKETABLE SECURITIES





FAIR
VALUE OF FINANCIAL INSTRUMENTS




Fair value is
defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the
measurement date (exit price). Inputs used to measure fair value are classified
in the following hierarchy:





Level
      1
            Unadjusted
      quoted prices in active markets for identical assets or
      liabilitiesLevel
      2
            Unadjusted
      quoted prices in active markets for similar assets or liabilities, or
      unadjusted quoted prices for identical or similar assets or liabilities in
      markets that are not active, or inputs other than quoted prices that are
      observable for the asset or liabilityLevel
      3
            Unobservable
      inputs for the asset or liability




The Company
endeavors to utilize the best available information in measuring fair value.
Financial assets and liabilities are classified in their entirety based on the
lowest level of input that is significant to the fair value measurement. The
following tables present a summary of fair value information for
available-for-sale securities as at October 3, 2009 presented in accordance with
ASC 820:





Fair
      Value Measurements at Reporting Date UsingSecurity
      Type
            
            Amortized
              Cost
      Basis
              (1)
            
            
            Fair
      Value
            
            
            Quoted
      Prices in Active Markets for Identical Assets
              (Level
      1)
            
            
            Significant
      Other Observable Inputs
              (Level
      2)
            
            
            Significant
      Unobservable Inputs
              (Level
      3)Non-auction
      Corporate Debt securities (2)
            
            
            1,529
            
            
            
            2,350
            
            
            
            -
            
            
            
            2,350
            
            
            
            -Auction
      Rate SecuritiesCorporate
      Debt (2)
            
            
            600
            
            
            
            933
            
            
            
            -
            
            
            
            -
            
            
            
            933Preferred
      Equity
            
            
            3,013
            
            
            
            3,348
            
            
            
            -
            
            
            
            -
            
            
            
            3,348State
      and Municipal Debt (2)
            
            
            1,560
            
            
            
            1,779
            
            
            
            -
            
            
            
            -
            
            
            
            1,779Total
            
            $
            6,702
            
            
            $
            8,410
            
            
            $
            -
            
            
            $
            2,350
            
            
            $
            6,060





(1)
              (2)
            Difference
      between amortized cost basis and fair value represents gross unrealized
      gains.
              These
      available for sale debt securities have contractual maturities in excess
      of 10 years.






The fair
value of a financial instrument is the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants. The fair value of each of the following instruments approximates
their carrying value because of the short maturity of these instruments: cash
and cash equivalents, accounts receivable, accounts payable and accrued
liabilities. At October 3, 2009 and December 31, 2008, the fair value of the
Company's outstanding convertible senior notes, determined by reference to
interest rates and the Company’s stock price (Level 2 valuation), were
approximately $38,065 and $33,630, respectively compared to their carrying
values of $38,000 and $38,000, respectively.




AUCTION
RATE SECURITIES




Auction rate
securities (ARS) are generally long-term financial instruments that provided
liquidity through a Dutch auction process that resets the applicable interest
rate at pre-determined calendar intervals, generally every 28 days. The
mechanism generally allowed existing investors to rollover their holdings while
continuing to own their respective securities or liquidating their holdings by
selling their securities at par value. The Company generally invested in these
securities for short periods of time as part of its cash management program.
During the second half of 2007, certain auction rate debt and preferred
securities failed to auction due to sell orders exceeding buy orders. In
February 2008, liquidity issues in the global credit markets resulted in
failures of the auction process for a broader range of ARS, including
substantially all of the auction rate corporate, state and municipal debt and
preferred equity securities the Company holds. The funds associated with thefailed auctions
will not be accessible until a successful auction occurs, a buyer is found
outside of the auction process or an issuer redeems its security. During the
quarter ended October 3, 2009, certain issuers redeemed $600 of ARS at face
value and the Company recorded income of $200 as prior write-downs of costs had
previously been charged to income as an other-than-temporary
impairment.




At October 3,
2009, there was insufficient observable ARS market information available to
determine the fair value of the Company’s investments in ARS. Given the
complexity of ARS investments, the Company obtained the assistance of an
independent valuation firm to assist management in assessing the Level 3 fair
value of its ARS portfolio. The third party valuations developed to estimate the
ARS fair value were determined using a combination of two calculations (1) a
discounted cash flow model, where the expected cash flows of the ARS are
discounted to the present using a yield that incorporates compensation for
illiquidity, and (2) a market comparables method, where the ARS are valued based
on indications, from the secondary market, of what discounts buyers demand when
purchasing similar ARS. The valuations include numerous assumptions such as
assessments of the underlying structure of each security, expected cash flows,
discount rates, credit ratings, workout periods, and overall capital market
liquidity. During the quarter ended October 3, 2009, a preferred equity ARS
ceased interest payments and the Company wrote down its remaining valuation to
zero. While interest at default rates continues to be paid currently by the
remaining issuers of these ARS, due to the severity of the decline in fair value
and the duration of time for which these ARS have been in a loss position, the
Company concluded that its ARS experienced an other-than-temporary decline in
fair value and recorded impairment charges of $165 and $1,376 for the three and
nine months periods ended October 3, 2009, respectively.




During 2008,
a corporate debt ARS position with a face value of $4,000 was exchanged for the
underlying 30 year notes due 2037. This debt is quoted but infrequently traded
and the Company values this security on a Level 2 basis. Due to the severity and
duration of the decline to April 4, 2009, the Company recorded an impairment of
$354 during the first quarter of 2009 related to this security, which in
combination with the ARS impairment discussed above, was reported in Other
income (expense).




As further
required by ASC 820, provided below is a reconciliation of the beginning and
ending balances for each type of security valued using a Level 3 valuation
during the three and nine months ended October 3, 2009.





($
      in 000’s)
            
            Fair
      Value Measurements Using Significant Unobservable Inputs (Level
      3)
              Nine
      months ended October 3, 2009State
      & Municipal Securities (a)
            
            
            Corporate
      Debt Securities (b)
            
            
            Preferred
      Equity Securities (c)
            
            
            TotalBalance
      at January 1, 2009
            
            $
            1,947
            
            
            $
            662
            
            
            $
            4,340
            
            
            $
            6,949Total
      gains or (losses) realized/unrealizedIncluded
      in net loss
              -
      quarter ended April 4, 2009
            
            
            (325
            )
            
            
            (62
            )
            
            
            (824
            )
            
            
            (1,211
            )-
      quarter ended July 4, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            --
      quarter ended October 3, 2009
            
            
            38
            
            
            
            -
            
            
            
            (3
            )
            
            
            35Included
      in other comprehensive (loss) income
              -
      quarter ended April 4, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            --
      quarter ended July 4, 2009
            
            
            47
            
            
            
            212
            
            
            
            321
            
            
            
            580-
      quarter ended October 3, 2009
            
            
            172
            
            
            
            121
            
            
            
            14
            
            
            
            307Purchases,
      redemptions, and settlements quarter ended October 3, 2009
            
            
            (100
            )
            
            
            -
            
            
            
            (500
            )
            
            
            (600
            )Transfers in and/or out of Level
      3
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      at October 3, 2009
            
            $
            1,779
            
            
            $
            933
            
            
            $
            3,348
            
            
            $
            6,060The
      amount of total gains or losses for the period included in loss
      attributable to the change in unrealized gains or losses relating to
      assets still held at the reporting date
              -
      as of April 4, 2009
            
            $
            (325
            )
            
            $
            (62
            )
            
            $
            (824
            )
            
            $
            (1,211
            )-
      as of July 4, 2009
            
            $
            (325
            )
            
            $
            (62
            )
            
            $
            (824
            )
            
            $
            (1,211
            )-
      as of October 3, 2009
            
            $
            (287
            )
            
            $
            (62
            )
            
            $
            (827
            )
            
            $
            (1,176
            )Securities
      held at October 3, 2009:Face
      value
            
            $
            2,500
            
            
            $
            2,500
            
            
            $
            7,000
            
            
            $
            12,000Amortized
      cost basis
            
            $
            1,560
            
            
            $
            600
            
            
            $
            3,013
            
            
            $
            5,173Weighted
      average interest rate (*)
            
            
            0.9
            %
            
            
            2.1
            %
            
            
            2.1
            %
            
            
            1.8
            %Maturity
      date
            
            
            2045
            
            
            
            2036
            
            
            
            N/A




*
Interest rates are reset every one to three months based on a premium to AA
Commercial Paper, LIBOR or Treasury Bill rates.
 (a)
Security represents an interest in pooled student loans that are guaranteed by
the Federal Family Education Loan Program. The security has a financial rating
of A3.
 (b)
Security issued by a publicly-held insurance company trust, which holds
investments in  U.S. Government obligations, highly rated commercial
paper and money market funds and other investments approved by two credit rating
agencies. The trust is funded by life insurance residuals. If the residuals are
insufficient, the security becomes an obligation of the publicly-held insurance
company. The security has a financial rating of A3.
 (c)
Includes preferred securities issued by three diversified closed-end management
investment companies which are governed by the Investment Company Act of 1940
with regard to operating standards, antifraud rules, diversification
requirements and an asset coverage requirement for asset backing of 200% of the
par value of the preferred stock issued and carry financial ratings of AAA. Also
includes preferred securities issued by subsidiaries of two publicly-held debt
default insurers, one of which carries a financial rating of A2 while the other
security, which no longer pays interest and has been written to zero, has a
financial rating of C.




For the three
and nine month periods ended September 27, 2008, the table below provides a
reconciliation of the beginning and ending balances for each type of security
valued using a Level 3 valuation.








($
      in 000’s)
            
            Fair
      Value Measurements Using Significant Unobservable Inputs (Level
      3)Nine
      months ended September 27, 2008State
      & Municipal Securities
            
            
            Corporate
      Debt Securities
            
            
            Preferred
      Equity Securities
            
            
            TotalBeginning
      balance
            
            $
            -
            
            
            $
            2,324
            
            
            $
            2,344
            
            
            $
            4,668Total
      gains or losses realized/unrealizedIncluded
      in net loss-
      quarter ended March 29, 2008
            
            
            (186
            )
            
            
            (43
            )
            
            
            (594
            )
            
            
            (823
            )-
      quarter ended June 28, 2008
            
            
            (389
            )
            
            
            (360
            )
            
            
            135
            
            
            
            (614
            )-
      quarter ended September 27, 2008
            
            
            186
            
            
            
            79
            
            
            
            (532
            )
            
            
            (267
            )Included
      in other comprehensive income-
      quarter ended March 29, 2008
            
            
            (130
            )
            
            
            -
            
            
            
            -
            
            
            
            (130
            )-
      quarter ended June 28, 2008
            
            
            130
            
            
            
            240
            
            
            
            -
            
            
            
            370-
      quarter ended September 27, 2008
            
            
            -
            
            
            
            (240
            )
            
            
            -
            
            
            
            (240
            )Purchases,
      redemptions, and settlements-
      quarter ended March 29, 2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            --
      quarter ended June 28, 2008
            
            
            (2,125
            )
            
            
            -
            
            
            
            (4,650
            )
            
            
            (6,775
            )-
      quarter ended September 27, 2008
            
            
            (1,775
            )
            
            
            -
            
            
            
            -
            
            
            
            (1,775
            )Transfers
      in and/or out of Level 3-
      quarter ended March 29, 2008
            
            
            6,500
            
            
            
            -
            
            
            
            9,475
            
            
            
            15,975-
      quarter ended June 28, 2008
            
            
            -
            
            
            
            3,760
            
            
            
            -
            
            
            
            3,760-
      quarter ended September 27, 2008
            
            
            -
            
            
            
            (3,760
            )
            
            
            -
            
            
            
            (3,760
            )Ending
      Balance
            
            $
            2,211
            
            
            $
            2,000
            
            
            $
            6,178
            
            
            $
            10,389The
      amount of total gains or losses for the period included in earnings
      attributable to the change in unrealized gains or losses relating to
      assets still held at the reporting date-
      as of March 29, 2008
            
            $
            (186
            )
            
            $
            (43
            )
            
            $
            (594
            )
            
            $
            (823
            )-
      as of June 28, 2008
            
            $
            (575
            )
            
            $
            (403
            )
            
            $
            (459
            )
            
            $
            (1,437
            )-
      as of September 27, 2008
            
            $
            (389
            )
            
            $
            (324
            )
            
            $
            (991
            )
            
            $
            (1,704
            )





6. INVENTORIES




Inventories
are stated at the lower of cost (first-in, first-out method) or
market.  Inventories consist of the following:





October
      3, 2009
            
            
            December
      31, 2008Raw
      materials
            
            $
            6,959
            
            
            $
            9,537Work
      in process
            
            
            13,972
            
            
            
            18,062Finished
      goods
            
            
            11,076
            
            
            
            15,00732,007
            
            
            
            42,606Reserves
            
            
            (10,542
            )
            
            
            (9,028
            )Total
            
            $
            21,465
            
            
            $
            33,578


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 (7,600 shares contingently issuable). Interest on the 2009 Notes
is payable semi-annually in arrears on April 15 and October 15 of each
year.  The 2009 Notes were repaid on the October 15, 2009 maturity
date.




8. BENEFIT FROM
INCOME TAXES





The Housing
and Economic Recovery Act of 2008 included the partial refund of certain
carried-forward Research and Experimental (R&E) tax credits. During the
three month period ended October 3, 2009 the Company finalized and filed the
R&E claim as part of its 2008 Federal tax return and subsequently received
cash of $321 for the R&E credits. Such refund was recorded as a benefit from
income taxes during the three months ended October 3, 2009.




9. STOCK BASED
COMPENSATION





Equity
Compensation Plans





The
Company had 4 equity compensation plans under which equity securities are
authorized for issuance to employees and/or directors:


§
            The
      1995 Long-Term Incentive and Share Award Plan for Officers and Directors
      (terminated February 28, 2005)  (1995
  Plan);


§
            The
      1997 Long Term Incentive and Share Award Plan (1997
  Plan);


§
            The
      2005 Long Term Incentive and Share Award Plan (2005 Plan, collectively
      with the 1995 Plan and the 1997 Plan, the Plans);
  and


§
            The
      Employee Stock Purchase Plan (ESP
Plan).




Employees and
outside directors have been granted restricted stock shares or units
(collectively, restricted stock) and options to purchase shares of common stock
under stock option plans adopted in 1995, 1997 and 2005. An aggregate of 4,913,
5,100 and 11,550 shares of common stock were reserved for issuance under the
1995 Plan, the 1997 Plan and the 2005 Plan, respectively. The Plans provide for
the granting of stock options, stock appreciation rights, restricted stock and
other share based awards to eligible employees and directors, as defined in the
Plans. Option grants have terms of ten years and become exercisable in varying
amounts over periods of up to three years. To date, no stock appreciation rights
have been granted under the Plans. In connection with the hiring of the
Company’s new President and Chief Executive Officer on February 1, 2009, an
inducement award of 700 stock options was granted to him outside of the
Plans.




In 1995, the
Company adopted the ESP Plan under Section 423 of the Internal Revenue Code. All
full-time employees of ANADIGICS, Inc. and part-time employees, as defined in
the ESP Plan, are eligible to participate in the ESP Plan. An aggregate of 4,194
shares of common stock were reserved for offering under the ESP Plan. Offerings
are made at the commencement of each calendar year and must be purchased by the
end of that calendar year. Pursuant to the terms of the ESP Plan, shares
purchased and the applicable per share price were 183 and $1.28, respectively
for the year ended December 31, 2008.




The table
below summarizes stock based compensation by source and by financial statement
line item for the three and nine month periods:




Three
      months ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008Amortization
      of restricted stock awards
            
            $
            1,866
            
            
            $
            5,191
            
            
            $
            6,156
            
            
            $
            13,345Amortization
      of ESP Plan
            
            
            60
            
            
            
            -
            
            
            
            460
            
            
            
            400Amortization
      of stock option awards
            
            
            986
            
            
            
            733
            
            
            
            2,683
            
            
            
            1,526Total
      stock based compensation
            
            $
            2,912
            
            
            $
            5,924
            
            
            $
            9,299
            
            
            $
            15,271By
      Financial Statement line itemCost
      of sales
            
            $
            601
            
            
            $
            697
            
            
            $
            1,943
            
            
            $
            2,449Research
      and development expenses
            
            
            1,167
            
            
            
            1,470
            
            
            
            3,715
            
            
            
            5,271Selling
      and administrative expenses
            
            
            1,144
            
            
            
            3,757
            
            
            
            3,832
            
            
            
            7,551Restructuring
      charge
            
            
            -
            
            
            
            -
            
            
            
            (191
            )
            
            
            -




No tax
benefits have been recorded due to the Company’s full valuation allowance
position.




Stock based
compensation for the three and nine months ended September 27, 2008 included
$2,065 for equity awards associated with the management separation charge
recorded during the three months ended September 27, 2008.





Restricted
Stock and Stock Option Awards




Commencing in
August 2004, the Company began granting restricted stock shares under the Plans
and in July 2008 began granting restricted stock units (collectively restricted
stock). The value of restricted stock grants are fixed upon the date of grant
and amortized over the related vesting period of one to three
years.  Restricted stock is subject to forfeiture if employment
terminates prior to vesting.  The Company estimates that approximately
2.5% of its restricted stock grants are forfeited annually.  The
restricted stock shares carry voting and certain forfeitable dividend rights
commencing upon grant, whereas restricted stock units do not. Neither restricted
stock shares nor restricted stock units may be traded or transferred prior to
vesting.  Grant, vest and forfeit activity and related weighted
average (WA) price per share for restricted stock and for stock options during
the period from January 1, 2008 to October 3, 2009 is presented in tabular form
below:





Restricted
      Stock Shares
            
            
            Restricted
      Stock Units
            
            
            Stock
      OptionsShares
            
            
            WA
      price/ share
            
            
            Units
            
            
            WA
      price/ unit
            
            
            Issuable
      upon exercise
            
            
            WA
      exercise priceOutstanding
      at January 1, 2008
            
            
            2,212
            
            
            $
            9.61
            
            
            
            -
            
            
            
            -
            
            
            
            3,491
            
            
            $
            9.68Granted
            
            
            1,802
            
            
            
            9.26
            
            
            
            678
            
            
            $
            5.04
            
            
            
            -
            
            
            
            -Shares
      vested/options exercised
            
            
            (1,722
            )
            
            
            9.16
            
            
            
            (31
            )
            
            
            5.88
            
            
            
            (384
            )
            
            
            6.78Forfeited/expired
            
            
            (318
            )
            
            
            12.17
            
            
            
            (36
            )
            
            
            5.89
            
            
            
            (288
            )
            
            
            10.36Balance
      at December 31, 2008
            
            
            1,974
            
            
            
            9.27
            
            
            
            611
            
            
            
            4.94
            
            
            
            2,819
            
            
            
            10.00Granted
            
            
            -
            
            
            
            -
            
            
            
            873
            
            
            
            3.22
            
            
            
            3,210
            
            
            
            2.03Shares
      vested/options exercised
            
            
            (1,009
            )
            
            
            8.60
            
            
            
            (556
            )
            
            
            4.78
            
            
            
            (49
            )
            
            
            2.06Forfeited/expired
            
            
            (57
            )
            
            
            10.88
            
            
            
            (27
            )
            
            
            5.72
            
            
            
            (591
            )
            
            
            9.42Balance
      at October 3, 2009
            
            
            908
            
            
            $
            9.90
            
            
            
            901
            
            
            $
            3.35
            
            
            
            5,389
            
            
            $
            5.39




Included
within the restricted stock shares granted in 2008 are 357 shares granted
pursuant to long-term incentive awards (LTI) issued to management contingent
upon the Company’s performance using multi-year adjusted earnings per share and
revenue targets measured over a three-year period ending December 31,
2010.  The number of shares issuable pursuant to the LTI award can
vary upon actual performance to such targets and range from 50% to 150% of the
base share award. Upon the separation of our former chief executive officer in
2008, 27 shares of the 357 LTI shares were released and 96 shares were
forfeited. Based upon the performance of the Company to October 3, 2009, no
further stock-based compensation for LTI has been expensed and the related
unrecognized stock-based compensation has been excluded from the table
below.




As
      of October 3, 2009Unrecognized
      stock based compensation costOption plans
            
            $
            3,448Restricted stock
            
            $
            5,107Weighted
      average remaining recognition periodOption plans
            
            1.7
      yearsRestricted stock
            
            0.7
      years





Stock
options outstanding at October 3, 2009 are summarized as follows:





Range
      of exercise prices
            
            
            Outstanding
      Options at October 3, 2009
            
            
            Weighted
      average remaining contractual life
            
            
            Weighted
      average exercise price
            
            
            Exercisable
      at October 3, 2009
            
            
            Weighted
      average exercise price$
            1.39
      - $2.03
            
            
            
            2,999
            
            
            
            9.3
            
            
            $
            1.97
            
            
            
            5
            
            
            $
            1.82$
            2.08
      - $8.79
            
            
            
            977
            
            
            
            4.6
            
            
            $
            5.36
            
            
            
            879
            
            
            $
            5.50$
            8.84
      – $15.56
            
            
            
            1,248
            
            
            
            4.9
            
            
            $
            11.24
            
            
            
            1,169
            
            
            $
            11.35$
            15.94
      - $34.33
            
            
            
            165
            
            
            
            1.3
            
            
            $
            23.46
            
            
            
            161
            
            
            $
            23.57





Valuation
Method for ESP Plan and Stock Option Awards




The fair
value of these equity awards was estimated at the date of grant using a
Black-Scholes option pricing model. The weighted average assumptions for stock
based compensation grants used for the nine month periods ended October 3, 2009
and September 27, 2008 were:





Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008Stock
      option awards:Risk-free
      interest rate
            
            
            1.6
            %
            
            
            N/AExpected
      volatility
            
            
            99
            %
            
            
            N/AAverage
      expected term (in years)
            
            
            5.0
            
            
            
            N/AExpected
      dividend yield
            
            
            0.0
            %
            
            
            N/AWeighted
      average fair value of options granted
            
            $
            1.51
            
            
            
            N/AESP
      Plan:Risk-free
      interest rate
            
            
            0.4
            %
            
            
            1.8
            %Expected
      volatility
            
            
            96
            %
            
            
            100
            %Average
      expected term (in years)
            
            
            1.0
            
            
            
            1.0Expected
      dividend yield
            
            
            0.0
            %
            
            
            0.0
            %Weighted
      average fair value of purchase option
            
            $
            0.72
            
            
            $
            1.44




For equity
awards with expected terms of greater than one year, the assumption for expected
volatility is based on a combination of implied and historical volatility,
whereas for equity awards with an expected term of one year or less, the
assumption is solely based on the Company’s historical volatility.




10. LEGAL
PROCEEDINGS




On or about
November 11, 2008, plaintiff Charlie Attias filed a putative securities class
action lawsuit in the United States District Court for the District of New
Jersey, captioned Charlie
Attias v. Anadigics, Inc., et al., No. 3:08-cv-05572, and, on or about
November 21, 2008, plaintiff Paul Kuznetz filed a related class action lawsuit
in the same court, captioned Paul J. Kuznetz v. Anadigics, Inc.,
et al., No. 3:08-cv-05750 (jointly, the "Class Actions").  The
Complaints in the Class Actions, which were consolidated by an Order of the
District Court dated November 24, 2008, seek unspecified damages for alleged
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
as well as Rule 10b-5 promulgated thereunder, in connection with alleged
misrepresentations and omissions relating to, among other things, Anadigics's
manufacturing capabilities and the demand for its products.  On
October 23, 2009, plaintiffs filed a Consolidated Amended Class Action
Complaint, which names the Company, a current officer and a former
officer-director, and alleges a proposed class period that runs from July 24,
2007 through August 7, 2008.  Defendants' response to that Amended
Complaint is due to be filed by December 23, 2009.




On or about
January 14, 2009, a shareholder's derivative lawsuit, captioned Sicari v. Anadigics, Inc., et
al., No. SOM-L-88-09, was filed in the Superior Court of New Jersey, and,
on or about February 2, 2009, a related shareholder's derivative lawsuit,
captioned Moradzadeh v.
Anadigics, Inc., et al., No. SOM-L-198-09, was filed in the same court
(jointly, the "Derivative Lawsuits").  The Derivative Lawsuits seek
unspecified damages for alleged state law claims against certain of the
Company's current and former directors arising out of the matters at issue in
the Class Actions.  By Order dated March 6, 2009, the New Jersey
Superior Court consolidated the Derivative Lawsuits under the caption In re Anadigics, Inc. Derivative
Litigation, No. SOM-L-88-09.  By Order dated March 27, 2009,
the court stayed the Derivative Lawsuits pending disposition of the defendants'
motion to dismiss the Consolidated Amended Complaint in the Class
Actions.




Because the
Class Actions and the Derivative Lawsuits, which are in a preliminary stage, do
not specify alleged monetary damages, the Company is unable to reasonably
estimate a possible range of loss, if any, to the Company in connection
therewith.




The Company
is also a party to ordinary course litigation arising out of the operation of
our business. The Company believes that the ultimate resolution of such ordinary
course litigation should not have a material adverse effect on its consolidated
financial condition or results of operations.





11. SUBSEQUENT
EVENTS




The Company
will record a management separation charge in the fourth quarter of 2009
following the resignation of an executive officer. The charge, approximating
$1,900 of which approximately $450 is non-cash stock based compensation, covers
severance, the accelerated vesting of outstanding equity awards and certain
other costs.











ANADIGICS,
Inc.





ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





OVERVIEW




ANADIGICS,
Inc. (“we” or the “Company”) is a leading provider of semiconductor solutions in
the growing broadband wireless and wireline communications
markets.  Our products include power amplifiers (PAs), tuner
integrated circuits, active splitters, line amplifiers and other components,
which can be sold individually or packaged as integrated radio frequency (RF)
and front end modules.  We believe that we are well-positioned to
capitalize on the high growth voice, data and video segments of the broadband
wireless and wireline communications markets.  We offer third
generation (3G) products that use the Wideband Code-Division Multiple Access
(W-CDMA) and Enhanced Data Rates for Global System for Mobile Communication
Evolution (EDGE) standards and combinations of W-CDMA and EDGE platforms
(WEDGE), beyond third generation (3.5G) products that use the High Speed Packet
Access (HSPA, inclusive of downlink and uplink) and Evolution Data Optimized
standards, fourth generation (4G) products for Worldwide Interoperability for
Microwave Access, Wireless Fidelity products that use the 802.11 a/b/g and
802.11 n (Multiple Input Multiple Output) standards, cable television (CATV)
cable modem and set-top box products, CATV infrastructure products and
Fiber-To-The-Premises products.




Our business
strategy focuses on developing RF front end solutions and partnering with
industry-leading wireless and wireline chipset providers to incorporate our
solutions into their reference designs.  Our integrated solutions
enable our customers to improve RF performance, power efficiency, reliability,
time-to-market and the integration of chip components into single packages,
while reducing the size, weight and cost of their products.




We continue
to focus on leveraging our technological advantages to remain a leading supplier
of innovative semiconductor solutions for broadband wireless and wireline
communications. We believe our patented InGaP-plustechnology, which
combines the bipolar technology of a PA (HBT PA) with the surface device
technology of an RF active switch (pHEMT) on the same die, provides us with a
competitive advantage in the marketplace. For instance, we believe technologies
such as High Efficiency at Low Power (HELP) power amplifiers provide our
customers a competitive advantage by enabling their 3G, 3.5G and 4G devices to
consume less battery power and deliver longer talk time than comparable products
in their markets.




We
experienced declines in quarterly revenue from the second quarter of 2008
through the first quarter of 2009, which resulted from a combination of a
reduction in market share with certain customers and an industry slowdown due to
the macroeconomic environment. During the fourth quarter of 2008, we reduced our
workforce by approximately 100 positions and in the first quarter of 2009, we
further reduced our workforce by approximately 110 positions. We believe these
combined workforce reductions along with other cost reduction actions should
result in anticipated savings in 2009 approximating $20 million to $25
million.




We were
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.




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 ended
            
            
            Nine
      months endedOctober
      3, 2009
            
            
            September
      27, 2008
            
            
            October
      3, 2009
            
            
            September
      27, 2008Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            87.8
            %
            
            
            77.1
            %
            
            
            91.4
            %
            
            
            67.2
            %Gross
      margin
            
            
            12.2
            %
            
            
            22.9
            %
            
            
            8.6
            %
            
            
            32.8
            %Research
      and development expenses
            
            
            30.0
            %
            
            
            22.3
            %
            
            
            33.5
            %
            
            
            19.8
            %Selling
      and administrative expenses
            
            
            17.2
            %
            
            
            25.1
            %
            
            
            20.4
            %
            
            
            15.4
            %Restructuring
      charge
            
            
            -
            
            
            
            -
            
            
            
            2.6
            %
            
            
            -Operating
      loss
            
            
            (35.0
            )%
            
            
            (24.5
            )%
            
            
            (47.9
            )%
            
            
            (2.4
            )%Interest
      income
            
            
            0.5
            %
            
            
            1.7
            %
            
            
            1.0
            %
            
            
            1.9
            %Interest
      expense
            
            
            (1.6
            )%
            
            
            (1.0
            )%
            
            
            (1.8
            )%
            
            
            (0.8
            )%Other
      income (expense)
            
            
            0.2
            %
            
            
            (2.8
            )%
            
            
            (1.4
            )%
            
            
            (1.3
            )%Net
      loss before income taxes
            
            
            (35.9
            )%
            
            
            (26.6
            )%
            
            
            (50.1
            )%
            
            
            (2.6
            )%Benefit
      from income taxes
            
            
            (0.9
            )%
            
            
            -
            
            
            
            (0.3
            )%Net
      loss
            
            
            (35.0
            )%
            
            
            (26.6
            )%
            
            
            (49.8
            )%
            
            
            (2.6
            )%





NET
SALES.Net
sales decreased 36.8% during the third quarter of 2009 to $36.7 million from
$58.1 million in the third quarter of 2008. For the nine months ended October 3,
2009, net sales were $98.7 million, a 53.7% decrease from net sales of $212.9
million for the nine months ended September 27, 2008.




Sales of
integrated circuits for wireless applications decreased 9.6% during the third
quarter of 2009 to $26.4 million from $29.3 million in the third quarter of
2008.  For the nine months ended October 3, 2009, net sales of
integrated circuits for wireless applications decreased 45.3% to $71.0 million
from $129.8 million for the nine months ended September 27, 2008. The decrease
in sales in the three month period was primarily due to decreased demand in the
CDMA cellular device markets resulting from a reduction in market share with
certain customers and an industry slowdown due to the current macroeconomic
environment.  The decrease in sales in the nine month period was
primarily due to decreased demand in both the CDMA and EDGE/WEDGE cellular
device markets.




Sales of
integrated circuits for broadband applications decreased 64.3% during the third
quarter of 2009 to $10.3 million from $28.8 million in the third quarter of
2008. For the nine months ended October 3, 2009, net sales of integrated
circuits for broadband applications decreased 66.7% to $27.7 million from $83.1
million for the nine months ended September 27, 2008. The decrease in sales was
primarily due to decreased demand for WLAN PAs shipped into the PC Notebook
market resulting from the combination of a reduction in market share with one of
our key customers and general softness in demand for WLAN PAs that has occurred
due to the current macroeconomic environment. To a lesser degree, decreased
demand in the set top box and cable infrastructure markets contributed to the
lower sales in the third quarter and nine month period.




GROSS MARGIN.
Gross margin during the third quarter of 2009 decreased to 12.2% of net sales
from 22.9% of net sales in the third quarter of 2008. The third quarter of 2009,
includes a charge $3.9 million in settlement of a commercial dispute with a
customer, which charge represented 10.6% of revenue. The third quarter of 2008
included charges of $3.9 million, representing 6.7% of revenue, associated with
production equipment purchase cancelation charges, equipment impairment charges
and inventory reserve charges, which the Company considered an anomaly of the
period. For the nine months ended October 3, 2009, gross margin decreased to
8.6% from 32.8% for the nine months ended September 27, 2008.  After
considering the charges outlined above, the remaining decreases in gross margin
were primarily due to lower product shipments and wafer production, and fixed
production costs increasing as a percent of lower revenues. Fixed production
costs include, but are not limited to depreciation, maintenance and operations’
support functions.




RESEARCH AND
DEVELOPMENT. Company-sponsored research and development (R&D) expenses
decreased 14.7% during the third quarter of 2009 to $11.0 million from $12.9
million during the third quarter of 2008. Company sponsored research and
development expenses for the nine month period ended October 3, 2009 decreased
21.5% to $33.0 million from $42.1 million during the nine month period ended
September 27, 2008.  The decrease was primarily due to decreased
headcount and materials used in our R&D product and process development
efforts in light of reduced revenues.




SELLING AND
ADMINISTRATIVE. Selling and administrative expenses decreased 56.7% to $6.3
million during the third quarter of 2009 from $14.6 million during the third
quarter of 2008. Selling and administrative expenses for the nine month period
ended October 3, 2009 decreased 38.9% to $20.1 million from $32.9 million during
the nine month period ended September 27, 2008. The third quarter of 2008
included charges of $5.7 million associated with the departure of our former
Chief Executive Officer, including $2.2 million of stock based compensation upon
accelerated vesting of certain equity awards.  The remaining decrease
was primarily driven by lower headcount and marketing expenses within our sales
organization in light of reduced revenues.




RESTRUCTURING
CHARGE.  During the first quarter of 2009 we implemented workforce
reductions, which eliminated approximately 110 positions, resulting in a
restructuring charge of $2.6 million principally for severance and related
benefits.




INTEREST
INCOME.Interest
income decreased 81.2% to $0.2 million during the third quarter of 2009 from
$1.0 million during the third quarter of 2008. For the nine months ended October
3, 2009, interest income decreased 75.5% to $1.0 million from $4.2 million in
the nine month period ended September 27, 2008. The decreases were principally
due to lower interest rates, as we maintained liquidity in Government-backed
investments, and were compounded by lower average funds invested.




OTHER INCOME
(EXPENSE). Other income (expense) primarily results from valuation activity in
marketable securities we hold. Other expense is primarily comprised of
other-than-temporary declines in value on certain auction rate securities and a
corporate debt security held by the Company, including $0.2 million and $1.7
million in the three and nine months periods ended October 3, 2009,
respectively. Other expense in the three month and nine month periods ended
September 27, 2008 was $1.6 million and $2.8 million, respectively. During the
third quarter of 2009, we recognized $0.2 million of income from redemptions, at
par value, of certain marketable securities which had previously been written
down due to other-than-temporary declines in value.




BENEFIT FROM
INCOME TAXES.   The Housing and Economic Recovery Act of 2008
included the partial refund of certain carried-forward Research and Experimental
(R&E) tax credits. During the three month period ended October 3, 2009 the
Company finalized and filed the R&E claim as part of its 2008 Federal tax
return and subsequently received cash of $0.3 million for the R&E credits.
Such refund was recorded as a benefit from income taxes during the three months
ended October 3, 2009.




LIQUIDITY
AND CAPITAL RESOURCES




As of October
3, 2009, we had $115.0 million in cash and cash equivalents and $8.4 million in
marketable securities.  As of October 3, 2009, we had outstanding
$38.0 million aggregate principal amount of our 2009 Notes, which were repaid on
October 15, 2009 from cash.




Operating
activities used $13.1 million in cash during the nine month period ended October
3, 2009, primarily as a result of our operating results adjusted for non-cash
expenses offset by cash generated by reducing working
capital.  Investing activities, consisting principally of net proceeds
received from the sale of marketable securities of $13.9 million, partly offset
by purchases of fixed assets of $9.5 million, provided $4.5 million of cash
during the nine month period ended October 3, 2009.  Financing
activities provided $0.1 million of cash, consisting of proceeds received from
stock option exercises.




We had
unconditional purchase obligations at October 3, 2009 of approximately $2.7
million.




Within our
$8.4 million in marketable securities at October 3, 2009, we held a total of
$6.1 million of auction rate securities (ARS) and $2.3 million as a corporate
debt security, which was originally purchased as an ARS prior to its exchange
for the underlying 30 year notes due 2037. ARS are generally financial
instruments of long-term duration with interest rates that are reset in short
intervals through auctions. During the second half of 2007, certain auction rate
debt and preferred securities failed to auction due to sell orders exceeding buy
orders. In February 2008, liquidity issues in the global credit markets resulted
in failures of the auction process for a broader range of ARS, including
substantially all of the auction rate corporate, state and municipal debt and
preferred equity securities we hold. When there is insufficient demand for the
securities at the time of an auction and the auction is not completed, the
interest rates reset to predetermined higher rates (default rates). While
certain issuers redeemed certain of their ARS during 2008, the market remained
constrained by illiquidity and the lack of free trading. The funds associated
with the remaining failed auctions will not be accessible until a successful
auction occurs, a buyer is found outside of the auction process or an issuer
redeems its security. If the credit ratings of the security issuers deteriorate
and any decline in market value is determined to be other-than-temporary, we
would be required to adjust the carrying value of the investment through an
additional impairment charge. To date, we have not realized any losses on ARS
held by the Company or the notes received in exchange for an ARS, but have
recognized other-than-temporary impairments of $9.3 million. During the three
and nine months periods ended October 3, 2009, fair market values of certain of
our ARS, when combined with the fair market values of our corporate debt
security, increased by $0.5 million and $1.7 million, respectively, which was
recorded to other comprehensive income.




We anticipate
selling these impaired debt securities prior to a recovery in valuation. We will
continue to monitor and evaluate these investments for impairment and for short
term classification purposes. We may not be able to access cash by selling the
aforementioned debt or preferred securities without the loss of principal until
a buyer is located, a future auction for these investments is successful, they
are redeemed by their issuers or they mature. If we are unable to sell these
securities in the market or they are not redeemed, then we may be required to
hold them to maturity or in perpetuity for the preferred ARS.




We believe
that after the repayment of our 2009 Notes, our existing sources of capital,
including our existing cash and marketable securities, will be adequate to
satisfy operational and anticipated capital needs for the next twelve months. We
may elect to finance all or part of our anticipated operational and capital
needs, which may include acquisitions of complementary businesses or
technologies, investments in other companies or repurchases of our equity,
through additional equity or debt financing.




IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In June 2009,
the Financial Accounting Standards Board (FASB) issued FAS 168, "The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles", which was primarily codified into Accounting Standards
Codification (ASC) 105 "Generally Accepted Accounting Standards". This standard
will become the single source of authoritative nongovernmental U.S. generally
accepted accounting principles.  All existing accounting standard
documents will be superseded and all other accounting literature not included in
the FASB Codification will be considered non-authoritative. This guidance is
effective for interim and annual periods ending after September 15, 2009. For
clarity, we have chosen to include the available Codification references in this
quarterly report in addition to pre-Codification accounting standard
references.  As the Codification is not intended to change the
existing accounting guidance, its adoption did not have an impact on our
consolidated financial statements.




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (ASC
820) which defined fair value, established a framework for measuring fair value
in generally accepted accounting principles and expanded disclosures about fair
value measurements. ASC 820 was effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. In February
2008, the FASB issued FSP FAS 157-2 “Partial Deferral of the Effective Date of
Statement 157” (ASC 820-10-65-2), which delayed the effective date for
non-financial assets and liabilities that are not measured or disclosed on a
recurring basis to fiscal years beginning after November 15, 2008. The adoption
of ASC 820-10-65-2 as of January 1, 2009 did not have a material effect on our
consolidated financial statements for non-financial assets and liabilities and
any other assets and liabilities carried at fair value.




In April
2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and
a Transaction Is Not Distressed” (ASC 820-10-65-4)), which provides additional
guidance on factors to consider in estimating fair value when there has been a
significant decrease in market activity for a financial asset. ASC 820-10-65-4
was effective for interim and annual periods ending after June 15, 2009. This
new standard was effective beginning with our second quarter financial reporting
and did not have a material impact on our consolidated financial
statements.




In August
2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, “Measuring
Liabilities at Fair Value.” This ASU clarifies the application of certain
valuation techniques in circumstances in which a quoted price in an active
market for the identical liability is not available and clarifies that when
estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. The
guidance provided in this ASU becomes effective for the Company on October 4,
2009. The adoption of this standard effective October 4, 2009 did not have a
material impact on our consolidated financial statements.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations” (ASC 805), which changes how business acquisitions are
accounted.  ASC 805 requires the acquiring entity in a business combination
to recognize all (and only) the assets acquired and liabilities assumed in the
transaction and establishes the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities assumed in a business
combination.  Certain provisions of this standard will, among other things,
impact the determination of acquisition-date fair value of consideration paid in
a business combination (including contingent consideration); exclude transaction
costs from acquisition accounting; and change accounting practices for acquired
contingencies, acquisition-related restructuring costs, in-process research and
development, indemnification assets, and tax benefits.  ASC 805 was
effective for financial statements issued for fiscal years beginning after
December 15, 2008 and upon adoption did not have a material impact on our
consolidated financial statements. However it is expected to change our
accounting prospectively for future business combinations consummated
subsequently.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an Amendment of ARB No. 51”
(ASC 810), which changes the accounting for and reporting of noncontrolling
interests (formerly known as minority interests) in consolidated financial
statements. It was effective for financial statements issued for fiscal years
and interim periods beginning after December 15, 2008, with early adoption
prohibited. Upon implementation, prior periods will be recast for the changes
required by ASC 810. The adoption of this standard effective January 1, 2009 did
not have a material impact on our consolidated financial
statements.




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (ASC
815), which applies to all derivative instruments and related hedged items
accounted for under FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  ASC 815 requires that objectives
for using derivative instruments be disclosed in terms of underlying risk and
accounting designation. The fair value of derivative instruments and their gains
and losses will need to be presented in tabular format in order to present a
more complete picture of the effects of using derivative instruments. ASC 815
was effective for financial statements issued for fiscal years beginning after
November 15, 2008. The adoption of this standard effective January 1, 2009 did
not have a material impact on our consolidated financial
statements.




In May 2008,
the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)" (ASC 470-20), which requires the issuer of certain convertible
debt instruments that may be settled in cash (or other assets) on conversion to
separately account for the liability (debt) and equity (conversion option)
components of the instrument in a manner that reflects the issuer's
non-convertible debt borrowing rate. ASC 470-20 was effective for fiscal years
beginning after December 15, 2008 on a retroactive basis. The adoption of this
standard effective January 1, 2009 did not have a material impact on our
consolidated financial statements.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (primarily
covered within ASC 260-10), which clarifies that all outstanding unvested
share-based payment awards that contain rights to nonforfeitable dividends
participate in undistributed earnings with common shareholders. Awards of this
nature are considered participating securities and the two-class method of
computing basic and diluted earnings per share must be applied. ASC 260-10 was
effective for fiscal years beginning after December 15, 2008. The adoption of
this standard effective January 1, 2009 did not have a material impact on our
consolidated financial statements.




In April
2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (ASC 320-10-65-1), which changes the method
for determining whether an other-than-temporary impairment exists for debt
securities and the amount of the impairment to be recorded in earnings. ASC
320-10-65-1 was effective for interim and annual periods ending after June 15,
2009 and apply based upon the Company’s ability and intent to hold the security
to maturity or a recovery in valuation. The adoption of this standard did not
have an impact on our consolidated financial statements, as it is more likely
than not that we will sell the impaired debt securities prior to a recovery in
valuation.




In April
2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value
of Financial Instruments” (ASC 825-10-65-1), which requires fair value
disclosures in both interim as well as annual financial statements in order to
provide more timely information about the effects of current market conditions
on financial instruments. ASC 825-10-65-1 was effective for interim and annual
periods ending after June 15, 2009. This new standard was effective beginning
with our second quarter financial reporting and the additional financial
reporting disclosures are included herein.




In May 2009,
the FASB issued FASB Statement No. 165, “Subsequent Events” (ASC 855-10), which
establishes general standards of accounting and disclosure for events that occur
after the balance sheet date but before the financial statements are issued. ASC
855-10 was effective for interim and annual periods ending after June 15,
2009.  This new standard was effective beginning with our second
quarter financial reporting and did not have an impact on our consolidated
financial statements.





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 the
possibility that we may continue to incur losses; (ii) unfavorable economic
conditions; (iii) our operating results may be harmed if we fail to sell a high
volume of products; (iv) our dependence on a small number of customers; (v)
insufficient cost reduction measures or realization of benefits therefrom; (vi)
we may face failures in our manufacturing processes or processes of our vendors;
(vii) the variability of our manufacturing yields may affect our gross margins;
(viii) the existence of intense competition in the markets for our products,
which could result in a decrease in our products’ prices and sales; (ix) our
dependence on foreign semiconductor component, assembly and test operations
contractors could lead to delays in product shipments; (x) sources for certain
components, materials and equipment are limited, which could result in delays or
reductions in product shipments; (xi) our need to keep pace with rapid product
and process development and technological changes as well as product cost
reductions to be competitive; (xii) our gallium arsenide semiconductors may
cease to be competitive with silicon alternatives; (xiii) the short life cycles
of some of our products may leave us with obsolete or excess inventories; (xiv)
our results of operations can vary significantly due to the cyclical nature of
the semiconductor industry and our end markets; (xv) our products have
experienced rapidly declining unit prices; (xvi) any failure to perform or meet
customer requirements; (xvii) capital required for our business may not be
available when we need it; (xviii) our marketable securities’ liquidity and
valuation could be affected by disruption in financial markets; (xix) our
success depends on our ability to attract and retain qualified personnel; (xx)
risks due to our international customer base and our subcontracting operations;
(xxi) stringent environmental laws and regulations both domestically and abroad;
(xxii) any failure to protect our intellectual property rights or avoid claims
that we have infringed on the intellectual property rights of others; (xxiii)
any pursuit of selective acquisitions and alliances which dilute the ownership
of our current shareholders and the management and integration of additional
operations which may be expensive and divert management time; (xxiv) we have had
significant volatility in our stock price and it may fluctuate in the future;
(xxv) certain provisions in our governing documents, our shareholders’ rights
agreement and of Delaware law could deter, delay or prevent a third party from
acquiring us and prevent shareholders from realizing a takeover premium; (xxvi)
an adverse outcome, to the extent not covered by insurance, in the class action
or shareholder derivative lawsuits in which we and certain of our officers and
directors are defendants. 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, 2008. 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 from the risks disclosed in Item 7A of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2008.





ITEM 4. CONTROLS AND
PROCEDURES




We maintain
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our reports filed with the Securities and Exchange
Commission, or SEC, is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate, to allow
timely decisions regarding required disclosure.  As of October 3,
2009, an evaluation was performed under the supervision and with the
participation of our Management, including our CEO and CFO, of the effectiveness
of the design and operation of our disclosure controls and procedures (as
defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of
1934).  Based on that evaluation, our management, including our CEO
and CFO, concluded that our disclosure controls and procedures were effective as
of October 3, 2009.




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




On or about
November 11, 2008, plaintiff Charlie Attias filed a putative securities class
action lawsuit in the United States District Court for the District of New
Jersey, captioned Charlie
Attias v. Anadigics, Inc., et al., No. 3:08-cv-05572, and, on or about
November 21, 2008, plaintiff Paul Kuznetz filed a related class action lawsuit
in the same court, captioned Paul J. Kuznetz v. Anadigics,
Inc., et al., No. 3:08-cv-05750 (jointly, the "Class
Actions").  The Complaints in the Class Actions, which were
consolidated by an Order of the District Court dated November 24, 2008, seek
unspecified damages for alleged violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder,
in connection with alleged misrepresentations and omissions relating to, among
other things, Anadigics's manufacturing capabilities and the demand for its
products.  On October 23, 2009, plaintiffs filed a Consolidated
Amended Class Action Complaint, which names the Company, a current officer and a
former officer-director, and alleges a proposed class period that runs from July
24, 2007 through August 7, 2008.  Defendants' response to that Amended
Complaint is due to be filed by December 23, 2009.




On or about
January 14, 2009, a shareholder's derivative lawsuit, captioned Sicari v. Anadigics, Inc., et
al., No. SOM-L-88-09, was filed in the Superior Court of New Jersey, and,
on or about February 2, 2009, a related shareholder's derivative lawsuit,
captioned Moradzadeh v.
Anadigics, Inc., et al., No. SOM-L-198-09, was filed in the same court
(jointly, the "Derivative Lawsuits").  The Derivative Lawsuits seek
unspecified damages for alleged state law claims against certain of the
Company's current and former directors arising out of the matters at issue in
the Class Actions.  By Order dated March 6, 2009, the New Jersey
Superior Court consolidated the Derivative Lawsuits under the caption In re Anadigics, Inc. Derivative
Litigation, No. SOM-L-88-09.  By Order dated March 27, 2009,
the court stayed the Derivative Lawsuits pending disposition of the defendants'
motion to dismiss the Consolidated Amended Complaint in the Class
Actions.




Because the
Class Actions and the Derivative Lawsuits, which are in a preliminary stage, do
not specify alleged monetary damages, we are unable to reasonably estimate a
possible range of loss, if any, to the Company in connection
therewith.




We are also a
party to ordinary course litigation arising out of the operation of our
business. We believe that the ultimate resolution of such ordinary course
litigation should not have a material adverse effect on our consolidated
financial condition or results of operations.








ITEM 6.
EXHIBITS





31.1 Rule
13a-14(a)/15d-14(a) Certification of Mario A. Rivas, President and Chief
Executive Officer of ANADIGICS, Inc.





31.2
      Rule 13a-14(a)/15d-14(a) Certification of Thomas C. Shields, Executive
      Vice President and Chief Financial Officer of ANADIGICS,
    Inc.





32.1
      Section 1350 Certification of Mario A. Rivas, President and Chief
      Executive Officer of ANADIGICS,
Inc.





32.2
      Section 1350 Certification of Thomas C. Shields, Executive 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. ShieldsExecutive
      Vice President and
      Chief Financial Officer





Dated:
November 5, 2009