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 SEPTEMBER 27, 2008.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 is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check
one):


Large
accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [
]





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





The
number of shares outstanding of the Registrant’s common stock as of September
27, 2008 was 63,126,124 (excluding 113,761 shares held in
treasury).











INDEX





ANADIGICS,
Inc.








PART
      I
            Financial
      InformationItem
      1.
            Financial
      Statements (unaudited)Condensed
      consolidated balance sheets – September 27, 2008 and December 31,
      2007Condensed
      consolidated statements of operations and comprehensive (loss) income –
      Three and nine months ended September 27, 2008 and September 29,
      2007Condensed
      consolidated statements of cash flows – Nine months ended September 27,
      2008 and September 29, 2007Notes
      to condensed consolidated financial statements – September 27,
      2008Item
      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)





September
      27, 2008
            
            
            December
      31, 2007(Unaudited)
            
            
            (Note
      1)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            130,102
            
            
            $
            57,786Marketable
      securities
            
            
            9,110
            
            
            
            103,778Accounts
      receivable, net
            
            
            36,525
            
            
            
            45,664Inventories
            
            
            34,432
            
            
            
            23,989Prepaid
      expenses and other current assets
            
            
            3,826
            
            
            
            3,277Total
      current assets
            
            
            213,995
            
            
            
            234,494Marketable
      securities
            
            
            13,029
            
            
            
            15,248Plant
      and equipment:Equipment
      and furniture
            
            
            198,889
            
            
            
            165,333Leasehold
      improvements
            
            
            40,440
            
            
            
            38,638Projects
      in process
            
            
            28,070
            
            
            
            23,180267,399
            
            
            
            227,151Less
      accumulated depreciation and amortization
            
            
            (160,730
            )
            
            
            (151,022
            )106,669
            
            
            
            76,129Goodwill
      and other intangibles, net of amortization
            
            
            6,330
            
            
            
            6,524Other
      assets
            
            
            763
            
            
            
            1,066Total
      assets
            
            $
            340,786
            
            
            $
            333,461LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            23,228
            
            
            $
            34,184Accrued
      liabilities
            
            
            13,716
            
            
            
            7,928Total
      current liabilities
            
            
            36,944
            
            
            
            42,112Other
      long-term liabilities
            
            
            3,161
            
            
            
            3,243Long-term
      debt, less current portion
            
            
            38,000
            
            
            
            38,000Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $0.01 par value, 144,000 shares authorized, 63,256 and 61,292
      issued at September 27, 2008 and December 31, 2007
            
            
            632
            
            
            
            613Additional
      paid-in capital
            
            
            559,793
            
            
            
            541,940Accumulated
      deficit
            
            
            (297,586
            )
            
            
            (292,095
            )Accumulated
      other comprehensive income (loss)
            
            
            100
            
            
            
            (94
            )Treasury
      stock at cost: 114 shares
            
            
            (258
            )
            
            
            (258
            )Total
      stockholders’ equity
            
            
            262,681
            
            
            
            250,106Total
      liabilities and stockholders’ equity
            
            $
            340,786
            
            
            $
            333,461











See
      accompanying notes.











ANADIGICS,
Inc.





CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





Three
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Net
      sales
            
            $
            58,065
            
            
            $
            59,545
            
            
            $
            212,927
            
            
            $
            162,987Cost
      of sales
            
            
            44,790
            
            
            
            39,387
            
            
            
            143,127
            
            
            
            107,637Gross
      profit
            
            
            13,275
            
            
            
            20,158
            
            
            
            69,800
            
            
            
            55,350Research
      and development expenses
            
            
            12,931
            
            
            
            12,491
            
            
            
            42,059
            
            
            
            33,309Selling
      and administrative expenses
            
            
            14,576
            
            
            
            7,221
            
            
            
            32,897
            
            
            
            22,062Operating
      (loss) income
            
            
            (14,232
            )
            
            
            446
            
            
            
            (5,156
            )
            
            
            (21
            )Interest
      income
            
            
            978
            
            
            
            2,338
            
            
            
            4,197
            
            
            
            5,776Interest
      expense
            
            
            (592
            )
            
            
            (592
            )
            
            
            (1,774
            )
            
            
            (1,872
            )Other
      (expense) income, net
            
            
            (1,622
            )
            
            
            173
            
            
            
            (2,758
            )
            
            
            173(Loss)
      income from continuing operations
            
            
            (15,468
            )
            
            
            2,365
            
            
            
            (5,491
            )
            
            
            4,056Loss
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (965
            )Net
      (loss) income
            
            $
            (15,468
            )
            
            $
            2,365
            
            
            $
            (5,491
            )
            
            $
            3,091Basic
      (loss) earnings per share(Loss)
      income from continuing operations
            
            $
            (0.26
            )
            
            $
            0.04
            
            
            $
            (0.09
            )
            
            $
            0.08Loss
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            (0.02
            )Net
      (loss) income
            
            $
            (0.26
            )
            
            $
            0.04
            
            
            $
            (0.09
            )
            
            $
            0.06Diluted
      (loss) earnings per share(Loss)
      income from continuing operations
            
            $
            (0.26
            )
            
            $
            0.04
            
            
            $
            (0.09
            )
            
            $
            0.07Loss
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            $
            (0.02
            )Net
      (loss) income
            
            $
            (0.26
            )
            
            $
            0.04
            
            
            $
            (0.09
            )
            
            $
            0.05Weighted
      average common shares outstanding used in computing (loss) earnings per
      shareBasic
            
            
            60,509
            
            
            
            57,505
            
            
            
            59,949
            
            
            
            54,114Diluted
            
            
            60,509
            
            
            
            60,648
            
            
            
            59,949
            
            
            
            57,403




CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)





(AMOUNTS
IN THOUSANDS)





Three
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Net
      (loss) income
            
            $
            (15,468
            )
            
            $
            2,365
            
            
            $
            (5,491
            )
            
            $
            3,091Other
      comprehensive (loss) income:Unrealized
      (loss) income on marketable securities
            
            
            (86
            )
            
            
            93
            
            
            
            (1,410
            )
            
            
            51Foreign
      currency translation adjustment
            
            
            (8
            )
            
            
            25
            
            
            
            170
            
            
            
            23Reclassification
      adjustment:Net
      realized loss previously recognized in other comprehensive (loss)
      income
            
            
            -
            
            
            
            -
            
            
            
            1,434
            
            
            
            9Comprehensive
      (loss) income
            
            $
            (15,562
            )
            
            $
            2,483
            
            
            $
            (5,297
            )
            
            $
            3,174





See
      accompanying notes.





ANADIGICS,
      Inc.





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)





(AMOUNTS
IN THOUSANDS)





Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
            
            $
            (5,491
            )
            
            $
            3,091Adjustments
      to reconcile net income to net cash provided by operating
      activities:Loss
      from discontinued operations
            
            
            -
            
            
            
            965Depreciation
            
            
            11,612
            
            
            
            6,655Amortization
            
            
            543
            
            
            
            555Stock
      based compensation
            
            
            15,271
            
            
            
            11,273Amortization
      of discount on marketable securities
            
            
            (98
            )
            
            
            (365
            )Recognized
      marketable securities impairment and other
            
            
            3,061
            
            
            
            9Gain
      on disposal of equipment
            
            
            (295
            )
            
            
            -Equipment
      impairment charge
            
            
            849
            
            
            
            -Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            9,139
            
            
            
            (13,367
            )Inventories
            
            
            (10,443
            )
            
            
            (352
            )Prepaid
      expenses and other assets
            
            
            (595
            )
            
            
            (3,866
            )Accounts
      payable
            
            
            (6,439
            )
            
            
            5,816Accrued
      liabilities and other liabilities
            
            
            5,876
            
            
            
            752Net
      cash provided by operating activities
            
            
            22,990
            
            
            
            11,166CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of plant and equipment
            
            
            (47,432
            )
            
            
            (24,089
            )Proceeds
      from sale of equipment
            
            
            209
            
            
            
            -Purchase
      of RF group assets
            
            
            -
            
            
            
            (2,415
            )Purchases
      of marketable securities
            
            
            (15,410
            )
            
            
            (196,358
            )Proceeds
      from sale of marketable securities
            
            
            109,358
            
            
            
            133,762Net
      cash provided by (used in) investing activities
            
            
            46,725
            
            
            
            (89,100
            )CASH
      FLOWS FROM FINANCING ACTIVITIESPayment
      of capital lease obligations
            
            
            -
            
            
            
            (1,775
            )Issuance
      of common stock
            
            
            2,601
            
            
            
            109,597Net
      cash provided by financing activities
            
            
            2,601
            
            
            
            107,822Net
      increase in cash and cash equivalents
            
            
            72,316
            
            
            
            29,888Cash
      and cash equivalents at beginning of period
            
            
            57,786
            
            
            
            13,706Cash
      and cash equivalents at end of period
            
            $
            130,102
            
            
            $
            43,594




































































See
      accompanying notes.








ANADIGICS,
Inc.





NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – SEPTEMBER 27,
2008





(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 nine month period ended September
27, 2008 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2008.




The condensed
consolidated balance sheet at December 31, 2007 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,
2007.




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.




IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS
157) which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements. FAS 157 is effective for financial statements issued 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” (FSP 157-2). FSP 157-2 delays the
effective date of FAS 157 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 this accounting pronouncement did not have a
material effect on the Company’s consolidated financial statements for financial
assets and liabilities and any other assets and liabilities carried at fair
value.  The Company is currently in the process of evaluating the
impact of adopting this pronouncement for other non-financial assets or
liabilities.




FAS 157
defines fair value 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). FAS 157 classifies the inputs used to measure
fair value into 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.




In October
2008, the FASB issued FSP 157-3 “Determining Fair Value of a Financial Asset in
a Market That Is Not Active” (FSP 157-3). FSP 157-3 clarified the application of
FAS No. 157 in an inactive market. It demonstrated how the fair value of a
financial asset is determined when the market for that financial asset is
inactive. FSP 157-3 was effective upon issuance, including prior periods for
which financial statements had not been issued.




In February
2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (FAS 159), which permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. FAS 159 is effective for fiscal years
beginning after November 15, 2007. As of January 1, 2008, the Company adopted
FAS 159. Since the Company has not utilized the fair value option for any
allowable items, the adoption of FAS 159 had no impact on the Company’s results
of operations or financial position.




In
June 2007, the FASB’s Emerging Issues Task Force reached a consensus on
EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities”
(EITF 07-3) that would require nonrefundable advance payments made by the
Company for future R&D activities to be capitalized and recognized as an
expense as the goods or services are received by the Company. EITF 07-3 is
effective with respect to new arrangements entered into beginning
January 1, 2008. The Company adopted EITF 07-3, which did not have a
material impact on its consolidated financial statements.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations” (FAS 141R), which changes how business acquisitions are
accounted.  FAS 141R 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.  FAS 141R is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact FAS 141R may have on its results of
operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51”
(FAS 160), which establishes new standards governing the accounting for and
reporting of noncontrolling interests (NCIs) in partially owned consolidated
subsidiaries and the loss of control of subsidiaries.  Certain provisions
of this standard indicate, among other things, that NCIs (previously referred to
as minority interests) be treated as a separate component of equity, not as a
liability; that increases and decrease in the parent’s ownership interest that
leave control intact be treated as equity transactions, rather than as step
acquisitions or dilution gains or losses; and that losses of a partially owned
consolidated subsidiary be allocated to the NCI even when such allocation might
result in a deficit balance. This standard also requires changes to certain
presentation and disclosure requirements. FAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008.
The provisions of the standard are to be applied to all NCIs prospectively,
except for the presentation and disclosure requirements, which are to be applied
retrospectively to all periods presented. The Company has not yet determined the
impact FAS 160 may have on its results of operations or financial
position.




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (FAS
161).  FAS 161 applies to all derivative instruments and related
hedged items accounted for under FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities".  FAS 161 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.
FAS 161 is effective for financial statements issued for fiscal years beginning
after November 15, 2008. The Company has not yet determined the impact FAS 161
may have on its results of operations or financial position.




In April
2008, the FASB issued FSP 142-3, “Determination of the Useful Life of Intangible
Assets”, (FSP 142-3). FSP 142-3 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets”. FSP 142-3 is effective for fiscal years beginning after December 15,
2008. The Company has not yet determined the impact FSP 142-3 may have on its
results of operations or financial position.




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)" (FSP APB 14-1). FSP APB 14-1 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. FSP APB 14-1 is effective for fiscal years
beginning after December 15, 2008 on a retroactive basis. The Company has not
yet determined the impact FSP APB 14-1 may have on its results of operations or
financial position.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (FSP EITF
03-6-1). FSP EITF 03-6-1 clarified 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. FSP EITF 03-6-1 is effective for
fiscal years beginning after December 15, 2008. The Company has not yet
determined the impact FSP EITF 03-6-1 may have on its results of operations or
financial position.




INCOME
TAXES




The Company
maintains a full valuation allowance on its deferred tax
assets.  Accordingly, the Company has not recorded a benefit or
provision for income taxes. We recognize interest and penalties related to the
underpayment of income taxes in income tax expense. At January 1, 2007, the
Company had no unrecognized tax benefits. No unrecognized tax benefits, interest
or penalties were accrued at September 27, 2008. 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 September 27, 2008 included $604 in
actual charges and $870 in provisions resulting in the balance of $593 at
September 27, 2008.  Warranty reserve movements in the nine months
ended September 29, 2007 included $412 in actual charges and a $382 increase in
the provision.





RECLASSIFICATIONS




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





2. DISCONTINUED
OPERATIONS




On April 2,
2007, the Company sold the majority of the operating assets of Telcom Devices
Inc. (Telcom, a wholly-owned subsidiary of the Company) to GTRAN Camarillo, Inc.
in exchange for $500 and effectively ceased Telcom’s operations. Accordingly,
the financial results, position and cashflow of Telcom have been classified as
discontinued operations in the accompanying financial statements for the
applicable period presented.




Summarized
operating results and loss on sale of discontinued operations through March 31,
2007 included with the nine months ended September 29, 2007 were as
follows:





Nine
      months endedSeptember
      29, 2007Revenue
            
            $
            559Operating
      loss
            
            
            (479
            )Interest
      income
            
            
            4Loss
      on sale of discontinued operations
            
            
            (490
            )Loss
      from discontinued operations
            
            $
            (965
            )




3. INVENTORIES




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





September
      27, 2008
            
            
            December
      31, 2007Raw
      materials
            
            $
            10,513
            
            
            $
            8,915Work
      in process
            
            
            21,051
            
            
            
            15,256Finished
      goods
            
            
            8,927
            
            
            
            4,05540,491
            
            
            
            28,226Reserves
            
            
            (6,059
            )
            
            
            (4,237
            )Total
            
            $
            34,432
            
            
            $
            23,989





4. (LOSS)
EARNINGS PER SHARE





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





Three
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Weighted
      average common shares for basic (loss) earnings per share
            
            
            60,509
            
            
            
            57,505
            
            
            
            59,949
            
            
            
            54,114Effect
      of dilutive securities:Stock options
    (*)
            
            
            -
            
            
            
            1,624
            
            
            
            -
            
            
            
            1,703Unvested restricted shares
      (*)
            
            
            -
            
            
            
            1,519
            
            
            
            -
            
            
            
            1,586Adjusted
      weighted average shares for diluted (loss) earnings per
    share
            
            
            60,509
            
            
            
            60,648
            
            
            
            59,949
            
            
            
            57,403





*
            Incremental
      shares from restricted shares and stock options are computed using the
      treasury stock method.




For the three
and nine month periods ended September 27, 2008 and September 29, 2007,
potential additional dilution arising from any of the Company's outstanding
stock options, unvested restricted 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
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Convertible
      notes
            
            
            7,600
            
            
            
            7,600
            
            
            
            7,600
            
            
            
            7,600Stock
      options
            
            
            2,944
            
            
            
            434
            
            
            
            2,944
            
            
            
            1,732Unvested
      restricted shares and units
            
            
            2,895
            
            
            
            -
            
            
            
            2,895
            
            
            
            10










The Company
classifies its revenues based upon the end application of the product in which
its integrated circuits are used.  Net sales by end application are
regularly reviewed by the chief operating decision maker and are as
follows:








Three
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Broadband
            
            $
            28,799
            
            
            $
            25,570
            
            
            $
            83,097
            
            
            $
            76,233Wireless
            
            
            29,266
            
            
            
            33,975
            
            
            
            129,830
            
            
            
            86,754Total
            
            $
            58,065
            
            
            $
            59,545
            
            
            $
            212,927
            
            
            $
            162,987




The Company
primarily sells to three geographic regions: Asia, USA and Canada, and Other.
The geographic region is determined by the destination of the shipped product.
Net sales to each of the three geographic regions are as follows:





Three
      months ended
            
            
            Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Asia
            
            $
            37,844
            
            
            $
            40,946
            
            
            $
            137,850
            
            
            $
            110,549USA
      and Canada
            
            
            13,143
            
            
            
            16,213
            
            
            
            57,354
            
            
            
            45,310Other
            
            
            7,078
            
            
            
            2,386
            
            
            
            17,723
            
            
            
            7,128Total
            
            $
            58,065
            
            
            $
            59,545
            
            
            $
            212,927
            
            
            $
            162,987





6. 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 following
is a summary of available-for-sale securities presented in accordance with FAS
157:





Fair
      Value Measurements at Reporting Date UsingSecurity
      Type
            
            
            
            
            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
            
            $
            6,097
            
            
            $
            6,097
            
            
            $
            -
            
            
            $
            -Government
      sponsored enterprise debt securities
            
            
            3,013
            
            
            
            3,013
            
            
            
            -
            
            
            
            -Auction
      Rate SecuritiesCorporate
      Debt
            
            
            4,640
            
            
            
            -
            
            
            
            2,640
            
            
            
            2,000Preferred
      Equity
            
            
            6,178
            
            
            
            -
            
            
            
            -
            
            
            
            6,178State
      and Municipal
            
            
            2,211
            
            
            
            -
            
            
            
            -
            
            
            
            2,211Total
            
            $
            22,139
            
            
            $
            9,110
            
            
            $
            2,640
            
            
            $
            10,389




Auction rate
securities (ARS) are generally long-term debt 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. In the period April to August,
2008 certain issuers
redeemed certain of the ARSheld by the Company with
a carrying value of $8,295.The related issuersredeemed such
ARSat par
resulting in proceeds of $8,750. 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.




At September
27, 2008, there was insufficient observable ARS market information available to
determine the fair value of certain of the Company’s investments in ARS.
Therefore, the Company estimated Level 3 fair values for these securities by
incorporating assumptions that market participants would use in their estimates
of fair value. Some of these assumptions included credit quality, final stated
maturity, impact due to extended periods of maximum auction rates and estimates
of the probability of the issue being called or becoming liquid prior to the
final maturity.  The
devaluationof the Company’s ARS holdingswas determined to be
other-than-temporary andthe Company hasrecorded$1,627 and
$3,064in other
expense, net
of recoveries,for the three and nine
month periods endedSeptember 27,
2008,
respectively.




Classification of
marketable securities as current or non-current is dependent upon management’s
intended holding period, the security’s maturity date and liquidity
considerations based on market conditions. If management intends to hold the
securities for longer than one year as of the balance sheet date, they are
classified as non-current. Since these marketable securities are classified as
available-for-sale securities, changes in fair value will flow through other
comprehensive income, with amounts reclassified out of other comprehensive
income into earnings upon sale or other-than-temporary impairment.




Management
has the ability and intent, if necessary, to liquidate certain of its marketable
securities in order to meet the Company’s liquidity needs in the next 12 months.
Accordingly, certain securities with contractual maturities greater than one
year from year-end were classified as short-term. Expected maturities may differ
from contractual maturities because the issuers of the securities may have the
right to prepay obligations without prepayment penalties.




As further
required by FAS 157, 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 months ended September 27, 2008.




($
      in 000’s)
            
            Fair
      Value Measurements Using Significant Unobservable Inputs (Level
      3)
              Three
      months ended September 27, 2008State
      & Municipal Securities
            
            
            Corporate
      Debt Securities
            
            
            Preferred
      Equity Securities
            
            
            TotalBeginning
      balance
            
            $
            3,799
            
            
            $
            5,921
            
            
            $
            6,710
            
            
            $
            16,430Total gains or losses
      realized/unrealizedIncluded in (loss)
      earnings
            
            
            187
            
            
            
            (281
            )
            
            
            (532
            )
            
            
            (626
            )Included in other comprehensive
      (loss)income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Purchases, issuances, and
      settlements
            
            
            (1,775
            )
            
            
            -
            
            
            _
            
            
            
            (1,775
            )Transfers in and/or out of Level
      3
            
            
            -
            
            
            
            (3,640
            )
            
            
            -
            
            
            
            (3,640
            )Ending
      Balance
            
            $
            2,211
            
            
            $
            2,000
            
            
            $
            6,178
            
            
            $
            10,389The
      amount of total gains or losses for the period included in (loss) earnings
      attributable to the change in unrealized gains or losses relating to
      assets still held at the reporting date
            
            $
            -
            
            
            $
            (281
            )
            
            $
            (532
            )
            
            $
            (813
            )





For the
nine month period 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 (loss)
      earnings
            
            
            (389
            )
            
            
            (324
            )
            
            
            (991
            )
            
            
            (1,704
            )Included in other comprehensive
      (loss)income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Purchases, issuances, and
      settlements
            
            
            (3,900
            )
            
            
            -
            
            
            
            (4,650
            )
            
            
            (8,550
            )Transfers in and/or out of Level
      3
            
            
            6,500
            
            
            
            -
            
            
            
            9,475
            
            
            
            15,975Ending
      Balance
            
            $
            2,211
            
            
            $
            2,000
            
            
            $
            6,178
            
            
            $
            10,389The
      amount of total gains or losses for the period included in (loss) earnings
      attributable to the change in unrealized gains or losses relating to
      assets still held at the reporting date
            
            $
            (389
            )
            
            $
            (324
            )
            
            $
            (991
            )
            
            $
            (1,704
            )










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 unpaid balance at September 27, 2008
was $4,768.




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.
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.









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 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 shares and units (collectively, 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 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 236 and $7.95, respectively
for the year ended December 31, 2007.




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 endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Amortization
      of restricted stock
            
            $
            5,191
            
            
            $
            2,742
            
            
            $
            13,345
            
            
            $
            9,050Amortization
      of ESP Plan
            
            
            -
            
            
            
            200
            
            
            
            400
            
            
            
            600Amortization
      of stock option awards
            
            
            733
            
            
            
            615
            
            
            
            1,526
            
            
            
            1,668Total
      stock based compensation
            
            $
            5,924
            
            
            $
            3,557
            
            
            $
            15,271
            
            
            $
            11,318By
      Financial Statement line itemCost
      of sales
            
            $
            697
            
            
            $
            736
            
            
            $
            2,449
            
            
            $
            2,487Research
      and development expenses
            
            
            1,470
            
            
            
            1,446
            
            
            
            5,271
            
            
            
            4,338Selling
      and administrative expenses
            
            
            3,757
            
            
            
            1,375
            
            
            
            7,551
            
            
            
            4,448Loss
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            45




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 includes
$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, including 600 in the
three months ended September 27, 2008. 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
(exclusive of LTI’s, as described below).  The restricted stock shares
carry voting and 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 price per share for restricted stock and
for stock options during the period from January 1, 2007 to September 27, 2008
is presented in tabular form below:





Restricted
      Stock
            
            
            Stock
      OptionsQuantity
            
            
            Weighted
      average price
            
            
            Issuable
      upon exercise
            
            
            Weighted
      average exercise priceGrants
      outstanding at January 1, 2007
            
            
            3,138
            
            
            $
            6.23
            
            
            
            5,669
            
            
            $
            8.36Granted
            
            
            1,185
            
            
            
            12.40
            
            
            
            182
            
            
            
            11.48Shares
      vested/options exercised
            
            
            (1,916
            )
            
            
            6.07
            
            
            
            (2,135
            )
            
            
            5.73Forfeited/expired
            
            
            (195
            )
            
            
            7.21
            
            
            
            (225
            )
            
            
            15.29Balance
      at December 31, 2007
            
            
            2,212
            
            
            
            9.61
            
            
            
            3,491
            
            
            
            9.68Granted
            
            
            2,402
            
            
            
            8.28
            
            
            
            -
            
            
            
            -Shares
      vested/options exercised
            
            
            (1,536
            )
            
            
            8.79
            
            
            
            (384
            )
            
            
            6.78Forfeited/expired
            
            
            (183
            )
            
            
            14.02
            
            
            
            (163
            )
            
            
            13.26Balance
      at September 27, 2008
            
            
            2,895
            
            
            $
            8.66
            
            
            
            2,944
            
            
            $
            9.86





Included
within the restricted stock shares granted in the nine months ended September
27, 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 Dr. Bastani’s resignation,
27 shares of the 357 LTI shares were released and 81 shares were
forfeited.




As
      of September 27, 2008Unrecognized
      stock based compensation costOption plans
            
            $
            2,418Restricted stock
            
            $
            16,718Weighted
      average remaining recognition periodOption plans
            
            1.3
      yearsRestricted stock
            
            1.3
      years





Stock
options outstanding at September 27, 2008 are summarized as
follows:





Range
      of exercise prices
            
            
            Outstanding
      Options at September 27, 2008
            
            
            Weighted
      average remaining contractual life
            
            
            Weighted
      average exercise price
            
            
            Exercisable
      at September 27, 2008
            
            
            Weighted
      average exercise price$
            1.39
      - $2.89
            
            
            
            311
            
            
            
            4.3
            
            
            $
            2.63
            
            
            
            311
            
            
            $
            2.63$
            2.93
      - $7.27
            
            
            
            931
            
            
            
            3.6
            
            
            $
            6.73
            
            
            
            928
            
            
            $
            6.73$
            7.65
      – $8.84
            
            
            
            868
            
            
            
            7.1
            
            
            $
            8.84
            
            
            
            540
            
            
            $
            8.84$
            9.00
      - $53.48
            
            
            
            834
            
            
            
            3.2
            
            
            $
            17.09
            
            
            
            763
            
            
            $
            17.42





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 September 27,
2008 and September 29, 2007 were:





Nine
      months endedSeptember
      27, 2008
            
            
            September
      29, 2007Stock
      option awards:Risk-free
      interest rate
            
            
            N/A
            
            
            
            4.7
            %Expected
      volatility
            
            
            N/A
            
            
            
            0.71Average
      expected term (in years)
            
            
            N/A
            
            
            
            4.75Expected
      dividend yield
            
            
            N/A
            
            
            
            0.0
            %Weighted
      average fair value of options granted
            
            
            N/A
            
            
            $
            6.44ESP
      Plan:Risk-free
      interest rate
            
            
            1.8
            %
            
            
            4.1
            %Expected
      volatility
            
            
            1.00
            
            
            
            0.54Average
      expected term (in years)
            
            
            1.00
            
            
            
            1.00Expected
      dividend yield
            
            
            0.0
            %
            
            
            0.0
            %Weighted
      average fair value of purchase option
            
            $
            1.44
            
            
            $
            2.85




For equity
awards with expected terms of one year or less, the assumption for expected
volatility is solely based on the Company’s historical volatility.




10.
STOCKHOLDERS’ EQUITY




In March,
2007, The Company completed an underwritten public offering of 8,625 shares of
common stock, generating net proceeds to the Company of
$98,955.





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 rapidly 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 uniquely positioned to
capitalize on the rapidly-growing 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 (GSM) 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 (inclusive of downlink and uplink) and Evolution Data
Optimized standards, fourth generation (4G) products for Worldwide
Interoperability for Microwave Access (WiMAX) inclusive of WiBRO systems,
Wireless Fidelity (WiFi) 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 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 have
established longstanding relationships with several of the industry-leading
chipset suppliers and tier-one customers.  For example, our
relationships with Qualcomm Inc., Intel Corporation, Cisco Systems, Inc. and
Motorola, Inc. have enabled us to develop RF products used in 3G, 3.5G, 4G
WiMAX, WiFi and CATV products and to be a key supplier with respect to such
partners and customers.  Other leading chipset suppliers and tier-one
customers with whom we are engaged include Beceem Communications, Inc, Broadcom
Corporation, High Tech Computer Corp., Huawei Technologies Co., Ltd., KYOCERA
Corporation, LG Electronics Inc., Marvell Technology Group Ltd., Murata
Manufacturing Co., Ltd., Novatel Wireless, Inc., NXP Semiconductors, Palm, Inc.,
Research In Motion Limited, Samsung Electronics Co., Ltd., Sierra Wireless,
Inc., Texas Instruments Incorporated and ZTE
Corporation.









We focus on
leveraging our technological advantage to remain a leading supplier of
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 on the same die, provides us with a
competitive advantage in the marketplace. Additionally, we believe our
InGaP-plus process and
design technologies such as High Efficiency at Low Power provide a competitive
advantage by enabling us to provide PAs that consume less battery power and
extend talk time for products in the 3G, 3.5G and 4G markets.




On April 2,
2007, we sold the majority of the operating assets of Telcom Devices Inc.
(Telcom, a wholly-owned subsidiary of the Company) to GTRAN Camarillo, Inc. in
exchange for $0.5 million and effectively ceased Telcom’s operations.
Accordingly, the financial results, position and cashflow of Telcom have been
classified as discontinued operations in the accompanying financial statements
for the applicable period presented.




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 endedSeptember
      27, 2008
            
            
            September
      29, 2007
            
            
            September
      27, 2008
            
            
            September
      29, 2007Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            77.1
            %
            
            
            66.1
            %
            
            
            67.2
            %
            
            
            66.0
            %Gross
      margin
            
            
            22.9
            %
            
            
            33.9
            %
            
            
            32.8
            %
            
            
            34.0
            %Research
      and development expenses
            
            
            22.3
            %
            
            
            21.0
            %
            
            
            19.8
            %
            
            
            20.5
            %Selling
      and administrative expenses
            
            
            25.1
            %
            
            
            12.1
            %
            
            
            15.4
            %
            
            
            13.5
            %Operating
      (loss) income
            
            
            (24.5
            )%
            
            
            0.8
            %
            
            
            (2.4
            )%
            
            
            -Interest
      income
            
            
            1.7
            %
            
            
            3.9
            %
            
            
            1.9
            %
            
            
            3.5
            %Interest
      expense
            
            
            (1.0
            )%
            
            
            (1.0
            )%
            
            
            (0.8
            )%
            
            
            (1.1
            )%Other
      (expense) income
            
            
            (2.8
            )%
            
            
            0.3
            %
            
            
            (1.3
            )%
            
            
            0.1
            %Loss
      (income) from continuing operations
            
            
            (26.6
            )%
            
            
            4.0
            %
            
            
            (2.6
            )%
            
            
            2.5
            %Loss
      from discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (0.6
            )%Net
      (loss) income
            
            
            (26.6
            )%
            
            
            4.0
            %
            
            
            (2.6
            )%
            
            
            1.9
            %





NET
SALES.Net
sales decreased 2.5% during the third quarter of 2008 to $58.1 million from
$59.5 million in the third quarter of 2007. For the nine months ended September
27, 2008, net sales were $212.9 million, a 30.6% increase from net sales of
$163.0 million for the nine months ended September 29, 2007.




Sales of
integrated circuits for wireless applications decreased 13.9% during the third
quarter of 2008 to $29.3 million from $33.9 million in the third quarter of
2007. For the nine months ended September 27, 2008, net sales of integrated
circuits for wireless applications increased 49.7% to $129.8 million from $86.8
million for the nine months ended September 29, 2007. The decrease in sales of
integrated circuits for wireless applications in the three month period was
primarily due to decreased demand for our GSM PAs, where revenue decreased by
$3.2 million. The increase in sales of integrated circuits for wireless
applications in the nine month period was primarily due to increased demand for
our 3G (EDGE, WEDGE, CDMA2000 1X applications & WCDMA) PAs where revenue
rose by $42.5 million.




Sales of
integrated circuits for broadband applications increased 12.6% during the third
quarter of 2008 to $28.8 million from $25.6 million in the third quarter of
2007. For the nine months ended September 27, 2008, net sales of integrated
circuits for broadband applications increased 9.0% to $83.1 million from $76.2
million for the nine months ended September 29, 2007. The increase in sales in
the three and nine month periods was primarily due to an increase in demand for
wireless LAN and tuner products, with combined increases of $4.7 million and
$14.0 million in the related periods, partially offset by lower infrastructure
demand in the amounts of $1.3 million and $8.1 million in the respective
periods.




GROSS MARGIN.
Gross margin during the third quarter of 2008 decreased to 22.9% of net sales
from 33.9% of net sales in the third quarter of 2007. For the nine months ended
September 27, 2008, gross margin decreased to 32.8% from 34.0% for the nine
months ended September 29, 2007.  The third quarter of 2008 included
charges of $3.9 million associated with production equipment purchase
cancelation charges, equipment impairment charges and inventory reserve charges,
which the Company considers an anomaly of the period. In addition, during the
three months ended September 27, 2008, depreciation expense increased by $1.5
million over the year earlier period.




RESEARCH AND
DEVELOPMENT. Company sponsored research and development expenses increased 3.5%
during the third quarter of 2008 to $12.9 million from $12.5 million during the
third quarter of 2007. Company sponsored research and development expenses for
the nine month period ended September 27, 2008 increased 26.3% to $42.1 million
from $33.3 million during the nine month period ended September 29, 2007. The
increase in the three and nine months periods ended September 27, 2008 was
primarily due to increased headcount and support of our R&D product and
process development efforts.




SELLING AND
ADMINISTRATIVE. Selling and administrative expenses increased 101.9% to $14.6
million during the third quarter of 2008 from $7.2 million during the third
quarter of 2007. Selling and administrative expenses for the nine month period
ended September 27, 2008 increased 49.1% to $32.9 million from $22.1 million
during the nine month period ended September 29, 2007. 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 increase in the
three and nine month periods ended September 27, 2008 was primarily driven by
increased staff and outside advisors costs in the respective
periods.




INTEREST
INCOME.Interest
income decreased 58.2% to $1.0 million during the third quarter of 2008 from
$2.3 million during the third quarter of 2007. For the nine months ended
September 27, 2008, interest income decreased 27.3% to $4.2 million from $5.8
million in the nine month period ended September 29, 2007. The decreases were
primarily due to lower interest rates in the second and third quarters of
2008.




OTHER
(EXPENSE) INCOME. Other (expense) income of $1.6 million and $2.8 million in the
three and nine month periods ended September 27, 2008 include provisions, net of
recoveries, for other-than-temporary declines in value on certain auction rate
securities held by the Company of $1.6million and $3.1
million in the respective periods. The nine month period ended September 27,
2008 included $0.3 million gain on sale of equipment.




LOSS FROM
DISCONTINUED OPERATIONS. Loss from discontinued operations relating to Telcom
was $1.0 million during 2007 and included the $0.5 million loss on sale of
discontinued operations.





LIQUIDITY
AND CAPITAL RESOURCES




As of
September 27, 2008, we had $130.1 million in cash and cash equivalents and $22.1
million in marketable securities.  As of September 27, 2008, we had
outstanding $38.0 million aggregate principal amount of our 2009
Notes.




Operating
activities provided $23.0 million in cash during the nine month period ended
September 27, 2008, primarily as a result of our operating results adjusted for
non-cash expenses.  Investing activities, consisting principally of
net proceeds received from the sale of marketable securities of $93.9 million,
partly offset by purchases of fixed assets of $47.4million,
provided $46.7 million of cash during the nine month period ended September 27,
2008.  Financing activities provided $2.6 million of cash, consisting
of proceeds received from stock option exercises.




We had
unconditional purchase obligations at September 27, 2008 of approximately $10.9
million, of which $8.1 million relates to capital equipment purchase
requirements primarily over the next three to six months. Such capital purchase
requirements relate to our New Jersey manufacturing operations.




Additionally, in
early 2007, the Company signed an agreement with the Kunshan New and Hi-Tech
Industrial Development Zone (KSND) in China to jointly construct a wafer
fabrication facility. The agreement requires the Companyto invest
approximately $50.0 million over a ten-year period, inclusive of $16.7 million
required by January 31, 2010, of which approximately $10.9 million has been paid
or accrued as of September 27, 2008. In the event we decide unilaterally not to
proceed with the agreement with KSND, our maximum obligation under the agreement
with KSND is to pay KSND $16.7 million, reduced by payments made to the date of
cancellation.




We held a
total of $13.0 million of auction rate securities (ARS) within our $22.1 million
in marketable securities at September 27, 2008.  ARS are generally
long-term debt instruments that provided liquidity through a Dutch auction
process that resets the applicable interest rate at pre-determined calendar
intervals, generally every 28 days. This mechanism generally allowed existing
investors to rollover their holdings while continuing to own their respective
securities or liquidate their holdings by selling their securities at par value.
We generally invested in these securities for short periods of time as part of
our 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 we hold. In the period April to August,
2008 certain issuers
redeemed certain of the ARS held by the Company with a carrying value of $8.3
million.The related issuersredeemed such
ARSat par
resulting in proceeds of $8.7 million.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.




At September
27, 2008, there was insufficient observable ARS market information available to
determine the fair value of certain of our investments in ARS. Therefore, we
estimated Level 3 fair values for these securities by incorporating assumptions
that market participants would use in their estimates of fair value. Some of
these assumptions included credit quality, final stated maturity, impact due to
extended periods of maximum auction rates and estimates of the probability of
the issue being called or becoming liquid prior to the final maturity. The ARS’
September 27, 2008 carrying value has been adjusted downward to fair value by
the amounts of $1.6 million and $3.1 million in the three and nine month periods
ended September 27, 2008, respectively.  The charges in the three and
nine months periods ended September 27, 2008 were partially offset by $0.2
million and $0.4 million, respectively, recovered upon redemption of ARS that
were previously written down.  While we believe these securities will
again become liquid, the timing is uncertain.  We currently have the
ability and intent to hold these auction rate securities until a recovery of the
auction process, early redemption or until maturity.




We believe
that our existing sources of capital, including our existing cash and marketable
securities, will be adequate to satisfy both operational and 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
outstanding debt or equity, through additional equity or debt financing. Our
ability to pay principal and interest on our outstanding 2009 Notes due in
October 2009, our other debt and to fund our planned capital expenditures
depends on our future operating performance and the liquidity of our
ARS.





IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS
157) which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements. FAS 157 is effective for financial statements issued 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” (FSP 157-2). FSP 157-2 delays the
effective date of FAS 157 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 this accounting pronouncement did not have a
material effect on the Company’s consolidated financial statements for financial
assets and liabilities and any other assets and liabilities carried at fair
value.  The Company is currently in the process of evaluating the
impact of adopting this pronouncement for other non-financial assets or
liabilities.




FAS 157
defines fair value 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). FAS 157 classifies the inputs used to measure
fair value into 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.




In October
2008, the FASB issued FSP 157-3 “Determining Fair Value of a Financial Asset in
a Market That Is Not Active” (FSP 157-3). FSP 157-3 clarified the application of
FAS No. 157 in an inactive market. It demonstrated how the fair value of a
financial asset is determined when the market for that financial asset is
inactive. FSP 157-3 was effective upon issuance, including prior periods for
which financial statements had not been issued.




In February
2007, the FASB issued FASB Statement No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (FAS 159), which permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. FAS 159 is effective for fiscal years
beginning after November 15, 2007. As of January 1, 2008, the Company adopted
FAS 159. Since the Company has not utilized the fair value option for any
allowable items, the adoption of FAS 159 had no impact on the Company’s results
of operations or financial position.




In
June 2007, the FASB’s Emerging Issues Task Force reached a consensus on
EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities”
(EITF 07-3) that would require nonrefundable advance payments made by the
Company for future R&D activities to be capitalized and recognized as an
expense as the goods or services are received by the Company. EITF 07-3 is
effective with respect to new arrangements entered into beginning
January 1, 2008. The Company adopted EITF 07-3, which did not have a
material impact on its consolidated financial statements.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations” (FAS 141R), which changes how business acquisitions are
accounted.  FAS 141R 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.  FAS 141R is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact FAS 141R may have on its results of
operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51”
(FAS 160), which establishes new standards governing the accounting for and
reporting of noncontrolling interests (NCIs) in partially owned consolidated
subsidiaries and the loss of control of subsidiaries.  Certain provisions
of this standard indicate, among other things, that NCIs (previously referred to
as minority interests) be treated as a separate component of equity, not as a
liability; that increases and decrease in the parent’s ownership interest that
leave control intact be treated as equity transactions, rather than as step
acquisitions or dilution gains or losses; and that losses of a partially owned
consolidated subsidiary be allocated to the NCI even when such allocation might
result in a deficit balance. This standard also requires changes to certain
presentation and disclosure requirements. FAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008.
The provisions of the standard are to be applied to all NCIs prospectively,
except for the presentation and disclosure requirements, which are to be applied
retrospectively to all periods presented. The Company has not yet determined the
impact FAS 160 may have on its results of operations or financial position.




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (FAS
161).  FAS 161 applies to all derivative instruments and related
hedged items accounted for under FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities".  FAS 161 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.
FAS 161 is effective for financial statements issued for fiscal years beginning
after November 15, 2008. The Company has not yet determined the impact FAS 161
may have on its results of operations or financial position.




In April
2008, the FASB issued FSP 142-3, “Determination of the Useful Life of Intangible
Assets”, (FSP 142-3). FSP 142-3 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible
Assets”. FSP 142-3 is effective for fiscal years beginning after December 15,
2008. The Company has not yet determined the impact FSP 142-3 may have on its
results of operations or financial position.




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)" (FSP APB 14-1). FSP APB 14-1 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. FSP APB 14-1 is effective for fiscal years
beginning after December 15, 2008 on a retroactive basis. The Company has not
yet determined the impact FSP APB 14-1 may have on its results of operations or
financial position.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (FSP EITF
03-6-1). FSP EITF 03-6-1 clarified 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. FSP EITF 03-6-1 is effective for
fiscal years beginning after December 15, 2008. The Company has not yet
determined the impact FSP EITF 03-6-1 may have on its results of operations or
financial position.




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 ability to respond to a
significant increase in demand from our customers; (ii) our history of recent
losses and the possibility that we may continue to incur losses; (iii) our
dependence on a small number of customers; (iv) sources for certain components,
materials and equipment are limited, which could result in delays or reductions
in product shipments; (v) we may face interruptions in our manufacturing
processes; (vi) the variability of our manufacturing yields may affect our gross
margins; (vii) our dependence on foreign semiconductor assembly and test
operations contractors could lead to delays in product shipments; (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 need to keep
pace with rapid product and process development and technological changes as
well as product cost reductions to be competitive; (x) our gallium arsenide
semiconductors may cease to be competitive with silicon alternatives; (xi) our
operating results may be harmed if we fail to sell a high volume of products;
(xii) the short life cycles of some of our products may leave us with obsolete
or excess inventories; (xiii) our results of operations can vary significantly
due to the cyclical nature of the semiconductor industry and our end markets;
(xiv) our products have experienced rapidly declining unit prices; (xv) our
marketable securities’ liquidity and valuation could be affected by disruption
in financial markets; (xvi) capital required for our business may not be
available when we need it; (xvii) our success depends on our ability to attract
and retain qualified personnel; (xviii) risks due to our international customer
base and our subcontracting operations; (xix) stringent environmental laws and
regulations both domestically and abroad; (xx) any failure to protect our
intellectual property rights or avoid claims that we have infringed on the
intellectual property rights of others; (xxi) 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; (xxii) we have had significant
volatility in our stock price and it may fluctuate in the future; (xxiii)
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. 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, 2007. The Company undertakes no
obligation to update publicly or revise any forward-looking statement, whether
as a result of new information, future developments or otherwise.





ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




The Company's
market risk has not changed significantly for the risks disclosed in Item 7A of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2007.





ITEM 4. CONTROLS AND
PROCEDURES




Under the
supervision and with the participation of our management, including our interim
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we
conducted an evaluation of the effectiveness of our disclosure controls and
procedures as of September 27, 2008. Based on that evaluation, our management,
including our CEO and CFO, concluded that our disclosure controls and procedures
were effective to ensure that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported as specified within the SEC’s rules and
forms.




There was no
change in the Company’s internal control over financial reporting during the
Company’s last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.




Because of
their inherent limitations, disclosure controls and procedures and internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.











ANADIGICS,
Inc.





PART II -
OTHER INFORMATION





ITEM          1.      LEGAL
PROCEEDINGS





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








ITEM          6.      EXHIBITS








31.1 Rule
13a-14(a)/15d-14(a) Certification of Gilles Delfassy, Chairman of the Board and
Interim 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 Gilles Delfassy, Chairman of the Board and
      Interim 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 3, 2008