UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION




WASHINGTON,
D.C. 20549




FORM
10-Q





/x/QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE QUARTERLY PERIOD ENDED APRIL 4, 2009.Or/
      /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
      ____________.Commission
      File No. 0-25662ANADIGICS,
      Inc.(Exact
      name of registrant as specified in its charter)Delaware
            22-2582106(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)141
      Mt. Bethel Road, Warren, New Jersey
            07059(Address
      of principal executive offices)
            (Zip
      Code)(908)
      668-5000(Registrant's
      telephone number, including area
code)








Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes [X] No [ ]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes [ ]
No [ ]




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


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





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





The
number of shares outstanding of the Registrant’s common stock as of April 4,
2009 was 63,165,779 (excluding 113,761 shares held in treasury).











INDEX





ANADIGICS,
Inc.








PART
      I
            Financial
      InformationItem
      1.
            Financial
      Statements (unaudited)Condensed
      consolidated balance sheets – April 4, 2009 and December 31,
      2008Condensed
      consolidated statements of operations and comprehensive (loss) income –
      Three months ended April 4, 2009 and March 29, 2008Condensed
      consolidated statements of cash flows – Three months ended April 4, 2009
      and March 29, 2008Notes
      to condensed consolidated financial statements – April 4,
    2009Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      OperationsItem
      3.
            Quantitative
      and Qualitative Disclosures About Market RiskItem
      4.
            Controls
      and ProceduresPART
      II.
            Other
      InformationItem
      1.
            Legal
      ProceedingsItem
      6.
            ExhibitsSignatures













































































PART I -
FINANCIAL INFORMATION





ITEM
1.                      FINANCIAL
STATEMENTS





ANADIGICS,
Inc.





CONDENSED
CONSOLIDATED BALANCE SHEETS





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





April
      4, 2009
            
            
            December
      31, 2008(Unaudited)
            
            
            (Note
      1)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            99,697
            
            
            $
            123,552Marketable
      securities
            
            
            25,502
            
            
            
            13,340Accounts
      receivable, net
            
            
            13,935
            
            
            
            25,384Inventories
            
            
            28,660
            
            
            
            33,578Prepaid
      expenses and other current assets
            
            
            4,118
            
            
            
            3,121Total
      current assets
            
            
            171,912
            
            
            
            198,975Marketable
      securities
            
            
            7,267
            
            
            
            8,832Plant
      and equipment:Equipment
      and furniture
            
            
            201,842
            
            
            
            201,217Leasehold
      improvements
            
            
            44,058
            
            
            
            40,589Projects
      in process
            
            
            17,128
            
            
            
            18,940263,028
            
            
            
            260,746Less
      accumulated depreciation and amortization
            
            
            (169,380
            )
            
            
            (165,075
            )93,648
            
            
            
            95,671Other
      assets
            
            
            290
            
            
            
            299Total
      assets
            
            $
            273,117
            
            
            $
            303,777LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            10,913
            
            
            $
            18,267Accrued
      liabilities
            
            
            7,385
            
            
            
            13,203Accrued
      restructuring costs
            
            
            2,392
            
            
            
            1,165Convertible
      notes
            
            
            38,000
            
            
            
            38,000Total
      current liabilities
            
            
            58,690
            
            
            
            70,635Other
      long-term liabilities
            
            
            3,107
            
            
            
            3,134Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $0.01 par value, 144,000 shares authorized, 63,276 issued at April
      4, 2009 and 63,424 issued at December 31, 2008
            
            
            633
            
            
            
            634Additional
      paid-in capital
            
            
            566,879
            
            
            
            563,468Accumulated
      deficit
            
            
            (355,949
            )
            
            
            (333,967
            )Accumulated
      other comprehensive income
            
            
            15
            
            
            
            131Treasury
      stock at cost: 114 shares
            
            
            (258
            )
            
            
            (258
            )Total
      stockholders’ equity
            
            
            211,320
            
            
            
            230,008Total
      liabilities and stockholders’ equity
            
            $
            273,117
            
            
            $
            303,777











See
      accompanying notes.











ANADIGICS,
Inc.





CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008(unaudited)
            
            
            (unaudited)Net
      sales
            
            $
            30,495
            
            
            $
            74,369Cost
      of sales
            
            
            29,245
            
            
            
            47,764Gross
      profit
            
            
            1,250
            
            
            
            26,605Research
      and development expenses
            
            
            11,625
            
            
            
            14,331Selling
      and administrative expenses
            
            
            7,432
            
            
            
            8,880Restructuring
      charge
            
            
            2,598
            
            
            
            -Operating
      (loss) income
            
            
            (20,405
            )
            
            
            3,394Interest
      income
            
            
            559
            
            
            
            1,938Interest
      expense
            
            
            (591
            )
            
            
            (591
            )Other
      expense, net
            
            
            (1,545
            )
            
            
            (812
            )Net
      (loss) income
            
            $
            (21,982
            )
            
            $
            3,929Basic
      (loss) earnings per share
            
            $
            (0.36
            )
            
            $
            0.07Diluted
      (loss) earnings per share
            
            $
            (0.36
            )
            
            $
            0.07Weighted
      average common shares outstanding used in computing (loss) earnings per
      shareBasic
            
            
            61,742
            
            
            
            59,310Diluted
            
            
            61,742
            
            
            
            60,430














CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME





(AMOUNTS
IN THOUSANDS)








Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008(unaudited)
            
            
            (unaudited)Net
      (loss) income
            
            $
            (21,982
            )
            
            $
            3,929Other
      comprehensive (loss) income:Unrealized
      loss on marketable securities
            
            
            (33
            )
            
            
            (957
            )Foreign
      currency translation adjustment
            
            
            (83
            )
            
            
            16Reclassification
      adjustment:Net
      recognized loss on marketable securities previously included in other
      comprehensive income
            
            
            -
            
            
            
            820Comprehensive
      (loss) income
            
            $
            (22,098
            )
            
            $
            3,808


























See
      accompanying notes.





ANADIGICS,
Inc.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





(AMOUNTS
IN THOUSANDS)





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008(unaudited)
            
            
            (unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
            
            $
            (21,982
            )
            
            $
            3,929Adjustments
      to reconcile net (loss) income to net cash (used in) provided by operating
      activities:Depreciation
            
            
            4,315
            
            
            
            3,368Amortization
            
            
            116
            
            
            
            181Stock
      based compensation
            
            
            3,410
            
            
            
            4,406Amortization
      of premium (discount) on marketable securities
            
            
            6
            
            
            
            (101
            )Recognized
      marketable securities impairment and other
            
            
            1,565
            
            
            
            820Gain
      on disposal of equipment
            
            
            (20
            )
            
            
            -Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            11,449
            
            
            
            2,627Inventories
            
            
            4,918
            
            
            
            (1,506
            )Prepaid
      expenses and other assets
            
            
            (1,104
            )
            
            
            (2,888
            )Accounts
      payable
            
            
            (2,792
            )
            
            
            1,104Accrued
      liabilities and other liabilities
            
            
            (4,701
            )
            
            
            1,152Net
      cash (used in) provided by operating activities
            
            
            (4,820
            )
            
            
            13,092CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of plant and equipment
            
            
            (6,854
            )
            
            
            (22,861
            )Proceeds
      from sale of equipment
            
            
            20
            
            
            
            -Purchases
      of marketable securities
            
            
            (15,201
            )
            
            
            (15,410
            )Proceeds
      from sale of marketable securities
            
            
            3,000
            
            
            
            68,083Net
      cash (used in) provided by investing activities
            
            
            (19,035
            )
            
            
            29,812CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of common stock
            
            
            -
            
            
            
            338Net
      cash provided by financing activities
            
            
            -
            
            
            
            338Net
      (decrease) increase in cash and cash equivalents
            
            
            (23,855
            )
            
            
            43,242Cash
      and cash equivalents at beginning of period
            
            
            123,552
            
            
            
            57,786Cash
      and cash equivalents at end of period
            
            $
            99,697
            
            
            $
            101,028










See
      accompanying notes.














ANADIGICS,
Inc.





NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – APRIL 4,
2009





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)








1. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES




BASIS OF
PRESENTATION




The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals and
adjustments) considered necessary for a fair presentation have been
included.  Operating results for the three month period ended April 4,
2009 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2009.




The condensed
consolidated balance sheet at December 31, 2008 has been derived from the
audited financial statements at that date but does not include all the
information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2008.




The condensed
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.




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 was 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 delayed 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 as of January
1, 2009 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.




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.




In April
2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and
a Transaction Is Not Distressed” (FSP 157-4). FSP 157-4 provides additional
guidance on factors to consider in estimating fair value when there has been a
significant decrease in market activity for a financial asset. FSP 157-4 is
effective for interim and annual periods ending after June 15, 2009. The Company
has not yet determined the impact this standard may have 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 and upon adoption
did not have a material impact on the Company’s consolidated financial
statements. However it is expected to change the Company’s accounting
prospectively for future business combinations consummated
subsequently.




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




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (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 adoption of this standard effective January 1, 2009
did not have a material impact on the Company’s consolidated financial
statements.




In May 2008,
the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)" (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 adoption of this
standard effective January 1, 2009 did not have a material impact on the
Company’s consolidated financial statements.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (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 adoption of this standard
effective January 1, 2009 did not have a material impact on the Company’s
consolidated financial statements.




In April
2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (FSP 115-2 and FSP 124-2). FSP 115-2 and FSP
124-2 change the method for determining whether an other-than-temporary
impairment exists for debt securities and the amount of the impairment to be
recorded in earnings. FSP 115-2 and FSP 124-2 are effective for interim and
annual periods ending after June 15, 2009. The Company currently does not expect
that the adoption of this standard will have a material impact on its
consolidated financial statements.




In April
2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value
of Financial Instruments” (FSP 107-1, APB 28-1). FSP 107-1, APB 28-1 requires
fair value disclosures in both interim as well as annual financial statements in
order to provide more timely information about the effects of current market
conditions on financial instruments. FSP 107-1, APB 28-1 is effective for
interim and annual periods ending after June 15, 2009. The Company currently
does not expect that the adoption of this standard will have a material impact
on its consolidated financial statements.





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. No unrecognized tax
benefits, interest or penalties were accrued at April 4, 2009. The Company’s
U.S. federal net operating losses have occurred since 1998 and as such, tax
years subject to potential tax examination could apply from that date because
carrying-back net operating loss opens the relevant year to audit.





WARRANTY




Based on the
examination of historical returns and other information it deems critical, the
Company estimates that a current charge to income will need to be provided in
order to cover future warranty obligations for products sold during the year.
The accrued liability for warranty costs is included in Accrued liabilities in
the condensed consolidated balance sheets.Warranty
reserve movements in the three months ended April 4, 2009 included $415 in
actual charges and $183 in provisions resulting in the balance of $413 at April
4, 2009.  Warranty reserve movements in the three months ended March
29, 2008 included $176 in actual charges and a $395 increase in the
provision.





RECLASSIFICATIONS




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





2. RESTRUCTURING
CHARGE




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




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





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





Workforce-related
            
            
            Other
            
            
            TotalDecember
      31, 2008 balance
            
            $
            1,065
            
            
            $
            100
            
            
            $
            1,165Additions
            
            
            2,598
            
            
            
            -
            
            
            
            2,598Deductions
            
            
            (1,311
            )
            
            
            (60
            )
            
            
            (1,371
            )April
      4, 2009 balance
            
            $
            2,352
            
            
            $
            40
            
            
            $
            2,392








3. (LOSS)
EARNINGS PER SHARE




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





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Weighted
      average common shares for basic (loss) earnings per share
            
            
            61,742
            
            
            
            59,310Effect
      of dilutive securities:Stock options
    (*)
            
            
            -
            
            
            
            463Unvested restricted shares
      (*)
            
            
            -
            
            
            
            657Adjusted
      weighted average shares for diluted (loss) earnings per
    share
            
            
            61,742
            
            
            
            60,430





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




For the three
months ended April 4, 2009 and March 29, 2008, potential additional dilution
arising from any of the Company's outstanding stock options, unvested restricted
stock (shares or units), or shares potentially issuable upon conversion of the
Convertible notes are detailed below. Such potential dilution was excluded as
their effect was anti-dilutive.





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Convertible
      notes
            
            
            7,600
            
            
            
            7,600Stock
      options
            
            
            5,867
            
            
            
            1,972Unvested
      restricted shares and units
            
            
            1,941
            
            
            
            362









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








Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Broadband
            
            $
            9,105
            
            
            $
            23,139Wireless
            
            
            21,390
            
            
            
            51,230Total
            
            $
            30,495
            
            
            $
            74,369





The Company
primarily sells to four geographic regions: Asia, USA and Canada, Latin America
and Other. The geographic region is determined by the destination of the
shipped


product.  
Net sales to each of the four geographic regions are as follows:





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Asia
            
            $
            18,199
            
            
            $
            47,866USA
      and Canada
            
            
            4,155
            
            
            
            21,965Latin
      America
            
            
            5,491
            
            
            
            3,090Other
            
            
            2,650
            
            
            
            1,448Total
            
            $
            30,495
            
            
            $
            74,369




5. MARKETABLE
SECURITIES





FAIR
VALUE OF FINANCIAL INSTRUMENTS




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





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




The Company
endeavors to utilize the best available information in measuring fair value.
Financial assets and liabilities are classified in their entirety based on the
lowest level of input that is significant to the fair value measurement. The
following is a summary of available-for-sale securities as at April 4, 2009
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)Certificates
      of Deposit
            
            $
            20,201
            
            
            $
            20,201
            
            
            $
            -
            
            
            $
            -Non-auction
      Corporate Debt securities
            
            
            6,830
            
            
            
            5,300
            
            
            
            1,530
            
            
            
            -Auction
      Rate SecuritiesCorporate
      Debt
            
            
            600
            
            
            
            -
            
            
            
            -
            
            
            
            600Preferred
      Equity
            
            
            3,516
            
            
            
            -
            
            
            
            -
            
            
            
            3,516State and
      Municipal
            
            
            1,622
            
            
            
            -
            
            
            
            -
            
            
            
            1,622Total
            
            $
            32,769
            
            
            $
            25,501
            
            
            $
            1,530
            
            
            $
            5,738





AUCTION
RATE SECURITIES




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




At April 4,
2009, there was insufficient observable ARS market information available to
determine the fair value of the Company’s investments in ARS. Given the
complexity of ARS investments, the Company obtained the assistance of an
independent valuation firm to assist management in assessing the Level 3 fair
value of its ARS portfolio. The third party valuations developed to estimate the
ARS fair value were determined using a combination of two calculations (1) a
discounted cash flow model, where the expected cash flows of the ARS are
discounted to the present using a yield that incorporates compensation for
illiquidity, and (2) a market comparables method, where the ARS are valued based
on indications, from the secondary market, of what discounts buyers demand when
purchasing similar ARS. The valuations include numerous assumptions such as
assessments of the underlying structure of each security, expected cash flows,
discount rates, credit ratings, workout periods, and overall capital market
liquidity. While interest at default rates continues to be paid currently by all
the issuers of these ARS, due to the severity of the decline in fair value and
the duration of time for which these ARS have been in a loss position, the
Company concluded that its ARS experienced an other-than-temporary decline in
fair value and recorded impairment charge of $1,211 for the three months ended
April 4, 2009.




During 2008,
a corporate debt ARS position was exchanged for the underlying 30 year notes due
2037. This debt is quoted but infrequently traded and the Company values this
security on a Level 2 basis. The face value of this corporate debt security is
$4,000 and was valued at $1,530 as of April 4, 2009.Due
to the severity and duration of the decline, the Company has recorded an
impairment of $354 for the three months ended April 4, 2009 related to this
security which in combination with the ARS impairment discussed above was
reported in Other expense, net.




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 April 4, 2009.





($
      in 000’s)
            
            Fair
      Value Measurements Using Significant Unobservable Inputs (Level
      3)
              Three
      months ended April 4, 2009State
      & Municipal Securities (a)
            
            
            Corporate
      Debt Securities (b)
            
            
            Preferred
      Equity Securities (c)
            
            
            TotalBalance
      at January 1, 2009
            
            $
            1,947
            
            
            $
            662
            
            
            $
            4,340
            
            
            $
            6,949Total gains or losses
      realized/unrealizedIncluded in (loss)
      earnings
            
            
            (325
            )
            
            
            (62
            )
            
            
            (824
            )
            
            
            (1,211
            )Included in other comprehensive
      (loss)income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Purchases, issuances, and
      settlements
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Transfers in and/or out of Level
      3
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      at April 4, 2009
            
            $
            1,622
            
            
            $
            600
            
            
            $
            3,516
            
            
            $
            5,738The
      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
            
            $
            (325
            )
            
            $
            (62
            )
            
            $
            (824
            )
            
            $
            (1,211
            )Securities
      held at April 4, 2009:Face
      value
            
            $
            2,600
            
            
            $
            2,500
            
            
            $
            7,500
            
            
            $
            12,600Financial
      ratings
            
            
            A3
            
            
            
            A3
            
            
            AAA
      to BBBWeighted
      average interest rate (*)
            
            
            1.56
            %
            
            
            2.27
            %
            
            
            3.21
            %
            
            
            2.68
            %Maturity
      date
            
            2045
            
            
            2036
            
            
            
            N/A




*
Interest rates are reset every one to three months based on a premium to AA
Commercial Paper, LIBOR or Treasury Bill rates.


(a)
Security represents an interest in pooled student loans that are guaranteed by
the Federal Family Education Loan Program.


(b)
Security issued by a publicly-held insurance company trust, which holds
investments in  U.S. Government obligations, highly rated commercial
paper and money market funds and other investments approved by two credit rating
agencies. The trust is funded by life insurance residuals. If the residuals are
insufficient, the security becomes an obligation of the publicly-held insurance
company.


(c)
Includes preferred securities issued by four diversified closed-end management
investment companies which are governed by the Investment Company Act of 1940
with regard to operating standards, antifraud rules, diversification
requirements and an asset coverage requirement for asset backing of 200% of the
par value of the preferred stock issued. Also includes preferred securities
issued by subsidiaries of two publicly-held debt default insurers.




For the three
month period ended March 29, 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)
              Three
      months ended March 29, 2008State
      & Municipal Securities
            
            
            Corporate
      Debt Securities
            
            
            Preferred
      Equity Securities
            
            
            TotalBalance
      at January 1, 2008
            
            $
            -
            
            
            $
            2,324
            
            
            $
            2,344
            
            
            $
            4,668Total gains or losses
      realized/unrealizedIncluded in (loss)
      earnings
            
            
            (186
            )
            
            
            (43
            )
            
            
            (594
            )
            
            
            (823
            )Included in other comprehensive
      (loss)income
            
            
            (131
            )
            
            
            -
            
            
            
            -
            
            
            
            (131
            )Purchases, issuances, and
      settlements
            
            
            -
            
            
            
            -
            
            
            -
            
            
            
            -Transfers in and/or out of Level
      3
            
            
            6,500
            
            
            
            -
            
            
            
            9,475
            
            
            
            15,975Balance
      at March 29, 2008
            
            $
            6,183
            
            
            $
            2,281
            
            
            $
            11,225
            
            
            $
            19,689The
      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
            
            $
            (186
            )
            
            $
            (43
            )
            
            $
            (594
            )
            
            $
            (823
            )





6. INVENTORIES




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





April
      4, 2009
            
            
            December
      31, 2008Raw
      materials
            
            $
            9,638
            
            
            $
            9,537Work
      in process
            
            
            12,917
            
            
            
            18,062Finished
      goods
            
            
            17,595
            
            
            
            15,00740,150
            
            
            
            42,606Reserves
            
            
            (11,490
            )
            
            
            (9,028
            )Total
            
            $
            28,660
            
            
            $
            33,578




7. LONG-TERM
DEBT




On September
24, 2004, the Company issued $38,000 aggregate principal amount of 5%
Convertible Senior Notes (2009 Notes) due October 15, 2009. The 2009 Notes are
convertible into shares of the Company’s common stock at any time prior to their
maturity, at an initial conversion rate, subject to adjustment, of 200 shares
for each $1,000 principal amount, which is equivalent to a conversion price of
$5.00 per share (7,600 shares contingently issuable). Interest on the 2009 Notes
is payable semi-annually in arrears on April 15 and October 15 of each
year.




8. STOCK BASED
COMPENSATION





Equity
Compensation Plans





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


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


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


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


§
            The
      Employee Stock Purchase Plan (ESP
Plan).




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




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




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




Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Amortization
      of restricted stock
            
            $
            2,464
            
            
            $
            3,887Amortization
      of ESP Plan
            
            
            200
            
            
            
            200Amortization
      of stock option awards
            
            
            746
            
            
            
            319Total
      stock based compensation
            
            $
            3,410
            
            
            $
            4,406By
      Financial Statement line itemCost
      of sales
            
            $
            725
            
            
            $
            726Research
      and development expenses
            
            
            1,431
            
            
            
            1,896Selling
      and administrative expenses
            
            
            1,445
            
            
            
            1,784Restructuring
      charge
            
            
            (191
            )
            
            
            -




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





Restricted
Stock and Stock Option Awards




Commencing in
August 2004, the Company began granting restricted stock shares under the Plans
and in July 2008 began granting restricted stock units (collectively restricted
stock). The value of restricted stock grants are fixed upon the date of grant
and amortized over the related vesting period of one to three
years.  Restricted stock is subject to forfeiture if employment
terminates prior to vesting.  The Company estimates that approximately
2.5% of its restricted stock grants are forfeited annually.  The
restricted stock shares carry voting and certain forfeitable dividend rights
commencing upon grant, whereas restricted stock units do not. Neither restricted
stock shares nor restricted stock units may be traded or transferred prior to
vesting.  Grant, vest and forfeit activity and related weighted
average (WA) price per share for restricted stock and for stock options during
the period from January 1, 2008 to April 4, 2009 is presented in tabular form
below:





Restricted
      Stock Shares
            
            
            Restricted
      Stock Units
            
            
            Stock
      OptionsShares
            
            
            WA
      price/ share
            
            
            Units
            
            
            WA
      price/ unit
            
            
            Issuable
      upon exercise
            
            
            WA
      exercise priceOutstanding
      at January 1, 2008
            
            
            2,212
            
            
            $
            9.61
            
            
            
            -
            
            
            
            -
            
            
            
            3,491
            
            
            $
            9.68Granted
            
            
            1,802
            
            
            
            9.26
            
            
            
            678
            
            
            $
            5.04
            
            
            
            -
            
            
            
            -Shares
      vested/options exercised
            
            
            (1,722
            )
            
            
            9.16
            
            
            
            (31
            )
            
            
            5.88
            
            
            
            (384
            )
            
            
            6.78Forfeited/expired
            
            
            (318
            )
            
            
            12.17
            
            
            
            (36
            )
            
            
            5.89
            
            
            
            (288
            )
            
            
            10.36Balance
      at December 31, 2008
            
            
            1,974
            
            
            
            9.27
            
            
            
            611
            
            
            
            4.94
            
            
            
            2,819
            
            
            
            10.00Granted
            
            
            -
            
            
            
            -
            
            
            
            318
            
            
            
            1.93
            
            
            
            3,114
            
            
            
            1.97Shares
      vested/options exercised
            
            
            (950
            )
            
            
            8.32
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Forfeited/expired
            
            
            (9
            )
            
            
            9.98
            
            
            
            (3
            )
            
            
            4.71
            
            
            
            (66
            )
            
            
            9.01Balance
      at April 4, 2009
            
            
            1,015
            
            
            $
            10.14
            
            
            
            926
            
            
            $
            3.91
            
            
            
            5,867
            
            
            $
            5.75




Included
within the restricted stock shares granted in 2008 are 357 shares granted
pursuant to long-term incentive awards (LTI) issued to management contingent
upon the Company’s performance using multi-year adjusted earnings per share and
revenue targets measured over a three-year period ending December 31,
2010.  The number of shares issuable pursuant to the LTI award can
vary upon actual performance to such targets and range from 50% to 150% of the
base share award. Upon the separation of our former chief executive officer in
2008, 27 shares of the 357 LTI shares were released and 96 shares were
forfeited. Based upon the performance of the Company to April 4, 2009, no
further stock-based compensation for LTI has been expensed and the related
unrecognized stock-based compensation has been excluded from the table
below.




As
      of April 4, 2009Unrecognized
      stock based compensation costOption plans
            
            $
            5,200Restricted stock
            
            $
            7,053Weighted
      average remaining recognition periodOption plans
            
            2.1
      yearsRestricted stock
            
            1.1
      years





Stock
options outstanding at April 4, 2009 are summarized as follows:





Range
      of exercise prices
            
            
            Outstanding
      Options at April 4, 2009
            
            
            Weighted
      average remaining contractual life
            
            
            Weighted
      average exercise price
            
            
            Exercisable
      at April 4, 2009
            
            
            Weighted
      average exercise price$
            1.39
      - $2.03
            
            
            
            3,114
            
            
            
            9.8
            
            
            $
            1.97
            
            
            
            2
            
            
            $
            1.66$
            2.08
      - $7.27
            
            
            
            1,122
            
            
            
            3.6
            
            
            $
            5.78
            
            
            
            1,120
            
            
            $
            5.78$
            8.79
      – $8.84
            
            
            
            836
            
            
            
            6.6
            
            
            $
            8.84
            
            
            
            650
            
            
            $
            8.84$
            9.00
      - $53.48
            
            
            
            795
            
            
            
            2.7
            
            
            $
            17.27
            
            
            
            753
            
            
            $
            17.50





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 three month periods ended April 4, 2009
and March 29, 2008 were:





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Stock
      option awards:Risk-free
      interest rate
            
            
            1.6
            %
            
            
            -Expected
      volatility
            
            
            99
            %
            
            
            -Average
      expected term (in years)
            
            
            5.0
            
            
            
            -Expected
      dividend yield
            
            
            0.0
            %
            
            
            -Weighted
      average fair value of options granted
            
            $
            1.46
            
            
            
            -ESP
      Plan:Risk-free
      interest rate
            
            
            0.6
            %
            
            
            1.6
            %Expected
      volatility
            
            
            115
            %
            
            
            66
            %Average
      expected term (in years)
            
            
            1.0
            
            
            
            1.0Expected
      dividend yield
            
            
            0.0
            %
            
            
            0.0
            %Weighted
      average fair value of purchase option
            
            $
            0.83
            
            
            $
            4.14




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





9. LEGAL
PROCEEDINGS




On or about
November 11, 2008, plaintiff Charlie Attias filed a putative securities class
action lawsuit in the United States District Court for the District of New
Jersey, captioned Charlie
Attias v. Anadigics, Inc., et al., No. 3:08-cv-05572, and, on or about
November 21, 2008, plaintiff Paul Kuznetz filed a related class action lawsuit
in the same court, captioned Paul J. Kuznetz v. Anadigics, Inc.,
et al., No. 3:08-cv-05750 (jointly, the "Class Actions").  The
Complaints in the Class Actions, which were consolidated by an Order of the
District Court dated November 24, 2008, seek unspecified damages for alleged
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
as well as Rule 10b-5 promulgated thereunder, in connection with alleged
misrepresentations and omissions relating to, among other things, Anadigics's
manufacturing capabilities and the demand for its products.  The
longer of the proposed class periods alleged in the Class Actions runs from
February 12, 2007 through October 22, 2008.  Currently pending before
the District Court are various motions by certain members of the proposed class
seeking appointment as Lead Plaintiff.




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




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




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














ANADIGICS,
Inc.





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





OVERVIEW




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




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




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




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




We were
incorporated in Delaware in 1984. Our corporate headquarters are located at 141
Mt. Bethel Road, Warren, New Jersey 07059, and our telephone number at that
address is 908-668-5000.




RESULTS OF
OPERATIONS




The following
table sets forth unaudited consolidated statements of operations data as a
percent of net sales for the periods presented:





Three
      months endedApril
      4, 2009
            
            
            March
      29, 2008Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            95.9
            %
            
            
            64.2
            %Gross
      margin
            
            
            4.1
            %
            
            
            35.8
            %Research
      and development expenses
            
            
            38.1
            %
            
            
            19.3
            %Selling
      and administrative expenses
            
            
            24.4
            %
            
            
            11.9
            %Restructuring
      charge
            
            
            8.5
            %
            
            
            -Operating
      (loss) income
            
            
            (66.9
            )%
            
            
            4.6
            %Interest
      income
            
            
            1.8
            %
            
            
            2.6
            %Interest
      expense
            
            
            (1.9
            )%
            
            
            (0.8
            )%Other
      expense, net
            
            
            (5.1
            )%
            
            
            (1.1
            )%Net
      (loss) income
            
            
            (72.1
            )%
            
            
            5.3
            %








FIRST
QUARTER 2009 (ENDED APRIL 4, 2009) COMPARED TO FIRST QUARTER 2008 (ENDED MARCH
29, 2008)




NET
SALES.Net
sales decreased 59.0% during the first quarter of 2009 to $30.5 million from
$74.4 million in the first quarter of 2008.




Sales of
integrated circuits for wireless applications decreased 58.2% during the first
quarter of 2008 to $21.4 million from $51.2 million in the first quarter of
2008.  This decrease in sales was primarily due to decreased demand in
all cellular device markets resulting from a reduction in market share with
certain customers and an industry slowdown due to the current macroeconomic
environment. Specifically, EDGE/WEDGE was most affected, whereas W-CDMA was down
proportionally less.




Sales of
integrated circuits for broadband applications decreased 60.6% during the first
quarter of 2009 to $9.1 million from $23.1 million in the first quarter of 2008.
This decrease in sales was primarily due to decreased demand for WLAN PAs
shipped into the PC Notebook market resulting from the combination of a
reduction in market share with one of our key customers and general softness in
demand for WLAN PAs that has occurred due to the current macroeconomic
environment.




GROSS MARGIN.
Gross margin during the first quarter of 2009 decreased to 4.1% of net sales
from 35.8% of net sales in the first quarter of 2008.  The decrease in
gross margin was primarily due to lower product shipments and wafer production,
and fixed production costs increasing as a percent of lower revenues. Fixed
production costs include, but are not limited to depreciation, maintenance and
operations’ support functions.




RESEARCH AND
DEVELOPMENT. Company-sponsored research and development (R&D) expenses
decreased 18.9% during the first quarter of 2009 to $11.6 million from $14.3
million during the first quarter of 2008. The decrease was primarily due to
decreased headcount and materials used in our R&D product and process
development efforts in light of reduced revenues.




SELLING AND
ADMINISTRATIVE. Selling and administrative expenses decreased 16.3% to $7.4
million during the first quarter of 2009 from $8.9 million during the first
quarter of 2008.  The decrease was primarily driven by lower headcount
and marketing expenses within our sales organization in light of reduced
revenues.




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




INTEREST
INCOME.Interest
income decreased 71.2% to $0.6 million during the first quarter of 2009 from
$1.9 million during the first quarter of 2008.  The decrease was
principally due to lower interest rates, as we maintained liquidity in
Government-backed investments, and was compounded by lower average funds
invested.




INTEREST
EXPENSE.  Interest expense was consistent at $0.6 million during the
first quarters of 2009 and 2008.




OTHER
EXPENSE. Other expense increased during the first quarter of 2009 to $1.5
million from $0.8 million in the first quarter of 2008. Other expense was
comprised of other-than-temporary declines in value on certain auction rate
securities and a corporate debt security held by the Company.





LIQUIDITY
AND CAPITAL RESOURCES




As of April
4, 2009, we had $99.7 million in cash and cash equivalents and $32.8 million in
marketable securities.  As of April 4, 2009, we had outstanding $38.0
million aggregate principal amount of our 2009 Notes, due October 15,
2009.




Operating
activities used $4.8 million in cash during the three month period ended April
4, 2009, primarily as a result of our operating results adjusted for non-cash
expenses offset by cash generated by reducing working
capital.  Investing activities, consisting principally of net
purchases of marketable securities of $12.2 million and cash paid for fixed
assets of $6.8million, used
$19.0 million of cash during the three month period ended April 4,
2009.




We had
unconditional purchase obligations at April 4, 2009 of approximately $2.7
million.




Within our
$32.8 million in marketable securities at April 4, 2009, we held a total of $5.7
million of auction rate securities (ARS) and $1.5 million as a corporate debt
security. The corporate debt security was originally purchased as an ARS prior
to its exchange for the underlying 30 year notes due 2037. ARS are generally
financial instruments of long-term duration with interest rates that are reset
in short intervals through auctions. During the second half of 2007, certain
auction rate debt and preferred securities failed to auction due to sell orders
exceeding buy orders. In February 2008, liquidity issues in the global credit
markets resulted in failures of the auction process for a broader range of ARS,
including substantially all of the auction rate corporate, state and municipal
debt and preferred equity securities we hold. When there is insufficient demand
for the securities at the time of an auction and the auction is not completed,
the interest rates reset to predetermined higher rates (default rates). While
certain issuers redeemed certain of their ARS during 2008, the market remained
constrained by illiquidity and the lack of free trading. The funds associated
with the remaining failed auctions will not be accessible until a successful
auction occurs, a buyer is found outside of the auction process or an issuer
redeems its security. If the credit ratings of the security issuers deteriorate
and any decline in market value is determined to be other-than-temporary, we
would be required to adjust the carrying value of the investment through an
additional impairment charge. To date, we have not realized any losses on ARS
held by the Company or the notes received in exchange for an ARS, but have
recognized other-than-temporary impairments of $9.3 million.




We may not be
able to access cash by selling the aforementioned securities without the loss of
principal until a future auction for these investments is successful, they are
redeemed by their issuers or they mature. If we are unable to sell these
securities in the market or they are not redeemed, then we may be required to
hold them to maturity or in perpetuity for the preferred ARS. We do not have a
need to access these funds for operational purposes for the foreseeable future.
We will continue to monitor and evaluate these investments on an ongoing basis
for impairment or for short term classification purposes. Based on our ability
to access our cash and other short-term investments, our expected operating cash
flows, and our other sources of cash, we do not anticipate that the potential
illiquidity of these investments will affect our ability to execute our current
business plan.




We believe
that our existing sources of capital, including our existing cash and marketable
securities, will be adequate to satisfy operational needs, repayment of our
$38.0 million convertible notes and anticipated capital needs for the next
twelve months. We may elect to finance all or part of our anticipated
operational, debt repayment 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.





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 was 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 delayed 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 as of January
1, 2009 did not have a material effect on our consolidated financial statements
for financial assets and liabilities and any other assets and liabilities
carried at fair value.




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.




In April
2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and
a Transaction Is Not Distressed” (FSP 157-4). FSP 157-4 provides additional
guidance on factors to consider in estimating fair value when there has been a
significant decrease in market activity for a financial asset. FSP 157-4 is
effective for interim and annual periods ending after June 15, 2009. We have not
yet determined the impact this standard may have on our 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 and upon adoption
did not have a material impact on our consolidated financial statements. However
it is expected to change our accounting prospectively for future business
combinations consummated subsequently.




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




In March
2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (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 adoption of this standard effective January 1, 2009
did not have a material impact on our consolidated financial
statements.




In May 2008,
the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)" (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 adoption of this
standard effective January 1, 2009 did not have a material impact on our
consolidated financial statements.




In June 2008,
the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities” (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 adoption of this standard
effective January 1, 2009 did not have a material impact on our consolidated
financial statements.




In April
2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments” (FSP 115-2 and FSP 124-2). FSP 115-2 and FSP
124-2 change the method for determining whether an other-than-temporary
impairment exists for debt securities and the amount of the impairment to be
recorded in earnings. FSP 115-2 and FSP 124-2 are effective for interim and
annual periods ending after June 15, 2009. We currently do not expect that the
adoption of this standard will have a material impact on our consolidated
financial statements.




In April
2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value
of Financial Instruments” (FSP 107-1, APB 28-1). FSP 107-1, APB 28-1 requires
fair value disclosures in both interim as well as annual financial statements in
order to provide more timely information about the effects of current market
conditions on financial instruments. FSP 107-1, APB 28-1 is effective for
interim and annual periods ending after June 15, 2009. We currently do not
expect that the adoption of this standard will have a material impact on our
consolidated financial statements.




FORWARD-LOOKING
STATEMENTS





This
quarterly report on Form 10-Q contains projections and other forward-looking
statements (as that term is defined in the Securities Exchange Act of 1934, as
amended).  These projections and forward-looking statements reflect
the Company’s current views with respect to future events and financial
performance and can generally be identified as such because the context of the
statement will include words such as “believe”, “anticipate”, “expect”, or words
of similar import. Similarly, statements that describe our future plans,
objectives, estimates or goals are forward-looking statements.  No
assurances can be given, however, that these events will occur or that these
projections will be achieved, and actual results and developments could differ
materially from those projected as a result of certain
factors.  Important factors that could cause actual results and
developments to be materially different from those expressed or implied by such
projections and forward-looking statements include, but are not limited to, the
following risks which are described in greater detail in the Company’s Annual
Report on Form 10-K referred to below: (i) our history of recent losses and the
possibility that we may continue to incur losses; (ii) unfavorable economic
conditions; (iii) our operating results may be harmed if we fail to sell a high
volume of products; (iv) our dependence on a small number of customers; (v)
insufficient cost reduction measures or realization of benefits therefrom; (vi)
we may face failures in our manufacturing processes or processes of our vendors;
(vii) the variability of our manufacturing yields may affect our gross margins;
(viii) the existence of intense competition in the markets for our products,
which could result in a decrease in our products’ prices and sales; (ix) our
dependence on foreign semiconductor component, assembly and test operations
contractors could lead to delays in product shipments; (x) sources for certain
components, materials and equipment are limited, which could result in delays or
reductions in product shipments; (xi) our need to keep pace with rapid product
and process development and technological changes as well as product cost
reductions to be competitive; (xii) our gallium arsenide semiconductors may
cease to be competitive with silicon alternatives; (xiii) the short life cycles
of some of our products may leave us with obsolete or excess inventories; (xiv)
our results of operations can vary significantly due to the cyclical nature of
the semiconductor industry and our end markets; (xv) our products have
experienced rapidly declining unit prices; (xvi) any failure to perform or meet
customer requirements; (xvii) capital required for our business may not be
available when we need it; (xviii) our marketable securities’ liquidity and
valuation could be affected by disruption in financial markets; (xix) our
success depends on our ability to attract and retain qualified personnel; (xx)
risks due to our international customer base and our subcontracting operations;
(xxi) stringent environmental laws and regulations both domestically and abroad;
(xxii) any failure to protect our intellectual property rights or avoid claims
that we have infringed on the intellectual property rights of others; (xxiii)
any pursuit of selective acquisitions and alliances which dilute the ownership
of our current shareholders and the management and integration of additional
operations which may be expensive and divert management time; (xxiv) we have had
significant volatility in our stock price and it may fluctuate in the future;
(xxv) certain provisions in our governing documents, our shareholders’ rights
agreement and of Delaware law could deter, delay or prevent a third party from
acquiring us and prevent shareholders from realizing a takeover premium; (xxvi)
an adverse outcome, to the extent not covered by insurance, in the class action
or shareholder derivative lawsuits in which we and certain of our officers and
directors are defendants. The foregoing review of important factors should not
be construed as exhaustive and should be read in conjunction with the other
cautionary statements that are included herein or detailed from time to time in
our reports filed with the Securities and Exchange Commission, including the
Company’s Annual Report on Form 10-K for the year ended December 31, 2008. The
Company undertakes no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information, future
developments or otherwise.





ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




The Company's
market risk has not changed significantly for the risks disclosed in Item 7A of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2008.





ITEM 4. CONTROLS AND
PROCEDURES




We maintain
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our reports filed with the Securities and Exchange
Commission, or SEC, is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate, to allow
timely decisions regarding required disclosure.  As of April 4, 2009,
an evaluation was performed under the supervision and with the participation of
our Management, including our CEO and CFO, of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) under the U.S. Securities Exchange Act of 1934).  Based on
that evaluation, our management, including our CEO and CFO, concluded that our
disclosure controls and procedures were effective as of April 4,
2009.




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




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











ANADIGICS,
Inc.





PART II -
OTHER INFORMATION





ITEM          1.      LEGAL
PROCEEDINGS




On or about
November 11, 2008, plaintiff Charlie Attias filed a putative securities class
action lawsuit in the United States District Court for the District of New
Jersey, captioned Charlie
Attias v. Anadigics, Inc., et al., No. 3:08-cv-05572, and, on or about
November 21, 2008, plaintiff Paul Kuznetz filed a related class action lawsuit
in the same court, captioned Paul J. Kuznetz v. Anadigics,
Inc., et al., No. 3:08-cv-05750 (jointly, the "Class
Actions").  The Complaints in the Class Actions, which were
consolidated by an Order of the District Court dated November 24, 2008, seek
unspecified damages for alleged violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder,
in connection with alleged misrepresentations and omissions relating to, among
other things, Anadigics's manufacturing capabilities and the demand for its
products.  The longer of the proposed class periods alleged in the
Class Actions runs from February 12, 2007 through October 22,
2008.  Currently pending before the District Court are various motions
by certain members of the proposed class seeking appointment as Lead
Plaintiff.




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




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




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








ITEM          6.      EXHIBITS








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





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





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





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





SIGNATURES








Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.








ANADIGICS,
INC.




By:
            /s/
      Thomas C. ShieldsThomas
      C. ShieldsExecutive
      Vice President and
      Chief Financial Officer





Dated:
May 8, 2009