Anadigics (ANAD) 10-Q 2007 Q3 Quarterly report

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 JUNE 30, 2007.
Or
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
Commission File No. 0-25662
ANADIGICS, Inc.
(Exact name of registrant as specified in its charter)
Delaware	22-2582106
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
141 Mt. Bethel Road, Warren, New Jersey	07059
(Address of principal executive offices)	(Zip Code)
(908) 668-5000
(Registrant's telephone number, including area code)

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

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

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

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

The number of shares outstanding of the Registrant’s common stock as of June 30, 2007 was 59,523,475 (excluding 113,761 shares held in treasury).

INDEX

ANADIGICS, Inc.

PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets - June 30, 2007 and December 31, 2006
	Condensed consolidated statements of operations and comprehensive income (loss) - Three and six months ended June 30, 2007 and July 1, 2006
	Condensed consolidated statements of cash flows - Six months ended June 30, 2007 and July 1, 2006
	Notes to condensed consolidated financial statements - June 30, 2007
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II.	Other Information
Item 1.	Legal Proceedings
Item 4.	Submission of Matters to a Vote of Security Holders
Item 6.	Exhibits
	Signatures

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS (UNAUDITED)

ANADIGICS, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

		June 30, 2007			December 31, 2006
		(unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	43,575		$	13,706
Marketable securities		128,755			60,892
Accounts receivable, net		33,561			26,707
Inventories		18,967			19,701
Prepaid expenses and other current assets		5,683			2,632
Assets of discontinued operations		21			1,429
Total current assets		230,562			125,067
Marketable securities		8,811			8,884
Plant and equipment:
Equipment and furniture		150,378			138,652
Leasehold improvements		38,322			38,310
Projects in process		10,089			4,975
		198,789			181,937
Less accumulated depreciation and amortization		(144,988	)		(140,678	)
		53,801			41,259
Goodwill and other intangibles, net of amortization		5,918			5,929
Other assets		1,231			1,463
Total assets	$	300,323		$	182,602
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	22,794		$	17,879
Accrued liabilities		6,526			5,588
Current maturities of capital lease obligations		-			312
Liabilities of discontinued operations		152			252
Total current liabilities		29,472			24,031
Other long-term liabilities		3,298			3,348
Long-term debt, less current portion		38,000			38,000
Capital lease obligations, less current portion		-			1,463
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 144,000 shares authorized, 59,756 and 49,200 issued at June 30, 2007 and December 31, 2006		598			492
Additional paid-in capital		538,401			413,672
Accumulated deficit		(309,044	)		(298,046	)
Accumulated other comprehensive loss		(144	)		(100	)
Treasury stock at cost: 114 shares		(258	)		(258	)
Total stockholders’ equity		229,553			115,760
Total liabilities and stockholders’ equity	$	300,323		$	182,602

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three months ended						Six months ended
		June 30, 2007			July 1, 2006			June 30, 2007			July 1, 2006
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	53,869		$	39,348		$	103,442		$	74,043
Cost of sales		34,963			28,237			68,250			53,526
Gross profit		18,906			11,111			35,192			20,517
Research and development expenses		11,080			8,358			20,818			16,364
Selling and administrative expenses		7,482			5,678			14,841			10,942
Operating income (loss)		344			(2,925	)		(467	)		(6,789	)
Interest income		2,198			1,567			3,438			2,430
Interest expense		(655	)		(1,287	)		(1,280	)		(2,575	)
Other income		-			21			-			21
Income (loss) from continuing operations		1,887			(2,624	)		1,691			(6,913	)
Loss from discontinued operations		-			(163	)		(965	)		(511	)
Net income (loss)	$	1,887		$	(2,787	)	$	726		$	(7,424	)
Basic earnings (loss) per share
Income (loss) from continuing operations	$	0.03		$	(0.06	)	$	0.03		$	(0.17	)
Loss from discontinued operations		-			-		$	(0.02	)	$	(0.01	)
Net income (loss)	$	0.03		$	(0.06	)	$	0.01		$	(0.18	)
Diluted earnings (loss) per share
Income (loss) from continuing operations	$	0.03		$	(0.06	)	$	0.03		$	(0.17	)
Loss from discontinued operations		-			-		$	(0.02	)	$	(0.01	)
Net income (loss)	$	0.03		$	(0.06	)	$	0.01		$	(0.18	)
Weighted average common shares outstanding used in computing earnings (loss) per share
Basic		56,523			47,198			52,419			42,184
Diluted		59,604			47,198			55,774			42,184

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(AMOUNTS IN THOUSANDS)

	Three months ended						Six months ended
		June 30, 2007			July 1, 2006			June 30, 2007			July 1, 2006
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net income (loss)	$	1,887		$	(2,787	)	$	726		$	(7,424	)
Unrealized (loss) gain on marketable securities		(52	)		62			(42	)		167
Foreign currency translation adjustment		2			(4	)		(2	)		2
Reclassification adjustment:
Net realized loss previously recognized in other comprehensive income		9			-			9			-
Comprehensive income (loss)	$	1,846		$	(2,729	)	$	691		$	(7,255	)

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

	Six months ended
		June 30, 2007			July 1, 2006
		(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	726		$	(7,424	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Loss from discontinued operations		965			511
Depreciation		4,137			4,062
Amortization		417			960
Stock based compensation		7,716			3,143
Amortization of (discount) premium on marketable securities		(171	)		168
Realized loss on sales of marketable securities		9			-
Gain on disposal of equipment		-			(19	)
Changes in operating assets and liabilities:
Accounts receivable		(6,854	)		(4,303	)
Inventories		734			(4,247	)
Prepaid expenses and other assets		(3,052	)		(1,423	)
Accounts payable		4,915			1,518
Accrued liabilities and other liabilities		1,273			284
Net cash provided by (used in) operating activities		10,815			(6,770	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(16,851	)		(5,529	)
Proceeds from sale of equipment		-			28
Purchases of marketable securities		(141,157	)		(134,457	)
Proceeds from sale of marketable securities		73,487			95,254
Net cash used in investing activities		(84,521	)		(44,704	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital lease obligations		(1,775	)		(115	)
Issuance of common stock		105,350			54,881
Net cash provided by financing activities		103,575			54,766
Net increase in cash and cash equivalents		29,869			3,292
Cash and cash equivalents at beginning of period		13,706			11,891
Cash and cash equivalents at end of period	$	43,575		$	15,183

See accompanying notes.

ANADIGICS, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - JUNE 30, 2007

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 BASIS OF PRESENTATION

 The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

 The condensed consolidated balance sheet at December 31, 2006 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, 2006.

 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.

 As more fully discussed in footnote 2 below, the Company sold the majority of the operating assets of Telcom Devices Inc. (“Telcom”, a wholly-owned subsidiary of the Company) on April 2, 2007 and effectively ceased Telcom’s operations. Accordingly, the financial results, position and cashflow of Telcom have been classified as discontinued operations in the accompanying financial statements for the periods presented.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In February, 2007, the FASB issued FASB Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”), which permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. FAS 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined the impact FAS 159 may have on its results of operations or financial position.

 In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company has not yet determined the impact FAS 157 may have on its results of operations or financial position.

 In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. As of January 1, 2007, the Company adopted FIN 48 which did not 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. The Company recognizes interest and penalties related to the underpayment of income taxes in income tax expense. Upon adoption of FIN 48, the Company had no unrecognized tax benefits. No unrecognized tax benefits, interest or penalties were accrued at June 30, 2007. 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 six months ended June 30, 2007 included $181 in actual charges and $116 in provisions resulting in the balance of $282 at June 30, 2007. Warranty reserve movements in the six months ended July 1, 2006 included $319 in actual charges and a $234 increase in the provision.

DEPRECIATION

 During 2007, the Company began depreciating certain new wafer fabrication equipment over a seven year useful life.

2. DISCONTINUED OPERATIONS

 On April 2, 2007, the Company sold the majority of Telcom’s operating assets to GTRAN Camarillo, Inc. in exchange for a $500 non-interest-bearing note due December 31, 2007 and effectively ceased Telcom’s operations. The transaction is subject to certain post-closing adjustments. As a consequence of the sale, the financial results, position and cashflow of Telcom have been classified as discontinued operations in the accompanying financial statements for the periods presented.

 Summarized operating results and loss on sale of discontinued operations in the three and six months ended July 1, 2006 and through March 31, 2007 included with the six months ended June 30, 2007 were as follows:

	Three months ended			Six months ended
	July 1, 2006			June 30, 2007			July 1, 2006
Revenue	$	867		$	559		$	1,893
Operating loss		(167	)		(479	)		(518	)
Interest income		4			4			7
Loss on sale of discontinued operations		-			(490	)		-
Loss from discontinued operations	$	(163	)	$	(965	)	$	(511	)

 The assets and liabilities of Telcom are reflected as discontinued operations as of June 30, 2007 and December 31, 2006 and were:

		June 30, 2007		December 31, 2006
Assets of discontinued operations
Accounts receivable	$	21	$	604
Inventory		-		654
Other current and non-current assets		-		62
Fixed assets, net		-		109
Total	$	21	$	1,429
Liabilities of discontinued operations	$	152	$	252

3.INVENTORIES

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

		June 30, 2007			December 31, 2006
Raw materials	$	5,013		$	5,370
Work in process		12,248			11,571
Finished goods		5,764			6,297
		23,025			23,238
Reserves		(4,058	)		(3,537	)
Total	$	18,967		$	19,701

4.EARNINGS (LOSS) PER SHARE

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

	Three months ended			Six months ended
		June 30, 2007	July 1, 2006		June 30, 2007	July 1, 2006
Weighted average common shares outstanding used to calculate basic earnings (loss) per share		56,523	47,198		52,419	42,184
Net effect of dilutive securities		3,081	-		3,355	-
Weighted average securities outstanding used to calculate diluted earnings (loss) per share		59,604	47,198		55,774	42,184

 Potential dilution arising from the remainder of the Company's outstanding stock options, unvested restricted shares or shares potentially issuable upon conversion of the Convertible notes are detailed below. Such potential dilution was excluded as their effect was anti-dilutive.

	Three months ended			Six months ended
		June 30, 2007	July 1, 2006		June 30, 2007	July 1, 2006
Convertible notes		7,600	9,824		7,600	9,824
Stock options		1,881	5,160		1,881	5,246
Unvested restricted shares		-	2,205		-	2,200

5.REVENUE SOURCES

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

	Three months ended				Six months ended
		June 30, 2007		July 1, 2006		June 30, 2007		July 1, 2006
Broadband	$	26,109	$	16,938	$	50,663	$	32,415
Wireless		27,760		22,410		52,779		41,628
Total	$	53,869	$	39,348	$	103,442	$	74,043

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

Net sales to each of the three geographic regions are as follows:

	Three months ended				Six months ended
		June 30, 2007		July 1, 2006		June 30, 2007		July 1, 2006
Asia	$	36,616	$	22,771	$	69,602	$	41,691
USA and Canada		14,742		13,406		29,097		26,286
Other		2,511		3,171		4,743		6,066
Total	$	53,869	$	39,348	$	103,442	$	74,043

6. LONG-TERM DEBT

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

 During 2006 the Company had $46.7 million principal amount outstanding of its 5% Convertible Senior Notes (“2006 Notes”) which were repaid upon maturity in November 2006. The 2006 Notes were convertible into shares of the Company’s common stock at an initial conversion rate, subject to adjustment, of 47.619 shares for each $1,000 principal amount, which was equivalent to a conversion price of $21.00 per share (2,224 shares were contingently issuable).

7. STOCK BASED COMPENSATION

 Effective January 1, 2006, the Company adopted the provisions of FASB Statement 123R Share Based Payment (“FAS 123R”) in accounting for share based payments to employees, having previously followed the provisions of Accounting Principles Board Number 25 “Accounting for Stock Issued to Employees”, as permitted by FAS 123 “Accounting for Stock Based Compensation”. The Company adopted FAS 123R using the modified-prospective transition method, which requires the recognition of compensation expense over the remaining vesting period for all awards that remained unvested as of January 1, 2006.

Equity Compensation Plans

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

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

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

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

§   The Employee Stock Purchase Plan (“ESP Plan”).

 Employees and outside directors have been granted restricted stock and options to purchase shares of common stock under stock option plans adopted in 1995, 1997 and 2005. An aggregate of 4,913, 5,100 and 6,450 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 shares and other share based awards to eligible employees and directors, as defined in the Plans. Option grants have terms of ten years and become exercisable in varying amounts over periods of up to three years. To date, no stock appreciation rights have been granted under the Plans.

 In 1995, the Company adopted the ESP Plan under Section 423 of the Internal Revenue Code. All full-time employees of ANADIGICS, Inc. and part-time employees, as defined in the ESP Plan, are eligible to participate in the ESP Plan. An aggregate of 2,694 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.

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

	Three months ended				Six months ended
		June 30, 2007		July 1, 2006		June 30, 2007		July 1, 2006
Amortization of restricted stock awards	$	3,159	$	1,644	$	6,308	$	2,960
Amortization of ESP Plan		200		100		400		200
Amortization of stock option awards		481		35		1,053		68
Total stock based compensation	$	3,840	$	1,779	$	7,761	$	3,228
By Financial Statement line item
Cost of sales	$	851	$	375	$	1,751	$	674
Research and development expenses		1,392		697		2,892		1,265
Selling and administrative expenses		1,597		660		3,073		1,205
Loss from discontinued operations		-		47		45		84

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

Restricted Stock Awards

 Commencing in August 2004, the Company began granting restricted shares under the Plans. The value of the restricted stock awards are fixed upon the date of grant and amortized over the related vesting period of one to three years. Restricted stock awards are subject to forfeiture if employment terminates prior to vesting. The Company estimates that approximately 2.5% of its restricted stock awards are forfeited annually. The restricted stock awards carry voting and dividend rights commencing upon grant but may not be traded or transferred prior to vesting. Grant, vest and forfeit activity and related weighted average price per share for restricted stock and for stock options during the period from January 1, 2006 to June 30, 2007 is presented in tabular form below:

	Restricted Shares		Stock Options
	Shares	Weighted average price per share	Issuable upon exercise	Weighted average exercise price
Grants outstanding at January 1, 2006	1,214	$2.72	5,944	$7.67
Granted	2,685	6.90	994	8.80
Shares vested/options exercised	(675)	2.68	(983)	3.85
Forfeited/expired	(86)	5.46	(286)	11.16
Balance at December 31, 2006	3,138	6.23	5,669	8.36
Granted	707	9.65	137	9.92
Shares vested/options exercised	(1,120)	5.72	(1,248)	5.12
Forfeited	(165)	6.93	(199)	15.83
Balance at June 30, 2007	2,560	$7.33	4,359	$8.99

 On July 26, 2007, the Company granted 249 restricted shares under the 2005 Plan at a market price of $15.20, which fully vest on July 28,2008.

		Information as of June 30, 2007
Unrecognized stock based compensation cost
Option plans	$	4,942
Restricted stock	$	11,724
Weighted average remaining recognition period
Option plans		2.4 years
Restricted stock		1.2 years

Stock options outstanding at June 30, 2007 are summarized as follows:

Range of exercise prices	Outstanding Options at June 30, 2007	Weighted average remaining contractual life		Weighted average exercise price	Exercisable at June 30, 2007		Weighted average exercise price
$1.39 - $6.21	1,143	3.68	$	3.80	1,121	$	3.81
$6.25 - $8.79	1,119	6.31	$	7.34	1,059	$	7.27
$8.84 - 10.90	1,187	7.92	$	9.24	215	$	10.72
$11.13 - $53.48	910	3.72	$	17.23	884	$	17.38

Valuation Method for Stock Option Awards and ESP Plan

 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 six month periods ended June 30, 2007 and July 1, 2006 were:

	Six months ended
		June 30, 2007			July 1, 2006
Stock option awards:
Risk-free interest rate		4.70	%		4.31	%
Expected volatility		0.72			0.94
Average expected term (in years)		4.75			3.00
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of options granted	$	6.07		$	3.91
ESP Plan:
Risk-free interest rate		4.91	%		5.26	%
Expected volatility		0.58			0.70
Average expected term (in years)		1.00			1.00
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of purchase option	$	3.02		$	2.31

8. STOCKHOLDERS’ EQUITY

 In March, 2007, The Company completed an underwritten public offering of 8,625 shares of common stock, generating net proceeds to the Company of $98,959. In March 2006, the Company completed an underwritten public offering of 10,446 shares of common stock, generating net proceeds to the Company of $53,110.

ANADIGICS, Inc.

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

OVERVIEW

 ANADIGICS, Inc. (“we” or the “Company”) is a leading provider of semiconductor solutions in the rapidly growing broadband wireless and wireline communications markets. Our products include power amplifiers (PAs), tuner integrated circuits, active splitters, line amplifiers and other components, which can be sold individually or packaged as integrated radio frequency (RF) and front end modules. We believe that we are uniquely positioned to capitalize on the rapidly-growing voice, data and video segments of the broadband wireless and wireline communications markets. We offer third generation (3G) products that use the Wideband Code-Division Multiple Access (W-CDMA) and Enhanced Data Rates for Global System for Mobile Communication (GSM) Evolution (EDGE) standards, beyond third generation (3.5G) products that use the High Speed Down Line Packet Access (HSDPA) and High Speed Uplink Line Packet Access (HSUPA) standards, fourth generation (4G) products for Worldwide Interoperability for Microwave Access (WiMAX) and Wireless Broadband (WiBRO) systems, Wireless Fidelity (WiFi) products that use the 802.11 a/b/g and 802.11 n (draft-n, Multiple Input Multiple Output (MIMO)) standards, cable television (CATV) 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 chipset providers to incorporate our solutions into their reference designs. Our integrated solutions enable our customers to improve RF performance, power efficiency, reliability, time-to-market and the integration of chip components into single packages, while reducing the size, weight and cost of their products. We have established longstanding relationships with several of the industry-leading chipset suppliers and tier-one customers. For example, our relationships with Cisco Systems, Inc. (Cisco), Intel Corporation (Intel), Motorola, Inc. (Motorola) and Qualcomm Incorporated (Qualcomm) have enabled us to develop RF products used in 3G, 3.5G, 4G WiMAX, WiFi and CATV products and to be the primary supplier with respect to such partners and customers. Other leading chipset suppliers and tier-one customers with whom we have longstanding relationships include Atheros Communications, Inc. (Atheros), High Tech Computer Corp. (HTC), Huawei Technologies Co., Ltd. (Huawei), Kyocera Corporation (Kyocera), Lenovo Group Limited (Lenovo), LG Electronics Inc. (LG Electronics), Marvell Technology Group Ltd. (Marvell), MediaTek AEI, Inc. (MediaTek), Murata Manufacturing Co., Ltd. (Murata), Novatel Wireless, Inc. (Novatel), Palm, Inc. (Palm), Research In Motion Limited (RIM), Samsung Electronics Co., Ltd. (Samsung), Sierra Wireless, Inc. (Sierra Wireless), TCL Mobile Communication Co., Ltd. (TCL), TDK Electronics Corporation (TDK), Texas Instruments Incorporated (Texas Instruments) and ZTE Corporation (ZTE).

 We continue to focus on leveraging our technological and manufacturing advantages to remain a leading supplier of semiconductor solutions for broadband wireless and wireline communications. We design, develop and manufacture RFICs primarily using GaAs compound semiconductor substrates with various process technologies, Metal Semiconductor Field Effect Transistors (MESFET), Pseudomorphic High Electron Mobility Transistors (pHEMT), and Heterojunction Bipolar Transistors (HBT). Our patented technology, which utilizes InGaP-plus, combines InGaP HBT and pHEMT processes on a single substrate, enabling us to integrate the PA function and the RF active switch function on the same die. Additionally, we believe our InGaP-plus process and design technologies such as High Efficiency at Low Power (HELP) provide a competitive advantage by enabling us to provide PAs that consume less battery power and extend talk time for products in the 3G, 3.5G and 4G markets.

 On April 2, 2007, we sold the majority of the operating assets of Telcom Devices Inc. (“Telcom”) to GTRAN Camarillo, Inc. in exchange for a $0.5 million non-interest-bearing note due December 31, 2007 and effectively ceased Telcom’s operations. As a consequence of the sale, the financial results, position and cashflow of Telcom have been classified as discontinued operations in the accompanying financial statements for all periods presented.

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

 RESULTS OF OPERATIONS

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

	Three months ended					Six months ended
		June 30, 2007		July 1, 2006			June 30, 2007		July 1, 2006
Net sales		100.0	%	100.0	%		100.0	%	100.0	%
Cost of sales		64.9	%	71.8	%		66.0	%	72.3	%
Gross margin		35.1	%	28.2	%		34.0	%	27.7	%
Research and development expenses		20.6	%	21.2	%		20.1	%	22.1	%
Selling and administrative expenses		13.9	%	14.4	%		14.4	%	14.8	%
Operating income (loss)		0.6	%	(7.4	%)		(0.5	%)	(9.2	%)
Interest income		4.1	%	4.0	%		3.3	%	3.4	%
Interest expense		(1.2	%)	(3.3	%)		(1.2	%)	(3.5	%)
Other income		-		-			-		-
Income (loss) from continuing operations		3.5	%	(6.7	%)		1.6	%	(9.3	%)
Loss from discontinued operations		-		(0.4	%)		(0.9	%)	(0.7	%)
Net income (loss)		3.5	%	(7.1	%)		0.7	%	(10.0	%)

 NET SALES.Net sales increased 36.9% during the second quarter of 2007 to $53.9 million from $39.3 million in the second quarter of 2006. For the six months ended June 30, 2007, net sales were $103.4 million, a 39.7% increase from net sales of $74.0 million for the six months ended July 1, 2006.

 Sales of integrated circuits for broadband applications increased 54.1% during the second quarter of 2007 to $26.1 million from $16.9 million in the second quarter of 2006. For the six months ended June 30, 2007, net sales of integrated circuits for broadband applications increased 56.3% to $50.7 million from $32.4 million for the six months ended July 1, 2006. The increase in sales in the three and six month periods was primarily due to an increase in demand for WLAN and infrastructure products, with combined increases of $7.3 million and $16.1 million in the related periods.

 Sales of integrated circuits for wireless applications increased 23.9% during the second quarter of 2007 to $27.8 million from $22.4 million in the second quarter of 2006. For the six months ended June 30, 2007, net sales of integrated circuits for wireless applications increased 26.8% to $52.8 million from $41.6 million for the six months ended July 1, 2006. The increase in sales of integrated circuits for wireless applications in the three and six month periods was primarily due to increased demand for our 3G (EDGE, WEDGE, CDMA2000 1X applications & WCDMA) PAs where revenue rose by $12.0 million and $21.0 million, respectively, which were partly offset by decreases of $6.5 million and $9.4 million, respectively in GSM revenues due to decreased volumes.

 Geographically, net sales in Asia increased 60.8% during the second quarter of 2007 to $36.6 million from $22.8 million in the second quarter of 2006. For the six months ended June 30, 2007, net sales in Asia increased 66.9% to $69.6 million from $41.7 million for the six months ended July 1, 2006. The increase in the three and six month periods was primarily driven by the increased demand for WLAN and 3G products.

 GROSS MARGIN. Gross margin during the second quarter of 2007 increased to 35.1% of net sales from 28.2% of net sales in the second quarter of 2006. For the six months ended June 30, 2007, gross margin increased to 34.0% from 27.7% for the six months ended July 1, 2006. The increase in gross margin in the three and six months was primarily due to increased sales and production volumes with the consequent absorption of fixed costs.

 ��  RESEARCH AND DEVELOPMENT. Company sponsored research and development expenses increased 32.6% during the second quarter of 2007 to $11.1 million from $8.4 million during the second quarter of 2006. Company sponsored research and development expenses for the six month period ended June 30, 2007 increased 27.2% to $20.8 million from $16.4 million during the six month period ended July 1, 2006. The increase in the three months ended June 30, 2007 was primarily due to increased stock based compensation of $0.7 million and increased staff costs supporting new product development. The increase in the six months ended June 30, 2007 was primarily due to increased stock based compensation of $1.6 million, increased staff costs and materials and support costs to drive new product development.

 SELLING AND ADMINISTRATIVE. Selling and administrative expenses increased 31.8% to $7.5 million during the second quarter of 2007 from $5.7 million during the second quarter of 2006. Selling and administrative expenses increased 35.6% to $14.8 million from $10.9 million during the six month period ended July 1, 2006. The increase in the three months ended June 30, 2007 was primarily driven by increased staff costs, inclusive of an increase in stock based compensation of $0.9 million. The increase in the six months ended June 30, 2007 was primarily driven by increased staff costs, inclusive of an increase in stock based compensation of $1.9 million as well increased sales and marketing program costs to better address our larger international market.

 INTEREST INCOME.Interest income increased 40.3% to $2.2 million during the second quarter of 2007 from $1.6 million during the second quarter of 2006. For the six months ended June 30, 2007, interest income increased 41.5% from to $3.4 million from $2.4 million in the six month period ended July 1, 2006. The increases were primarily due to higher average funds invested as a result of our underwritten public offering of 8.6 million shares of common stock in March of 2007 (the “March 2007 Offering”) and higher interest rates.

 INTEREST EXPENSE. Interest expense decreased 49.1% to $0.7 million during the second quarter of 2007 as compared to $1.3 million during the second quarter of 2006. For the six months ended June 30, 2007, interest expense decreased 50.3% to $1.3 million from $2.6 million in the six month period ended July 1, 2006. The decreases related to the repayment our $46.7 million outstanding balance of our 5% Convertible Senior Notes in November of 2006.

 LOSS FROM DISCONTINUED OPERATIONS. Loss on discontinued operations in the second quarter of 2007 was zero compared to $0.2 million in the second quarter of 2006. For the six months ended June 30, 2007 the loss on discontinued operations increased 88.8% to $1.0 million as compared to $0.5 million during the six months ended July 1, 2006. The loss on discontinued operations in 2007 was comprised of $0.5 million loss on sale of Telcom recognized in the first quarter of 2007 and the increased operating loss as sales for the business decreased.

LIQUIDITY AND CAPITAL RESOURCES

 As of June 30, 2007, we had $43.6 million in cash and cash equivalents and $137.6 million in marketable securities. Included in these amounts are proceeds we received from completion of an underwritten public offering of an aggregate of 8.6 million shares of common stock in our March 2007 Offering, which raised $99.0 million, net of underwriting discounts and commissions and related offering expenses. As of June 30, 2007, we had outstanding $38.0 million aggregate principal amount of our 2009 Notes.

 Operating activities provided $10.8 million in cash during the six month period ended June 30, 2007, primarily as a result of our improved operating results and non-cash expenses. Investing activities, consisting principally of net purchases of marketable securities of $67.7 million and purchases of fixed assets of $16.8 million, used $84.5 million of cash during the six month period ended June 30, 2007. Financing activities provided $103.6 million, and consisted primarily of proceeds received from the March 2007 Offering.

 As of June 30, 2007, we had unconditional purchase obligations of approximately $11.4 million of which $10.0 million relates to capital equipment purchase requirements primarily over the next six to nine months to increase the installed equipment capacity of the Company's manufacturing operations in response to anticipated increases in customer demand for the Company's products. The Company has an Investment Contract with the Kunshan (China) New and Hi-Tech Industrial Development Zone to jointly construct a wafer fabrication facility, and anticipates capital expenditures of approximately $10 - 15 million during the next 18 months.

 We believe that our existing sources of capital, including our existing cash and marketable securities, will be adequate to satisfy both operational and capital needs for the next twelve months. We may elect to finance all or part of our anticipated operational and capital needs, which may include acquisitions of complimentary businesses or technologies, or investments in other companies or repurchases of our outstanding debt or equity, through additional equity or debt financing. Our ability to pay principal and interest on our outstanding 2009 Notes due in October 2009, our other debt and to fund our planned capital expenditures depends on our future operating performance.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In February 2007, the FASB issued FASB Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”), which permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. FAS 159 is effective for fiscal years beginning after November 15, 2007. We have not yet determined the impact FAS 159 may have on our results of operations or financial position.

 In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. We have not yet determined the impact FAS 157 may have on our results of operations or financial position.

 In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. As of January 1, 2007, we adopted FIN 48, which did not have a material impact on our consolidated financial statements. Upon adoption of FIN 48, we had no unrecognized tax benefits. No unrecognized tax benefits, interest or penalties were accrued at June 30, 2007. Our 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.

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 incur losses in the future; (ii) the existence of intense competition in the markets for our products, which could result in a decrease in our products’ prices and sales; (iii) our need to keep pace with rapid product and process development and technological changes as well as product cost reductions to be competitive; (iv) our gallium arsenide semiconductors may cease to be competitive with silicon alternatives; (v) sources for certain components, materials and equipment are limited, which could result in delays or reductions in product shipments; (vi) our ability to respond to a significant increase in demand from our customers; (vii) our dependence on a small number of customers; (viii) our operating results may be harmed if we fail to sell a high volume of products; (ix) the short life cycles of some of our products may leave us with obsolete or excess inventories; (x) we may face interruptions in our manufacturing processes; (xi) the variability of our manufacturing yields may affect our gross margins; (xii) our dependence on foreign semiconductor assembly and test operations contractors could lead to delays in product shipments; (xiii) our results of operations can vary significantly due to the cyclical nature of the semiconductor industry and our end markets; (xiv) our products have experienced rapidly declining unit prices; (xv) capital required for our business may not be available when we need it; (xvi) our success depends on our ability to attract and retain qualified personnel; (xvii) risks due to our international customer base and our subcontracting operations; (xviii) stringent environmental laws and regulations both domestically and abroad; (ixx) any failure to protect our intellectual property rights or avoid claims that we have infringed on the intellectual property rights of others; (xx) 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; and (xxi) certain provisions in our governing documents, our shareholders’ rights agreement and of Delaware law could deter, delay or prevent a third party from acquiring us and prevent shareholders from realizing a takeover premium. The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein or detailed from time to time in our reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. 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, 2006.

ITEM 4. CONTROLS AND PROCEDURES

 Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”), we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2007. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported as specified within the SEC’s rules and forms.

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

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

ANADIGICS, Inc.

PART II - OTHER INFORMATION

ITEM1.LEGAL PROCEEDINGS

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

ITEM   4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 The Company held its annual meeting of stockholders on May 17, 2007 at which the Company’s stockholders voted on:

§   The election of three Class III Directors of the Company to hold office until 2010.

§   The amendment of the 2005 Long Term Incentive and Share Award Plan to increase the number of shares issuable thereunder by 5,450,000 to 6,450,000.

 The two matters listed above were voted upon and approved by the shareholders of the Company as follows:

§   The election of David Fellows as Class III Director was approved by holders of 51,492,342 shares of the Company’s outstanding capital stock.  Holders of 1,425,464 shares withheld from voting on such election.  The election of Ronald Rosenzweig as Class III Director was approved by holders of 51,199,120 shares of the Company’s outstanding capital stock.  Holders of 1,718,686 shares withheld from voting on such election. The election of Lewis Solomon as Class III Director was approved by holders of 50,498,943 shares of the Company’s outstanding capital stock.  Holders of 2,418,863 shares withheld from voting on such election. Messrs. Fellows, Rosenzweig and Solomon join the continuing Directors of the Company Messrs. Bachow, Bastani, Rein and Strigl.

§   The amendment of the 2005 Long Term Incentive and Share Award Plan increased the number of shares issuable.  The amendment was approved by holders of 25,021,573 shares of the Company’s outstanding capital stock. Holders of 6,093,558 shares voted against the ratification.  Holders of 225,380 shares abstained from voting on such ratification and broker non-votes totaled 21,577,295.

ITEM6.EXHIBITS

10.1 Amendment No. 6 - as of July 23, 2007 to the Employment Agreement dated June 1, 1999, as amended between the Company and Ronald Rosenzweig

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

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

32.1 Section 1350 Certification of Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc.

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

Dated: August 6, 2007