UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| /x/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 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 September 29, 2007 was 60,434,324 (excluding 113,761 shares held in treasury).
INDEX
ANADIGICS, Inc.
| PART I | Financial Information |
| Item 1. | Financial Statements (unaudited) |
| Condensed consolidated balance sheets – September 29, 2007 and December 31, 2006 | |
| Condensed consolidated statements of operations and comprehensive income (loss) – Three and nine months ended September 29, 2007 and September 30, 2006 | |
| Condensed consolidated statements of cash flows – Nine months ended September 29, 2007 and September 30, 2006 | |
| Notes to condensed consolidated financial statements – September 29, 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 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)
| September 29, 2007 | December 31, 2006 | |||||||
| (unaudited) | (Note 1) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 43,594 | $ | 13,706 | ||||
| Marketable securities | 126,008 | 60,892 | ||||||
| Accounts receivable, net | 40,074 | 26,707 | ||||||
| Inventories | 20,076 | 19,701 | ||||||
| Prepaid expenses and other current assets | 6,468 | 2,632 | ||||||
| Assets of discontinued operations | - | 1,429 | ||||||
| Total current assets | 236,220 | 125,067 | ||||||
| Marketable securities | 6,780 | 8,884 | ||||||
| Plant and equipment: | ||||||||
| Equipment and furniture | 156,999 | 138,652 | ||||||
| Leasehold improvements | 38,539 | 38,310 | ||||||
| Projects in process | 13,018 | 4,975 | ||||||
| 208,556 | 181,937 | |||||||
| Less accumulated depreciation and amortization | (148,313 | ) | (140,678 | ) | ||||
| 60,243 | 41,259 | |||||||
| Goodwill and other intangibles, net of amortization | 6,588 | 5,929 | ||||||
| Other assets | 1,122 | 1,463 | ||||||
| Total assets | $ | 310,953 | $ | 182,602 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 23,695 | $ | 17,879 | ||||
| Accrued liabilities | 6,138 | 5,588 | ||||||
| Current maturities of capital lease obligations | - | 312 | ||||||
| Liabilities of discontinued operations | - | 252 | ||||||
| Total current liabilities | 29,833 | 24,031 | ||||||
| Other long-term liabilities | 3,271 | 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, 60,616 and 49,200 issued at September 29, 2007 and December 31, 2006 | 606 | 492 | ||||||
| Additional paid-in capital | 534,473 | 413,672 | ||||||
| Accumulated deficit | (294,955 | ) | (298,046 | ) | ||||
| Accumulated other comprehensive loss | (17 | ) | (100 | ) | ||||
| Treasury stock at cost: 114 shares | (258 | ) | (258 | ) | ||||
| Total stockholders’ equity | 239,849 | 115,760 | ||||||
| Total liabilities and stockholders’ equity | $ | 310,953 | $ | 182,602 | ||||
| See accompanying notes. |
ANADIGICS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Three months ended | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Net sales | $ | 59,545 | $ | 43,943 | $ | 162,987 | $ | 117,986 | ||||||||
| Cost of sales | 39,387 | 30,278 | 107,637 | 83,804 | ||||||||||||
| Gross profit | 20,158 | 13,665 | 55,350 | 34,182 | ||||||||||||
| Research and development expenses | 12,491 | 8,976 | 33,309 | 25,340 | ||||||||||||
| Selling and administrative expenses | 7,221 | 6,139 | 22,062 | 17,081 | ||||||||||||
| Operating income (loss) | 446 | (1,450 | ) | (21 | ) | (8,239 | ) | |||||||||
| Interest income | 2,338 | 1,643 | 5,776 | 4,073 | ||||||||||||
| Interest expense | (592 | ) | (1,285 | ) | (1,872 | ) | (3,860 | ) | ||||||||
| Other income | 173 | - | 173 | 21 | ||||||||||||
| Income (loss) from continuing operations | 2,365 | (1,092 | ) | 4,056 | (8,005 | ) | ||||||||||
| Loss from discontinued operations | - | (220 | ) | (965 | ) | (731 | ) | |||||||||
| Net income (loss) | $ | 2,365 | $ | (1,312 | ) | $ | 3,091 | $ | (8,736 | ) | ||||||
| Basic earnings (loss) per share | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.04 | $ | (0.02 | ) | $ | 0.08 | $ | (0.18 | ) | ||||||
| Loss from discontinued operations | - | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
| Net income (loss) | $ | 0.04 | $ | (0.03 | ) | $ | 0.06 | $ | (0.20 | ) | ||||||
| Diluted earnings (loss) per share | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.04 | $ | (0.02 | ) | $ | 0.07 | $ | (0.18 | ) | ||||||
| Loss from discontinued operations | - | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||||
| Net income (loss) | $ | 0.04 | $ | (0.03 | ) | $ | 0.05 | $ | (0.20 | ) | ||||||
| Weighted average common shares outstanding used in computing earnings (loss) per share | ||||||||||||||||
| Basic | 57,505 | 45,237 | 54,114 | 43,202 | ||||||||||||
| Diluted | 60,648 | 45,237 | 57,403 | 43,202 | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(AMOUNTS IN THOUSANDS)
| Three months ended | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Net income (loss) | $ | 2,365 | $ | (1,312 | ) | $ | 3,091 | $ | (8,736 | ) | ||||||
| Unrealized gain on marketable securities | 93 | 32 | 51 | 199 | ||||||||||||
| Foreign currency translation adjustment | 25 | 4 | 23 | 6 | ||||||||||||
| Reclassification adjustment: | ||||||||||||||||
| Net realized loss previously recognized in other comprehensive income | - | - | 9 | - | ||||||||||||
| Comprehensive income (loss) | $ | 2,483 | $ | (1,276 | ) | $ | 3,174 | $ | (8,531 | ) | ||||||
| See accompanying notes. |
| ANADIGICS, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
| Nine months ended | ||||||||
| September 29, 2007 | September 30, 2006 | |||||||
| (unaudited) | (unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | 3,091 | $ | (8,736 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Loss from discontinued operations | 965 | 731 | ||||||
| Depreciation | 6,655 | 5,818 | ||||||
| Amortization | 555 | 1,441 | ||||||
| Stock based compensation | 11,273 | 5,325 | ||||||
| Amortization of (discount) premium on marketable securities | (365 | ) | 155 | |||||
| Realized loss on sales of marketable securities | 9 | - | ||||||
| Gain on disposal of equipment | - | (19 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (13,367 | ) | (6,636 | ) | ||||
| Inventories | (375 | ) | (3,823 | ) | ||||
| Prepaid expenses and other assets | (3,843 | ) | (1,543 | ) | ||||
| Accounts payable | 5,816 | 3,780 | ||||||
| Accrued liabilities and other liabilities | 752 | (221 | ) | |||||
| Net cash provided by (used in) operating activities | 11,166 | (3,728 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of plant and equipment | (24,089 | ) | (7,330 | ) | ||||
| Proceeds from sale of equipment | - | 28 | ||||||
| Purchase of RF group assets | (2,415 | ) | - | |||||
| Purchases of marketable securities | (196,358 | ) | (180,254 | ) | ||||
| Proceeds from sale of marketable securities | 133,762 | 140,329 | ||||||
| Net cash used in investing activities | (89,100 | ) | (47,227 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Payment of capital lease obligations | (1,775 | ) | (185 | ) | ||||
| Issuance of common stock | 109,597 | 55,301 | ||||||
| Net cash provided by financing activities | 107,822 | 55,116 | ||||||
| Net increase in cash and cash equivalents | 29,888 | 4,161 | ||||||
| Cash and cash equivalents at beginning of period | 13,706 | 11,891 | ||||||
| Cash and cash equivalents at end of period | $ | 43,594 | $ | 16,052 | ||||
| See accompanying notes. |
ANADIGICS, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – SEPTEMBER 29, 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 nine month periods ended September 29, 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 3 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 June 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 September 29, 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 nine months ended September 29, 2007 included $412 in actual charges and $382 in provisions resulting in the balance of $317 at September 29, 2007. Warranty reserve movements in the nine months ended September 30, 2006 included $503 in actual charges and a $407 increase in the provision.
DEPRECIATION
During 2007, the Company began depreciating certain new wafer fabrication equipment over a seven year useful life.
2. PURCHASE OF ASSETS OF RF GROUP
On September 5, 2007, the Company purchased certain assets and assumed certain related obligations of the radio frequency group of Fairchild Semiconductor (“RF group”) in exchange for cash of $2,415, inclusive of transaction costs of $115. The assets acquired were principally equipment used in researching and developing radio frequency semiconductor products for the broadband wireless communications markets. No products or manufacturing processes were included as part of the purchase. The RF group staff of 23 accepted employment with the Company.
Included in the purchase were fixed assets with an estimated fair market value of $1,723, non-exclusive rights to certain intellectual property and assembled workforce valued at approximately $168 and $524, respectively. The fixed assets, intellectual property and assembled workforce costs will be amortized over their estimated useful lives of 3, 2 and 3 years, respectively.
3. 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 nine months ended September 30, 2006 and through March 31, 2007 included with the nine months ended September 29, 2007 were as follows:
| Three months ended | Nine months ended | |||||||||||
| September 30, 2006 | September 29, 2007 | September 30, 2006 | ||||||||||
| Revenue | $ | 882 | $ | 559 | $ | 2,775 | ||||||
| Operating loss | (225 | ) | (479 | ) | (743 | ) | ||||||
| Interest income | 5 | 4 | 12 | |||||||||
| Loss on sale of discontinued operations | - | (490 | ) | - | ||||||||
| Loss from discontinued operations | $ | (220 | ) | $ | (965 | ) | $ | (731 | ) | |||
The assets and liabilities of Telcom as of September 29, 2007 are zero. Such amounts as of December 31, 2006 are reflected as discontinued operations and were:
| December 31, 2006 | ||||
| Assets of discontinued operations | ||||
| Accounts receivable | $ | 604 | ||
| Inventory | 654 | |||
| Other current and non-current assets | 62 | |||
| Fixed assets, net | 109 | |||
Total | $ | 1,429 | ||
| Liabilities of discontinued operations | $ | 252 | ||
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consist of the following:
| September 29, 2007 | December 31, 2006 | |||||||
| Raw materials | $ | 5,296 | $ | 5,370 | ||||
| Work in process | 14,697 | 11,571 | ||||||
| Finished goods | 4,391 | 6,297 | ||||||
| 24,384 | 23,238 | |||||||
| Reserves | (4,308 | ) | (3,537 | ) | ||||
| Total | $ | 20,076 | $ | 19,701 | ||||
5. 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 | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Weighted average common shares outstanding used to calculate basic earnings (loss) per share | 57,505 | 45,237 | 54,114 | 43,202 | ||||||||||||
| Net effect of dilutive securities | 3,143 | - | 3,289 | - | ||||||||||||
| Weighted average securities outstanding used to calculate diluted earnings (loss) per share | 60,648 | 45,237 | 57,403 | 43,202 | ||||||||||||
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 | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Convertible notes | 7,600 | 9,824 | 7,600 | 9,824 | ||||||||||||
| Stock options | 434 | 5,044 | 1,732 | 5,044 | ||||||||||||
| Unvested restricted shares | - | 2,600 | 10 | 2,600 | ||||||||||||
6. 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 | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Broadband | $ | 25,570 | $ | 20,507 | $ | 76,233 | $ | 52,922 | ||||||||
| Wireless | 33,975 | 23,436 | 86,754 | 65,064 | ||||||||||||
| Total | $ | 59,545 | $ | 43,943 | $ | 162,987 | $ | 117,986 | ||||||||
The Company primarily sells to three geographic regions: Asia, USA and Canada, and Other. The geographic region is determined by the destination of the shipped product. Net sales to each of the three geographic regions are as follows:
| Three months ended | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Asia | $ | 40,946 | $ | 24,392 | $ | 110,549 | $ | 66,084 | ||||||||
| USA and Canada | 16,213 | 16,467 | 45,310 | 42,753 | ||||||||||||
| Other | 2,386 | 3,084 | 7,128 | 9,149 | ||||||||||||
| Total | $ | 59,545 | $ | 43,943 | $ | 162,987 | $ | 117,986 | ||||||||
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.
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).
8. 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 nine month periods:
| Three months ended | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Amortization of restricted stock awards | $ | 2,742 | $ | 2,110 | $ | 9,050 | $ | 5,070 | ||||||||
| Amortization of ESP Plan | 200 | 100 | 600 | 300 | ||||||||||||
| Amortization of stock option awards | 615 | 18 | 1,668 | 86 | ||||||||||||
| Total stock based compensation | $ | 3,557 | $ | 2,228 | $ | 11,318 | $ | 5,456 | ||||||||
| By Financial Statement line item | ||||||||||||||||
| Cost of sales | $ | 736 | $ | 466 | $ | 2,487 | $ | 1,140 | ||||||||
| Research and development expenses | 1,446 | 877 | 4,338 | 2,142 | ||||||||||||
| Selling and administrative expenses | 1,375 | 838 | 4,448 | 2,043 | ||||||||||||
| Loss from discontinued operations | - | 47 | 45 | 131 | ||||||||||||
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 September 29, 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 | 971 | 11.15 | 161 | 10.65 | ||||||||||||
| Shares vested/options exercised | (1,714 | ) | 5.76 | (1,898 | ) | 5.62 | ||||||||||
| Forfeited/expired | (168 | ) | 6.94 | (204 | ) | 15.76 | ||||||||||
| Balance at September 29, 2007 | 2,227 | $ | 8.71 | 3,728 | $ | 9.44 | ||||||||||
| As of September 29, 2007 | ||||
| Unrecognized stock based compensation cost | ||||
Option plans | $ | 4,529 | ||
Restricted stock | $ | 12,635 | ||
| Weighted average remaining recognition period | ||||
Option plans | 2.1 years | |||
Restricted stock | 1.0 years | |||
Stock options outstanding at September 29, 2007 are summarized as follows:
| Range of exercise prices | Outstanding Options at September 29, 2007 | Weighted average remaining contractual life | Weighted average exercise price | Exercisable at September 29, 2007 | Weighted average exercise price | |||||||||||||||||
| $ | 1.39 - $7.27 | 1,664 | 5.11 | $ | 5.55 | 1,643 | $ | 5.57 | ||||||||||||||
| $ | 7.65 - $8.84 | 989 | 9.08 | $ | 8.82 | 18 | $ | 7.66 | ||||||||||||||
| $ | 9.00 – 17.64 | 940 | 3.70 | $ | 13.70 | 837 | $ | 13.95 | ||||||||||||||
| $ | 17.75 - $53.48 | 135 | 1.82 | $ | 32.30 | 135 | $ | 32.30 | ||||||||||||||
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 nine month periods ended September 29, 2007 and September 30, 2006 were:
| Nine months ended | ||||||||
| September 29, 2007 | September 30, 2006 | |||||||
| Stock option awards: | ||||||||
| Risk-free interest rate | 4.74 | % | 4.31 | % | ||||
| Expected volatility | 0.71 | 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 | $ | 6.44 | $ | 3.91 | ||||
| ESP Plan: | ||||||||
| Risk-free interest rate | 4.05 | % | 4.91 | % | ||||
| Expected volatility | 0.54 | 0.69 | ||||||
| Average expected term (in years) | 1.00 | 1.00 | ||||||
| Expected dividend yield | 0.0 | % | 0.0 | % | ||||
| Weighted average fair value of purchase option | $ | 2.85 | $ | 2.29 | ||||
9. STOCKHOLDERS’ EQUITY
In March, 2007, The Company completed an underwritten public offering of 8,625 shares of common stock, generating net proceeds to the Company of $98,955.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.
On September 5, 2007, we purchased certain assets and assumed certain related obligations of the radio frequency group of Fairchild Semiconductor (“RF group”) in exchange for approximately $2.4 million. The assets acquired were principally equipment used in researching and developing radio frequency semiconductor products for the broadband wireless communications markets. No products or manufacturing processes were included as part of the purchase. The RF group staff of 23 accepted employment with the Company.
We were incorporated in Delaware in 1984. Our corporate headquarters are located at 141 Mt. Bethel Road, Warren, New Jersey 07059, and our telephone number at that address is 908-668-5000.
RESULTS OF OPERATIONS
The following table sets forth unaudited consolidated statements of operations data as a percent of net sales for the periods presented:
| Three months ended | Nine months ended | |||||||||||||||
| September 29, 2007 | September 30, 2006 | September 29, 2007 | September 30, 2006 | |||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of sales | 66.1 | % | 68.9 | % | 66.0 | % | 71.0 | % | ||||||||
| Gross margin | 33.9 | % | 31.1 | % | 34.0 | % | 29.0 | % | ||||||||
| Research and development expenses | 21.0 | % | 20.4 | % | 20.5 | % | 21.5 | % | ||||||||
| Selling and administrative expenses | 12.1 | % | 14.0 | % | 13.5 | % | 14.5 | % | ||||||||
| Operating income (loss) | 0.8 | % | (3.3 | %) | - | (7.0 | %) | |||||||||
| Interest income | 3.9 | % | 3.7 | % | 3.5 | % | 3.5 | % | ||||||||
| Interest expense | (1.0 | %) | (2.9 | %) | (1.1 | %) | (3.3 | %) | ||||||||
| Other income | 0.3 | % | - | 0.1 | % | - | ||||||||||
| Income (loss) from continuing operations | 4.0 | % | (2.5 | %) | 2.5 | % | (6.8 | %) | ||||||||
| Loss from discontinued operations | - | (0.5 | %) | (0.6 | %) | (0.6 | %) | |||||||||
| Net income (loss) | 4.0 | % | (3.0 | %) | 1.9 | % | (7.4 | %) | ||||||||
NET SALES. Net sales increased 35.5% during the third quarter of 2007 to $59.5 million from $43.9 million in the third quarter of 2006. For the nine months ended September 29, 2007, net sales were $163.0 million, a 38.1% increase from net sales of $118.0 million for the nine months ended September 30, 2006.
Sales of integrated circuits for broadband applications increased 24.7% during the third quarter of 2007 to $25.6 million from $20.5 million in the third quarter of 2006. For the nine months ended September 29, 2007, net sales of integrated circuits for broadband applications increased 44.0% to $76.2 million from $52.9 million for the nine months ended September 30, 2006. The increase in sales in the third quarter of 2007 was primarily due to an increased demand for WLAN products, approximating $4.1 million. The increase in sales in the nine months ended September 29, 2007 was primarily due to increased demand for both WLAN and infrastructure products, representing a combined revenue increase of $22.1 million.
Sales of integrated circuits for wireless applications increased 45.0% during the third quarter of 2007 to $33.9 million from $23.4 million in the third quarter of 2006. For the nine months ended September 29, 2007, net sales of integrated circuits for wireless applications increased 33.3% to $86.8 million from $65.1 million for the nine months ended September 30, 2006. The increase in sales of integrated circuits for wireless applications in the third quarter of 2007 was primarily due to increased demand for our 3G (EDGE, WEDGE, CDMA2000 1X applications and WCDMA) PAs where revenue rose by $9.9 million. The increase in sales for wireless applications in the nine months ended September 29, 2007 was primarily due to increased demand for our 3G (EDGE, WEDGE, CDMA2000 1X applications and WCDMA) PAs where revenue rose by $30.9 million, which was partly offset by a decrease of $9.2 million in GSM revenues due principally to decreased volumes.
Geographically, net sales in Asia increased 67.9% during the third quarter of 2007 to $40.9 million from $24.4 million in the third quarter of 2006. For the nine months ended September 29, 2007, net sales in Asia increased 67.3% to $110.5 million from $66.1 million for the nine months ended September 30, 2006. The increases in the three and nine month periods were primarily driven by the increased demand for WLAN and 3G products.
GROSS MARGIN. Gross margin during the third quarter of 2007 increased to 33.9% of net sales from 31.1% of net sales in the third quarter of 2006. For the nine months ended September 29, 2007, gross margin increased to 34.0% from 29.0% for the nine months ended September 30, 2006. The increases in gross margin in the three and nine months were 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 39.2% during the third quarter of 2007 to $12.5 million from $9.0 million during the third quarter of 2006. Company sponsored research and development expenses for the nine month period ended September 29, 2007 increased 31.4% to $33.3 million from $25.3 million during the nine month period ended September 30, 2006. The increases in the three and nine month periods ended September 29, 2007 were primarily due to increased staff costs supporting new product development, inclusive of increased stock based compensation of $0.6 million and $2.2 million, respectively. Both the three and nine month periods ended September 29, 2007 included costs of $0.6 million associated with the new RF group purchased in September 2007.
SELLING AND ADMINISTRATIVE. Selling and administrative expenses increased 17.6% to $7.2 million during the third quarter of 2007 from $6.1 million during the third quarter of 2006. Selling and administrative expenses increased 29.2% to $22.1 million from $17.1 million during the nine month period ended September 30, 2006. The increases in the three and nine month periods ended September 29, 2007 were primarily driven by increased staff costs, inclusive of increases in stock based compensation of $0.5 million and $2.4 million, respectively.
INTEREST INCOME. Interest income increased 42.3% to $2.3 million during the third quarter of 2007 from $1.6 million during the third quarter of 2006. For the nine months ended September 29, 2007, interest income increased 41.8% from to $5.8 million from $4.1 million in the nine month period ended September 30, 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 53.9% to $0.6 million during the third quarter of 2007 as compared to $1.3 million during the third quarter of 2006. For the nine months ended September 29, 2007, interest expense decreased 51.5% to $1.9 million from $3.9 million in the nine month period ended September 30, 2006. The decreases related to the repayment of the $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 third quarter of 2007 was zero compared to $0.2 million in the third quarter of 2006. For the nine months ended September 29, 2007 the loss on discontinued operations increased 32.0% to $1.0 million as compared to $0.7 million during the nine months ended September 30, 2006. The loss on discontinued operations in 2007 included a $0.5 million loss on the sale of Telcom recognized in the first quarter of 2007 in addition to the operating loss for the business.
LIQUIDITY AND CAPITAL RESOURCES
As of September 29, 2007, we had $43.6 million in cash and cash equivalents and $132.8 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 September 29, 2007, we had outstanding $38.0 million aggregate principal amount of our 2009 Notes.
Operating activities provided $11.2 million in cash during the nine month period ended September 29, 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 $62.6 million, purchases of fixed assets of $24.1 million, and the purchase of the assets of the RF group of $2.4 million, used $89.1 million of cash during the nine month period ended September 29, 2007. Financing activities provided $107.8 million, and consisted primarily of proceeds received from the March 2007 Offering and stock option exercises.
As of September 29, 2007, we had unconditional purchase obligations of approximately $24.0 million of which $22.6 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 15 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 June 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 September 29, 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 September 29, 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
ITEM 1. LEGAL PROCEEDINGS
We are a party to litigation arising in the ordinary course out of the operation of our business. We believe that the ultimate resolution of such litigation should not have a material adverse effect on our financial condition, results of operations or liquidity.
| 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: November 8, 2007