SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2002.
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 (I.R.S. Employer Identification No.)
incorporation or organization)
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 [ ]
The number of shares outstanding of the registrant's common stock as of April
24, 2002 was 30,572,942.
INDEX
ANADIGICS, Inc.
Part. I. Financial Information
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets - March 30,
2002 and December 31, 2001.
Condensed consolidated statements of operations
and comprehensive income (loss) - Three months
ended March 30, 2002 and March 31, 2001.
Condensed consolidated statements of cash flows -
Three months ended March 30, 2002 and March 31,
2001.
Notes to condensed consolidated financial
statements - March 30, 2002.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ANADIGICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
March 30, 2002 December 31, 2001
--------------- -----------------
(unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 43,195 $ 63,102
Marketable securities 79,029 55,364
Accounts receivable 11,630 10,200
Inventories 12,643 14,661
Prepaid expenses and other current assets 6,865 6,635
--------- ---------
Total current assets 153,362 149,962
Marketable securities 70,738 81,629
Property and equipment:
Equipment and furniture 125,709 127,903
Leasehold improvements 27,278 34,207
Projects in process 18,777 17,702
--------- ---------
171,764 179,812
Less accumulated depreciation and amortization 90,151 89,329
--------- ---------
81,613 90,483
Intangible assets, net of amortization 3,120 3,390
Goodwill, net of amortization 16,053 16,053
Other assets 6,008 5,397
--------- ---------
Total assets $ 330,894 $ 346,914
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,504 $ 9,115
Accrued liabilities 5,709 6,549
Current maturities of capital lease obligations 38 94
Accrued restructuring costs 3,413 1,898
Current maturities of long-term debt 179 244
--------- ---------
Total current liabilities 20,843 17,900
Long-term debt, less current portion 100,000 100,000
Other long-term liabilities 2,443 2,378
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 144,000,000 shares
authorized, 30,571,922 and 30,568,761 issued and
outstanding at March 30, 2002 and December 31, 2001,
respectively 306 306
Additional paid-in capital 333,880 333,860
Accumulated deficit (126,297) (108,238)
Accumulated other comprehensive (loss) income (281) 708
--------- ---------
Total stockholders' equity 207,608 226,636
--------- ---------
Total liabilities and stockholders' equity $ 330,894 $ 346,914
========= =========
See accompanying notes.
3
ANADIGICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three months ended
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
(unaudited) (unaudited)
Net sales $ 19,521 $ 28,520
Cost of sales 19,005 21,205
------------ ------------
Gross profit 516 7,315
Research and development expenses 7,578 10,051
Selling and administrative expenses 5,279 6,640
Restructuring charges 5,959 --
------------ ------------
Operating loss (18,300) (9,376)
Interest income 1,681 2,423
Interest expense (1,442) (61)
Other income (expense) 2 (60)
------------ ------------
Loss before income taxes (18,059) (7,074)
(Benefit) provision for income taxes -- (2,476)
------------ ------------
Net loss (18,059) $ (4,598)
============ ============
Basic loss per share $ (0.59) $ (0.15)
============ ============
Weighted average common
shares outstanding 30,570,828 30,063,509
============ ============
Diluted loss per share $ (0.59) $ (0.15)
============ ============
Weighted average common and
dilutive securities outstanding 30,570,828 30,063,509
============ ============
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(DOLLARS IN THOUSANDS)
Three months ended
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
(unaudited) (unaudited)
Net loss $ (18,059) $ (4,598)
Unrealized (losses) gains on marketable securities (965) 256
Foreign currency translation adjustment (55) (72)
Reclassification adjustment:
Net realized loss (gain) previously recognized
in other comprehensive income 31 (11)
----------- ----------
Comprehensive loss $ (19,048) $ (4,425)
=========== ==========
See accompanying notes.
4
ANADIGICS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
Three months ended
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(18,059) $ (4,598)
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation 5,055 6,052
Amortization 545 31
Amortization of premium (discount) on marketable securities 637 (350)
Impairment of long-lived assets 3,244 --
Realized loss (gain) on sale of marketable securities 31 (11)
Deferred taxes -- (2,506)
Loss on sale of equipment -- 60
Changes in operating assets and liabilities:
Accounts receivable (1,430) 5,112
Inventory 2,018 195
Prepaid expenses and other assets (204) (1,319)
Accounts payable 2,389 (3,479)
Accrued liabilities and other liabilities 685 (607)
-------- --------
Net cash used in operating activities (5,089) (1,420)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment (373) (2,419)
Purchases of marketable securities (27,318) (38,830)
Proceeds from sale of marketable securities 12,974 39,912
Proceeds from sale of equipment -- 21
-------- --------
Net cash used in investing activities (14,717) (1,316)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of capital lease obligations (56) (133)
Repayments of long-term debt (65) (250)
Issuance of common stock 20 609
-------- --------
Net cash (used in) provided by financing activities (101) 226
-------- --------
Net decrease in cash and cash equivalents (19,907) (2,510)
Cash and cash equivalents at beginning of period 63,102 95,116
-------- --------
Cash and cash equivalents at end of period $ 43,195 $ 92,606
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 5 $ 62
Taxes paid 115 --
Acquisition of equipment under capital leases -- 23
See accompanying notes.
5
ANADIGICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -
MARCH 30, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND 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 accounting principles generally accepted
in the United States 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 generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ended March 30, 2002 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2002.
The condensed, consolidated balance sheet at December 31, 2001 has been
derived from the audited financial statements at that date but does not include
all the information and footnotes required by accounting principles generally
accepted in the United States 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, 2001.
The condensed, consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the FASB issued Statement of Financial Accounting Standards
("FAS") No. 141 "Business Combinations" and 142 "Goodwill and Other Intangible
Assets". The statements will be effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be subject to
amortization but will be reviewed for potential impairment annually or upon the
occurrence of an impairment indicator. Other intangible assets continue to be
amortized over their useful lives. The annual amortization of goodwill that
would have approximated $2,567 is no longer required. The Company has not yet
determined the impact, if any, on its earnings or financial position of the
required impairment tests of goodwill.
In July 2001, the Financial Accounting Standards Board issued Statement No.
143, Accounting for Asset Retirement Obligations ("FAS 143"). FAS 143 requires
that asset retirement obligations that are identifiable upon acquisition and
construction, and during the operating life of a long-lived asset be recorded as
a liability using the present value of the estimated cash flows. A corresponding
amount would be capitalized as part of the asset's carrying amount and amortized
to expense over the asset's useful life. The Company is required to adopt the
provisions of FAS 143 effective January 1, 2003. The Company is currently
evaluating the impact of adoption of this statement.
2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Inventories consist of the following:
MARCH 30, 2002 DECEMBER 31, 2001
-------------- -----------------
Raw materials $ 4,645 $ 6,095
Work in process 10,192 8,963
Finished goods 6,201 8,105
-------- --------
21,038 23,163
Reserves (8,395) (8,502)
-------- --------
Total $ 12,643 $ 14,661
======== ========
6
ANADIGICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -
MARCH 30, 2002
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
3. EARNINGS PER SHARE
The reconciliation of shares used to calculate basic and diluted earnings
per share consists of the following:
Three months ended
--------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Weighted average common shares
outstanding used to calculate
basic earnings per share 30,570,828 30,063,509
Net effect of dilutive securities
based upon the treasury stock method
using an average market price --* --*
------------- --------------
Weighted average common and
dilutive securities outstanding
used to calculate diluted earnings
per share 30,570,828 30,063,509
============= ==============
* Any dilution arising from the Company's outstanding stock options or shares
potentially issuable upon conversion of the Convertible notes are not included
as their effect is anti-dilutive.
4. REVENUE SOURCES
The Company classifies its revenues based upon the end application of the
product in which its integrated circuits are used. In conjunction with the
restructuring of the business and the resulting de-emphasis of fiber optic
research activities, as well as convergence within the end markets for the
Company's cable and fiber products, the Company is now focused on the Broadband
and Wireless end market categories. Prior year results have been reclassified to
conform to these categories. Net sales by end application are regularly reviewed
by the chief operating decision maker and are as follows:
Three months ended
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Broadband 10,502 22,176
Wireless 9,019 6,344
-------------- --------------
Total $ 19,521 $ 28,520
============== ==============
The Company primarily sells to four geographic regions: Europe, Asia,
U.S.A. and Canada, and Latin America. The geographic region is determined by the
destination of the shipped product. Net sales to each of the four geographic
regions are as follows:
Three months ended
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Europe $ 1,087 $ 2,478
Asia 7,465 12,972
U.S.A. and Canada 10,451 8,708
Latin America 518 4,362
--------------- --------------
Total $ 19,521 $ 28,520
=============== ==============
5. ACQUISITION OF TELCOM DEVICES
On April 2, 2001, ANADIGICS, Inc. acquired Telcom Devices Corp. ("Telcom"),
a manufacturer of indium phosphide based photodiodes for the telecommunications
and data communications markets. The acquisition was accounted for using the
purchase method of accounting. The results of operations of Telcom are included
in the Company's consolidated results of operations from the date of purchase.
There are no significant differences between the accounting policies of
ANADIGICS and Telcom.
7
The cash consideration paid on April 2, 2001, for 100% of Telcom's stock
was $28,000. In addition, the Company incurred $300 in acquisition-related
costs. The total purchase price of $28,300 was allocated to the assets acquired
and liabilities assumed, based on their fair values (as determined by an
appraisal) as follows:
Fair value of tangible assets $5,522
Fair value of liabilities assumed (1,369)
In-process research and development 3,800
Process technology 3,400
Covenant not to compete 800
Deferred tax liability (1,831)
Goodwill 17,978
------
Total purchase price $28,300
Attainment of certain sales and profit targets by Telcom through March 31,
2002, which were not reached, could have resulted in the payment of up to
$17,000 of contingent purchase consideration.
The following unaudited pro-forma consolidated financial information
reflects the results of operations for the three months ended March 30,2002 and
March 31, 2001, as if the acquisition of Telcom had occurred on December 31,
2000 and after giving effect to purchase accounting adjustments. The charge for
purchased in-process R&D is not included in the pro-forma results, because it is
non-recurring.
Three months ended
-----------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Pro-forma revenue $ 19,521 $ 30,980
Pro-forma net loss $ (18,059) $ (5,143)
Pro-forma net loss per basic and diluted share $ (0.59) $ (0.17)
The following values are calculated assuming that FAS 142 had been
effective as from January 1, 2001, thereby excluding goodwill amortization from
2001 to be comparable to 2002.
Three months ended
------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Pro-forma revenue $ 19,521 $ 30,980
Pro-forma net (loss) income $ (18,059) $ (4,501)
Pro-forma net (loss) income per basic and diluted share $ (0.59) $ (0.15)
These pro-forma results have been prepared for comparative purposes only
and do not purport to be indicative of what operating results would have been
had the acquisition actually taken place on December 31, 2000. In addition,
these results are not intended to be a projection of future results and do not
reflect any synergies that might be achieved from the combined operations.
6. RESTRUCTURING CHARGES
During the first quarter of 2002, the Company recorded restructuring
charges of $5,959. As part of its cost reduction initiatives, the Company has
curtailed certain fiber-optic research activities and is consolidating
facilities at its Warren headquarters. The restructuring charges include $2,185
for facilities consolidation costs and $3,244 for an impairment of certain
leasehold improvements and research fixed assets, which are no longer used in
the ongoing activities of the business. A charge of $530 was recorded for
severance and related benefits of workforce reductions undertaken in first
quarter. The workforce reductions eliminate approximately 23 Fiber research and
marketing positions to whom $130 of benefits were paid through March 30, 2002.
7. INCOME TAXES
During the second quarter of 2001, the Company recorded a valuation
allowance of $26,814 against the carrying value of its deferred tax asset.
Deferred tax assets require a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of the deferred tax
assets may not be realized. Whereas realization of the deferred tax assets is
dependent upon the timing and magnitude of future taxable income prior to the
expiration of the deferred tax attributes, management has recorded a full
valuation allowance. The amount of the deferred tax assets considered
realizable, however, could change if estimates of future taxable income during
the carry-forward period are changed.
8. LONG-TERM DEBT
On November 27, 2001, the Company issued $100,000 aggregate principal
amount of 5% Convertible Senior Notes ("Convertible notes") due November 15,
2006. The notes are convertible into shares of common stock at any time prior to
their maturity or prior redemption by the Company. The notes are convertible
into shares of common stock at a rate of 47.619 shares for each $1,000 principal
amount (convertible at a price of $21.00 per share), subject to adjustment.
Interest is payable semi-annually on May 15 and November 15 of each year.
8
ANADIGICS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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
---------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Net sales 100.0% 100.0%
Cost of sales 97.4% 74.4%
----- -----
Gross profit 2.6% 25.6%
Research and development expenses 38.8% 35.2%
Selling and administrative expenses 27.0% 23.3%
Restructuring charges 30.5% --
----- -----
Operating loss (93.7%) (32.9%)
Interest income 8.6% 8.5%
Interest expense (7.4%) (0.2%)
Other income (expense) -- (0.2%)
----- -----
Loss before income taxes (92.5%) (24.8%)
(Benefit) provision for income taxes -- (8.7%)
----- -----
Net loss (92.5%) (16.1%)
===== =====
FIRST QUARTER 2002 (ENDED MARCH 30, 2002) COMPARED TO FIRST QUARTER 2001 (ENDED
MARCH 31, 2001)
NET SALES. Net sales during the first quarter of 2002 decreased 32% to
$19.5 million from $28.5 million in the first quarter of 2001.
Sales of integrated circuits for Wireless applications increased 42% during
the first quarter of 2002 to $9.0 million from $6.3 million in the first quarter
of 2001. The increase in sales of integrated circuits for Wireless applications
was primarily due to the increase in sales of our CDMA power amplifier modules,
which accounted for 69% of the first quarter 2002 revenues compared with zero in
the prior year quarter. The first quarter of 2001 net sales were predominantly
derived from TDMA power amplifiers.
Sales of integrated circuits for Broadband applications decreased 53%
during the first quarter of 2002 to $10.5 million from $22.2 million in the
first quarter of 2001, despite the inclusion of the sales of Telcom Devices in
2002. The decrease in sales of integrated circuits for Broadband applications
was primarily due to decreased demand for our reverse amplifiers and converters
used in digital set-top boxes and cable modems and a reduction in sales of
integrated circuits for fiber optic applications. The decrease in demand is
attributable to market softness.
The shift in the geographic distribution of sales is due to a decline in
Broadband sales which are more heavily concentrated in Asia and a mix shift
within Wireless to the U.S.A. and Canada in 2002 versus Latin America in 2001.
Generally, selling prices for same product sales were lower during the
first quarter of 2002 compared to the first quarter of 2001.
GROSS MARGIN. Gross margin during the first quarter of 2002 decreased to
2.6% from 25.6% in the first quarter of 2001. A $3.5 million inventory charge,
predominately for datacom fiber optic products, was recorded in the first
quarter of 2001. The decrease in gross margin in 2002 was primarily due to the
decrease in revenues, lower production and consequent lower absorption of fixed
costs.
RESEARCH AND DEVELOPMENT. Company sponsored research and development
expense decreased 25% during the first quarter of 2002 to $7.6 million from
$10.1 million during the first quarter of 2001. The decrease was primarily
attributable to the realignment of R&D programs favoring wireless and cable, and
the refocusing of efforts on specific fiber-related projects. As a percentage of
sales, research and development expense increased to 38.8% in the first quarter
of 2002 from 35.2% in the first quarter of 2001.
SELLING AND ADMINISTRATIVE. Selling and administrative expenses decreased
20% during the first quarter of 2002 to $5.3 million from $6.6 million in the
first quarter of 2001. The decrease in selling and administrative expenses was
primarily due to lower compensation and operating expenses following our
restructuring initiatives of 2001 and was achieved despite increases in 2002 of
$0.4 from Telcom Devices. As a percentage of sales, selling and administrative
expenses increased to 27.0% in the first quarter of 2002 from 23.3% in the first
quarter of 2001
9
RESTRUCTURING CHARGES. During the first quarter of 2002, we recorded
restructuring charges of $6.0 million. As part of our cost reduction
initiatives, we have curtailed certain fiber-optic research activities and are
consolidating facilities at our Warren headquarters. The restructuring charges
include $2.2 million for facilities consolidation costs and $3.2 million for an
impairment of certain leasehold improvements and research fixed assets, which
are no longer used in our ongoing business. A charge of $0.5 million was
recorded for severance and related benefits of workforce reductions undertaken
in the first quarter. The workforce reductions eliminate approximately 22 fiber
research and marketing positions to whom $0.1 of benefits were paid through
March 30, 2002. The anticipated annual savings from these charges is expected to
approximate $5.0 million.
INTEREST INCOME. Interest income decreased 31% to $1.7 million during the
first quarter of 2002 from $2.4 million during the first quarter of 2001. The
decrease of $0.7 million was due to lower interest rates.
INTEREST EXPENSE. During the first quarter of 2002, we incurred $1.4
million in interest expense on its $100.0 million of 5% Convertible notes,
following their issuance on November 27, 2001.
(BENEFIT) PROVISION FOR INCOME TAXES. The provision for income taxes during
the first quarter of 2001 was recorded at an estimated effective tax rate of
35.0% of the loss before income taxes. During the second quarter of 2001, we
recorded a valuation allowance of $26.8 million against the carrying value of
our deferred tax asset. Since realization of deferred tax assets is dependent
upon the timing and magnitude of future taxable income prior to the expiration
of the deferred tax attributes, management has recorded a full valuation
allowance in 2001 and 2002.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2002, we had $43.2 million in cash and cash equivalents and
$149.8 million in marketable securities. We had $100.2 million of
interest-bearing debt outstanding as of March 30, 2002. These figures reflect
our private offering of $100 million aggregate principal amount of Convertible
notes due in 2006, completed during November 2001.
Operating activities used $5.1 million in cash during the three month
period ended March 30, 2002. Investing activities, which primarily consisted of
purchases of equipment of $0.4 million and net purchases of marketable
securities of $14.3 million, used $14.7 million of cash during the three month
period ended March 30, 2002. Financing activities, which primarily consisted of
repayments of bank debt, used $0.1 million during the three month period ended
March 30, 2002.
As of March 30, 2002, we had purchase commitments of approximately $1.4
million of equipment, furniture and leasehold improvements.
We believe that our existing sources of capital, including internally
generated funds, will be adequate to satisfy operational needs and anticipated
capital needs for the next twelve months and beyond. Our anticipated capital
needs may include acquisitions of complimentary businesses or technologies, or
investments in other companies. However, we may elect to finance all or part of
our future capital requirements through additional equity or debt financing.
There can be no assurance that such additional financing would be available on
satisfactory terms.
Attainment of certain sales and profit targets by Telcom through March 31,
2002, which were not reached, could have resulted in the payment of up to $17.0
million of contingent purchase consideration.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2001, the FASB issued Statement of Financial Accounting Standards
("FAS") No. 141 "Business Combinations" and 142 "Goodwill and Other Intangible
Assets". The statements will be effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill will no longer be subject to
amortization but will be reviewed for potential impairment annually or upon the
occurrence of an impairment indicator. Other intangible assets continue to be
amortized over their useful lives. The annual amortization of goodwill that
would have approximated $2.6 million is no longer required. We have not yet
determined the impact, if any, on our earnings or financial position of the
required impairment tests of goodwill.
In July 2001, the Financial Accounting Standards Board issued Statement No.
143, Accounting for Asset Retirement Obligations ("FAS 143"). FAS 143 requires
that asset retirement obligations that are identifiable upon acquisition and
construction, and during the operating life of a long-lived asset be recorded as
a liability using the present value of the estimated cash flows. A corresponding
amount would be capitalized as part of the asset's carrying amount and amortized
to expense over the asset's useful life. We are required to adopt the provisions
of FAS 143 effective January 1, 2003. We are currently evaluating the impact of
adoption of this statement.
10
RISKS AND UNCERTAINTIES
Except for historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties,
including, but not limited to, order rescheduling or cancellation, changes in
customer's forecasts of product demand, timely product and process development,
individual product pricing pressure, variation in production yield, changes in
estimated product lives, difficulties in obtaining components and assembly
services needed for production of integrated circuits, change in economic
conditions of the various markets we serve, as well as the other risks detailed
from time to time in the Company's reports filed with the Securities and
Exchange Commission, including the report on Form 10-K for the year ended
December 31, 2001 and the Registration Statement on Form S-3 (Registration No.
333-83889). These forward-looking statements can generally be identified as such
because the context of the statement will include words such as we "believe",
"anticipate", "expect", or words of similar import. Similarly, statements that
describe our future plans, objectives, estimates or goals are forward-looking
statements. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. Important factors that could cause actual results and
developments to be materially different from those expressed or implied by such
statements include those factors discussed herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to changes in interest rates primarily from our investments
in certain available-for-sale securities. Our available-for-sale securities
consist primarily of fixed income investments (U.S. Treasury and Agency
securities, commercial paper and corporate bonds). We continually monitor our
exposure to changes in interest rates and credit ratings of issuers from our
available-for-sale securities. Accordingly, we believe that the effects of
changes in interest rates and credit ratings of issuers are limited and would
not have a material impact on our financial condition or results of operations.
However, it is possible that we are at risk if interest rates or credit ratings
of issuers change in an unfavorable direction. The magnitude of any gain or loss
will be a function of the difference between the fixed rate of the financial
instrument and the market rate and our financial condition and results of
operations could be materially affected.
Our Convertible notes bear a fixed rate of interest of 5%. A change in interest
rates on long-term debt is assumed to impact fair value but not earnings or cash
flow because the interest rate is fixed.
11
ANADIGICS, Inc.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ANADIGICS is a party to litigation arising out of the operation of our
business. We believe that the ultimate resolution of such litigation should not
have a material adverse effect on our financial condition, results of operations
or liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K during the quarter ended March 30, 2002.
None.
12
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
Senior Vice President
and Chief Financial Officer
Dated: April 26, 2002
13