10-Q

  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 JULY 4, 2009.
Or
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
Commission File No. 0-25662
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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ] No [ ]

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

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

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

The number of shares outstanding of the Registrant’s common stock as of July 4, 2009 was 63,229,238 (excluding 114,520 shares held in treasury).

INDEX

ANADIGICS, Inc.

PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets – July 4, 2009 and December 31, 2008
	Condensed consolidated statements of operations and comprehensive (loss) income – Three and six months ended July 4, 2009 and June 28, 2008
	Condensed consolidated statements of cash flows – Six months ended July 4, 2009 and June 28, 2008
	Notes to condensed consolidated financial statements – July 4, 2009
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

ANADIGICS, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	July 4, 2009			December 31, 2008
	(Unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	96,743		$	123,552
Marketable securities		23,216			13,340
Accounts receivable, net		16,757			25,384
Inventories		22,320			33,578
Prepaid expenses and other current assets		4,115			3,121
Total current assets		163,151			198,975
Marketable securities		8,438			8,832
Plant and equipment:
Equipment and furniture		210,573			201,217
Leasehold improvements		44,058			40,589
Projects in process		8,840			18,940
		263,471			260,746
Less accumulated depreciation and amortization		(173,952	)		(165,075	)
		89,519			95,671
Other assets		293			299
Total assets	$	261,401		$	303,777
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,965		$	18,267
Accrued liabilities		6,671			13,203
Accrued restructuring costs		433			1,165
Convertible notes		38,000			38,000
Total current liabilities		57,069			70,635
Other long-term liabilities		3,079			3,134
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 144,000 shares authorized, 63,384 issued at July 4, 2009 and 63,424 issued at December 31, 2008		634			634
Additional paid-in capital		569,864			563,468
Accumulated deficit		(370,207	)		(333,967	)
Accumulated other comprehensive income		1,221			131
Treasury stock at cost: 115 shares		(259	)		(258	)
Total stockholders’ equity		201,253			230,008
Total liabilities and stockholders’ equity	$	261,401		$	303,777

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three months ended						Six months ended
	July 4, 2009			June 28, 2008			July 4, 2009			June 28, 2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	31,463		$	80,493		$	61,958		$	154,862
Cost of sales		28,703			50,573			57,948			98,337
Gross profit		2,760			29,920			4,010			56,525
Research and development expenses		10,376			14,797			22,001			29,128
Selling and administrative expenses		6,338			9,441			13,770			18,321
Restructuring charge		-			-			2,598			-
Operating (loss) income		(13,954	)		5,682			(34,359	)		9,076
Interest income		287			1,281			846			3,219
Interest expense		(591	)		(591	)		(1,182	)		(1,182	)
Other expense, net		-			(324	)		(1,545	)		(1,136	)
Net (loss) income	$	(14,258	)		6,048		$	(36,240	)		9,977
Basic (loss) earnings per share	$	(0.23	)	$	0.10		$	(0.58	)	$	0.17
Diluted (loss) earnings per share	$	(0.23	)	$	0.10		$	(0.58	)	$	0.16
Weighted average common shares outstanding used in computing (loss) earnings per share
Basic		62,209			60,027			61,976			59,669
Diluted		62,209			69,351			61,976			68,596

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(AMOUNTS IN THOUSANDS)

	Three months ended						Six months ended
	July 4, 2009			June 28, 2008			July 4, 2009			June 28, 2008
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net (loss) income	$	(14,258	)	$	6,048		$	(36,240	)	$	9,977
Other comprehensive (loss) income:
Unrealized gain (loss) on marketable securities		1,204			(367	)		1,171			(1,324	)
Foreign currency translation adjustment		2			162			(81	)		178
Reclassification adjustment:
Net recognized loss on marketable securities previously included in other comprehensive income		-			614			-			1,434
Comprehensive (loss) income	$	(13,052	)	$	6,457		$	(35,150	)	$	10,265

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

	Six months ended
	July 4, 2009			June 28, 2008
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(36,240	)	$	9,977
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation		8,915			7,375
Amortization		233			362
Stock based compensation		6,387			9,347
Amortization of premium (discount) on marketable securities		10			(104	)
Recognized marketable securities impairment and other		1,565			1,434
Gain on disposal of equipment		(20	)		(286	)
Changes in operating assets and liabilities:
Accounts receivable		8,627			(4,676	)
Inventories		11,258			(3,409	)
Prepaid expenses and other assets		(1,221	)		(1,419	)
Accounts payable		(1,560	)		(1,175	)
Accrued liabilities and other liabilities		(7,400	)		3,266
Net cash (used in) provided by operating activities		(9,446	)		20,692
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(7,505	)		(37,634	)
Proceeds from sale of equipment		20			200
Purchases of marketable securities		(15,201	)		(15,410	)
Proceeds from sale of marketable securities		5,315			95,963
Net cash (used in) provided by investing activities		(17,371	)		43,119
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock		9			2,552
Repurchase of common stock into treasury		(1	)		-
Net cash provided by financing activities		8			2,552
Net (decrease) increase in cash and cash equivalents		(26,809	)		66,363
Cash and cash equivalents at beginning of period		123,552			57,786
Cash and cash equivalents at end of period	$	96,743		$	124,149

See accompanying notes.

ANADIGICS, Inc.

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

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

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

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

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

 The Company has evaluated subsequent events through August 10, 2009, the filing date of this Form 10-Q with the SEC, and determined that there were no subsequent events to recognize or disclose in these unaudited interim condensed consolidated financial statements.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS 157) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 was effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued FSP FAS 157-2 “Partial Deferral of the Effective Date of Statement 157” (FSP 157-2). FSP 157-2 delayed the effective date of FAS 157 for non-financial assets and liabilities that are not measured or disclosed on a recurring basis to fiscal years beginning after November 15, 2008. The adoption of FSP 157-2 as of January 1, 2009 did not have a material effect on the Company’s consolidated financial statements for non-financial assets and liabilities and any other assets and liabilities carried at fair value.

 In April 2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed” (FSP 157-4). FSP 157-4 provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. FSP 157-4 is effective for interim and annual periods ending after June 15, 2009. This new standard was effective beginning with the Company’s second quarter financial reporting and did not have a material impact on its consolidated financial statements.

 In December 2007, the FASB issued FASB Statement No. 141R, “Business Combinations” (FAS 141R), which changes how business acquisitions are accounted.  FAS 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination.  Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits.  FAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008 and upon adoption did not have a material impact on the Company’s consolidated financial statements. However it is expected to change the Company’s accounting prospectively for future business combinations consummated subsequently.

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

 In March 2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (FAS 161).  FAS 161 applies to all derivative instruments and related hedged items accounted for under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities".  FAS 161 requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The fair value of derivative instruments and their gains and losses will need to be presented in tabular format in order to present a more complete picture of the effects of using derivative instruments. FAS 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on the Company’s consolidated financial statements.

 In May 2008, the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The adoption of this standard effective January 1, 2009 did not have a material impact on the Company’s consolidated financial statements.

 In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1). FSP EITF 03-6-1 clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on the Company’s consolidated financial statements.

 In April 2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (FSP 115-2 and FSP 124-2). FSP 115-2 and FSP 124-2 change the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of the impairment to be recorded in earnings. FSP 115-2 and FSP 124-2 are effective for interim and annual periods ending after June 15, 2009 and apply based upon the Company’s ability and intent to hold the security to maturity or a recovery in valuation. The adoption of this standard did not have an impact on the Company’s consolidated financial statements, as it is more likely than not that the Company will sell the impaired debt securities prior to a recovery in valuation.

 In April 2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value of Financial Instruments” (FSP 107-1, APB 28-1). FSP 107-1, APB 28-1 requires fair value disclosures in both interim as well as annual financial statements in order to provide more timely information about the effects of current market conditions on financial instruments. FSP 107-1, APB 28-1 is effective for interim and annual periods ending after June 15, 2009. This new standard was effective beginning with the Company’s second quarter financial reporting and the additional financial reporting disclosures are included herein.

 In May 2009, the FASB issued FAS 165, “Subsequent Events”, which establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before the financial statements are issued. FAS 165 is effective for interim and annual periods ending after June 15, 2009.  This new standard was effective beginning with the Company’s second quarter financial reporting and did not have an impact on its consolidated financial statements.

 INCOME TAXES

 The Company maintains a full valuation allowance on its deferred tax assets.  Accordingly, the Company has not recorded a benefit or provision for income taxes. We recognize interest and penalties related to the underpayment of income taxes in income tax expense. No unrecognized tax benefits, interest or penalties were accrued at July 4, 2009. The Company’s U.S. federal net operating losses have occurred since 1998 and as such, tax years subject to potential tax examination could apply from that date because carrying-back net operating loss opens the relevant year to audit.

WARRANTY

 Based on the examination of historical returns and other information it deems critical, the Company estimates that a current charge to income will need to be provided in order to cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in Accrued liabilities in the condensed consolidated balance sheets.Warranty reserve movements in the six months ended July 4, 2009 included $990 in actual charges and $972 in provisions resulting in the balance of $627 at July 4, 2009.  Warranty reserve movements in the six months ended June 28, 2008 included $263 in actual charges and a $554 increase in the provision.

RECLASSIFICATIONS

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

2. RESTRUCTURING CHARGE

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

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

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

	Workforce-related			Other			Total
December 31, 2008 balance	$	1,065		$	100		$	1,165
Additions		2,598			-			2,598
Deductions		(3,230	)		(100	)		(3,330	)
July 4, 2009 balance	$	433		$	-		$	433

3. (LOSS) EARNINGS PER SHARE

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

	Three months ended					Six months ended
	July 4, 2009			June 28, 2008		July 4, 2009			June 28, 2008
Net (loss) income for basic (loss) earnings per share	$	(14,258	)	$	6,048	$	(36,240	)	$	9,977
Effect of dilutive securities: Interest expense on 5% Convertible notes		-			591		-			1,182
Adjusted net (loss) income for diluted (loss) earnings per share, assuming conversion	$	(14,258	)	$	6,639	$	(36,240	)	$	11,159
Weighted average common shares for basic (loss) earnings per share		62,209			60,027		61,976			59,669
Effect of dilutive securities:
Convertible notes		-			7,600		-			7,600
Stock options (*)		-			756		-			617
Unvested restricted shares (*)		-			968		-			710
Adjusted weighted average shares for diluted (loss) earnings per share		62,209			69,351		61,976			68,596

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

 For the three and six months ended July 4, 2009 and June 28, 2008, potential additional dilution arising from any of the Company's outstanding stock options, unvested restricted stock (shares or units), or shares potentially issuable upon conversion of the Convertible notes are detailed below. Such potential dilution was excluded as their effect was anti-dilutive.

	Three months ended				Six months ended
	July 4, 2009		June 28, 2008		July 4, 2009		June 28, 2008
Convertible notes		7,600		-		7,600		-
Stock options		5,832		826		5,832		834
Unvested restricted shares and units		1,849		582		1,849		593

4.  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 as follows:

	Three months ended				Six months ended
	July 4, 2009		June 28, 2008		July 4, 2009		June 28, 2008
Broadband	$	8,281	$	31,159	$	17,386	$	54,298
Wireless		23,182		49,334		44,572		100,564
Total	$	31,463	$	80,493	$	61,958	$	154,862

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

	Three months ended				Six months ended
	July 4, 2009		June 28, 2008		July 4, 2009		June 28, 2008
Asia	$	21,383	$	52,140	$	39,582	$	100,006
USA and Canada		5,130		22,246		9,285		44,211
Latin America		3,288		3,752		8,779		6,842
Other		1,662		2,355		4,312		3,803
Total	$	31,463	$	80,493	$	61,958	$	154,862

5. FAIR VALUE AND MARKETABLE SECURITIES

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

 The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables present a summary of fair value information for available-for-sale securities as at July 4, 2009 presented in accordance with FAS 157:

					Fair Value Measurements at Reporting Date Using
Security Type	Amortized Cost Basis (1)		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Certificates of Deposit	$	20,201	$	20,201	$	20,201	$	-	$	-
Non-auction Corporate Debt securities		4,531		5,135		3,015		2,120		-
Auction Rate Securities
Corporate Debt		600		812		-		-		812
Preferred Equity		3,516		3,837		-		-		3,837
State and Municipal		1,622		1,669		-		-		1,669
Total	$	30,470	$	31,654	$	23,216	$	2,120	$	6,318

(1)   Difference between amortized cost basis and fair value represents gross unrealized gains.

 The amortized cost and estimated fair value of marketable debt securities at July 4, 2009 by contractual maturity are shown below:

	Available-for-Sale Debt Securities
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	23,203	$	23,216
Due after 10 years		3,751		4,601
Total	$	26,954	$	27,817

 The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of each of the following instruments approximates their carrying value because of the short maturity of these instruments: cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities. At July 4, 2009 and December 31, 2008, the fair value of the Company's outstanding convertible senior notes, determined by reference to interest rates and the Company’s stock price (Level 2 valuation), were approximately $38,665 and $33,630, respectively compared to their carrying values of $38,000 and $38,000, respectively.

AUCTION RATE SECURITIES

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

 At July 4, 2009, there was insufficient observable ARS market information available to determine the fair value of the Company’s investments in ARS. Given the complexity of ARS investments, the Company obtained the assistance of an independent valuation firm to assist management in assessing the Level 3 fair value of its ARS portfolio. The third party valuations developed to estimate the ARS fair value were determined using a combination of two calculations (1) a discounted cash flow model, where the expected cash flows of the ARS are discounted to the present using a yield that incorporates compensation for illiquidity, and (2) a market comparables method, where the ARS are valued based on indications, from the secondary market, of what discounts buyers demand when purchasing similar ARS. The valuations include numerous assumptions such as assessments of the underlying structure of each security, expected cash flows, discount rates, credit ratings, workout periods, and overall capital market liquidity. While interest at default rates continues to be paid currently by all the issuers of these ARS, due to the severity of the decline in fair value and the duration of time for which these ARS have been in a loss position, the Company concluded that its ARS experienced an other-than-temporary decline in fair value and recorded impairment charge of $1,211 during the three months ended April 4, 2009 and for the six months ended July 4, 2009. During the three months ended July 4, 2009, the ARS fair value increased by $580 which was recorded to Other Comprehensive Income to adjust the value of these securities to their aggregate fair market value of $6,318 as of July 4, 2009.

 During 2008, a corporate debt ARS position with a face value of $4,000 was exchanged for the underlying 30 year notes due 2037. This debt is quoted but infrequently traded and the Company values this security on a Level 2 basis. Due to the severity and duration of the decline to April 4, 2009, the Company has recorded an impairment of $354 during the three months ended April 4, 2009 and for the six months ended July 4, 2009 related to this security which in combination with the ARS impairment discussed above was reported in Other expense, net. During the three months ended July 4, 2009, the security’s fair value increased by $590 which was recorded to Other Comprehensive Income to adjust the value of the security to its fair value of $2,120 as of July 4, 2009.

 As further required by FAS 157, provided below is a reconciliation of the beginning and ending balances for each type of security valued using a Level 3 valuation during the three and six months ended July 4, 2009.

($ in 000’s)	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Six months ended July 4, 2009
	State & Municipal Securities (a)			Corporate Debt Securities (b)			Preferred Equity Securities (c)			Total
Balance at January 1, 2009	$	1,947		$	662		$	4,340		$	6,949
Total gains or losses realized/unrealized in    the quarters ended April 4, and July 4, 2009
Included in (loss) earnings    - quarter ended April 4, 2009		(325	)		(62	)		(824	)		(1,211	)
- quarter ended July 4, 2009		-			-			-			-
Included in other comprehensive (loss) income    - quarter ended April 4, 2009		-			-			-			-
- quarter ended July 4, 2009		47			212			321			580
Purchases, issuances, and settlements		-			-			-			-
Transfers in and/or out of Level 3		-			-			-			-
Balance at July 4, 2009	$	1,669		$	812		$	3,837		$	6,318
The amount of total gains or losses for the period included in (loss) earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date     - as of April 4, 2009	$	(325	)	$	(62	)	$	(824	)	$	(1,211	)
- as of July 4, 2009	$	(325	)	$	(62	)	$	(824	)	$	(1,211	)
Securities held at July 4, 2009:
Face value	$	2,600		$	2,500		$	7,500		$	12,600
Amortized cost basis	$	1,622		$	600		$	3,516		$	5,738
Weighted average interest rate (*)		1.03	%		2.24	%		2.16	%		1.94	%
Maturity date	2045			2036				N/A

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

(a) Security represents an interest in pooled student loans that are guaranteed by the Federal Family Education Loan Program. The security has a financial rating of A3.

(b) Security issued by a publicly-held insurance company trust, which holds investments in  U.S. Government obligations, highly rated commercial paper and money market funds and other investments approved by two credit rating agencies. The trust is funded by life insurance residuals. If the residuals are insufficient, the security becomes an obligation of the publicly-held insurance company. The security has a financial rating of A3.

(c) Includes preferred securities issued by four diversified closed-end management investment companies which are governed by the Investment Company Act of 1940 with regard to operating standards, antifraud rules, diversification requirements and an asset coverage requirement for asset backing of 200% of the par value of the preferred stock issued and carry financial ratings of AAA. Also includes preferred securities issued by subsidiaries of two publicly-held debt default insurers, one of which carries a financial rating of B while the other security is no longer rated.

 For the three and six month periods ended June 28, 2008, the table below provides a reconciliation of the beginning and ending balances for each type of security valued using a Level 3 valuation.

($ in 000’s)	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Six months ended June 28, 2008
	State & Municipal Securities			Corporate Debt Securities			Preferred Equity Securities			Total
Beginning balance	$	-		$	2,324		$	2,344		$	4,668
Total gains or losses realized/unrealized
Included in earnings
- quarter ended March 29, 2008		(186	)		(43	)		(594	)		(823	)
- quarter ended June 28, 2008		(389	)		(360	)		135			(614	)
Included in other comprehensive income
- quarter ended March 29, 2008		(130	)		-			-			(130	)
- quarter ended June 28, 2008		130			240			-			370
Purchases, issuances, and settlements
- quarter ended March 29, 2008		-			-			-			-
- quarter ended June 28, 2008		(2,125	)		-			(4,650	)		(6,775	)
Transfers in and/or out of Level 3
- quarter ended March 29, 2008		6,499			-			9,475			15,974
- quarter ended June 28, 2008		-			3,760			-			3,760
Ending Balance	$	3,799		$	5,921		$	6,710		$	16,430
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
- as of March 29, 2008	$	(186	)	$	(43	)	$	(594	)	$	(823	)
- as of June 28, 2008	$	(575	)	$	(403	)	$	(459	)	$	(1,437	)

6. INVENTORIES

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

	July 4, 2009			December 31, 2008
Raw materials	$	8,499		$	9,537
Work in process		12,827			18,062
Finished goods		12,134			15,007
		33,460			42,606
Reserves		(11,140	)		(9,028	)
Total	$	22,320		$	33,578

7. LONG-TERM DEBT

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

8. STOCK BASED COMPENSATION

Equity Compensation Plans

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

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

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

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

§   The Employee Stock Purchase Plan (ESP Plan).

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

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

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

	Three months ended				Six months ended
	July 4, 2009		June 28, 2008		July 4, 2009			June 28, 2008
Amortization of restricted stock awards	$	1,826	$	4,267	$	4,290		$	8,154
Amortization of ESP Plan		200		200		400			400
Amortization of stock option awards		951		474		1,697			793
Total stock based compensation	$	2,977	$	4,941	$	6,387		$	9,347
By Financial Statement line item
Cost of sales	$	617	$	1,026	$	1,342		$	1,752
Research and development expenses		1,117		1,905		2,548			3,801
Selling and administrative expenses		1,243		2,010		2,688			3,794
Restructuring charge		-		-		(191	)		-

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

Restricted Stock and Stock Option Awards

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

	Restricted Stock Shares					Restricted Stock Units					Stock Options
	Shares			WA price/ share		Units			WA price/ unit		Issuable upon exercise			WA exercise price
Outstanding at January 1, 2008		2,212		$	9.61		-			-		3,491		$	9.68
Granted		1,802			9.26		678		$	5.04		-			-
Shares vested/options exercised		(1,722	)		9.16		(31	)		5.88		(384	)		6.78
Forfeited/expired		(318	)		12.17		(36	)		5.89		(288	)		10.36
Balance at December 31, 2008		1,974			9.27		611			4.94		2,819			10.00
Granted		-			-		421			1.97		3,190			2.02
Shares vested/options exercised		(973	)		8.38		(104	)		2.18		(4	)		2.48
Forfeited/expired		(52	)		11.13		(27	)		5.72		(173	)		5.76
Balance at July 4, 2009		949		$	10.07		901		$	3.85		5,832		$	5.76

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

	As of July 4, 2009
Unrecognized stock based compensation cost
Option plans	$	4,321
Restricted stock	$	5,064
Weighted average remaining recognition period
Option plans	1.9 years
Restricted stock	0.8 years

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

Range of exercise prices		Outstanding Options at July 4, 2009		Weighted average remaining contractual life		Weighted average exercise price		Exercisable at July 4, 2009		Weighted average exercise price
$	1.39 - $2.03		3,037		9.5	$	1.97		4	$	1.81
$	2.08 - $7.27		1,178		3.7	$	5.67		1,100	$	5.78
$	8.79 – $8.84		829		6.2	$	8.84		709	$	8.84
$	9.00 - $53.48		788		2.4	$	17.29		756	$	17.46

Valuation Method for ESP Plan and Stock Option Awards

 The fair value of these equity awards was estimated at the date of grant using a Black-Scholes option pricing model. The weighted average assumptions for stock based compensation grants used for the six month periods ended July 4, 2009 and June 28, 2008 were:

	Six months ended
	July 4, 2009			June 28, 2008
Stock option awards:
Risk-free interest rate		1.6	%		N/A
Expected volatility		99	%		N/A
Average expected term (in years)		5.0			N/A
Expected dividend yield		0.0	%		N/A
Weighted average fair value of options granted	$	1.50			N/A
ESP Plan:
Risk-free interest rate		0.5	%		2.4	%
Expected volatility		115	%		77	%
Average expected term (in years)		1.0			1.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of purchase option	$	0.82		$	4.54

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

9. LEGAL PROCEEDINGS

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

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

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

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

ANADIGICS, Inc.

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

OVERVIEW

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

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

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

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

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

 RESULTS OF OPERATIONS

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

	Three months ended						Six months ended
	July 4, 2009			June 28, 2008			July 4, 2009			June 28, 2008
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		91.2	%		62.8	%		93.5	%		63.5	%
Gross margin		8.8	%		37.2	%		6.5	%		36.5	%
Research and development expenses		33.0	%		18.4	%		35.5	%		18.8	%
Selling and administrative expenses		20.1	%		11.8	%		22.2	%		11.8	%
Restructuring charge		-			-			4.2	%		-
Operating (loss) income		(44.3	%)		7.0	%		(55.4	%)		5.9	%
Interest income		0.9	%		1.6	%		1.3	%		2.0	%
Interest expense		(1.9	%)		(0.7	%)		(1.9	%)		(0.8	%)
Other expense		-			(0.4	%)		(2.5	%)		(0.7	%)
Net (loss) income		(45.3	%)		7.5	%		(58.5	%)		6.4	%

 NET SALES.Net sales decreased 60.9% during the second quarter of 2009 to $31.5 million from $80.5 million in the second quarter of 2008. For the six months ended July 4, 2009, net sales were $62.0 million, a 60.0% decrease from net sales of $154.9 million for the six months ended June 28, 2008.

 Sales of integrated circuits for wireless applications decreased 53.0% during the second quarter of 2009 to $23.2 million from $49.3 million in the second quarter of 2008.  For the six months ended July 4, 2009, net sales of integrated circuits for wireless applications decreased 55.7% to $44.6 million from $100.6 million for the six months ended June 28, 2008. The decrease in sales in the three and six month periods was primarily due to decreased demand in the CDMA and EDGE/WEDGE cellular device markets resulting from a reduction in market share with certain customers and an industry slowdown due to the current macroeconomic environment.

 Sales of integrated circuits for broadband applications decreased 73.4% during the second quarter of 2009 to $8.3 million from $31.2 million in the second quarter of 2008. For the six months ended July 4, 2009, net sales of integrated circuits for broadband applications decreased 68.0% to $17.4 million from $54.3 million for the six months ended June 28, 2008. The decrease in sales was primarily due to decreased demand for WLAN PAs shipped into the PC Notebook market resulting from the combination of a reduction in market share with one of our key customers and general softness in demand for WLAN PAs that has occurred due to the current macroeconomic environment. To a lesser degree, decreased demand in the set top box and cable infrastructure markets contributed to the lower sales in the second quarter and six month period.

 GROSS MARGIN. Gross margin during the second quarter of 2009 decreased to 8.8% of net sales from 37.2% of net sales in the second quarter of 2008.  For the six months ended July 4, 2009, gross margin decreased to 6.5% from 36.5% for the six months ended June 28, 2008.  The decrease in gross margin was primarily due to lower product shipments and wafer production, and fixed production costs increasing as a percent of lower revenues. Fixed production costs include, but are not limited to depreciation, maintenance and operations’ support functions.

 RESEARCH AND DEVELOPMENT. Company-sponsored research and development (R&D) expenses decreased 29.9% during the second quarter of 2009 to $10.4 million from $14.8 million during the second quarter of 2008. Company sponsored research and development expenses for the six month period ended July 4, 2009 decreased 24.5% to $22.0 million from $29.1 million during the six month period ended June 28, 2008.  The decrease was primarily due to decreased headcount and materials used in our R&D product and process development efforts in light of reduced revenues.

 SELLING AND ADMINISTRATIVE. Selling and administrative expenses decreased 32.9% to $6.3 million during the second quarter of 2009 from $9.4 million during the second quarter of 2008. Selling and administrative expenses for the six month period ended July 4, 2009 decreased 24.8% to $13.8 million from $18.3 million during the six month period ended June 28, 2008.   The decrease was primarily driven by lower headcount and marketing expenses within our sales organization in light of reduced revenues.

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

 INTEREST INCOME.Interest income decreased 77.6% to $0.3 million during the second quarter of 2009 from $1.3 million during the second quarter of 2008. For the six months ended July 4, 2009, interest income decreased 73.7% to $0.8 million from $3.2 million in the six month period ended June 28, 2008. The decreases were principally due to lower interest rates, as we maintained liquidity in Government-backed investments, and was compounded by lower average funds invested.

 OTHER EXPENSE. Other expense increased 36.0% to $1.5 million for the six months ended July 4, 2009 from $1.1 million for the six months ended June 28, 2008. Other expense was comprised of other-than-temporary declines in value on certain auction rate securities and a corporate debt security held by the Company.

LIQUIDITY AND CAPITAL RESOURCES

 As of July 4, 2009, we had $96.7 million in cash and cash equivalents and $31.7 million in marketable securities.  As of July 4, 2009, we had outstanding $38.0 million aggregate principal amount of our 2009 Notes, due October 15, 2009.

 Operating activities used $9.4 million in cash during the six month period ended July 4, 2009, primarily as a result of our operating results adjusted for non-cash expenses offset by cash generated by reducing working capital.  Investing activities, consisting principally of net purchases of marketable securities of $9.9 million and cash paid for fixed assets of $7.5million, used $17.4 million of cash during the six month period ended July 4, 2009.

 We had unconditional purchase obligations at July 4, 2009 of approximately $2.5 million.

 Within our $31.7 million in marketable securities at July 4, 2009, we held a total of $6.3 million of auction rate securities (ARS) and $2.1 million as a corporate debt security, which was originally purchased as an ARS prior to its exchange for the underlying 30 year notes due 2037. ARS are generally financial instruments of long-term duration with interest rates that are reset in short intervals through auctions. During the second half of 2007, certain auction rate debt and preferred securities failed to auction due to sell orders exceeding buy orders. In February 2008, liquidity issues in the global credit markets resulted in failures of the auction process for a broader range of ARS, including substantially all of the auction rate corporate, state and municipal debt and preferred equity securities we hold. When there is insufficient demand for the securities at the time of an auction and the auction is not completed, the interest rates reset to predetermined higher rates (default rates). While certain issuers redeemed certain of their ARS during 2008, the market remained constrained by illiquidity and the lack of free trading. The funds associated with the remaining failed auctions will not be accessible until a successful auction occurs, a buyer is found outside of the auction process or an issuer redeems its security. If the credit ratings of the security issuers deteriorate and any decline in market value is determined to be other-than-temporary, we would be required to adjust the carrying value of the investment through an additional impairment charge. To date, we have not realized any losses on ARS held by the Company or the notes received in exchange for an ARS, but have recognized other-than-temporary impairments of $9.3 million. During the quarter ended July 4, 2009, fair market values of certain of our ARS increased by $1.2 million which was recorded to other comprehensive income.

 We anticipate selling these impaired debt securities prior to a recovery in valuation. We will continue to monitor and evaluate these investments for impairment and for short term classification purposes. We may not be able to access cash by selling the aforementioned debt or preferred securities without the loss of principal until a buyer is located, a future auction for these investments is successful, they are redeemed by their issuers or they mature. If we are unable to sell these securities in the market or they are not redeemed, then we may be required to hold them to maturity or in perpetuity for the preferred ARS.

 We believe that our existing sources of capital, including our existing cash and marketable securities, will be adequate to satisfy operational needs, repayment of our $38.0 million convertible notes and anticipated capital needs for the next twelve months. We may elect to finance all or part of our anticipated operational, debt repayment and capital needs, which may include acquisitions of complementary businesses or technologies, investments in other companies or repurchases of our outstanding debt or equity, through additional equity or debt financing.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS 157) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 was effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued FSP FAS 157-2 “Partial Deferral of the Effective Date of Statement 157” (FSP 157-2). FSP 157-2 delayed the effective date of FAS 157 for non-financial assets and liabilities that are not measured or disclosed on a recurring basis to fiscal years beginning after November 15, 2008. The adoption of FSP 157-2 as of January 1, 2009 did not have a material effect on our consolidated financial statements for non-financial assets and liabilities and any other assets and liabilities carried at fair value.

 In April 2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed” (FSP 157-4). FSP 157-4 provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. FSP 157-4 is effective for interim and annual periods ending after June 15, 2009. This new standard was effective beginning with our second quarter financial reporting and did not have a material impact on our consolidated financial statements.

 In December 2007, the FASB issued FASB Statement No. 141R, “Business Combinations” (FAS 141R), which changes how business acquisitions are accounted.  FAS 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination.  Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits.  FAS 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008 and upon adoption did not have a material impact on our consolidated financial statements. However it is expected to change our accounting prospectively for future business combinations consummated subsequently.

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

 In March 2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (FAS 161).  FAS 161 applies to all derivative instruments and related hedged items accounted for under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities".  FAS 161 requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The fair value of derivative instruments and their gains and losses will need to be presented in tabular format in order to present a more complete picture of the effects of using derivative instruments. FAS 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

 In May 2008, the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

 In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1). FSP EITF 03-6-1 clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

In April 2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (FSP 115-2 and FSP 124-2). FSP 115-2 and FSP 124-2 change the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of the impairment to be recorded in earnings. FSP 115-2 and FSP 124-2 are effective for interim and annual periods ending after June 15, 2009 and apply based upon the Company’s ability and intent to hold the security to maturity or a recovery in valuation. The adoption of this standard did not have an impact on our consolidated financial statements, as it is more likely than not that we will sell the impaired debt securities prior to a recovery in valuation.

 In April 2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value of Financial Instruments” (FSP 107-1, APB 28-1). FSP 107-1, APB 28-1 requires fair value disclosures in both interim as well as annual financial statements in order to provide more timely information about the effects of current market conditions on financial instruments. FSP 107-1, APB 28-1 is effective for interim and annual periods ending after June 15, 2009. This new standard was effective beginning with our second quarter financial reporting and the additional financial reporting disclosures are included herein.

 In May 2009, the FASB issued FAS 165, “Subsequent Events”, which establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before the financial statements are issued. FAS 165 is effective for interim and annual periods ending after June 15, 2009.  This new standard was effective beginning with our second quarter financial reporting and did not have an impact on our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

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

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

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

ANADIGICS, Inc.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

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

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

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

 The Company held its annual meeting of stockholders on May 14, 2009 at which the Company’s stockholders voted on:

§   The election of two Class II Directors of the Company to hold office until 2012.

§   The ratification of the appointment of Ernst & Young LLP as independent registered public accountants of the Company for the fiscal year ending December 31, 2009.

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

§   The election of Mario Rivas as Class II Director was approved by holders of 50,605,506 shares of the Company’s outstanding capital stock.  Holders of 1,615,339 shares withheld from voting on such election.  The election of Paul Bachow as Class II Director was approved by holders of 34,653,808 shares of the Company’s outstanding capital stock.  Holders of 17,567,537 shares withheld from voting on such election. Messrs. Rivas and Bachow join the following continuing Directors of the Company: Messrs. Delfassy, Fellows, Rein, Rosenzweig and Solomon.

§   The ratification of the appointment of Ernst & Young LLP as independent registered public accountants was approved by holders of 51,820,275 shares of the Company’s outstanding capital stock. Holders of 260,710 shares voted against the ratification.  Holders of 139,860 shares abstained from voting on such ratification and broker non-votes totaled 10,936,846.

ITEM 6. EXHIBITS

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

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

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

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

SIGNATURES

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

  ANADIGICS, INC.

By:	/s/ Thomas C. Shields
	Thomas C. Shields
	Executive Vice President and Chief Financial Officer

Dated: August 10, 2009

EX-31.1

           < font id="TAB2" style="LETTER-SPACING: 9pt">                    ;  Exhibit 31.1

CERTIFICATION

I, Mario A. Rivas, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of ANADIGICS, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:                       August 10, 2009                                                             

By:	/s/ Mario A. Rivas
	Mario A. Rivas
	President and Chief Executive Officer

EX-31.2

 Exhibit 31.2

CERTIFICATION

I, Thomas C. Shields, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of ANADIGICS, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:                       August 10, 2009

By:	/s/ Thomas C. Shields
	Thomas C. Shields
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

The undersigned, Mario A. Rivas, President and Chief Executive Officer of ANADIGICS, Inc. (the "Company"), hereby certifies that the Quarterly Report of the Company on Form 10-Q for the period ended July 4, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 10, 2009

By:	/s/ Mario A. Rivas
	Mario A. Rivas
	President and Chief Executive Officer

This certification shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to ANADIGICS, Inc. and will be retained by ANADIGICS, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

The undersigned, Thomas C. Shields, Executive Vice President and Chief Financial Officer of ANADIGICS, Inc. (the "Company"), hereby certifies that the Quarterly Report of the Company on Form 10-Q for the period ended July 4, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 10, 2009

By:	/s/ Thomas C. Shields
	Thomas C. Shields
	Executive Vice President and Chief Financial Officer

This certification shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to ANADIGICS, Inc. and will be retained by ANADIGICS, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.