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 OCTOBER 2, 2010.
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 [ ] Accelerated filer [X] 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 October 2, 2010 was 66,190,770 (excluding 114,574 shares held in treasury).

INDEX

ANADIGICS, Inc.

PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets – October 2, 2010 and December 31, 2009
	Condensed consolidated statements of operations and comprehensive income (loss) – Three and nine months ended October 2, 2010 and October 3, 2009
	Condensed consolidated statements of cash flows – Nine months ended October 2, 2010 and October 3, 2009
	Notes to condensed consolidated financial statements – October 2, 2010
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II.	Other Information
Item 1.	Legal Proceedings
Item 6.	Exhibits
	Signatures

PART I - FINANCIAL INFORMATION

ITEM 1.                      FINANCIAL STATEMENTS

ANADIGICS, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	October 2, 2010			December 31, 2009
	(Unaudited)			(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	87,319		$	83,172
Accounts receivable, net		35,220			20,013
Inventories		19,840			18,250
Prepaid expenses and other current assets		4,567			2,503
Total current assets		146,946			123,938
Marketable securities		8,661			9,354
Plant and equipment:
Equipment and furniture		205,822			208,735
Leasehold improvements		45,873			44,705
Projects in process		3,113			5,978
		254,808			259,418
Less accumulated depreciation and amortization		(184,444	)		(178,534	)
		70,364			80,884
Other assets		245			276
Total assets	$	226,216		$	214,452
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,848		$	11,287
Accrued liabilities		12,367			10,208
Accrued restructuring costs		-			55
Total current liabilities		28,215			21,550
Other long-term liabilities		2,755			3,844
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 144,000 shares authorized, 66,306 issued at October 2, 2010 and 64,517 issued at December 31, 2009		663			645
Additional paid-in capital		585,182			576,975
Accumulated deficit		(393,155	)		(391,050	)
Accumulated other comprehensive income		2,815			2,747
Treasury stock at cost: 115 shares		(259	)		(259	)
Total stockholders’ equity		195,246			189,058
Total liabilities and stockholders’ equity	$	226,216		$	214,452

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	Three months ended						Nine months ended
	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	61,288		$	36,716		$	156,485		$	98,674
Cost of sales		39,049			32,246			102,949			90,194
Gross profit		22,239			4,470			53,536			8,480
Research and development expenses		13,326			11,025			37,321			33,026
Selling and administrative expenses		7,101			6,315			20,985			20,085
Restructuring and impairment (recovery) charges		-			-			(1,717	)		2,598
Operating income (loss)		1,812			(12,870	)		(3,053	)		(47,229	)
Interest income		106			184			292			1,030
Interest expense		(34	)		(584	)		(129	)		(1,766	)
Other income (expense), net		111			89			488			(1,456	)
Income (loss) before income taxes		1,995			(13,181	)		(2,402	)		(49,421	)
Benefit from income taxes		(297	)		(321	)		(297	)		(321	)
Net income (loss)	$	2,292		$	(12,860	)	$	(2,105	)	$	(49,100	)
Basic earnings (loss) per share	$	0.04		$	(0.21	)	$	(0.03	)	$	(0.79	)
Diluted earnings (loss) per share	$	0.03		$	(0.21	)	$	(0.03	)	$	(0.79	)
Weighted average common shares outstanding used in computing earnings (loss) per share
Basic		65,320			62,617			64,808			62,189
Diluted		67,488			62,617			64,808			62,189

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(AMOUNTS IN THOUSANDS)

	Three months ended						Nine months ended
	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net income (loss)	$	2,292		$	(12,860	)	$	(2,105	)	$	(49,100	)
Other comprehensive income (loss):
Unrealized (loss) gain on marketable securities		(14	)		524			287			1,695
Foreign currency translation adjustment		19			4			(35	)		(77	)
Reclassification adjustment:
Net recognized gain on marketable securities previously included in other comprehensive income		(15	)		-			(184	)		-
Comprehensive income (loss)	$	2,282		$	(12,332	)	$	(2,037	)	$	(47,482	)

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

	Nine months ended
	October 2, 2010			October 3, 2009
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,105	)	$	(49,100	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		14,403			13,539
Amortization		-			349
Stock based compensation		7,284			9,299
Recognized marketable securities impairment, net and other		(379	)		1,542
Recovery on sale of China building		(1,717	)		-
Loss (gain) on disposal of equipment		32			(68	)
Changes in operating assets and liabilities:
Accounts receivable		(15,207	)		2,160
Inventories		(1,590	)		12,113
Prepaid expenses and other assets		(2,034	)		(1,103	)
Accounts payable		4,651			107
Accrued liabilities and other liabilities		980			(1,922	)
Net cash provided by (used in) operating activities		4,318			(13,084	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(4,055	)		(9,519	)
Proceeds from sale of building and equipment		1,768			62
Purchases of marketable securities		-			(15,201	)
Proceeds from sale of marketable securities		1,175			29,116
Net cash (used in) provided by investing activities		(1,112	)		4,458
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock		941			100
Repurchase of common stock into treasury		-			(1	)
Net cash provided by financing activities		941			99
Net increase (decrease) in cash and cash equivalents		4,147			(8,527	)
Cash and cash equivalents at beginning of period		83,172			123,552
Cash and cash equivalents at end of period	$	87,319		$	115,025

See accompanying notes.

ANADIGICS, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – OCTOBER 2, 2010

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 BASIS OF PRESENTATION

 The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included.  Operating results for the three and nine month period ended October 2, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2 010.

 The condensed consolidated balance sheet at December 31, 2009 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, 2009.

 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 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 January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic 820)”.  This standard requires disclosure of the transfers in and out of Level 1 and 2 and a schedule for Level 3 that separately identifies purchases, sales, issuances and settlements and requires more detailed disclosures regarding valuation techniques and inputs.  The adoption of this standard effective January 1, 2010 did not have a material impact on the Company’s consolidated financial statements.

INCOME TAXES

 The Company maintains a full valuation allowance on its deferred tax assets.  Accordingly, the Company has not recorded a benefit or provision for income taxes. The Company recognizes interest and penalties related to the underpayment of income taxes in income tax expense. No unrecognized tax benefits, interest or penalties were accrued at October 2, 2010. The Company’s U.S. federal net operating losses have occurred since 1998 and as such, tax years subject to potential tax examination could apply from that date because carrying-back net operating loss opens the relevant year to audit.

WARRANTY

 Based on the examination of historical returns and other information it deems critical, the Company estimates that a current charge to income will need to be provided in order to cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in Accrued liabilities in the condensed consolidated balance sheets.Warranty reserve movements in the nine months ended October 2, 2010 included $744 in actual charges and $540 in provisions resulting in the balance of $790 at October 2, 2010.  Warranty reserve movements in the nine months ended October 3, 2009 included $1,465 in actual charges and a $1,754 increase in the provision.

RECLASSIFICATIONS

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

2. RESTRUCTURING, IMPAIRMENT (RECOVERY) AND OTHER CHARGES

 During the second quarter of 2010, the Company sold its wafer fabrication building in Kunshan, China for net proceeds of $1,717, resulting in the partial recovery of a related impairment charge. During 2008, the Company had written-off the value of this unfinished wafer fabrication building following an evaluation of alternatives in light of the then current circumstances, including: surplus industry production capacity, reduced demand experienced by the Company as well as the broader macroeconomic environment. As a result of its analysis of projected discounted cashflows, the Company recorded a $12,957 impairment charge in 2008 related to the China wafer fabrication facility.

 During the fourth quarter of 2008 and first quarter of 2009, the Company implemented certain workforce reduction programs, which eliminated approximately 210 positions throughout the Company, resulting in charges aggregating $4,738 for severance and related benefits.

	Workforce-related			Other			Total
December 31, 2008 balance	$	1,065		$	100		$	1,165
Additions		2,598			-			2,598
Deductions		(3,608	)		(100	)		(3,708	)
December 31, 2009 balance	$	55		$	-		$	55
Deductions		(55	)		-			(55	)
October 2, 2010 balance	$	-		$	-		$	-

 In the three months ended October 3, 2009, the Company recorded a charge within Cost of Sales in the amount of $3,879 in settlement of a commercial dispute with a customer. The settlement, dated October 26, 2009, required an initial payment of $1,110 and six quarterly payments of $500 which commenced in March 2010.

3. EARNINGS (LOSS) PER SHARE

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

	Three months ended				Nine months ended
	October 2, 2010		October 3, 2009		October 2, 2010		October 3, 2009
Weighted average common shares for basic earnings (loss) per share		65,320		62,617		64,808		62,189
Effect of dilutive securities:
Stock options (*)		1,579		-		-		-
Unvested restricted shares (*)		589		-		-		-
Adjusted weighted average shares for diluted earnings (loss) per share		67,488		62,617		64,808		62,189

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

 For the three and nine months ended October 2, 2010 and October 3, 2009, 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				Nine months ended
	October 2, 2010		October 3, 2009		October 2, 2010		October 3, 2009
Convertible notes		N/A		7,600		N/A		7,600
Stock options		1,760		5,389		4,640		5,389
Unvested restricted shares and units		160		1,809		1,811		1,809

4. 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 table presents a summary of fair value information for available-for-sale securities as at December 31, 2009 and October 2, 2010 in accordance with ASC Topic 820:

					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)
Non-auction Corporate Debt securities (2)	$	1,530	$	2,740	$	2,740	$	-	$	-
Auction Rate Securities
Corporate Debt (2)		600		1,106		-		-		1,106
Preferred Equity		3,013		3,703		-		-		3,703
State and Municipal Debt (2)		1,497		1,805		-		-		1,805
Total at December 31, 2009	$	6,640	$	9,354	$	2,740	$	-	$	6,614
Non-auction Corporate Debt securities (2)	$	1,530	$	2,800	$	2,800	$	-	$	-
Auction Rate Securities
Corporate Debt (2)		600		1,096		-		-		1,096
Preferred Equity		2,404		2,978		-		-		2,978
State and Municipal Debt (2)		1,310		1,787		-		-		1,787
Total at October 2, 2010	$	5,844	$	8,661	$	2,800	$	-	$	5,861

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

(2)   These available for sale debt securities have contractual maturities in excess of 10 years.

 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.

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 October 2, 2010, 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.

 During 2008, a corporate debt ARS position with a face value of $4,000 was exchanged for the underlying 30 year notes due 2037. At October 2, 2010, the Company values this security on a Level 1 basis, with a fair value of $2,800.

 The Company considers it more likely than not that it will sell their marketable debt securities prior to a recovery in valuation.

 For the three and nine months ended October 2, 2010, 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) Nine months ended October 2, 2010
	State & Municipal Debt Securities (a)			Corporate Debt Securities (b)			Preferred Equity Securities (c)			Total
Balance at January 1, 2010	$	1,805		$	1,106		$	3,703		$	6,614
Total gains or losses realized/unrealized
Included in earnings (loss)
- quarter ended April 3, 2010		38			-			-			38
- quarter ended July 3, 2010		38			-			265			303
- quarter ended October 2, 2010		38			-			-			38
Included in other comprehensive income(loss)
- quarter ended April 3, 2010		37			23			42			102
- quarter ended July 3, 2010		23			(11	)		(122	)		(110	)
- quarter ended October 2, 2010		108			(22	)		(35	)		51
Purchases, redemptions, and settlements:
Purchases		-			-			-			-
Redemptions
- quarter ended April 3, 2010		(100	)		-			-			(100	)
- quarter ended July 3, 2010		(100	)		-			(875	)		(975	)
- quarter ended October 2, 2010		(100	)		-			-			(100	)
Settlements		-			-			-			-
Transfers in and/or out of Level 3		-			-			-			-
Balance at October 2, 2010	$	1,787		$	1,096		$	2,978		$	5,861
Amount of total gains or losses for the period included in earnings(loss) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
- as of April 3, 2010		-			-			-			-
- as of July 3, 2010		-			-			-			-
- as of October 2, 2010		-			-			-			-
Securities held at October 2, 2010:
Face value	$	2,100		$	2,500		$	6,125		$	10,725
Financial ratings		A3			A		AAA to NR
Weighted average interest rate (*)		1.09	%		2.12	%		1.73	%		1.70	%
Maturity date		2045			2036			N/A

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

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

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

(c) Preferred securities issued by i) diversified closed-end management investment companies and ii) subsidiaries of two publicly-held debt default insurers. The investment companies 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. One of the debt default insurers no longer pays interest and the security has been written to zero.

 For the three and nine month period ended October 3, 2009, 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) Nine months ended October 3, 2009
	State & Municipal Debt 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
Included in (loss) earnings
- quarter ended April 4, 2009		(325	)		(62	)		(824	)		(1,211	)
- quarter ended July 4, 2009		-			-			-			-
- quarter ended October 3, 2009		38			-			(3	)		35
Included in other comprehensive (loss) income
- quarter ended April 4, 2009		-			-			-			-
- quarter ended July 4, 2009		47			212			321			580
- quarter ended October 3, 2009		172			121			14			307
Purchases, redemptions, and settlements quarter ended October 3, 2009		(100	)		-			(500	)		(600	)
Transfers in and/or out of Level 3		-			-			-			-
Balance at October 3, 2009	$	1,779		$	933		$	3,348		$	6,060
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	)
- as of October 3, 2009	$	(312	)	$	(62	)	$	(892	)	$	(1,266	)

5. INVENTORIES

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

	October 2, 2010			December 31, 2009
Raw materials	$	6,491		$	6,582
Work in process		15,497			9,845
Finished goods		8,451			11,702
		30,439			28,129
Reserves		(10,599	)		(9,879	)
Total	$	19,840		$	18,250

6. CONVERTIBLE 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 were convertible into shares of the Company’s common stock at any time prior to their maturity, at an initial conversion rate of 200 shares for each $1,000 principal amount, which was equivalent to a conversion price of $5.00 per share (7,600 shares contingently issuable). Interest on the 2009 Notes was payable semi-annually in arrears on April 15 and October 15 of each year.  The 2009 Notes were repaid on the October 15, 2009 maturity date.

7. BENEFIT FROM INCOME TAXES

 The Housing and Economic Recovery Act of 2008 included the partial refund of certain carried-forward Research and Experimental (R&E) tax credits. During the three month period ended October 2, 2010, the Company finalized and filed the R&E claim as part of its 2009 federal tax return and subsequently received cash of $297 for the R&E credits. During the three month period ended October 3, 2009, the Company received cash of $321 for R&E credits relating to its 2008 federal tax return.  Such refunds were recorded as a benefit from income taxes during the third quarters of 2009 and 2010.

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 16,050 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 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 6,694 shares of common stock were reserved for offering under the ESP Plan. Offerings are made at the commencement of each calendar year and must be purchased by the end of that calendar year. Pursuant to the terms of the ESP Plan, shares purchased and the applicable per share price were 729 and $1.39, respectively for the year ended December 31, 2009.

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

	Three months ended				Nine months ended
	October 2, 2010		October 3, 2009		October 2, 2010		October 3, 2009
Amortization of restricted stock	$	1,948	$	1,866	$	5,609	$	6,156
Amortization of ESP Plan		200		60		600		460
Amortization of stock option awards		275		986		1,075		2,683
Total stock based compensation	$	2,423	$	2,912	$	7,284	$	9,299
By Financial Statement line item
Cost of sales	$	590	$	601	$	1,752	$	1,943
Research and development expenses		879		1,167		2,562		3,715
Selling and administrative expenses		954		1,144		2,970		3,832
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. The value of restricted stock grants are fixed upon the date of grant and amortized over the related vesting period of six months 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 and stock option awards are forfeited annually (exclusive of LTI’s, as described below).  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, 2009 to October 2, 2010 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, 2009		1,974		$	9.27		611		$	4.94		2,819		$	10.00
Granted		-			-		873			3.22		3,245			2.04
Shares vested/options exercised		(1,195	)		8.66		(587	)		4.71		(49	)		2.06
Forfeited/expired		(141	)		11.52		(69	)		4.01		(708	)		9.18
Balance at December 31, 2009		638		$	9.90		828		$	3.36		5,307		$	5.32
Granted		-			-		2,006			4.32		98			4.79
Shares vested/options exercised		(273	)		9.61		(1,337	)		3.56		(479	)		1.97
Forfeited/expired		(22	)		8.55		(29	)		4.11		(286	)		12.35
Balance at October 2, 2010		343		$	10.21		1,468		$	4.48		4,640		$	5.22

 In 2008, 357 restricted stock shares were 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. In 2008, 27 shares of the 357 LTI shares were released upon the separation of our former chief executive officer.  As of October 2, 2010, a total of 174 LTI shares have forfeited since their initial grant date. Based upon the performance of the Company through October 2, 2010 and anticipated to Dece mber 31, 2010, 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 October 2, 2010
Unrecognized stock based compensation cost
Option plans	$	1,608
Restricted stock	$	5,474
Weighted average remaining recognition period
Option plans	1.4 years
Restricted stock	1.7 years

Stock options outstanding at October 2, 2010 are summarized as follows:

Range of exercise prices		Outstanding Options at October 2, 2010		Weighted average remaining contractual life		Weighted average exercise price		Exercisable at October 2, 2010		Weighted average exercise price
$	1.39 - $1.93		1,204		8.3	$	1.93		648	$	1.93
$	2.03 - $4.36		1,676		7.3	$	2.37		981	$	2.37
$	4.84 - $8.84		1,174		4.9	$	8.01		1,118	$	8.15
$	9.00 - $18.98		586		1.5	$	14.56		586	$	14.56

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 and fair values for stock based compensation grants used for the nine month periods ended October 2, 2010 and October 3, 2009 were:

	Nine months ended
	October 2, 2010			October 3, 2009
Stock option awards:
Risk-free interest rate		2.6	%		1.6	%
Expected volatility		85	%		99	%
Average expected term (in years)		5.0			5.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of options granted	$	3.26		$	1.51
ESP Plan:
Risk-free interest rate		0.3	%		0.4	%
Expected volatility		61	%		96	%
Average expected term (in years)		1.0			1.0
Expected dividend yield		0.0	%		0.0	%
Weighted average fair value of purchase option	$	1.44		$	0.72

 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 under the caption In re Anadigics, Inc. Securities Litigation, No. 3:08-cv-05572, 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 in connection with, among other things, Anadigics's manufacturing capabilities and the demand for its products.  On October 23, 2009, plaintiffs filed a Consolidated Amended Class Action Complaint, (the “First Amended Complaint”), which names the Company, a current officer and a former officer-director, and alleges a proposed class period that runs from July 24, 2007 through August 7, 2008.  On December 23, 2009, defendants filed a motion to dismiss the First Amended Complaint; that motion was fully briefed as of March 30, 2010.  After holding extensive oral argument on defendants' motion on Au gust 3, 2010, the District Court found plaintiffs' First Amended Complaint to be deficient, but afforded them another opportunity to amend their pleading.  The District Court therefore denied defendants' motion to dismiss without prejudice to defendants' renewing the motion in response to plaintiffs' Second Amended Complaint, which plaintiffs filed on October 4, 2010.  The Second Amended Complaint, which contains the same substantive claims that were alleged in the First Amended Complaint, alleges a proposed class period that runs from February 12, 2008 through August 7, 2008.  Defendants' motion to dismiss the Second Amended Complaint is to be filed by December 3, 2010.  The briefing in connection with defendants' motion is expected to be completed by March 2011.

 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 Deriva tive Lawsuits under the caption In re Anadigics, Inc. Derivative Litigation, No. SOM-L-88-09.  By Order dated March 27, 2009, the Superior Court stayed the Derivative Lawsuits pending disposition of the defendants' motion to dismiss the First Amended Complaint in the Class Actions.  By Order dated September 13, 2010, the Superior Court extended the stay of the Derivative Lawsuits until the disposition of defendants' motion to dismiss the Second 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) standar ds 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)and Long Term Evolution (LTE), 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 for our customers 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 during 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 macroeconomic environment. Commencing in the second quarter of 2009, we have experienced sequential growth in quarterly revenues and in the second quarter of 2010, attained positive operating income.

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

 RESULTS OF OPERATIONS

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

	Three months ended						Nine months ended
	October 2, 2010			October 3, 2009			October 2, 2010			October 3, 2009
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		63.7	%		87.8	%		65.8	%		91.4	%
Gross margin		36.3	%		12.2	%		34.2	%		8.6	%
Research and development expenses		21.7	%		30.0	%		23.8	%		33.5	%
Selling and administrative expenses		11.6	%		17.2	%		13.4	%		20.4	%
Restructuring and impairment (recovery) charges		-			-			(1.1	)%		2.6	%
Operating income (loss)		3.0	%		(35.0	)%		(1.9	)%		(47.9	)%
Interest income		0.2	%		0.5	%		0.2	%		1.0	%
Interest expense		(0.1	)%		(1.6	)%		(0.1	)%		(1.8	)%
Other income (expense), net		0.2	%		0.2	%		0.3	%		(1.4	)%
Income (loss) before income taxes		3.3	%		(35.9	)%		(1.5	)%		(50.1	)%
Benefit from income taxes		(0.4	)%		(0.9	)%		(0.2	)%		(0.3	)%
Net income (loss)		3.7	%		(35.0	)%		(1.3	)%		(49.8	)%

 NET SALES.Net sales increased 66.9% during the third quarter of 2010 to $61.3 million from $36.7 million in the third quarter of 2009.  For the nine months ended October 2, 2010, net sales were $156.5 million, a 58.6% increase from net sales of $98.7 million for the nine months ended October 3, 2009.

 Sales of integrated circuits for wireless applications increased 76.7% during the third quarter of 2010 to $45.2 million from $25.6 million in the third quarter of 2009.  For the nine months ended October 2, 2010, net sales of integrated circuits for wireless applications increased 64.9% to $113.9 million from $69.1 million for the nine months ended October 3, 2009. The increase in sales in the three and nine month periods was primarily due to increased demand in W-CDMA cellular device markets.

 Sales of integrated circuits for broadband applications increased 44.4% during the third quarter of 2010 to $16.1 million from $11.1 million in the third quarter of 2009. For the nine months ended October 2, 2010, net sales of integrated circuits for broadband applications increased 43.9% to $42.6 million from $29.6 million for the nine months ended October 3, 2009. This increase in sales in the three and nine month periods was primarily due to increased demand for CATV, infrastructure and WiMax products, marginally offset by declines in WiFi PAs shipped into the PC Notebook market.

 GROSS MARGIN. Gross margin during the third quarter of 2010 increased to 36.3% of net sales from 12.2% of net sales in the third quarter of 2009.  The third quarter of 2009 included a charge of $3.9 million in settlement of a commercial dispute with a customer, which represented 10.6% of revenue. For the nine months ended October 2, 2010, gross margin increased to 34.2% from 8.6% for the nine months ended October 3, 2009.  After considering the charge outlined above, the remaining increase in gross margin was primarily due to increased product shipments and wafer production, and fixed production costs decreasing as a percent of higher revenues and was further supported by variable cost improvements gained over the prior year. Fixed production costs include, but are not limi ted to depreciation, maintenance and operations’ support functions.

 RESEARCH AND DEVELOPMENT. Company-sponsored research and development (R&D) expenses increased 20.9% during the third quarter of 2010 to $13.3 million from $11.0 million during the third quarter of 2009. Company sponsored research and development expenses for the nine month period ended October 2, 2010 increased 13.0% to $37.3 million from $33.0 million during the nine month period ended October 3, 2009.  The increases were primarily due to higher material spending, personnel and support costs for our accelerated R&D product and process development efforts.

 SELLING AND ADMINISTRATIVE. Selling and administrative expenses increased 12.5% to $7.1 million during the third quarter of 2010 from $6.3 million during the third quarter of 2009.  Selling and administrative expenses for the nine month period ended October 2, 2010 increased 4.5% to $21.0 million from $20.1 million during the nine month period ended October 3, 2009.   The increase in the third quarter was driven by increased investment in our sales effort, which were partly offset by reductions in general and administrative costs.

 RESTRUCTURING AND IMPAIRMENT (RECOVERY) CHARGES.  During the second quarter of 2010, we sold the wafer fabrication building in Kunshan, China which had been fully written-off in 2008. The sale resulted in a net recovery of $1.7 million. 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 42.4% to $0.1 million during the third quarter of 2010 from $0.2 million during the third quarter of 2009.  For the nine months ended October 2, 2010, interest income decreased 71.7% to $0.3 million from $1.0 million in the nine month period ended October 3, 2009. The decreases were due to lower interest rates and compounded by lower average funds invested.

 INTEREST EXPENSE.  Interest expense decreased 94.2% when compared to $0.6 million during the third quarter of 2009. For the nine months ended October 2, 2010, interest expense decreased 92.7% to $0.1 million from $1.8 million in the nine month period ended October 3, 2009. The decreases are principally related to the repayment of our $38.0 million outstanding balance of our 5% Convertible Senior Notes due in October 2009.

 OTHER INCOME (EXPENSE), NET. For the nine months ended October 2, 2010, other income of $0.5 million principally relates to recoveries on redemptions of certain auction rate securities and compares to $1.5 million of other expense in the nine month period ended October 3, 2009. Other expense in the nine month period ended October 3, 2009 was comprised of other-than-temporary declines in value on certain auction rate securities and a corporate debt security held by the Company.

 BENEFIT FROM INCOME TAXES.   The Housing and Economic Recovery Act of 2008 included the partial refund of certain carried-forward Research and Experimental (R&E) tax credits. During the third quarter of 2010 and 2009 the Company finalized and filed its R&E claims as part of its 2009 and 2008 Federal tax return and subsequently received cash of $0.3 million in each of these periods. Such refund was recorded as a benefit from income taxes during the third quarters of 2009 and 2010.

LIQUIDITY AND CAPITAL RESOURCES

 As of October 2, 2010, we had $87.3 million in cash and cash equivalents and $8.7 million in marketable securities.

 Operating activities provided $4.3 million in cash during the nine month period ended October 2, 2010, primarily as a result of our operating results adjusted for non-cash expenses offset by $13.2 million of cash used to fund working capital. Investing activities, consisting of net proceeds received from the sale of a wafer fabrication building in Kunshan, China of $1.7 million, net proceeds received from the sale of marketable securities of $1.2 million, and cash paid for fixed assets of $4.0 million, used $1.1 million of cash during the nine month period ended October 2, 2010.  Financing activities provided $0.9 million of cash, consisting of proceeds received from stock option exercises.

 We had unconditional purchase obligations at October 2, 2010 of approximately $3.0 million.

 Within our $8.7 million in marketable securities at October 2, 2010, we held a total of $5.9 million of auction rate securities (ARS) and $2.8 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 have redeemed certain of their ARS since 2008, the market remains 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 below our amortized cost basis 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 $8.9 million.

 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. Based on our ability to access our cash, our expected operating cash flows, and our other sources of cash, we do not anticipate that the potential illiquidity of these invest ments will affect our ability to execute our current business plan.

 We believe that our existing sources of capital, including our existing cash and marketable securities, will be adequate to satisfy operational needs and anticipated capital needs for at least the next twelve months. We may elect to finance all or part of our future capital requirements through additional equity or debt financing.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic 820)”.  This standard requires disclosure of the transfers in and out of Level 1 and 2 and a schedule for Level 3 that separately identifies purchases, sales, issuances and settlements and requires more detailed disclosures regarding valuation techniques and inputs.  The adoption of this standard effective January 1, 2010 did not have a material impact on our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

 This quarterly report on Form 10-Q contains projections and other forward-looking statements (as that term is defined in the Securities Exchange Act of 1934, as amended).  These projections and forward-looking statements reflect the Company’s current views with respect to future events and financial performance and can generally be identified as such because the context of the statement will include words such as “believe”, “anticipate”, “expect”, or words of similar import. Similarly, statements that describe our future plans, objectives, estimates or goals are forward-looking statements.  No assurances can be given, however, that these events will occur or that these projections will be achieved, an d 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 results of operations can vary significantly due to the cyclical nature of the semiconductor industry and our end markets; (iv) our operating results may be harmed if we fail to sell a high volume of products; (v) our dependence on a small number of customers; (vi) the existence of intense competition in the markets for our products, which could result in a decrease in our products’ prices and sales; (vii) cost redu ction measures may again be required and could be inadequate or not realize their anticipated savings; (viii) we may face failures in our manufacturing processes or processes of our vendors; (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) the variability of our manufacturing yields may affect our gross margins; (xii) our products have experienced rapidly declining unit prices; (xiii) the short life cycles of some of our products may leave us with obsolete or excess inventories; (xiv) our need to keep pace with rapid product and process development and technological changes as well as product cost reductions to be competitive; (xv) any failure to perform or meet customer requirements; (xvi) our gallium arsenide semiconductors may cease to be competitive with silicon alternatives ; (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; and (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, 2009. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 The Company's market risk has not changed significantly for the risks disclosed in Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

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 October 2, 2010, 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 contr ols 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 October 2, 2010.

 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 under the caption In re Anadigics, Inc. Securities Litigation, No. 3:08-cv-05572, 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 in connection with, among other things, Anadigics's manufacturing capabilities and the demand for its products.  On October 23, 2009, plaintiffs filed a Consolidated Amended Class Action Complaint, (the “First Amended Complaint”), which names the Company, a current officer and a former officer-director, and alleges a proposed class period that runs from July 24, 2007 through August 7, 2008.  On December 23, 2009, defendants filed a motion to dismiss the First Amended Complaint; that motion was fully briefed as of March 30, 2010.  After holding extensive oral argument on defendants' motion on Au gust 3, 2010, the District Court found plaintiffs' First Amended Complaint to be deficient, but afforded them another opportunity to amend their pleading.  The District Court therefore denied defendants' motion to dismiss without prejudice to defendants' renewing the motion in response to plaintiffs' Second Amended Complaint, which plaintiffs filed on October 4, 2010.  The Second Amended Complaint, which contains the same substantive claims that were alleged in the First Amended Complaint, alleges a proposed class period that runs from February 12, 2008 through August 7, 2008.  Defendants' motion to dismiss the Second Amended Complaint is to be filed by December 3, 2010.  The briefing in connection with defendants' motion is expected to be completed by March 2011.

 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 Deriva tive Lawsuits under the caption In re Anadigics, Inc. Derivative Litigation, No. SOM-L-88-09.  By Order dated March 27, 2009, the Superior Court stayed the Derivative Lawsuits pending disposition of the defendants' motion to dismiss the First Amended Complaint in the Class Actions.  By Order dated September 13, 2010, the Superior Court extended the stay of the Derivative Lawsuits until the disposition of defendants' motion to dismiss the Second Amended Complaint in the Class Actions.

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

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

ITEM 6. EXHIBITS

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

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

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

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

SIGNATURES

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

 ANADIGICS, INC.

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

Dated: November 3, 2010

EX-31.1

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:                       November 3, 2010                                                               

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:                       November 3, 2010

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 October 2, 2010 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: November 3, 2010

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 October 2, 2010 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: November 3, 2010

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.