SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004.

OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-25662

ANADIGICS, Inc.

------------------------------------------------------

(Exact name of registrant as specified in its charter)

Delaware 22-2582106

--------------------------------- -----------------------------------

(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

141 Mt. Bethel Road

Warren, New Jersey 07059

------------------------------------------ ----------------------

(Address of principal executive offices) (Zip Code)

(908) 668-5000

----------------------------------------------------

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

The above securities are registered on the NASDAQ National Market

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated in Part III of this Form 10-K or any amendment to this Form 10-K. /X/

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes /X/ No / /

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of July 3, 2004 was approximately $151 million, based upon the closing sales price of the Registrant’s common stock as quoted on the NASDAQ National Market on such date.

The number of shares outstanding of the Registrant's common stock as of December 31, 2004 was 33,072,438.   

Documents incorporated by reference: Definitive proxy statement for the Registrant's 2005 annual meeting of shareholders (Part III).

TABLE OF CONTENTS

		Page
PART I
Item 1:	Business	3
Item 2:	Properties	16
Item 3:	Legal Proceedings	17
Item 4:	Submission of Matters to a Vote of Security Holders	17
PART II
Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6:	Selected Financial Data	17
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	24
Item 8:	Financial Statements and Supplementary Data	25
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
1tem 9A:	Controls and Procedures	41
Item 9B:	Other Information	42
PART III
Item 10:	Directors and Executive Officers of the Registrant	43
Item 11:	Executive Compensation	43
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	43
Item 13:	Certain Relationships and Related Transactions	43
Item 14:	Principal Accountant Fees and Services	43
PART IV
Item 15:	Exhibits, Financial Statement Schedules	43

PART 1

ITEM 1. BUSINESS.

Background

 ANADIGICS, Inc. ("we" or the "Company") was 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.

We design and manufacture radio frequency integrated circuit (RFIC) solutions for the wireless and broadband communications markets. Our high frequency RFIC products enable manufacturers of communications equipment to enhance overall system performance and reduce manufacturing cost and time to market. Our products are primarily included in cellular and personal communications service (PCS) phones and base stations, wireless local area networks (WLANs), and cable television infrastructure and set-top boxes. We offer a broad array of products including amplifiers, switches, tuner integrated circuits, photodiodes and integrated RF modules. These integrated circuits perform the transmit and receive functions that are critical to the performance of wireless and broadband communication systems.

In the wireless market, we focus on RFIC solutions for wireless communication handset applications operating over various air interface standards, including Code Division Multiple Access (CDMA), Global System for Mobile communication (GSM), Wideband CDMA (WCDMA), General Packet Radio Service (GPRS) and Enhanced Data rate for GSM Evolution (EDGE). In the broadband markets, our focus is on applications for WLAN systems, cable television (CATV) subscriber products, CATV infrastructure systems, and fiber optic communications systems. We believe we have a competitive advantage in the markets we serve due to our design, development and applications expertise, our superior compound semiconductor technologies, our high-volume, low-cost state-of-the-art manufacturing processes and expertise, and our strong working relationships with leading original equipment manufacturers (OEMs), original design manufacturers (ODMs) and reference design houses (collectively our "market customers").

We design, develop and manufacture RFICs primarily using Gallium Arsenide (GaAs) compound semiconductor substrates with various process technologies, Metal Semiconductor Field Effect Transistors (MESFET), Pseudomorphic High Electron Mobility Transistors (pHEMT), and Heterojunction Bipolar Transistors (HBT).

The quality and reliability of our products results from a comprehensive design, characterization, qualification, and robust manufacturing process. In addition to the manufacturing facility and design team located at our corporate headquarters in Warren, New Jersey, we operate a development center and manufacturing facility in Camarillo, California and development centers in Richardson, Texas; Atlanta, Georgia; Aalborg, Denmark; Taipei, Taiwan; Seoul, Korea and Shanghai, China.

Our design and applications engineering staff is strategically active and engaged with customers during all phases of design and production. This strategy helps our customers streamline their design process and time to market, achieve cost-effective and manufacturable designs, and ensure a smooth transition into high-volume production.

We have two company-owned fabrication facilities (fabs): a state-of-the-art six-inch diameter analog GaAs fab located at our corporate headquarters in Warren, New Jersey, and a two-inch diameter indium phosphide (InP) fab located in Camarillo, California. Our six-inch wafer fab allows us to produce, at a small incremental cost, more than twice the RF die per wafer compared with a four-inch wafer, still used by some of our competition. We believe our strong manufacturing fabrication capability, combined with logistics expertise and innovative product designs, allow us to quickly develop and manufacture products in line with market and customer requirements.

Industry Background

Over the last decade, there have been remarkable developments in electronic communications, as evidenced by the emergence of wireless communications, Internet services and digital television services. Radio frequency/microwave and integrated circuit technologies have enabled increases in communications capacity and significant reductions in systems costs. The wireless and broadband communications markets are beneficiaries of current technological trends, including higher frequencies, digital modulation and higher levels of electronic integration.

Wireless communications are growing rapidly and replacing landline telephone services in mature markets and are being built in lieu of landline services in other emerging markets. Worldwide unit sales of cellular/PCS wireless handsets were approximately 610 million in 2004.

Broadband markets are also benefiting from technological changes. Cable television systems are moving from one-way analog signal distribution systems to interactive digital systems offering increased and new video content, Internet connection services and telephony. We estimate that approximately 10 million digital CATV set-top boxes were produced in 2004. The continued build out and upgrading of the cable infrastructure network required a production of approximately 2.8 million amplifier components for line extenders, systems amplifiers and fiber nodes. Additionally, the WLAN market continues to be a bright spot in the worldwide chip marketplace. The demand for increased mobility, seamless communications, internet browsing, and streaming video/audio is driving the need for increased throughput and gaining even greater momentum provided by WLAN modems for the enterprise and home markets. New standards, such as 802.11g, 802.11 b/g as well as dual-band combo products, are accelerating the adoption and expanding the use of WLANs globally. We estimate that approximately 75 million WLAN chipsets, primarily wireless notebooks and access points, were shipped in 2004.

Activity in broadband fiber optic networks is being driven by demand from Internet and corporate users for high-speed data transfer capability resulting in increased deployment of Fiber to the Home (FTTH), Local Area Networks (LAN), Metropolitan Area Networks (MAN), and Storage Area Networks (SAN).

Given these developments, our customers are facing the following challenges and need the following solutions from their suppliers:

*   Shorter cycle times. In both the wireless and broadband communications markets, manufacturers must bring new subscriber products to market quickly in order to maintain their market position. The development of multi-chip modules, using advanced packaging techniques, and the development of relationships with providers of RF reference designs is imperative;

*   Need for low-cost products. Wireless handsets and cable set-top boxes are increasingly becoming consumer-driven, commodity products. Component suppliers must be cost effective in order for their market customers to stay competitive; and

*   Stronger supplier relationships. The digital, wireless, cable and fiber optic industries are standards-driven. Companies in the communications industry must work very closely with their suppliers in order to develop new products. Companies therefore limit themselves to a small number of suppliers in order to keep their competitive advantages.

The GaAs Advantage

Through our research and development efforts, we have developed expertise in producing cost-effective GaAs-based RFICs for high-volume commercial applications. These circuits offer the performance attributes required for radio frequency/microwave applications that are not easily obtained with silicon-based integrated circuits. GaAs transistors can operate at frequencies greater than silicon transistors, and therefore can handle the requirements of radio frequency/microwave applications. GaAs RFICs have a lower noise figure than silicon-based integrated circuits, providing increased sensitivity, less distortion and interference and better dynamic range, thereby enabling systems to handle a wide range of signal strengths. GaAs is a semi-insulating material that facilitates integration of the passive components required in radio frequency/microwave applications. Finally, GaAs RFICs used in transmitter applications are more power-efficient than silicon-based circuits, allowing for longer battery life or use of smaller batteries.

The InGaP Advantage

 In the industry, there are two predominant commercially viable types of HBT process technologies. Earlier generations use either beryllium or carbon doping in the base layer and Aluminum Gallium Arsenide (AlGaAs) in the emitter layer. The state-of-the-art for HBT uses carbon doping in the base layer and Indium Gallium Phosphide (InGaP) in the emitter layer.

 There are several significant advantages to InGaP. One advantage is stability over a range of temperatures. An InGaP HBT device will experience only an approximate 10% drop in gain over a range of 0 to 100 degrees Celsius, while the gain loss in an AlGaAs device approximates 50%. An InGaP device has much higher reliability than an AlGaAs device, giving the option to run the InGaP device at higher temperatures. These advantages lead to smaller chip sizes and thus lower cost. Finally, InGaP allows for more robust manufacturing because the material has the advantage of a selective etch process not possible with AlGaAs.

 The InGaP advantages of performance, reliability and manufacturability led to our decision to develop the world’s first commercially viable 6-inch InGaP HBT process, which was completed in 2000 and complements our GaAs MESFET technology.

ANADIGICS’ Strategy

Our objective is to be a leading supplier of RFICs for the wireless and broadband communications markets. The cornerstone of our strategy is to capitalize on opportunities in the wireless and broadband communications markets by addressing applications that leverage our RFIC design and manufacturing expertise and longstanding relationships with leading companies in these markets. The key elements of this strategy include:

Be First-to-Market with Proprietary Value-Added Products

We intend to continue to design timely, cost-effective RFIC solutions for our target markets. In developing prototypes, the combination of an experienced engineering staff, a "quick-turn" wafer fabrication facility, the flexibility of using both in-house and contracted product assembly, and a world class product testing process generally allow us to develop parts and be ready for customer evaluation in less than one month. This design efficiency contributes to customer satisfaction and allows us to improve product designs rapidly for manufacturing efficiency. We will continue to apply our "best-of-breed" product differentiation strategy, which focuses on developing high-performance and integrated products.

Capitalize on World Class Manufacturing Capabilities, while Reducing Costs

We will continue to focus on improving manufacturing performance and customer service, while reducing costs. We believe we can effectively control the critical phases of the production process in order to realize high manufacturing yields, product quality and customer satisfaction. Our six-inch wafer fab provides increased manufacturing capacities and shorter cycle times at a lower incremental cost than four-inch wafer fabs. We believe our strong working relationship with overseas manufacturing subcontractors will allow us to continue to deliver low-cost products to our customers.

Forge Strong Customer Relationships

We have developed strong working relationships with our customers, many of whom are leading manufacturers in their markets. Because our target markets are standards-driven, customer relationships are important. These relationships provide us with product development opportunities and the ability to anticipate future market trends. The rapid feedback received from our customers during the product design phase increases the likelihood that our designs will meet our customers' cost and performance requirements. We believe strengthening our relationships with reference design companies will continue to contribute market share gains within each of the wireless and broadband communications markets.

Pursue Strategic Alliances and Investments

We will continue to pursue strategic alliances and investments to expand and improve upon our technologies, industry expertise, products and market share. We expect that these alliances and investments will be complementary to current activities and will enhance our ability to work with leading companies to develop next generation solutions. As new strategic opportunities to increase shareholder value arise, we will continue to monitor and selectively pursue them.

Target Markets and Products

The Company classifies its revenues based upon the end application of the product in which its integrated circuits are used. For the years ended December 31, 2002, 2003 and 2004, wireless applications accounted for approximately 54%, 55% and 50% of total net sales, while broadband applications accounted for approximately 46%, 45% and 50% of total net sales.

Wireless Communications

The wireless communications market is a growing, dynamic market as a result of increasing demand for:

*   Portable voice, video and data communications;

*   Smaller, lighter handsets offering increased functionality;

*   Reliable access and voice quality comparable to land lines;

*   Longer talk-time and standby time; and

*   Wireless access to the Internet.

Our RFIC products are used in handsets where small size, multi-band operation and low power consumption are key features. Currently in the United States, the primary digital air interface communications standard is CDMA. Another standard, GSM, is the most widely deployed digital standard on a worldwide basis. We currently offer and continue to bring to market an array of products for both the handset and infrastructure markets for these major air interface standards.

We have developed multiband/multimode InGaP HBT power amplifier (PA) modules for the CDMA and GSM standards. InGaP HBT module technology offers high efficiency, low power consumption and stability over a range of temperatures, as well as a lower total solution cost. This combination allows our customers to build the transmitter section of the wireless handset more efficiently by reducing design complexity and component counts.

Our principal customers in the wireless market include LG Electronics and Kyocera. Of our total net sales in the year ended December 31, 2004, LG Electronics accounted for 15% and Kyocera accounted for 11%, while no other customer in this market accounted for 10% or more of total net sales during 2004.

 The following table sets forth information regarding our principal products in the wireless communications market:

Product	Application
Handset Products
Power Amplifier (PA)	Used in RF transmit chain of wireless handset to amplify signal to base station.
Single-band PA module	Encapsulates InGaP HBT PA die and certain passive components in multi-layer laminate module. Used primarily in CDMA handsets.
Quad-band PA module	Encapsulates InGaP HBT PA die, CMOS bias control chip, and certain passive components in multi-layer laminate module. Used primarily in GSM handsets.
PowerPlexerTM	Encapsulates two InGaP HBT PA die, CMOS, bias and power control chip, antenna switch, coupler, harmonic filter and passives in multi-layer laminate module. Used in GSM handsets.
RF Switches	Used in wireless handsets and other wireless applications to switch between receive and transmit modes and multiple frequency bands.
Infrastructure Products
Driver Amplifiers	Used in cellular base stations in the transmit chain.
Gain Blocks	Used in cellular base stations in the transmit chain.

Broadband

The Broadband segment of our business encompasses our key markets in video and data telecommunications systems, primarily consisting of cable television, WLAN and fiber optic applications.    

Cable television systems traditionally delivered one-way analog television programming, limited to a few entertainment channels, via a coaxial cable. However, upgraded coaxial cable and hybrid fiber-coax systems are increasingly used to deliver digital content as well as a wide array of interactive video and other services, such as high speed Internet access and telephony. These market trends require system operators to upgrade the bandwidth, quality and functionality of both the system infrastructure and terminal equipment.

Consumer preferences for digital programming, watch-and-record capability and video-on-demand (VoD) has resulted in an increased demand for CATV set-top boxes with advanced features and multiple tuners. Our double conversion tuner RFICs support these enhanced features, and our new active splitter RFICs facilitate the use of multiple tuners per box. Both product lines enable our customers to accelerate and simplify the design of their set-top boxes.

Our CATV line amplifier RFICs are used in infrastructure equipment such as line extenders, distribution amplifiers, system amplifiers and fiber nodes. Including products that operate from power supplies as high as 24 volts, our line amplifier product line supports the stringent performance requirements of the latest high-bandwidth CATV systems. We also provide amplifier RFICs for drop amplifier applications, which provide the final stage of amplification in the CATV system at individual subscriber locations.

Hybrid fiber-coax CATV systems utilize fiber optic lines to a fiber node or subscriber location, at which point the signal is converted from an optical signal to an RF signal. We manufacture photodetector diodes that are used to perform the optical to RF translation. Typically, a photodetector diode will interface to an RF amplifier, like one of our line amplifiers, to drive the local coaxial network.

The following table sets outlines our principal CATV products and their applications:

Product	Application
CATV Set-top Boxes Products
Tuner Upconverters and Downconverters	Used to perform signal amplification and frequency conversion in double-conversion video and data tuners.
Active Splitters	Used to split an incoming signal to feed multiple tuners.
CATV Infrastructure Products
Line Amplifiers	Used to distribute RF signals from headends to subscribers.
Drop Amplifiers	Used to amplify RF signals at individual subscriber locations.
Photodetector Diodes	Used to convert from optical to RF signals.

Our principal customers in the cable and broadcast markets are Motorola, Inc. and Scientific Atlanta, which each represented 10% of total net sales in 2004. No other customer in this market accounted for 10% or more of our total net sales in 2004.

In March 2003, we acquired the WLAN power amplifier product line from RF Solutions, headquartered in Atlanta, Georgia as an entrance into the growing WLAN market. The WLAN market is being driven by:

*   Demand for wireless data access and portability of wireless access devices;

*   Emergence of several wireless data networking mediums, primarily via personal computers; and

*   New market applications such as consumer electronics and wireless voice over Internet protocol (VoIP).

Adoption of wireless data networking has been enabled by the introduction of a family of industry standards for WLAN technology that have substantially increased capacity and data rates. The introduction of the 802.11g standard allows the existing 2.4 GHz spectrum to be operated more efficiently with a substantial increase in data rates from the previous one or two megabits per second (Mbps) now up to 54 Mbps. The introduction of the 802.11a standard has enabled the use of the 5 GHz spectrum and substantially increased the available channel capacity. The wireless networking market is further transitioning from products that operate using a single standard to products that support all of the standards using the 2.4 GHz and 5 GHz bands in a variety of combinations. These 802.11a/g dual band products will support the continued growth of the market while substantially diminishing or avoiding frequency interference and network congestion.

The wireless capabilities of WLAN networking products are provided primarily by a semiconductor chipset. A wireless chipset typically contains a radio transceiver, a digital media access controller (MAC), baseband processor and power amplifier to boost the transmit signal, thereby improving range and data throughput. Traditionally, a single power amplifier supported a chipset. However, the market has begun seeking both dual band power amplifiers and power amplifiers with higher levels of integration. This increased integration will provide for smaller size, higher reliability and faster time to market for WLAN systems.

No single customer in the WLAN market was responsible for 10% or more of our total net sales in 2004. The following table sets forth information regarding our principal products in the WLAN market:

Product	Application
Single band Products
2.4 GHz power amplifiers	Used in wireless network interface cards (NIC), embedded PC notebook (mini-PCI) and access point (AP) applications to boost the transmit signal for increased range and data throughput.
5 GHz power amplifiers	Used in wireless rich-media applications, such as streaming audio/video, to boost the transmit signal for increased range and data throughput.
Dual band power amplifiers	Used in wireless network systems that require seamless transition between frequencies to mitigate interference and congestion.

Marketing, Sales, Distribution and Customer Support

We primarily sell our products to our direct customers worldwide. We have developed close working relationships with leading companies in the broadband and wireless communications markets. Additionally, we selectively use independent manufacturers' representatives and distributors to complement our direct sales and customer support efforts. In 2004 we continued to evaluate, upgrade and expand our sales representative organization. We believe this is critical to our objective of expanding our customer base, especially as we expand our product portfolio. In addition to our field sales applications support centers in both Taipei, Taiwan and Seoul, South Korea established in 2003, we opened a new office in Shanghai, China in 2004. Our support centers position our resources in close proximity to our existing and potential customers enabling real-time service.

We believe that the technical nature of our products and markets demands an extraordinary commitment to building and maintaining close relationships with our customers. The sales and marketing staff, assisted by the technical staff and senior management, visit prospective and existing customers worldwide on a regular basis. We believe that these contacts are vital to the development of close, long-term working relationships with our customers, and in obtaining regular forecasts, market updates and information regarding technical and market trends.

Our design and applications engineering staff actively communicate with customers during all phases of design and production. We provide our customers with engineering data and up-to-date product application notes, and communicate with our customers' engineers on a regular basis to assist in resolving technical problems on and off site. In most cases the design and applications engineers obtain prototypes from our customers in order to troubleshoot and identify potential improvements to the design in parallel with our customers' efforts. This strategy helps our customers accelerate their design process, achieve cost-effective and manufacturable designs, and ensure a smooth transition into high-volume production.

We believe that reference-design manufacturers in the wireless and broadband market will continue to play an ever-increasing role in the future of these markets. Therefore, we believe it is essential that we maintain strong relationships in partnering with these companies to penetrate these market opportunities.

Manufacturing, Assembly and Testing

Manufacturing

We fabricate substantially all of our integrated circuits in our six-inch diameter GaAs wafer fab in Warren, New Jersey and in our two-inch diameter InP fab in Camarillo, California.

Our Warren facility has a 19,000 square foot fab, including 10,000 square feet of Class 100 "clean room" space. Based on physical floor space, weekly production capacity at the Warren facility is approximately 1,200 equivalent six-inch HBT wafers. Based on equipment currently installed, present weekly capacity is 600 equivalent six-inch HBT wafers, although this space can be equipped to expand capacity as market conditions require. On the basis of equivalent four-inch HBT wafers, which is the industry norm, present weekly capacity is 1,350 wafers per week. See "Risk Factors - We may face constraints on our manufacturing capacity which would limit our ability to increase sales volumes."

Our InP fab in Camarillo is a 22,000 square foot facility with 2,000 and 6,000 square feet of fab and assembly clean room, respectively. Production capacity is currently 50 InP wafers per week per shift.

Our six-inch diameter InGaP HBT process, including a backside VIA hole process, was among the firstin the industry and is the technology platform for our newer-generation PA module wireless applications. The advantages of better performance over a range of temperatures and higher reliability lead to smaller chip sizes and thus lower cost. InGaP also allows for more robust manufacturing because the material has the advantage of a selective etch process not possible with AlGaAs.

Our wafer processing technologies have been developed for low cost, high yield, rapid throughput and short cycle-time manufacturing. Our GaAs MESFET process uses ion implant variations to optimize performance and yield, allowing us to produce high-linearity, low-noise, receiver integrated circuits or transmitter integrated circuits with high power and efficiency. MESFET is the technology platform underlying the majority of our broadband products.

Our GaAs pHEMT manufacturing process achieves extremely high electron mobility. Devices manufactured using this process have better sensitivity and bandwidth than conventional MESFET devices, and offer better stability at higher frequencies. The pHEMT process is an enabling technology for our wireless switch products.

Our Warren manufacturing processes were first certified as ISO 9001 compliant in December 1993. Since that time, we have updated our compliance to the ISO 9001:2000 upgrade of this standard. In 2004, we also received ISO 14001 certification.

 Our manufacturing process technology includes our two-inch InP process in Camarillo. InP applications for discrete active devices are widespread in communications networking, making it the natural starting place for wholesale integration of passive devices for a complete system on a chip. As a semiconductor material, InP can provide all-in-one integrated functionality that includes light generation, detection, amplification, high-speed modulation and switching, as well as passive splitting, combining and routing. The same material can be used to make high-speed modulators, switches, amplifiers and detectors, or just passive waveguides for interconnecting these diverse devices.

Assembly

Fabricated GaAs wafers are shipped to contractors in Asia for packaging into monolithic microwave integrated circuits (MMICs) or for assembly into standard plastic lead frame-based packaging or modules.

The components within mobile phones have become increasingly integrated, enabling the development of ever smaller, lighter, and more efficient phones. However, integration in the RF subsystem at the IC level is considerably more challenging, given that various components require different manufacturing processes for optimal performance. Typical RF processes include pHEMT, MESFET, HBT, and RF CMOS. The choice of process for various RFICs is typically based on the relative weight given to performance (often measured by efficiency and linearity) versus cost. In low-end phones, cost will dominate, and less-efficient, less-costly components will be used. On the other hand, in high-end phones, the emphasis will shift to better performance.

Since the processes cannot be easily or economically integrated onto a single die, multi-chip modules that combine multiple die within a single package have taken hold, enabling the selection of the optimal process technology for each IC within the package, while providing enhanced integration at the system level. These solutions generate significant size and weight reductions in handset component circuitry, while simultaneously increasing the reliability of the components.

A number of challenges, outlined below, are being overcome as we become a fully integrated module manufacturer:

Design complexity: Within a cellphone, the RF section arguably represents the greatest design challenge for engineers. Modules place the burden of designing and optimizing RF front-end subsystems on RFIC manufacturers. These manufacturers must focus on providing the optimal IC process (e.g., InGaP HBT for PAs) and then integrate the technology into a well-designed module that also incorporates additional passive and control circuitry. The quality of the RF module design ultimately drives the device’s performance and manufacturability.

Increased cost: Modules can be substantially more expensive to produce than individual IC components. Modules often require extensive design and engineering expertise, new production processes, and additional assembly costs. In many cases, the necessary components (e.g., discretes and passives) must be purchased from outside vendors. Consequently, the gross margin is generally lower for modules than for discrete RF MMICs.

Manufacturing challenges: In addition to the increased costs of designing modules, achieving sufficient yields on new products can be problematic. Previously, RFIC companies had little or no experience in manufacturing modules. As a result, our gross margins were under pressure as we progressed on the learning curve. In order to attain high "final test" yields, the challenge continues to be to achieve high yields in the fab, in assembly, and in test.

Modules allow our customers to get their product to market more rapidly at a lower overall end product cost due largely to the reduced parts count and reduction in required engineering effort. We believe we are well positioned to address the shift toward multi-chip modules because we possess both extensive process breadth (a key advantage, as modules typically incorporate numerous process technologies) and a large portfolio of RF expertise (e.g., PAs, switches, transceivers, filters, and discretes).

Final Test

After assembly, packaged integrated circuits are tested prior to shipment to our customers. Increasingly, these test activities are being performed by third-party contractors in Asia.

We outsource a majority of our production RF testing operations, which are performed nearby our module assembly contractors in Asia.  This adds considerable efficiencies to the device manufacturing process in reducing product cycle times and manufacturing costs and supports our initiative to reduce manufacturing costs by lowering test cost per unit.

See "Risk Factors - We depend on foreign semiconductor assembly contractors and a loss of an assembly contractor could result in delays or reductions in product shipment," "The manufacturing of our products could be delayed as a result of the outsourcing of our test operations" and "We may face constraints on our manufacturing capacity which would limit our ability to increase sales volumes."

Raw Materials

GaAs wafers, InP wafers, HBT/pHEMT epitaxial wafers, passive components, other raw materials, and equipment used in the production of our integrated circuits are available from a limited number of sources. See "Risk Factors - Sources for certain components, materials and equipment are limited which could result in delays or reductions in product shipments."

Research and Development

We have made significant investments in our proprietary processes, including product design, wafer fabrication and integrated circuit testing, which we believe gives us a competitive advantage. Research and development expenses were $29.7 million, $32.1 million, and $33.3 million in 2002, 2003, and 2004, respectively. Our research and development efforts in 2002 and 2003 were primarily focused on improving performance relative to the size of our CDMA products and developing products to compete in the GSM market. In 2003 and 2004, our activities included the continued development and expansion of products offered to the GSM and WLAN markets.

As of December 31, 2004, we had approximately 121 engineers assigned primarily to research and development.

Our wireless power amplifier capability has expanded from plastic-packaged GaAs RF integrated circuit products to RF modules incorporating multiple technologies. This capability is critical to encapsulating RF intellectual property and know-how into a module that may be used to shrink the time-to-market for cellular phone manufacturers. Our RF power amplifier modules use a multi-layer laminate substrate to combine our proprietary InGaP HBT power amplifier integrated circuits with custom-designed CMOS controllers and passive components.

Module integration capability required extending our design tools in several dimensions. Electromagnetic simulation of laminate substrates to design embedded passive components and model parasitic effects were added to our RF design tool set. In addition, the ability to simulate at the module level was greatly enhanced through our partnership with a leading manufacturer of electronic design automation tools.

Additionally, several silicon CMOS components were developed to support our module efforts. We currently do not intend to manufacture this technology in-house, as we believe there will be adequate external foundry capacity available. See "Risk Factors - Sources for certain components, materials and equipment are limited, which could result in delays or reductions in product shipments."

Customers

 We receive most of our revenues from a few significant customers. See "Risk Factors - We depend on a small number of customers; a loss of or a decrease in purchases and/or change in purchasing patterns by one of these customers would materially and adversely affect our revenues and our ability to forecast revenue."

Employees

As of December 31, 2004, we had 424 employees, including five employees in Denmark who were members of the Danish Engineering Union. We believe our labor relations to be good and we have never experienced a work stoppage. During 2004 our workforce decreased by 56 employees, primarily as a result of staff reductions in operations and research and development.

Competition

Competition in all of the markets for our current products is intense; competition is on the basis of performance, price and delivery. Our competitors in the wireless market are suppliers of both discrete devices and integrated circuits, and include Hitachi, Ltd., RF Micro Devices, Inc., Skyworks Solutions, Inc. and certain of our customers who design and fabricate their own in-house solutions.

Within the Broadband markets, which include the cable television, WLAN and fiber optic markets, our competitors are also primarily manufacturers of both discrete components and integrated circuits. Our competitors include Analog Devices, Inc., Applied Micro Circuits Corp., Conexant Systems, Inc., Maxim Integrated Products, Inc., Microsemi Corp. and Microtune, Inc., as well as certain of our customers who design and fabricate their own in-house solutions.

Many of our competitors have significantly greater financial, technical, manufacturing and marketing resources. Increased competition could adversely affect our revenue and profitability through price reductions or reduced demand for our products. See "Risk Factors - We face intense competition, which could result in a decrease in our products’ prices and sales."

Patents, Licenses and Proprietary Rights

It is our practice to seek U.S. and foreign patent and copyright protection on our products and developments where appropriate and to protect our valuable technology under U.S. and foreign laws affording protection for trade secrets and for semiconductor chip designs. We own 47 U.S. patents and have twelve pending U.S. patent applications in addition to one pending foreign patent application filed under the Patent Cooperation Treaty. The U.S. patents were issued between 1992 and 2004 and will expire between 2009 and 2023.

We rely primarily upon trade secrets, technical know-how and other unpatented proprietary information relating to our product development and manufacturing activities. To protect our trade secrets, technical know-how and other proprietary information, our employees are required to enter into agreements providing for maintenance of confidentiality and the assignment of rights to inventions made by them while in our employ. We have also entered into non-disclosure agreements to protect our confidential information delivered to third parties in conjunction with possible corporate collaborations and for other purposes. See "Risk Factors - We may not be successful in protecting our intellectual property rights or in avoiding claims that we infringed on the intellectual property rights of others."

Environmental Matters

Our operations are subject to federal, state and local environmental laws, regulations and ordinances that govern activities or operations that may have adverse effects on human health or the environment. These laws, regulations or ordinances may impose liability for the cost of remediating, and for certain damages resulting from, sites of past releases of hazardous materials. We believe that we currently conduct, and have conducted, our activities and operations in substantial compliance with applicable environmental laws, and that costs arising from existing environmental laws will not have a material adverse effect on our results of operations. We cannot assure you, however, that the environmental laws will not become more stringent in the future or that we will not incur significant costs in the future in order to comply with these laws. See "Risk Factors - We are subject to stringent environmental regulation both domestically and abroad."

Available Information

Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website (www.anadigics.com) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission.

RISK FACTORS

CERTAIN STATEMENTS IN THIS REPORT ARE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED) THAT INVOLVE RISKS AND UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS CAN GENERALLY BE IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT WILL INCLUDE WORDS SUCH AS WE "BELIEVE", "ANTICIPATE", "EXPECT" OR WORDS OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE OUR FUTURE PLANS, OBJECTIVES, ESTIMATES OR GOALS ARE FORWARD-LOOKING STATEMENTS. THE CAUTIONARY STATEMENTS MADE IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS AND DEVELOPMENTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS PRESENTED HEREIN INCLUDE THE RISK FACTORS DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.

IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN ANADIGICS, INC. AND IN ANALYZING OUR FORWARD-LOOKING STATEMENTS.

Risks Related to ANADIGICS

We have a history of recent losses, and expect to continue to incur losses.

We have incurred operating and net losses in each of the three years in the period ended December 31, 2004 and expect to continue to incur losses in 2005. The markets for our products weakened substantially in 2001. The downturn from 2000 levels reflected a reduction in capital spending by many of our customers and lower end consumer demand.

Although the company has gained increased market acceptance for certain of its products in 2004, the market for our products remains weak. We cannot assure you as to whether or when we will become profitable again. If the recent trend in our net losses does not reverse, either because the economy does not improve or because we underperform, our ability to compete in a very difficult market may be materially and adversely affected.

Our results of operations can vary significantly.

The semiconductor industry has been cyclical, seasonal and subject to significant downturns. Since the beginning of 2001, the industry has experienced market weaknesses that have created lower order demand, production overcapacity, high inventory levels, and accelerated declines in average selling prices for our products, which is expected to continue in the future. These elements have continued to negatively affect our operating results.

Our results of operations have been subject to significant quarterly fluctuations. As a result, we may experience substantial period-to-period fluctuations in future operating results. Investors should not rely on our results of operations for any previous period as an indicator of what results may be for any future period.

Our decline in revenue and underutilized manufacturing capacity have adversely affected our gross margins and profitability.

Our manufacturing infrastructure and capacity were designed to address significantly higher volume levels and consequently we have underutilized manufacturing capacity. Many of our expenses, particularly those relating to capital equipment and manufacturing overhead, are fixed. Accordingly, our fixed production costs increase as a percentage of revenues during a period of declining revenues, which adversely affects our gross margin and profitability. In the future, improved utilization of our manufacturing capacity will primarily depend on continued growth in demand for our wireless products. Our ability to reduce expenses is further constrained because we must continue to invest in research and development in order to maintain our competitive position.

We depend on a small number of customers; a loss of or a decrease in purchases and/or change in purchasing patterns by one of these customers would materially and adversely affect our revenues and our ability to forecast revenue.

We receive most of our revenues from a few significant customers and their subcontractors. Sales to LG Electronics, Kyocera, Motorola, Inc. and Scientific Atlanta accounted for 15%, 11%, 10% and 10%, respectively, of total net sales during 2004. Sales to our greater than 10% customers have exceeded 45% of total revenues in each of the last three years. Our operating results have been materially and adversely affected in the past by the failure of anticipated orders to be realized and by deferrals or cancellations of orders as a result of changes in customer requirements. If we were to lose LG Electronics, Kyocera, Motorola, Scientific Atlanta or another major customer, or if sales to these customers were to decrease materially, results of operations would be materially and adversely affected.

Several of our customers have reduced the lead times on orders placed with us for our products. While this trend has enabled us to reduce our inventories, it also restricts our ability to forecast future revenues. We cannot predict whether a change in order demand patterns or lead times from customers will take place.

We will need to keep pace with rapid product and process development and technological changes as well as product cost reductions to be competitive.

Rapid changes in both product and process technologies characterize the markets for our products. Because these technologies are continually evolving, we believe that our future success will depend, in part, upon our ability to continue to improve the efficiencies of our product and process technologies and rapidly develop new products and process technologies. If a competing technology emerges that is, or is perceived to be, superior to our existing technology and we are unable to develop and/or implement the new technology successfully or to develop and implement a competitive and economic alternative technology, our results of operations would be materially and adversely affected. We will need to make substantial investments to develop these enhancements and technologies, and we cannot assure investors that funds for these investments will be available or that these enhancements and technologies will be successful.

Our products have experienced rapidly declining unit prices.

In each of the markets where we compete, prices of established products tend to decline significantly over time. Accordingly, in order to remain competitive, we believe that we must continue to develop product enhancements and new technologies that will either slow the price declines of our products or reduce the cost of producing and delivering our products. If we fail to do so, our results of operations and financial condition would be materially and adversely affected.

The variability of our manufacturing yields may affect our gross margins.

Our manufacturing yields vary significantly among products, depending on the complexity of a particular integrated circuit’s design and our experience in manufacturing that type of integrated circuit. We have experienced difficulties in achieving planned yields in the past, particularly in pre-production and upon initial commencement of full production volumes, which have adversely affected our gross margins.

Regardless of the process technology used, the fabrication of integrated circuits is a highly complex and precise process. Problems in the fabrication process can cause a substantial percentage of wafers to be rejected or numerous integrated circuits on each wafer to be nonfunctional, thereby reducing yields. These difficulties can include:

·   defects in masks, which are used to transfer circuit patterns onto our wafers;

·   impurities in the materials used;

·   contamination of the manufacturing environment; and

·   equipment failure.

Many of our manufacturing costs are relatively fixed and average selling prices for our products tend to decline over time. Therefore, it is critical for us to improve the number of shippable integrated circuits per wafer and increase the production volume of wafers in order to maintain and improve our results of operations. Yield decreases can result in substantially higher unit costs, which could materially and adversely affect our operating results and have done so in the past. We cannot assure you that we will not suffer periodic yield problems, particularly during the early production of new products or introduction of new process technologies. In either case, our results of operations and financial condition could be materially and adversely affected.

We depend on foreign semiconductor assembly contractors and a loss of an assembly contractor could result in delays or reductions in product shipment.

We do not assemble our integrated circuits or multi-chip modules. Instead, we provide the integrated circuit die and, in some cases, packaging and other components to assembly vendors located primarily in Asia. We maintain two qualified service suppliers for each assembly process. If we are unable to obtain sufficient high quality and timely assembly service, or if we lose one of our current assembly vendors, or if we experience delays in transferring our production between assembly vendors, or if means of transportation to our vendors are interrupted, we would experience delays or reductions in product shipment, and/or reduced product yields, that could materially and adversely affect our results of operations and financial condition.

The manufacturing of our products could be delayed as a result of the outsourcing of our test operations.

We outsource most of the testing of certain of our products to test houses or vendors overseas, primarily in Asia. The failure of these test houses or other third parties to maintain our standards of testing or complete the testing process of our products in a timely manner, could subject us to delays in manufacturing and in the delivery of products to customers, which could have a material adverse effect on our results of operations and financial condition. In addition to the test houses, we also test some of our products internally.

The short life cycles of some of our products may leave us with obsolete or excess inventories.

The life cycles of some of our products depend heavily upon the life cycles of the end products into which our products are designed. For example, we estimate that current life cycles for cellular and PCS telephone handsets, and in turn our cellular and PCS products, are approximately 12 to 24 months. Products with short life cycles require us to manage production and inventory levels closely. We cannot assure investors that obsolete or excess inventories, which may result from unanticipated changes in the estimated total demand for our products and/or the estimated life cycles of the end products into which our products are designed, will not affect us beyond the inventory charges taken in the past.

Our announced restructuring plans may have insufficiently addressed market conditions.

In 2002 and 2003, we announced restructuring plans in response to a sharp downturn in our industry. Under our restructuring plans, we have incurred charges relating to reductions in our workforce, impairments of certain manufacturing and research fixed assets, and the consolidation of facilities. From January 1, 2001 to December 31, 2004, our workforce was reduced by over 25%, primarily through restructuring and cost reduction initiatives. We may have incorrectly anticipated the extent of the long-term market decline for our products and services and we may be forced to restructure further or may incur further operating charges due to poor business conditions.

We face intense competition, which could result in a decrease in our products’ prices and sales.

The semiconductor industry is intensely competitive and is characterized by rapid technological change. We compete primarily with manufacturers of discrete gallium arsenide and silicon semiconductors and with manufacturers of gallium arsenide and silicon integrated circuits. We expect increased competition from:

·   other gallium arsenide integrated circuit manufacturers who may replace us as a supplier to our market customers or otherwise dilute our sales to them;

·   silicon analog integrated circuit manufacturers; and

·   companies which may penetrate the radio frequency/microwave integrated circuit communications market with other breakthrough technologies.

Increased competition could result in:

·   decreased prices of our integrated circuits;

·   reduced demand for our products; and

·   a reduction in our ability to recover development engineering costs.

Any of these developments could materially and adversely affect our results of operations and financial condition.

Most of our current and potential competitors, including Hitachi Ltd., Maxim Integrated Products Inc., Microtune Inc., Motorola, RF Micro Devices Inc. and Skyworks Solutions, Inc. have significantly greater financial, technical, manufacturing and marketing resources than we do. We cannot assure investors that we will be able to compete successfully with existing or new competitors.

We may not have sufficient cash flow to make payments on our convertible senior unsecured notes and any other debt we may incur.

Our ability to pay principal and interest on our $84.7 million in outstanding convertible senior unsecured notes, $46.7 million of which are due in November of 2006 and the remainder of which are due in October of 2009, and our other debt and to fund our planned capital expenditures depends on our future operating performance. Our future operating performance is subject to a number of risks and uncertainties that are often beyond our control, including general economic conditions and financial, competitive and regulatory factors. Consequently, we cannot assure investors that we will have sufficient cash flow to meet our liquidity needs.

We face a risk that capital needed for our business will not be available when we need it.

In the future, we may need to access sources of financing to fund our growth. Taking into consideration our cash balance including marketable securities of $104.1 million at December 31, 2004 and our $84.7 million in outstanding convertible senior notes, $46.7 million of which are due in November of 2006 and the remainder of which are due in October of 2009, we believe that our existing sources of liquidity, together with cash expected to be generated from operations, will be sufficient to fund our research and development, capital expenditure, working capital and other financing requirements for at least the next twelve months.

However, there is no assurance that the capital required to fund these expenses will be available in the future. Conditions existing in the U.S. capital markets when we seek financing, as well as the then current condition of the Company will affect our ability to raise capital, as well as the terms of any financing. We may not be able to raise enough capital to meet our capital needs on a timely basis or at all. Failure to obtain capital when required would have a material adverse effect on the Company.

In addition, any strategic investments and acquisitions that we may make to help us grow our business may require additional capital resources. We cannot assure you that the capital required to fund these investments and acquisitions will be available in the future.

We may pursue selective acquisitions and alliances and the management and integration of additional operations could be expensive and could divert management time and acquisitions may dilute the ownership of our current shareholders.

As part of our strategy, we will selectively pursue acquisitions and alliances. Our ability to complete acquisitions or alliances is dependent upon, and may be limited by, the availability of suitable candidates and capital. In addition, acquisitions and alliances involve risks that could materially adversely affect our operating results, including the management time that may be diverted from operations in order to pursue and complete such transactions and difficulties in integrating and managing the additional operations and personnel of acquired companies. We cannot assure investors that we will be able to obtain the capital necessary to consummate acquisitions or alliances on satisfactory terms, if at all. Further, any businesses that we acquire will likely have their own capital needs, which may be significant, which we could be called upon to satisfy independent of the acquisition price. Future acquisitions or alliances could result in additional debt, equity, costs and contingent liabilities, all of which could materially adversely affect our results of operations and financial condition. Any such additional debt could subject us to substantial and burdensome covenants and any such equity could be materially dilutive to existing stockholders. The growth that may result from future acquisitions or alliances may place significant strains on our resources, systems and management. If we are unable to effectively manage such growth by implementing systems, expanding our infrastructure and hiring, training and managing employees, our ability to offer our products could be materially harmed.

We depend heavily on key personnel.

Our success depends in part on keeping key technical, marketing, sales and management personnel. We must also continue to attract qualified personnel. The competition for qualified personnel is intense, and the number of people with experience, particularly in radio frequency engineering, integrated circuit design, and technical marketing and support, is limited. We cannot be sure that we will be able to attract and retain other skilled personnel in the future.

Our international sales and operations involve foreign exchange risks.

Sales to customers located outside North America (based on shipping addresses and not on the locations of ultimate end users) accounted for 46%, 49% and 61% of our net sales for the years ended December 31, 2002, 2003, and 2004 respectively. We expect that revenues derived from international sales will continue to represent a significant portion of our net sales.

In addition, independent third parties located in Asia supply a substantial portion of the starting wafers and packaging components that we use in the production of gallium arsenide integrated circuits, and assemble and test nearly all of our products.

Due to our reliance on international sales and foreign suppliers, assemblers and test houses, we are subject to risks of conducting business outside of the United States, including primarily those arising from currency fluctuations, which could affect the price of our products and/or the cost of producing them.

Sources for certain components, materials and equipment are limited, which could result in delays or reductions in product shipments.

We do not manufacture any of the starting wafers, packaging or passive components used in the production of our gallium arsenide integrated circuits. Wafers and packaging components are available from a limited number of sources. If we are unable to obtain these wafers or components in the required quantities and quality, we could experience delays or reductions in product shipments, which would materially and adversely affect our results of operations and financial condition.

We depend on a limited number of vendors to supply equipment used in our manufacturing processes. When demand for semiconductor manufacturing equipment is high, lead times for delivery of such equipment can be substantial. We cannot assure investors that we would not lose potential sales if required manufacturing equipment is unavailable and, as a result, we are unable to maintain or increase our production levels.

We may face constraints on our manufacturing capacity which would limit our ability to increase sales volumes.

We believe that our six-inch wafer fabrication facility, the expansion of which was completed in June of 2002, should be able to satisfy our forecasted production needs. However, if production volumes were to increase significantly from expected levels, we might be required to hire, train and manage additional production personnel in order to successfully increase production capacity at our facility. We cannot assure investors that we would be able to implement these changes successfully. A delay for any reason in increasing capacity would limit our ability to increase sales volumes. In addition, if we fail to increase production and do not have sufficient capacity to satisfy the demand for our products, our relationships with customers could be harmed.

We may face interruptions in our manufacturing processes.

Our manufacturing operations are complex and subject to disruption, including for causes beyond our control. The fabrication of integrated circuits is an extremely complex and precise process consisting of multiple steps. It requires production in a highly controlled, clean environment. Minor impurities, contamination of the clean room environment, errors in any step of the fabrication process, defects in the masks used to print circuits on a wafer, defects in equipment or materials, human error, or a number of other factors can cause a substantial percentage of wafers to be rejected or numerous die on each wafer to malfunction. Because our operating results are highly dependent upon our ability to produce integrated circuits at acceptable manufacturing yields, these factors could have a material adverse effect on our business. In addition, we may discover from time to time defects in our products after they have been shipped, which may require us to replace such products.

Additionally, our operations may be affected by lengthy or recurring disruptions of operations at any of our production facilities or those of our subcontractors. These disruptions may include electrical power outages, fire, earthquake, flooding, war, acts of terrorism, or other natural or man-made disasters. Disruptions of our manufacturing operations could cause significant delays in shipments until we are able to shift the products from an affected facility or subcontractor to another facility or subcontractor. In the event of such delays, we cannot assure investors that the required alternative capacity, particularly wafer production capacity, would be available on a timely basis or at all. Even if alternative wafer production or assembly and test capacity is available, we may not be able to obtain it on favorable terms, which could result in higher costs and/or a loss of customers. We may be unable to obtain sufficient manufacturing capacity to meet demand, either at our own facilities or through external manufacturing or similar arrangements with others.

Due to the highly specialized nature of the gallium arsenide integrated circuit manufacturing process, in the event of a disruption at the Warren, New Jersey semiconductor wafer fabrication facility, alternative gallium arsenide production capacity would not be immediately available from third-party sources. These disruptions could have a material adverse effect on our business, financial condition and results of operations.

We are subject to stringent environmental regulation both domestically and abroad.

We are subject to a variety of federal, state and local requirements governing the protection of the environment. These environmental regulations include those related to the use, storage, handling, discharge and disposal of toxic or otherwise hazardous materials used in or resulting from our manufacturing processes. Failure to comply with environmental laws could subject us to substantial liability or force us to significantly change our manufacturing operations. In addition, under some of these laws and regulations, we could be held financially responsible for remedial measures if our properties are contaminated, even if we did not cause the contamination.Although we are aware of contamination resulting from historical third-party operations at one of our facilities, a prior owner has been performing, and paying for the costs associated with, remediation of this property pursuant to an agreement with the state environmental regulatory authority. However, we cannot assure you that such prior owner will continue to do so or that we will not incur any material costs or liabilities associated with compliance with environmental laws in the future.

We may not be successful in protecting our intellectual property rights or in avoiding claims that we infringed on the intellectual property rights of others.

Our success depends in part on our ability to obtain patents and copyrights, maintain trade secret protection and operate without infringing on the proprietary rights of third parties. As is typical in the semiconductor industry, we have been notified, and may be notified in the future, that we may be infringing on certain patent and/or other intellectual property rights of others. We cannot assure investors that we will not be subject to patent litigation to defend our products or processes against claims of patent infringement or other intellectual property claims. Any such litigation could result in substantial costs and diversion of our resources. If we determine that we have infringed on the intellectual property rights of others, we cannot assure investors that we would be able to obtain any required licenses on commercially reasonable terms.

In addition to patent and copyright protection, we also rely on trade secrets, technical know-how and other non-patented proprietary information relating to our product development and manufacturing activities, which we seek to protect, in part, by confidentiality agreements with our collaborators and employees. We cannot assure investors that these agreements will not be breached, that we would have adequate remedies for any breach or that our trade secrets and proprietary know-how will not otherwise become known or independently discovered by others.

Provisions in our governing documents and our shareholders rights agreement could discourage takeovers and prevent shareholders from realizing an investment premium.

Certain provisions of our articles of incorporation and by-laws could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of our Company. These provisions include the ability of the board of directors to designate the rights and preferences of preferred stock and issue such shares without shareholder approval, our staggered board of directors, and our advance notice requirements for stockholder proposals and director nominations. In addition, the Company has adopted a shareholders’ rights agreement that may make it more difficult and expensive for a third party to acquire the Company. Any of the foregoing could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

We have had significant volatility in our stock price and it may fluctuate in the future. Therefore, the ability to sell shares of common stock at or above the price paid for them may be difficult.

The trading price of our common stock has and may continue to fluctuate significantly. Such fluctuations may be influenced by many factors, including:

• our performance and prospects;

• the performance and prospects of our major customers;

• the depth and liquidity of the market for our common stock;

• investor perception of us and the industry in which we operate;

• changes in earnings estimates or buy/sell recommendations by analysts;

• general financial and other market conditions; and

• domestic and international economic conditions.

Public stock markets have experienced, and are currently experiencing, extreme price and trading volume volatility, particularly in the technology sectors of the market. This volatility has significantly affected the market prices of securities of many technology companies for reasons frequently unrelated to or disproportionately impacted by the operating performance of these companies. These broad market fluctuations may materially and adversely affect the market price of our common stock.

In addition, fluctuations in our stock price and our price-to-earnings multiple may have made our stock attractive to momentum, hedge or day-trading investors who often shift funds into and out of stocks rapidly, exacerbating price fluctuations in either direction, particularly when viewed on a quarterly basis.

ITEM 2. PROPERTIES.

Our executive offices and primary fabrication facility are located at 141 Mt. Bethel Road, Warren, New Jersey 07059. We currently lease space in several buildings in Warren, New Jersey, all of which are located in the same industrial park. Approximately 150,000 square feet of manufacturing and office space is occupied in a building located at 141 Mt. Bethel Road in Warren, New Jersey under a twenty-year lease expiring on December 31, 2016. Approximately 92,500 square feet of office and laboratory space is leased at 35 Technology Drive in Warren, New Jersey under a twelve-year lease, which expires on May 1, 2005. We have moved out of this space and over half of the space at 35 Technology Drive has been sublet in order to reduce costs. Additionally, we lease an approximately 22,000 square foot building in Camarillo, California. The lease expires on July 31, 2005; however the term may be extended up to two times for additional two-year periods.

We also lease approximately 36,700 square feet of office space in the following locations: Richardson, Texas; Atlanta, Georgia; San Jose California; Aalborg, Denmark; Rehovot, Israel; Taipei, Taiwan; Shanghai, China; and Seoul, South Korea under lease agreements with remaining terms ranging from seven months to two years that can be extended, at our option. The space in Rehovot, Israel has been sublet in order to reduce costs.

ITEM 3. LEGAL PROCEEDINGS.

The Company is a party to litigation arising out of the operation of its business. We believe that the ultimate resolution of such litigation should not have a material adverse effect on our financial condition, results of operation or liquidity.

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

No matters were submitted to a vote of the Company’s security holders during the fourth quarter of 2004.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our $0.01 par value Common Stock, ("Common Stock") has been quoted on the NASDAQ National Market under the symbol "ANAD" since the commencement of trading on April 21, 1995 following our initial public offering of our Common Stock. The following table sets forth for the periods indicated the high and low sale prices for our Common Stock.

	High		Low
Calendar 2004
Fourth Quarter	$3.92		$2.65
Third Quarter		5.15		3.21
Second Quarter		7.04		4.17
First Quarter		9.11		5.65
Calendar 2003
Fourth Quarter	$	7.38	$	4.52
Third Quarter		5.65		2.98
Second Quarter		3.72		1.81
First Quarter		2.95		1.69

As of December 31, 2004, there were 33,072,438 shares of Common Stock outstanding and 568 holders of record of the Common Stock.

We have never paid cash dividends on our capital stock. We currently anticipate that we will retain all available funds for use in the operation and expansion of our business, and do not anticipate paying any cash dividends in the foreseeable future.

See also "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" under Part III, Item 12 of this report.

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data set forth below should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and our financial statements, related notes and other financial information included herein. The selected consolidated financial data set forth below as of December 31, 2004 and 2003 and for the years ended December 31, 2004, 2003, and 2002 have been derived from our audited financial statements included herein. The selected consolidated financial data set forth below as of December 31, 2002, 2001 and 2000 and for the years ended December 31, 2001 and 2000 have been derived from our audited financial statements that are not included herein or incorporated by reference herein. Our historical results are not necessarily indicative of the results that may be expected for any future period.

	2000		2001			2002			2003			2004
RESULTS OF OPERATIONS
Net sales	$	172,268	$	84,765		$	82,564		$	75,212		$	91,350
Gross profit (loss)		82,797		(2,932	)		7,262			3,285			13,995
Operating income (loss)		16,796		(85,986	)		(65,565	)		(50,998	)		(41,822	)
Income (loss) before income taxes		28,596		(82,782	)		(52,183	)		(51,139	)		(43,082	)
Net income (loss)		18,892		(107,120	)		(55,886	)		(50,757	)		(43,082	)
Earnings (loss) per share:
Basic	$	0.64	$	(3.54	)	$	(1.83	)	$	(1.65	)	$	(1.33	)
Diluted	$	0.60	$	(3.54	)	$	(1.83	)	$	(1.65	)	$	(1.33	)
BALANCE SHEET DATA:
Total cash and marketable securities	$	166,161	$	200,095		$	155,518		$	121,630		$	104,051
Working capital		179,987		132,062			110,151			81,100			89,517
Total assets		352,473		346,914			255,671			207,898			185,895
Total capital lease obligations		250		94			-			90			18
Long-term debt, including current portion		3,000		100,244			66,700			66,700			84,700
Total stockholders’ equity		328,832		226,636			171,088			121,046			84,615

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

We were organized in 1984 and initially focused on the development and manufacture of GaAs integrated circuits for low-volume defense and aerospace applications. In 1988 we began shifting our strategy to focus on radio frequency/microwave communications systems for high-volume applications, and began production for these applications in 1989. In 1992 we introduced integrated circuits for the cable television market. In late 1994 we entered the wireless communications market with the introduction of cellular telephone integrated circuits. In 2001 we introduced our InGaP HBT power amplifier modules to the wireless communications market and in 2003 expanded into the WLAN power amplifier marketplace.

We strive to achieve market advantage through the application of our radio frequency/microwave design and application knowledge. With our design expertise we have led the industry with the introduction of innovative products. Recent examples include quad-band GSM/GPRS power amplifiers with integrated power control, high efficiency low power (HELP™) 3mm x 3mm CDMA PA modules, wideband CDMA power amplifier modules, PowerPlexer™ integrated GSM front end modules, active splitter integrated circuits for cable infrastructure and set-top box applications and high output 802.11 b/g WLAN power amplifier modules, all of which offer greater levels of product performance and reduce manufacturers' production costs.

We aim to achieve cost advantages through the scale and efficiency of our manufacturing operations. During 1999 we began production in our six-inch analog GaAs wafer fabrication facility, which we believe was among the first six-inch analog GaAs wafer fabrication facility in our industry. Using a six-inch wafer allows us to produce, at a small incremental cost, more than twice the integrated circuit dice per wafer than can be produced from the industry norm four-inch wafer.

We have fixed expenses particularly relating to capital equipment and manufacturing overhead. Accordingly, decreases in revenue result in our fixed production costs increasing as a percentage of revenue, which adversely affects our gross margin and profitability. We will continue to invest in selected strategic research and development programs to maintain our competitive position.

We resumed revenue growth in 2004 primarily due to increased demand for our broadband products for the Wireless LAN (WLAN) market consisting of our power amplifiers and for the cable subscriber and infrastructure markets consisting of our newer broadband RF integrated circuits. We also experienced increased demand for our wireless products, while at a lesser degree than the stronger revenue growth in broadband, consisted of our newer and smaller power amplifier modules having lower average selling prices than those offered in the prior year.

We believe our markets are, and will continue to remain, competitive, which could result in continued quarterly volatility to our revenue stream and therefore cause continued fluctuations in our profitability. The ongoing market shift to newer and smaller power amplifier modules will continue to influence average selling prices to trend downward, which could adversely affect our gross margin and profitability.

We have only one reportable segment. For financial information related to such segment and certain geographic areas, see Note 5 to the accompanying financial statements.

CRITICAL ACCOUNTING POLICIES

GENERAL

We believe the following accounting policies are critical to our business operations and the understanding of our results of operations. Such accounting policies may require management to exercise a higher degree of judgment and make estimates used in the preparation of our consolidated financial statements.

REVENUE RECOGNITION

Production revenue is recorded when products are shipped to customers pursuant to a purchase order. We charge customers for the costs of certain contractually-committed inventories that remain at the end of a product's life. Cancellation revenue is recognized when cash is received. The value of the inventory related to cancellation revenue may, in some instances, have been reserved during prior periods in accordance with our inventory obsolescence policy.

WARRANTY COSTS

We provide for potential warranty claims by recording a current charge to income. We estimate potential claims by examining historical returns and other information deemed critical and provide for an amount which we believe will cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in accrued liabilities in the consolidated balance sheets.

LONG-LIVED ASSETS

Long-lived assets include fixed assets, goodwill and other intangible assets. We regularly review these assets for indicators of impairment and assess the carrying value of the assets against market values. When an impairment exists, we record an expense to the extent that the carrying value exceeds fair market value.

Goodwill and intangibles impairment

We have intangible assets related to goodwill and other acquired intangibles. Significant judgements are involved in the determination of the estimated useful lives for our other intangibles and whether the goodwill or other intangible assets are impaired. In assessing the recoverability of goodwill and other intangibles, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets.

Impairment of long-lived assets

We record impairment losses on long-lived assets used in operations or expected to be disposed of when events and circumstances indicate that the undiscounted cash flows estimated to be generated by these assets is less than the carrying amounts of those assets. Management considers sensitivities to capacity, utilization and technological developments in making its assumptions.

DEFERRED TAXES

We record a valuation allowance to reduce deferred tax assets when it is more likely than not that some portion of the amount may not be realized. During 2001, we determined that it was no longer more likely than not that we would be able to realize all or part of our net deferred tax asset in the future, and an adjustment to provide a valuation allowance against the deferred tax asset was charged to income. We continue to maintain a full valuation allowance on our deferred tax assets.

While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future, an adjustment to the deferred tax asset would increase income in the period such determination was made.

INVENTORY

Inventories are valued at the lower of cost or market ("LCM"), using the first-in, first-out method. In addition to LCM limitations, we reserve against inventory items for estimated obsolescence or unmarketable inventory. Our reserve for excess and obsolete inventory is primarily based upon forecasted short-term demand for the product and any change to the reserve arising from forecast revisions is reflected in cost of sales in the period the revision is made.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We maintain an allowance for doubtful accounts for estimated losses resulting from customers' failure to make payments. If the financial condition of our customers were to erode, making them unable to make payments, additional allowances may be required.

RESULTS OF OPERATIONS

The following table sets forth statements of operations data as a percentage of net sales for the periods indicated:

	2002			2003			2004
Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		91.2			95.6			84.7
Gross profit		8.8			4.4			15.3
Research and development expense		36.0			42.7			36.5
Selling and administrative expenses		25.9			25.8			24.6
Restructuring and other charges		6.1			1.2			-
Asset impairment charges		10.5			-			-
Goodwill impairment charge		9.7			-			-
Purchased in-process R & D		-			2.5			-
Operating loss		(79.4	)		(67.8	)		(45.8	)
Interest income		7.7			4.4			2.4
Interest expense		(6.2	)		(5.0	)		(4.5	)
Impairment of investments		(0.5	)		-			-
Gain on repurchase of Convertible notes		15.2			-			0.4
Other income		-			0.4			0.3
Loss before income taxes		(63.2	)		(68.0	)		(47.2	)
Benefit from income taxes		(5.2	)		(0.5	)		-
Loss before cumulative effect of accounting change		(58.0	)		(67.5	)		(47.2	)
Cumulative effect of accounting change		(9.7	)		-			-
Net loss		(67.7	%)		(67.5	%)		(47.2	%)

2004 COMPARED TO 2003

NET SALES. Net sales during 2004 increased 21.5% to $91.3 million, compared to $75.2 million for 2003. The sales improvement was primarily due to an increase in demand for Broadband products, particularly our Wireless LAN (WLAN) power amplifiers used in wireless PC access and RF integrated circuits used in both cable subscriber and infrastructure applications and the remainder to demand for our GSM power amplifiers used in wireless handsets and hand-held devices.

Sales during 2004 of RF integrated circuits used for broadband applications increased 36.5% to $46.0 million from $33.7 million in 2003. The increase was primarily due to increased volumes of our power amplifiers used for Wireless LAN (WLAN) applications and products used for both cable and subscriber and infrastructure applications.

Specifically, net sales of RF integrated circuits used for cellular and PCS applications increased 9.2% during 2004 to $45.4 million from $41.5 million in 2003. The increase was due to our expanded product presence and volumes for our GSM power amplifiers.

Generally, selling prices for same product sales were lower during 2004 as compared to 2003.

GROSS MARGIN. Gross margin for 2004 improved to 15.3% of net sales, compared with 4.4% of net sales in the prior year. The increase in gross margin from the prior year is the result of the increase in revenue, improved production throughput in our facilities, lower depreciation expense and lower product costs.

RESEARCH & DEVELOPMENT. Company sponsored research and development expense increased 3.8% during 2004 to $33.3 million from $32.1 million during 2003 primarily due to the incremental year-over-year operating costs of the company’s acquisitions of RFS and Tavanza.

PURCHASED IN-PROCESS R&D. In 2003, the Company expensed purchased in-process research and development costs of $1.9 million resulting from the acquisitions of RFS and Tavanza. The charge represented the fair value of certain acquired research and development projects that were determined to have not reached technological feasibility and did not have alternative future uses. No acquisitions or in-process R&D applied in 2004.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses increased 15.9% during 2004 to $22.5 million from $19.4 million in 2003. The increase was primarily due to increased headcount and sales-related costs associated with our sales expansion efforts, including application centers in Taiwan and South Korea.

ASSET AND INVESTMENT IMPAIRMENT CHARGES AND RESTRUCTURING AND OTHER CHARGES. During 2003, we recorded charges of $0.9 million for restructuring and other charges related to severance and related employee benefits in connection with workforce reductions of approximately 19 operations and administrative positions and lease-related costs.

Activity and liability balances related to the restructuring and other charges for the years ended December 31, 2003 and 2004 are as follows (in millions):

	Lease Related			Workforce Reductions			Total
Year ended December 31, 2003
Beginning balance	$	2.8		$	0.2		$	3.0
Restructuring and other expenses		0.3			0.6			0.9
Deductions		(1.1	)		(0.8	)		(1.9	)
December 31, 2003 restructuring balance		2.0			-			2.0
Year ended December 31, 2004
Deductions		(1.3	)		-			(1.3	)
December 31, 2004 restructuring balance	$	0.7		$	-		$	0.7

INTEREST INCOME.Interest income decreased 34.1% to $2.2 million during 2004 from $3.3 million in 2003. The decrease was due to lower average invested funds and was compounded by lower interest rates.

INTEREST EXPENSE. Interest expense increased to $4.1 million in 2004 from $3.8 million in 2003. Interest expense arises from obligations under our 5% Convertible Senior Notes due in 2006 ("2006 Notes") and our 5% Convertible Senior Notes due in 2009 ("2009 Notes"). In September, 2004, we repurchased $20.0 million aggregate principal amount of our 2006 Notes and consequently reduced the outstanding principal balance to $46.7 million, and concurrently issued $38 million aggregate principal amount of our 2009 Notes.

GAIN ON REPURCHASE OF CONVERTIBLE NOTES. During 2004, we recognized a gain of $0.3 million, on the repurchase of $20.0 million aggregate principal amount of our 2006 Notes, after adjusting for accrued interest and the write-off of a proportionate share of unamortized offering costs.

BENEFIT FROM INCOME TAXES. In 2004, the Company received no benefit from income taxes and recorded a full valuation allowance for its deferred tax balance.

2003 COMPARED TO 2002

NET SALES. Net sales during 2003 decreased 8.9% to $75.2 million, compared to $82.6 million for 2002. The sales decline was due to a decrease in demand of TDMA power amplifiers used in cellular handsets resulting from a market shift in the U.S. from the TDMA air interface standard to the emergence and deployment of the CDMA-1X telecommunication standard. Additionally, demand was lower for IC’s used in set-top boxes attributed to overall market softness for set-top boxes.

Specifically, net sales of integrated circuits for cellular and PCS applications decreased 7.1% during 2003 to $41.5 million from $44.7 million in 2002. Net sales for TDMA power amplifiers declined to zero in 2003 from $3.5 million in 2002.

Sales during 2003 of integrated circuits for broadband applications decreased 11.1% to $33.7 million from $37.9 million in 2002. The decline was partially offset by sales of our power amplifiers used in Wireless LAN (WLAN) applications. On March 31, 2003, we purchased the power amplifier business of RF Solutions (RFS) providing the Company an entrance into the growing WLAN power amplifier market.

Generally, selling prices for same product sales were lower during 2003 as compared to 2002.

GROSS MARGIN. Gross margin for 2003 decreased to 4.4% of net sales, compared with 8.8% of net sales in the prior year. The decline in gross margin from the prior year is the result of the decrease in revenue, lower production throughput in our facilities due to outsourcing and consequent lower absorption of fixed costs. The aforementioned lower pricing was largely offset by savings related to lower test, assembly and raw material costs.

RESEARCH & DEVELOPMENT. Company sponsored research and development expense increased 7.8% during 2003 to $32.1 million from $29.7 million during 2002 primarily due to the acquisition of the RFS power amplifier business on March 31, 2003 and the acquisition of the Tavanza CDMA wireless handset business from Celeritek on October 14, 2003.

PURCHASED IN-PROCESS R&D. The Company expensed purchased in-process research and development costs of $1.9 million resulting from the acquisitions of RFS and Tavanza. The charge represented the fair value of certain acquired research and development projects that were determined to have not reached technological feasibility and did not have alternative future uses. No acquisitions or in-process R&D applied in 2002.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses decreased 9.3% during 2003 to $19.4 million from $21.4 million in 2002. The decrease was primarily due to the elimination of intangibles’ amortization as a result of the write-off of intangibles in the fourth quarter of 2002 and savings realized from the administrative headcount reductions resulting from our restructuring activities. The expense reductions were partially offset by increased expenses from the RFS acquisition and the establishment of new application centers in Taiwan and South Korea.

ASSET AND INVESTMENT IMPAIRMENT CHARGES AND RESTRUCTURING AND OTHER CHARGES. During 2003, we recorded charges of $0.9 million for restructuring and other charges related to severance and related employee benefits in connection with workforce reductions involving approximately 19 operations and administrative positions and lease-related costs. During 2002, we recorded charges of $8.6 million for asset impairments, $0.4 million for impairment on investments and $5.0 million for restructuring and other charges.

Activity and liability balances related to the restructuring and other charges for the years ended December 31, 2002 and 2003 were as follows (in millions):

		Lease Related			Workforce Reductions			Total
Year ended December 31, 2002
Beginning balance	$	1.1		$	0.8		$	1.9
Restructuring and other expenses		3.4			1.6			5.0
Deductions		(1.7	)		(2.2	)		(3.9	)
December 31, 2002 restructuring balance		2.8			0.2			3.0
Year ended December 31, 2003
Restructuring and other expenses		0.3			0.6			0.9
Deductions		(1.1	)		(0.8	)		(1.9	)
December 31, 2003 restructuring balance	$	2.0		$	-		$	2.0

 GOODWILL IMPAIRMENT CHARGE. During 2002, we monitored fiber market conditions in light of additional job cuts and difficult prospects announced by several of our end-market customers. In view of these weaker market conditions during the third quarter of 2002, we evaluated our goodwill and intangible assets for potential impairment. As a result of that evaluation, we recorded a goodwill impairment charge of $8.0 million. Also see cumulative effect of accounting change below. There was no impairment of goodwill in 2003.

INTEREST INCOME.Interest income decreased 47.0% to $3.3 million during 2003 from $6.3 million in 2002. The decrease was due to lower average invested funds and was compounded by lower interest rates.

INTEREST EXPENSE. Interest expense decreased to $3.8 million in 2003 from $5.1 million in 2002. Our interest expense arose from obligations under our 2006 Notes, issued on November 27, 2001. In September 2002, we repurchased $33.3 million in face value of the 2006 Notes and consequently reduced the outstanding principal balance to $66.7 million.

GAIN ON REPURCHASE OF CONVERTIBLE NOTES. During 2002, we recognized a gain of $12.6 million, on the repurchase of $33.3 million in principal of our 2006 Notes, after adjusting for accrued interest and the write-off of a proportionate share of unamortized offering costs.

BENEFIT FROM INCOME TAXES. In December 2002, the Company received a $4.3 million refund pursuant to a carryback claim under the Job Creation and Workers Assistance Tax Act of 2002. The refund represented taxes paid in 1996 and 1997.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE. In 2002, we adopted the provisions of Statement of Financial Accounting Standards ("FAS") No 142, "Goodwill and Other Intangible Assets". Under the new rules, goodwill is no longer subject to amortization but is reviewed for potential impairment, upon adoption and thereafter annually or upon the occurrence of an impairment indicator. The annual amortization of goodwill which would have approximated $2.6 million was no longer required. As a result of completing the required test, we recorded a charge for the cumulative effect of the accounting change in the amount of $8.0 million representing the excess of the carrying value of a reporting unit as compared to its estimated fair value. In 2003, there was no charge for an accounting change.

LIQUIDITY AND SOURCES OF CAPITAL

At December 31, 2004 we had $11.2 million of cash and cash equivalents on hand and $92.9 million in marketable securities. We had $38.0 million aggregate principal amount of our 2009 Notes and $46.7 million aggregate principal amount of our 2006 Notes outstanding as of December 31, 2004.

Operations required the use of $29.7 million in cash during 2004. Investing activities provided $4.1 million of cash during 2004, consisting principally of net sales of marketable securities of $7.5 million, partially offset by purchases of equipment of $3.4 million. Financing activities provided $18.2 million of cash in 2004, primarily consisting of proceeds received from our issuance of $38.0 million aggregate principal amount of our 2009 Notes, net of offering costs and further reduced by our repurchase of $20.0 million aggregate principal amount of our 2006 notes.

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 the next twelve months as well as the repayment of our debt prinicipal obligation due in November, 2006. Our anticipated capital needs may include acquisitions of complimentary businesses or technologies, investments in other companies or repurchases of our outstanding debt or equity. However, we may elect to finance all or part of our future capital requirements through additional equity or debt financing. There can be no assurance that such additional financing would be available on satisfactory terms.  Our ability to pay principal and interest on our $84.7 million in outstanding convertible senior unsecured notes, $46.7 million of which are due in November of 2006 and the remainder of which are due in October of 2009, and our other debt and to fund our planned capital expenditures depends on our future operating performance.

The table below summarizes required cash payments as of December 31, 2004:

CONTRACTUAL OBLIGATIONS	PAYMENTS DUE BY PERIOD (in thousands)
		Total		1 year and less		1 - 3 years		4 - 5 years		After 5 years
Long-term debt, including interest	$	98,182	$	4,235	$	52,543	$	41,404	$	-
Operating leases		23,628		2,641		3,392		3,480		14,115
Capital leases		18		18		-		-		-
Unconditional purchase obligations		2,445		2,445		-		-		-
Total contractual cash obligations	$	124,273	$	9,339	$	55,935	$	44,884	$	14,115

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 In December 2004, the Financial Accounting Standards Board issued Statement No. 123(R) (FAS 123R), Share-Based Payment, amending FAS 123 and requiring that all share-based payments to employees be recognized in the financial statements. Generally, the approach to accounting for share-based payments in FAS 123R is similar to the approach described in FAS 123, however, pro forma footnote disclosure will no longer be an alternative to financial statement recognition. This statement becomes effective in the first interim or annual period beginning after June 15, 2005. The Company expects to adopt the new statement effective January 1, 2005, using the modified-prospective transition method described in the statement. Under this method, the Company will be required to recognize compensation expense over the remaining vesting period for all awards that remain unvested as of January 1, 2005. As permitted by FAS 123, the Company currently accounts for share-based payments to employees using APB 25's intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. The Company believes based on the level of share-based payments previously granted and unvested, that the adoption of FAS 123R will not have a material effect on its financial position, results of operations or cashflows, however, the level of future equity based compensation grants could have a material effect on amounts recorded in our statement of operations. On December 22, 2004, the Company authorized an immediate vesting of eligible employees’ unvested share options with an exercise price greater than $5.00 per share. Directors were not eligible. In total, 1,772,289 options with an average exercise price of $7.26 immediately vested and have an average remaining contractual life of 9.1 years. The unamortized fair value associated with these accelerated-vest shares of approximately $2.65 million amortized immediately. In addition to its employee-retention value, the Company’s decision to accelerate the vesting of these "out-of-the-money" options was based upon the accounting of such costs moving from disclosure-only in 2004 to being included in the Company’s statement of operations in 2005.

In November 2004, the Financial Accounting Standards Board issued Statement No. 151 (FAS 151), Inventory costs, an amendment of ARB No. 43, Chapter 4. FAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as current period charges. In addition, FAS 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. FAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company currently believes that the adoption of FAS 151 will not have a material impact on its consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in interest rates primarily from our investments in certain available-for-sale securities. Our available-for-sale securities consist primarily of fixed income investments, including corporate bonds, commercial paper and U.S. Treasury and agency securities. We continually monitor our exposure to changes in interest rates and the credit ratings of issuers with respect to our available-for-sale securities. Accordingly, we believe that the effects of changes in interest rates and the credit ratings of these issuers are limited and would not have a material impact on our financial condition or results of operations. However, it is possible that we are at risk if interest rates or credit ratings of issuers change in an unfavorable direction. The magnitude of any gain or loss will be a function of the difference between the fixed rate of the financial instrument and the market rate and our financial condition and results of operations could be materially affected.

At December 31, 2004, we held marketable securities with an estimated fair value of $92.9 million. Our primary interest rate exposure results from changes in short-term interest rates. We do not purchase financial instruments for trading or speculative purposes. All of our marketable securities are classified as available-for-sale securities. The following table provides information about our marketable securities at December 31, 2004:

Estimated Principal Amount and Weighted Average Stated Rate by Expected Maturity Value												Fair Value
($’s 000)		2005			2006		2007		Total			($’s 000	)
Principal	$	63,240		$	28,839		-	$	92,079		$	92,880
Weighted Average Stated Rates		3.79	%		4.43	%	-		3.99	%		-

The stated rates of interest expressed in the above table may not approximate the actual yield of the securities which we currently hold since we have purchased some of our marketable securities at other than face value. Additionally, some of the securities represented in the above table may be called or redeemed, at the option of the issuer, prior to their expected due dates. If such early redemptions occur, we may reinvest the proceeds realized on such calls or redemptions in marketable securities with stated rates of interest or yields that are lower than those of current holdings, affecting both future cash interest streams and future earnings. In addition to investments in marketable securities, we place some of our cash in money market funds in order to keep cash available to fund operations and to hold cash pending investments in marketable securities. Fluctuations in short term interest rates will affect the yield on monies invested in such money market funds. Such fluctuations can have an impact on our future cash interest streams and future earnings, but the impact of such fluctuations are not expected to be material.

Each of our 2006 Notes and 2009 Notes are convertible notes that bear a fixed rate of interest of 5%. A change in interest rates on long-term debt is assumed to impact fair value but not earnings or cash flow because the interest rate is fixed. At December 31, 2004, the fair value of the outstanding Convertible notes, estimated based upon dealer quotes, was approximately $86.1 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

ANADIGICS, Inc.

We have audited the accompanying consolidated balance sheets of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 3, the Company changed its method of accounting for goodwill and other intangible assets in 2002.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of ANADIGICS, Inc.’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2005 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

MetroPark, New Jersey

March 2, 2005

ANADIGICS, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	December 31,
		2003			2004
ASSETS
Current assets:
Cash and cash equivalents	$	18,525		$	11,171
Marketable securities		54,130			63,615
Accounts receivable, net of allowance for doubtful accounts of $752 and $988 in 2003 and 2004, respectively		12,074			10,770
Inventories		10,321			14,436
Prepaid expenses and other current assets		3,243			3,073
Total current assets		98,293			103,065
Marketable securities		48,975			29,265
Plant and equipment
Equipment and furniture		130,815			132,864
Leasehold improvements		38,437			38,774
Projects in process		1,609			1,341
		170,861			172,979
Less accumulated depreciation and amortization		115,619			129,941
		55,242			43,038
Goodwill and other intangibles, less accumulated amortization of $64 and $258 in 2003 and 2004, respectively		1,788			6,297
Other assets		3,600			4,230
	$	207,898		$	185,895
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable	$	9,497		$	8,021
Accrued liabilities		5,618			4,783
Accrued restructuring costs		1,994			726
Current maturities of capital lease obligations		84			18
Total current liabilities		17,193			13,548
Long-term debt		66,700			84,700
Other long-term liabilities		2,959			3,032
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued or outstanding
Common stock, convertible, non-voting, $0.01 par value, 1,000,000 shares authorized, none issued or outstanding
Common stock, $0.01 par value, 144,000,000 shares authorized at December 31, 2003 and 2004, and  31,225,888 and 33,072,438 issued and outstanding at December 31, 2003 and 2004, respectively		312			331
Additional paid-in capital		335,477			343,594
Deferred compensation		-			(861	)
Accumulated deficit		(214,881	)		(257,963	)
Accumulated other comprehensive income		138			(486	)
Total stockholders’ equity		121,046			84,615
	$	207,898		$	185,895

See accompanying notes.

ANADIGICS, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	YEAR ENDED DECEMBER 31,
		2002			2003			2004
Net sales	$	82,564		$	75,212		$	91,350
Cost of sales		75,302			71,927			77,355
Gross profit		7,262			3,285			13,995
Research and development expenses		29,742			32,075			33,306
Selling and administrative expenses		21,400			19,420			22,511
Restructuring and other charges		5,001			925			-
Asset impairment charges		8,641			-			-
Goodwill impairment charges		8,043			-			-
Purchased in-process R&D		-			1,863			-
		72,827			54,283			55,817
Operating loss		(65,565	)		(50,998	)		(41,822	)
Interest income		6,309			3,344			2,203
Interest expense		(5,119	)		(3,761	)		(4,085	)
Impairment of investments		(390	)		-			-
Gain on repurchase of Convertible notes		12,581			-			327
Other income		1			276			295
Loss before income taxes		(52,183	)		(51,139	)		(43,082	)
Benefit from income taxes		(4,307	)		(382	)		-
Loss before cumulative effect of accounting change		(47,876	)		(50,757	)		(43,082	)
Cumulative effect of accounting change		(8,010	)		-			-
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Net loss per share
Basic and diluted
Loss before cumulative effect of accounting change	$	(1.57	)	$	(1.65	)	$	(1.33	)
Net loss	$	(1.83	)	$	(1.65	)	$	(1.33	)
Weighted average common and dilutive securities outstanding		30,587,032			30,716,749			32,412,922

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(DOLLARS IN THOUSANDS)

	Year Ended December 31,
		2002			2003			2004
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities		116			(666	)		(617	)
Foreign currency translation adjustment		(10	)		46			12
Reclassification adjustment:
Net realized (gain) loss previously included in other comprehensive income		(71	)		15			(19	)
Comprehensive loss	$	(55,851	)	$	(51,362	)	$	(43,706	)

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(SHARES AND DOLLARS IN THOUSANDS)

	Common Stock Shares			Common Stock Amount		Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit			Accumulated Other Comprehensive Income (loss	)		Total Stockholders’ Equity
Balance, December 31, 2001	30,569		$	306	$	333,860			-		$	(108,328	)	$	708		$	226,636
Stock options exercised	17			-		108												108
Shares issued under employee stock purchase plan	88			1		194												195
Unrealized gains on marketable securities															116			116
Foreign currency translation adjustment															(10	)		(10	)
Net realized gain, previously included in other comprehensive income															(71	)		(71	)
Net loss												(55,886	)					(55,886	)
Balance, December 31, 2002	30,674			307		334,162			-			(164,124	)		743			171,088
Stock options exercised	23			-		67												67
Shares issued under employee stock purchase plan	529			5		1,222												1,227
Unrealized loss on marketable securities															(666	)		(666	)
Foreign currency translation adjustment															46			46
Net realized loss, previously included in other comprehensive income															15			15
Stock-based compensation						26												26
Net loss												(50,757	)					(50,757	)
Balance, December 31, 2003	31,226			312		335,477			-			(214,881	)		138			121,046
Stock options exercised	536			5		1,355												1,360
Shares issued under employee stock purchase plan	182			2		561												563
Shares issued as contingent acquisition consideration	747			8		4,640												4,648
Restricted stock grant	403			4		1,613		$	(1,617	)								-
Restricted stock forfeitures	(22	)		-		(87	)		87									-
Amortization of restricted stock									669									669
Unrealized loss on marketable securities															(617	)		(617	)
Foreign currency translation adjustment															12			12
Net realized gain, previously included in other comprehensive income															(19	)		(19	)
Stock-based compensation						35												35
Net loss												(43,082	)					(43,082	)
Balance, December 31, 2004	33,072		$	331	$	343,594		$	(861	)	$	(257,963	)	$	(486	)	$	84,615

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

	YEAR ENDED DECEMBER 31,
		2002			2003			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Adjustments to reconcile net loss to net cash used in operating activities:
Cumulative effect of accounting change		8,010			-			-
Gain on repurchase of Convertible notes		(12,581	)		-			(327	)
Depreciation		19,828			18,481			15,282
Amortization		2,197			1,173			1,483
Stock based compensation		-			26			704
Amortization of premium on marketable securities		2,256			2,432			2,090
Impairments of long-lived assets and investments		17,074			-			-
Purchased in-process R&D		-			1,863			-
Loss on sale of equipment		-			20			15
Changes in operating assets and liabilities:
Accounts receivable		1,184			(2,906	)		1,304
Inventory		1,384			2,957			(4,115	)
Prepaid expenses and other assets		1,070			1,234			361
Accounts payable		(1,681	)		1,730			(1,476	)
Accrued and other liabilities		(386	)		146			(1,892	)
Net cash used in operating activities		(17,531	)		(23,601	)		(29,653	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(4,945	)		(4,178	)		(3,427	)
Purchases of marketable securities		(104,619	)		(97,605	)		(51,128	)
Proceeds from sales of marketable securities		108,197			122,577			58,627
Business acquisitions		-			(4,217	)		(55	)
Proceeds from sale of equipment		2			-			130
Net cash (used in) provided by investing activities		(1,365	)		16,577			4,147
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of obligations under capital leases		(94	)		(88	)		(66	)
Repayments of long-term debt		(244	)		-			-
Proceeds from issuance of long-term debt net of offering costs		-			-			35,695
Repurchase of Convertible notes		(19,828	)		-			(19,400	)
Issuances of common stock, net of related expenses		303			1,294			1,923
Net cash (used in) provided by financing activities		(19,863	)		1,206			18,152
Net decrease in cash and cash equivalents		(38,759	)		(5,818	)		(7,354	)
Cash and cash equivalents at beginning of period		63,102			24,343			18,525
Cash and cash equivalents at end of period	$	24,343		$	18,525		$	11,171
Supplemental disclosures of cash flow information:
Interest paid	$	4,549		$	3,335		$	3,193
Taxes paid		200			-			117

See accompanying notes.

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ANADIGICS, Inc. (the "Company") is a leading supplier of radio frequency ("RF")/microwave integrated circuit solutions for the communications industry. The Company’s products are used to send and receive signals in a variety of broadband and wireless communications applications. In the broadband markets, the focus is on applications for cable subscriber products, cable infrastructure systems, wireless local area networks ("WLAN"), and fiber optic communications systems. In the wireless market, the Company’s efforts are focused on applications for cellular and personal communication systems ("PCS") handsets.

The Company designs, develops and manufactures radio frequency integrated circuit solutions primarily using gallium arsenide ("GaAs") semiconductor material with either Metal Semiconductor Field Effect Transistor (MESFET), Pseudomorphic High Electron Mobility Transistor (PHEMT) or Heterojunction Bipolar Transistor (HBT) process technology. The Company manufactures its integrated circuits in its six-inch analog GaAs wafer fabrication facility. GaAs offers certain advantages in RF/microwave applications including the integration of numerous RF/microwave functions, which cannot be easily integrated in silicon-based circuits. The Company’s high frequency integrated circuits enable manufacturers of communications equipment to enhance overall system performance and reduce manufacturing cost and time to market.

The consolidated financial statements include the accounts of ANADIGICS, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates that affect the financial statements include, but are not limited to: recoverability of inventories, useful lives and amortization periods and recoverability of long-lived assets.

CONCENTRATION OF CREDIT RISK

The Company grants trade credit to its customers, who are primarily foreign manufacturers of wireless communication devices, cable and broadcast television receivers and fiber optic communication devices. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Sales and accounts receivable from customers are denominated in U.S. dollars. The Company has not experienced significant losses related to receivables from these individual customers.

Net sales to individual customers who accounted for 10% or more of the Company’s total net sales and corresponding end application information are as follows:

	YEAR ENDED DECEMBER 31
		2002					2003					2004
		$		%			$		%			$	%
Customer (application)
Motorola (Broadband)	$	18,666		23	%	$	10,422		14	%	$	9,184	10	%
Kyocera (Wireless)		29,231		35	%		21,263		28	%		9,751	11	%
Scientific Atlanta (Broadband)		<10	%	<10	%		<10	%	<10	%		9,218	10	%
LG Electronics (Wireless)		<10	%	<10	%		10,346		14	%		13,628	15	%

Accounts receivable at December 31, 2003 and 2004 from the greater than 10% customers accounted for 49% and 51% of total accounts receivable, respectively.

REVENUE RECOGNITION

Production revenue is recorded when products are shipped to customers pursuant to a purchase order. The Company charges customers for the costs of certain contractually-committed inventories that remain at the end of a product's life. Cancellation revenue is recognized when cash is received. The value of the inventory related to cancellation revenue may, in some instances, have been reserved during prior periods in accordance with the Company’s inventory obsolescence policy. The Company maintains an allowance for doubtful accounts for estimated losses resulting from customers' failure to make payments.

WARRANTY COSTS

The Company provides, by a current charge to income, an amount it estimates, by examining historical returns and other information it deems critical, will be needed to cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in Accrued liabilities in the consolidated balance sheets.

PLANT AND EQUIPMENT

Plant and equipment are stated at cost. Depreciation of plant, furniture and equipment has been provided on the straight-line method over 3-5 years. Leasehold improvements are amortized and included in depreciation over the useful life of the leasehold or the life of the lease, whichever is shorter.

The cost of equipment acquired under capital leases was $10,633 and $10,545 at December 31, 2003 and 2004, respectively, and accumulated amortization was $10,484 and $10,519 at December 31, 2003 and 2004, respectively. Equipment acquired under a capital lease is amortized and included in depreciation over the useful life of the leased equipment or the life of the lease, whichever is shorter.

GOODWILL AND OTHER INTANGIBLES

Goodwill, process technology, customer list and a covenant-not-to-compete were recorded as part of the Company's acquisitions. Effective January 1, 2002, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets (FAS 142). Under the new rules, goodwill is no longer subject to amortization but is reviewed for potential impairment upon adoption and thereafter annually or upon the occurrence of an impairment indicator. FAS 142 prescribes a two-phase process for impairment testing of goodwill. The first phase screens for impairment; while the second phase measures the impairment. Process technology, the customer list and the covenant continued to be amortized using the straight-line method over three to four year lives. The carrying amount of the Company’s intangibles are reviewed on a regular basis for any signs of an impairment. The Company determines if the carrying amount is impaired based on anticipated cash flows. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. For each of the reporting units, fair value is determined primarily using the anticipated cash flows, discounted at a rate commensurate with the associated risk.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell.

INCOME TAXES

Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the income tax basis of such assets and liabilities. The Company maintains a full valuation allowance on its deferred tax assets.

RESEARCH AND DEVELOPMENT COSTS

The Company charges all research and development costs associated with the development of new products to expense when incurred.

IN-PROCESS RESEARCH AND DEVELOPMENT

In the event of an acquisition, the Company will calculate the fair value of in-process research and development projects, based upon discounted cash flows estimated by management of future revenues and expected profitability of the related technology. The rate used to discount the projected future cash flows accounts for the time value of money, as well as the risks of realization of the cash flows. Management will record a charge to earnings where projects are determined to have not reached technological feasibility and do not have alternative uses.

CASH EQUIVALENTS

The Company considers all highly liquid marketable securities with an original stated maturity of three months or less as cash equivalents.

MARKETABLE SECURITIES

Available for sale securities are stated at fair value, as determined by quoted market prices, with unrealized gains and losses reported in other accumulated comprehensive income or loss. The cost of securities sold is based upon the specific identification method. The amortized cost of debt securities is adjusted for amortization of premium and accretion of discounts to maturity. Such amortization, realized gains and losses, interest and dividends are included in interest income. See Note 8 for a summary of available-for-sale securities.

FOREIGN CURRENCY TRANSLATION

The financial statements of subsidiaries outside of the United States are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date. The resultant translation adjustments are included in other accumulated comprehensive income or loss. Income and expense items are translated at the average monthly rates of exchange. Gains and losses from foreign currency transactions of these subsidiaries are included in the determination of net income or loss.

STOCK BASED COMPENSATION

As permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (FAS 123), the Company has elected to follow the intrinsic value method under Accounting Principle Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations in accounting for its employee stock option and other stock based compensation plans. Under APB 25, no compensation expense is recognized at the time of option grant when the exercise price of the Company’s employee stock options equals the fair market value of the underlying common stock on the date of grant. Compensation expense attributable to restricted stock awards is based on the fair value of such shares at the date of issuance and is amortized over the vesting period.

The following table illustrates the effect on net loss and loss per common share as if the Company had applied the fair value method to measure stock-based compensation, required under the disclosure provisions of SFAS No. 123:

		2002			2003			2004
Net loss, as reported	$	(55,886	)	$	(50,757	)	$	(43,082	)
Stock based compensation included in reported net loss		-			26			704
Stock based compensation expense under fair value reporting		(10,863	)		(7,905	)		(9,978	)
Pro forma net loss	$	(66,749	)	$	(58,636	)	$	(52,356	)
Basic and diluted loss per share
Net loss, as reported	$	(1.83	)	$	(1.65	)	$	(1.33	)
Pro forma net loss	$	(2.18	)	$	(1.91	)	$	(1.62	)

On December 22, 2004, the Company authorized an immediate vesting of eligible employees’ unvested share options with an exercise price greater than $5.00 per share. Directors were not eligible. In total, 1,772,289 options with an average exercise price of $7.26 immediately vested and have an average remaining contractual life of 9.1 years. The unamortized fair value associated with these accelerated-vest shares in the amount of $2,654 amortized immediately. Had the accelerated-vest program not occurred, the related-cost in the years ended December 31, 2005, 2006 and 2007 would have included $1,846, $751 and $57, respectively. In addition to its employee-retention value, the Company’s decision to accelerate the vesting of these "out-of-the-money" options was based upon the accounting of such costs moving from disclosure-only in 2004 to being included in the Company’s statement of operations in 2005.

EARNINGS PER SHARE

Basic and diluted earnings per share are calculated in accordance with FASB Statement No. 128, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised resulting in the issuance of common stock of the Company.  Any dilution arising from the Company's outstanding stock options or share potentially issuable upon conversion of the Convertible notes are not included as their effect is anti-dilutive. 

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. 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 December 31, 2004, the fair value of the Company's outstanding Convertible senior notes, estimated based upon dealer quotes, was approximately $86,062.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the Financial Accounting Standards Board issued Statement No. 123(R) (FAS 123R), Share-Based Payment, amending FAS 123 and requiring that all share-based payments to employees be recognized in the financial statements. Generally, the approach to accounting for share-based payments in FAS 123R is similar to the approach described in FAS 123, however, pro forma footnote disclosure will no longer be an alternative to financial statement recognition. This statement becomes effective in the first interim or annual period beginning after June 15, 2005. The Company expects to adopt the new statement effective January 1, 2005, using the modified-prospective transition method described in the statement. Under this method, the Company will be required to recognize compensation expense over the remaining vesting period for all awards that remain unvested as of January 1, 2005. As permitted by FAS 123, the Company currently accounts for share-based payments to employees using APB 25's intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. The Company believes based on the level of share-based payments previously granted and unvested, that the adoption of FAS 123R will not have a material effect on its financial position, results of operations or cashflows, however, the level of future equity based compensation grants could have a material effect on amounts recorded in our statement of operations.

In November 2004, the Financial Accounting Standards Board issued Statement No. 151 (FAS 151), Inventory costs, an amendment of ARB No. 43, Chapter 4. FAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as current period charges. In addition, FAS 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. FAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company currently believes that the adoption of FAS 151 will not have a material impact on its consolidated financial statements.

RECLASSIFICATIONS

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

2. BUSINESS ACQUISITIONS

 On March 31, 2003, the Company acquired certain assets and liabilities of the WLAN power amplifier business of RF Solutions ("RFS"). The RFS acquisition was a strategic initiative that allows the Company to participate in the emerging and fast-growing WLAN market with a depth of experienced design personnel and cutting-edge products. The Company paid cash purchase consideration on March 31, 2003 of $2,800 and pursuant to the terms of the acquisition agreement, issued 747,280 shares effective March 31, 2004, valued at $4,648 after RFS achieved certain revenue milestones. In addition, the Company incurred $217 in acquisition-related costs.

 On October 14, 2003, the Company acquired certain assets of a CDMA wireless handset power amplifier developer, formerly named Tavanza, a wholly-owned subsidiary of Celeritek. The Company paid cash consideration of $1,000 and incurred $255 in acquisition-related costs.

 The acquisitions were accounted for using the purchase method of accounting. The results of operations for RFS and Tavanza are included in the results of operations of the Company from the respective dates of purchase. There are no significant differences between the accounting policies of the Company and RFS or Tavanza.

 The acquisition costs of $8,920 was allocated to the assets acquired and liabilities assumed, based on their fair values as follows:

		Total
Fair value of tangible assets	$	1,029
Fair value of liabilities assumed		(527	)
In-process research and development		1,863
Process technology		210
Covenant-not-to-compete		175
Customer list		240
Goodwill		5,930
Total purchase price	$	8,920

 The Company recorded a charge of $1,863 representing the fair value of certain acquired research and development projects relating to dual band, high gain and modules applications for Wireless LAN and certain passive-free power amplifier applications, in the case of Tavanza, that were determined to have not reached technological feasibility and to not have alternative future uses. The fair value of such projects was determined based on discounted net cash flows. These cash flows were based upon management’s estimates of future revenues and expected profitability of each technology. The rate used to discount these projected cash flows accounted for the time value of money, as well as the risks of realization of cash flows.

 The following table reflects the changes in goodwill for the year ended December 31, 2004:

Balance at December 31, 2003	$	1,227
Additions, primarily related to RFS share issuance		4,703
Balance at December 31, 2004	$	5,930

The following unaudited pro-forma consolidated financial information reflects the results of operations for the twelve months ended December 31, 2002 and 2003, as if the acquisitions of RFS and Tavanza had occurred on December 31, 2001 and after giving effect to purchase accounting adjustments. The charge for purchased in-process research and development is not included in the pro-forma results, because it is non-recurring.

	Year Ended December 31
		2002			2003
Pro-forma revenue	$	83,020		$	75,751
Pro-forma net loss before cumulative effect of accounting change		(57,034	)		(51,947	)
Pro-forma net loss		(65,044	)		(51,947	)
Basic and diluted net loss per share
Pro-forma net loss before cumulative effect of accounting change	$	(1.86	)	$	(1.69	)
Pro-forma net loss		(2.13	)		(1.69	)

 These pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the acquisition actually taken place on December 31, 2001. In addition, these results are not intended to be a projection of future results and do not reflect any synergies that might be achieved from the combined operations.

3.  INTANGIBLES, GOODWILL, CUMULATIVE EFFECT OF ACCOUNTING CHANGE AND ACQUISITION INTANGIBLES' IMPAIRMENT CHARGES

As of December 31, 2003 and 2004, the Company's intangible assets consist of the following:

	Gross Carrying Amount				Accumulated Amortization
	December 31,				December 31,
		2003		2004		2003		2004
Goodwill	$	1,227	$	5,930	$	-	$	-
Process Technology		210		210		35		91
Covenant not to compete		175		175		12		70
Customer list		240		240		17		97
	$	1,852	$	6,555	$	64	$	258

Annual amortization expense related to intangible assets is calculated over their estimated useful lives of three to four years and was $64 and $194 in the years ended December 31, 2003 and 2004, respectively. In the year ended December 31, 2002, intangible asset amortization expense was $1,080 which was recorded prior to the impairment write-off of the intangibles in the fourth quarter of 2002, as discussed below.

Future annual amortization expense related to intangible assets is expected to be as follows:

		2005		2006		2007
Amortization expense	$	194	$	162	$	11

Effective January 1, 2002, the Company adopted the provisions of FAS 142 and under the new rules, goodwill is no longer subject to amortization but is reviewed for potential impairment annually or upon the occurrence of an impairment indicator. The annual amortization of Telcom’s goodwill, which would have approximated $2,567 was no longer required in 2002. Other intangible assets continued to be amortized over their useful lives. As a result of completing the initial required impairment test, the Company recorded a charge for the cumulative effect of the accounting change in the amount of $8,010 ($0.26 per share) representing the excess of the carrying value of a reporting unit (Telcom) as compared to its estimated fair value as of January 1, 2002.

During the course of 2002, the Company monitored fiber market conditions in light of job cuts and difficult prospects announced by several of its end-market customers. In view of these weaker market conditions, the Company performed several tests of its goodwill and intangible assets for potential impairment during the year. As a result of those evaluations, the Company recorded a goodwill impairment charge of $8,043 and an asset impairment charge for its remaining acquired intangibles of $2,310. The $2,310 was included within charges for asset impairments as discussed in Note 4 below.

4. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

During 2003, the Company recorded restructuring charges of $925 pertaining to severance and related benefits of workforce reductions of approximately 19 operations and administrative positions and lease-related costs.

In 2002, the Company recorded charges for asset impairments, impairment on investments and for restructuring and other charges of $8,641, $390 and $5,001, respectively. The asset impairment charge of $8,641 related to the write-off of certain manufacturing and research equipment, leasehold improvements, certain acquired intangibles and certain technology licenses that are no longer used in the ongoing activities of the business. The charge for impairment on investments was recorded on a private-equity investment following an evaluation that indicated the carrying value of such investment exceeded its estimated fair market value. The restructuring and other charges were for lease-related costs and for severance and related employee benefit costs of workforce reductions. The workforce reductions eliminated approximately 83 positions throughout the Company.

Activity and liability balances related to the restructuring and other charges for the years ended December 31, 2002, 2003 and 2004 are as follows:

		Lease Related			Workforce Reductions			Total
Year ended December 31, 2002
Beginning balance	$	1,189		$	709		$	1,898
Restructuring and other expenses		3,374			1,628			5,002
Deductions		(1,759	)		(2,185	)		(3,944	)
December 31, 2002 restructuring balance		2,804			152			2,956
Year ended December 31, 2003
Restructuring and other expenses		300			625			925
Deductions		(1,124	)		(763	)		(1,887	)
December 31, 2003 restructuring balance		1,980			14			1,994
Deductions		(1,254	)		(14	)		(1,268	)
December 31, 2004 restructuring balance	$	726		$	-		$	726

5. SEGMENTS

The Company operates in one segment. Its integrated circuits are primarily manufactured using common manufacturing facilities located in the same domestic geographic area. All operating expenses and assets of the Company are combined and reviewed by the chief operating decision maker on an enterprise-wide basis, resulting in no additional discrete financial information or reportable segment information.

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

	Year Ended December 31,
		2002		2003		2004
Wireless	$	44,689	$	41,538	$	45,379
Broadband		37,875		33,674		45,971
Total	$	82,564	$	75,212	$	91,350

The Company primarily sells to three geographic regions: Asia, U.S.A. and Canada, and Other. The geographic region is determined based on shipping addresses, not on the locations of the ultimate users. Net sales to each of the three geographic regions are as follows:

	Year Ended December 31,
		2002		2003		2004
Asia	$	31,897	$	31,014	$	48,939
USA and Canada		44,193		38,024		35,982
Other		6,474		6,174		6,429
Total	$	82,564	$	75,212	$	91,350

6. LONG-TERM DEBT

On September 24, 2004, the Company issued $38,000 aggregate principal amount of 5% Convertible Senior Notes ("2009 Notes") due October 15, 2009. The 2009 Notes are convertible into shares of the Company’s common stock at any time prior to their maturity, at an initial conversion rate, subject to adjustment, of 200 shares for each $1,000 principal amount, which is equivalent to a conversion price of $5.00 per share. Pursuant to the indenture, dated as of September 24, 2004, between the Company and U.S. Bank Trust Association, as trustee, in the event of a "fundamental change" on or prior to July 15, 2009, the Company will pay a make whole premium upon the repurchase or conversion of the 2009 Notes. Subject to certain exceptions, the make whole premium will be 1% of the principal amount of the 2009 Notes, plus an additional premium based on the date such "fundamental change" becomes effective and the price paid per share of the Company’s common stock in the transaction constituting the "fundamental change". Interest on the 2009 Notes is payable semi-annually in arrears on April 15 and October 15 of each year.

On November 27, 2001, the Company issued $100,000 aggregate principal amount of 5% Convertible Senior Notes ("2006 Notes") due November 15, 2006. The outstanding 2006 Notes are convertible into shares of common stock at any time prior to their maturity or prior redemption by the Company. The 2006 Notes are convertible into shares of common stock at a rate of 47.619 shares for each $1,000 principal amount (convertible at a price of $21.00 per share), subject to adjustment. Interest is payable semi-annually in arrears on May 15 and November 15 of each year.

ANADIGICS, Inc. has the option to redeem all or a portion of the 2006 Notes at a redemption price of 102% of the principal amount during the period from November 15, 2004 through November 14, 2005 and at a redemption price of 101% of the principal amount during the period from November 15, 2005 to November 14, 2006. In the event of a change in control, as defined, 2006 Note-holders may require the Company to repurchase the notes at 100% of the principal amount. In the event of a change in control, the Company, in certain circumstances, may elect to repay the 2006 Notes in common stock valued at 95% of the average of the closing prices of the Company's common stock for the five days immediately preceding and including the third trading day prior to the repurchase.

As of December 31, 2004, $46,700 aggregate principal amount of the 2006 Notes remain outstanding. During the third quarter of 2002, the Company repurchased and retired $33,300 aggregate principal amount of the 2006 Notes for $20,365 in cash, inclusive of accrued interest of $537. The Company recognized a gain of $12,581 on the repurchase after adjusting for accrued interest and the write-off of a proportionate share of unamortized offering costs. In addition, in the third quarter of 2004 and concurrent with the issuance of the 2009 Notes, the Company repurchased and retired $20,000 aggregate principal amount of the 2006 Notes for $19,758 in cash, inclusive of accrued interest of $358. The Company recognized a gain of $327 on the repurchase after adjusting for the write-off of a proportionate share of unamortized offering costs.

Unamortized debt issuance costs of $1,221 and $2,744 at December 31, 2003 and 2004, respectively, consisting principally of underwriters' fees, were included in other assets and are being amortized over the life of the notes.

7. COMMITMENTS AND CONTINGENCIES

The Company leases manufacturing, warehousing and office space and manufacturing equipment under noncancelable operating leases that expire through 2016. The Company also leases certain equipment under capital leases that expire in 2005. Rent expense, net of sublease income was $3,560, $3,225 and $3,063 in 2002, 2003 and 2004, respectively. Sublease income was $406, $789 and $780 in 2002, 2003 and 2004, respectively. The future minimum lease payments under the noncancelable operating leases and the present value of the minimum capital lease payments are as follows:

YEAR		Capital Leases		Operating Leases
2005	$	18	$	2,641
2006				1,693
2007				1,699
2008				1,704
2009				1,776
Thereafter				14,115
Total minimum lease payments		18		23,628
Less: contractually-required sublease income		-		(268	)
	$	18	$	23,360

The lessor on the lease for the Company’s headquarters building in Warren, New Jersey, changed during 2003 as a result of the settlement of a bankruptcy proceeding involving the prior lessor. The lease agreement is unchanged as a result of the transfer of ownership.

In addition to the above, at December 31, 2004, the Company had unconditional purchase obligations of approximately $2,445.

8. MARKETABLE SECURITIES

The following is a summary of available-for-sale securities:

	Available-for-Sale Securities
		Cost		Gross Unrealized Gains (Losses)			Estimated Fair Value
US Treasury & Agency Securities	$	9,966	$	(16	)	$	9,950
US Corporate Securities		93,014		141			93,155
Total at December 31, 2003	$	102,980	$	125		$	103,105
US Treasury & Agency Securities	$	11,908	$	(81	)	$	11,827
US Corporate Securities		81,483		(430	)		81,053
Total at December 31, 2003	$	93,391	$	(511	)	$	92,880

The amortized cost and estimated fair value of debt and marketable equity securities at December 31, 2004, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

	Available-for-Sale Securities
		Cost		Estimated Fair Value
Due in one year or less	$	63,827	$	63,615
Due after one year through two years		29,564		29,265
Total	$	93,391	$	92,880

9. INVENTORIES

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

	December 31,
		2003			2004
Raw materials	$	3,302		$	3,510
Work in progress		7,200			9,026
Finished goods		4,564			5,974
		15,066			18,510
Reserves		(4,745	)		(4,074	)
Total	$	10,321		$	14,436

10. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	December 31,
		2003		2004
Accrued compensation	$	3,732	$	2,005
Warranty reserve		100		159
Other		1,786		2,619
	$	5,618	$	4,783

Warranty reserve movements in the years ended December 31, 2003 and 2004 for returns were $278 and $331, respectively. The periodic charges for estimated warranty costs were $10 and $390 in the years ended December 31, 2003 and 2004.

11. INCOME TAXES

The components of the provision (benefit) for income taxes are as follows:

	Year Ended December 31,
		2002			2003			2004
Current benefit:
Federal	$	(4,307	)	$	(382	)	$	-
State and foreign		-			-			-
Deferred provision:
Federal		-			-			-
State and foreign		-			-			-
Total	$	(4,307	)	$	(382	)	$	-

In December 2002, the Company received a $4,307 refund pursuant to a carryback claim under the Job Creation and Workers Assistance Tax Act of 2002. The refund represents taxes paid in 1996 and 1997. Deferred tax assets require a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets may not be realized. Whereas realization of the deferred tax assets is dependent upon the timing and magnitude of future taxable income prior to the expiration of the deferred tax attributes, management began recording a full valuation allowance in 2001. The amount of the deferred tax assets considered realizable, however, could change if estimates of future taxable income during the carry-forward period are changed.

Significant components of the Company’s net deferred taxes as of December 31, 2003 and 2004 are as follows:

	December 31,
		2003			2004
Deferred tax balances
Accurals/reserves	$	3,790		$	3,642
Net operating loss carryforwards		77,260			94,285
General business and research and development credits		4,634			5,073
Deferred rent expense		1,091			1,160
Difference in basis of plant and equipment		2,295			2,689
Other		(71	)		-
Valuation reserve		(88,999	)		(106,849	)
Net deferred tax assets		-			-

As of December 31, 2004, the Company had net operating loss carryforwards of approximately $260,000 for both federal and state tax reporting purposes. The federal carryforward will begin to expire in 2018, and the state carryforwards will begin to expire in 2005. At December 31, 2004, approximately $24,860 of the deferred tax asset related to net operating loss carryforwards and an equivalent amount of deferred tax asset valuation allowance represented tax benefits associated with the exercise of non-qualified stock options. Such benefit, when realized, will be credited to additional paid-in capital.               

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the benefit from income taxes is as follows:

	Year Ended December 31,
	2002					2003					2004
Tax at US statutory rate	$	(18,264	)	(35.0	)%	$	(17,899	)	(35.0	)%	$	(15,079	)	(35.0	)%
State and foreign tax (benefit), net of federal tax effect		(1,696	)	(3.2	)		(1,662	)	(3.2	)		(1,400	)	(3.2	)
Research and experimentation tax credits		(337	)	(0.6	)		-		-			(516	)	(1.2	)
Valuation allowance, net of carryback		11,232		21.5			20,098		39.3			17,850		41.4
Intangibles amortization and other		4,758		9.1			(919	)	(1.8	)		(855	)	(2.0	)
Benefit from income taxes	$	(4,307	)	(8.2	)%	$	(382	)	(0.7	)%	$	-		0.0	%

12. STOCKHOLDERS' EQUITY

On December 17, 1998, the Company adopted a Shareholders’ Rights Agreement (the "Agreement"). Pursuant to the Agreement, as amended on November 30, 2000, rights were distributed as a dividend at the rate of one right for each share of ANADIGICS, Inc. common stock, par value $0.01 per share, held by stockholders of record as of the close of business on December 31, 1998. The rights will expire on December 17, 2008, unless earlier redeemed or exchanged. Under the Agreement, each right will entitle the registered holder to buy one one-thousandth of a share of Series A Junior Participating Preferred Stock at a price of $75.00 per one one-thousandth of a share, subject to adjustment in accordance with the Agreement. The rights will become exercisable only if a person or group of affiliated or associated persons acquires, or obtains the right to acquire, beneficial ownership of ANADIGICS, Inc. common stock or other voting securities that have 18% or more of the voting power of the outstanding shares of voting stock, or upon the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in such person or group acquiring, or obtaining the right to acquire, beneficial ownership of 18% or more of the voting power of ANADIGICS, Inc. common stock or other voting securities.

13. EMPLOYEE BENEFIT PLANS

In 1995, the Company adopted an employee stock purchase plan ("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 1,693,750 shares of common stock are 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 ESP Plan, shares purchased and their applicable per share prices were 88,493 ($2.21), 528,894 ($2.32), 181,685 ($3.11), for the years ended December 31, 2002, 2003 and 2004, respectively.

Employees and outside directors have been granted options to purchase shares of common stock under stock option plans adopted in 1994, 1995 and 1997. An aggregate of 489,130, 4,912,500 and 5,100,000 shares of common stock were reserved for issuance under the 1994 Long-Term Incentive Share and Award Plan, the 1995 Long-Term Incentive Share Award Plan and the 1997 Long-Term Incentive and Share Award Plan for Employees (the "Plans"), respectively. The Plans provide for the granting of stock options, stock appreciation rights, restricted shares, or other share based awards to eligible employees and directors, as defined in the Plans. Options granted under the Plans become exercisable in varying amounts over periods of up to three years. To date, no stock appreciation rights have been granted under the Plans.

On July 23, 2004, the Company granted 403,204 restricted shares under the 1995 and 1997 Long-Term Incentive Share Award plans ("Plans"). On the date of the grant, the market price of the shares was $4.01. The value of the grant has been recorded as deferred compensation, a component of Stockholders’ Equity and is being amortized over the required one-year vest period. At December 31, 2004, 21,622 restricted shares have been forfeited under the conditions of the Plans. During the first quarter of 2005, the Company has granted an additional 1,028,716 restricted shares under the Plans at an average market price of $2.78 and carrying vesting periods of one or three years.

On May 20, 2002, the Company announced a voluntary stock option exchange program for eligible employees. Officers and directors were not eligible for the exchange program. Pursuant to the terms and conditions of the offer, which expired on June 18, 2002, the Company accepted for cancellation options to purchase 838,157 shares of common stock having a weighted average exercise price of $36.90. On December 20, 2002, participating employees were issued 760,742 options under this program in exchange for the cancelled options. The new options have an exercise price equal to $2.53, which represents the fair market value at the date of grant and fully vested on December 20, 2003.

On July 3, 2003, the Company announced a voluntary stock option exchange program for employees and officers. Directors of the Company were not eligible for the exchange program. Pursuant to the terms and conditions of the offer, which expired on August 4, 2003, the Company accepted for cancellation options to purchase 1,673,931 shares of common stock having a weighted average exercise price of $19.49. On February 6, 2004, participating employees were issued 551,564 stock options, under this one for three-exchange program, for the cancelled options. The new options have an exercise price equal to $7.27, which represents the fair market value at the date of grant.

   A summary of the Company’s stock option activity, and related information for the years ended December 31, 2002, 2003 and 2004 are as follows:

	2002					2003					2004
		Common Stock Options			Weighted Average Exercise Price		Common Stock Options			Weighted Average Exercise Price		Common Stock Options			Weighted Average Exercise Price
Outstanding at beginning of year		6,283,632		$	17.52		7,132,034		$	10.80		5,904,937		$	7.30
Granted		2,248,353			3.90		856,366			3.44		1,943,713			7.16
Exercised		(16,773	)		6.44		(22,961	)		2.93		(536,633	)		2.53
Forfeited		(545,021	)		21.17		(386,571	)		10.78		(520,311	)		9.31
Cancelled		(838,157	)		36.90		(1,673,931	)		19.49		-			-
Outstanding at end of year		7,132,034			10.80		5,904,937			7.30		6,791,706			7.47
Exercisable at end of year		3,903,164			13.69		4,185,488			8.65		6,172,285			7.94

Stock options outstanding at December 31, 2004 are summarized as follows:

Range of exercise prices	Outstanding Options at Dec. 31, 2004	Weighted average remaining contractual life		Weighted average exercise price	Exercisable at Dec. 31, 2004		Weighted average exercise price
$1.98 - $2.53	1,412,550	8.00	$	2.49	1,058,948	$	2.50
$2.79 - $5.33	1,816,777	5.13	$	4.21	1,566,058	$	4.39
$5.63 - $7.65	1,892,492	8.88	$	7.18	1,877,392	$	7.19
$7.66 - $13.59	897,338	4.78	$	11.95	897,338	$	11.95
$13.60 - $53.48	772,549	5.10	$	19.77	772,549	$	19.77

FASB 123 requires pro forma information regarding net income and earnings per share as if the Company has accounted for its employee stock options, warrants and shares of common stock purchased by employees in connection with the ESP Plan ("equity awards") under the fair value method prescribed by FASB 123. The fair value of these equity awards was estimated at the date of grant using a Black-Scholes option pricing model. The following are weighted average assumptions for stock option grants for 2002, 2003 and 2004, respectively: risk-free interest rate of 2.0%, 1.8% and 2.2%; expected volatility of 1.08, 1.10 and 1.01; expected option life of one year from vesting and an expected dividend yield of 0.0%. The weighted average fair value of options granted during 2002, 2003 and 2004 was $2.40, $2.24 and $4.17, respectively.

ANADIGICS, Inc. also sponsors an Employee Savings and Protection Plan under Section 401(k) of the Internal Revenue Code which is available to all full-time employees. Employees can make voluntary contributions up to limitations prescribed by the Internal Revenue Code. The Plan was amended in 2001 and the Company now matches 50% of employee contributions up to 6% of their gross pay. The Company recorded expense of $696, $628 and $730 for the years ended December 31, 2002, 2003 and 2004, respectively, relating to plan contributions.

14. EARNINGS PER SHARE

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

	Year ended December 31,
		2002	2003	2004
Weighted average common shares outstanding used to calculate basic earnings per share		30,587,032	30,716,749	32,412,922
Net effect of dilutive securities - based on treasury stock method using average market price		-*	-*	-*
Weighted average common and dilutive securities outstanding used to calculate diluted earnings per share		30,587,032	30,716,749	32,412,922

* Any dilution arising from the Company's outstanding stock options or shares potentially issuable upon conversion of the Convertible notes are not included as their effect is anti-dilutive.

15. OTHER ACCUMULATED COMPREHENSIVE INCOME

The components of other accumulated comprehensive income are as follows:

		Foreign Currency Translation Adjustments			Unrealized Gain (loss) on available-for-sale securities			Total
Balance at December 31, 2002	$	(33	)	$	776		$	743
Unrealized gain on available-for-sale securities		-			(666	)		(666	)
Foreign currency translation adjustment		46			-			46
Net loss recognized in other comprehensive income		-			15			15
Balance at December 31, 2003		13			125			138
Unrealized gain on available-for-sale securities		-			(617	)		(617	)
Foreign currency translation adjustment		12			-			12
Net gain recognized in other comprehensive income		-			(19	)		(19	)
Balance at December 31, 2004	$	25		$	(511	)	$	(486	)

The earnings associated with the Company’s investment in its foreign subsidiaries is considered to be permanently invested and no provision for U.S. federal and state income taxes on those earnings or translation adjustments have been provided.

16. LEGAL PROCEEDINGS

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

17. QUARTERLY FINANCIAL DATA (UNAUDITED)

	Quarter Ended
	2003												2004
		Mar 29			June 28			Sept. 28			Dec. 31			April 3			July 3			Oct. 2			Dec. 31
Net sales	$	16,087		$	18,037		$	17,750		$	23,338		$	21,195		$	22,687		$	25,053		$	22,415
Cost of sales		16,079			17,250			17,538			21,060			19,175			19,207			19,811			19,162
Gross profit		8			787			212			2,278			2,020			3,480			5,242			3,253
Research and development		7,157			8,280			8,029			8,609			8,902			8,866			7,884			7,654
Selling and administrative expense		4,518			4,521			4,795			5,586			5,790			6,099			5,482			5,140
Restructuring and other charges		625			-			-			300			-			-			-			-
Purchased in-process R&D		-			1,690			-			173			-			-			-			-
Operating loss		(12,292	)		(13,704	)		(12,612	)		(12,390	)		(12,672	)		(11,485	)		(8,124	)		(9,541	)
Interest income		1,013			875			741			715			659			551			469			524
Interest expense		(941	)		(940	)		(940	)		(940	)		(940	)		(940	)		(955	)		(1,250	)
Gain on notes repurchase		-			-			-			-			-			-			327			-
Other (expense) income		(21	)		(2	)		183			116			201			143			(36	)		(13	)
Loss before income taxes		(12,241	)		(13,771	)		(12,628	)		(12,499	)		(12,752	)		(11,731	)		(8,319	)		(10,280	)
Benefit from income taxes		-			-			-			(382	)		-			-			-			-
Net loss	$	(12,241	)	$	(13,771	)	$	12,628	)	$	12,117	)	$	(12,752	)	$	(11,731	)	$	(8,319	)	$	(10,280	)
Basic and diluted loss per share	$	(0.40	)	$	(0.45	)	$	(0.41	)	$	(0.39	)	$	(0.40	)	$	(0.36	)	$	(0.25	)	$	(0.31	)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 Under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO and Chief Financial Officer, or CFO, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2004. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported as specified within the SEC’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

 Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework of Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.

 Our management’s evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included below.

 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.

Inherent Limitations of Controls

 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.

ITEM 9B. OTHER INFORMATION

None.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

ANADIGICS, Inc.

We have audited management’s assessment, included in Item 9A, Management's Report on Internal Control Over Financial Reporting, that ANADIGICS, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). ANADIGICS, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, 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.

In our opinion, management’s assessment that ANADIGICS, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, ANADIGICS, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004 and our report dated March 2, 2005 expressed an unqualified opinion thereon.

/s/    ERNST & YOUNG LLP

MetroPark, New Jersey

March 2, 2005

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

 The Company has adopted a Code of Conduct and Business Ethics that applies to directors, officers and employees, including the President and Chief Executive Officer, and Chief Financial Officer and has posted such code on its website at (www.anadigics.com). Changes to and waivers granted with respect to the Company’s Code of Conduct and Business Ethics for officers and directors that are required to be disclosed pursuant to the applicable rules and regulations will be filed on a current report on Form 8-K and posted on the Company website.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this item.

ITEM 11. EXECUTIVE COMPENSATION.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) 1. Financial Statements

 Financial Statements are included in Item 8, "Financial Statements and Supplementary Data" as follows:

-   Report of Independent Registered Public Accounting Firm

-   Consolidated Balance Sheets - December 31, 2003 and 2004

-   Consolidated Statements of Operations - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Comprehensive Loss - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Cash Flows - Years ended December 31, 2002, 2003 and 2004

-   Notes to Consolidated Financial Statements

    2. Financial Statement Schedules

 Schedule II - Valuation and Qualifying Accounts

 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(b) Exhibit List

2.1	Stock Purchase Agreement dated April 2, 2001, among the Company, Telcom Devices Corp. and the sellers named therein. Filed as an exhibit to the Company’s Current Report on Form 8-K dated April 6, 2001, and incorporated herein by reference.
3.1	Amended and Restated Certificate of Incorporation of the Company, together with all amendments thereto. Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
3.2	Amended and Restated By-laws of the Company. Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.1	Form of Common Stock Certificate. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
4.2	Indenture, dated as of November 27, 2001, between the Company, as Issuer, and State Street Bank & Trust Company, N.A., as Trustee for the 5% Convertible Senior Notes due November 15, 2006. Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.3	Form of Registration Rights Agreement. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
4.4	Schedule to Form of Registration Rights Agreement. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 333-20783), and incorporated herein by reference.
4.5	Rights Agreement dated as of December 17, 1998 between the Company and Chase Mellon Shareholder Services L.L.C., as Rights Agent. Filed as an exhibit to the Company’s current report on Form 8-K filed on December 17, 1998, and incorporated herein by reference.
4.6	Amendment No. 1 as of November 20, 2000 to the Rights Agreement dated as of December 17, 1998 between the Company and Chase Mellon Shareholder Services L.L.C., as Rights Agent. Filed as an exhibit to the Company’s Current Report on Form 8-K filed on December 4, 2000.
4.7	Registration Rights Agreement, dated November 27, 2001, between the Company, as Issuer, and the Purchasers of the 5% Convertible Senior Notes due November 15, 2006. Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.8	Form of 5% Convertible Senior Note due November 15, 2006 (included in Exhibit 4.2).
4.9	Post-effective Amendment No. 1 to Form S-3 for 5% Convertible Senior Notes due November 15, 2006. Filed on Form POS AM dated November 6, 2002, and incorporated herein by reference.
4.10	Indenture, dated as September 24, 2004, between the Company, as Issuer and U.S. Bank Trust National Association, as Trustee for the 5% Convertible Senior Notes due October 15, 2009. Filed as an exhibit to the Company’s Current Report on Form 8-K dated September 28, 2004, and incorporated herein by reference.
4.11	Registration Rights Agreement, dated September 24, 2004, between the Company, as Issuer, and the Purchasers of 5% Convertible Senior Notes due October 15, 2009. Filed as an exhibit to the Company’s Current Report on Form 8-K dated September 28, 2004, and incorporated herein by reference.
4.12	Form of 5% Convertible Senior Note due October 15, 2009 (included in Exhibit 4.10).
10.1	1994 Long-Term Incentive and Share Award Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.2	1995 Long-Term Incentive and Share Award Plan, as amended May 29, 1997 and May 24, 2000. Filed as an exhibit to the Company’s current report on Form S-8 (Registration No. 333-49632), and incorporated herein by reference.
10.3	Employee Savings and Protection Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.4	Form of Employee Stock Purchase Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.5	Lease Agreement between Mt. Bethel Corporate Center and the Company dated May 1, 1993. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.6	Lease Agreement between United States Land Resources, L.P. and the Company dated as of April 26, 1996. Filed as an exhibit to the Company's Registration Statement on Form S-1(Registration No. 333-20783), and incorporated herein by reference.
10.7	First Amendment, dated as of November 20, 1996, to the Lease agreement between United States Land Resources, L.P. and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.8	Second Amendment, dated as of September 8, 1997, to the Lease agreement between Warren Hi-Tech Center, L.P. (successor in interest to United States Land Resources, L.P.) and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.9	Third Amendment, dated as of December 20, 2000, to the Lease agreement between Warren Hi-Tech Center, L.P. (successor in interest to United States Land Resources, L.P.) and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.10	Employment Agreement between the Company and Dr. Bamdad Bastani, dated September 17, 1998. Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1999, and incorporated herein by reference.
10.11	Employment Agreement between the Company and Ronald Rosenzweig, dated June 1, 1999. Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1999, and incorporated herein by reference.
10.12	Amendment No. 1 as of March 15, 2002, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.13	Employment Agreement between the Company and Thomas Shields, dated July 25, 2000. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.14	Employment Agreement between the Company and Charles Huang, dated July 25, 2000. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.15	Amendment No. 2 as of May 27, 2003, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Annual Report on Form 10-K dated March 15, 2004, and incorporated herein by reference.
10.16	Amendment No. 3 as of August 20, 2004, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Quarterly report on Form 10-Q for the quarter ended October 2, 2004, and incorporated herein by reference.
10.17	Form of 1997 Long-Term Incentive and Share Award Plan. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated February 18, 1997, and incorporated herein by reference.
*21	Subsidiary Listing
*23.1	Consent of Ernst and Young LLP.
24.1	Power of Attorney (included on the signature page of this Annual Report on Form 10-K).
*31.1	Rule 13a-14(a)/15d-14(a) Certification of Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc.
*31.2	Rule 13a-14(a)/15d-14(a) Certification of Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc.
*32.1	Section 1350 Certification of Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc.
*32.2	Section 1350 Certification of Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc.
* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on the 16th day of March 2005.

ANADIGICS, INC.

BY: /s/ Bami Bastani

-----------------------------------------

Dr. Bami Bastani

CHIEF EXECUTIVE OFFICER

AND PRESIDENT

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bami Bastani and Thomas Shields as his/her attorney-in-fact and agent, with full power of substitution and resubstitution, for him/her and in his/her name, place, and stead, in any and all capacities, to sign and file any and all amendments to this Annual Report on Form 10-K, with all exhibits thereto and hereto, and other documents with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF ANADIGICS, INC. IN THE CAPACITIES AND ON THE DATES INDICATED:

Name	Title	Date
/s/ Bami Bastani	President, Chief Executive Officer and Director (Principal Executive Officer)	March 16, 2005
Dr. Bami Bastani
/s/ Thomas C. Shields	Senior Vice President and Chief Financial Officer (Principal Financial Accounting Officer)	March 16, 2005
Thomas C. Shields
/s/ Ronald Rosenzweig	Chairman of the Board of Directors	March 16, 2005
Ronald Rosenzweig
/s/ Paul S. Bachow	Director	March 16, 2005
Paul S. Bachow
/s/ Garry McGuire	Director	March 16, 2005
Gary McGuire
/s/ Harry T. Rein	Director	March 16, 2005
Harry T. Rein
/s/ Lewis Solomon	Director	March 16, 2005
Lewis Solomon
/s/ Dennis F. Strigl	Director	March 16, 2005
Dennis F. Strigl

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Description (Dollars in Thousands)		Balance at Beginning of Period		Additions Charged to Costs and Expenses			Deductions				Balance at end of period
Year ended December 31, 2004:
Deducted from asset account:
Allowance for doubtful accounts	$	752	$	240		$	(4	)	(1)	$	988
Reserve for excess and obsolete inventory		4,745		1,636			(2,307	)	(2)		4,074
Reserve for warranty claims		100		390			(331	)	(3)		159
Year ended December 31, 2003
Deducted from asset account:
Allowance for doubtful accounts	$	781	$	-		$	(29	)	(1)	$	752
Reserve for excess and obsolete inventory		7,134		287			(2,676	)	(2)		4,745
Reserve for warranty claims		368		10			(278	)	(3)		100
Year ended December 31, 2002
Deducted from asset account:
Allowance for doubtful accounts	$	715	$	297		$	(231	)	(1)	$	781
Reserve for excess and obsolete inventory		8,502		4,188			(5,556	)	(2)		7,134
Reserve for warranty claims		960		(259	)		(333	)	(3)		368

(1)   Uncollectible accounts written-off to the allowance account.

(2) Inventory write-offs to the reserve account.

(3) Warranty expenses incurred to the reserve for warranty claims.

EXHIBIT 21

Subsidiaries of ANADIGICS, Inc.

Name of Subsidiary	State of Jurisdiction of Incorporation	% Owned
ANADIGICS (U.K.) Limited	United Kingdom	100%
ANADIGICS, Limited	Israel	100%
ANADIGICS Denmark ApS	Denmark	100%
ANADIGICS Acquisition Corp	Delaware	100%
ANADIGICS Holding Corp.	Delaware	100%
Broadband & Wireless Investors, Incorporated	Delaware	100%
Integral Pathway, Inc.	New Jersey	100%
Telcom Devices Corp.	California	100%

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-89928) pertaining to the ANADIGICS, Inc. Stock Option Plan, 1994 Long-Term Incentive and Share Award Plan, 1995 Long-Term Incentive Share Award Plan and  Employee Stock Purchase Plan, in the Registration Statements (Form S-8 No. 33-32533 and Form S-8 No. 333-63836) pertaining to the ANADIGICS, Inc. 1997 Long-Term Incentive and Share Award Plan for Employees and in the Registration Statements (Form S-3 No. 333-75040, Form S-3 No. 333-110538 and Form S-3 No. 333-120947) of our reports dated March 2, 2005, with respect to the consolidated financial statements and schedule of ANADIGICS, Inc. and ANADIGICS, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of ANADIGICS, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2004.

MetroPark, New Jersey

March 11, 2005

Exhibit 31.1

CERTIFICATION

I, Bami Bastani, certify that:

1.   I have reviewed this Annual Report on Form 10-K 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 the 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: : March 16, 2005           

By:	/s/ Bami Bastani
	Bami Bastani
	President and
	Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Thomas Shields, certify that:

1.   I have reviewed this Annual Report on Form 10-K 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 the 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: : March 16, 2005

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

Exhibit 32.1

CERTIFICATION

The undersigned, Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc. (the "Company") hereby certifies that the Annual Report of the Company on Form 10-K for the period ended December 31, 2004 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: March 16, 2005

By:	/s/ Bami Bastani
	Bami Bastani
	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.

Exhibit 32.2

CERTIFICATION

The undersigned, Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc. (the "Company") hereby certifies that the Annual Report of the Company on Form 10-K for the period ended December 31, 2004 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: March 16, 2005

/s/ Thomas C. Shields

Thomas C. Shields

Senior 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

ANADIGICS, Inc.

We have audited the accompanying consolidated balance sheets of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 3, the Company changed its method of accounting for goodwill and other intangible assets in 2002.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of ANADIGICS, Inc.’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2005 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

MetroPark, New Jersey

March 2, 2005

ANADIGICS, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	December 31,
		2003			2004
ASSETS
Current assets:
Cash and cash equivalents	$	18,525		$	11,171
Marketable securities		54,130			63,615
Accounts receivable, net of allowance for doubtful accounts of $752 and $988 in 2003 and 2004, respectively		12,074			10,770
Inventories		10,321			14,436
Prepaid expenses and other current assets		3,243			3,073
Total current assets		98,293			103,065
Marketable securities		48,975			29,265
Plant and equipment
Equipment and furniture		130,815			132,864
Leasehold improvements		38,437			38,774
Projects in process		1,609			1,341
		170,861			172,979
Less accumulated depreciation and amortization		115,619			129,941
		55,242			43,038
Goodwill and other intangibles, less accumulated amortization of $64 and $258 in 2003 and 2004, respectively		1,788			6,297
Other assets		3,600			4,230
	$	207,898		$	185,895
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable	$	9,497		$	8,021
Accrued liabilities		5,618			4,783
Accrued restructuring costs		1,994			726
Current maturities of capital lease obligations		84			18
Total current liabilities		17,193			13,548
Long-term debt		66,700			84,700
Other long-term liabilities		2,959			3,032
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued or outstanding
Common stock, convertible, non-voting, $0.01 par value, 1,000,000 shares authorized, none issued or outstanding
Common stock, $0.01 par value, 144,000,000 shares authorized at December 31, 2003 and 2004, and  31,225,888 and 33,072,438 issued and outstanding at December 31, 2003 and 2004, respectively		312			331
Additional paid-in capital		335,477			343,594
Deferred compensation		-			(861	)
Accumulated deficit		(214,881	)		(257,963	)
Accumulated other comprehensive income		138			(486	)
Total stockholders’ equity		121,046			84,615
	$	207,898		$	185,895

See accompanying notes.

ANADIGICS, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

	YEAR ENDED DECEMBER 31,
		2002			2003			2004
Net sales	$	82,564		$	75,212		$	91,350
Cost of sales		75,302			71,927			77,355
Gross profit		7,262			3,285			13,995
Research and development expenses		29,742			32,075			33,306
Selling and administrative expenses		21,400			19,420			22,511
Restructuring and other charges		5,001			925			-
Asset impairment charges		8,641			-			-
Goodwill impairment charges		8,043			-			-
Purchased in-process R&D		-			1,863			-
		72,827			54,283			55,817
Operating loss		(65,565	)		(50,998	)		(41,822	)
Interest income		6,309			3,344			2,203
Interest expense		(5,119	)		(3,761	)		(4,085	)
Impairment of investments		(390	)		-			-
Gain on repurchase of Convertible notes		12,581			-			327
Other income		1			276			295
Loss before income taxes		(52,183	)		(51,139	)		(43,082	)
Benefit from income taxes		(4,307	)		(382	)		-
Loss before cumulative effect of accounting change		(47,876	)		(50,757	)		(43,082	)
Cumulative effect of accounting change		(8,010	)		-			-
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Net loss per share
Basic and diluted
Loss before cumulative effect of accounting change	$	(1.57	)	$	(1.65	)	$	(1.33	)
Net loss	$	(1.83	)	$	(1.65	)	$	(1.33	)
Weighted average common and dilutive securities outstanding		30,587,032			30,716,749			32,412,922

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(DOLLARS IN THOUSANDS)

	Year Ended December 31,
		2002			2003			2004
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Other comprehensive income (loss)
Unrealized gain (loss) on marketable securities		116			(666	)		(617	)
Foreign currency translation adjustment		(10	)		46			12
Reclassification adjustment:
Net realized (gain) loss previously included in other comprehensive income		(71	)		15			(19	)
Comprehensive loss	$	(55,851	)	$	(51,362	)	$	(43,706	)

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(SHARES AND DOLLARS IN THOUSANDS)

	Common Stock Shares			Common Stock Amount		Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit			Accumulated Other Comprehensive Income (loss	)		Total Stockholders’ Equity
Balance, December 31, 2001	30,569		$	306	$	333,860			-		$	(108,328	)	$	708		$	226,636
Stock options exercised	17			-		108												108
Shares issued under employee stock purchase plan	88			1		194												195
Unrealized gains on marketable securities															116			116
Foreign currency translation adjustment															(10	)		(10	)
Net realized gain, previously included in other comprehensive income															(71	)		(71	)
Net loss												(55,886	)					(55,886	)
Balance, December 31, 2002	30,674			307		334,162			-			(164,124	)		743			171,088
Stock options exercised	23			-		67												67
Shares issued under employee stock purchase plan	529			5		1,222												1,227
Unrealized loss on marketable securities															(666	)		(666	)
Foreign currency translation adjustment															46			46
Net realized loss, previously included in other comprehensive income															15			15
Stock-based compensation						26												26
Net loss												(50,757	)					(50,757	)
Balance, December 31, 2003	31,226			312		335,477			-			(214,881	)		138			121,046
Stock options exercised	536			5		1,355												1,360
Shares issued under employee stock purchase plan	182			2		561												563
Shares issued as contingent acquisition consideration	747			8		4,640												4,648
Restricted stock grant	403			4		1,613		$	(1,617	)								-
Restricted stock forfeitures	(22	)		-		(87	)		87									-
Amortization of restricted stock									669									669
Unrealized loss on marketable securities															(617	)		(617	)
Foreign currency translation adjustment															12			12
Net realized gain, previously included in other comprehensive income															(19	)		(19	)
Stock-based compensation						35												35
Net loss												(43,082	)					(43,082	)
Balance, December 31, 2004	33,072		$	331	$	343,594		$	(861	)	$	(257,963	)	$	(486	)	$	84,615

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

	YEAR ENDED DECEMBER 31,
		2002			2003			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(55,886	)	$	(50,757	)	$	(43,082	)
Adjustments to reconcile net loss to net cash used in operating activities:
Cumulative effect of accounting change		8,010			-			-
Gain on repurchase of Convertible notes		(12,581	)		-			(327	)
Depreciation		19,828			18,481			15,282
Amortization		2,197			1,173			1,483
Stock based compensation		-			26			704
Amortization of premium on marketable securities		2,256			2,432			2,090
Impairments of long-lived assets and investments		17,074			-			-
Purchased in-process R&D		-			1,863			-
Loss on sale of equipment		-			20			15
Changes in operating assets and liabilities:
Accounts receivable		1,184			(2,906	)		1,304
Inventory		1,384			2,957			(4,115	)
Prepaid expenses and other assets		1,070			1,234			361
Accounts payable		(1,681	)		1,730			(1,476	)
Accrued and other liabilities		(386	)		146			(1,892	)
Net cash used in operating activities		(17,531	)		(23,601	)		(29,653	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(4,945	)		(4,178	)		(3,427	)
Purchases of marketable securities		(104,619	)		(97,605	)		(51,128	)
Proceeds from sales of marketable securities		108,197			122,577			58,627
Business acquisitions		-			(4,217	)		(55	)
Proceeds from sale of equipment		2			-			130
Net cash (used in) provided by investing activities		(1,365	)		16,577			4,147
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of obligations under capital leases		(94	)		(88	)		(66	)
Repayments of long-term debt		(244	)		-			-
Proceeds from issuance of long-term debt net of offering costs		-			-			35,695
Repurchase of Convertible notes		(19,828	)		-			(19,400	)
Issuances of common stock, net of related expenses		303			1,294			1,923
Net cash (used in) provided by financing activities		(19,863	)		1,206			18,152
Net decrease in cash and cash equivalents		(38,759	)		(5,818	)		(7,354	)
Cash and cash equivalents at beginning of period		63,102			24,343			18,525
Cash and cash equivalents at end of period	$	24,343		$	18,525		$	11,171
Supplemental disclosures of cash flow information:
Interest paid	$	4,549		$	3,335		$	3,193
Taxes paid		200			-			117

See accompanying notes.

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ANADIGICS, Inc. (the "Company") is a leading supplier of radio frequency ("RF")/microwave integrated circuit solutions for the communications industry. The Company’s products are used to send and receive signals in a variety of broadband and wireless communications applications. In the broadband markets, the focus is on applications for cable subscriber products, cable infrastructure systems, wireless local area networks ("WLAN"), and fiber optic communications systems. In the wireless market, the Company’s efforts are focused on applications for cellular and personal communication systems ("PCS") handsets.

The Company designs, develops and manufactures radio frequency integrated circuit solutions primarily using gallium arsenide ("GaAs") semiconductor material with either Metal Semiconductor Field Effect Transistor (MESFET), Pseudomorphic High Electron Mobility Transistor (PHEMT) or Heterojunction Bipolar Transistor (HBT) process technology. The Company manufactures its integrated circuits in its six-inch analog GaAs wafer fabrication facility. GaAs offers certain advantages in RF/microwave applications including the integration of numerous RF/microwave functions, which cannot be easily integrated in silicon-based circuits. The Company’s high frequency integrated circuits enable manufacturers of communications equipment to enhance overall system performance and reduce manufacturing cost and time to market.

The consolidated financial statements include the accounts of ANADIGICS, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates that affect the financial statements include, but are not limited to: recoverability of inventories, useful lives and amortization periods and recoverability of long-lived assets.

CONCENTRATION OF CREDIT RISK

The Company grants trade credit to its customers, who are primarily foreign manufacturers of wireless communication devices, cable and broadcast television receivers and fiber optic communication devices. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Sales and accounts receivable from customers are denominated in U.S. dollars. The Company has not experienced significant losses related to receivables from these individual customers.

Net sales to individual customers who accounted for 10% or more of the Company’s total net sales and corresponding end application information are as follows:

	YEAR ENDED DECEMBER 31
		2002					2003					2004
		$		%			$		%			$	%
Customer (application)
Motorola (Broadband)	$	18,666		23	%	$	10,422		14	%	$	9,184	10	%
Kyocera (Wireless)		29,231		35	%		21,263		28	%		9,751	11	%
Scientific Atlanta (Broadband)		<10	%	<10	%		<10	%	<10	%		9,218	10	%
LG Electronics (Wireless)		<10	%	<10	%		10,346		14	%		13,628	15	%

Accounts receivable at December 31, 2003 and 2004 from the greater than 10% customers accounted for 49% and 51% of total accounts receivable, respectively.

REVENUE RECOGNITION

Production revenue is recorded when products are shipped to customers pursuant to a purchase order. The Company charges customers for the costs of certain contractually-committed inventories that remain at the end of a product's life. Cancellation revenue is recognized when cash is received. The value of the inventory related to cancellation revenue may, in some instances, have been reserved during prior periods in accordance with the Company’s inventory obsolescence policy. The Company maintains an allowance for doubtful accounts for estimated losses resulting from customers' failure to make payments.

WARRANTY COSTS

The Company provides, by a current charge to income, an amount it estimates, by examining historical returns and other information it deems critical, will be needed to cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in Accrued liabilities in the consolidated balance sheets.

PLANT AND EQUIPMENT

Plant and equipment are stated at cost. Depreciation of plant, furniture and equipment has been provided on the straight-line method over 3-5 years. Leasehold improvements are amortized and included in depreciation over the useful life of the leasehold or the life of the lease, whichever is shorter.

The cost of equipment acquired under capital leases was $10,633 and $10,545 at December 31, 2003 and 2004, respectively, and accumulated amortization was $10,484 and $10,519 at December 31, 2003 and 2004, respectively. Equipment acquired under a capital lease is amortized and included in depreciation over the useful life of the leased equipment or the life of the lease, whichever is shorter.

GOODWILL AND OTHER INTANGIBLES

Goodwill, process technology, customer list and a covenant-not-to-compete were recorded as part of the Company's acquisitions. Effective January 1, 2002, the Company adopted the provisions of Financial Accounting Standards Board Statement No. 142, Goodwill and Other Intangible Assets (FAS 142). Under the new rules, goodwill is no longer subject to amortization but is reviewed for potential impairment upon adoption and thereafter annually or upon the occurrence of an impairment indicator. FAS 142 prescribes a two-phase process for impairment testing of goodwill. The first phase screens for impairment; while the second phase measures the impairment. Process technology, the customer list and the covenant continued to be amortized using the straight-line method over three to four year lives. The carrying amount of the Company’s intangibles are reviewed on a regular basis for any signs of an impairment. The Company determines if the carrying amount is impaired based on anticipated cash flows. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. For each of the reporting units, fair value is determined primarily using the anticipated cash flows, discounted at a rate commensurate with the associated risk.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell.

INCOME TAXES

Deferred income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the income tax basis of such assets and liabilities. The Company maintains a full valuation allowance on its deferred tax assets.

RESEARCH AND DEVELOPMENT COSTS

The Company charges all research and development costs associated with the development of new products to expense when incurred.

IN-PROCESS RESEARCH AND DEVELOPMENT

In the event of an acquisition, the Company will calculate the fair value of in-process research and development projects, based upon discounted cash flows estimated by management of future revenues and expected profitability of the related technology. The rate used to discount the projected future cash flows accounts for the time value of money, as well as the risks of realization of the cash flows. Management will record a charge to earnings where projects are determined to have not reached technological feasibility and do not have alternative uses.

CASH EQUIVALENTS

The Company considers all highly liquid marketable securities with an original stated maturity of three months or less as cash equivalents.

MARKETABLE SECURITIES

Available for sale securities are stated at fair value, as determined by quoted market prices, with unrealized gains and losses reported in other accumulated comprehensive income or loss. The cost of securities sold is based upon the specific identification method. The amortized cost of debt securities is adjusted for amortization of premium and accretion of discounts to maturity. Such amortization, realized gains and losses, interest and dividends are included in interest income. See Note 8 for a summary of available-for-sale securities.

FOREIGN CURRENCY TRANSLATION

The financial statements of subsidiaries outside of the United States are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the rates of exchange at the balance sheet date. The resultant translation adjustments are included in other accumulated comprehensive income or loss. Income and expense items are translated at the average monthly rates of exchange. Gains and losses from foreign currency transactions of these subsidiaries are included in the determination of net income or loss.

STOCK BASED COMPENSATION

As permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (FAS 123), the Company has elected to follow the intrinsic value method under Accounting Principle Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related interpretations in accounting for its employee stock option and other stock based compensation plans. Under APB 25, no compensation expense is recognized at the time of option grant when the exercise price of the Company’s employee stock options equals the fair market value of the underlying common stock on the date of grant. Compensation expense attributable to restricted stock awards is based on the fair value of such shares at the date of issuance and is amortized over the vesting period.

The following table illustrates the effect on net loss and loss per common share as if the Company had applied the fair value method to measure stock-based compensation, required under the disclosure provisions of SFAS No. 123:

		2002			2003			2004
Net loss, as reported	$	(55,886	)	$	(50,757	)	$	(43,082	)
Stock based compensation included in reported net loss		-			26			704
Stock based compensation expense under fair value reporting		(10,863	)		(7,905	)		(9,978	)
Pro forma net loss	$	(66,749	)	$	(58,636	)	$	(52,356	)
Basic and diluted loss per share
Net loss, as reported	$	(1.83	)	$	(1.65	)	$	(1.33	)
Pro forma net loss	$	(2.18	)	$	(1.91	)	$	(1.62	)

On December 22, 2004, the Company authorized an immediate vesting of eligible employees’ unvested share options with an exercise price greater than $5.00 per share. Directors were not eligible. In total, 1,772,289 options with an average exercise price of $7.26 immediately vested and have an average remaining contractual life of 9.1 years. The unamortized fair value associated with these accelerated-vest shares in the amount of $2,654 amortized immediately. Had the accelerated-vest program not occurred, the related-cost in the years ended December 31, 2005, 2006 and 2007 would have included $1,846, $751 and $57, respectively. In addition to its employee-retention value, the Company’s decision to accelerate the vesting of these "out-of-the-money" options was based upon the accounting of such costs moving from disclosure-only in 2004 to being included in the Company’s statement of operations in 2005.

EARNINGS PER SHARE

Basic and diluted earnings per share are calculated in accordance with FASB Statement No. 128, Earnings Per Share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised resulting in the issuance of common stock of the Company.  Any dilution arising from the Company's outstanding stock options or share potentially issuable upon conversion of the Convertible notes are not included as their effect is anti-dilutive. 

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. 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 December 31, 2004, the fair value of the Company's outstanding Convertible senior notes, estimated based upon dealer quotes, was approximately $86,062.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the Financial Accounting Standards Board issued Statement No. 123(R) (FAS 123R), Share-Based Payment, amending FAS 123 and requiring that all share-based payments to employees be recognized in the financial statements. Generally, the approach to accounting for share-based payments in FAS 123R is similar to the approach described in FAS 123, however, pro forma footnote disclosure will no longer be an alternative to financial statement recognition. This statement becomes effective in the first interim or annual period beginning after June 15, 2005. The Company expects to adopt the new statement effective January 1, 2005, using the modified-prospective transition method described in the statement. Under this method, the Company will be required to recognize compensation expense over the remaining vesting period for all awards that remain unvested as of January 1, 2005. As permitted by FAS 123, the Company currently accounts for share-based payments to employees using APB 25's intrinsic value method and, as such, generally recognized no compensation cost for employee stock options. The Company believes based on the level of share-based payments previously granted and unvested, that the adoption of FAS 123R will not have a material effect on its financial position, results of operations or cashflows, however, the level of future equity based compensation grants could have a material effect on amounts recorded in our statement of operations.

In November 2004, the Financial Accounting Standards Board issued Statement No. 151 (FAS 151), Inventory costs, an amendment of ARB No. 43, Chapter 4. FAS 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as current period charges. In addition, FAS 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. FAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company currently believes that the adoption of FAS 151 will not have a material impact on its consolidated financial statements.

RECLASSIFICATIONS

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

2. BUSINESS ACQUISITIONS

 On March 31, 2003, the Company acquired certain assets and liabilities of the WLAN power amplifier business of RF Solutions ("RFS"). The RFS acquisition was a strategic initiative that allows the Company to participate in the emerging and fast-growing WLAN market with a depth of experienced design personnel and cutting-edge products. The Company paid cash purchase consideration on March 31, 2003 of $2,800 and pursuant to the terms of the acquisition agreement, issued 747,280 shares effective March 31, 2004, valued at $4,648 after RFS achieved certain revenue milestones. In addition, the Company incurred $217 in acquisition-related costs.

 On October 14, 2003, the Company acquired certain assets of a CDMA wireless handset power amplifier developer, formerly named Tavanza, a wholly-owned subsidiary of Celeritek. The Company paid cash consideration of $1,000 and incurred $255 in acquisition-related costs.

 The acquisitions were accounted for using the purchase method of accounting. The results of operations for RFS and Tavanza are included in the results of operations of the Company from the respective dates of purchase. There are no significant differences between the accounting policies of the Company and RFS or Tavanza.

 The acquisition costs of $8,920 was allocated to the assets acquired and liabilities assumed, based on their fair values as follows:

		Total
Fair value of tangible assets	$	1,029
Fair value of liabilities assumed		(527	)
In-process research and development		1,863
Process technology		210
Covenant-not-to-compete		175
Customer list		240
Goodwill		5,930
Total purchase price	$	8,920

 The Company recorded a charge of $1,863 representing the fair value of certain acquired research and development projects relating to dual band, high gain and modules applications for Wireless LAN and certain passive-free power amplifier applications, in the case of Tavanza, that were determined to have not reached technological feasibility and to not have alternative future uses. The fair value of such projects was determined based on discounted net cash flows. These cash flows were based upon management’s estimates of future revenues and expected profitability of each technology. The rate used to discount these projected cash flows accounted for the time value of money, as well as the risks of realization of cash flows.

 The following table reflects the changes in goodwill for the year ended December 31, 2004:

Balance at December 31, 2003	$	1,227
Additions, primarily related to RFS share issuance		4,703
Balance at December 31, 2004	$	5,930

The following unaudited pro-forma consolidated financial information reflects the results of operations for the twelve months ended December 31, 2002 and 2003, as if the acquisitions of RFS and Tavanza had occurred on December 31, 2001 and after giving effect to purchase accounting adjustments. The charge for purchased in-process research and development is not included in the pro-forma results, because it is non-recurring.

	Year Ended December 31
		2002			2003
Pro-forma revenue	$	83,020		$	75,751
Pro-forma net loss before cumulative effect of accounting change		(57,034	)		(51,947	)
Pro-forma net loss		(65,044	)		(51,947	)
Basic and diluted net loss per share
Pro-forma net loss before cumulative effect of accounting change	$	(1.86	)	$	(1.69	)
Pro-forma net loss		(2.13	)		(1.69	)

 These pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of what operating results would have been had the acquisition actually taken place on December 31, 2001. In addition, these results are not intended to be a projection of future results and do not reflect any synergies that might be achieved from the combined operations.

3.  INTANGIBLES, GOODWILL, CUMULATIVE EFFECT OF ACCOUNTING CHANGE AND ACQUISITION INTANGIBLES' IMPAIRMENT CHARGES

As of December 31, 2003 and 2004, the Company's intangible assets consist of the following:

	Gross Carrying Amount				Accumulated Amortization
	December 31,				December 31,
		2003		2004		2003		2004
Goodwill	$	1,227	$	5,930	$	-	$	-
Process Technology		210		210		35		91
Covenant not to compete		175		175		12		70
Customer list		240		240		17		97
	$	1,852	$	6,555	$	64	$	258

Annual amortization expense related to intangible assets is calculated over their estimated useful lives of three to four years and was $64 and $194 in the years ended December 31, 2003 and 2004, respectively. In the year ended December 31, 2002, intangible asset amortization expense was $1,080 which was recorded prior to the impairment write-off of the intangibles in the fourth quarter of 2002, as discussed below.

Future annual amortization expense related to intangible assets is expected to be as follows:

		2005		2006		2007
Amortization expense	$	194	$	162	$	11

Effective January 1, 2002, the Company adopted the provisions of FAS 142 and under the new rules, goodwill is no longer subject to amortization but is reviewed for potential impairment annually or upon the occurrence of an impairment indicator. The annual amortization of Telcom’s goodwill, which would have approximated $2,567 was no longer required in 2002. Other intangible assets continued to be amortized over their useful lives. As a result of completing the initial required impairment test, the Company recorded a charge for the cumulative effect of the accounting change in the amount of $8,010 ($0.26 per share) representing the excess of the carrying value of a reporting unit (Telcom) as compared to its estimated fair value as of January 1, 2002.

During the course of 2002, the Company monitored fiber market conditions in light of job cuts and difficult prospects announced by several of its end-market customers. In view of these weaker market conditions, the Company performed several tests of its goodwill and intangible assets for potential impairment during the year. As a result of those evaluations, the Company recorded a goodwill impairment charge of $8,043 and an asset impairment charge for its remaining acquired intangibles of $2,310. The $2,310 was included within charges for asset impairments as discussed in Note 4 below.

4. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

During 2003, the Company recorded restructuring charges of $925 pertaining to severance and related benefits of workforce reductions of approximately 19 operations and administrative positions and lease-related costs.

In 2002, the Company recorded charges for asset impairments, impairment on investments and for restructuring and other charges of $8,641, $390 and $5,001, respectively. The asset impairment charge of $8,641 related to the write-off of certain manufacturing and research equipment, leasehold improvements, certain acquired intangibles and certain technology licenses that are no longer used in the ongoing activities of the business. The charge for impairment on investments was recorded on a private-equity investment following an evaluation that indicated the carrying value of such investment exceeded its estimated fair market value. The restructuring and other charges were for lease-related costs and for severance and related employee benefit costs of workforce reductions. The workforce reductions eliminated approximately 83 positions throughout the Company.

Activity and liability balances related to the restructuring and other charges for the years ended December 31, 2002, 2003 and 2004 are as follows:

		Lease Related			Workforce Reductions			Total
Year ended December 31, 2002
Beginning balance	$	1,189		$	709		$	1,898
Restructuring and other expenses		3,374			1,628			5,002
Deductions		(1,759	)		(2,185	)		(3,944	)
December 31, 2002 restructuring balance		2,804			152			2,956
Year ended December 31, 2003
Restructuring and other expenses		300			625			925
Deductions		(1,124	)		(763	)		(1,887	)
December 31, 2003 restructuring balance		1,980			14			1,994
Deductions		(1,254	)		(14	)		(1,268	)
December 31, 2004 restructuring balance	$	726		$	-		$	726

5. SEGMENTS

The Company operates in one segment. Its integrated circuits are primarily manufactured using common manufacturing facilities located in the same domestic geographic area. All operating expenses and assets of the Company are combined and reviewed by the chief operating decision maker on an enterprise-wide basis, resulting in no additional discrete financial information or reportable segment information.

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

	Year Ended December 31,
		2002		2003		2004
Wireless	$	44,689	$	41,538	$	45,379
Broadband		37,875		33,674		45,971
Total	$	82,564	$	75,212	$	91,350

The Company primarily sells to three geographic regions: Asia, U.S.A. and Canada, and Other. The geographic region is determined based on shipping addresses, not on the locations of the ultimate users. Net sales to each of the three geographic regions are as follows:

	Year Ended December 31,
		2002		2003		2004
Asia	$	31,897	$	31,014	$	48,939
USA and Canada		44,193		38,024		35,982
Other		6,474		6,174		6,429
Total	$	82,564	$	75,212	$	91,350

6. LONG-TERM DEBT

On September 24, 2004, the Company issued $38,000 aggregate principal amount of 5% Convertible Senior Notes ("2009 Notes") due October 15, 2009. The 2009 Notes are convertible into shares of the Company’s common stock at any time prior to their maturity, at an initial conversion rate, subject to adjustment, of 200 shares for each $1,000 principal amount, which is equivalent to a conversion price of $5.00 per share. Pursuant to the indenture, dated as of September 24, 2004, between the Company and U.S. Bank Trust Association, as trustee, in the event of a "fundamental change" on or prior to July 15, 2009, the Company will pay a make whole premium upon the repurchase or conversion of the 2009 Notes. Subject to certain exceptions, the make whole premium will be 1% of the principal amount of the 2009 Notes, plus an additional premium based on the date such "fundamental change" becomes effective and the price paid per share of the Company’s common stock in the transaction constituting the "fundamental change". Interest on the 2009 Notes is payable semi-annually in arrears on April 15 and October 15 of each year.

On November 27, 2001, the Company issued $100,000 aggregate principal amount of 5% Convertible Senior Notes ("2006 Notes") due November 15, 2006. The outstanding 2006 Notes are convertible into shares of common stock at any time prior to their maturity or prior redemption by the Company. The 2006 Notes are convertible into shares of common stock at a rate of 47.619 shares for each $1,000 principal amount (convertible at a price of $21.00 per share), subject to adjustment. Interest is payable semi-annually in arrears on May 15 and November 15 of each year.

ANADIGICS, Inc. has the option to redeem all or a portion of the 2006 Notes at a redemption price of 102% of the principal amount during the period from November 15, 2004 through November 14, 2005 and at a redemption price of 101% of the principal amount during the period from November 15, 2005 to November 14, 2006. In the event of a change in control, as defined, 2006 Note-holders may require the Company to repurchase the notes at 100% of the principal amount. In the event of a change in control, the Company, in certain circumstances, may elect to repay the 2006 Notes in common stock valued at 95% of the average of the closing prices of the Company's common stock for the five days immediately preceding and including the third trading day prior to the repurchase.

As of December 31, 2004, $46,700 aggregate principal amount of the 2006 Notes remain outstanding. During the third quarter of 2002, the Company repurchased and retired $33,300 aggregate principal amount of the 2006 Notes for $20,365 in cash, inclusive of accrued interest of $537. The Company recognized a gain of $12,581 on the repurchase after adjusting for accrued interest and the write-off of a proportionate share of unamortized offering costs. In addition, in the third quarter of 2004 and concurrent with the issuance of the 2009 Notes, the Company repurchased and retired $20,000 aggregate principal amount of the 2006 Notes for $19,758 in cash, inclusive of accrued interest of $358. The Company recognized a gain of $327 on the repurchase after adjusting for the write-off of a proportionate share of unamortized offering costs.

Unamortized debt issuance costs of $1,221 and $2,744 at December 31, 2003 and 2004, respectively, consisting principally of underwriters' fees, were included in other assets and are being amortized over the life of the notes.

7. COMMITMENTS AND CONTINGENCIES

The Company leases manufacturing, warehousing and office space and manufacturing equipment under noncancelable operating leases that expire through 2016. The Company also leases certain equipment under capital leases that expire in 2005. Rent expense, net of sublease income was $3,560, $3,225 and $3,063 in 2002, 2003 and 2004, respectively. Sublease income was $406, $789 and $780 in 2002, 2003 and 2004, respectively. The future minimum lease payments under the noncancelable operating leases and the present value of the minimum capital lease payments are as follows:

YEAR		Capital Leases		Operating Leases
2005	$	18	$	2,641
2006				1,693
2007				1,699
2008				1,704
2009				1,776
Thereafter				14,115
Total minimum lease payments		18		23,628
Less: contractually-required sublease income		-		(268	)
	$	18	$	23,360

The lessor on the lease for the Company’s headquarters building in Warren, New Jersey, changed during 2003 as a result of the settlement of a bankruptcy proceeding involving the prior lessor. The lease agreement is unchanged as a result of the transfer of ownership.

In addition to the above, at December 31, 2004, the Company had unconditional purchase obligations of approximately $2,445.

8. MARKETABLE SECURITIES

The following is a summary of available-for-sale securities:

	Available-for-Sale Securities
		Cost		Gross Unrealized Gains (Losses)			Estimated Fair Value
US Treasury & Agency Securities	$	9,966	$	(16	)	$	9,950
US Corporate Securities		93,014		141			93,155
Total at December 31, 2003	$	102,980	$	125		$	103,105
US Treasury & Agency Securities	$	11,908	$	(81	)	$	11,827
US Corporate Securities		81,483		(430	)		81,053
Total at December 31, 2003	$	93,391	$	(511	)	$	92,880

The amortized cost and estimated fair value of debt and marketable equity securities at December 31, 2004, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

	Available-for-Sale Securities
		Cost		Estimated Fair Value
Due in one year or less	$	63,827	$	63,615
Due after one year through two years		29,564		29,265
Total	$	93,391	$	92,880

9. INVENTORIES

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

	December 31,
		2003			2004
Raw materials	$	3,302		$	3,510
Work in progress		7,200			9,026
Finished goods		4,564			5,974
		15,066			18,510
Reserves		(4,745	)		(4,074	)
Total	$	10,321		$	14,436

10. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	December 31,
		2003		2004
Accrued compensation	$	3,732	$	2,005
Warranty reserve		100		159
Other		1,786		2,619
	$	5,618	$	4,783

Warranty reserve movements in the years ended December 31, 2003 and 2004 for returns were $278 and $331, respectively. The periodic charges for estimated warranty costs were $10 and $390 in the years ended December 31, 2003 and 2004.

11. INCOME TAXES

The components of the provision (benefit) for income taxes are as follows:

	Year Ended December 31,
		2002			2003			2004
Current benefit:
Federal	$	(4,307	)	$	(382	)	$	-
State and foreign		-			-			-
Deferred provision:
Federal		-			-			-
State and foreign		-			-			-
Total	$	(4,307	)	$	(382	)	$	-

In December 2002, the Company received a $4,307 refund pursuant to a carryback claim under the Job Creation and Workers Assistance Tax Act of 2002. The refund represents taxes paid in 1996 and 1997. Deferred tax assets require a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets may not be realized. Whereas realization of the deferred tax assets is dependent upon the timing and magnitude of future taxable income prior to the expiration of the deferred tax attributes, management began recording a full valuation allowance in 2001. The amount of the deferred tax assets considered realizable, however, could change if estimates of future taxable income during the carry-forward period are changed.

Significant components of the Company’s net deferred taxes as of December 31, 2003 and 2004 are as follows:

	December 31,
		2003			2004
Deferred tax balances
Accurals/reserves	$	3,790		$	3,642
Net operating loss carryforwards		77,260			94,285
General business and research and development credits		4,634			5,073
Deferred rent expense		1,091			1,160
Difference in basis of plant and equipment		2,295			2,689
Other		(71	)		-
Valuation reserve		(88,999	)		(106,849	)
Net deferred tax assets		-			-

As of December 31, 2004, the Company had net operating loss carryforwards of approximately $260,000 for both federal and state tax reporting purposes. The federal carryforward will begin to expire in 2018, and the state carryforwards will begin to expire in 2005. At December 31, 2004, approximately $24,860 of the deferred tax asset related to net operating loss carryforwards and an equivalent amount of deferred tax asset valuation allowance represented tax benefits associated with the exercise of non-qualified stock options. Such benefit, when realized, will be credited to additional paid-in capital.               

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the benefit from income taxes is as follows:

	Year Ended December 31,
	2002					2003					2004
Tax at US statutory rate	$	(18,264	)	(35.0	)%	$	(17,899	)	(35.0	)%	$	(15,079	)	(35.0	)%
State and foreign tax (benefit), net of federal tax effect		(1,696	)	(3.2	)		(1,662	)	(3.2	)		(1,400	)	(3.2	)
Research and experimentation tax credits		(337	)	(0.6	)		-		-			(516	)	(1.2	)
Valuation allowance, net of carryback		11,232		21.5			20,098		39.3			17,850		41.4
Intangibles amortization and other		4,758		9.1			(919	)	(1.8	)		(855	)	(2.0	)
Benefit from income taxes	$	(4,307	)	(8.2	)%	$	(382	)	(0.7	)%	$	-		0.0	%

12. STOCKHOLDERS' EQUITY

On December 17, 1998, the Company adopted a Shareholders’ Rights Agreement (the "Agreement"). Pursuant to the Agreement, as amended on November 30, 2000, rights were distributed as a dividend at the rate of one right for each share of ANADIGICS, Inc. common stock, par value $0.01 per share, held by stockholders of record as of the close of business on December 31, 1998. The rights will expire on December 17, 2008, unless earlier redeemed or exchanged. Under the Agreement, each right will entitle the registered holder to buy one one-thousandth of a share of Series A Junior Participating Preferred Stock at a price of $75.00 per one one-thousandth of a share, subject to adjustment in accordance with the Agreement. The rights will become exercisable only if a person or group of affiliated or associated persons acquires, or obtains the right to acquire, beneficial ownership of ANADIGICS, Inc. common stock or other voting securities that have 18% or more of the voting power of the outstanding shares of voting stock, or upon the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in such person or group acquiring, or obtaining the right to acquire, beneficial ownership of 18% or more of the voting power of ANADIGICS, Inc. common stock or other voting securities.

13. EMPLOYEE BENEFIT PLANS

In 1995, the Company adopted an employee stock purchase plan ("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 1,693,750 shares of common stock are 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 ESP Plan, shares purchased and their applicable per share prices were 88,493 ($2.21), 528,894 ($2.32), 181,685 ($3.11), for the years ended December 31, 2002, 2003 and 2004, respectively.

Employees and outside directors have been granted options to purchase shares of common stock under stock option plans adopted in 1994, 1995 and 1997. An aggregate of 489,130, 4,912,500 and 5,100,000 shares of common stock were reserved for issuance under the 1994 Long-Term Incentive Share and Award Plan, the 1995 Long-Term Incentive Share Award Plan and the 1997 Long-Term Incentive and Share Award Plan for Employees (the "Plans"), respectively. The Plans provide for the granting of stock options, stock appreciation rights, restricted shares, or other share based awards to eligible employees and directors, as defined in the Plans. Options granted under the Plans become exercisable in varying amounts over periods of up to three years. To date, no stock appreciation rights have been granted under the Plans.

On July 23, 2004, the Company granted 403,204 restricted shares under the 1995 and 1997 Long-Term Incentive Share Award plans ("Plans"). On the date of the grant, the market price of the shares was $4.01. The value of the grant has been recorded as deferred compensation, a component of Stockholders’ Equity and is being amortized over the required one-year vest period. At December 31, 2004, 21,622 restricted shares have been forfeited under the conditions of the Plans. During the first quarter of 2005, the Company has granted an additional 1,028,716 restricted shares under the Plans at an average market price of $2.78 and carrying vesting periods of one or three years.

On May 20, 2002, the Company announced a voluntary stock option exchange program for eligible employees. Officers and directors were not eligible for the exchange program. Pursuant to the terms and conditions of the offer, which expired on June 18, 2002, the Company accepted for cancellation options to purchase 838,157 shares of common stock having a weighted average exercise price of $36.90. On December 20, 2002, participating employees were issued 760,742 options under this program in exchange for the cancelled options. The new options have an exercise price equal to $2.53, which represents the fair market value at the date of grant and fully vested on December 20, 2003.

On July 3, 2003, the Company announced a voluntary stock option exchange program for employees and officers. Directors of the Company were not eligible for the exchange program. Pursuant to the terms and conditions of the offer, which expired on August 4, 2003, the Company accepted for cancellation options to purchase 1,673,931 shares of common stock having a weighted average exercise price of $19.49. On February 6, 2004, participating employees were issued 551,564 stock options, under this one for three-exchange program, for the cancelled options. The new options have an exercise price equal to $7.27, which represents the fair market value at the date of grant.

   A summary of the Company’s stock option activity, and related information for the years ended December 31, 2002, 2003 and 2004 are as follows:

	2002					2003					2004
		Common Stock Options			Weighted Average Exercise Price		Common Stock Options			Weighted Average Exercise Price		Common Stock Options			Weighted Average Exercise Price
Outstanding at beginning of year		6,283,632		$	17.52		7,132,034		$	10.80		5,904,937		$	7.30
Granted		2,248,353			3.90		856,366			3.44		1,943,713			7.16
Exercised		(16,773	)		6.44		(22,961	)		2.93		(536,633	)		2.53
Forfeited		(545,021	)		21.17		(386,571	)		10.78		(520,311	)		9.31
Cancelled		(838,157	)		36.90		(1,673,931	)		19.49		-			-
Outstanding at end of year		7,132,034			10.80		5,904,937			7.30		6,791,706			7.47
Exercisable at end of year		3,903,164			13.69		4,185,488			8.65		6,172,285			7.94

Stock options outstanding at December 31, 2004 are summarized as follows:

Range of exercise prices	Outstanding Options at Dec. 31, 2004	Weighted average remaining contractual life		Weighted average exercise price	Exercisable at Dec. 31, 2004		Weighted average exercise price
$1.98 - $2.53	1,412,550	8.00	$	2.49	1,058,948	$	2.50
$2.79 - $5.33	1,816,777	5.13	$	4.21	1,566,058	$	4.39
$5.63 - $7.65	1,892,492	8.88	$	7.18	1,877,392	$	7.19
$7.66 - $13.59	897,338	4.78	$	11.95	897,338	$	11.95
$13.60 - $53.48	772,549	5.10	$	19.77	772,549	$	19.77

FASB 123 requires pro forma information regarding net income and earnings per share as if the Company has accounted for its employee stock options, warrants and shares of common stock purchased by employees in connection with the ESP Plan ("equity awards") under the fair value method prescribed by FASB 123. The fair value of these equity awards was estimated at the date of grant using a Black-Scholes option pricing model. The following are weighted average assumptions for stock option grants for 2002, 2003 and 2004, respectively: risk-free interest rate of 2.0%, 1.8% and 2.2%; expected volatility of 1.08, 1.10 and 1.01; expected option life of one year from vesting and an expected dividend yield of 0.0%. The weighted average fair value of options granted during 2002, 2003 and 2004 was $2.40, $2.24 and $4.17, respectively.

ANADIGICS, Inc. also sponsors an Employee Savings and Protection Plan under Section 401(k) of the Internal Revenue Code which is available to all full-time employees. Employees can make voluntary contributions up to limitations prescribed by the Internal Revenue Code. The Plan was amended in 2001 and the Company now matches 50% of employee contributions up to 6% of their gross pay. The Company recorded expense of $696, $628 and $730 for the years ended December 31, 2002, 2003 and 2004, respectively, relating to plan contributions.

14. EARNINGS PER SHARE

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

	Year ended December 31,
		2002	2003	2004
Weighted average common shares outstanding used to calculate basic earnings per share		30,587,032	30,716,749	32,412,922
Net effect of dilutive securities - based on treasury stock method using average market price		-*	-*	-*
Weighted average common and dilutive securities outstanding used to calculate diluted earnings per share		30,587,032	30,716,749	32,412,922

* Any dilution arising from the Company's outstanding stock options or shares potentially issuable upon conversion of the Convertible notes are not included as their effect is anti-dilutive.

15. OTHER ACCUMULATED COMPREHENSIVE INCOME

The components of other accumulated comprehensive income are as follows:

		Foreign Currency Translation Adjustments			Unrealized Gain (loss) on available-for-sale securities			Total
Balance at December 31, 2002	$	(33	)	$	776		$	743
Unrealized gain on available-for-sale securities		-			(666	)		(666	)
Foreign currency translation adjustment		46			-			46
Net loss recognized in other comprehensive income		-			15			15
Balance at December 31, 2003		13			125			138
Unrealized gain on available-for-sale securities		-			(617	)		(617	)
Foreign currency translation adjustment		12			-			12
Net gain recognized in other comprehensive income		-			(19	)		(19	)
Balance at December 31, 2004	$	25		$	(511	)	$	(486	)

The earnings associated with the Company’s investment in its foreign subsidiaries is considered to be permanently invested and no provision for U.S. federal and state income taxes on those earnings or translation adjustments have been provided.

16. LEGAL PROCEEDINGS

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

17. QUARTERLY FINANCIAL DATA (UNAUDITED)

	Quarter Ended
	2003												2004
		Mar 29			June 28			Sept. 28			Dec. 31			April 3			July 3			Oct. 2			Dec. 31
Net sales	$	16,087		$	18,037		$	17,750		$	23,338		$	21,195		$	22,687		$	25,053		$	22,415
Cost of sales		16,079			17,250			17,538			21,060			19,175			19,207			19,811			19,162
Gross profit		8			787			212			2,278			2,020			3,480			5,242			3,253
Research and development		7,157			8,280			8,029			8,609			8,902			8,866			7,884			7,654
Selling and administrative expense		4,518			4,521			4,795			5,586			5,790			6,099			5,482			5,140
Restructuring and other charges		625			-			-			300			-			-			-			-
Purchased in-process R&D		-			1,690			-			173			-			-			-			-
Operating loss		(12,292	)		(13,704	)		(12,612	)		(12,390	)		(12,672	)		(11,485	)		(8,124	)		(9,541	)
Interest income		1,013			875			741			715			659			551			469			524
Interest expense		(941	)		(940	)		(940	)		(940	)		(940	)		(940	)		(955	)		(1,250	)
Gain on notes repurchase		-			-			-			-			-			-			327			-
Other (expense) income		(21	)		(2	)		183			116			201			143			(36	)		(13	)
Loss before income taxes		(12,241	)		(13,771	)		(12,628	)		(12,499	)		(12,752	)		(11,731	)		(8,319	)		(10,280	)
Benefit from income taxes		-			-			-			(382	)		-			-			-			-
Net loss	$	(12,241	)	$	(13,771	)	$	12,628	)	$	12,117	)	$	(12,752	)	$	(11,731	)	$	(8,319	)	$	(10,280	)
Basic and diluted loss per share	$	(0.40	)	$	(0.45	)	$	(0.41	)	$	(0.39	)	$	(0.40	)	$	(0.36	)	$	(0.25	)	$	(0.31	)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 Under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO and Chief Financial Officer, or CFO, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2004. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported as specified within the SEC’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

 Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework of Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.

 Our management’s evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included below.

 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.

Inherent Limitations of Controls

 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.

ITEM 9B. OTHER INFORMATION

None.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

ANADIGICS, Inc.

We have audited management’s assessment, included in Item 9A, Management's Report on Internal Control Over Financial Reporting, that ANADIGICS, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). ANADIGICS, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, 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.

In our opinion, management’s assessment that ANADIGICS, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, ANADIGICS, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ANADIGICS, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2004 and our report dated March 2, 2005 expressed an unqualified opinion thereon.

/s/    ERNST & YOUNG LLP

MetroPark, New Jersey

March 2, 2005

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

 The Company has adopted a Code of Conduct and Business Ethics that applies to directors, officers and employees, including the President and Chief Executive Officer, and Chief Financial Officer and has posted such code on its website at (www.anadigics.com). Changes to and waivers granted with respect to the Company’s Code of Conduct and Business Ethics for officers and directors that are required to be disclosed pursuant to the applicable rules and regulations will be filed on a current report on Form 8-K and posted on the Company website.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this item.

ITEM 11. EXECUTIVE COMPENSATION.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 The registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 2005 annual meeting of shareholders that is responsive to the information required with respect to this Item.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) 1. Financial Statements

 Financial Statements are included in Item 8, "Financial Statements and Supplementary Data" as follows:

-   Report of Independent Registered Public Accounting Firm

-   Consolidated Balance Sheets - December 31, 2003 and 2004

-   Consolidated Statements of Operations - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Comprehensive Loss - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2002, 2003 and 2004

-   Consolidated Statements of Cash Flows - Years ended December 31, 2002, 2003 and 2004

-   Notes to Consolidated Financial Statements

    2. Financial Statement Schedules

 Schedule II - Valuation and Qualifying Accounts

 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(b) Exhibit List

2.1	Stock Purchase Agreement dated April 2, 2001, among the Company, Telcom Devices Corp. and the sellers named therein. Filed as an exhibit to the Company’s Current Report on Form 8-K dated April 6, 2001, and incorporated herein by reference.
3.1	Amended and Restated Certificate of Incorporation of the Company, together with all amendments thereto. Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
3.2	Amended and Restated By-laws of the Company. Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.1	Form of Common Stock Certificate. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
4.2	Indenture, dated as of November 27, 2001, between the Company, as Issuer, and State Street Bank & Trust Company, N.A., as Trustee for the 5% Convertible Senior Notes due November 15, 2006. Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.3	Form of Registration Rights Agreement. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
4.4	Schedule to Form of Registration Rights Agreement. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 333-20783), and incorporated herein by reference.
4.5	Rights Agreement dated as of December 17, 1998 between the Company and Chase Mellon Shareholder Services L.L.C., as Rights Agent. Filed as an exhibit to the Company’s current report on Form 8-K filed on December 17, 1998, and incorporated herein by reference.
4.6	Amendment No. 1 as of November 20, 2000 to the Rights Agreement dated as of December 17, 1998 between the Company and Chase Mellon Shareholder Services L.L.C., as Rights Agent. Filed as an exhibit to the Company’s Current Report on Form 8-K filed on December 4, 2000.
4.7	Registration Rights Agreement, dated November 27, 2001, between the Company, as Issuer, and the Purchasers of the 5% Convertible Senior Notes due November 15, 2006. Filed as an exhibit to the Company’s Registration Statement on Form S-3 (Registration No. 333-75040), and incorporated herein by reference.
4.8	Form of 5% Convertible Senior Note due November 15, 2006 (included in Exhibit 4.2).
4.9	Post-effective Amendment No. 1 to Form S-3 for 5% Convertible Senior Notes due November 15, 2006. Filed on Form POS AM dated November 6, 2002, and incorporated herein by reference.
4.10	Indenture, dated as September 24, 2004, between the Company, as Issuer and U.S. Bank Trust National Association, as Trustee for the 5% Convertible Senior Notes due October 15, 2009. Filed as an exhibit to the Company’s Current Report on Form 8-K dated September 28, 2004, and incorporated herein by reference.
4.11	Registration Rights Agreement, dated September 24, 2004, between the Company, as Issuer, and the Purchasers of 5% Convertible Senior Notes due October 15, 2009. Filed as an exhibit to the Company’s Current Report on Form 8-K dated September 28, 2004, and incorporated herein by reference.
4.12	Form of 5% Convertible Senior Note due October 15, 2009 (included in Exhibit 4.10).
10.1	1994 Long-Term Incentive and Share Award Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.2	1995 Long-Term Incentive and Share Award Plan, as amended May 29, 1997 and May 24, 2000. Filed as an exhibit to the Company’s current report on Form S-8 (Registration No. 333-49632), and incorporated herein by reference.
10.3	Employee Savings and Protection Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.4	Form of Employee Stock Purchase Plan. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.5	Lease Agreement between Mt. Bethel Corporate Center and the Company dated May 1, 1993. Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-89928), and incorporated herein by reference.
10.6	Lease Agreement between United States Land Resources, L.P. and the Company dated as of April 26, 1996. Filed as an exhibit to the Company's Registration Statement on Form S-1(Registration No. 333-20783), and incorporated herein by reference.
10.7	First Amendment, dated as of November 20, 1996, to the Lease agreement between United States Land Resources, L.P. and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.8	Second Amendment, dated as of September 8, 1997, to the Lease agreement between Warren Hi-Tech Center, L.P. (successor in interest to United States Land Resources, L.P.) and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.9	Third Amendment, dated as of December 20, 2000, to the Lease agreement between Warren Hi-Tech Center, L.P. (successor in interest to United States Land Resources, L.P.) and the Company dated as of April 26, 1996. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.10	Employment Agreement between the Company and Dr. Bamdad Bastani, dated September 17, 1998. Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1999, and incorporated herein by reference.
10.11	Employment Agreement between the Company and Ronald Rosenzweig, dated June 1, 1999. Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 4, 1999, and incorporated herein by reference.
10.12	Amendment No. 1 as of March 15, 2002, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.13	Employment Agreement between the Company and Thomas Shields, dated July 25, 2000. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.14	Employment Agreement between the Company and Charles Huang, dated July 25, 2000. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated March 29, 2002, and incorporated herein by reference.
10.15	Amendment No. 2 as of May 27, 2003, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Annual Report on Form 10-K dated March 15, 2004, and incorporated herein by reference.
10.16	Amendment No. 3 as of August 20, 2004, to the Employment Agreement dated June 1, 1999, between the Company and Ronald Rosenzweig. Filed as an exhibit to the Company’s Quarterly report on Form 10-Q for the quarter ended October 2, 2004, and incorporated herein by reference.
10.17	Form of 1997 Long-Term Incentive and Share Award Plan. Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated February 18, 1997, and incorporated herein by reference.
*21	Subsidiary Listing
*23.1	Consent of Ernst and Young LLP.
24.1	Power of Attorney (included on the signature page of this Annual Report on Form 10-K).
*31.1	Rule 13a-14(a)/15d-14(a) Certification of Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc.
*31.2	Rule 13a-14(a)/15d-14(a) Certification of Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc.
*32.1	Section 1350 Certification of Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc.
*32.2	Section 1350 Certification of Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc.
* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on the 16th day of March 2005.

ANADIGICS, INC.

BY: /s/ Bami Bastani

-----------------------------------------

Dr. Bami Bastani

CHIEF EXECUTIVE OFFICER

AND PRESIDENT

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bami Bastani and Thomas Shields as his/her attorney-in-fact and agent, with full power of substitution and resubstitution, for him/her and in his/her name, place, and stead, in any and all capacities, to sign and file any and all amendments to this Annual Report on Form 10-K, with all exhibits thereto and hereto, and other documents with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF ANADIGICS, INC. IN THE CAPACITIES AND ON THE DATES INDICATED:

Name	Title	Date
/s/ Bami Bastani	President, Chief Executive Officer and Director (Principal Executive Officer)	March 16, 2005
Dr. Bami Bastani
/s/ Thomas C. Shields	Senior Vice President and Chief Financial Officer (Principal Financial Accounting Officer)	March 16, 2005
Thomas C. Shields
/s/ Ronald Rosenzweig	Chairman of the Board of Directors	March 16, 2005
Ronald Rosenzweig
/s/ Paul S. Bachow	Director	March 16, 2005
Paul S. Bachow
/s/ Garry McGuire	Director	March 16, 2005
Gary McGuire
/s/ Harry T. Rein	Director	March 16, 2005
Harry T. Rein
/s/ Lewis Solomon	Director	March 16, 2005
Lewis Solomon
/s/ Dennis F. Strigl	Director	March 16, 2005
Dennis F. Strigl

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

Description (Dollars in Thousands)		Balance at Beginning of Period		Additions Charged to Costs and Expenses			Deductions				Balance at end of period
Year ended December 31, 2004:
Deducted from asset account:
Allowance for doubtful accounts	$	752	$	240		$	(4	)	(1)	$	988
Reserve for excess and obsolete inventory		4,745		1,636			(2,307	)	(2)		4,074
Reserve for warranty claims		100		390			(331	)	(3)		159
Year ended December 31, 2003
Deducted from asset account:
Allowance for doubtful accounts	$	781	$	-		$	(29	)	(1)	$	752
Reserve for excess and obsolete inventory		7,134		287			(2,676	)	(2)		4,745
Reserve for warranty claims		368		10			(278	)	(3)		100
Year ended December 31, 2002
Deducted from asset account:
Allowance for doubtful accounts	$	715	$	297		$	(231	)	(1)	$	781
Reserve for excess and obsolete inventory		8,502		4,188			(5,556	)	(2)		7,134
Reserve for warranty claims		960		(259	)		(333	)	(3)		368

(1)   Uncollectible accounts written-off to the allowance account.

(2) Inventory write-offs to the reserve account.

(3) Warranty expenses incurred to the reserve for warranty claims.

EXHIBIT 21

Subsidiaries of ANADIGICS, Inc.

Name of Subsidiary	State of Jurisdiction of Incorporation	% Owned
ANADIGICS (U.K.) Limited	United Kingdom	100%
ANADIGICS, Limited	Israel	100%
ANADIGICS Denmark ApS	Denmark	100%
ANADIGICS Acquisition Corp	Delaware	100%
ANADIGICS Holding Corp.	Delaware	100%
Broadband & Wireless Investors, Incorporated	Delaware	100%
Integral Pathway, Inc.	New Jersey	100%
Telcom Devices Corp.	California	100%

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-89928) pertaining to the ANADIGICS, Inc. Stock Option Plan, 1994 Long-Term Incentive and Share Award Plan, 1995 Long-Term Incentive Share Award Plan and  Employee Stock Purchase Plan, in the Registration Statements (Form S-8 No. 33-32533 and Form S-8 No. 333-63836) pertaining to the ANADIGICS, Inc. 1997 Long-Term Incentive and Share Award Plan for Employees and in the Registration Statements (Form S-3 No. 333-75040, Form S-3 No. 333-110538 and Form S-3 No. 333-120947) of our reports dated March 2, 2005, with respect to the consolidated financial statements and schedule of ANADIGICS, Inc. and ANADIGICS, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of ANADIGICS, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2004.

MetroPark, New Jersey

March 11, 2005

Exhibit 31.1

CERTIFICATION

I, Bami Bastani, certify that:

1.   I have reviewed this Annual Report on Form 10-K 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 the 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: : March 16, 2005           

By:	/s/ Bami Bastani
	Bami Bastani
	President and
	Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Thomas Shields, certify that:

1.   I have reviewed this Annual Report on Form 10-K 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 the 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: : March 16, 2005

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

Exhibit 32.1

CERTIFICATION

The undersigned, Bami Bastani, President and Chief Executive Officer of ANADIGICS, Inc. (the "Company") hereby certifies that the Annual Report of the Company on Form 10-K for the period ended December 31, 2004 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: March 16, 2005

By:	/s/ Bami Bastani
	Bami Bastani
	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.

Exhibit 32.2

CERTIFICATION

The undersigned, Thomas C. Shields, Senior Vice President and Chief Financial Officer of ANADIGICS, Inc. (the "Company") hereby certifies that the Annual Report of the Company on Form 10-K for the period ended December 31, 2004 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: March 16, 2005

/s/ Thomas C. Shields

Thomas C. Shields

Senior 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.