-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ib+xs9HAr/t3esC/wgrNiPMXrM/tatjuQ0lUDKsjTCjpWsiv74MIEK2MQPhstJP0 EsBBcEK24u8hkAOyiX/D0A== /in/edgar/work/0001125282-00-000578/0001125282-00-000578.txt : 20001115 0001125282-00-000578.hdr.sgml : 20001115 ACCESSION NUMBER: 0001125282-00-000578 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANADIGICS INC CENTRAL INDEX KEY: 0000940332 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 222582106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25662 FILM NUMBER: 765248 BUSINESS ADDRESS: STREET 1: 35 TECHNOLOGY DR CITY: WARREN STATE: NJ ZIP: 07059 BUSINESS PHONE: 9086685000 MAIL ADDRESS: STREET 1: 35 TECHNOLOGY DRIVE CITY: WARREN STATE: NJ ZIP: 07059 10-Q 1 0001.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000. or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________. Commission File No. 0-25662 ANADIGICS, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 22-2582106 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) [ANADIGICS LOGO] 35 Technology Drive Warren, New Jersey 07059 - ---------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) (908) 668-5000 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the registrant's common stock as of September 30, 2000 was 29,908,071. INDEX ANADIGICS, Inc. Part. I. Financial Information Item 1. Financial Statements (unaudited) Condensed consolidated balance sheets - September 30, 2000 and December 31, 1999. Condensed consolidated statements of operations and comprehensive income (loss) - Three and nine months ended September 30, 2000 and October 3, 1999. Condensed consolidated statements of cash flows - Nine months ended September 30, 2000 and October 3, 1999. Notes to condensed consolidated financial statements - September 30, 2000. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Item 3. Quantitative and Qualitative Disclosures About Market Risk Part II. Other Information Item 1. Legal Proceedings Item 6. Exhibits and Reports on Form 8-K 2 PART I - FINANCIAL STATEMENTS Item 1. Financial Statements (unaudited) CONDENSED CONSOLIDATED BALANCE SHEETS ANADIGICS, Inc. (Amounts in thousands, except share and per share amounts)
September 30, 2000 December 31, 1999 ------------------ ----------------- (unaudited) (Note 1) Assets Current assets: Cash and cash equivalents $ 103,264 $ 149,895 Marketable securities 29,746 14,452 Accounts receivable, net 34,149 25,151 Inventory 17,709 10,334 Prepaid expenses and other current assets 2,863 2,708 Insurance settlement receivable -- 5,325 Deferred taxes 4,106 4,840 --------- --------- Total current assets 191,837 212,705 Marketable securities 35,652 7,404 Property and equipment: Equipment and furniture 129,612 115,195 Leasehold improvements 29,151 27,553 Projects in process 20,395 8,525 Less accumulated depreciation and amortization 77,665 66,383 --------- --------- 101,493 84,890 Other assets 4,516 2,164 Deferred taxes -- 10,447 --------- --------- Total assets $ 333,498 $ 317,610 ========= ========= Liabilities and stockholders' equity Current liabilities: Accounts payable $ 13,386 $ 15,901 Accrued litigation settlement costs -- 11,761 Accrued liabilities 7,168 6,577 Accrued restructuring costs 606 993 Current maturities of long-term debt 1,000 1,000 Current maturities of capital lease obligations 226 151 --------- --------- Total current liabilities 22,386 36,383 Capital lease obligations, less current portion -- 32 Other long-term liabilities 1,908 1,546 Long-term debt, less current portion 2,250 3,000 Commitments and contingencies Stockholders' equity Common stock, $0.01 par value, 144,000,000 shares authorized, 29,908,071 and 28,853,614 issued and outstanding at September 30, 2000 and December 31, 1999, respectively 299 289 Additional paid-in capital 307,464 296,496 Accumulated deficit (786) (20,010) Accumulated other comprehensive loss (23) (126) --------- --------- Total stockholders' equity 306,954 276,649 --------- --------- Total liabilities and stockholders' equity $ 333,498 $ 317,610 ========= =========
See notes to condensed consolidated financial statements. 3 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ANADIGICS, Inc. (Amounts in thousands, except share and per share amounts)
Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ (unaudited) (unaudited) Net sales $ 51,075 $ 35,460 $ 141,597 $ 91,042 Cost of sales 24,810 18,862 69,778 55,011 ------------ ------------ ------------ ------------ Gross profit 26,265 16,598 71,819 36,031 Research and development expenses 10,852 8,293 30,821 20,260 Selling and administrative expenses 7,121 5,091 19,885 13,834 Restructuring charge -- (441) -- (441) ------------ ------------ ------------ ------------ Operating income 8,292 3,655 21,113 2,378 Interest income, net 2,756 503 7,876 1,497 Gain on sale of equipment 15 -- 1,353 -- Provision for litigation settlement, net -- -- -- 6,925 ------------ ------------ ------------ ------------ Income (loss) before income taxes 11,063 4,158 30,342 (3,050) Provision (benefit) for income taxes 3,986 1,413 11,119 (1,253) ------------ ------------ ------------ ------------ Net income (loss) $ 7,077 $ 2,745 $ 19,223 $ (1,797) ============ ============ ============ ============ Basic earnings (loss) per share(1) $ 0.24 $ 0.12 $ 0.65 $ (0.08) ============ ============ ============ ============ Weighted average common shares outstanding(1) 29,880,442 22,487,981 29,655,966 22,314,602 ============ ============ ============ ============ Diluted earnings (loss) per share(1) $ 0.23 $ 0.11 $ 0.61 $ (0.08) ============ ============ ============ ============ Weighted average common and dilutive securities outstanding(1) 31,241,801 25,336,989 31,655,258 22,314,602 ============ ============ ============ ============
(1) - Historical share and per share data have been restated to reflect a 3-for-2 stock split. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ANADIGICS, Inc. (Amounts in thousands)
Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ (unaudited) (unaudited) Net income (loss) $ 7,077 $ 2,745 $ 19,223 $ (1,797) Unrealized gain (loss) on marketable securities 192 (10) 103 (98) ------------ ------------ ------------ ------------ Comprehensive income (loss) $ 7,269 $ 2,735 $ 19,326 $ (1,895) ============ ============ ============ ============
See notes to condensed consolidated financial statements. 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ANADIGICS, Inc. (Amounts in thousands)
Nine months ended ----------------- Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ (unaudited) (unaudited) Cash flows from operating activities: Net income (loss) $ 19,223 $ (1,797) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 16,253 15,890 Amortization 226 242 Deferred taxes 11,181 (1,141) Gain on sale of equipment (1,353) -- Provision for litigation settlement, net (6,436) 6,551 Changes in operating assets and liabilities Accounts receivable (8,998) (11,670) Inventory (7,375) (1,658) Prepaid expenses and other assets (2,507) (2,787) Accounts payable (2,515) 6,285 Accrued liabilities and other liabilities 566 3,815 --------- --------- Net cash provided by operating activities 18,265 13,730 Cash flows from investing activities: Purchases of plant and equipment (32,693) (17,048) Purchases of marketable securities (67,510) (22,667) Proceeds from sale of marketable securities 24,071 17,863 Proceeds from sale of equipment 1,342 -- --------- --------- Net cash used in investing activities (74,790) (21,852) Cash flows from financing activities: Issuance of common stock 10,958 5,934 Repayment of long-term debt (750) (750) Payment of capital lease obligations (314) (181) --------- --------- Net cash provided by financing activities 9,894 5,003 --------- --------- Net decrease in cash and cash equivalents (46,631) (3,119) Cash and cash equivalents at beginning of period 149,895 23,987 --------- --------- Cash and cash equivalents at end of period $ 103,264 $ 20,868 ========= ========= Supplemental disclosures of cash flow information: Interest paid $ 230 $ 285 ========= ========= Taxes paid $ 46 $ 225 ========= ========= Supplemental schedule of non-cash investing activity: Acquisition of equipment under capital leases $ 357 $ -- ========= =========
See notes to condensed consolidated financial statements. 5 ANADIGICS, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) - September 30, 2000 1. Summary of Significant Accounting Policies ------------------------------------------ Basis of Presentation The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The condensed, consolidated balance sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The condensed, consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 2. Inventories ----------- Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consist of the following: Sept. 30, 2000 Dec. 31, 1999 -------------- ------------- Raw materials $ 3,501 $ 1,995 Work in process 10,407 7,370 Finished goods 8,061 4,105 ------- ------- 21,969 13,470 Reserves 4,260 3,136 ------- ------- $17,709 $10,334 ======= ======= 3. Legal Proceedings ----------------- The court-approved settlement of the previously-disclosed consolidated securities class action, captioned In re ANADIGICS, Inc. Securities Litigation, No. 98-CV-917 (MLC) (D.N.J.), and shareholder's derivative lawsuit, captioned Deegan v. Rosenzweig, No. 98-CV-3640 (MLC) (D.N.J.), became final and was funded in January 2000. The total settlement payment (including the costs of administering the settlement) was $11.8 million, of which approximately $5.3 million was paid on behalf of ANADIGICS, Inc. by the Company's insurers. 6 ANADIGICS, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) - September 30, 2000 (Continued) 4. Earnings Per Share ------------------ The reconciliation of shares used to calculate basic and diluted earnings per share consists of the following:
Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ Weighted average common shares outstanding used to calculate basic earnings per share 29,880,442 22,487,981 29,655,966 22,314,602 Net effect of diluted stock options - based upon the treasury stock method using an average market price 1,361,359 2,849,008 1,999,292 -- * ------------ ------------ ------------ ------------ Weighted average common and dilutive securities outstanding used to calculate diluted earnings per share 31,241,801 25,336,989 31,655,258 22,314,602 ============ ============ ============ ============
* - The dilutive stock options are not included as their effect is anti-dilutive. 5. Revenue Sources Revenues by Application The Company classifies its revenues based upon the end application of the product in which its integrated circuits are used. Net sales by end application are regularly reviewed by the chief operating decision maker and are as follows:
Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ Cellular and PCS Applications $ 20,732 $ 15,715 $ 69,615 $ 38,205 Cable and Broadcast Applications 23,586 12,726 55,874 33,231 Fiber Optic Applications 6,757 6,997 16,108 19,483 Engineering service sale - 22 -- 123 ------------ ------------ ------------ ------------ Total $ 51,075 $ 35,460 $ 141,597 $ 91,042 ============ ============ ============ ============
Geographic Information The Company primarily sells to four geographic regions; Europe, Asia, North America (primarily U.S.A.), and South America. The geographic region is determined by the destination of the shipped product. Net sales to each of the four geographic regions are as follows:
Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ Europe $ 7,709 $ 8,175 $ 27,599 $ 21,919 Asia 13,557 9,676 31,562 24,332 North America (primarily U.S.A.) 17,258 13,476 53,341 34,975 Central and South America 12,551 4,133 29,095 9,816 ------------ ------------ ------------ ------------ Total $ 51,075 $ 35,460 $ 141,597 $ 91,042 ============ ============ ============ ============
7 ANADIGICS, Inc. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth unaudited consolidated statements of operations data as a percent of net sales for the periods presented:
Consolidated Statement of Operations Three months ended Nine months ended ------------------ ----------------- Sept. 30, 2000 Oct. 3, 1999 Sept. 30, 2000 Oct. 3, 1999 -------------- ------------ -------------- ------------ (unaudited) (unaudited) Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 48.6% 53.2% 49.3% 60.4% ------------ ------------ ------------ ------------ Gross profit 51.4% 46.8% 50.7% 39.6% Research and development expenses 21.2% 23.4% 21.8% 22.3% Selling and administrative expenses 13.9% 14.4% 14.0% 15.2% Restructuring charge -- (1.2%) -- (0.5%) ------------ ------------ ------------ ------------ Operating income 16.3% 10.2% 14.9% 2.6% Interest income, net 5.4% 1.4% 5.6% 1.6% Gain on sale of equipment -- -- 1.0% -- Provision for litigation settlement, net -- -- -- 7.6% ------------ ------------ ------------ ------------ Income (loss) before income taxes 21.7% 11.6% 21.5% (3.4%) Provision (benefit) for income taxes 7.8% 4.0% 7.9% (1.4%) ------------ ------------ ------------ ------------ Net income (loss) 13.9% 7.6% 13.6% (2.0%) ============ ============ ============ ============
Third Quarter 2000 (Ended September 30, 2000) Compared to Third Quarter 1999 (Ended October 3, 1999) Net Sales. Net sales during the third quarter of 2000 increased 44% to $51.1 million from $35.5 million in the third quarter of 1999. Sales of integrated circuits for cellular and PCS applications increased 32% during the third quarter of 2000 to $20.7 million from $15.7 million in the third quarter of 1999. The increase in sales of integrated circuits for cellular and PCS applications was primarily due to an increase in demand for our multi-band, multi-mode power amplifier integrated circuits used in wireless telephone handsets. Sales of integrated circuits for cable and broadcast applications increased 85% during the third quarter of 2000 to $23.6 million from $12.7 million in the third quarter of 1999. The increase in sales of integrated circuits for cable and broadcast applications during the third quarter of 2000 was primarily due to increases in demand for our integrated circuit reverse amplifiers and converters used in digital set-top boxes, cable modems, and our integrated circuit line amplifiers used as repeaters in cable television distribution networks. Sales of integrated circuits for fiber optic telecommunications and data communications ("fiber optic") applications decreased 3% during the third quarter of 2000 to $6.8 million from $7.0 million in the third quarter of 1999. The reduction in sales of integrated circuits for fiber optic applications was due to a repositioning of the telecommunications product line. Generally, selling prices for same product sales were lower during the third quarter of 2000 compared to the third quarter of 1999. 8 Due to certain inventory corrections and issues related to component shortages experienced by our largest cellular and PCS (wireless) customer, we believe we may continue to experience a mix shift of our product revenue throughout the fourth quarter of 2000. This revenue shift is expected to result in a sequential reduction in our revenue. On September 15, 2000 the Company announced that fourth quarter revenues are anticipated to be 30 - 35% lower than third quarter 2000 levels. Gross Margin. Gross margin during the third quarter of 2000 increased to 51.4% from 46.8% in the third quarter of 1999. The increase in gross margin during the third quarter of 2000 resulted from leveraging fixed costs over higher sales levels, as well as manufacturing efficiencies and per unit material cost reductions which resulted from the use of six-inch wafers during the third quarter of 2000 compared to four-inch wafers used during the third quarter of 1999. Research and Development. Company sponsored research and development expense increased 31% during the third quarter of 2000 to $10.9 million from $8.3 million during the third quarter of 1999. The increase was primarily attributable to: (1) increased research and development of integrated circuits for cellular and PCS, CATV, and fiber optic applications, and (2) increased research and development of new process technologies, particularly Indium Gallium Phosphide Heterojunction Bi-polar Transistor (InGaP HBT) process technology for integrated circuits used in cellular and PCS, and fiber optic applications. As a percentage of sales, research and development expense decreased to 21.2% in the third quarter of 2000 from 23.4% in the third quarter of 1999. Selling and Administrative. Selling and administrative expenses increased 40% during the third quarter of 2000 to $7.1 million from $5.1 million in the third quarter of 1999. The increase in selling and administrative expenses during the third quarter of 2000 was primarily due to increases in sales and marketing expenses to support our revenue growth, as well as an increase in professional fees. As a percentage of sales, selling and administrative expenses decreased to 13.9% in the third quarter of 2000 from 14.4% in the third quarter of 1999. Interest Income, net. Interest income, net increased $2.3 million to $2.8 million during the third quarter of 2000 from $0.5 million during the third quarter of 1999 on substantially higher invested cash balances following our secondary offering of common stock completed in November 1999. Provision for Income Taxes. The provision for income taxes during the third quarter of 2000 was recorded at an estimated effective tax rate of 36.0% of the income before income taxes. Nine Months 2000 (Ended September 30, 2000) Compared to Nine Months 1999 (Ended October 3, 1999) Net Sales. Net sales during the nine month period ended September 30, 2000 increased 56% to $141.6 million from $91.0 million in the nine month period ended October 3, 1999. Sales of integrated circuits for cellular and PCS applications increased 82% during the nine month period ended September 30, 2000 to $69.6 million from $38.2 million in the nine month period ended October 3, 1999. The increase in sales of integrated circuits for cellular and PCS applications was due to an increase in demand for our multi-band, multi-mode power amplifier integrated circuits used in wireless telephone handsets. Sales of integrated circuits for cable and broadcast applications increased 68% during the nine month period ended September 30, 2000 to $55.9 million from $33.2 million in the nine month period ended October 3, 1999. The increase in sales of integrated circuits for cable and broadcast applications during the nine month period ended September 30, 2000 was due to increases in demand for the Company's integrated circuit reverse amplifiers and converters used in digital set-top boxes and cable modems, and the Company's integrated circuit line amplifiers used as repeaters in hybrid cable television distribution networks. 9 Sales of integrated circuits for fiber optic applications decreased 18% during the nine month period ended September 30, 2000 to $16.1 million from $19.5 million in the nine month period ended October 3, 1999. The reduction in sales of fiber optic applications was due to the Company's repositioning the product line to address the growing opportunities in higher data rates. Generally, selling prices for same product sales were lower during the nine month period ended September 30, 2000 compared to the nine month period ended October 3, 1999. Gross Margin. Gross margin during the nine month period ended September 30, 2000 increased to 50.7% from 39.6% in the nine month period ended October 3, 1999. Gross margin during the nine month period ended October 3, 1999 included $5.3 million of accelerated depreciation expense associated with the closing of the Company's four-inch wafer fabrication facility. The accelerated depreciation expense was due to a reduction in the useful lives of the fabrication facility equipment and leasehold improvements with original lives ranging from five to twenty years that were reduced to a life of nine months beginning October 1, 1998. The reduction in estimated useful life followed our October 1998 decision to close our four-inch wafer fabrication facility. Excluding the accelerated depreciation expense of $5.3 million, gross margin during the nine month period ended October 3, 1999 was 45.4%. The increase in gross margin during the nine month period ended September 30, 2000 to 50.7% compared to the nine month period ended October 3, 1999, resulted from leveraging fixed costs over higher sales levels, as well as manufacturing efficiencies and per unit material cost reductions which resulted from the use of six-inch wafers during the nine month period ended September 30, 2000, compared to four-inch wafers used during the nine month period ended October 3, 1999. Research and Development. Company sponsored research and development expense increased 52% during the nine month period ended September 30, 2000 to $30.8 million from $20.3 million in the nine month period ended October 3, 1999. The increase was primarily attributable to: (1) increased research and development of integrated circuits for cellular and PCS, CATV, and fiber optic applications, and (2) increased research and development of new process technologies, particularly InGaP HBT process technology for integrated circuits used in cellular and PCS, and fiber optic applications. As a percent of sales, company funded research and development decreased to 21.8% during the nine month period ended September 30, 2000 from 22.3% in the nine month period ended October 3, 1999. Selling and Administrative. Selling and administrative expenses increased 44% during the nine month period ended September 30, 2000 to $19.9 million from $13.8 million in the nine month period ended October 3, 1999. The increase was due in part to increased relocation and recruiting costs, payroll taxes associated with employee stock options exercised, professional fees, and increased sales commission expense. As a percentage of sales, selling and administrative expenses decreased to 14.0% during the nine month period ended September 30, 2000 from 15.2% in the nine month period ended October 3, 1999. Gain on Sale of Equipment. During the nine month period ended September 30, 2000, the Company sold equipment, which resulted in a gain on the sale of approximately $1.4 million. Substantially all of the equipment was fully depreciated prior to its sale. 10 Interest Income, net. Interest income, net increased $6.4 million during the nine month period ended September 30, 2000 to $7.9 million from $1.5 million in the nine month period ended October 3, 1999 on substantially higher invested cash balances following our secondary offering of common stock completed in November 1999. Provision For Litigation Settlement, Net. The Company recorded a provision for litigation settlement of $6.9 million in the second quarter of 1999, as it reached an agreement in principle with the plaintiffs' counsel to settle a consolidated class action lawsuit and a derivative lawsuit. The $6.9 million provision consisted of a payment of $11.8 million (offset by insurance proceeds of $5.3 million) and $0.4 million of additional legal, settlement, notification and court related fees. (See Part II. Other Information - Item 1. Legal Proceedings - Shareholder Litigation for additional information on the court-approved settlement of this litigation). Provision for Income Taxes. The provision for income taxes during the nine month period ended September 30, 2000 was recorded at an estimated annual effective tax rate of 37% of the income before income taxes. Liquidity and Capital Resources As of September 30, 2000, the Company had $103.3 million in cash and cash equivalents and $65.4 million in marketable securities. The Company had $3.3 million outstanding under its revolving bank credit facility as of the end of the third quarter of 2000. The Company entered into an interest rate swap agreement in 1998, which effectively fixes the interest rate on this portion of the credit facility at 7.09%. The swap effectively changed the variable interest rate of this bank debt to a fixed rate for which the present value of cash flows are approximately the same. As of September 30, 2000, the Company also had available $15.0 million under a term loan facility. The term loan facility drawdown period expires on July 1, 2001. The outstanding bank debt and term loan facility are subject to certain financial covenants. Substantially all of the Company's assets are pledged as security for repayments of the outstanding bank debt and borrowings, if any, under the term loan facility. Operating activities, which included a payment of $6.4 million during the period to settle a shareholder lawsuit, generated $18.3 million in cash during the nine month period ended September 30, 2000. Investing activities, which primarily consisted of purchases of equipment of $32.7 million and net purchases of marketable securities of $43.4 million, used $74.8 million of cash during the nine month period ended September 30, 2000. Financing activities, which primarily consisted of proceeds received from employee stock options exercised, raised $9.9 million during the nine month period ended September 30, 2000. As previously planned and disclosed, the Company ceased the wafer fabrication operations in the four-inch wafer fabrication facility during the third quarter of 1999. Fabrication facility dismantling and restoration activities began late in the fourth quarter of 1999 and are expected to continue through early 2001. The Company plans to restore these areas as office space in early 2001. 11 As of September 30, 2000, the Company is committed to purchase approximately $22.7 million of equipment and furniture, and leasehold improvements. Included in the $22.7 million of equipment and furniture, and leasehold improvements are commitments associated with the expansion of our six-inch wafer fabrication facility. The expansion, which is expected to cost approximately $11.0 million, will approximately double our current production capacity and is expected to be completed in early 2001. We believe that existing funds and sources of capital, including internally generated funds and/or the $15.0 million available under the existing term loan facility, will be adequate to satisfy anticipated capital needs for the next twelve months and beyond. Our anticipated capital needs may include acquisitions of complimentary businesses or technologies, or investments in other companies. However, we may elect to finance all or part of our future capital requirements through additional equity or debt financing. There can be no assurance that such additional financing would be available on satisfactory terms. Impact Of Recently Issued Accounting Standards In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended in June 2000 by Statement of Financial Accounting Standards No. 138 ("SFAS 138"), "Accounting for Certain Derivative Instruments and Certain Hedging Activities," which requires companies to recognize all derivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value. As amended by Statement of Financial Accounting Standards No. 137 (SFAS 137"), "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB 133," the provisions of SFAS 133 will require adoption no later than the beginning of the Company's fiscal year ending December 31, 2001. Adoption of SFAS 133, as amended by SFAS 138, is not expected to have a material impact on the Company's results of operations or financial position. Risks and Uncertainties Except for historical information contained herein, this Management's Discussion and Analysis of Financial Condition and Results of Operation contains forward-looking statements that involve risks and uncertainties, including, but not limited to, order rescheduling or cancellation, changes in customer's forecasts of product demand, timely product and process development, individual product pricing pressure, variation in production yield, changes in estimated product lives, difficulties in obtaining components and assembly services needed for production of integrated circuits, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 1999 and the Registration Statement on Form S-3 (Registration No. 333-83889). These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes", "anticipates", "expects", or words of similar import. Similarly, statements that describe the Company's future plans, objectives, estimates or goals are forward-looking statements. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Important factors that could cause actual results and developments to be materially different from those expressed or implied by such statements include those factors discussed herein. 12 Item 3. Quantitative And Qualitative Disclosures About Market Risk We are exposed to changes in interest rates primarily from our credit facility and our investments in certain available-for-sale securities. To date, we have managed our exposure to changes in interest rates from our credit facility by entering into interest rate swap agreements which allow us to convert our debt from variable to fixed interest rates. We plan to continue to reduce our exposure to changes in interest rates from our credit facility by using interest rate derivative instruments. Our available-for-sale securities consist of fixed income investments (U.S. Treasury and Agency securities and short-term commercial paper). We continually monitor our exposure to changes in interest rates from our available-for-sale securities. Accordingly, we believe that the effects of changes in interest rates 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 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. 13 ANADIGICS, Inc. PART II. OTHER INFORMATION Item 1. Legal Proceedings Shareholder Litigation The court-approved settlement of the previously-disclosed consolidated securities class action, captioned In re ANADIGICS, Inc. Securities Litigation, No. 98-CV-917 (MLC) (D.N.J.), and shareholder's derivative lawsuit, captioned Deegan v. Rosenzweig, No. 98-CV-3640 (MLC) (D.N.J.), became final and was funded in January 2000. The total settlement payment (including the costs of administering the settlement) was $11.8 million, of which approximately $5.3 million was paid on behalf of ANADIGICS, Inc. by the Company's insurers. Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are included herein: Exhibit 27. - Financial Data Schedule (b) Reports on Form 8-K during the quarter ended September 30, 2000. Form 8-K filed on August 15, 2000 relating to the Amended and Restated By-Laws of the Company. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ANADIGICS, INC. By: /s/ Thomas C. Shields ------------------------------- Thomas C. Shields Senior Vice President and Chief Financial Officer Dated: November 14, 2000 15 ANADIGICS, Inc. EXHIBIT INDEX Page ---- Exhibit 27. Financial Data Schedule ................................ 17 16 EX-27 2 0002.txt EXHIBIT 27
5 This schedule contains summary financial information extracted for the three months ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-2000 SEP-30-2000 103,264,000 29,746,000 34,149,000 0 17,709,000 191,837,000 179,158,000 77,665,000 333,498,000 22,386,000 0 0 0 299,000 307,464,000 333,498,000 51,075,000 51,075,000 24,810,000 24,810,000 17,973,000 (15,000) (2,756,000) 11,063,000 3,986,000 7,077,000 0 0 0 7,077,000 0.24 0.23
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