Table Of Contents

 

    UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 27, 2014.
or
/  / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
Commission File No. 0-25662
ANADIGICS, Inc.
(Exact name of registrant as specified in its charter)
Delaware	22-2582106
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
141 Mt. Bethel Road, Warren, New Jersey	07059
(Address of principal executive offices)	(Zip Code)
(908) 668-5000
(Registrant's telephone number, including area code)

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

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

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

 

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

 

The number of shares outstanding of the Registrant’s common stock as of September 27, 2014 was 86,579,634 (excluding 114,574 shares held in treasury).

 

 

INDEX

 

ANADIGICS, Inc.

 

 

PART I	Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets – September 27, 2014 and December 31, 2013
	Condensed consolidated statements of operations and comprehensive loss – Three and nine months ended September 27, 2014 and September 28, 2013
	Condensed consolidated statements of cash flows – Nine months ended September 27, 2014 and September 28, 2013
	Notes to Condensed consolidated financial statements – September 27, 2014
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II.	Other Information
Item 1A.	Risk Factors
Item 5.	Other Information
Item 6.	Exhibits
	Signatures

 

 

PART I - FINANCIAL INFORMATION

 

Item 1.     Financial Statements

 

ANADIGICS, Inc.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(AMOUNTS in thousands, EXCEPT PER SHARE AMOUNTS)

 

		September 27, 2014				December 31, 2013
		(Unaudited)				(Note 1)
ASSETS
Current assets:
Cash and cash equivalents		$	13,483			$	20,947
Short-term marketable securities			-				3,447
Accounts receivable, net			9,459				15,156
Inventories			15,318				21,114
Prepaid expenses and other current assets			3,858				3,628
Assets held for sale			3,251				-
Total current assets			45,369				64,292
Plant and equipment:
Equipment and furniture			180,724				203,797
Leasehold improvements			46,850				46,850
Projects in process			2,477				4,832
			230,051				255,479
Less accumulated depreciation and amortization			212,131				222,303
			17,920				33,176
Other assets			212				213
Total assets		$	63,501			$	97,681
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	6,174			$	13,043
Accrued liabilities			3,657				4,380
Accrued restructuring costs			1,018				245
Bank borrowings			4,000				-
Total current liabilities			14,849				17,668
Other long-term liabilities			1,262				1,604
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 144,000 shares authorized, 86,694 issued at September 27, 2014 and 84,437 issued at December 31, 2013			867				844
Additional paid-in capital			641,980				637,922
Accumulated deficit			(595,198	)			(561,745	)
Accumulated other comprehensive income			-				1,647
Treasury stock at cost: 115 shares			(259	)			(259	)
Total stockholders’ equity			47,390				78,409
Total liabilities and stockholders’ equity		$	63,501			$	97,681

 

 

 

See accompanying notes.

 

 

ANADIGICS, Inc.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(AMOUNTS in thousands, except per share amounts)

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net sales		$	18,871			$	37,011			$	65,403			$	97,956
Cost of sales			16,038				32,912				59,654				94,282
Gross profit			2,833				4,099				5,749				3,674
Research and development expenses			5,600				9,551				21,438				29,264
Selling and administrative expenses			3,792				5,782				13,454				18,239
Restructuring charges			105				-				5,965				1,915
Operating loss			(6,664	)			(11,234	)			(35,108	)			(45,744	)
Interest income			1				46				7				204
Interest expense			(76	)			(31	)			(169	)			(51	)
Other income, net			70				15				1,817				1,569
Net loss		$	(6,669	)		$	(11,204	)		$	(33,453	)		$	(44,022	)
Basic and diluted loss per share		$	(0.08	)		$	(0.13	)		$	(0.39	)		$	(0.55	)
Weighted average common shares outstanding used in computing loss per share
Basic and diluted			86,199				83,723				85,550				79,974

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

(AMOUNTS in thousands)

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net loss		$	(6,669	)		$	(11,204	)		$	(33,453	)		$	(44,022	)
Other comprehensive income
Unrealized (loss) gain on marketable securities			-				(55	)			81				1,305
Foreign currency translation adjustment			-				-				-				3
Reclassification adjustment:
Net recognized gain on marketable securities previously included in Accumulated other comprehensive income			-				(25	)			(1,728	)			(1,476	)
Comprehensive loss		$	(6,669	)		$	(11,284	)		$	(35,100	)		$	(44,190	)

 

 

  

See accompanying notes.

 

 

ANADIGICS, Inc.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(AMOUNTS in thousands)

 

		Nine months ended
		September 27, 2014				September 28, 2013
		(unaudited)				(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(33,453	)		$	(44,022	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			8,821				11,064
Amortization			51				52
Stock based compensation			4,071				5,288
Marketable securities recovery and accretion			(1,728	)			(1,476	)
Loss (gain) on disposal or anticipated disposal of equipment			2,044				(175	)
Changes in operating assets and liabilities:
Accounts receivable			5,697				(3,736	)
Inventories			5,796				(3,895	)
Prepaid expenses and other assets			(280	)			(1,239	)
Accounts payable			(6,869	)			1,175
Accrued liabilities and other liabilities			(292	)			1,568
Net cash used in operating activities			(16,142	)			(35,396	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment			(797	)			(5,182	)
Proceeds from sale of equipment			1,937				2
Purchases of marketable securities			-				(8,130	)
Proceeds from sale of marketable securities			3,528				30,124
Net cash provided by investing activities			4,668				16,814
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock			10				19,804
Borrowings from credit facility			4,000				-
Net cash provided by financing activities			4,010				19,804
Net (decrease) increase in cash and cash equivalents			(7,464	)			1,222
Cash and cash equivalents at beginning of period			20,947				24,949
Cash and cash equivalents at end of period		$	13,483			$	26,171

 

 

 

See accompanying notes.

 

  

ANADIGICS, Inc.

 

Notes to Condensed Consolidated Financial Statements (unaudited) – September 27, 2014

 

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

 

1.     Summary of Significant Accounting Policies

 

Basis of Presentation

 

The terms “we,” “our,” “ours,” “us” and “Company” refer to ANADIGICS, Inc. The Company is a global leader in the design and manufacture of radio frequency semiconductor solutions for Infrastructure and Mobile applications. Infrastructure is comprised of products for the following applications:  CATV, small cell, WiFi, M2M, optical and other general RF applications.  Mobile is comprised of WiFi and Cellular products that primarily address the smartphone, handset and tablet markets.

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 27, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

 

The condensed consolidated balance sheet at December 31, 2013 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

 

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

 

The Company has evaluated subsequent events and determined that, other than matters outlined in Note 10, there were no subsequent events to recognize or disclose in these unaudited interim condensed consolidated financial statements.

 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 

Changes to accounting principles generally accepted in the United States of America are established by the Financial Accounting Standards Board (FASB) in the form of Accounting Standards Updates (ASU) to the FASB’s Accounting Standards Codification.

 

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

 

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The guidance states that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition. The guidance is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most current revenue recognition guidance. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. It also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption prohibited. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

  

 

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity's operations and financial results. The revised guidance is effective prospectively for fiscal and interim periods beginning on or after December 15, 2014. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

INCOME TAXES

 

The Company maintains a full valuation allowance on its deferred tax assets. Accordingly, the Company has not recorded a benefit or provision for income taxes. The Company recognizes interest and penalties related to the underpayment of income taxes in income tax expense. No unrecognized tax benefits, interest or penalties were accrued at September 27, 2014. The Company’s U.S. federal net operating losses have occurred since 1998 and as such, tax years subject to potential tax examination could apply from that date because carrying-back net operating loss opens the relevant year to audit.

 

WARRANTY

 

Based on the examination of historical returns and other information it deems critical, the Company estimates that a current charge to income will need to be provided in order to cover future warranty obligations for products sold during the year. The accrued liability for warranty costs is included in Accrued liabilities in the condensed consolidated balance sheets. Changes in the Company’s product warranty reserve are as follows:

 

		Nine months ended
		September 27, 2014				September 28, 2013
Beginning balance		$	383			$	770
Additions charged to costs and expenses			245				500
Claims processed			(465	)			(855	)
Ending balance		$	163			$	415

 

RECLASSIFICATIONS

 

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

 

 

2. RESTRUCTURING AND OTHER CHARGES

 

RESTRUCTURING

 

During the three and nine months ended September 27, 2014, the Company implemented workforce reductions that eliminated approximately 50 and 150 positions, respectively, throughout the Company, and recorded restructuring charges of $1,696 and $3,834, respectively, for severance, related benefits and other costs. The unpaid balance at September 27, 2014 was $1,018 and was recorded within Accrued restructuring costs.

 

During the nine months ended September 28, 2013, the Company implemented a workforce reduction that eliminated approximately 25 positions throughout the Company, and recorded a restructuring charge of $1,915 for severance, related benefits and other costs.

 

 

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

 

		Accrued Restructuring Costs
December 31, 2012 balance		$	395
Restructuring expense			1,915
Payments			(2,065	)
December 31, 2013 balance		$	245
Restructuring expense			3,834
Payments			(3,061	)
September 27, 2014 balance		$	1,018

 

OTHER CHARGES

 

During the second quarter of 2014, the Company reviewed and identified certain surplus manufacturing fixed assets and recorded a restructuring charge of $3,722 to write down certain assets to their current market value based on expected cash proceeds for the sale of these fixed assets. During the third quarter of 2014, the Company recorded approximate proceeds on the sale of certain Assets held for sale of $1,850 and offset their related $1,591 net gain against Restructuring charges. As of September 27, 2014, the Company maintains $3,251 of net fixed assets classified as Assets held for sale within Current assets on the Condensed consolidated balance sheets.

 

During the second quarter of 2014, the Company recorded a charge of $2,080 to Cost of sales for inventory write-downs on certain excess Mobile inventory.

 

 

3. FAIR VALUE AND MARKETABLE SECURITIES

 

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

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

 

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

 

    The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table presents a summary of fair value information for available-for-sale securities at December 31, 2013 and September 27, 2014:

 

										Fair Value Measurements at Reporting Date Using
Security Type		Amortized Cost Basis (1)				Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Former-auction corporate debt security (2)		$	1,800			$	2,997			$	-			$	2,997			$	-
Auction Rate Security - Preferred Equity			-				450				-				-				450
Total at December 31, 2013		$	1,800			$	3,447			$	-			$	2,997			$	450
Total at September 27, 2014		$	-			$	-			$	-			$	-			$	-

 

(1)

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

(2)

Available for sale debt security with a contractual maturity in excess of 10 years.

 

 

During the first half of 2014, our Level 2 former-auction corporate debt security and remaining Level 3 preferred equity action rate security sold for $2,960 and $568, respectively, resulting in a realized gain of $1,728, which was recorded to Other income, net.

 

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.

 

For the three and nine months ended September 28, 2013, the table below provides a reconciliation of the beginning and ending balances for each type of security valued using a Level 3 valuation.

 

($ in 000’s)		Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine months ended September 28, 2013
		Preferred Equity Securities (a)
Balance at January 1, 2013		$	1,568
Total gains or losses realized/unrealized
Included in earnings (loss)
- quarter ended March 30, 2013			-
- quarter ended June 29, 2013			872
- quarter ended September 28, 2013			-
Included in other comprehensive income(loss)
- quarter ended March 30, 2013			477
- quarter ended June 29, 2013			(467	)
- quarter ended September 28, 2013			(56	)
Purchases			-
Redemptions and settlements
- quarter ended March 30, 2013			-
- quarter ended June 29, 2013			(2,000	)
- quarter ended September 28, 2013			-
Transfers in and/or out of Level 3			-
Balance at September 28, 2013		$	394
Amount of total gains or losses for the period included in earnings(loss) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date			-
Securities held at September 28,2013:
Face value		$	1,125
Financial ratings		NR
Weighted average interest rate			0	%
Maturity date		N/A

 

(a) Preferred securities issued by subsidiaries of two publicly-held debt default insurers. During the second quarter of 2013, one of these securities redeemed at $2,000 par, resulting in an $872 realized gain recorded to Other income, net.

 

 

4. Inventories

 

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

 

		September 27, 2014				December 31, 2013
Raw materials		$	4,119			$	7,323
Work in process			5,181				8,424
Finished goods			6,018				5,367
Total		$	15,318			$	21,114

 

 

5. STOCKHOLDERS’ EQUITY

 

NASDAQ LISTING

 

The Company’s common stock currently trades on the Nasdaq Global Market (“Nasdaq”). On August 11, 2014, the Company received a letter from the staff of NASDAQ informing the Company that for the previous 30 consecutive business days, the bid price for the Company’s common stock had closed below $1.00, a requirement for listing on NASDAQ. The Company has until February 9, 2015 to regain compliance which would be satisfied if the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days. If the Company does not regain compliance by February 9, 2015, the Company may be eligible for an additional 180 calendar days compliance period. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the deficiency during the second compliance period. However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible, the staff would notify the Company that its securities would then be subject to delisting. In the event of such notification the Company may appeal the staff’s determination to delist its securities.

 

STOCK OFFERING

 

    In March 2013, the Company completed an underwritten public offering, resulting in an aggregate issuance of 10,704 shares of common stock at a price of $2.00 per share, generating net proceeds to the Company of $19,675.

 

 

6. STOCK BASED COMPENSATION

 

Equity Compensation Plans

 

The Company has two active equity compensation plans under which equity securities are authorized for issuance to employees and/or directors and two plans (the 1995 Plan and 1997 Plan, described below) which have been terminated:

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

■	The 1997 Long Term Incentive and Share Award Plan (terminated February 28, 2005) (1997 Plan);

■	The Amended and Restated (as of March 30, 2013) 2005 Long Term Incentive and Share Award Plan (2005 Plan, collectively with the 1995 Plan and the 1997 Plan, the Plans); and

■	The Employee Stock Purchase Plan (ESP Plan).

 

Employees and outside directors have been granted restricted stock units and options to purchase shares of common stock under stock option plans adopted in 1995, 1997 and 2005. An aggregate of 4,913, 5,100 and 24,850 shares of common stock were reserved for issuance under the 1995 Plan, the 1997 Plan and the 2005 Plan, respectively. The Plans provide for the granting of stock options, stock appreciation rights, restricted stock units and other share based awards to eligible employees and directors, as defined in the Plans. Option grants have terms of ten years and become exercisable in varying amounts over periods of up to three years. To date, no stock appreciation rights have been granted under the Plans.

 

In 1995, the Company adopted the ESP Plan under Section 423 of the Internal Revenue Code. All full-time employees of ANADIGICS, Inc. and part-time employees, as defined in the ESP Plan, are eligible to participate in the ESP Plan. An aggregate of 6,694 shares of common stock were reserved for offering under the ESP Plan. Offerings are made at the commencement of each calendar year and must be purchased by the end of that calendar year. Pursuant to the terms of the ESP Plan, shares purchased and the applicable per share price were 271 and $1.64, respectively for the year ended December 31, 2013.

 

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

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Amortization of restricted stock units		$	871			$	1,557			$	3,887			$	4,824
Amortization of ESP Plan			-				120				85				390
Amortization of stock option awards			1				54				99				74
Total stock based compensation		$	872			$	1,731			$	4,071			$	5,288
By Financial Statement line item
Cost of sales		$	183			$	322			$	705			$	914
Research and development expenses			374				613				1,450				1,653
Selling and administrative expenses			315				796				1,916				2,792
Restructuring charge			-				-				-				(71	)

 

 

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

 

Restricted Stock Units and Stock Option Awards

 

   Under the Plans, the Company grants restricted stock units to its employees. The value of restricted stock units are fixed upon the date of grant and amortized over the related vesting period, primarily ranging up to three years. Restricted stock units are subject to forfeiture if employment terminates prior to vesting. The Company estimates that approximately 2.5% of its restricted stock units and stock option awards are forfeited annually (exclusive of performance-based restricted stock units and performance-based option shares, as described below). Restricted stock units do not carry voting, forfeitable dividend rights, and cannot be traded or transferred prior to vesting. Grant, vest and forfeit activity and related weighted average (WA) price per share for restricted stock units and for stock options during the period from January 1, 2013 to September 27, 2014 is presented in tabular form below:

 

		Restricted Stock Units																Stock Options
		Time-based								Performance-based								Time-based								Performance-based
		Units				WA price/ unit				Units				WA price/ unit				Issuable upon exercise				WA exercise price				Issuable upon exercise				WA exercise price
Outstanding at January 1, 2013			1,430			$	4.63				-			$	-				2,328			$	5.01				167			$	3.24
Granted			2,949				2.12				560				2.02				13				2.26				-				-
Shares vested/options exercised			(1,539	)			3.34				-				-				(69	)			1.93				-				-
Forfeited/expired (1)			(144	)			3.75				(384	)			2.02				(355	)			4.25				(125	)			3.24
Balance at December 31, 2013			2,696			$	2.67				176			$	2.02				1,917			$	5.24				42			$	3.24
Granted			2,785				1.49				433				1.84				3				1.91				-				-
Shares vested/options exercised			(2,215	)			2.74				(37	)			1.99				(5	)			1.83				-				-
Forfeited/expired			(390	)			1.83				(10	)			1.84				(677	)			5.97				(42	)			3.24
Balance at September 27, 2014			2,876			$	1.59				562			$	1.89				1,238			$	4.85				-			$	-

(1)

In the second quarter of 2013, 125 time-based and 83 (125 at maximum performance achievement) market performance-based stock options were rescinded with the consent of and without payment to the Chief Executive Officer (CEO) due to the fact that the original grants with respect to which these options were a part of exceeded the sub-limits of the applicable plan by the number of shares as to which the options were rescinded.

 

In June 2011, the Company’s CEO was awarded a base grant of 250 market performance-based stock options contingent upon the Company’s shareholder return performance against the performance of the Philadelphia Semiconductor Index component companies. Following the rescission discussed in footnote (1) in the table immediately above, the base grant was reduced by 83 market performance-based stock options during the second quarter of 2013. The award and market performance was evaluated during the one, two and three-year periods following the award. The market performance-based stock options had an exercise price of $3.24, an expiration of 10 years after the grant date, and an average fair value of $2.62 on the date of grant. The fair value estimate was calculated with the assistance of a valuation consultant using a Monte Carlo Simulation model. In the second quarters of 2012, 2013, and 2014, 83, 42 and 42 shares, respectively, were forfeited for non-achievement of market performance goals at the end of their three year annual measurement periods.

 

 

On February 16, 2012, subject to stockholder approval of additional 2005 Plan shares at the Company’s 2013 Annual Stockholder Meeting (at which such approval was received), the Company awarded 661 time-based and 220 Company performance-based restricted stock units to its officers and employees. The time-based restricted stock units vested one-third on May 20, 2013 and one-third on February 18, 2014, and vest one-third on February 18, 2015. The Company performance-based restricted stock units vest based on absolute total stockholder return for one-year, two-year and three-year periods starting from the baseline date of December 31, 2011, compared to total stockholder return targets for each of the respective periods. As of December 31, 2013, the performance metrics for the first and second year periods were not met on the Company performance-based awards and 155 restricted stock units were forfeited.

 

On December 4, 2012, subject to stockholder approval of additional 2005 Plan shares at the Company’s 2013 Annual Stockholder Meeting (at which such approval was received), the Company awarded 660 restricted stock units to its officers and other key employees (subsequently increased by 20 units awarded to an additional officer in July 2013). Fifty percent of these restricted stock units have time-based vesting conditions and fifty percent have Company performance-based vesting conditions. The restricted stock units vest one-third annually in May 2014, 2015, and 2016 (August 2014, 2015 and 2016 vest for the July 2013 grant). The Company performance-based awards were evaluated based on the Company’s adjusted cash flow from operations for the year ended December 31, 2013, with 34.8% of the Company performance metrics achieved, 111 performance-based restricted stock units qualified for vest, and the remaining 229 performance-based stock units were forfeited.

 

On February 13, 2014, the Company awarded 825 restricted stock units to its officers and other key employees (subsequently increased by 40 units awarded to an additional officer in July 2014) where fifty percent of these restricted stock units have time-based vesting conditions and fifty percent (assuming maximum goal performance) have market performance-based vesting conditions contingent upon the Company’s relative shareholder returns measured against the peer group companies. The restricted stock units will vest, if at all, one-third annually in March 2015, 2016, and 2017. The market performance-based awards will be evaluated annually in one-third increments measuring Company shareholder returns during the one, two and three year periods following the award. Company performance within the 75^th percentile tier in a measurement period would result in maximum performance attainment, while performance below the 25th-percentile results in no vesting for that period. The performance-based restricted stock units have an average fair value of $1.84 on the date of grant, calculated with the assistance of a valuation consultant using a Monte Carlo Simulation model. As of September 27, 2014, 10 performance-based restricted awards have forfeited.

 

As of September 27, 2014, unrecognized stock based compensation cost and weighted average remaining recognition periods for our equity compensation plans are as follows:

 

		As of September 27, 2014
Unrecognized stock based compensation cost
Option plans		$	7
Restricted stock units		$	3,211
Weighted average remaining recognition period
Option plans (in years)			1.8
Restricted stock units (in years)			1.3

 

Stock options outstanding at September 27, 2014 are summarized as follows:

 

Range of exercise prices					Outstanding Options at September 27, 2014				Weighted average remaining contractual life				Weighted average exercise price				Exercisable at September 27, 2014				Weighted average exercise price
$1.23	-	$1.91				12				6.9			$	1.76				6			$	1.67
$1.93	-	$1.93				444				3.6			$	1.93				444			$	1.93
$2.00	-	$3.68				333				5.5			$	3.27				331			$	3.28
$4.15	-	$18.98				449				2.2			$	8.97				449			$	8.97

 

 

Valuation Method for ESP Plan and Stock Option Awards

 

The fair value of these equity awards was estimated at the date of grant using a Black-Scholes option pricing model. The weighted average assumptions and fair values for stock based compensation grants used for the nine month periods ended September 27, 2014 and September 28, 2013 are summarized below:

 

		Nine months ended
		September 27, 2014				September 28, 2013
Stock option awards:
Risk-free interest rate			1.7	%			0.8	%
Expected volatility			58	%			72	%
Average expected term (in years)			5.0				5.0
Expected dividend yield			0.0	%			0.0	%
Weighted average fair value of options granted		$	0.97			$	1.37
ESP Plan:
Risk-free interest rate			0.1	%			0.1	%
Expected volatility			68	%			61	%
Average expected term (in years)			1.0				1.0
Expected dividend yield			0.0	%			0.0	%
Weighted average fair value of purchase option		$	0.26			$	0.67

 

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

 

 

7.     Loss Per Share

 

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

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Weighted average common shares for basic loss per share			86,199				83,723				85,550				79,974
Effect of dilutive securities:
Stock options (*)			-				-				-				-
Unvested restricted stock units (*)			-				-				-				-
Adjusted weighted average shares for diluted loss per share			86,199				83,723				85,550				79,974

 

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

 

For the three and nine months ended September 27, 2014 and September 28, 2013, potential additional dilution arising from any of the Company's outstanding stock options or unvested restricted stock units is detailed below. Such potential dilution was excluded as their effect was anti-dilutive.

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Stock options			1,238				1,988				1,238				1,988
Unvested restricted stock units			3,438				3,200				3,438				3,200

 

 

8. ACCUMULATED OTHER COMPREHENSIVE INCOME

 

The changes in accumulated other comprehensive income are as follows (in thousands):

 

		Accumulated other comprehensive income
		Three months ended								Nine months ended
		Sep 27, 2014				Sep 28, 2013				Sep 27, 2014				Sep 28, 2013
Beginning balance		$	-			$	1,964			$	1,647			$	2,052
Other comprehensive income before reclassifications			-				(55	)			81				1,305
Amounts reclassified from accumulated other comprehensive income
Net Unrealized Gain(Loss) on Marketable Securities *			-				(25	)			(1,728	)			(1,476	)
Foreign Currency Translation			-				-				-				3
Net current period other comprehensive income			-				(80	)			(1,647	)			(168	)
Ending balance		$	-			$	1,884			$	-			$	1,884

 

* Amounts reclassified are recorded within Other income, net in the Condensed Consolidated Statements of Operations.

 

 

9. LEGAL PROCEEDINGS

 

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

 

 

10. LINE OF CREDIT

 

In April 2013, the Company entered into a Revolving Credit and Security Agreement (the “PNC Credit Agreement”) with PNC Bank, N.A. The PNC Credit Agreement was amended in December 2013 and further amended on April 30, 2014, to revise the minimum EBITDA covenants. The PNC Credit Agreement provided the Company with a three-year revolving credit facility of $11,000 that expires on April 30, 2016. The PNC Credit Agreement was secured by certain cash balances with borrowing availability based upon accounts receivable and compliance with covenants, including minimum EBITDA (as defined in the PNC Credit Agreement) and certain capital expenditure limits. The Company was permitted to elect to borrow at rates approximating LIBOR plus 3.25%. The PNC Credit Agreement contained a fee for any unused portion of the facility. On April 30, 2014, the Company entered into an Amended and Restated Collateral Assignment of Account which secured the Company’s existing and future obligations to the Lenders with a Company business account. As of September 27, 2014, the Company was in compliance with its covenants and $4,000 was outstanding under the PNC Credit Agreement. On October 24, 2014, all outstanding amounts due under the PNC Credit Facility were satisfied in full and the PNC Credit Facility was terminated.

 

On October 24, 2014, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “SVB Loan Agreement”). The SVB Loan Agreement provides the Company with a two-year revolving credit facility of $10,000 that expires on October 24, 2016. The Credit Agreement enables borrowings based upon accounts receivable and is secured by certain insured accounts receivable and substantially all of the Company’s other assets. The SVB Loan Agreement requires compliance with certain covenants, including minimum EBITDA (as defined in the SVB Loan Agreement) and quick ratio levels, in addition to certain capital expenditure limits. The interest rate on the outstanding balance under the SVB Loan Agreement is Prime plus 0.5%. The SVB Loan Agreement contains a fee for any unused portion of the facility.

 

 

ANADIGICS, Inc.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

OVERVIEW

 

The terms “we,” “our,” “ours,” “us” and “Company” refer to ANADIGICS, Inc. We are a global leader in the design and manufacture of radio frequency semiconductor solutions for Infrastructure and Mobile applications. Infrastructure is comprised of products for the following applications:  CATV, small cell, WiFi, M2M, optical and other general RF applications.  Mobile is comprised of WiFi and Cellular products that primarily address the smartphone, handset and tablet markets.

 

Our CATV line amplifiers, reverse amplifiers, and edgeQAM amplifiers provide the critical link in CATV network infrastructure devices, as well as set-top boxes and cable modems. Our small-cell power amplifiers enable 3G and 4G connectivity in picocells, enterprise-class femtocells, and high-performance customer premises equipment (CPE). Our WiFi power amplifiers and FEICs are optimized for the latest standards, including 802.11n and 802.11ac, enabling wireless LAN connectivity for infrastructure, multimedia and mobile devices, such as modems, routers, access points, set-top boxes, televisions, gaming consoles, smartphones, tablets, and notebooks. Our cellular power amplifiers enable handsets, smartphones, tablets, and datacards, as well as M2M, automotive and industrial devices to access 3G and 4G wireless networks. We believe that our solutions are well positioned to address these market dynamics and will enable us to deliver value in the CATV infrastructure, small cell, WiFi, and cellular communications markets.

 

Our business strategy is focused on enabling communications connectivity with RF solutions that offer greater performance and integration to enhance the user’s experience. We are a customer-centric organization that works closely with leading equipment manufacturers, such as OEMs and ODMs. We also partner with industry-leading chipset providers where our functionality enhances their reference designs. These relationships enable us to provide targeted applications expertise that helps reduce time-to-market and design new products that target emerging trends in the market.

 

We are focused on the design and manufacture of differentiated RF semiconductors. Many of our products leverage proven MESFET, high-performance GaN, and patented InGaP-Plus™ technologies. Our MESFET process technology ensures outstanding performance and superior reliability to minimize field failures and extend service life. GaN technology enables exceptional performance, especially for output stages that require high power and linearity. InGaP-Plus technology allows unique architectures that combine HBT amplifying structures and pHEMT RF switches on the same die. We believe that our products cost-effectively enhance RF reliability, performance, and overall functionality.

 

Our six-inch diameter GaAs fab located at our corporate headquarters in Warren, New Jersey, has been operational since 1999. In addition, we have foundry agreements that expand our wafer fabrication capability.

 

We executed certain staff reductions earlier in the year and in June 2014, we announced a strategic restructuring plan to better address growth opportunities in infrastructure markets and to lower our operating costs. The plan included expanding our presence in the infrastructure space and reducing the fixed costs associated with certain legacy mobile activities through a resizing of our staff and manufacturing capability. The restructuring plan and other related actions are anticipated to be complete by the end of 2014.

 

In connection with our restructuring plans, workforce reductions eliminated approximately 150 positions throughout the Company, or approximately 30% of our workforce. The workforce reductions, along with other cost reduction actions, will result in achieving annualized savings of approximately $25 million.

 

During the second quarter of 2014, the Company reviewed and identified certain surplus manufacturing fixed assets and recorded a restructuring charge of $3.7 million to write down certain assets to their current market value based on expected cash proceeds for the sale of these fixed assets. During the third quarter of 2014, the Company recorded approximate proceeds on the sale of certain Assets held for sale of $1.8 million and offset the related $1.6 million net gain against Restructuring. As of September 27, 2014, net fixed assets in the amount of $3.2 million are classified as Assets held for sale within Current assets on the Condensed consolidated balance sheets.

 

 We believe our markets, particularly in the Mobile business, are, and will continue to remain, competitive which could result in quarterly volatility in our net sales, average selling prices, and market share.

 

 

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

 

Results of Operations

 

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

 

		Three months ended								Nine months ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Net sales			100.0	%			100.0	%			100.0	%			100.0	%
Cost of sales			85.0	%			88.9	%			91.2	%			96.2	%
Gross margin			15.0	%			11.1	%			8.8	%			3.8	%
Research and development expenses			29.7	%			25.8	%			32.8	%			29.9	%
Selling and administrative expenses			20.1	%			15.6	%			20.6	%			18.6	%
Restructuring charges			0.5	%			-				9.1	%			2.0	%
Operating loss			(35.3	)%			(30.3	)%			(53.7	)%			(46.7	)%
Interest income			-				0.1	%			-				0.2	%
Interest expense			(0.4	)%			(0.1	)%			(0.2	)%			(0.1	)%
Other income, net			0.4	%			-				2.8	%			1.6	%
Net loss			(35.3	)%			(30.3	)%			(51.1	)%			(45.0	)%

 

Net Sales. Net sales decreased 49.0% during the third quarter of 2014 to $18.9 million from $37.0 million in the third quarter of 2013. For the nine months ended September 27, 2014, net sales were $65.4 million, a 33.2% decrease from net sales of $98.0 million for the nine months ended September 28, 2013. The net sales decreases primarily resulted from a decrease in market demand for our Mobile products, slightly offset by increased Infrastructure product sales.

 

Sales of Infrastructure products increased 18.1% during the third quarter of 2014 to $10.0 million from $8.5 million in the third quarter of 2013. For the nine months ended September 27, 2014, net sales of Infrastructure products increased 18.0% to $29.4 million from $25.0 million for the nine months ended September 28, 2013. The increases in sales were primarily due to increased demand in CATV and small cell infrastructure markets.

 

Sales of Mobile products decreased 69.0% during the third quarter of 2014 to $8.9 million from $28.5 million in the third quarter of 2013. For the nine months ended September 27, 2014, net sales of Mobile products decreased 50.7% to $36.0 million from $73.0 million for the nine months ended September 28, 2013. The decreases in sales were primarily due to decreased demand for our cellular and WiFi mobile products.

 

Gross Margin. Gross margin during the third quarter of 2014 increased to 15.0% of net sales from 11.1% of net sales in the third quarter of 2013. For the nine months ended September 27, 2014, gross margin improved to 8.8% of net sales from 3.8% of net sales for the nine months ended September 28, 2013. The nine months ended September 27, 2014 included a non-recurring period charge of $2.1 million for excess inventory write-downs on Mobile products. The nine months ended September 28, 2013 included non-recurring period charges totaling $1.9 million relating to customer cost reimbursement, power interruption costs, and production ramp costs incurred in the first half of 2013. After allowing for the aforementioned non-recurring charges, increases in gross margin during 2014 were primarily due to an increase in Infrastructure product mix and manufacturing cost improvements achieved from restructuring.

 

Research and Development. Company-sponsored research and development expenses decreased 41.4% to $5.6 million during the third quarter of 2014 from $9.6 million during the third quarter of 2013. Company sponsored research and development expenses for the nine months ended September 27, 2014 decreased 26.7% to $21.4 million from $29.3 million during the nine months ended September 28, 2013. The decreases were primarily due to cost savings achieved from restructuring and improved spending focus on our key projects.

 

Selling and Administrative. Selling and administrative expenses decreased 34.4% to $3.8 million during the third quarter of 2014 from $5.8 million during the third quarter of 2013. Selling and administrative expenses for the nine months ended September 27, 2014 decreased 26.2% to $13.5 million from $18.2 million during the nine months ended September 28, 2013. The decreases were primarily due to savings achieved from restructuring and ongoing cost reduction actions.

 

 

RESTRUCTURING CHARGES.  During the three and nine months ended September 27, 2014, we implemented workforce reductions that eliminated approximately 50 and 150 positions, respectively, throughout the Company, and recorded restructuring charges of $1.7 million and $3.8 million, respectively, for severance, related benefits and other costs.

 

Restructuring charges also included a $3.7 million fixed assets restructuring charge recorded in the second quarter of 2014 to write down certain surplus manufacturing assets to their current market value based on expected cash proceeds for the sale of these fixed assets. During the third quarter of 2014, the Company recorded approximate proceeds on the sale of certain Assets held for sale of $1.8 million and offset their related $1.6 million net gain against Restructuring charges.

 

During the nine months ended September 28, 2013, we implemented a workforce reduction that eliminated approximately 25 positions throughout the Company which resulted in recording a restructuring charge of $1.9 million for severance, related benefits and other costs.

 

OTHER INCOME, NET. Other income for the nine months ended September 27, 2014 included a gain of $1.8 million, primarily from redemption proceeds received on two of our auction rate securities (ARS) which were in excess of our amortized cost basis. For the nine months ended September 28, 2013, other income of $1.6 million was primarily from redemptions received on two of our ARS which were in excess of our amortized cost basis.

 

 

Liquidity and Capital Resources

 

As of September 27, 2014, we had $13.5 million in cash and cash equivalents, of which $4.0 million was drawn from our revolving line of credit.

 

Operating activities used $16.1 million in cash during the nine month period ended September 27, 2014, primarily as a result of our operating results adjusted for non-cash expenses. Investing activities provided $4.6 million of cash during the nine month period ended September 27, 2014 consisting principally of $3.5 million net sales of marketable securities and $1.9 million proceeds received from the sale of certain fixed assets, partly offset by purchases of fixed assets of $0.8 million. Financing activities provided $4.0 million from drawings on our working capital credit line.

 

We had unconditional purchase obligations at September 27, 2014 of approximately $3.5 million.

 

We believe that our existing sources of capital, including our existing cash, will be adequate to satisfy operational needs and anticipated capital needs for at least the next twelve months. We may elect to finance all or part of our future capital requirements through additional equity or debt financing. There can be no assurance that such additional financing would be available on satisfactory terms. 

 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 

Changes to accounting principles generally accepted in the United States of America are established by the Financial Accounting Standards Board (FASB) in the form of Accounting Standards Updates (ASU) to the FASB’s Accounting Standards Codification.

 

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter, with early adoption permitted. We are in the process of evaluating the impact of this guidance on our consolidated financial statements.

 

In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The guidance states that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition. The guidance is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. We are in the process of evaluating the impact of this guidance on our consolidated financial statements.

 

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most current revenue recognition guidance. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. It also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption prohibited. We are in the process of evaluating the impact of this guidance on our consolidated financial statements.

 

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that represents a strategic shift that has, or will have, a major effect on an entity's operations and financial results. The revised guidance is effective prospectively for fiscal and interim periods beginning on or after December 15, 2014. Adoption of this guidance is not expected to have a material impact on our consolidated financial statements. 

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report on Form 10-Q contains projections and other forward-looking statements (as that term is defined in the Securities Exchange Act of 1934, as amended). These projections and forward-looking statements reflect the Company’s current views with respect to future events and financial performance and can generally be identified as such because the context of the statement will include words such as “believe”, “anticipate”, “expect”, or words of similar import. Similarly, statements that describe our future plans, objectives, estimates or goals are forward-looking statements. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results and developments could differ materially from those projected as a result of certain factors. Such factors include, but are not limited to, those risk factors listed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and the risk factor set forth in this quarterly report on Form 10-Q. The Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

Item 3. Quantitative And Qualitative Disclosures About Market Risk

 

The Company's market risk has not changed significantly from the risks disclosed in Item 7A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013. 

 

ITem 4. Controls and Procedures 

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission (SEC) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate, to allow timely decisions regarding required disclosure. As of September 27, 2014, an evaluation was performed under the supervision and with the participation of our Management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934). Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 27, 2014.

 

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

 

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

 

 

ANADIGICS, Inc.

 

PART II - OTHER INFORMATION

 

Item 1A.   RISK FACTORS

 

There have been no material changes from the risks as previously disclosed in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2013, except for the following additional risk factor:

 

If the closing bid price of our stock continues to remain below $1.00 per share, our common stock may be subject to delisting from the NASDAQ Stock Market.

 

Shares of our common stock are listed on the Nasdaq Global Market (“Nasdaq”) under the symbol “ANAD”. We are required to comply with Nasdaq’s listing standards in order to maintain the listing of our common stock on the exchange. Nasdaq has the authority pursuant to Nasdaq Rule 5550(a)(2) to delist our common stock if, during any period of 30 consecutive trading days, the closing bid price falls below $1.00 minimum bid price. In addition, Nasdaq has the authority to delist our common stock if Nasdaq determines that the trading price of our shares is abnormally low or we otherwise fail to comply with applicable Nasdaq regulations or criteria used in evaluating continued listing status.

 

On August 11, 2014, we received a letter from the staff of Nasdaq notifying us that, for the previous 30 consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial period of 180 calendar days, or until February 9, 2015, to regain compliance. If at any time before February 9, 2015, the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide us with written confirmation of compliance.

 

If we do not regain compliance with Rule 5550(a)(2) by February 9, 2015, we may be eligible for an additional 180 calendar days compliance period. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of our intention to cure the deficiency during the second compliance period. However, if it appears to the staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, the staff would notify us that our securities would be subject to delisting. In the event of such notification, we may appeal the staff’s determination to delist our securities, but there can be no assurance the staff would grant our request for continued listing.

 

We are actively monitoring the bid price of our common stock and its minimum market value of listed securities and will consider and implement any and all options available to us to achieve compliance, including, without limitation, effecting a reverse stock split. To the extent that we are unable to resolve the listing deficiency, there is a risk that our common stock may be delisted from NASDAQ, which would adversely impact the liquidity of our common stock which, in turn, may result in a decrease in our stock’s trading price. Our delisting from NASDAQ could also negatively affect the perceptions of investors, customers and suppliers and others regarding the stability of our business.

 

ITEM 5.      Other Information

 

NONE.

 

Item 6.      Exhibits

 

31.1   Rule 13a-14(a)/15d-14(a) Certification of Ronald Michels, Chairman and Chief Executive Officer of ANADIGICS, Inc.

 

31.2   Rule 13a-14(a)/15d-14(a) Certification of Terrence G. Gallagher, Vice President and Chief Financial Officer of ANADIGICS, Inc.

 

32.1   Section 1350 Certification of Ronald Michels, Chairman and Chief Executive Officer of ANADIGICS, Inc.

 

32.2   Section 1350 Certification of Terrence G. Gallagher, Vice President and Chief Financial Officer of ANADIGICS, Inc.

 

101.INS**     XBRL Instance

  

101.SCH**    XBRL Taxonomy Extension Schema

  

101.CAL**    XBRL Taxonomy Extension Calculation

  

101.DEF**     XBRL Taxonomy Extension Definition

  

101.LAB**    XBRL Taxonomy Extension Labels

  

101.PRE**     XBRL Taxonomy Extension Presentation

 

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

 

 

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/ Terrence G. Gallagher
	Terrence G. Gallagher
	Vice President and Chief Financial Officer

 

 

Dated: October 30, 2014

 

 

 

 

 

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