UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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 October 3, 2015 was 88,834,921 (excluding 114,574 shares held in treasury).

INDEX

ANADIGICS, Inc.

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

ANADIGICS, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS in thousands, EXCEPT PER SHARE AMOUNTS)

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS in thousands, except per share amounts)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(AMOUNTS in thousands)

See accompanying notes.

ANADIGICS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS in thousands)

See accompanying notes.

ANADIGICS, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited) – October 3, 2015

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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 technology, design, and manufacturing of RF semiconductor solutions for infrastructure and mobile communications and data transmission markets. Our product portfolio includes line amplifiers, reverse path amplifiers, PAs, and FEICs. Our recently introduced foundry services provide the capacity for large scale VCSEL wafer processing and testing. Our CATV solutions include line amplifiers, reverse path amplifiers, and other RF products that provide the critical link within CATV infrastructure communications networks, as well as CPE devices, such as set-top boxes and cable modems. Our WiFi infrastructure products include PAs and FEICs that enable wireless connectivity for infrastructure and multimedia applications, including access points, routers, media gateways, and set-top boxes. Our wireless infrastructure solutions include PAs that are crucial components in 3G and 4G Small-Cell base stations, including picocells, enterprise-class femtocells, and CPE devices that help carriers expand broadband network coverage and support greater levels of data transmission. Our PAs are used in a variety of 3G and 4G IoT applications, including automotive, M2M, and industrial devices.

Our WiFi mobile products include FEICs and PAs that are designed to enable WiFi connectivity in smartphones, tablets, notebooks, and gaming systems. Supporting the latest 802.11 standards, our FEICs ensure optimal WiFi performance. Our cellular products include PAs that enable 3G and 4G wireless connectivity in mobile handsets, smartphones, tablets, and notebooks. We believe our products and services are well positioned to address these market opportunities by delivering exceptional performance and value in the infrastructure and mobile markets, as well as cost-effective, high-volume foundry services for the sensing markets.

Our strategy is focused on manufacturing and delivering RF products that offer greater performance, reliability, and integration to enable high-speed data communications and transmissions, as well as compelling foundry services that provide designers with scalability and greater value. We are a customer-centric organization that works closely with leading equipment designers and manufacturers to improve data transmission quality and system capacity. We also collaborate with industry-leading chipset providers where our functionality enhances their reference designs. These relationships enable us to target emerging trends in the market and help our customers achieve their performance, integration, and manufacturing goals.

Leveraging a variety of advanced internal and external technologies and materials, including MESFET, InGaP-Plus™, CMOS, GaAs, and GaN, our solutions deliver exceptional performance and integration. We believe that when used in our customers’ data transmission and communication devices, our products cost-effectively enhance RF performance, reliability, and overall functionality.

Our six-inch diameter GaAs fab located at our corporate headquarters in Warren, New Jersey, has been operational since 1999. We also have foundry arrangements with several companies to supply alternate technologies and supplement our existing wafer fab capabilities. This structure provides us with access to unique technologies and flexible capacity without the requisite capital investment.

In mid 2014, we implemented a strategic restructuring plan to better address growth opportunities in infrastructure markets and to lower our operating costs (“Strategic Restructuring”). Our strategy 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. As an extension of our strategic shift to Infrastructure and migration of our business model, in the second quarter of 2015 we reduced our workforce by approximately 25 employees throughout the Company.

On November 11, 2015, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Aloha Holding Company, Inc., a Delaware corporation (“Parent”), and Aloha Acquisition Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (the “Purchaser”), pursuant to which Parent will acquire the Company. The boards of directors of the Company, Parent and Purchaser have approved the Merger Agreement and the transactions contemplated by the Merger Agreement.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, the Purchaser has agreed to commence a cash tender offer (the “Offer”) to purchase all of the issued and outstanding shares of common stock, par value $0.01, of the Company (the “Shares”) at a purchase price of $0.35 per Share (the “Offer Price”), net to the seller in cash, without interest, less any applicable withholding taxes. The Purchaser agreed to commence the Offer as promptly as reasonably practicable, but not later than ten (10) business days after the date of the Merger Agreement, and the Offer must remain open for twenty (20) business days, subject to certain extensions of the Offer as set forth in the Merger Agreement. Upon completion of the Offer and subject to the terms and conditions of the Merger Agreement, the Purchaser will merge with and into the Company (the “Merger”), with the Company surviving as a wholly-owned subsidiary of Parent.

The consummation of the Offer and the Merger are subject to the satisfaction of certain closing conditions, including among others, that (a) there is validly tendered (and not validly withdrawn) the number of shares which, when added to any Shares owned by Parent or any of its subsidiaries would represent at least a majority of the outstanding Shares of the Company, and (b) other customary conditions as set forth in Annex I to the Merger Agreement have been satisfied or waived. The Offer is not subject to a financing condition.

The Merger will be effected pursuant to Section 251(h) of the Delaware General Corporation Law, with no stockholder vote required to consummate the Merger. At the Effective Time (as defined in the Merger Agreement), each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares then held by Parent, Purchaser, the Company or their respective subsidiaries and (ii) shares that are held by any stockholders of the Company who properly demand appraisal in connection with the Merger) will be canceled and retired, will cease to exist and will be converted into the right to receive an amount in cash equal to the Offer Price, without interest, less any applicable withholding taxes.

The Merger Agreement contains customary representations, warranties and covenants for a transaction of this nature, including covenants regarding the operation of the business of the Company prior to the closing of the Merger. In addition, under the terms of the Merger Agreement, the Company will have the right to seek Acquisition Proposals (as defined in the Merger Agreement) through December 6, 2015 (the “Go-Shop Period End Date”). Following the Go-Shop Period End Date, the Company has agreed not to solicit or otherwise facilitate any alternative Acquisition Proposals, subject to customary exceptions that permit the Company to respond to any unsolicited Acquisition Proposal, provided that the Company’s board of directors has determined in good faith that the failure to do so would reasonably be expected to result in a breach of its fiduciary duties, and the Company has complied with certain notice requirements. The Company is also permitted to change its recommendation in favor of the Offer or to terminate the Merger Agreement in order to accept a Superior Offer (as defined in the Merger Agreement) (subject to giving Parent five business days’ notice of its intention to do so and, among other things, making available the Company’s representatives to discuss and negotiate with Parent in good faith any amendments Parent desires to make to its proposal), provided that the Company’s board of directors has determined in good faith that the failure to do so would reasonably be expected to result in a breach of its fiduciary duties. If the Company does terminate the Merger Agreement under such circumstances, the Company must pay Parent, concurrently with such termination, a termination fee of $1.2 million. In addition, this termination fee is payable by the Company to Parent under other specified circumstances.

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:

Net Sales. Net sales decreased 35.8% during the third quarter of 2015 to $12.1 million from $18.9 million in the third quarter of 2014. For the nine months ended October 3, 2015, net sales were $46.4 million, a 29.1% decrease from net sales of $65.4 million for the nine months ended September 27, 2014. The net sales decreases primarily resulted from a decrease in market demand for our Mobile products in line with our Strategic Restructuring toward Infrastructure.

Sales of Infrastructure products decreased 8.9% during the third quarter of 2015 to $9.1 million from $10.0 million in the third quarter of 2014. For the nine months ended October 3, 2015, net sales of Infrastructure products increased 10.8% to $32.6 million from $29.4 million for the nine months ended September 27, 2014. The decrease in the third quarter was primarily due to decreased demand for our CATV and Wimax applications, partly offset with increased demand for our Wifi products. The increase in nine month sales was primarily due to increased demand for our Wifi and small cell infrastructure products, which is in line with the Company expanding its focus in the infrastructure space. The increase in the nine months Infrastructure sales was partly offset with decreased demand for our Wimax applications.

Sales of Mobile products decreased 66.2% during the third quarter of 2015 to $3.0 million from $8.9 million in the third quarter of 2014. For the nine months ended October 3, 2015, net sales of Mobile products decreased 61.7% to $13.8 million from $36.0 million for the nine months ended September 27, 2014. The decreases in sales were primarily due to decreased demand for our cellular products used in mobile applications.

Gross Margin. Gross margin during the third quarter of 2015 decreased to 13.4% of net sales from 15.0% of net sales in the third quarter of 2014. For the nine months ended October 3, 2015, gross margin improved to 18.6% of net sales from 8.8% of net sales for the nine months ended September 27, 2014. The decrease in the third quarter was primarily due to lower production and sales volume and a concentration of fixed costs as a percent of smaller revenues. Fixed production costs include, but are not limited to, depreciation, maintenance and operations’ support functions. 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. After allowing for the aforementioned non-recurring charge, the increase for the nine months ended October 3, 2015 was primarily due to manufacturing cost improvements achieved from restructuring and the increase in better margin Infrastructure product mix, despite a reduction in revenue.

Research and Development. Company-sponsored research and development expenses decreased 16.2% to $4.7 million during the third quarter of 2015 from $5.6 million during the third quarter of 2014. Company-sponsored research and development expenses for the nine months ended October 3, 2015 decreased 30.2% to $15.0 million from $21.4 million during the nine months ended September 27, 2014. 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 18.8% to $3.1 million during the third quarter of 2015 from $3.8 million during the third quarter of 2014. Selling and administrative expenses for the nine months ended October 3, 2015 decreased 22.7% to $10.4 million from $13.5 million during the nine months ended September 27, 2014. The decreases were primarily due to savings achieved from our Strategic Restructuring.

RESTRUCTURING CHARGES. During the nine months ended October 3, 2015, we implemented a workforce reduction that eliminated approximately 25 positions throughout the Company, and recorded a restructuring charge of $0.6 million for severance, related benefits and other costs. 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 approximately $1.7 million and $3.8 million, respectively, for severance, related benefits and other costs.

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. Restructuring charges for the nine months ended September 27, 2014 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.

INTEREST AND OTHER (EXPENSE) INCOME, NET. During the nine months ended September 27, 2014, Interest and other (expense) income, net of $1.7 million was primarily from redemption proceeds received on two of our auction rate securities which were in excess of our amortized cost basis.

Liquidity and Capital Resources

As of October 3, 2015, we had $11.7 million in cash and cash equivalents, of which $3.8 million was drawn from our revolving line of credit.

Operating activities used $6.4 million in cash during the nine month period ended October 3, 2015, primarily as a result of our operating results adjusted for non-cash expenses, partly offset by $2.2 million of cash provided by working capital movements. Investing activities used $0.1 million of cash during the nine month period ended October 3, 2015 consisting principally of purchases of fixed assets. Financing activities used $0.2 million of cash, primarily consisting of 12.0 million repayments on our working capital credit line facility, partly offset with $11.8 million credit line facility borrowing for the nine month period ended October 3, 2015.

We had unconditional purchase obligations at October 3, 2015 of approximately $1.1 million.

Historically, we have operated at a loss and have not consistently generated sufficient cash from operations to cover our operating and other cash expenses. In mid-2014, we implemented a strategic restructuring plan that we believed would place increased emphasis on infrastructure markets, lower operating costs and position the business for improved operating results. By the three months ended April 4, 2015, our infrastructure revenue improved, costs were lowered and operating losses were reduced in keeping with the strategic restructuring plan. However, subsequent to that date, unexpected declines in revenues resulted in an increase in operating losses. Therefore, the delayed improvement in infrastructure revenue is forecast to result in operating losses into 2016, larger than those foreseen under the strategic restructuring plan. Additionally, in future periods it is possible that we will not maintain compliance with certain covenants under our revolving credit facility which could result in outstanding borrowings being immediately due and payable and the termination of the revolving credit facility. The combination of these factors raises substantial doubt about our ability to continue as a going concern in 2016. Management’s plans to overcome these difficulties include financing all or part of its operations through additional equity or debt financing. However, there can be no assurance that additional financing will be available on satisfactory terms or at all. We also expect to continue to aggressively pursue available sales opportunities, work with distributors and end users to grow future sales, and continue to control costs. The ability to continue as a going concern in 2016 is dependent upon increasing infrastructure revenue, continuing to control costs and obtaining the necessary financing to meet obligations and repay liabilities arising from normal business operations when they come due. If we are unable to execute our operating plan, increase our infrastructure revenue, continue to control costs and raise additional capital, we will not have adequate capital to satisfy operational needs and anticipated capital needs for the next twelve months.

RECENTLY ADOPTED ACCOUNTING STANDARDS

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. The ASU became effective January 1, 2015. Adoption of this guidance did not impact our consolidated financial statements.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2015, the FASB issued ASU 2015-11, Inventory. The guidance was issued to simplify the measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. This guidance is effective for reporting periods beginning after December 15, 2016. The adoption of this guidance is not expected to have a significant impact 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 currently evaluating the impact of adopting 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 ASU permits the initial application to be applied either retrospectively to each prior reporting period presented, or retrospectively with a cumulative effect adjustment made at the date of initial application. The guidance is effective for annual and interim periods beginning after December 15, 2016. In July 2015, the FASB approved a one year deferral of the effective date of this standard to December 15, 2017 and early adoption of the standard, but not before the original effective date of December 15, 2016. We are evaluating the transition methods and the impact of the amended guidance 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, 2014. 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, 2014.

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 October 3, 2015, 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 October 3, 2015.

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 Form 10-Q for the three and six months period ended July 4, 2015 and Annual Report on Form 10-K for the year ended December 31, 2014.

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, Executive 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, Executive 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

 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.

Dated: November 12, 2015

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