<PAGE>

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

                                  United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                 Form 10-K405

            [X] Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

For the fiscal year ended December 28, 2001           Commission File No. 0-4466

                           Artesyn Technologies, Inc.
                           --------------------------
             (Exact name of Registrant as specified in its charter)

            Florida                                          59-1205269
            -------                                          ----------
(State or other jurisdiction of                            (I.R.S. Employer
      incorporation)                                     Identification No.)

7900 Glades Road, Suite 500, Boca Raton, Florida             33434-4105
------------------------------------------------             ----------
    (Address of principal executive offices)                 (Zip Code)

                                 (561) 451-1000
                                 --------------
              (Registrant's telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $0.01 par value
                          Common Stock Purchase Rights
                          ----------------------------

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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
                                            --.

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

The aggregate market value of our common stock held by non-affiliates of the
Registrant as of February 22, 2002 was approximately $307 million.

As of March 4, 2002, 38,350,033 shares of the Registrant's common stock were
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

--------------------------------------------------------------------------------
<PAGE>

                                    PART I

ITEM 1. Business
        --------

We provide advanced power conversion equipment and embedded communications
controllers to the communications industry. We are headquartered in Boca Raton,
Florida and are primarily engaged in the design, development, manufacture and
sale of electronic products, power supplies, power conversion products and power
subsystems. With one of the broadest product portfolios available, our Power
Conversion business offers customers a wide range of high efficiency AC/DC power
supplies, as well as advanced DC/DC and Point-of-Load converters for distributed
power architectures. Our Communications Products business offers customers a
line of WAN interfaces, CPU boards, DSP solutions and protocol stacks that are
utilized in many of today's leading TeledatacomTM networks. Our customers
include worldwide market leaders in each of our chosen market sectors such as
Alcatel, Ciena, Cisco Systems, Compaq, Dell Computer, Ericsson, Hewlett-Packard,
Lucent Technologies, Motorola, Nortel, Nokia, Siemens and Sun Microsystems. We
also provide power supplies to many other companies in the computing and
communications industry and maintain a worldwide network of well-regarded
distributors including Arrow, Avnet, EBV/Unique and Sager Electronics.

Founded in the late 1960's as Computer Products, Inc., we have serviced many
product lines and market sectors in the electronics industry throughout our
history. In late 1997, we merged with Zytec Corporation and changed our name to
Artesyn Technologies, Inc. Since that time, we have focused on power conversion
and embedded communications controller solutions for the telecommunications
industry. Over the past two years, we have made several strategic acquisitions,
including the acquisitions of Spider Software Ltd., AzCore Technologies, Inc.
and Real-Time Digital, Inc., to develop new products for our chosen markets. We
have also disposed of businesses and lines of products that were outside our
chosen market focus, including the sale of Artesyn Solutions, Inc. to Solectron
Global Services, Inc., a subsidiary of Solectron Corporation, in the fourth
quarter of 2001. We believe the industry in which we compete and the markets we
have chosen to serve will provide us with opportunities for many years to come.

If you would like additional information on our business, please visit our
website at http://www.artesyn.com. Information contained in or accessible
           -----------------------
through our website is not part of this report.

                          Industry and Market Overview

As a provider of electronic products, subsystems and services to Original
Equipment Manufacturers, the producers of electronic equipment, we have chosen
to focus on those sectors of the communications industry that we believe offer
us the strongest prospects for sustained growth over the long-term. Our products
directly address the internet infrastructure through its focus on the
communications industry, including computing/mass storage, carrier/enterprise
solutions, wireless infrastructure and network access technologies.

Fiscal year 2001 was very difficult for the communications industry. A
significant drop in end-user demand resulted in cancelled orders, downsizing and
industry contraction. Many of the markets we serve, especially the
telecommunications markets, are still experiencing difficult financial
conditions, impacting demand for our products. We believe that the
communications marketplace still holds significant long-term growth
opportunities, and we will continue to focus on these opportunities.

The leading companies in the communications industry typically value quality,
reliability, technical support, continuous and rapid technological development
and flexible manufacturing, all qualities we believe we are capable of
providing. In addition, we believe we benefit from a number of strategic
advantages as described below.

Continued Investment in Research and Development
While we spent a significant amount of energy reducing the size of our business
during 2001 to more closely match our cost structure with our current level of
demand, we maintained our level of investment in research and development, as a
percentage of revenue. During 2001, research and development was 8.4% of revenue
in comparison with 6.5% in 2000.

                                       2
<PAGE>

As part of a rapidly changing industry, we believe companies that are able to
offer their customers continuing innovation and timely product development will
emerge from the industry downturn as stronger competitors.

New Products
During 2001, as a result of our continued commitment to research and
development, we introduced several new products that are continuing to provide
our customers with the technical innovation required to manufacture smaller and
more capable products. We introduced several new high efficiency DC/DC quarter
bricks developed with technology purchased in our acquisition of AzCore
Technologies. In addition, we continue to develop and record program wins for
our Point-of-Load products. Our products are being used to power advanced 32 bit
Intel processors at all of the leading computing companies including Compaq,
Dell Computer, Hewlett-Packard and IBM. We also have the technology available to
power the next generation of 64 bit processors.

Market-Focused Commercial Organization
During 2001, not only did we reduce our cost structure, but the commercial side
of our business was reorganized by customer and product line to allow it to
better identify technology trends and understand our end market customers. The
new organization will generate more accurate information on the product and
technology requirements of our customers on a more timely basis. We believe
this, in combination with our continued commitment to research and development,
will allow us to effectively serve customers in a rapidly changing technology
environment.

Alliance with Delta Electronics
We anticipate that our recently announced strategic alliance with Delta
Electronics will provide many opportunities for both companies. For example,
Delta has a large custom AC/DC business serving the personal computing market,
but it does not have a substantial portfolio of standout DC/DC and Point-of-Load
Products as we do. Delta has a very strong presence and customer relationships
in the fast-growing Asian markets, which could provide opportunities for both
companies. There are several other areas outside of product offerings and
customer base where working together could benefit both companies. We believe
that the strategic alliance with Delta will make us a much stronger competitor.

                              Products and Services

Power Conversion
All electronic systems require a steady supply of electrical power at one or
more voltage levels. AC/DC power supplies convert alternating electric current
(AC) (the form in which virtually all electric current is delivered by utility
companies) from a primary power source, such as a wall outlet, into the direct
current (DC) required to operate virtually all solid state electronic equipment.
DC/DC power supplies are used to convert a particular direct current voltage
into another (higher or lower) direct current voltage. Power supplies can also
be designed to perform diagnostic functions, protect equipment from power
surges, power outages or even the equipment's own malfunction. In addition,
certain power supplies may provide reserve power through the use of a short-term
battery back-up system when the electronic equipment's primary power source
fails.

We provide standard products, modified standard products and custom products.
Standard products, which are manufactured based on standard platforms and
offered to customers off-the-shelf, provide for rapid time-to-market and minimal
risk due to proven design. They are ideal for low to moderate volume
applications or for application specific requirements. Modified standard
products are slightly customized from an existing product platform to meet a
particular customer's special requirement. Custom products are developed
specifically for a single customer to its own specification. We maintain a group
of custom power supply designers and focus these resources on carefully selected
long-term opportunities with companies that are either leaders or emerging as
leaders in high growth markets. Whether standard, modified standard or custom,
our power conversion products fall into one of the following categories:

     .    AC/DC Power Supplies - These products represent the majority of our
          product sales, as they are used by almost every piece of electronic
          equipment powered from an AC outlet. Standard AC/DC power supplies
          include open-frame, closed-frame and external units, as well as a
          series of rack-mountable front-end power supplies for distributed
          power systems. Most are advanced switch mode designs. These products
          range in power from a few watts to several kilowatts.

                                       3
<PAGE>

     .    DC/DC Power - Due to the emergence of low-voltage, high performance
          silicon, the demand for DC/DC converters has grown rapidly in recent
          years. Our product portfolio includes converters with power outputs
          from 2W to 264W with output voltages as low as 1.1V and models with
          output currents as high as 80A. Many of our DC/DC products employ
          open-frame packaging to simplify thermal management, and many of our
          latest generation products use state-of-the-art synchronous
          rectification to provide unprecedented conversion efficiency.

          The latest trend in DC/DC power converters toward smaller,
          ultra-efficient low voltage converters has resulted in our newest line
          of DC/DC bricks. These products, which resulted primarily from our
          2000 acquisition of AzCore Technologies, meet our customers' requests
          to provide high-current, low-voltage solutions with the smallest
          possible footprint.

     .    Point-of-Load Power - One of the fastest growing DC/DC product areas
          is used to provide power in close physical proximity to the
          point-of-use and is referred to as "Point-of-Load" power supplies.
          Advanced processors, digital signal processors and memory chips can go
          from zero to a full load in millionths of a second, and the power
          supply must keep pace. In order to provide the low voltages, high
          currents and fast response time necessary, the power converter must be
          placed in close proximity to the point of use. Our products are being
          used to power advanced 32 bit Intel processors, and we have the
          technology available to power the next generation of 64 bit
          processors.

     .    External Power Supplies - These products, commonly referred to as
          adapters, are a special type of AC/DC power supply. External power
          supplies are provided in their own housing outside of the equipment
          being powered. Typically, these products range from a few watts of
          power to as much as 130W and are commonly used for mobile
          applications. We provide these products in high volume to makers of
          various types of terminals, modems and storage systems.

Many of our products are also used extensively in modular systems employing a
scheme known as Distributed Power Architecture or DPA. This architecture, which
uses several power supplies in order to provide an integrated power solution to
an end product, is quite commonly employed in larger networking and
communication systems. Typically, multiple power processing or conversion
locations and several power conversions are required to deliver the most
efficient use of power in the end product. DC/DC converters will be employed
alongside other products such as an AC/DC front end, a Point-of-Load converter
or a centralized DC/DC power supply. This type of architecture makes for very
reliable end products due to the efficient distribution of heat and lower
voltage levels.

Currently, an area of significant opportunity for us is the utilization of our
products in wireless applications. Typically, high efficiency DC/DC converters,
high density AC/DC front ends, Point-of-Load designs for switching current at
low voltages and external power supplies are utilized in wireless base stations
for communications networks and wireless access systems, such as wireless
internet providers. The technology in the market is changing so rapidly, our
customers in this arena need a highly capable, design-oriented partner to
provide low cost and highly automated solutions. We believe that our standard
product offerings, low total cost of ownership, automated manufacturing
techniques and semiconductor integration technology make us a preferred provider
to wireless customers.

Communications Products
We also provide the core communications technology and building blocks for
today's converging telecommunications networks. Product lines include high
performance CPU boards, telecom interfaces, protocol software, digital signal
processing boards and bundled sub-systems which have been delivered to many of
the top names in the telecom industry. Based on worldwide industry standards and
open systems technology such as PMC, PCI and CompactPCI(TM) for communication
between computer boards, these solutions can be used off-the-shelf or customized
to meet specific cost and performance requirements.

Our CPU boards typically function as embedded controllers in telecommunications
systems such as high-speed routers and switches, fiber optic transport systems
and cable headends.

                                       4
<PAGE>

Our primary product line includes communications interfaces, such as T1 or E1,
which are able to carry either voice or data. Integrated with our Spider(TM)
brand protocol software, these interfaces are employed in a wide range of
worldwide telecom and datacom systems, such as gateway/routers, switching, call
processing and wireless communications infrastructure.

Digital signal processors, or DSPs, are in high demand for the emerging Voice
over IP (VoIP) applications that have resulted from the convergence of telecom
and datacom networks. The VoIP market includes technology and products that
manage the transmission of information, both voice and data, from the
circuit-based public telephone network into the Internet. Our DSP cards are
deployed in VoIP gateways and servers and offer, what we believe to be,
industry-leading cost and density benefit for our customers.

                                    Strategy

Artesyn utilizes its product offerings (power supplies and embedded
communications controllers and software) to meet the needs of multinational OEM
customers who require sophisticated solutions and who are likely to have
substantial volume requirements. During 2001, one of our most immediate
objectives was to react to our changing business environment by restructuring
our Company to reduce cost, improve focus and strengthen our long-term
competitive position in preparation for the market's expected rebound. The key
elements of this strategy are as follows:

     .    Improved Economic Value

               We have reduced expenses and improved efficiency including
               consolidating facilities, while moving production to lower-cost
               manufacturing sites around the world. Where possible, we have
               tried to maintain flexibility, positioning these factories to
               respond to an increase in demand for new products. When fully
               implemented in 2002, these actions are expected to generate
               significant cost savings and provide strong economic value to our
               customers and shareholders.

     .    Enhanced Focus and Competitive Position

               A streamlined, focused company is able to react quickly to
               capture market opportunities. During 2001, we recognized a
               technology shift and reorganized our power business to focus on
               customers in what we call the Enterprise Computing and
               Communications Infrastructure sectors of the market. This
               exclusive focus on communications provides us with not only
               closer customer relationships, but also the ability to leverage
               the knowledge gained from such close relationships by introducing
               advanced products tailored to today's and tomorrow's market
               needs.

     .    Committed to Communications

               In spite of the slowdown in the technology market, a recent study
               showed that Internet backbone traffic doubled in 2001. This trend
               does not appear to be slowing and will continue to drive the
               future need for bandwidth and the associated infrastructure
               produced by our customers. Looking into the future, we believe
               there are few, if any, markets in electronics that promise the
               growth rates of communications. We believe we have become an
               industry leader in communications, and we intend to build upon
               our position.

                           Marketing and Distribution

Our products are sold directly to Original Equipment Manufacturers, or OEM's,
private-label customers and distributors. In addition, our sales and engineering
personnel supervise and provide technical assistance to independent domestic
sales representatives and to domestic and foreign distributors.

                                       5
<PAGE>

Although we seek to diversify both our customer and market application bases,
sales to Hewlett-Packard and Dell Computer represented 13% and 12%,
respectively, of fiscal year 2001 sales. Such sales to Hewlett-Packard include
sales from Artesyn Solutions, Inc. prior to the sale of the subsidiary in
December 2001. The sales from Artesyn Solutions Inc. to Hewlett-Packard
represent approximately 6% of the 13%. Sales from Artesyn Solution Inc. will not
be included in our consolidated results in the future.

We have derived a significant portion of our sales in recent years from our
international operations, primarily in China, Ireland and Austria. Thus, our
future operations and financial results could be significantly effected by
international factors, such as changes in foreign currency exchange rates or
political instability. Our operating strategy and pricing take into account
changes in exchange rates over time. However, our future results of operations
may be significantly effected in the short term by fluctuations in foreign
currency exchange rates. See Note 15, "Business Segments and Geographic
Information" of the Notes to Consolidated Financial Statements for additional
information.

                           Customers and Applications

The targeted customers and applications are generally the same in the Power
Conversion and Communications Products groups. These include market leaders and
emerging companies in the computing and communications markets. The applications
and key customers for our products can be grouped as follows:

Computing/Mass Storage                        Carrier/Enterprise Solutions
..    Brocade                                  .    Agilent
..    Compaq                                   .    Alcatel
..    Dell                                     .    Ciena
..    Hewlett-Packard                          .    Cisco
..    IBM                                      .    Ericsson
..    Intel                                    .    Marconi
..    Iomega                                   .    Siemens
..    Sun Microsystems

Network Access Technologies                   Wireless Infrastructure
..    3Com                                     .    Alcatel
..    Ciena                                    .    Ericsson
..    Cisco                                    .    Lucent
..    Lucent                                   .    Motorola
..    Nortel Networks                          .    Nokia
                                              .    Siemens

                            Materials and Components

The manufacture of our products requires a wide variety of materials and
components. We have multiple external sources for most of the materials and
components used in our production of off-the-shelf standard products. However,
as a result of the custom nature of our other products, components used in the
manufacture of these products are currently obtained from a limited number of
suppliers. We also manufacture certain components. We will continue to design
component flexibility into our manufacturing process, including identifying
alternative parts and suppliers. Due to the reduction in demand experienced
throughout our industry, the component supply problems we encountered in 1999
have been resolved.

We participate in an industry where customers are constantly expecting price
reductions and increased capability for our products due to the rapidly changing
technological environment in which we compete. As a result, we must continue to
secure adequate price reductions from our suppliers in order to keep our
products competitive. It is very important that the level of cost reductions for
raw materials maintain the same pace of cost reduction as is expected of our end
products. Maintaining these reductions and forecasting the expectations of our
end markets is key to the cost structure of our business.

                                       6
<PAGE>

                                  Manufacturing

We maintain a number of manufacturing facilities around the world. Most of the
high-volume, labor intensive products are manufactured in our facility in
Zhongshan, China. A smaller number of moderate to high-volume products are
manufactured at our factory in Kindberg, Austria for the wireless and
telecommunications markets. We operate facilities in Redwood Falls, Minnesota,
which manufactures higher value products in the low to moderate volume range,
Youghal, Ireland, which manufactures many of our highly automated DC/DC
products, and Tatabanya, Hungary, which manufactures mainly labor intensive
AC/DC products. We also maintain a low volume manufacturing facility in
Einsiedel, Germany that is primarily used for AC/DC products. Communications
products are manufactured exclusively in Madison, Wisconsin.

                          Intellectual Property Matters

Although our future success is dependent upon the technical competence and
creative skills of our personnel, we rely upon the protection of our patents and
other proprietary rights. We have protected certain of our products with patents
where appropriate and have defended, and will continue to defend, our rights
under these patents.

We currently maintain approximately 30 patents related to the technology we
market. We do not believe that any of these individual patents provide us with a
significant market position. The oldest of these patents expires in five to
seven years. Due to the rapidly changing technological environment, none of
these patents is responsible for a significant amount of current revenue.
Therefore, we do not believe there is significant risk associated with the
expiration of these patents.

                                     Backlog

Sales are generally made pursuant to purchase orders rather than long-term
contracts. Backlog consists of purchase orders on hand generally having delivery
dates scheduled within the next six months. Order backlog at December 28, 2001
was $92.4 million as compared to $231.5 million at December 29, 2000. Our
backlog level at the end of 2000 was historically high due to strong customer
demand and an industry-wide disruption in the supply of certain components used
in the manufacture of our products. This disruption caused a significant
increase in lead times required for us to produce certain products,
significantly increasing our backlog. The significant reduction in backlog in
comparison with fiscal 2000 is primarily due to the significant decrease in
customer demand the industry experienced in 2001, the resulting cancellation of
orders and shortened lead times from order to delivery. We expect to ship
substantially all of our December 28, 2001 backlog in the first six months of
2002.

                                   Competition

The industry in which we compete is highly competitive and characterized by
customer demands for improved product performance, shorter manufacturing cycles
and lower prices. These trends result in frequent introductions of new products
with added capabilities and features and continuous improvements in the relative
price/performance of the products. Increased competition could result in price
reductions, reduced profit margins and loss of market share, each of which could
adversely affect our results of operations and financial condition. Our
principal competitors include Delta Electronics, Emerson Electric, Magnetek,
Power-One and Tyco International. If our competitors consolidate, the resulting
combinations would likely result in entities with increased market share,
customer bases, proprietary technology, marketing expertise and an expanded
sales force. These developments may adversely affect our ability to compete in
such markets. Our broad strategies to deal with such competition include, but
are not limited to, a continued commitment to investment in research and
development, maintaining and expanding our relationships with customers in the
growth sectors of our industry and sales and technology ventures with industry
partners.

                            Research and Development

We maintain an active research and development department, which is engaged in
the modification and improvement of existing products and the development of new
products. Expenditures for research and development during fiscal years 2001,
2000, and 1999 were approximately $41.5 million, $44.9 million and $36.4
million, respectively. These amounts

                                       7
<PAGE>

represented 8.4%, 6.5%, and 6.1% of revenue in the respective periods presented.
Research and development spending decreased in absolute dollars during 2001 due
to the significant decrease in demand the industry experienced during the year.
We decided to reduce our total spending related to research and development
believing it is important to match our existing cost structure to our current
level of customer demand. We believe, however, that the percentage of spending
for research and development is among the highest in our industry, reflecting
our commitment to maintaining our level of timely introduction of new technology
and products.

                                    Employees

We presently employ approximately 2,400 full-time people. In addition, we
presently have approximately 2,800 temporary employees and contractors, the
majority of whom are at our facility in China. Our ability to conduct our
present and proposed activities would be impaired if we lost the services of a
significant number of our engineers and technicians and could not readily
replace them with comparable personnel. Although there is demand for qualified
technical personnel, we have not, to date, experienced difficulty in attracting
and retaining sufficient engineering and technical personnel to meet our needs
and business objectives. None of our domestic employees is covered by collective
bargaining agreements.

                              Environmental Matters

Compliance with federal, state, local and foreign laws and regulations
regulating the discharge of materials into the environment has not had and,
under present conditions, we do not anticipate that such laws and regulations
will have a material effect on our results of operations, capital expenditures,
financial condition or competitive position.

ITEM 2. Properties
        ----------

We currently occupy approximately 856,600 square feet of office and
manufacturing space worldwide. Approximately 63% of the space utilized by
Artesyn is owned while 37% is leased. We maintain the following facilities
excluding the facilities abandoned pursuant to the restructuring plan:

<TABLE>
<CAPTION>
                                                                                   Approximate
                                                                                     Square       Owned vs
     Facility               Primary Activity               Segment                  Footage        Leased
----------------------------------------------------------------------------------------------------------
<S>                    <C>                            <C>                            <C>          <C>
Boca Raton, FL         Corporate Headquarters         Corporate                        8,700      Leased
Eden Prairie, MN       Engineering, Administration    Power Conversion                28,000      Leased
Edinburgh, Scotland    Engineering, Administration    Communications Products          6,000      Leased
Einsiedel, Germany     Manufacturing                  Power Conversion                28,400       Owned
Framingham, MA         Engineering, Administration    Power Conversion                26,000      Leased
Fremont, CA            Engineering, Administration    Power Conversion                51,000      Leased
Hong Kong, China       Engineering, Administration    Power Conversion               144,900       Owned
Kindberg, Austria      Manufacturing                  Power Conversion                75,000      Leased
Madison, WI            Manufacturing                  Communications Products         45,000       Owned
Madison, WI            Administration                 Communications Products         15,000      Leased
Redwood Falls, MN      Manufacturing                  Power Conversion               117,000       Owned
Redwood Falls, MN      Manufacturing                  Power Conversion                72,000      Leased
Tatabanya, Hungary     Manufacturing                  Power Conversion               118,000       Owned
Tuscon, AZ             Engineering                    Power Conversion                 5,000      Leased
Vienna, Austria        Engineering, Administration    Power Conversion                20,600      Leased
Wall, NJ               Engineering                    Communications Products          3,000      Leased
Westminster, CO        Engineering                    Power Conversion                 7,000      Leased
Youghal, Ireland       Manufacturing                  Power Conversion                86,000       Owned
</TABLE>

In addition to the above locations we have leased sales offices located in or
near Amsterdam, The Netherlands; Munich, Germany; and Paris, France. We consider
the facilities described in this Item to be adequate for our current needs.

                                       8
<PAGE>

ITEM 3. Legal Proceedings
        -----------------

On February 8, 2001, VLT, Inc. and Vicor Corporation filed a lawsuit against
Artesyn in the United States District Court of Massachusetts alleging that
Artesyn has infringed and is infringing on U.S. Reissue Patent No. 36,098
entitled "Optimal Resetting of The Transformer's Core in Single Ended Forward
Converters". VLT and Vicor have alleged that they are, respectively, the owner
and licensee of such patent and that Artesyn has manufactured, used or sold
electronic power converters with reset circuits that fall within the claims of
the patent. The suit requests that we pay damages, including royalties, lost
profits, interest, attorneys' fees and increased damages under 35 U.S.C. s.284.
We have challenged the validity of the patent and have denied the claims of the
infringement. The parties are currently in litigation discovery and no trial
date has yet been set. Although we believe that we have a strong defense to the
claims asserted by VLT and Vicor, if we are found liable to pay all of the
damages requested by VLT and Vicor, such a payment could have a material adverse
effect on our business, operating results and financial condition.

The patent applies to sales of products that included the technology in question
from the middle of 1996 through early 2002. The plaintiffs are requesting a
royalty to be paid relating to the sales in question. We continue to assert that
the patent was not valid and that the technology included in the products sold
did not infringe on the patent. The process has not progressed to the point
where any determination of the outcome can be reasonably estimated.

The claims against us relating to the patent in dispute involve compensation for
sales booked prior to the expiration of the patent, which occurred in early
February 2002. We believe no future sales related to this patent or similar
technology are at risk.

We are a party to various other legal proceedings which have arisen in the
ordinary course of business. While the results of these matters cannot be
predicted with certainty, we believe that losses, if any, resulting from the
ultimate resolution of these matters will not have a material adverse effect on
our consolidated results of operations, cash flows or financial position.

ITEM 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 28, 2001.

ITEM 4A. Executive Officers
         ------------------

The information required by Item 4A is included in this report as part of Item
10 in Part III.

PART II

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
        ---------------------------------------------------------------------

Our common stock is traded on The Nasdaq National MarketSM under the symbol
ATSN. High and low sales prices by quarter for the common stock appear in Note
16 of the Notes to Consolidated Financial Statements entitled "Selected
Consolidated Quarterly Data" accompanying this report.

As of December 28, 2001, there were approximately 13,352 holders of record of
our common stock. We believe that, in addition, there are a significant number
of beneficial owners of our common stock whose shares are held in "street name".

To date, we have not paid any cash dividends on our capital stock. The Board of
Directors presently intends to retain all of our earnings for use in our
business and does not anticipate paying cash dividends in the foreseeable
future. In addition, the payment of dividends is prohibited by our current
credit agreement. However, on July 22, 1998, the Board of Directors authorized a
share repurchase program to purchase up to 4.0 million shares of common stock in
the open market or in privately-negotiated transactions, depending on market
conditions and other factors. As of December 28, 2001, we had repurchased and
retired 3,737,700 shares of our common stock for a total of approximately $62.8
million in cash. The authorization to repurchase shares expired in July 2001.

                                       9
<PAGE>

ITEM 6. Selected Financial Data
        -----------------------

The following table sets forth certain of our selected financial information.

For  the  Years  Ended  on  the Friday Nearest December 31
(Dollars in Thousands Except Per Share Data)

<TABLE>
<CAPTION>
                                                           2001          2000         1999         1998         1997
                                                         -------------------------------------------------------------
<S>                                                      <C>           <C>          <C>          <C>          <C>
Results of Operations

Sales                                                    $493,968      $690,083     $594,155     $532,392     $527,236
Income (loss) from continuing operations                  (31,763)       43,253       43,362       27,044       31,882
     Per share - basic                                      (0.83)         1.15         1.16         0.70         0.87
     Per share - diluted                                    (0.83)         1.10         1.11         0.67         0.80
Net income (loss)                                         (31,763)       43,253       43,362       27,044       29,820
     Per share - basic                                      (0.83)         1.15         1.16         0.70         0.81
     Per share - diluted                                    (0.83)         1.10         1.11         0.67         0.75

Financial Position

Working capital                                          $152,776      $176,113     $127,637     $120,970     $115,822
Property, plant & equipment, net                          103,291       105,059       88,468       75,032       61,581
Total assets                                              426,483       497,815      359,050      325,392      322,177
Long-term debt and capital lease obligations              100,399        73,301       44,154       50,283       52,949
Total debt                                                100,606        74,813       46,110       52,990       68,547
Shareholders' equity                                      219,245       256,512      199,912      181,088      162,676
Total capitalization                                      319,851       331,325      246,022      234,078      231,223

Financial Statistics

Selling, general and administrative expenses (includes
    amortization of goodwill)                             $62,138       $68,979      $52,404      $54,548      $52,058
   - as a % of sales                                         12.6%         10.0%         8.8%        10.2%         9.9%
Research and development expenses                          41,470        44,867       36,413       33,401       30,032
   - as a % of sales                                          8.4%          6.5%         6.1%         6.3%         5.7%
Operating income (loss)                                   (31,945)       67,139       64,861       41,981       52,443
   - as a % of sales                                         (6.5)%         9.7%        10.9%         7.9%         9.9%
Total debt as a % of total capitalization                    31.4%         22.6%        18.7%        22.6%        29.6%
Debt to equity ratio                                         45.9%         29.2%        23.1%        29.3%        42.1%
Interest coverage (shortfall) ratio                         (3.77)        13.42        21.01        11.06        11.00

Other Data

Capital expenditures                                      $28,763       $39,256      $33,359      $26,795      $22,231
Depreciation and amortization                             $34,423       $27,195      $20,109      $16,898      $13,561
Common shares outstanding (000's)                          38,253        38,282       37,127       37,882       38,381
Employees                                                   2,427         5,227        4,628        4,290        4,219
Temporary employees and contractors                         2,818         3,960        3,269        2,326        2,663
</TABLE>

                                       10
<PAGE>

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operations
        -------------

The following discussion should be read in conjunction with the consolidated
financial statements and related notes as well as the section under the heading
Risk Factors that May Affect Future Results. With the exception of historical
information, the matters discussed below may include forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. We caution readers that a number of important
factors, including those identified in the section entitled Risk Factors that
May Affect Future Results, as well as factors discussed in our other reports
filed with the Securities and Exchange Commission, could affect our actual
results and cause them to differ materially from those expressed in the
forward-looking statements. Many forward-looking statements included in this
Form 10-K are made only as of the date hereof, based on information available as
of the date hereof, and subject to applicable law to the contrary, the Company
assumes no obligation to update any forward looking statements.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business
operations and an understanding of our results of operations. The listing is not
intended to be a comprehensive list of all of our accounting policies. In many
cases, the accounting treatment of a particular transaction is specifically
dictated by accounting principles generally accepted in the United States, with
no need for management's judgment in their application. The impact and any
associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis of Financial Condition
and Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 1 in the Notes to the Consolidated Financial
Statements in Item 14 on Form 10-K, beginning on page 37. Note that our
preparation of this Form 10-K requires us to make estimates and assumptions that
affect the reported amount of assets and liabilities, disclosure of contingent
assets and liabilities at the date of our financial statements, and the reported
amounts of revenue and expenses during the reporting period. There can be no
assurance that actual results will not differ from those estimates.

Revenue recognition and accounts receivable
We recognize revenue and the related costs of sales as products are shipped and
title is passed to the customer or as services are provided. Provisions for
estimated returns and sales allowances are established concurrently with the
recognition of revenue and are based on a variety of factors including actual
return and sale allowance history and projected economic conditions. We
regularly monitor customer inventory levels and make adjustments to these
provisions when management believes actual product returns or other allowances
may differ from established reserves. While actual return and allowance rates
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same rates that we
have in the past. Any significant increase in returns or sales allowances could
have a material adverse impact on our operating results for the period or
periods in which such provisions materialize.

We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and the customers' current credit worthiness, as
determined by our review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated credit losses based upon our historical experience and any specific
customer collection issues that we have identified. While such credit losses
have historically been within our expectations and the provisions established,
we cannot guarantee that we will continue to experience the same credit loss
rates that have occurred in the past. Our accounts receivable balance as of
December 28, 2001 was $72.6 million, net of allowance for doubtful accounts of
$4.1 million.

Inventories
We value our inventory at the lower of the actual cost to purchase and/or
manufacture the inventory or the current estimated market value of the
inventory. We regularly review inventory quantities on hand and record a
provision for excess and obsolete inventory based primarily on our estimated
forecast of product demand and production requirements for the following twelve
months. As demonstrated during 2001, demand for our products can fluctuate
significantly. A significant decrease in demand could result in an increase in
the amount of excess inventory quantities on hand. Additionally, our estimates
of future product demand may prove to be inaccurate, in which case we may have
understated or overstated the provision required for excess and obsolete
inventory. In the future, if our inventory is determined to be overvalued, we
would be required to recognize such costs in our cost of goods sold at the time
of such determination. Therefore, although we make every effort to ensure the
accuracy of our forecasts of future product demand, any significant
unanticipated changes in demand or technological developments could have a
significant impact on the value of our inventory and our reported operating
results.

                                      11
<PAGE>

Warranties
We offer warranties of various lengths to our customers depending upon the
specific product and terms of the customer purchase agreement. Our standard
warranties require us to repair or replace defective products returned to us
during such warranty period at no cost to the customer. We record an estimate
for warranty related costs based on our actual historical return rates and
repair costs at the time of sale. While our warranty costs have historically
been within our expectations and the provisions established, we cannot guarantee
that we will continue to experience the same warranty return rates or repair
costs that we have in the past. A significant increase in product return rates,
or a significant increase in the costs to repair our products, could have a
material adverse impact on our operating results for the period or periods in
which such returns or additional costs materialize.

Goodwill
We continually evaluate whether events and changes in circumstances warrant
revised estimates of useful lives or recognition of an impairment loss of
unamortized goodwill. The conditions that would trigger an impairment assessment
of unamortized goodwill include a significant, sustained negative trend in our
operating results or cash flows, a decrease in demand for our products, a change
in the competitive environment and other industry and economic factors. We
measure impairment of unamortized goodwill utilizing the undiscounted cash flow
method. The estimated cash flows are then compared to our goodwill amounts; if
the unamortized balance of the goodwill exceeds the estimated cash flows, the
excess of the unamortized balance is written off. As of December 28, 2001, we
determined that there has been no impairment of goodwill.

We will adopt SFAS No. 142 in the first quarter of 2002. With the adoption of
SFAS No. 142, we will assess the impact based on a two-step approach to assess
goodwill based on applicable reporting units and will reassess any intangible
assets, including goodwill, recorded in connection with our previous
acquisitions. We had recorded approximately $8.1 million of amortization on
goodwill during 2001 and would have recorded approximately $9.0 million of
amortization during 2002. In lieu of amortization, we are required to perform an
initial impairment review of our goodwill in 2002 and an annual impairment
review thereafter. We are currently assessing, but have not yet determined the
impact the adoption of SFAS No. 142 will have on our consolidated financial
statements. As of December 28, 2001, we had unamortized goodwill of $64.6
million.

Accounting for income taxes
As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes in each of the jurisdictions in which
we operate. This process involves us estimating our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items for tax and accounting purposes. These differences result in deferred
tax assets and liabilities, which are included within our consolidated balance
sheet. We must then assess the likelihood that our deferred tax assets will be
recovered from future taxable income and to the extent we believe that recovery
is not likely, we must establish a valuation allowance. To the extent we
establish a valuation allowance or increase this allowance in a period, we must
include an expense within the tax provision in the consolidated statement of
operations.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities and any valuation
allowance recorded against our net deferred tax assets. We have recorded a
valuation allowance of $2.9 million as of December 28, 2001, due to
uncertainties related to our ability to utilize some of our deferred tax assets,
primarily consisting of certain net operating losses carried forward and foreign
tax credits, before they expire. The valuation allowance is based on our
estimates of taxable income by jurisdiction in which we operate and the period
over which our deferred tax assets will be recoverable. In the event that actual
results differ from these estimates, or we adjust these estimates in future
periods, we may need to establish an additional valuation allowance which could
materially impact our financial position and results of operations. The net
deferred tax asset as of December 28, 2001 was $15.8 million, net of the
valuation allowance.

                                       12
<PAGE>

Results of Operations

2001 Compared to 2000

Consolidated

Sales. Sales for the fiscal year ended December 28, 2001 were $494.0 million
compared to $690.1 million in fiscal 2000, a decrease of $196.1 million or 28%.
The decrease in sales is primarily the result of a significant and unexpected
reduction in demand that we experienced from most of our major customers across
our product lines. Our expectations are that general market conditions will
continue to be weak in the first half of 2002, and we do not expect increases in
revenue in comparison with the fourth quarter of 2001 until the second half of
the year. During the second half of the fiscal year, our current forecasts
indicate that some modest growth should occur. Any forecast of growth is
dependent on growth in our customers' end markets and a reduction in our
customers' levels of inventory.

The weakness in customer demand is further reflected in the levels of orders and
backlog reported during fiscal 2001. Orders booked in 2001 were $361.7 million,
a decrease of $424.0 million or 54% from the $785.7 million booked in 2000.
Backlog, which consists of purchase orders on hand having delivery dates
scheduled within the next six months, decreased $139.1 million or 60% from
$231.5 million on December 29, 2000 to $92.4 million on December 28, 2001. As
with sales, we do not anticipate significant changes in the level of orders or
backlog for the first half of 2002 in comparison with 2001 until end-user demand
returns.

Gross Margin. Gross margin decreased $124.7 million, or 69%, to $56.3 million in
fiscal 2001 from $181.0 million in fiscal 2000. As a percent of revenue, gross
margin decreased to 11.4% for fiscal 2001 compared to 26.2% for fiscal 2000.
Included in the 2001 results is a charge of approximately $16.0 million for
increased excess and obsolete inventory reserve taken during the period outside
of our normal adjustments, accounting for approximately 3% of the decrease in
gross margin as a percentage of revenue. The charges were recorded in cost of
sales, reducing gross margin by that amount during the period. During early
2001, we had purchased raw materials and manufactured finished goods to fulfill
orders cancelled or delayed as customer demand unexpectedly decreased. This
resulted in a significant increase in inventory during the first half of 2001.
The increase in the excess and obsolete inventory reserve is the result of the
overall increase in inventory. Inventory levels have been significantly reduced
in the second half of 2001, and we do not anticipate additional charges to
inventory outside of our normal adjustments if sales reach anticipated levels.

In addition to the inventory charge, the decrease in gross margin is primarily
the result of the decrease in revenue experienced in the period (approximately
$50.0 million). Gross margin was negatively impacted to a lesser extent by
manufacturing inefficiencies and mix and pricing issues. Manufacturing
inefficiencies resulted from the decrease in demand, which lowered plant
utilization, reducing the absorption of costs, and resulting in lower gross
margins (approximately $25.0 million). Included in the mix and pricing issues
were a decline in sales of several long-running, high-margin, custom products
and the start-up costs of new programs that began to ship during 2001. We expect
to see modest improvement in the margin for these start-up programs during 2002,
but we do not anticipate a significantly higher gross margin as a percent of
revenue until overall demand increases and the effect of the manufacturing
inefficiencies is eased.

Gross margins were also negatively impacted during 2001 throughout the company
by raw material supply and pricing issues. The component supply problems we
experienced throughout fiscal year 2000 eased or were eliminated in the first
half of 2001, and many of our suppliers were able to fulfill orders placed in
previous periods. The commitments to purchase these components, however, had
been locked in during 2000 at premium prices during a time of supply shortage
and strong customer demand for our products, which resulted in our purchasing
components at premium prices that we could not pass along to our customers.

Our industry normally experiences a constant reduction in component pricing due
to technological innovation and relatively short product life cycles. We would
normally expect to take advantage of significant reductions in the price of
certain components during 2002. However, we expect to continue reducing
inventory levels which lowers our component purchases and limits the extent to
which we take advantage of normal reductions in component prices. This will
continue to have a negative effect on gross margins during 2002.

                                       13
<PAGE>

During the second quarter of 2001, we announced we would initiate company-wide
cost saving measures in order to match our level of expenses with the reduced
level of demand for our products. The result of these measures is the
restructuring plan discussed in "Restructuring and Related Charges" below. As
part of the restructuring plan, we closed our Broomfield, Colorado manufacturing
facility, our Huntington Beach, California product renewal center, and several
other administrative and engineering offices worldwide. We also announced that
we would close our Oberhausen, Germany manufacturing facility in the first
quarter of 2002. All functions provided by these facilities have been
consolidated into other locations throughout the world. The cost reduction
initiatives implemented in both operating segments during 2001 included factory
work force reduction, shortened work weeks and restrictions on discretionary
spending. We are committed to making sure our cost structure is in line with the
level of customer demand we are experiencing. To that end, if we feel it is
necessary to make additional cost reductions during 2002 due to the degree of
the industry slowdown or state of the overall economy, we are prepared to do so.

The restructuring initiatives, reduction in capacity and transfer of production
to low-cost facilities should have some positive impact on the manufacturing
inefficiencies experienced during 2001. We expect modest improvement in overall
gross margin as a percent of revenue in 2002 in comparison with 2001 as a result
of the cost savings initiatives.

Operating Expenses. Selling, general and administrative expenses were $54.1
million, or 11% of sales, for the fiscal year ended December 28, 2001 compared
to $62.8 million, or 9% of sales, for the comparable prior year period.

In response to the significant decrease in customer demand experienced during
2001, we have implemented several cost savings plans to reflect our reduced
level of customer demand. Our initial expectations for 2001 included revenue
growth over comparable 2000 periods. In order to administer anticipated growth,
we increased our investment in infrastructure and personnel in late 2000 and
early 2001 leading to higher operating expenses on an actual dollar basis. When
this growth did not materialize, we took steps, which are discussed below in
"Restructuring and Related Charges", to reduce infrastructure and personnel to
maintain the proper relationship between operating expenses and revenue. These
steps included closure of engineering and administrative facilities and
headcount reductions. These cost savings initiatives are the primary reason
behind the dollar reduction in selling, general and administrative expenses in
fiscal 2001 in comparison to the applicable period in 2000. The initiatives are
also the primary reason that selling, general and administrative expenses are
expected to decrease in 2002, on an actual dollar basis, in comparison with the
applicable 2001 periods, especially for the first half of the year.

Research and development expenses totaled $41.5 million, or 8% of sales, in
fiscal 2001 compared to $44.9 million, or 7% of sales, for fiscal 2000. While we
have reduced our research and development expenses to maintain an appropriate
relationship with revenue, we will maintain our commitment to invest in research
and development activities. The timely introduction of new technology and
products will continue to be an integral component of our competitive strategy.
We expect the level of quarterly research and development expenses to continue,
on an actual dollar basis, to be consistent with the level in the second half of
2001. We do not anticipate material increases in the actual dollar commitment to
research and development until demand recovers.

Restructuring and Related Charges. During 2001, we implemented a plan to
restructure certain of our operations as a result of the significant reduction
in customer demand experienced during 2001. The reduction in customer demand
resulted in our having excess manufacturing capacity and costs. The
restructuring plan is designed to address these issues and is comprised of the
following elements:

     1)   A realignment of our commercial functions along customer/market lines
          in order to provide our customers with enhanced service.

     2)   Addressing certain excess capacity and cost issues by closing several
          operating and administrative facilities throughout the world and
          consolidating their functions into other existing locations.

     3)   The elimination of certain operational and administrative positions
          company-wide.

Pursuant to our restructuring plan, we recorded a pre-tax restructuring charge
of approximately $15.9 million. The remaining restructuring accrual at December
28, 2001 is included in Accounts Payable and Accrued Liabilities in the

                                       14
<PAGE>

accompanying consolidated statement of financial position. The components of
this charge, along with the 2001 activity, are presented in the following table
($000s).

<TABLE>
<CAPTION>
                                                            2001 Activity
                                               -------------------------------------
                                Accrued                                                      Accrued
                              Liability at                                                Liability at
                              December 29,     Restructuring                               December 28,
                                  2000            Charge          Cash       Non-Cash         2001
                              ------------     -------------     ------      --------     -------------
<S>                             <C>              <C>              <C>         <C>             <C>
Facility closures               $   153          $ 7,226          $1,465      $2,765          $3,149
Employee termination costs          255            8,687           6,659          --           2,283
                                -------          -------          ------      ------          ------
                                $   408          $15,913          $8,124      $2,765          $5,432
                                =======          =======          ======      ======          ======
</TABLE>

The charge for facility closures primarily includes write-downs, of equipment,
property and other fixed assets to be disposed of or abandoned at locations that
have been closed, to estimated fair value considering the asset condition,
current market factors and third party offers. The remaining accrued liability
represents our estimate of future lease commitments and buyout options after
considering sublease opportunities for certain of our leased facilities in
Broomfield Colorado; Huntington Beach, California; Fremont, California;
Framingham, Massachusetts; Boca Raton, Florida; Etten-Leur, The Netherlands;
Edinburgh, Scotland; and Madison, Wisconsin. The lease liability is estimated
based on contract provisions and historical and current market rates. This
estimate can be materially affected by changes in market conditions. We
anticipate that the closure of facilities and disposal of assets will be
completed during 2002. Lease payments for the closed facilities extend into
2006. Although we are aggressively marketing these locations for subleases on
acceptable terms, the ultimate time required to obtain acceptable subleases may
extend beyond our estimates.

The restructuring plan includes the termination and payment of related severance
benefits for approximately 1,100 employees (600 direct labor, 300 indirect labor
and 200 administrative), of which approximately 1,000 have been terminated as of
December 28, 2001. The remaining terminations and associated payments are based
on our policies, commitments and statutory requirements and are expected to be
made during 2002.

As part of ongoing restructuring efforts, we expect to record additional
restructuring charges of approximately $1.0 million during 2002 for an expected
total charge of approximately $17.0 million.

Gain on Sale of Artesyn Solutions. During the fourth quarter of 2001, we sold
our repair and logistics business, Artesyn Solutions, to Solectron Global
Services Inc. Included as a reduction in operating expenses in fiscal 2001 is
the pre-tax gain on the sale of the subsidiary of $31.3 million. The net
proceeds from the transaction were used to pay down long-term debt.

Amortization of Goodwill. Amortization expense for fiscal 2001 was $8.1 million,
an increase of $1.9 million, or 31%, over the comparable 2000 period. These
increases were the result of amortization expense related to goodwill from the
acquisition of Spider Software, AzCore Technologies and Real-Time Digital.

During 2001, the Financial Accounting Standards Board enacted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets".
With the adoption of SFAS 142 in the first quarter of 2002, goodwill is no
longer subject to amortization. Rather, goodwill will be subject to an annual
assessment for impairment using a fair-value based test. This means that there
will be no amortization of goodwill in 2002 and beyond. We are currently
assessing, but have not yet determined, the impact that SFAS 142 will have on
our financial statements.

Operating Income (Loss). Total operating loss for fiscal 2001 was $31.9 million
compared with operating income of $67.1 million in fiscal 2000. The primary
reasons for the decrease were the industry-wide decrease in demand experienced
in 2001 along with the other factors discussed in Gross Margin. Included in the
operating loss in 2001 was the additional excess and obsolete inventory reserve
of $16.0 million and the restructuring charges of $15.9 million, offset by the
gain on sale of Artesyn Solutions of $31.3 million.

                                       15
<PAGE>

Interest Expense, Net. Interest expense, net of interest income for fiscal 2001,
increased from $3.3 million in the comparable 2000 period to $7.3 million, or
121%. This increase was primarily the result of additional outstanding
borrowings related to the use of operating cash flow to fund the increase in
working capital (see Liquidity and Capital Resources) in the first half of 2001,
borrowings related to the acquisition of Spider Software and available cash used
for the acquisition of AzCore Technologies and Real-Time Digital.

In the first quarter of 2001, we entered into a new credit agreement. We were
out of compliance with the covenant requirements contained in this credit
agreement at the end of the third quarter of 2001. At that point, we obtained a
waiver related to these covenants from our syndicate of banks and began the
process of amending our credit agreement, taking into account the new business
conditions we experienced in 2001. In the first quarter of 2002, we signed and
executed an amendment to our credit agreement. The amendment includes, among
other things, higher interest rates for the borrowings outstanding than the
previous version of the credit agreement that was in place, and revised
financial covenants. We are currently in compliance with all such covenants.

On January 15, 2002, we received a $50.0 million investment from Finestar
International Limited, an entity controlled by Mr. Bruce Cheng, founder and
chairman of Delta Electronics, a leading global power supply, electronic
component and video display manufacturer and one of our competitors. The $50.0
million investment was made through the issuance of a five-year subordinated
convertible note and warrants to purchase 1,550,000 shares of our common stock.
A portion of the cash received from the transaction with Finestar International
was used to pay down our senior debt related to the credit agreement. Interest
expense in future periods will include interest and accretion related to the
instruments issued in connection with this transaction.

Overall, the effect of the additional interest expense from higher interest
rates in the amended credit agreement and interest related to the convertible
debt will be approximately offset by the reduction of interest expense resulting
from a lower level of outstanding borrowings in 2002 on the revolving credit
agreement due to the sale of Artesyn Solutions and the investment by Finestar
International. Interest expense, net for fiscal 2002 should be comparable to
levels experienced in fiscal 2001.

Provision (benefit) for Income Taxes. In fiscal 2001, a benefit for income taxes
of 19% of the pretax loss was recorded compared to a tax provision of 32% of
pretax income recorded in fiscal year 2000. The change in our effective tax rate
is primarily attributable to the geographic distribution of losses in 2001 along
with certain tax benefits that could not be utilized in certain countries in
2001, resulting in the creation of valuation allowances in those locations. In
2002, we expect that our effective tax rate will return to a level similar to
the one experienced in 2000, assuming we return to profitability. For additional
information regarding income taxes, refer to Note 8 of the Notes to Consolidated
Financial Statements.

Net Income (Loss). The net loss for fiscal 2001 was $31.8 million, or $0.83 per
diluted share, compared to net income of $43.3 million, or $1.10 per diluted
share, for the comparable period in fiscal 2000. The net loss resulted primarily
from the significant reduction in customer demand we experienced in the first
half of 2001, and the inventory and restructuring charges recorded in fiscal
year 2001 as discussed above.

Power Conversion

Sales. Sales for our Power Conversion segment were $392.4 million in fiscal year
2001 compared to $567.2 million in fiscal year 2000, a decrease of $174.8
million or 31%. Power Conversion was significantly affected by the decrease in
revenue in 2001 across all of its markets. Our expectations are that general
market conditions will continue to be weak for Power Conversion in the first
half of 2002. We do not expect increases in revenue in comparison with the
fourth quarter of 2001 until the second half of the year. During the second
half, our current forecasts indicate that some modest growth should occur.
However, there can be no assurance this will be the case.

Operating Income (Loss). Operating loss for our Power Conversion segment was
$60.9 million in fiscal 2001 compared to operating income of $48.0 million in
fiscal 2000. The difference in the two periods is primarily the result of the
significant decrease in demand experienced in 2001 (approximately $40.0
million), resulting in significantly fewer margin dollars to cover operating
expenses. The excess and obsolete inventory charges of approximately $15.5
million and restructuring

                                       16
<PAGE>

charges of approximately $13.8 million also negatively impacted operating income
in Power Conversion. To a lesser extent, manufacturing inefficiencies, volume
and sales mix issues, and material pricing issues discussed above also
contributed to the change in operating income (loss) from fiscal 2000 to fiscal
2001.

Communications Products

Sales. Sales for our Communications Products segment for fiscal year 2001 were
$55.8 million compared to $75.8 million in fiscal 2000, a decrease of $19.9
million or 26%. The decrease in revenue is the result of decreased demand from
customers in all markets served by Communications Products. It is our current
expectation that the level of revenue from Communications Products will be flat
or modestly lower in the first half of 2002 in comparison to the level of
revenue recorded in the fourth quarter of 2001. Our forecast is dependent on
growth in our customers' end markets and a reduction in our customers' levels of
inventory.

Operating Income (Loss). Operating loss for our Communications Products segment
was $4.9 million in fiscal 2001 compared to operating income of $15.5 million in
fiscal 2000. The difference in operating income in comparison to 2000 was
primarily the result of the significant decrease in revenue experienced in 2001
(approximately $11.0 million), resulting in significantly fewer margin dollars
to cover operating expenses. To a lesser extent, restructuring charges,
manufacturing inefficiencies and sales and volume mix issues discussed above
also contributed to the change in operating income (loss) from fiscal year 2000
to fiscal year 2001 in Communications Products.

2000 Compared to 1999

Consolidated

Sales. Sales for fiscal year 2000 increased 16% to $690.1 million from $594.2
million reported in fiscal year 1999 primarily due to increases in sales in the
Communications Products segment (approximately $37.0 million) and increased
sales to distribution customers in Power Conversion (approximately $25.0
million).

Orders for fiscal year 2000 were $785.7 million compared to $639.9 million
fiscal year 1999. On December 29, 2000, our order backlog was $231.5 million
compared to $140.4 million on December 31, 1999, representing a 65% increase.

Gross margin. Gross margin increased $27.3 million, or 18%, to $181.0 million in
2000 from $153.7 million in 1999. As a percent of sales, gross margin increased
slightly to 26.2% in fiscal 2000 compared to 25.9% in fiscal 1999. The increase
in gross margin was primarily the result of a favorable change in volume and
sales mix during 2000 (approximately $39.0 million) somewhat offset by higher
cost of sales due to premiums paid for obtaining certain components to fill
orders that had been booked. Throughout 2000, we experienced a disruption in the
supply of certain components, mainly tantalum capacitors and magnetics, which
reduced sales and kept us from filling certain orders. In order to obtain as
many of these parts as possible, we paid premiums to suppliers to ensure an
adequate supply. During 2000, these premiums had a negative effect on our gross
margin as a percent of sales.

Sales in our Communications Products segment were a higher percentage of total
sales in fiscal 2000 in comparison to fiscal 1999. Generally, the Communications
Products segment experiences higher gross margin than the Power Conversion
segment. This was the primary factor contributing to the positive impact of the
change in sales mix.

Operating expenses. Selling, general and administrative expenses were $62.8
million, or 9% of sales, in fiscal 2000 compared to $50.2 million, or 8% of
sales, in fiscal 1999. This increase is primarily the result of higher selling
and administrative expenses to promote the growth of revenue in 2000. In
addition, operating expenses were impacted by an increase in the amount of
commissions paid in fiscal 2000 in comparison with fiscal 1999 (approximately
$2.0 million), due to the increase in sales of standard products in the Power
Conversion segment and increases in sales in the Communications Products
segment. These products generally require higher commission rates than sales of
other products.

                                       17
<PAGE>

We increased our long-term commitment to new products by investing $44.9
million, or 6.5% of sales, in research and development activities during fiscal
2000 compared to $36.4 million, or 6.1% of sales, in fiscal 1999. In addition,
development expenses at Spider Software and AzCore Technologies (approximately
$2.1 million) also contributed to the increase. The dollar increase is the
result of our competitive strategy to continue to invest in the timely
introduction of new technology and products.

Operating Income. Operating income for the fiscal 2000 was $67.1 million, an
increase of 4% compared to the same period in 1999.

Interest Expense, net. Net interest expense in fiscal 2000 increased from $1.7
million in fiscal 1999 to $3.3 million in fiscal 2000, an increase of 97%. These
increases were primarily the result of additional outstanding borrowings related
to the acquisition of Spider Software.

Provision for Income Taxes. Provision for income taxes increased to 32.3% of
pretax income in fiscal 2000 from 31.4% in fiscal 1999. The effective tax rate
was higher in fiscal 2000 primarily due to the non-deductibility of amortization
expenses associated with the goodwill recorded related to the acquisitions of
Spider Software and AzCore Technologies in fiscal 2000. For additional
information regarding income taxes, refer to Note 8 of the Notes to Consolidated
Financial Statements.

Net Income. Net income for fiscal 2000 was $43.3 million, or $1.10 per diluted
share, compared to $43.4 million or $1.11 per diluted share for the previous
year. Net income was essentially the same in fiscal 2000 in comparison to fiscal
1999 despite a significant increase in sales. The increase in sales was offset
by amortization of goodwill related to the acquisitions of Spider Software and
AzCore Technologies, increased prices paid for critical components as discussed
above and increases in operating expenses and interest expense.

Power Conversion

Sales for the Power Conversion segment in 2000 were $567.2 million compared to
$516.7 million in fiscal 1999, an increase of 10%. The increase is the result of
improved volume, including higher sales of DC/DC power converters and higher
sales to distribution customers.

Operating income for Power Conversion was $48.0 million in fiscal 2000 in
comparison to $52.2 million in 1999, a decrease of 8%. The decrease is primarily
the result of increased cost of sales due to the premiums paid for critical
components in 2001, which primarily affected the Power Conversion segment, along
with increased research and development expenses and commissions.

Communications Products

Sales for the Communications Products segment were $75.8 million compared to
$39.0 million in 1999, an increase of 94%. The increase was the result of
increased sales of embedded CPU boards and integrated communications products to
communications customers. Also contributing to the increase was the inclusion of
sales from Spider Software, which was acquired in the first quarter of 2000.

Operating income for the Communications Products segment was $15.5 million in
fiscal 2000 in comparison to $9.5 million in 1999, an increase of 63%. The
increase in operating income is primarily the result of the increased revenue
somewhat offset by higher operating expenses related to the increases in sales
and commissions paid.

Liquidity and Capital Resources

As of December 28, 2001, our cash and equivalents had increased to $54.1 million
from $34.4 million on December 29, 2000. This increase was primarily
attributable to increased collection of accounts receivable, decreases in
inventory, proceeds from the sale of Artesyn Solution Inc. and borrowings on our
line of credit offset by the cash impact of our net loss and

                                      18
<PAGE>

payments of accounts payable and accrued liabilities to the extent not
financed by borrowings under our credit agreement during 2001.

Cash provided by operations was $2.0 million for fiscal year 2001 compared with
cash provided by operations of $30.4 million in fiscal year 2000. Cash from
operations was impacted negatively by the impact of our 2001 net loss, payments
made related to the restructuring plan initiated in 2001 and payments of
accounts payable and accrued liabilities. These amounts were offset by increased
collections of accounts receivable and reductions in inventory in the period.
Although there were additional collections in 2001, there was no change in
credit or collection policy during the year. Additional resources were committed
to improving our collections, and a portion of the decrease is the result of
that change. The cash flow impact from accounts payable and accounts receivable
during 2001 is primarily a reflection of the decrease in customer demand
experienced in the period. The reduced level of business activity caused us to
reduce the rate at which new accounts payable are incurred and revenue is
invoiced.

Approximately $5.3 million of the reduction in accounts receivable and $2.7
million of the decrease in accounts payable was the result of the sale of
Artesyn Solutions, which occurred in the fourth quarter of 2001.

Our inventory balance of approximately $150.5 million at the end of 2000 was
high in comparison with our 2000 revenue and the inventory balance in previous
years. The inventory balance at the end of 1999 was $89.4 million. The increase
during 2000 was the result of the level of orders and backlog we had experienced
during the year. Additionally, long lead times from component suppliers required
higher levels of component inventory to be held.

During 2001, our inventory balance continued to be at a high level throughout
the first half of the year. We ordered components, allocated resources and set
production schedules based on the level of demand our customers had communicated
to us. However, this demand did not materialize. Our manufacturing schedule had
been set and raw materials had been procured for orders that were pushed out or
cancelled. At the end of the first quarter, our inventory balance had climbed to
$175.0 million. The increase in inventory represented a significant use of cash
in the first half of the year. Cash used in operations was $27.7 million for the
twenty-six weeks ended June 29, 2001. From that point, our inventory balance
significantly decreased, primarily resulting from the decreased business
activity and better resource management. We believe we have taken steps that
should result in a continued reduction in inventories during 2002. Purchases of
raw materials have been cancelled or postponed where possible as a result of
reduced customer demand. In addition, production schedules have been
significantly modified in order to adjust inventory levels for the reduction in
demand. However, there can be no assurance that a continued reduction in
inventory will take place due to the significant uncertainty in the marketplace.

Capital expenditures for fiscal 2001 totaled $28.8 million, which were primarily
financed by borrowings under our credit agreement and, to a lesser extent, from
cash on hand. Capital expenditures in fiscal 2001 were primarily for the
continued upgrade of existing facilities and equipment in support of current
operating activities. In addition, capital expenditures included the expansion
of our manufacturing facility in China and construction of a new facility in
Hungary, both of which were initiated in previous years. We believe that these
facilities will be a source of low-cost, high-efficiency production in the
future. The new facility in Hungary became operational in the first quarter of
2001. All cash requirements related to these programs have been fulfilled.
Capital expenditures were down significantly in fiscal 2001 from the levels
experienced in fiscal 2000 ($39.3 million) due to the significant downturn in
customer demand, as planned capital spending for upgrades and expansion were
postponed or cancelled. We expect that the level of capital expenditures in 2002
to be significantly below the level experienced in 2001 due to our excess
capacity and the still uncertain business conditions in our industry.

Spider Software Ltd. was acquired in March 2000 for approximately $33.0 million
of fixed cash payments and up to $10.0 million in contingent consideration. Cash
payments related to the acquisition of $28.0 million were made in the first
quarter of fiscal year 2000 and the remaining fixed cash payments of $5.0
million will be paid in equal installments in March 2002 and March 2003.
Additional contingent consideration is based on Spider Software's ability to
achieve certain annual earnings targets through March 2003. These targets will
be based on revenue and earnings for the three annual periods ending March 30,
2001, March 29, 2002 and March 31, 2003. For the earn-out period ending March
30, 2001, an additional $1.2 million in purchase price was recorded based on
Spider Software's results. Approximately $0.7 million of the earn-out was paid
during 2001, with the remaining $0.5 million to be paid in the third quarter of
2002. Currently, as a result of the reduced level of

                                       19
<PAGE>

business activity, the total contingent payment to be made is not expected to
exceed $9.0 million over the three-year earn-out period. Given the current
business environment, we do not expect that the full amount will be paid.

AzCore Technologies, Inc. was acquired in August 2000 for approximately $5.8
million of fixed cash payments and up to $8.0 million in contingent
consideration based on certain milestones through fiscal years 2001 and 2002.
The first of these milestones was reached in the fourth quarter of fiscal year
2000, and a payment of $0.7 million was made. During 2001, additional payments
of approximately $3.3 million were made to the former owners of AzCore. The
remaining amount of the contingent consideration is expected to be paid in 2002.

Real-Time Digital, or RTD, was acquired in January 2001 for approximately $3.3
million, net of cash acquired, of fixed cash payments and up to $7.0 million in
contingent consideration based on certain milestones. We made the initial
earn-out payment of approximately $3.0 million to the former owners of RTD in
the fourth quarter of 2001. The remaining contingent consideration is expected
to be paid in 2002.

During the fourth quarter of 2001, we sold our repair and logistics business,
Artesyn Solutions Inc., to Solectron Global Services Inc., a subsidiary of
Solectron Corporation, for approximately $33.5 million, which is reflected as a
source of cash for investing activities. The net proceeds from the sale were
used to reduce our balance on the senior revolving credit facility.

Net cash provided by financing activities of $23.6 million for fiscal 2001
includes net proceeds from revolving credit loans (which includes amounts
borrowed under our previous credit agreement) less principal payments on capital
leases of $35.9 million partially offset by the repurchase and retirement of
189,000 shares of common stock for $2.3 million.

On January 15, 2002, we received an investment by Finestar International
Limited, an entity controlled by Mr. Bruce Cheng, founder and chairman of Delta
Electronics, a leading global power supply, electronic component and video
display manufacturer and one of our competitors. The transaction, for which the
net proceeds were approximately $49.5 million, included the issuance of a
five-year convertible note which carries a 3% interest rate and an $11.00
conversion price. The agreement also contains certain registration rights and
warrants to purchase an additional 1.55 million shares of our common stock at
$11.50 per share. Approximately $24 million of the net proceeds were used to pay
down the balance on our senior revolving debt, with the remaining funds to be
used for general corporate purposes. Both parties have the right to redeem the
note after three years.

On January 23, 2001, we entered into a revolving credit agreement with a
syndicate of banks that provided a three-year, multi-currency, $275 million
credit facility. The revolving facility, which expires on March 31, 2004,
replaced our previous $200 million credit facility. On January 23, 2001, $91.7
million in existing loans under the previous credit agreement were repaid from
borrowings under the new revolving credit facility. As of September 28, 2001, we
were not in compliance with the restrictive covenants contained in the current
credit facility. We obtained waivers through January 15, 2002 for the September
2001 financial covenant tests. On January 15, 2002, we amended our credit
facility and changed the restrictive covenants to take into account the new
business conditions under which we are operating. The amended credit agreement
contains restrictive covenants that, among other things, require us to maintain
a certain minimum liquidity, and limits the purchase, transfer and distribution
of certain assets. The credit facility has also been reduced to $85 million and
is secured by certain assets.

The amended credit agreement provides for various interest rate options on the
facility initially based on the London Interbank Offer Rates plus 2.5% and
includes a fee of 0.5% on the unused balance, and a 0.25% utilization fee when
the line is more than 50% drawn. Any outstanding amounts under the credit
facility are due on March 31, 2004. On January 25, 2002, the balance on the
revolving credit facility was $69.9 million.

Based on current expectations and business conditions, we believe our cash and
equivalents, available credit line, cash generated from operations and other
financing activities are expected to be adequate to meet working capital
requirements, capital expenditure requirements, debt and capital lease
obligations, contingent payments related to acquisitions, and operating lease
commitments for the next twelve months. We currently expect that these sources
will also be adequate to fulfill our long-term capital requirements. During
2004, the amounts outstanding on our current revolving credit agreement will
come due. We will, at that time, need to put a new bank agreement in place to
cover the

                                      20
<PAGE>

amounts outstanding. If an agreement cannot be reached, we would be forced to
look to alternative sources of financing to retire the amounts outstanding, and
we cannot be certain that such financing would be available at all or on terms
favorable to us.

Recent Accounting Pronouncements

We utilize interest rate swap derivative instruments to manage changes in market
conditions related to interest rate payments on certain of our variable rate
debt obligations. As of December 28, 2001, we had three interest rate swap
agreements with a total notional amount of $48.4 million effectively fixing the
rate on a like amount of variable rate borrowings. We adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138, at the
beginning of fiscal year 2001. SFAS No. 133 requires the transition adjustment
resulting from adopting these statements to be reported in net income or other
comprehensive income, as appropriate, as the cumulative effect of a change in
accounting principle. In accordance with the transition provisions of SFAS No.
133, we recorded a cumulative transition adjustment upon adoption of
approximately $0.9 million, net of income taxes, to reduce Accumulated Other
Comprehensive Loss to recognize the fair value of our interest rate swap
derivative instruments. Accordingly, the adoption of SFAS No. 133 is not
material. During the fiscal year ended December 28, 2001, we recorded the
subsequent change in fair value of the interest rate swap derivatives as an
increase in Accumulated Other Comprehensive Loss totaling approximately $1.2
million.

We recognize all derivatives on the balance sheet at fair value. Such
derivatives total a liability of approximately $0.2 million as of December 28,
2001 and are included in Accounts Payable and Accrued Liabilities in the
accompanying Consolidated Statement of Financial Condition. Changes in the fair
value for the effective portion of the gain or loss on a derivative that is
designated as and meets all the required criteria for a cash flow hedge are
recorded in Accumulated Other Comprehensive Loss and reclassified into earnings
as the underlying hedged item affects earnings. Amounts reclassified into
earnings related to interest rate swap agreements are included in interest
expense. The ineffective portion of the gain or loss on a derivative is
recognized in earnings within interest income or expense. There was no
significant hedge ineffectiveness for the existing derivative instruments for
the fiscal year ended December 28, 2001.

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations." SFAS 141
addresses financial accounting and reporting for business combinations and
supercedes Accounting Principles Board Opinion No. 16, "Business Combinations
and Statement of Financial Accounting Standards No. 38 "Accounting for
Preacquisition Contingencies of Purchased Enterprises." All business
combinations in the scope of SFAS 141 are to be accounted for under the purchase
method. SFAS 141 became effective June 30, 2001. The adoption of SFAS 141 did
not have an impact on our financial position, results of operations or cash
flows.

In June 2001, the FASB also issued Statement of Financial Accounting Standards
No. 142 "Goodwill and Other Intangible Assets". SFAS 142 addresses financial
accounting and reporting for intangible assets acquired individually or with a
group of other assets (but not those acquired in a business combination) at
acquisition. SFAS 142 also addresses financial accounting and reporting for
goodwill and other intangible assets subsequent to their acquisition. With the
adoption of SFAS 142, goodwill is no longer subject to amortization. Rather,
goodwill will be subject to at least an annual assessment for impairment by
applying a fair-value based test. The impairment loss is the amount, if any, by
which the implied fair value of goodwill is less than the carrying or book
value. SFAS 142 is effective for fiscal years beginning after December 15, 2001.
Impairment loss for goodwill arising from the initial application of SFAS 142 is
to be reported as resulting from a change in accounting principle.

We will adopt SFAS No. 142 in the first quarter of 2002. With the adoption of
SFAS No. 142, we will assess the impact based on a two-step approach to assess
goodwill based on applicable reporting units and will reassess any intangible
assets, including goodwill, recorded in connection with our previous
acquisitions. We had recorded approximately $8.1 million of amortization of
goodwill during 2001. We are currently assessing, but have not yet determined
the impact of adoption of SFAS No. 142 will have on our financial statements. As
of December 28, 2001, we had unamortized goodwill of $64.6 million.

                                      21
<PAGE>

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS 144 supercedes FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30, "Reporting Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business." SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001, and will
thus be adopted, as required, on December 29, 2001. The adoption of SFAS 144
will not have an impact on our consolidated financial position, results of
operations or cash flows.

Market Value

 Fair value estimates are made at a specific point in time, based on relevant
market information about a financial instrument. These estimates are subjective
in nature and involve uncertainties and matters of significant judgment. The
fair value of variable rate debt approximates the carrying value since interest
rates are variable and, thus, approximate current market rates. The fair value
of interest rate swaps is determined from dealer quotations and represents the
discounted future cash flows through maturity or expiration using current rates.
The fair value is effectively the amount we would pay or receive to terminate
the agreements ($000s) :

<TABLE>
<CAPTION>
                                 2002      2003         2004        2005    2006     Thereafter        Total
                                ------------------------------------------------------------------------------
<S>                             <C>         <C>      <C>            <C>      <C>        <C>          <C>
Variable Rate Debt              $  --       $ --     $ 100,383      $ --     $ --       $ --         $ 100,383
   Average interest rates          --         --          5.61%       --       --         --                --

Interest rate swaps             $ (36)        --     $    (204)       --       --         --         $    (240)
   Average pay rate              6.75%        --          4.83%       --       --         --                --
   Average receive rate          2.14%        --          3.45%       --       --         --                --
</TABLE>

Conversion to the Euro Currency

On January 1, 1999, eleven of the fifteen member countries of the European Union
adopted the euro as their common legal currency and established fixed conversion
rates between their existing sovereign currencies and the euro. The legacy
currencies of the participating European Union members remained legal tender in
the participating countries for the transition period from January 1, 1999
through January 1, 2002. January 1, 2002, the participating countries issued new
euro-denominated bills and coins for use in cash transactions. Legacy currencies
will no longer be legal tender for any transactions beginning July 1, 2002,
making conversion to the euro complete. We have assessed and addressed the
issues involved with the introduction of the euro. Issues facing us relating to
the euro include: converting information technology systems; reassessing
currency risk; negotiating and amending licensing agreements and contracts; and
processing tax and accounting records. We do not presently expect that
introduction and use of the euro will materially affect our foreign exchange and
hedging activities or use of derivative instruments. While we will continue to
evaluate the impact of the euro's introduction over time, based on currently
available information, we do not believe that the introduction of the euro
currency will have a material adverse impact on the financial condition or
overall trends in results of operations.

Risk Factors That May Affect Future Results

We have experienced and will continue to experience significant operating losses
if customer demand for our products does not significantly improve.

We have incurred significant operating losses and working capital and liquidity
deficiencies throughout 2001 due to a significant drop in the demand for our
products from our customers. We had net losses of $16.6 million and $8.0 million
(excluding a gain from the sale of Artesyn Solutions, Inc. to Solectron Global
Services, Inc. in December of 2001) for fiscal quarters ended on September 28,
2001 and December 28, 2001, respectively. Because of these poor operating
results, we implemented certain cost-saving measures including, but not limited
to, factory work-force reductions, shortened work-weeks, restrictions on
discretionary spending, consolidation of job functions, reduction of product
offerings, facility

                                      22
<PAGE>

closures and other similar measures. However, even if our cost-saving measures
are successful, our future profitability is primarily dependent on our ability
to successfully market and sell our products to our customers.


We implemented a restructuring plan to address the significant drop in the level
of demand for our products from our customers.

As a result of our operating losses and in an effort to address the significant
decrease in the level of demand for our products, in the second quarter of 2001,
we approved and implemented a restructuring plan that:

     .    eliminated approximately 30% of all positions throughout Artesyn and
          consolidated various departments within Artesyn to more closely align
          our cost structure with end-market demand;

     .    closed five of our twenty-two facilities in an attempt to increase the
          efficiency usage at the remaining facilities and, generally, to reduce
          the cost associated with operating a facility; and

     .    changed our commercial-marketing structure to more align it with our
          customer's needs.

There can be no assurances that our restructuring plan will be successful nor
can we assure that our restructuring plan is sufficient or timely enough to
return us to profitability. If we fail to achieve the expected cost savings, or
if our estimates of potential liability that may be incurred by us in connection
with our facility closures are inaccurate, it could have a material adverse
effect on our future profitability.

Our future profitability depends on our ability to successfully market our
products in a volatile industry characterized by rapidly changing technologies
and customer demand.

The markets for our products are characterized by rapidly changing technologies,
changing customer demands, evolving industry standards, frequent new product
introductions and, in some cases, short product life cycles. The development of
new, technologically advanced products is a complex and uncertain process
requiring high levels of innovation and cost, as well as an accurate
anticipation of technological and market trends. There can be no assurance that
we will successfully develop, introduce or manage the transition of new
products. The failure of or the delay in anticipating technological advances or
developing and marketing product enhancements or new products that respond to
any significant technological change could cause our products to become
uncompetitive obsolete thereby severely diminishing our ability to generate
revenues from those products.

We rely on significant relationships with a small number of our customers.

Sales to Hewlett-Packard and Dell Computer accounted for approximately 13% and
12%, respectively, of sales for the 52 weeks ended on December 28, 2001. Such
sales to Hewlett-Packard include sales from Artesyn Solutions, Inc. prior to the
sale of the subsidiary in December 2001. The sales from Artesyn Solutions Inc.
to Hewlett-Packard represent approximately 6% of the 13%. Sales from Artesyn
Solutions Inc. will not be included in our consolidated results in the future.
Decisions by a small number of customers to defer their purchasing decisions or
to purchase products elsewhere could have a material adverse effect on our
business, operating results and financial condition. As such we must generate
additional contracts in order to remain viable.

In addition, if we were to experience an unanticipated catastrophic quality
issue (i.e. a product or design failure) with one of our customers (especially
one of our two largest customers) and our relationship with that customer or
customers were threatened, the competitive nature of our industry would easily
allow that customer or customers to terminate their relationship with us and
move their business to one of our competitors. Although we are "designed in" to
many long-term programs with our customers enabling us to be included in our
customer's new products to be offered over a product life cycle, our reliance on
significant parts of our business depends primarily on the continued
relationship with our existing customers. If such relationships are terminated
for any reason, it would significantly reduce our total number of sales, thereby
greatly impacting our future profitability.

                                      23
<PAGE>

We face intense competition in our industry which could impact our future
profitability.

The industry in which we compete is highly competitive and characterized by
increasing customer demands for product performance, shorter manufacturing
cycles and lower prices. These trends result in frequent introductions of new
products with added capabilities and features and continuous improvements in the
relative price/performance of the products. Increased competition could result
in price reductions, reduced profit margins and loss of market share, each of
which could adversely affect our results of operations and financial condition.

Market consolidation could create companies that are larger and have greater
resources than us.

Our principal competitors include Delta Electronics, Emerson Electric, MagneTek,
Power One, Tyco International and Vicor. If our competitors consolidate they
would likely create entities with increased market share, customer bases,
proprietary technology, marketing expertise and an expanded sales force size.
Such a development may adversely affect our ability to compete in such markets.
Our broad strategies to cope with the competition include, but are not limited
to, continuing to have a high level of investment in research and development
and maintaining and expanding the relationships with our customers in the high
growth sectors of our industry.

Our future success is dependent upon the protection of our intellectual
property.

Our success depends, in large part, on our ability to protect our current and
future products and to defend our intellectual property rights. If we fail to
protect our intellectual property adequately, competitors may manufacture and
market products similar to ours. Numerous patents covering our products have
been issued to us, and we have filed, and expect to continue to file, patent
applications seeking to protect newly developed products in various countries,
including the United States. Some patent applications in the United States are
maintained in secrecy until the patent is issued. Because the publication of
discoveries tends to follow their actual discovery by several months, we cannot
be certain that we were the first to invent or file patent applications on any
of our discoveries. We cannot be certain that patents will be issued with
respect to any of our patent applications or that any existing or future patents
issued to or licensed by us will provide competitive advantages for our products
or will not be challenged, invalidated or circumvented by our competitors.
Furthermore, our patent rights may not prevent our competitors from developing,
using or commercializing products that are similar or functionally equivalent to
our products. In addition, the laws of some foreign countries do not protect our
proprietary rights to the same extent, as do the laws of the United States.
Although we continue to evaluate and implement protective measures, there can be
no assurance that these efforts will be successful or that third parties will
not assert intellectual property infringement claims against us.

We also rely on trade secrets, unpatented proprietary expertise and continuing
innovation that we seek to protect, in part, by entering into confidentiality
agreements with licensees, suppliers, employees and consultants. We cannot
assure you that these agreements will not be breached. We also cannot be certain
that there will be adequate remedies in the event of a breach. Disputes may
arise concerning the ownership of intellectual property or the applicability of
confidentiality agreements. We cannot be sure that our trade secrets and
proprietary technology will not otherwise become known or be independently
developed by our competitors or, if patents are not issued with respect to
products arising from research, that we will be able to maintain the
confidentiality of information relating to these products. In addition, efforts
to ensure our intellectual property rights can be costly, time-consuming and
ultimately unsuccessful.

Our gross margin is a function of many changing factors.

Our gross margin percentage is a function of the product mix sold in any period.
Other factors such as unit volumes, heightened price competition, changes in
channels of distribution, shortages in components due to timely supplies of
parts from vendors or ability to obtain items at reasonable prices, availability
of skilled labor, and factory over/under utilization may also affect the cost of
sales and the fluctuation in gross margin percentages in future periods. We
compete in an industry where our customers constantly expect price reductions
due to technological advancements and manufacturing efficiencies. As a result,
we need to continue to obtain price reductions from our suppliers. If we are
unable to secure such reductions, our gross margin could be significantly
reduced.

                                      24
<PAGE>

In addition to the factors discussed above, we perceive additional risks related
to the value of our inventory. We anticipate that the price for our products and
components of our products will decrease over time due to the rapidly changing
technology of our industry. As a result of these price reductions, we constantly
assess the value of our inventory using "lower of cost or market" parameters. If
the difference in value between the cost of inventory and the value the
marketplace assigns such inventory is significant, such a development would
necessitate a revaluation of our inventory which would result in a significant
change to current period earnings.

The volatility of the market price of our common stock could adversely affect
our stockholders.

The market price of our common stock has been, and may continue to be,
relatively volatile. The closing sales prices of our common stock ranged from a
low of $4.65 to a high of $26.1875 in 2001. The market price for our common
stock could continue to be subject to wide fluctuations due to the following
factors, among others:

   . actual or anticipated variations in our quarterly operating results or
     financial condition or those of our competitors;

   . announcements by us or our competitors of new and enhanced products or
     acquisitions of new businesses;

   . market conditions or trends in our industry or the industries of our
     customers;

   . developments or disputes concerning proprietary rights;

   . introduction of technologies or product enhancements by others that reduce
     the need for our products;

   . changes in financial estimates by securities analysts;

   . general economic and political conditions;

   . unexpected departures of key personnel;

   . changes in the market valuations of our competitors;

   . the sale of a large amount of our common stock by our largest shareholders
     could cause volatility of our share price and may have a significant impact
     on the market price of our common stock;

   . preferred stock that we may issue could have other rights, including
     economic rights, senior to our common stock, so that the issuance of such
     preferred stock could adversely affect the market value of our common stock
     and could also have the effect of delaying, deferring or preventing a
     change of control of our company without any action by the common
     stockholders; and

   . the other risk factors listed in this section.

We may need additional financing, which may not be available, and any financings
may reduce the percentage ownership of our existing stockholders.

Our ultimate success may depend upon our ability to raise additional working
capital by selling equity securities or obtaining debt financing until our
operating results improve. The sale of additional securities, if available at
all, would result in dilution to the holders of common stock. If we need
additional working capital from sources other than from operations, we will most
likely attempt to privately sell additional equity or debt securities, and given
the present financial condition, there can be no assurances we will be
successful. Presently, we believe that our current capital resources are
sufficient to meet our cash needs for at least the next 12 months.

                                      25
<PAGE>

We rely on certain key personnel and a loss of those personnel could adversely
affect our business.

Our future success depends, to a substantial degree, upon the continued service
of Joseph M. O'Donnell, our President and Chief Executive Officer, and Richard
J. Thompson, our Vice President, Chief Financial Officer and Secretary, and
other key members of our management team. We currently have agreements that
provide incentives for our management to continue working for us. Except for Mr.
O'Donnell and Mr. Thompson, we do not have employment agreements with any of our
other senior officers. Although we are not aware that any key personnel are
planning to retire or leave Artesyn in the near future, the loss of the services
of Mr. O'Donnell or Mr. Thompson or of certain other members of our management
team, or their inability to perform services on our behalf, could materially and
adversely affect our operations. While we believe that we have been successful
in attracting and retaining skilled personnel in all areas of our business
recently, we cannot assure you that we can continue to attract, train and retain
such personnel. Our failure in this regard could limit the rates at which we
generate sales and develop new products.

We face certain risks related to delivery lead-times and customer order
cancellations.

We have attempted to reduce our product manufacturing lead times and the backlog
of orders. To the extent that backlog is reduced during any particular period,
it could result in more variability and less predictability in our
quarter-to-quarter sales and operating results. If manufacturing lead times are
not reduced, our customers may cancel or not place orders because shorter lead
times may be available from other manufacturers. As of December 28, 2001,
backlog was at $92.4 million. If we cannot acquire enough critical parts to meet
manufacturing requirements, customers may cancel the orders they have already
placed. At this time, we are not experiencing any material difficulties in
acquiring critical parts.

If orders are cancelled for products that have already been manufactured or
where components to produce them have already been procured, a significant
change in the evaluation of the amount of our inventory that is considered
excess and obsolete could occur. Such a change could potentially require us to
reevaluate all inventory that cannot be used in other products or cannot be
recovered from the customer. We currently maintain a reserve related to excess
and obsolete inventory that is reevaluated on a periodic basis. In instances
where we have a significant amount of cancellations (as was the case during
2001), the amount of excess and obsolete inventory, and the resulting write-off,
negatively impacted our operating results. At this time, we cannot predict the
amount of cancellations in 2002, however, if the level of cancellations are high
relative to our revenue, additional reductions in the value of our inventory and
in our operational results will occur.

Our future profitability may be adversely affected by a disruption in our supply
chain.

As a result of the custom nature of certain of our manufactured products,
components used in the manufacture of these products are currently obtained from
a limited number of suppliers. Therefore, a change in suppliers could cause a
delay in manufacturing, additional manufacturing costs, and a possible loss of
sales that could adversely affect our future operating results and financial
position.

For example, in 2000, we experienced shortages of certain ferrite cores that
were single sourced. For varying periods of time, suppliers were unable to
fulfill previously agreed to commitments. To mitigate this risk, we have
instituted a preferred parts program whereby we identified critical components
that are multi-sourced.

We face certain risks inherent with international sales.

International sales have been, and are expected to continue to be, an important
component of our total sales. For fiscal years 2001 and 2000, international
sales represented 32% and 28% of our total sales, respectively. International
sales are subject to certain inherent risks, including unexpected changes in
regulatory requirements and tariffs, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable and potentially adverse tax consequences. Other risks of
international sales include changes in economic conditions in the international
markets in which the products are sold, political and economic instability,
fluctuations in currency exchange rates, import-export controls, and the burden
and expense of complying with foreign laws. In addition, sales to customers in
developing nations may fluctuate to a greater extent than sales to customers in
developed nations, as those markets are

                                      26
<PAGE>

only beginning to adopt new technologies and establish purchasing practices. If
any of these risks were to materialize, our total number of sales would be
reduced thereby negatively impacting our future profitability.

We face risks associated with the manufacture of our products in foreign
locations.

We manufacture a significant amount of our products in foreign locations.
Approximately 43% of our sales for the 52 weeks ended on December 28, 2001 were
from products manufactured in Asia-Pacific, 24% from products manufactured in
Europe and the remaining 33% from domestic operations.

The supply and cost of these products can be adversely affected, among other
reasons, by changes in foreign currency exchange rates, increased import duties,
imposition of tariffs, imposition of import quotas, interruptions in sea or air
transportation and political or economic changes. From time to time, we explore
opportunities to diversify the sourcing and/or production of certain products to
other low cost locations or with other third parties to reduce our dependence on
production in any one location. In addition, we have taken necessary measures,
including insuring against certain risks, to mitigate our exposure to potential
political and economic changes such as in Hong Kong and China. In the event of
confiscation, expropriation, nationalization, or governmental restrictions in
the above mentioned foreign or other locations, earnings could be adversely
affected from business disruption resulting in delays and/or increased costs in
the production and delivery of products.

We are involved in litigation in connection with a certain patent.

On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against
Artesyn in the U.S. District Court of Massachusetts alleging that Artesyn has
infringed and is infringing on U.S. Reissue Patent No. 36,098. VLT and Vicor
have alleged that they are, respectively, the owner and a licensee of such
patent and that Artesyn has manufactured, used or sold electronic power
converters with reset circuits that fall within the claims of the patent. The
suit requests that we pay damages, including royalties, lost profits, interest,
attorneys' fees and increased damages under 35 U.S.C. ss. 284. We have
challenged the validity of the patent and have denied the claims of
infringement. The parties are currently in litigation discovery and no trial
date has yet been set. Although we believe that we have a strong defense to the
claims asserted by VLT and Vicor, if we are found liable to pay all of the
damages requested by VLT and Vicor, such a payment could have a material adverse
effect on our operating results, cash balances and outstanding debt.

Our future profitability may be adversely affected by a change in governmental
regulation.

Our operations are subject to laws, regulations, government policies and product
certification requirements worldwide. Changes in such laws, regulations,
policies or requirements could affect the demand for our products or result in
the need to modify products, which may involve substantial costs or delays in
sales and could have an adverse effect on our future operating results.

There are certain risks associated with the Finestar investment.

     .    The right to require early repayment of the note issued in connection
          with the Finestar investment could create a liquidity problem and/or
          impede an acquisition of our company.

Under the terms of the note issued in connection with the Finestar investment,
the holder has the right to require us to repurchase the note in its entirety or
any portion thereof (but not an amount less than $1,000,000) (i) at any time on
or after January 15, 2005 for the amount of outstanding principal plus accrued
but unpaid interest or (ii) in the event a change of control occurs for 115% of
the outstanding principal plus accrued but unpaid interest. In the event of a
change of control involving the purchase of all or substantially all of the
assets of Artesyn for cash, the note will automatically be redeemed for an
amount equal to the accrued and unpaid interest plus the greater of (a) 115% of
the principal amount outstanding or (b) the fair market value of the shares of
common stock issuable upon conversion of the note. The holder's right to require
us to repurchase the note could cause us to face liquidity problems if the
holder requests payment at a time when we do not have cash on hand or readily
available funds sufficient to satisfy both our repayment obligation and meet the
cash flow needs of our operations. For example, a repurchase request could be
made within one year of our existing $85 million credit facility being paid when
due in March 2004 or being refinanced. Additionally, this feature of the note
could

                                      27
<PAGE>

deter a third party from acquiring or attempting to acquire us because of
the immediate cash obligation and premium on principal that would be triggered.

     .    Finestar's right of first negotiation under the securities purchase
          agreement may impede competing offers for our company.

Under the securities purchase agreement with Finestar, Finestar is entitled to a
"right of first negotiation". In the event our management or our Board of
Directors (i) receives a proposal (oral or written or otherwise) that
contemplates a sale of control or a sale of all or substantially all of our
assets on a consolidated basis or of our power supply business or (ii)
determines to sell 15% or more of our total voting power or all or substantially
all of our assets on a consolidated basis or our power supply business (subject
to certain exceptions), then we must first notify Finestar and afford Finestar
the opportunity to negotiate a transaction. While the time periods for the first
negotiation right is limited, and our Board of Directors, to the extent its
fiduciary duties require, may determine not to proceed with Finestar and accept
a superior proposal, the existence of such right and the requirement that we
deal exclusively with Finestar during the applicable periods, could materially
hamper our ability to attract and/or pursue other offers and opportunities.

     .    Failure to obtain shareholder or governmental approvals, if required,
          in connection with the issuance of our common stock upon conversion of
          the note and/or exercise of the warrant would, in certain instances,
          cause a cash payment obligation.

Two instances may arise in which we would need to seek either shareholder
approval or governmental approval in connection with issuing common stock upon
conversion of the note and/or exercise of the warrant, and failure to obtain
such approval, if required, would, in certain instances, trigger a cash payment
obligation. Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, (the "HSR Act") we are required to file a Notification and Report Form
together with related material with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice before issuing $50
million or more of our voting securities. Additionally, Nasdaq Marketplace Rule
4350 ("Rule 4350") requires a Nasdaq-listed company to obtain shareholder
consent before issuing more than 20% of its common stock or voting power
outstanding before the issuance at a price per share less than the greater of
book or market value at the time of the transaction. Although not presently
applicable, Rule 4350 could be triggered due to the anti-dilution protections of
the note and the warrant if we were to issue a significant number of shares of
common stock or a significant number of options, warrants or convertible
securities at a price per share below the conversion price of the note and the
exercise price of the warrant. If either shareholder approval or approval under
the HSR Act is required but not obtained, we would be required, in certain
instances, to purchase the number of affected shares at the then market price
per share. Such a payment obligation could be significant depending on the
number of affected shares and the market price per share, and if significant,
could cause us to face liquidity problems.

     .    A conversion of the note and the exercise of the warrant could
          negatively impact the trading price of our common stock.

Conversion of the convertible note and exercise of the warrant and the
subsequent sales of the underlying common stock may cause a downward trend in
the trading price of the common stock if the interest to buy the common stock by
investors at that time is weak. Additionally, any significant downward pressure
on the trading price of the common stock caused by the conversion of the note or
the exercise of the warrant and the subsequent sales of the common stock may
encourage short sales by investors thereby causing further downward pressure on
the trading price.

The provisions of our credit agreement could affect our ability to enter into
certain transactions.

Our credit agreement, dated as of January 23, 2001, as amended, with a syndicate
of banks, may restrict our ability to enter into certain corporate transactions,
unless we obtain the prior written consent of a majority of the required
lenders. Although we believe that we will be able to obtain any such consent, we
cannot guarantee that the required lenders will, in all circumstances, provide
consent for the specific purposes for which we intend, which may restrict our
ability to enter into, or delay the consummation of, certain corporate
transactions.

                                      28
<PAGE>

If we fail to comply with the financial covenants of our credit agreement it
could result in liquidity problems for our company.

Our credit agreement contains certain financial covenants including a minimum
liquidity requirement, working capital to senior debt ratio, and a graduating
minimum EBIDTA requirement. If we were to violate any one of these restrictive
covenants it could (i) result in a cross-default under the terms of the Finestar
note, (ii) limit the amount of our borrowings under the credit agreement, (iii)
restrict our use of certain domestic assets and/or (iv) accelerate any
outstanding obligations then due under the credit agreement.

Although we are currently in compliance with the restrictive covenants contained
in the credit agreement, our ability to remain in compliance depends, in part
on, our ability to continue to cost effectively market and sell our products to
our customers. Although we are undertaking all measures we feel are necessary to
enable us to remain in compliance with these covenants, there can be no
assurances customer demand and our profit margins will remain sufficient to meet
any or all of these covenants. If we violate any of these covenants, it would
result in significant liquidity problems for us if alternate financing options
are not available.

We will be penalized if we fail to register the common stock underlying the note
and the warrant.

Under the registration rights agreement with Finestar, we are required to use
our best efforts to register for resale the shares of our common stock
underlying the note and warrant. If the registration statement is not declared
effective by April 5, 2002 or does not remain effective, we shall be required to
pay additional interest under the note for the period during which the
registration statement is not effective a rate per annum equal to an additional
nine percent (9%) of the principal amount due under the convertible note.

Our Board of Directors' ability to issue preferred shares could deter a change
in control that could be profitable to our shareholders.

Pursuant to our Certificate of Incorporation, as amended, our Board of Directors
has the authority to issue up to 1,000,000 shares of preferred stock, of which
451,376 have been designated as series A Junior Participating Preferred Stock in
connection with our poison pill, and to establish the preferences and rights of
any such shares of preferred stock issued. The issuance of the preferred shares
can have the effect of delaying, making more difficult, or preventing a change
of control of Artesyn, even if a change of control is in the shareholders'
interest.

We have a "poison pill" that could deter a potentially profitable take-over by a
third party.

Under a rights agreement, rights are issued along with each of our shares of
common stock. A holder of such rights can purchase from us, under specified
conditions, a portion of a preferred share, or receive common stock of Artesyn,
or receive common stock of the entity acquiring us having a value equal to twice
the exercise price of the right. The exercise price of the right is $95.00. This
arrangement is often called a "poison pill." Our poison pill may have the effect
of delaying or preventing a change of control of Artesyn, even if a change of
control is in the shareholders' interest.

There are certain provisions of Florida law that could limit acquisitions and
changes of control.

The Florida 1989 Business Corporation Act, as amended, contains a section
entitled "control-share acquisitions" which, in certain circumstances,
eliminates the voting rights of shares acquired in quantities so as to
constitute "control shares", as defined under Florida law. Florida law may also
restrict business combinations between Artesyn and 10% owners of our common
stock unless approved by two-thirds of the voting shares of "disinterested"
shareholders or by a majority of Artesyn's "disinterested" directors. These
provisions may also have the effect of inhibiting a third-party from making an
acquisition proposal for Artesyn or of delaying, deferring or preventing a
change of control of Artesyn under circumstances that otherwise can provide the
holders of our common stock with the opportunity to realize a premium over the
then current price.

We do not anticipate paying a cash dividend in the foreseeable future.

We have never paid a cash dividend on our common stock and we do not intend to
pay a cash dividend in the foreseeable future, but rather intend to retain any
earnings to finance growth.

                                      29
<PAGE>

ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk
         ---------------------------------------------------------

We are exposed to the impact of interest rate changes and foreign currency
fluctuations. In the normal course of business, we employ established policies
and procedures to manage our exposure to changes in interest rates and
fluctuations in the value of foreign currencies using a variety of derivative
financial instruments. We manage our interest rate risk on variable rate debt
instruments through the use of interest rate swaps pursuant to which we exchange
our floating rate interest obligations for fixed rates. The fixing of the
interest rates offsets our exposure to the uncertainty of floating interest
rates during the term of the debt.

We have significant assets and operations in Europe and Asia and, as a result,
its financial performance could be affected by significant fluctuations in
foreign exchange rates. To mitigate potential adverse trends, our operating
strategy takes into account changes in exchange rates over time. Accordingly, we
enter into various forward contracts that change in value as foreign exchange
rates change to protect the value of its existing foreign currency assets,
liabilities, commitments and anticipated foreign currency revenues. The
principal currency hedged is the Euro.

It is our policy to enter into foreign currency and interest rate transactions
only to the extent considered necessary to meet the objectives as stated above.
We do not enter into foreign currency or interest rate transactions for
speculative purposes. Gains or losses that result from changes in foreign
currency rates are booked into income at the time they are incurred. These gains
or losses have not been material to any period presented.

ITEM 8. Financial Statements and Supplementary Data
        -------------------------------------------

Statement of Management Responsibility

Artesyn's management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and other financial
information presented in this Form 10-K. The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted
in the United States and reflect the effects of certain estimates and judgments
made by management.

Artesyn's management maintains a system of internal control that is designed to
provide reasonable assurance that assets are safeguarded and transactions are
properly recorded and executed in accordance with management's authorization.
The system is continuously monitored by direct management review and by internal
auditors who conduct an extensive program of audits throughout Artesyn. Artesyn
selects and trains qualified people who are provided with and expected to adhere
to its standards of business conduct. These standards, which set forth the
highest principles of business ethics and conduct, are a key element of
Artesyn's control system. Additionally, our independent certified public
accountants obtain a sufficient understanding of the internal control structure
in order to plan and complete the annual audit of the Company's consolidated
financial statements.

The Audit Committee of the Board of Directors, which consists of five outside
directors, meets regularly with management, the internal auditors and the
independent certified public accountants to review accounting, reporting,
auditing and internal control matters. The Committee has direct and private
access to both internal and external auditors.

Joseph M. O'Donnell
Co-Chairman of the Board, President and Chief Executive Officer

Richard J. Thompson
Vice President, Finance and Chief Financial Officer

                                       30
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------

To Artesyn Technologies, Inc.:

We have audited the accompanying consolidated statements of financial condition
of Artesyn Technologies, Inc. (a Florida corporation) and subsidiaries as of
December 28, 2001 and December 29, 2000, and the related consolidated statements
of operations, shareholders' equity and comprehensive income (loss) and cash
flows for each of the three fiscal years in the period ended December 28, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Artesyn
Technologies, Inc. and subsidiaries as of December 28, 2001 and December 29,
2000, and the results of their operations and their cash flows for each of the
three fiscal years in the period ended December 28, 2001 in conformity with
accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP


Fort Lauderdale, Florida,
  January 21, 2002.

                                       31
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
For the Years Ended on the Friday Nearest
December 31                                                   2001         2000         1999
-----------------------------------------------------------------------------------------------
(Amounts in Thousands Except Per Share Data)

<S>                                                         <C>          <C>          <C>
Sales                                                       $ 493,968    $ 690,083    $ 594,155
Cost of Sales                                                 437,700      509,098      440,477
                                                            -----------------------------------
Gross Profit                                                   56,268      180,985      153,678
                                                            -----------------------------------

Expenses
   Selling, general and administrative                         54,057       62,771       50,185
   Research and development                                    41,470       44,867       36,413
   Gain on sale of Artesyn Solutions                          (31,308)          --           --
   Restructuring and related charges                           15,913           --           --
   Goodwill amortization                                        8,081        6,208        2,219
                                                            -----------------------------------
                                                               88,213      113,846       88,817
                                                            -----------------------------------

Operating Income (Loss)                                       (31,945)      67,139       64,861
                                                            -----------------------------------

Other Income (Expense)
   Interest expense                                            (8,236)      (5,142)      (3,160)
   Interest income                                                894        1,886        1,509
                                                            -----------------------------------
                                                               (7,342)      (3,256)      (1,651)
                                                            -----------------------------------
Income (Loss) before Provision (Benefit) for Income Taxes     (39,287)      63,883       63,210

Provision (Benefit)  for Income Taxes                          (7,524)      20,630       19,848
                                                            -----------------------------------

Net Income (Loss)                                           $ (31,763)   $  43,253    $  43,362
                                                            ===================================

Earnings (Loss) per Share
   Basic                                                    $   (0.83)   $    1.15    $    1.16
                                                            ===================================
   Diluted                                                  $   (0.83)   $    1.10    $    1.11
                                                            ===================================

Weighted Shares Outstanding
   Basic                                                       38,229       37,666       37,272
                                                            -----------------------------------
   Diluted                                                     38,229       39,471       38,999
                                                            -----------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       32
<PAGE>

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
As of the Friday Nearest December 31                                   2001            2000
---------------------------------------------------------------------------------------------
(Amounts in Thousands Except Share Data)
<S>                                                                 <C>             <C>
ASSETS

Current Assets
   Cash and equivalents                                             $     54,083    $  34,383
   Accounts receivable, net of allowance for doubtful accounts
       of $4,140 in 2001 and $3,571 in 2000                               72,580      122,377
   Inventories, net                                                      103,556      150,462
   Prepaid expenses and other                                              2,690        6,886
   Deferred income taxes                                                  12,398       12,552
                                                                    -------------------------
     Total current assets                                                245,307      326,660

                                                                    -------------------------
Property, Plant & Equipment, Net                                         103,291      105,059
                                                                    -------------------------

Other Assets
   Goodwill, net                                                          64,573       62,880
   Deferred income taxes, net                                             10,103        1,586
   Other assets, net                                                       3,209        1,630
                                                                    -------------------------
     Total other assets                                                   77,885       66,096
                                                                    -------------------------
                                                                    $    426,483    $ 497,815
                                                                    =========================
LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
   Current maturities of long-term debt and capital leases          $        207    $   1,512
   Accounts payable and accrued liabilities                               92,324      149,035
                                                                    -------------------------
     Total current liabilities                                            92,531      150,547
                                                                    -------------------------

Long-Term Liabilities
   Long-term debt and capital leases                                     100,399       73,301
   Deferred income taxes                                                   6,750        7,434
   Other long-term liabilities                                             7,558       10,021
                                                                    -------------------------
     Total long-term liabilities                                         114,707       90,756
                                                                    -------------------------
     Total liabilities                                                   207,238      241,303
                                                                    -------------------------

Commitments and Contingencies (Notes 5, 6 and 10)

Shareholders' Equity
   Preferred stock, par value $0.01; 1,000,000 shares authorized;
      none issued or outstanding                                              --           --
   Common stock, par value $0.01; 80,000,000 shares authorized;
     38,252,770 shares issued and outstanding in 2001
     (38,282,007shares in 2000)                                              383          383
   Additional paid-in capital                                            122,041      121,360
   Retained earnings                                                     116,403      149,873
   Accumulated other comprehensive loss                                  (19,582)     (15,104)
                                                                    -------------------------
     Total shareholders' equity                                          219,245      256,512
                                                                    -------------------------
                                                                    $    426,483    $ 497,815
                                                                    =========================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       33
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
For the Years Ended on the Friday Nearest December 31                2001        2000        1999
---------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S>                                                                <C>         <C>         <C>
Operating Activities
   Net income (loss)                                               $(31,763)   $ 43,253    $ 43,362
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
     Depreciation and amortization                                   34,423      27,195      20,109
     Deferred income tax benefit                                     (9,114)       (723)     (2,340)
     Provision for inventory write-down                              31,722      13,519       9,436
     Gain on sale of Artesyn Solutions, Inc.                        (31,308)         --          --
     Tax benefit from exercise of stock options                         186       8,989       3,391
     Provision for bad debts                                          2,059       2,409         890
     Non-cash restructuring charges                                   2,765          --          --
     Other non-cash items                                               125       2,190      (3,150)
   Changes in operating assets and liabilities:
     Accounts receivable                                             41,144     (35,829)     (6,902)
     Inventories                                                     12,642     (74,779)    (38,704)
     Prepaid expenses and other                                       3,187      (1,654)       (321)
     Accounts payable and accrued liabilities                       (54,100)     45,870      27,070
                                                                   --------------------------------
Net Cash Provided by Operating Activities                             1,968      30,440      52,841
                                                                   --------------------------------

Investing Activities
     Purchases of property, plant & equipment                       (28,763)    (39,256)    (33,359)
     Proceeds from sale of property, plant & equipment                  353       1,730         287
     Proceeds from sale of Artesyn Solutions, Inc.                   33,500          --          --
     Other assets                                                        --          --       2,831
     Purchase of Real-Time Digital, Inc., net of cash acquired       (6,326)         --          --
     Purchase of Spider Software Ltd., net of cash acquired            (703)    (27,949)         --
     Purchase of AzCore Technologies, net of cash acquired           (3,320)     (6,500)         --
                                                                   --------------------------------
Net Cash Used in Investing Activities                                (5,259)    (71,975)    (30,241)
                                                                   --------------------------------

Financing Activities
         Proceeds from issuances of long-term debt,
         net of financing fees                                       60,690      54,536      17,633
         Principal payments on debt and capital leases              (35,862)    (24,031)    (20,794)
         Proceeds from exercises of stock options                     1,095      19,217       9,980
         Repurchases of common stock                                 (2,307)     (9,189)    (31,912)
                                                                   --------------------------------
Net Cash Provided by (Used in) Financing Activities                  23,616      40,533     (25,093)
                                                                   --------------------------------

Effect of Exchange Rate Changes on Cash and Equivalents                (625)     (2,177)     (1,470)
                                                                   --------------------------------

Increase (Decrease) in Cash and Equivalents                          19,700      (3,179)     (3,963)
                                                                   --------------------------------
Cash and Equivalents, Beginning of Year                              34,383      37,562      41,525
                                                                   --------------------------------
Cash and Equivalents, End of Year                                  $ 54,083    $ 34,383    $ 37,562
                                                                   ================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       34
<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended on the Friday Nearest December 31
--------------------------------------------------------------------------------
(Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                                            Accumulated Other
                                           Common Stock                                     Comprehensive Loss
                                           ------------                                     ------------------
                                                                                          Foreign      Changes in    Compre-
                                                             Additional                  Currency      Fair Value    hensive
                                                              Paid-in       Retained    Translation        of         Income
                                         Shares     Amount    Capital       Earnings    Adjustment     Derivatives    (Loss)
                                         ------------------------------------------------------------------------------------
<S>                                       <C>        <C>       <C>          <C>          <C>              <C>        <C>
Balance, January 1, 1999                  37,882     $ 379     $ 85,018    $  99,128     $(3,437)         $ --
Issuance of common  stock under stock
 option plans                              1,105        11        9,969           --          --            --
Tax benefit  from  exercises of stock
 options                                      --        --        3,391           --          --            --
Repurchases and retirement of common
 stock                                    (1,860)      (19)      (3,913)     (27,980)         --            --
Net income                                    --        --           --       43,362          --            --       $ 43,362
Foreign currency translation
 adjustment, net of tax of $2,745
                                              --        --           --           --      (5,997)           --         (5,997)
                                                                                                                     --------
Comprehensive income                                                                                                 $ 37,365
                                         ----------------------------------------------------------------------------========

Balance, December 31, 1999                37,127       371       94,465      114,510      (9,434)           --
Issuance of common  stock under stock
 option plans                              1,632        16       19,201           --          --            --
Tax benefit  from  exercises of stock
 options                                      --        --        8,989           --          --            --
Repurchases and retirement of common
 stock                                      (477)       (4)      (1,295)      (7,890)         --            --
Net income                                    --        --           --       43,253          --            --       $ 43,253
Foreign currency translation
 adjustment, net of tax of $2,706
                                              --        --           --           --      (5,670)           --         (5,670)
                                                                                                                     --------
Comprehensive income                                                                                                 $ 37,583
                                         ----------------------------------------------------------------------------========
</TABLE>

                                   (Continued)

                                       35
<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
For the Years Ended on the Friday Nearest December 31
--------------------------------------------------------------------------------
(Amounts in Thousands)
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                         Accumulated Other
                                           Common Stock                                  Comprehensive Loss
                                           ------------                                  ------------------
                                                                                       Foreign      Changes in    Compre-
                                                            Additional                 Currency     Fair Value    hensive
                                                             Paid-in     Retained    Translation        of        Income
                                         Shares    Amount    Capital     Earnings     Adjustment    Derivatives   (Loss)
                                         ---------------------------------------------------------------------------------
<S>                                      <C>       <C>       <C>         <C>          <C>          <C>            <C>
Balance, December 29, 2000               38,282    $ 383     $121,360    $ 149,873    $(15,104)         --
Issuance of common  stock under stock
 option plans                               160        2        1,093           --          --          --
Tax benefit from  exercises of stock
 options                                     --       --          186           --          --          --
Repurchases and retirement of common
 stock                                     (189)      (2)        (598)     S (1,707)         --          --
Cumulative effect of accounting
 change for derivatives, net of tax
 provision of $442                                    --           --           --          --         938        $    938
Changes in fair value of
 derivatives, net of tax benefit of
 $(499)                                               --           --           --          --      (1,178)         (1,178)
Net loss                                              --           --      (31,763)         --          --         (31,763)
Foreign currency translation
 adjustment, net of tax of
  $(1,004)                                            --           --           --      (4,238)         --          (4,238)
                                                                                                                  --------
Comprehensive loss                                                                                                $(36,241)
                                         -------------------------------------------------------------------------========
Balance, December 28, 2001               38,253    $ 383     $122,041    $ 116,403    $(19,342)    $  (240)
                                         =========================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       36
<PAGE>

Notes to Consolidated Financial Statements

1.   Summary of Significant Accounting Policies

General Artesyn Technologies, Inc. (Nasdaq: ATSN), a Florida corporation formed
in 1968, is primarily engaged in the design, development, manufacture, sale and
service of electronic products, power supplies, power conversion products, and
power subsystems for producers of electronic equipment in the computing and
communications industry.

Basis of Presentation The consolidated financial statements include the accounts
of Artesyn Technologies, Inc. and its subsidiaries (collectively referred to as
"Artesyn" or "The Company"). Intercompany accounts and transactions have been
eliminated in consolidation.

Fiscal Year Artesyn's fiscal year ends on the Friday nearest December 31, which
results in a 52- or 53-week year. The fiscal years ended December 28, 2001,
December 29, 2000 and December 31, 1999 are all comprised of 52 weeks.

Cash and Equivalents Only highly liquid investments with original maturities of
90 days or less are classified as cash and equivalents. These investments are
carried at cost, which approximates market value.

Inventories Inventories are stated at the lower of cost, on a first-in,
first-out basis, or market. A provision has been made to reduce obsolete or
excess inventories to market based on current and expected demand for the
finished product and the components used to manufacture it. Finished goods and
work-in-process inventories include material, labor and manufacturing overhead.
Artesyn recorded inventory writedowns of $31.7 million, $13.5 million and $9.4
million in fiscal 2001, 2000 and 1999, respectively.

Property, Plant & Equipment Property, plant and equipment is stated at cost.
Depreciation and amortization is provided on the straight-line method over the
estimated useful lives of the assets ranging from three to thirty years.
Leasehold improvements are recorded at cost and are amortized using the
straight-line method over the remaining lease term or the economic useful life,
whichever is shorter. Leasehold improvements are written off if the related
leasehold is vacated. Major renewals and improvements are capitalized, while
maintenance, repairs and minor renewals not expected to extend the life of an
asset beyond its normal useful life are expensed as incurred.

Impairment of Long-Lived Assets Artesyn periodically evaluates whether events
and circumstances have occurred that may warrant revision of the estimated
useful life of its long-lived assets or whether the remaining balance of
long-lived assets should be evaluated for possible impairment. Artesyn uses an
estimate of the related undiscounted cash flows over the remaining life of the
long-lived assets to determine whether an impairment has occurred. Fair value is
compared to cost in calculating the amount of the impairment. There was no
impairment of assets held and used for any of the years presented (See Note 5
for asset disposals related to restructuring activities).

Goodwill The excess of purchase price over net assets of companies acquired
(goodwill), which were accounted for under the purchase method of accounting, is
capitalized and amortized on a straight-line basis over periods ranging from six
to forty years. Related accumulated amortization was $25.4 million and $17.6
million at December 28, 2001 and December 29, 2000, respectively. Amortization
expense was $8.1 million, $6.2 million and $2.2 million in fiscal years 2001,
2000 and 1999, respectively.

Artesyn continually evaluates whether events and changes in circumstances
warrant revised estimates of useful lives or recognition of an impairment loss
of unamortized goodwill. The conditions that would trigger an impairment
assessment of unamortized goodwill include a significant, sustained negative
trend in Artesyn's operating results or cash flows, a decrease in demand for
Artesyn's products, a change in the competitive environment and other industry
and economic factors. Artesyn reviews for any impairment utilizing the
undiscounted cash flow method. Artesyn measures impairment of unamortized
goodwill utilizing the discounted cash flow method. The estimated cash flows are
then compared to Artesyn's unamortized goodwill; if the unamortized balance of
the goodwill exceeds the estimated cash flows, the excess of the unamortized
balance is written off. As of December 28, 2001, Artesyn determined that there
has been no impairment of goodwill.

                                       37
<PAGE>

Foreign Currency Translation The functional currency of Artesyn's European and
certain Asian subsidiaries is each entity's local currency. Assets and
liabilities are translated from their functional exchange into US dollars using
exchange rates in effect at the balance sheet date. Equity is translated using
historical exchange rates. Income and expense items are translated using average
exchange rates for the period. The effect of exchange rate fluctuations on
translating foreign currency assets and liabilities into US dollars is included
in accumulated other comprehensive loss, net of income taxes. Translation of
intercompany accounts and foreign exchange transaction gains and losses are
included in the results of operations and were not significant for any period
presented. The functional currency of substantially all of Artesyn's Asian
subsidiaries is the US dollar, as their transactions are generally denominated
in US dollars.

Revenue Recognition Artesyn recognizes revenue and the related costs of sales as
products are shipped and title is passed to the customer or as services are
provided. For sales including software products, Artesyn typically has no future
obligations related to the software and, accordingly, revenue is recognized as
the products are shipped and title is transferred to the customer. For those
agreements that include support services, revenue related to the services is
deferred and recognized as the services are performed in accordance with
Statement of Position 97-2 "Software Revenue Recognition" and related
interpretations.

Sales are comprised of gross revenues less provisions for estimated customer
returns and other sales allowances. The related reserve for these provisions are
included in "Accounts Receivable, net" in the accompanying consolidated
statements of financial condition. Provisions for estimated returns and sales
allowances are established by the Company concurrently with the recognition of
revenue and are based on a variety of factors including actual return and sale
allowance history and projected economic conditions. The Company continually
monitors customer inventory levels and makes adjustments to these provisions
when management believes actual product returns or other allowances may differ
from established reserves. The Company has not incurred any significant amount
of returns or sales allowances in fiscal 2001, 2000 or 1999.

All amounts billed to customers related to shipping and handling are included in
revenue. All costs associated with shipping and handling are recognized in cost
of sales.

Effective October 2000, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition," which provides
guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC. SAB No. 101 outlines the basic criteria
that must be met to recognize revenue and provides guidance for disclosure
related to revenue recognition policies. Artesyn believes its revenue
recognition practices are in conformity with the guidelines prescribed in SAB
No. 101. There was no effect on the consolidated financial statements related to
the adoption of SAB No. 101.

Product Warranty Artesyn records estimated product warranty costs in the period
in which the related revenues are recognized. Management periodically evaluates
estimates used in the preparation of the financial statements for continued
reasonableness. Warranty costs are generally determined by calculating the
historical relationship between sales and warranty costs and applying the
calculation to the current period's sales. Appropriate adjustments, if any, to
the estimates used are made prospectively based on such periodic evaluation.

Research and Development Research and development costs include product
engineering, product development and research and development costs which are
expensed in the period incurred. Research and development expenses were $41.5
million, $44.9 million and $36.4 million for year ended December 28, 2001,
December 29, 2000 and December 31, 1999, respectively.

Income Taxes Income taxes reflect the current and deferred tax consequences of
events that have been recognized in Artesyn's financial statements or tax
returns. The realization of deferred tax assets is based on historical tax
positions and expectations about future taxable income.

Valuation allowances are recorded related to deferred tax assets if their
realization does not meet the "more likely than not" criteria detailed in
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes."

                                       38
<PAGE>

Tax returns related to the consolidated financial statements of Artesyn are
filed in the United States, individual states, and foreign countries where
Artesyn conducts business.

Stock-Based Compensation Artesyn applies Accounting Principles Board ("APB") No.
25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for stock-based compensation for employees and non-employee
directors. Artesyn has provided the pro forma disclosure of the effect on net
income (loss) and earnings (loss) per common share as if the fair value-based
method prescribed in SFAS No. 123, "Accounting for Stock-Based Compensation" had
been applied in measuring compensation expense using the Black-Scholes option
pricing model. Other than grants to non-employee directors, all stock-based
awards to non-employees are recognized as compensation expense, although there
have been no such awards to any non-employees in any of the periods presented.

Earnings (Loss) Per Share Basic earnings (loss) per share ("EPS") is calculated
by dividing income (loss) available to common shareholders by the
weighted-average number of common shares outstanding during each period in
accordance with SFAS No. 128 "Earnings Per Share." Where applicable, diluted
earnings per share includes the potential impact of convertible securities and
dilutive common stock equivalents using the treasury stock method of accounting.
The reconciliation of the numerator and denominator of the EPS calculation is
presented in Note 9.

Comprehensive Income (Loss) SFAS No. 130, "Reporting Comprehensive Income"
requires companies to report all changes in equity in a financial statement for
the period in which they are recognized, except those resulting from investment
by owners and distributions to owners. Artesyn has chosen to disclose
Comprehensive Income (Loss), which encompasses net income (loss), effects of
derivatives and foreign currency translation adjustments, net of tax, in the
Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss).

Use of Estimates in the Preparation of Financial Statements The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying notes. The more significant estimates made by management include
the provision for doubtful accounts receivable, inventory write-downs for
potentially excess or obsolete inventory, restructuring liabilities, warranty
reserves, valuation allowance on deferred tax assets and the valuation and
amortization period for intangible assets. Actual results could differ from
those estimates.

Concentration of Credit Risk Financial instruments that potentially subject
Artesyn to concentrations of credit risk consist principally of cash and
equivalents, trade accounts receivable and financial instruments used in hedging
activities. Artesyn's cash management and investment policies restrict
investments to low-risk, highly liquid securities, and Artesyn performs periodic
evaluations of the credit standing of the financial institutions with which it
deals. Artesyn sells its products to customers in various geographical areas.
Artesyn performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. Artesyn maintains reserves
for potential credit losses, and such losses traditionally have been within
management's expectations and have not been material in any year. As of December
28, 2001 and December 29, 2000, management believes Artesyn had no significant
concentrations of credit risk.

The following table includes sales to customers in excess of 10% of total sales
for any period presented:

                              2001             2000              1999
---------------------------------------------------------------------
Hewlett-Packard                13%              14%               17%
Dell Computer                  12%               5%                6%
Cisco Systems                   6%              11%               12%
Sun Microsystems                9%              10%               13%

Sales to Hewlett-Packard include sales from Artesyn Solutions, Inc. prior to the
sale of the subsidiary (See Note 18). Sales from Artesyn Solutions, Inc. will
not be included Artesyn's consolidated results in future periods. During the
periods presented, sales from Artesyn Solutions, Inc. represented approximately
half of the amount sold to Hewlett-Packard.

                                       39
<PAGE>

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an Amendment of SFAS No. 133"
(collectively, "SFAS 133"). SFAS 133 requires Artesyn to recognize all
derivative instruments in the balance sheet at fair value. Derivatives that are
not part of a hedging relationship must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge, the
effective portion of the hedge's change in fair value is either (1) offset
against the change in fair value of the hedged asset, liability or firm
commitment through income or (2) held in equity until the hedged item is
recognized in income. The ineffective portion of a hedge's change in fair value
is immediately recognized in income. SFAS No. 138 establishes accounting and
reporting standards for derivative instruments, including certain derivative
investments embedded in other contracts, and for hedging activities. In
addition, it addresses a limited number of issues causing implementation
difficulties for numerous entities that apply SFAS 133 and amends the accounting
and reporting standards of SFAS 133 for certain derivative instruments and
certain hedging activities. Artesyn adopted SFAS 133, as amended, on December
30, 2000. Changes in the fair value for the effective portion of the gain or
loss on a derivative that is designated as and meets all the required criteria
for a cash flow hedge are recorded in Accumulated Other Comprehensive Loss and
reclassified into earnings as the underlying hedged item affects earnings.
Amounts reclassified into earnings related to interest rate swap agreements are
included in interest expense. The ineffective portion of the gain or loss on a
derivative is recognized in earnings within interest income or expense. The
adoption of SFAS 133 resulted in an increase in total assets of $1.4 million and
a $0.9 million increase, net of tax, in shareholders' equity. Accordingly, the
adoption of SFAS No. 133 was not material. During the fiscal year ended December
28, 2001, Artesyn recorded the subsequent change in fair value of the interest
rate swap derivatives as an increase in Accumulated Other Comprehensive Loss
totaling approximately $1.2 million. As of December 28, 2001, the fair value of
Artesyn's derivative instruments was a liability of approximately $0.2 million
and is included in Accounts Payable and Accrued Liabilities in the accompanying
Consolidated Statement of Financial Condition.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" ("SFAS
141"). SFAS 141 addresses financial accounting and reporting for business
combinations and supercedes Accounting Principles Board Opinion No. 16,
"Business Combinations" and SFAS No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises." All business combinations in the scope
of SFAS 141 are to be accounted for under the purchase method. SFAS 141 is
effective June 30, 2001. The adoption of SFAS 141 did not have any impact on
Artesyn's consolidated financial position, results of operations or cash flows.

In June 2001, the FASB also issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 addresses financial accounting and reporting for
intangible assets acquired individually or with a group of other assets (but not
those acquired in a business combination) at acquisition. SFAS 142 also
addresses financial accounting and reporting for goodwill and other intangible
assets subsequent to their acquisition. With the adoption of SFAS 142, goodwill
is no longer subject to amortization. Rather, goodwill will be subject to at
least an annual assessment for impairment by applying a fair-value based test.
The impairment loss is the amount, if any, by which the implied fair value of
goodwill is less than the carrying or book value. SFAS 142 is effective for
fiscal years beginning after December 15, 2001. Any impairment loss for goodwill
arising from the initial application of SFAS 142 is to be reported as resulting
from a change in accounting principle.

Artesyn will adopt SFAS 142 in the first quarter of 2002. With the adoption of
SFAS 142, Artesyn will assess the impact based on a two-step approach to assess
goodwill based on applicable reporting units and will reassess any intangible
assets, including goodwill, recorded in connection with its previous
acquisitions. Artesyn had recorded approximately $8.1 million of amortization of
goodwill during 2001. Artesyn is currently assessing, but has not yet determined
the impact of adoption of SFAS 142 will have on its financial statements. As of
December 28, 2001, Artesyn had unamortized goodwill of $64.6 million.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 supercedes FASB Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of." SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting Principles Board
Opinion No. 30, "Reporting Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business." SFAS 144 is effective for financial
statements issued for fiscal years

                                      40
<PAGE>

beginning after December 15, 2001, and will thus be adopted, as required, on
December 29, 2001. The adoption of SFAS 144 will not have an impact on Artesyn's
consolidated financial position, results of operations or cash flows.

Fair Value of Financial Instruments Carrying value of cash and equivalents,
accounts receivable and accounts payable approximates fair value due to the
short-term nature of these accounts. The fair value of long-term debt is
determined using current applicable interest rates as of the balance sheet date
and approximates the carrying value of such debt because the underlying
instruments are at variable rates that are repriced frequently.

Reclassifications Certain prior years' amounts have been reclassified to conform
to the current year's presentation.

2.   Inventories

The components of inventories are as follows ($000s):
                                          December 28,    December 29,
                                              2001           2000
---------------------------------------------------------------------
Raw materials                              $  57,684       $  87,419
Work in process                               10,802          17,166
Finished goods                                35,070          45,877
                                           -------------------------

                                           $ 103,556       $ 150,462
                                           =========================

3.   Property, Plant, & Equipment

Property, plant & equipment is comprised of the following ($000s):

                                          December 28,    December 29,
                                             2001            2000
---------------------------------------------------------------------
Land                                       $   2,521       $   2,077
Buildings and fixtures                        20,462          18,453
Machinery and equipment                      173,857         167,809
Leasehold improvements                         8,246           5,658
Equipment, furniture and leasehold
   improvements under capital leases             274          11,316
                                           -------------------------
                                             205,360         205,313
Less accumulated depreciation and
   amortization                             (102,069)       (100,254)
                                           -------------------------

                                           $ 103,291       $ 105,059
                                           =========================

Depreciation and amortization expense was $25.5 million, $20.5 million, and
$17.5 million in fiscal years 2001, 2000 and 1999, respectively.

                                       41
<PAGE>

4.   Accounts Payable and Accrued Liabilities

The components of accounts payable and accrued liabilities are as follows
($000s):

                                       December 28,     December 29,
                                          2001             2000
--------------------------------------------------------------------
Accounts payable                        $ 35,616          $ 85,383
Accrued liabilities:
     Compensation and benefits            12,365            21,312
     Income taxes payable                 12,476            15,121
     Warranty reserve                      6,197             8,140
     Commissions                           1,074             2,763
     Restructuring reserve                 5,432               408
     Deferred Acquisition payments         2,485                --
     Other                                16,679            15,908
                                        --------------------------

                                        $ 92,324          $149,035
                                        ==========================

At December 28, 2001 and December 29, 2000, other accrued liabilities consisted
primarily of accruals for deferred acquisition payments, professional fees,
consulting, insurance, interest and other taxes.

5.   Restructuring and Related Charges

During 2001, Artesyn implemented a plan to restructure certain of its operations
as a result of the significant reduction in customer demand experienced during
2001. The reduction in customer demand resulted in Artesyn having excess
manufacturing capacity and costs. The restructuring plan is designed to address
these issues and is comprised of the following elements:

     1)   A realignment of Artesyn's commercial functions along customer/market
          lines in order to provide our customers with enhanced service.

     2)   Addressing certain excess capacity and cost issues by closing several
          operating and administrative facilities throughout the world and
          consolidating their functions into other existing locations.

     3)   The elimination of certain operational and administrative positions
          company-wide.

Pursuant to Artesyn's restructuring plan, the Company recorded a pre-tax
restructuring charge of approximately $15.9 million. The remaining restructuring
accrual at December 28, 2001 is included in Accounts Payable and Accrued
Liabilities in the accompanying consolidated statement of financial position.
The components of this charge, along with the 2001 activity, are presented in
the following table ($000s):

<TABLE>
<CAPTION>
                                                      2001 Activity
                                            ------------------------------
                               Accrued                                         Accrued
                             Liability at   Restruct-                        Liability at
                             December 29,     uring                          December 28,
                                 2000        Charge       Cash    Non-Cash       2001
                             ------------   ---------    ------   --------   ------------
<S>                             <C>          <C>         <C>      <C>           <C>
Facility closures               $ 153        $ 7,226     $1,465   $ 2,765       $3,149
Employee termination costs        255          8,687      6,659        --        2,283
                                -----        -------     ------   -------       ------
                                $ 408        $15,913     $8,124   $ 2,765       $5,432
                                =====        =======     ======   =======       ======
</TABLE>

The charge for facility closures is primarily write-downs of equipment, property
and other fixed assets to be disposed of or abandoned at locations that have
been closed to estimated fair value considering the asset condition, current
market factors and third party offers. The remaining accrued liability
represents Artesyn's estimate of the future lease

                                       42
<PAGE>

commitments and buyout options after considering sublease opportunities for the
exit of certain of the Company's leased facilities in Broomfield, Colorado;
Huntington Beach, California; Fremont, California; Framingham, Massachusetts;
Boca Raton, Florida; Etten-Leur, The Netherlands; Edinburgh, Scotland; and
Madison, Wisconsin. The lease liability is estimated based on contract
provisions and historical and current market rates. This estimate can be
materially affected by changes in market conditions. Artesyn anticipates that
the closure of facilities and disposal of assets will be completed during 2002.
Lease payments for the closed facilities extend into 2006. Although Artesyn is
aggressively marketing these locations for subleases on acceptable terms, the
ultimate time required to obtain acceptable subleases may extend beyond
Artesyn's estimates.

The restructuring plan includes the termination and payment of related severance
benefits for approximately 1,100 employees (600 direct labor, 300 indirect labor
and 200 administrative), of which approximately 1,000 have been terminated as of
December 28, 2001. The remaining terminations and associated payments are based
on Artesyn's policies, commitments and statutory requirements and are expected
to be made during 2002.

As part of ongoing restructuring efforts, Artesyn expects to record additional
restructuring charges of approximately $1.0 million during 2002 for expected
total charges for the restructuring plan to be approximately $17.0 million.

6.  Business Combinations

Effective March 27, 2000, Artesyn acquired 100% of the capital stock of Spider
Software Ltd. ("Spider"). Spider supplies embedded telecommunications and
protocol software to the communications marketplace within Artesyn's
Communications Products segment. The purchase price included approximately $33
million of fixed cash payments, of which $28 million was paid in the first
quarter of 2000 and the remaining $5 million, which is included in long-term and
accrued liabilities in the accompanying consolidated statements of financial
condition, will be paid in equal installments in March 2002 and March 2003. Up
to an additional $10 million of contingent consideration could be earned based
on Spider's ability to achieve certain earnings targets through March 2003. For
the earn out period ending March 30, 2001, an additional $1.2 million in
purchase price was recorded based on Spider's results. Approximately $0.7
million of the earn out was paid during 2001, with the remaining $0.5 million to
be paid in the third quarter of 2002. Currently, as a result of the reduced
level of business activity, the total contingent payment to be made is not
expected to exceed $9.0 million over the three-year earn out period.

In connection with the acquisition, the allocation of purchase price was as
follows ($ millions):

Fair value of tangible assets acquired                                  $ 2.7
Liabilities assumed                                                      (2.2)
Goodwill                                                                 35.0
                                                                        -----
Amount paid / accrued for Spider's common stock                         $35.5

Effective August 4, 2000, Artesyn acquired 100% of the capital stock of AzCore
Technologies, Inc. ("AzCore"). The purchase price consisted of a $5.8 million
cash payment, net of cash acquired, made in the third quarter of 2000 and
additional contingent payments of up to $8.0 million if AzCore's products meet
certain milestones. A payment of $0.7 million was made to AzCore in December
2000. Additional payments were made during 2001 to the former owners of AzCore
for approximately $3.3 million related to the contingent payments. The remaining
contingent payments are expected to be made in 2002. AzCore has certain products
and technology that Artesyn believes compliment and enhance its current product
offerings and provide significant long-term growth opportunities.

In connection with the acquisition, the allocation of purchase price was as
follows ($ millions):

Fair value of tangible assets acquired                                   $0.1
Liabilities assumed                                                        --
Goodwill                                                                  9.7
                                                                         -----
Cash paid for AzCore's common stock                                      $9.8

                                       43
<PAGE>

Real-Time Digital, Inc. ("RTD") was acquired in January 2001 for approximately
$3.3 million, net of cash acquired, for fixed cash payments and up to $7.0
million in contingent consideration based on certain milestones. Artesyn made
the initial earn-out payment of approximately $3.0 million to the former owners
of RTD in the fourth quarter of 2001. The remaining contingent consideration is
expected to be paid in 2002. RTD designs systems to be used in the Voice Over IP
internet market within Artesyn's Communications Products segment.

In connection with the acquisition, the allocation of purchase price was as
follows ($ millions):

Fair value of tangible assets acquired                               $ 0.2
Liabilities assumed                                                   (0.1)
Goodwill                                                               6.2
                                                                     -----
Cash paid for RTD's common stock                                     $ 6.3

All acquisitions were accounted for under the purchase method of accounting.
Accordingly, goodwill of approximately $35.0 million related to Spider, $9.7
million related to AzCore and $6.2 million related to RTD was recorded,
representing the excess of the purchase price over the estimated fair value of
the net assets acquired and transaction costs. Through December 28, 2001, the
goodwill related to the Spider, AzCore and RTD transactions was being amortized
on a straight-line basis over a period of six, twenty and ten years,
respectively. The results of operations of the companies have been included in
Artesyn's consolidated financial statements from the date of acquisition. The
following unaudited pro forma information combines the consolidated results of
operations of Artesyn, Spider, AzCore and RTD as if the acquisitions had
occurred at the beginning of the following periods.

                                                   Fiscal Year Ended
                                      ------------------------------------------
                                      December 28,   December 29,   December 31,
                                          2001           2000           1999
                                      ------------------------------------------
Sales                                   $493,990       $692,231       $598,758
Net income (loss)                        (31,795)        40,317         35,087
Earnings (loss) per share - Basic       $  (0.83)      $   1.07       $   0.94
Earnings (loss) per share - Diluted     $  (0.83)      $   1.02       $   0.90

The unaudited consolidated pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense resulting from goodwill, increased interest expense on the acquisition
debt, and related income tax effects. The combined pro forma results do not
purport to be indicative of results that would have occurred had the combination
been in effect for the periods presented, nor do they purport to be indicative
of the results that will be obtained in the future.


7.   Long-Term Debt and Capital Leases

     Long-term debt and capital lease obligations consist of the following
($000s):

                                                     December 28,   December 29,
                                                        2001           2000
--------------------------------------------------------------------------------
Revolving debt facility (b)
  Euro denominated borrowings                          $ 23,383       $24,816
  U.S. dollar denominated borrowings                     77,000        48,000

Capital lease obligations (a)                               108         1,753

Other                                                       115           244
                                                       ----------------------
                                                        100,606        74,813
Less current maturities                                     207         1,512
                                                       ----------------------

                                      44
<PAGE>

Long-term debt and capital leases                      $100,399       $73,301
                                                       ======================

     a)   Items under capital leases include certain equipment, furniture and
          leasehold improvements.

     b)   Effective January 23, 2001, Artesyn entered into a credit agreement
          with a syndicate of banks which provided a three-year, multi-currency
          $275 million credit facility. As of December 28, 2001, Artesyn was not
          in compliance with the restrictive covenants contained in the credit
          facility. Effective January 15, 2002, Artesyn and its syndicate of
          banks signed an amendment to the credit facility that waived the
          compliance requirement for December 28, 2001 and changed the
          restrictive covenants to take into account current business
          conditions. The amended credit agreement, which is to expire March 31,
          2004, provides for various interest rate options on the facility
          initially based on LIBOR plus 2.5% and a fee of 0.5% on the unused
          balance, and a 0.25% utilization fee when the line is more than 50%
          drawn. The credit agreement, which is secured by certain assets,
          contains restrictive covenants that, among other things, require
          Artesyn to maintain a certain minimum liquidity, and limits the
          purchase, transfer and distribution of certain assets. The aggregate
          loan commitment of the credit facility is $85 million. Artesyn is
          currently in compliance with all financial related covenants to the
          revolving debt facility.

Future obligations related to the maturities of long-term debt and capital
leases and other are as follows ($000s):

                                                    Revolving     Capital Leases
Fiscal Year                                       Debt Facility     and Other
--------------------------------------------------------------------------------
2002                                                $     --           $207
2003                                                      --             12
2004                                                 100,383              4
----                                                -----------------------
                                                    $100,383           $223
                                                    =======================

8.   Income Taxes

The components of the provision (benefit) for income taxes consist of the
following ($000s):

                                              2001        2000         1999
--------------------------------------------------------------------------------
Currently payable:
     Federal                                 $ 2,804    $ 13,023    $ 14,168
     State                                       281       3,425       3,102
     Foreign                                  (1,495)      4,905       4,918
                                             -----------------------------------
Total current                                  1,590      21,353      22,188
                                             -----------------------------------

Deferred provision (benefit):
     Federal                                    (553)     (1,524)     (2,193)
     State                                       (61)         24        (313)
     Foreign                                  (8,500)        777         166
                                             -----------------------------------
Total deferred                                (9,114)       (723)     (2,340)
                                             -----------------------------------
Total provision (benefit) for income taxes   $(7,524)   $ 20,630    $ 19,848
                                             ===================================

The exercise of nonqualified stock options resulted in state and federal income
tax benefits to Artesyn related to the difference between the fair market price
of the stock at the date of exercise and the exercise price. In fiscal years
2001, 2000 and 1999, the provision (benefit) for income taxes excludes current
tax benefits of $0.2 million, $9.0 million and $3.4 million, respectively,
related to the exercise of stock options credited directly to additional paid-in
capital.

                                      45
<PAGE>

Income taxes have not been provided on the undistributed net earnings of
Artesyn's foreign subsidiaries, which approximated $103.0 million as of December
28, 2001, as Artesyn does not intend to repatriate such earnings.

The components of Artesyn's income (loss) before provision (benefit) for income
taxes consist of the following ($000s):

<TABLE>
<CAPTION>
                                                         2001        2000     1999
------------------------------------------------------------------------------------
<S>                                                    <C>         <C>       <C>
U.S. (including gain on sale of Artesyn Solutions)     $ (6,224)   $33,805   $35,373
Foreign                                                 (33,063)    30,078    27,837
                                                       -----------------------------
Total income (loss) before  provision  (benefit) for
     income taxes                                      $(39,287)   $63,883   $63,210
                                                       =============================
</TABLE>

Artesyn's effective tax rate differs from the U.S. statutory federal income tax
rate due to the following:

                                                     2001       2000       1999
--------------------------------------------------------------------------------
U.S. federal statutory tax rate                      35.0%      35.0%      35.0%
Foreign tax effects                                 (15.4)      (7.6)      (7.0)
Permanent items -non-deductible                       1.9        0.4        0.6
Change in the valuation allowance                     --          --       (1.3)
State income tax effect, net of federal
benefit                                              (0.4)       4.5        3.3
Other                                                (1.9)        --        0.8
                                                    ----------------------------
Effective income tax rate                            19.2%      32.3%      31.4%
                                                    ============================
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
Artesyn's deferred tax assets and deferred tax liabilities as of December 28,
2001 and December 29, 2000 are as follows ($000s):

                                                         2001            2000
--------------------------------------------------------------------------------
Current Deferred Tax Assets
     Inventory reserves                                $  4,981        $  5,282
     Other accrued liabilities                            6,113           5,962
     Allowance for doubtful accounts                        953           1,308
     Net operating loss carryforwards                       351              --
                                                       -------------------------
                                                       $ 12,398        $ 12,552
                                                       =========================
Long-Term Deferred Tax Assets
     Lease liabilities                                 $  1,707        $  1,033
     Other accrued liabilities                              466             553
     Net operating loss carryforwards                    10,840           2,342
     Valuation allowance                                 (2,910)         (2,342)
                                                       -------------------------
                                                       $ 10,103        $  1,586
                                                       =========================

Long-Term Deferred Tax Liabilities
     Property, plant and equipment                     $  5,399        $  6,830
     Goodwill                                               672             604
     Other                                                  679              --
                                                       -------------------------
                                                       $  6,750        $  7,434
                                                       =========================

The valuation allowance as of December 28, 2001 and December 29, 2000 is
associated with pre-acquisition net operating loss carryforwards related to
Spider and operating losses at other subsidiaries. Management believes that it
is not "more

                                      46
<PAGE>

likely than not" that it will realize these deferred tax assets based on
historical tax positions and expectations about future taxable income.

Approximately $1.6 million of Artesyn's tax-effected net operating loss
carryforwards expire through fiscal 2020. Certain other foreign tax-effected net
operating loss carryforwards totaling approximately $6.7 million have an
indefinite life. Approximately $2.9 million of Artesyn's tax-effected net
operating loss carryforwards are offset by a valuation allowance.


9.   Earnings (Loss) Per Share

The following data show the amounts used in computing earnings (loss) per share
and the effects on income (loss) and the weighted-average number of shares of
potentially dilutive common stock. The reconciliation of the numerator and
denominator of the EPS calculation is presented below ($000s except per share
data):

                                               2001         2000          1999
-------------------------------------------------------------------------------
Basic EPS
   Net income (loss)                         $(31,763)     $43,253      $43,362
                                             ----------------------------------
   Weighted average shares                     38,229       37,666       37,272
                                             ----------------------------------
   Per share - basic                         $  (0.83)     $  1.15      $  1.16
                                             ==================================
Diluted EPS
   Net income (loss)                         $(31,763)     $43,253      $43,362
                                             ----------------------------------
   Weighted average shares                     38,229       37,666       37,272
   Effect of dilutive items:
     Stock options                                 --        1,805        1,727
                                             ----------------------------------
                                               38,229       39,471       38,999
                                             ----------------------------------
   Per share - diluted                       $  (0.83)     $  1.10      $  1.11
                                             ==================================
Antidilutive weighted options                   7,161          211          731
                                             ==================================

The above antidilutive weighted options to purchase shares of common stock were
not included in computing diluted earnings per share because their effects were
antidilutive for the respective periods due to the 2001 net loss and the
relative price of Artesyn's stock in relation to the exercise price of the
options.

10.  Commitments and Contingencies

Legal Proceedings

On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against
Artesyn in the United States District Court of Massachusetts alleging that
Artesyn has infringed and is infringing on U.S. Reissue Patent No. 36,098
entitled "Optimal Resetting of The Transformer's Core in Single Ended Forward
Converters." VLT and Vicor have alleged that they are, respectively, the owner
and licensee of such patent and that Artesyn has manufactured, used or sold
electronic power converters with reset circuits that fall within the claims of
the patent. The suit requests that we pay damage, including royalties, lost
profits, interest, attorney's fees and increased damages under 35 U.S.C. (S)
284. Artesyn has challenged the validity of the patent and has denied the claims
of the infringement. The parties are currently in litigation discovery and no
trial date has yet been set. Although Artesyn believes it has a strong defense
to the claims asserted by VLT and Vicor, if Artesyn is found liable to pay all
of the damages requested by VLT and Vicor such a payment could have a material
adverse effect on Artesyn's business, operating result and financial condition.

                                      47
<PAGE>

The patent applies to sales of products that included the technology in question
from the middle of 1996 through early 2002. The plaintiffs are requesting a
royalty to be paid relating to the sales in question. Artesyn continues to
assert that the patent was not valid and that the technology included in the
products sold did not infringe on the patent. The process has not progressed to
the point where any determination of the outcome can be reasonably estimated.

The claims against us relating to the patent in dispute involve compensation for
sales booked prior to the expiration of the patent, which occurred in early
February 2002, Management believes no future sales related to this patent or
similar technology are at risk.

Artesyn is a party to various other legal proceedings, which have arisen in the
ordinary course of business. While the results of these matters cannot be
predicted with certainty, Artesyn believes that losses, if any, resulting from
the ultimate resolution of these matters will not have a material adverse effect
on Artesyn's consolidated results of operations, cash flows or financial
position.

Purchase Commitments

Artesyn has long-term relationships pertaining to the purchase of certain raw
materials with various suppliers as of December 28, 2001. These purchase
commitments are not expected to exceed Artesyn's usage requirements.

Lease Obligations

Artesyn is obligated under non-cancelable operating leases for facilities and
equipment that expire at various dates through 2006 and thereafter and contain
renewal options. Future minimum annual rental obligations and non-cancelable
sublease income as of December 28, 2001 are as follows ($000s):
                                                      Operating         Sublease
     Fiscal Year                                        Leases           Income
--------------------------------------------------------------------------------
2002                                                  $  9,918          $ 2,562
2003                                                     7,690              427
2004                                                     5,770               --
2005                                                     3,446               --
2006 and thereafter                                        440               --
                                                      -------------------------
                                                      $ 27,264          $ 2,989
                                                      =========================

Rental expense under operating leases amounted to $9.6 million, $10.1 million
and $8.9 million in fiscal years 2001, 2000 and 1999, respectively. Sublease
income was $2.6 million, $2.3 million and $2.2 million for fiscal years 2001,
2000 and 1999, respectively.

A lease liability has been recorded for a leased manufacturing facility no
longer deployed in Artesyn's operations. Although the facility is being
subleased, the future lease obligations exceed future sublease income. The
aggregate minimum annual rental obligations and sublease income under this lease
have been included in the lease commitments table presented above. The lease
liability is estimated based on contract provisions and historical and current
market rates. This estimate can be materially affected by changes in market
conditions. This lease liability is included in Other Long-Term Liabilities in
the Consolidated Statements of Financial Condition and amounted to $4.4 million
as of December 28, 2001.

11.  Stock Repurchases

On July 22, 1998, Artesyn's Board of Directors authorized a share repurchase
program to purchase up to 4.0 million shares of Artesyn's common stock in the
open market or in privately negotiated transactions, depending on market
conditions and other factors. During fiscal years 2001, 2000 and 1999, Artesyn
repurchased and retired 189,000, 476,500 and 1,860,700 shares, respectively, of
its common stock for a total of approximately $2.3 million, $9.2 million and
$31.9 million, respectively. All of such repurchases were funded with cash. The
excess of the cost of shares repurchased over par value was allocated to
additional paid-in capital based on the pro rata share amount of additional
paid-in capital for all shares with the difference charged to retained earnings.
The authorization for the share repurchase program expired in the third quarter
of 2001.

                                       49
<PAGE>

12.  Stock-Based Compensation Plans

Employee Stock Options Plans

During 2000, Artesyn established the 2000 Performance Equity Plan ("PEP") under
which it reserved 4,400,000 shares of common stock for granting of either
incentive or nonqualified stock options to key employees and officers. This
replaced the 1990 Performance Equity Plan, which expired in 2000. Under the
current plan, both incentive and nonqualified stock options have been granted at
prices not less than the fair market value on the date of each grant as
determined by the Compensation Committee of Artesyn's Board of Directors. The
maximum term of the options is 10 years, although some options have been granted
with a five-year term. Beginning with grants made in 1995, the majority of the
options granted become exercisable after the price of Artesyn's common stock
achieves certain levels for specified periods of time or upon the passage of a
certain number of years from the date of grant. For grants made prior to 1995,
options vest at the rate of 25% per year beginning one year from the date of
grant. As of December 28, 2001, 793,450 stock options were reserved for future
grants.

In December 1997, Artesyn completed a merger with Zytec Corporation ("Zytec").
Outstanding Zytec stock options as of the date of the merger were converted to
Artesyn's stock options. The Zytec option activity and share prices have been
restated to Artesyn's equivalents using the exchange ratio of 1.33 shares of
Artesyn's common stock to one share of Zytec common stock. Zytec options
generally expire six years from the date of grant, or three months after
termination of employment, if earlier. Options vest at the rate of 20% per year
beginning one year from the date of grant. No additional grants from the Zytec
plans were allowed to be made after December 29, 1997.

Outside Directors Stock Options Plans

Artesyn established an Outside Directors Stock Option Plan in 1986, which was
replaced by an updated plan in 1990. Under the current provisions of the plan,
1,000,000 shares of common stock are reserved for granting of nonqualified stock
options to directors of Artesyn who are not employees of Artesyn at exercise
prices not less than the fair market value on the date of each grant. Upon
initial election or appointment to the Board of Directors and each year
thereafter, outside directors shall receive an option to purchase 10,000 shares
of common stock provided that they own a given number of shares of common stock
of Artesyn based on a formula set forth in the plan. The options granted under
both Outside Directors plans fully vest on the one year anniversary of the date
of grant. As of December 28, 2001, 240,000 stock options were reserved for
future grants.

Artesyn applies APB No. 25, "Accounting for Stock Issued to Employees" and
related interpretations with supplemental disclosures in accounting for
stock-based compensation. In accordance with APB No. 25, as the exercise price
of Artesyn's stock options equals the market price of the underlying stock on
the date of grant, no compensation cost has been recognized for its fixed stock
option plans. Pro forma information regarding net income (loss) and earnings
(loss) per share is required by SFAS No. 123 "Accounting for Stock-Based
Compensation" and has been determined as if Artesyn had accounted for its
employee and outside directors stock-based compensation plans under the fair
value method. The fair value of each option grant was estimated at the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

                                    2001           2000           1999
----------------------------------------------------------------------------
Risk-free interest rate                   4.5%           6.4%           5.5%
Dividend yield                             --             --             --
Expected volatility                        94%            96%            67%
Expected life                       3.9 years      4.5 years      2.9 years

                                       50
<PAGE>

Artesyn's pro forma information follows ($000s except per share data):

                              2001      2000      1999
--------------------------------------------------------
Net Income
(Loss)
              As reported   $(31,763)  $43,253   $43,362
                            ============================
              Pro forma     $(43,511)  $31,223   $36,680
                            ============================

EPS-Basic     As reported   $  (0.83)  $  1.15   $  1.16
                            ============================
              Pro forma     $  (1.14)  $  0.83   $  0.98
                            ============================

EPS-Diluted   As reported   $  (0.83)  $  1.10   $  1.11
                            ============================
              Pro forma     $  (1.14)  $  0.80   $  0.95
                            ============================

The effects of applying SFAS No. 123 in this pro forma disclosure are not
necessarily indicative of future results. The following table summarizes
activity under all plans for the years ended 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                          2001                      2000                      1999
----------------------------------------------------------------------------------------------------------
                                             Weighted-                 Weighted-                 Weighted-
                                             Average                   Average                   Average
                                             Exercise                  Exercise                  Exercise
                                  Options     Price        Options       Price       Options     Price
                                 -------------------------------------------------------------------------
<S>                              <C>          <C>          <C>          <C>        <C>            <C>
Options outstanding,
 beginning of year               5,378,978    $18.14       5,531,633    $14.30       6,386,197    $12.01
Options granted                  2,813,850      8.58       1,855,500     24.03         909,055     22.99
Options exercised                 (159,763)     5.54      (1,631,877)    11.78      (1,105,082)     9.03
Options canceled                  (872,310)    18.59        (376,278)    18.65        (658,537)    13.46
                                 -----------------------------------------------------------------------
Options  outstanding,  end of
 year                            7,160,755    $14.62       5,378,978    $18.14       5,531,633    $14.30
                                 =========               ===========               ===========
Options  exercisable,  end of
 year                            3,274,021    $16.04       2,570,206    $14.55       2,858,549    $12.03
                                 =========               ===========               ===========
Weighted-average  fair  value
 of    options    granted
 during the year                 $    5.74               $     16.65               $     10.96
                                 =========               ===========               ===========
</TABLE>

                                       51
<PAGE>

The following table summarizes information about stock options outstanding at
December 28, 2001:

<TABLE>
<CAPTION>
                                 Options Outstanding       Options Exercisable
---------------------------------------------------------------------------------
                                 Weighted-
                                  Average
                                 Remaining    Weighted-                 Weighted-
  Range of          Number      Contractual    Average      Number      Average
  Exercise       Outstanding       Life        Exercise   Exercisable   Exercise
   Prices         at 12/28/01    (Years)        Price     at 12/28/01    Price
-------------------------------------------------------   -----------------------
<S>               <C>              <C>         <C>         <C>          <C>
$ 2.38 -$ 2.69      301,250        2.35        $  2.63       301,250    $  2.63
  2.75 -  5.37    1,175,185        4.41           5.22       130,685       4.00
  5.44 -  7.42      143,750        4.21           7.06        25,500       7.36
  7.61 -  9.19    1,100,946        4.09           9.18        48,846       9.02
  9.30 - 14.94      761,478        2.35          11.36       543,537      11.40
 15.13 - 16.00      753,693        3.66          15.94       625,193      15.97
 16.44 - 19.83      855,455        4.27          17.93       701,120      18.02
 19.88 - 22.88      358,050        4.82          21.22       222,500      21.12
    23.56           784,450        3.37          23.56            --         --
 23.81 - 43.13      926,498        3.45          26.51       675,390      25.27
                 --------------------------------------   ---------------------

$ 2.38 -$43.13    7,160,755        3.74        $ 14.62     3,274,021    $ 16.04
                  =========                                =========
</TABLE>

Employee Stock Purchase Plans

In May 1996, Artesyn's Board of Directors established an employee stock purchase
plan that allows substantially all employees to purchase shares of Artesyn's
common stock. Under the terms of the plan, eligible employees may purchase
shares of common stock through the accumulation of payroll deductions of at
least 2% and up to 10% of their base salary. The purchase price is an amount
equal to 85% of the market price determined on the tenth trading day following
each three-month offering period. Artesyn's policy is to purchase these shares
on the open market rather than issue them from treasury; therefore, the 15%
employee discount is currently being recognized as compensation expense. Such
amounts were not significant in fiscal years 2001, 2000 and 1999. Employees
purchased 87,093, 16,926 and 40,792 shares in fiscal years 2001, 2000 and 1999,
respectively.

13.  Employee Benefit Plans

Artesyn provides retirement benefits to its employees through the Artesyn
Technologies, Inc. Employees' Thrift and Savings Plan (the "Plan"). As allowed
under Section 401(k) of the Internal Revenue Code, the Plan provides tax
deferred salary deductions for eligible employees. The Plan permits
substantially all United States employees to contribute up to 20% of their base
compensation (as defined) to the Plan, limited to a maximum amount as set by the
Internal Revenue Service. Artesyn may, at the discretion of the Board of
Directors, make a matching contribution to the Plan. Costs charged to operations
for matching contributions were approximately $1.0 million, $1.3 million and
$1.5 million, respectively, for fiscal years 2001, 2000 and 1999.

Substantially all employees of Artesyn's Austrian subsidiary are entitled to
benefit payments upon termination. The benefit payments are based primarily on
the employees' salaries and the number of years of service. At December 28, 2001
and December 29, 2000, Artesyn had recorded a liability of $1.4 million and $1.4
million, respectively, related to this plan. Artesyn recorded $0.1 million, $0.1
million and $0.4 million in severance expense during fiscal years 2001, 2000 and
1999, respectively.


                                       52
<PAGE>

14.  Derivative Financial Instruments

From time to time, Artesyn enters into foreign currency forward contracts and
interest rate swap agreements to manage the risks associated with foreign
currency-denominated transactions and variable rate debt. Contracts are
denominated in the same currency in which the projected foreign cash flows are
expected to occur or the underlying debt is held. These contracts generally have
maturities of less than one year. No foreign currency forward contracts were
outstanding at December 28, 2001.

As of December 28, 2001, Artesyn is a party to two interest rate swap agreements
with a bank that swap its floating rate interest obligations on the aggregate
23.4 million Euro notional principal loan amount for a fixed rate payment
obligation at 4.83% per annum through March 2004. These swaps are designated as
and meet the criteria as effective cash flow hedges. Accordingly, changes in the
fair value for the effective portion of the derivatives are recorded in
Accumulated Other Comprehensive Loss in the accompanying consolidated statements
of financial condition and reclassified into earnings as the underlying hedged
item affects earnings. The ineffective portion of the derivative is recognized
in earnings currently. As of December 28, 2001, the fair value of Artesyn's
interest rate swaps was approximately $0.2 million and is included in Accounts
Payable and Accrued Liabilities in the accompanying Consolidated Statement of
Financial Condition.

15.  Business Segments and Geographic Information

As a result of restructuring activities and other strategic events during 2001,
Artesyn changed the way each of its businesses is analyzed and evaluated by the
chief operating decision makers. Artesyn is now organized in two industry
segments, Power Conversion and Communications Products. Power Conversion is
engaged in the business of designing and manufacturing power supplies and power
conversions products for the communications, wireless, transmission and
computing markets. Those same markets are serviced by the Communications
Products segment, which provides WAN interfaces, CPU boards, DSP solutions and
protocol stacks. Artesyn sells products directly to Original Equipment
Manufacturers and also to a network of industrial and retail distributors
throughout the world. Artesyn's principal markets are in the United States,
Europe and Asia-Pacific, with the United States and Europe being the largest
based on sales. Sales are in U.S. dollars and certain European currencies.
"Other" below represents the results of Artesyn Solutions Inc. which was sold
during 2001.

                                       53
<PAGE>

The table below presents information about reported segments ($000s):

                                       2001        2000       1999
--------------------------------------------------------------------
Sales
     Power Conversion                $ 392,357   $567,241   $516,665
     Communications Products            55,805     75,767     39,019
     Other                              45,806     47,075     38,471
                                     ---------   --------   --------
          Total                      $ 493,968   $690,083   $594,155
                                     =========   ========   ========

Operating Income (Loss)
     Power Conversion                $ (60,938)  $ 48,011   $ 52,247
     Communications Products            (4,904)    15,528      9,511
     Other                               2,589      3,600      3,103
     Gain  on   sale  of   Artesyn
       Solutions Inc.                   31,308         --         --
                                     ---------   --------   --------
          Total                      $ (31,945)  $ 67,139   $ 64,861
                                     =========   ========   ========

Year-End Assets
     Power Conversion                $ 332,437   $399,203   $308,067
     Communications Products            62,698     76,842     30,608
     Other                                  --      8,987      9,739
     Corporate                          31,348     12,783     10,636
                                     ---------   --------   --------
          Total                      $ 426,483   $497,815   $359,050
                                     =========   ========   ========

Capital Expenditures
     Power Conversion                $  25,949   $ 35,546   $ 29,751
     Communications Products             2,252      2,733      3,008
     Other                                 562        977        600
                                     ---------   --------   --------
          Total                      $  28,763   $ 39,256   $ 33,359
                                     =========   ========   ========

Depreciation and Amortization
     Power Conversion                $  24,171   $ 18,983   $ 16,128
     Communications Products             8,242      6,080      1,558
     Other                               1,330      1,885      2,091
     Corporate                             680        247        332
                                     ---------   --------   --------
          Total                      $  34,423   $ 27,195   $ 20,109
                                     =========   ========   ========

                                       54
<PAGE>

Information about Artesyn's operations in different geographical regions is
shown below. Sales are attributed to geographical areas based on selling
location. Long-lived assets consist of property, plant and equipment, net, at
year-end ($000s):

                                              2001          2000          1999
--------------------------------------------------------------------------------
Sales
United States                               $334,430      $499,836      $408,717
Austria                                       73,408        88,872        96,583
Ireland                                       46,543        54,451        42,536
Hong Kong                                     30,972        34,179        33,389
Other foreign countries                        8,615        12,745        12,930
                                            ------------------------------------
     Total sales                            $493,968      $690,083      $594,155
                                            ====================================

Year-End Assets
United States                               $ 27,449      $ 46,025      $ 39,688
Austria                                       10,125         7,917         9,431
Ireland                                        6,848         5,903         5,842
Hong Kong                                     45,575        37,219        30,799
Other foreign countries                       13,294         7,995         2,708
                                            ------------------------------------
     Total long-lived assets                $103,291      $105,059      $ 88,468
                                            ====================================

16.  Selected Consolidated Quarterly Data (Unaudited)

Data in the table below is presented on a 13-week period ($000s except per share
data):

                                First      Second     Third      Fourth
                               Quarter    Quarter    Quarter    Quarter
------------------------------------------------------------------------
Fiscal 2001
Sales                          $150,274   $127,716   $108,572   $107,406
Gross profit                     24,763      9,477      6,303     15,725
Net income (loss)                (4,738)   (21,904)   (16,578)    11,457
     Per share - basic            (0.12)     (0.57)     (0.43)      0.30
               - diluted          (0.12)     (0.57)     (0.43)      0.30

Stock price per common share
     High                         25.87      18.18      13.24       9.99
     Low                           8.75      10.61       4.65       4.75

Fiscal 2000
Sales                          $159,619   $164,322   $182,493   $183,649
Gross profit                     41,055     45,160     50,272     44,498
Net income                       10,610     10,581     13,106      8,956
     Per share - basic             0.29       0.28       0.35       0.23
               - diluted           0.28       0.27       0.33       0.22

The sum of the quarterly earnings (loss) per share amounts differs from those
reflected in Artesyn's Consolidated Statements of Operations due to the
weighting of common and common equivalent shares outstanding during each of the
respective periods. The fourth quarter of 2001 includes a $31.3 million pre-tax
gain on the sale of Artesyn Solutions (See Note 18).

                                       55
<PAGE>

17.  Supplemental Cash Flow Disclosures

<TABLE>
<CAPTION>
                                                                               2001      2000     1999
---------------------------------------------------------------------------------------------------------
<S>                                                                           <C>       <C>        <C>
Cash paid during the year for:
     Interest                                                                 $ 7,029   $ 5,223   $ 2,926
                                                                              ===========================
     Income taxes                                                             $   192   $10,919   $10,045
                                                                              ===========================

Noncash investing and financing activities:

      Property and equipment acquired under capital lease obligations         $    11   $   375   $    75
                                                                              ===========================

  Information with regard to Artesyn's acquisitions which are accounted for
        under the purchase method of accounting is as follows:
      Fair value of non-cash assets acquired, net of liabilities              $   106   $   641   $    --
      Goodwill                                                                 10,243    40,079        --
      Deferred acquisition payments                                                --    (6,271)       --
                                                                              ---------------------------
      Cost, net of cash acquired                                              $10,349   $34,449   $    --
                                                                              ===========================
</TABLE>

18.  Sale of Artesyn Solutions Inc.

During the fourth quarter of 2001, Artesyn sold its component repair and
logistics business, Artesyn Solutions Inc., to Solectron Global Services Inc., a
subsidiary of Solectron Corporation. The purchase price for the sale was
approximately $33.5 million, which is reflected as cash flows from investing
activities on the consolidated statements of cash flows. A substantial portion
of the proceeds from the sale was used to reduce the outstanding balance on the
senior revolving credit facility. Included as a reduction of Operating Expenses
in fiscal 2001 is the pre-tax gain on the sale of the subsidiary of $31.3
million.

19.  Subsequent Event

On January 15, 2002, Artesyn received an equity investment by Finestar
International Limited, an entity controlled by Mr. Bruce Cheng, founder and
chairman of Delta Electronics, a leading global power supply, electronic
component, and video display manufacturer and one of Artesyn's competitors. The
transaction, for which the net proceeds were approximately $49.5 million,
included the issuance of a five-year convertible note which carries a 3%
interest rate and an $11.00 conversion price. The agreement also contains
certain registration rights and warrants to purchase an additional 1.55 million
shares of Artesyn's common stock at $11.50 per share. Approximately $24 million
of the net proceeds were used to reduce the outstanding balance on Artesyn's
senior revolving debt, with the remaining funds to be used for general corporate
purposes. Both parties have the right to redeem the note after three years.

                                       56
<PAGE>

ITEM 9. Changes in and Disagreements with Accountants on Accounting and
        ---------------------------------------------------------------
        Financial Disclosure
        --------------------

None.

PART III

ITEM 10. Directors and Executive Officers
         --------------------------------

Executive Officers

     The following table sets forth the executive officers and key employees of
our company and their positions with us.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
        Name                Age            Position(s) with our company
--------------------------------------------------------------------------------------------------
<S>                         <C>         <C>
Robert J. Aebli             66          President - Communication Products
--------------------------------------------------------------------------------------------------
Kenneth E. Blake            47          President - Marketing and Development
--------------------------------------------------------------------------------------------------
Ewald Braith                38          President - Communications Infrastructure Group
--------------------------------------------------------------------------------------------------
D. Harvey Dewan             62          President - Global Marketing
--------------------------------------------------------------------------------------------------
Richard F. Gerrity          46          Corporate Treasurer
--------------------------------------------------------------------------------------------------
Joseph M. O'Donnell         55          Co-Chairman of the Board of Directors; President and Chief
                                        Executive Officer
--------------------------------------------------------------------------------------------------
Richard J. Thompson         52          Vice President - Finance; Chief Financial Officer and
                                        Secretary
--------------------------------------------------------------------------------------------------
Norman C. Wussow            56          President - Enterprise Computing Group
--------------------------------------------------------------------------------------------------
</TABLE>

Robert J. Aebli has been President of Communications Products since November
1993.

Kenneth E. Blake has been President-Marketing and Development since August 2000.
Previously Mr. Blake was Vice President-Sales and Marketing for Arcom, Inc., a
provider of design and installation services for network systems from February
1999 through August 2000. For more than five years prior to February 1999, Mr.
Blake was Vice President-Sales of our company.

Ewald Braith was appointed President - Communications Infrastructure Group in
January 2002. From January 2000 through December 2001, Mr. Braith served as
Vice-President - Engineering for the Global Wireless and Communications
Infrastructure divisions. Mr. Braith joined Zytec in 1991 and held various
engineering positions, most recently Engineering Manager of Zytec Hungary, until
December 1997.

D. Harvey Dewan was appointed President of Global Manufacturing in January 2000.
From December 1997 to December 1999, Mr. Dewan served as President of our North
American and Asian Manufacturing divisions. From February to December 1997, Mr.
Dewan was Vice President of Operations for Communications Products.

Richard F. Gerrity was appointed Corporate Treasurer in July 2000. From April
1996 to July 2000, Mr. Gerrity served as Director of Treasury at Hadco
Corporation, a manufacturer of electronic components for the technology
industry.

Joseph M. O'Donnell was appointed Chairman of the Board of Directors in February
1997 and as Co-Chairman of the Board following the Zytec merger. Mr. O'Donnell
has served as President and Chief Executive Officer since July 1994.

Richard J. Thompson has served as Vice President - Finance, Chief Financial
Officer, and Secretary since June 1990.

                                       57
<PAGE>

Norman C. Wussow was appointed to the position of President - Enterprise
Computing Group in June 2001. From June 1999 through June 2001, Mr. Wussow
served as President of our North America-Commercial division. From January 1998
through June 1999, Mr. Wussow served as Vice President - Custom Engineering of
North America's Commercial division. Mr. Wussow joined Zytec in 1993 and held
various engineering positions, most recently Vice President - Engineering until
December 1997, when we merged with Zytec.

The Board of Directors

The Board of Directors consists of eleven members. Each of the present directors
was elected at the annual meeting of shareholders of our Company held in May
2001, each to serve until the next annual meeting of shareholders or until his
respective successor is duly elected. Set forth below is certain information
with respect to each director of our Company (based solely upon information
furnished by such persons):

<TABLE>
<CAPTION>
                        Age     Year of First             Principal Occupations
                       (as of   Election as a            during Past Five Years;
Name                   3/1/02)     Director                  Other Directorships
----                   ------   -------------           ------------------------
<S>                      <C>        <C>         <C>
Edward S. Croft, III     59         1980        Since  August 1996, Managing Director of
(1)(3)                                          Croft & Bender LLC, a private investment
                                                banking firm; from April 1996 to August
                                                1996, President of Croft & Co., a financial
                                                advisory firm; for more than five years
                                                prior to April 1996, Managing Director of
                                                The Robinson-Humphrey Company, Inc., an
                                                investment banking firm.

Dr. Fred C. Lee          55         1997        From  February 1986 to December 1997,  a
(1)(3)                                          director of Zytec;  since 1977, Professor
                                                at Virginia Polytechnic Institute and State
                                                University ("VPI") and director of the
                                                Virginia Power Electronics Center at VPI.

Lawrence J. Matthews     73         1997        For more than the past  five  years,
(1)(3)                                          retired executive. From January 1999 to
                                                June 2000, Acting President and Chief
                                                Executive Officer of Veritec, Inc., a
                                                seller of microprocessor-based encoding
                                                and decoding systems products. In October
                                                1995, an involuntary Chapter 7 petition
                                                under the United States Bankruptcy Code,
                                                was filed against Veritec, Inc. This filing
                                                was subsequently converted to a Chapter 11
                                                petition. Veritec emerged from bankruptcy
                                                in October 1999.  Currently a director of
                                                Veritec, Inc.
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>
                         Age     Year of First            Principal Occupations
                        (as of   Election as a          during Past Five Years;
Name                    3/1/02)     Director                Other Directorships
----                    ------   -------------          ------------------------
<S>                       <C>        <C>         <C>
Joseph M. O'Donnell       55         1994        Co-Chairman of the Board of Directors of
                                                 our Company since December 1997;

(4)                                              from February 1997 to December 1997, Chairman
                                                 and since July 1994, Chief Executive Officer
                                                 and President of our Company.

Stephen A. Ollendorff     63         1984        Practicing attorney for more than the
(3)(4)                                           past five years; since February 1999 Of
                                                 Counsel to Kirkpatrick & Lockhart LLP; from
                                                 December 1990 to January 1999, Of Counsel to
                                                 Hertzog, Calamari & Gleason; from 1983 to
                                                 present, Vice President, then President,
                                                 then Chairman and Chief Executive Officer
                                                 and director of Acorn Holding Corp., a
                                                 manufacturer of microcrystalline silicon
                                                 wafers.

Phillip A. O'Reilly       75         1988        For more than the past five years,
(1)(2)                                           retired executive.

Bert Sager                76         1968        Practicing attorney for more than the
(2)(3)                                           past five years; director of Acorn
                                                 Holding Corp., a  manufacturer of
                                                 microcrystalline silicon wafers.

A. Eugene Sapp, Jr.       65         1997        Since December 2001,  Co-Chairman and a
                                                 director of Sanmina-SCI Corporation (the
                                                 surviving corporation of the merger of
                                                 SCI Systems, Inc. with a wholly-owned
                                                 subsidiary of Sanmina Corporation); from
                                                 1994 until 1999,  President and Chief
                                                 Operating Officer of SCI Systems, Inc.;
                                                 since July 2000, Chairman of the Board
                                                 and, since July 1999, Chief Executive
                                                 Officer of SCI, until the merger in
                                                 December 2001.

Ronald D. Schmidt         65         1997        Co-Chairman of the Board of Directors of
(1)(4)                                           our Company since December 1997; from
                                                 January 1984 to December 1997, an executive
                                                 officer (including Chairman of the Board
                                                 and Chief Executive Officer) and director
                                                 of Zytec.

</TABLE>

                                       59
<PAGE>

<TABLE>
<CAPTION>
                        Age     Year of First            Principal Occupations
                       (as of   lection as a           during Past Five Years;
Name                   3/1/02)     Director                 Other Directorships
----                   ------   -------------          -----------------------
<S>                      <C>        <C>         <C>
Lewis Solomon            68         1995        Since October 1999, Chief Executive
(2)(3)(4)                                       Officer of Broadband Services, Inc.,
                                                which provides logistic and technical services
                                                to the cable television, DBS, fixed wireless
                                                and telecommunication industries; from August
                                                1990 to October 1999, Chairman of G&L of
                                                Syosset, Inc., a financial consulting firm;
                                                director of Anadigics, Inc., a manufacturer of
                                                gallium arsenide semiconductors; director of
                                                Terayon Communications, Inc., a manufacturer
                                                of cable and wireless modems; and director of
                                                Harmonic, Inc., a designer, manufacturer and
                                                marketer of digital and fiber optic systems.

John M. Steel            57         1997        Since July 2000, retired executive; from
                                                December 1997 until July 2000, Vice President
                                                of our Company; from January 1984 to December
                                                1997, executive officer and director of Zytec.
</TABLE>

(1)  Member of the Audit Committee.
(2)  Member of the Compensation and Stock Option Committee.
(3)  Member of the Nominating Committee.
(4)  Member of the Executive Committee.

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
our directors and executive officers and beneficial owners of greater than 10%
of our common stock are required to file certain reports with the Securities and
Exchange Commission in respect of their ownership of our company's securities.
We believe that during fiscal year 2001, all required reports were filed on a
timely basis.

                                       60
<PAGE>

ITEM 11. Executive Compensation
         ----------------------

Summary Compensation Table

         The following table sets forth information for the fiscal years ended
December 28, 2001 ("fiscal year 2001"), December 29, 2000 ("fiscal year 2000"),
and December 31, 1999 ("fiscal year 1999"), in respect of compensation earned by
the Chief Executive Officer and by the other four most highly compensated
executive officers (whose salary and bonus earned in fiscal year 2001 exceeded
$100,000) of our company serving at the end of fiscal year 2001 (the "Named
Executives").

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
         Name                              Annual Compensation                          Long-Term Compensation
--------------------------------------------------------------------------------------------------------------------
                                                                Other Annual        Securities      All Other
 Name and Position(s)     Fiscal                   Bonus       Compensation        Underlying       Compensation ($)
                           Year      Salary ($)    ($)(1)         ($)(2)         Options(#)(3)
--------------------------------------------------------------------------------------------------------------------
<S>                       <C>        <C>           <C>                  <C>         <C>                <C>
Joseph M. O'Donnell       2001       $559,854           -0-             -0-         170,000            $32,600(4)
Co-Chairman, Chief        2000        516,910      $450,270             -0-         137,500             32,500(4)
Executive Officer and     1999        495,150       553,217             -0-          70,000             32,300(4)
President
--------------------------------------------------------------------------------------------------------------------
Richard J. Thompson       2001        292,191           -0-             -0-         105,000             14,946(5)
Vice President-           2000        269,794       101,113             -0-         127,500             14,639(5)
Finance,Chief             1999        247,188       197,245             -0-          45,000             14,358(5)
Financial Officer
and Secretary
--------------------------------------------------------------------------------------------------------------------
Robert J. Aebli           2001        227,146           -0-             -0-          35,000             22,685(6)
President-Communication   2000        216,000       247,428             -0-          15,000             21,754(6)
Products                  1999        188,023        97,544             -0-          15,429             18,085(6)
--------------------------------------------------------------------------------------------------------------------
Norman C. Wussow          2001        223,776           -0-             -0-          40,000             15,824(7)
President-Enterprise      2000        201,807        26,520             -0-          50,000             15,353(7)
Computing Group           1999        175,280        61,339             -0-          16,000             14,213(7)
--------------------------------------------------------------------------------------------------------------------
Kenneth E. Blake          2001        247,531           -0-             -0-          40,000              8,065(9)
President-Marketing       2000(8)      89,481        11,750             -0-          40,000              3,125(9)
and Development           1999            -0-           -0-             -0-             -0-                   -0-
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes annual amounts awarded under our Executive Incentive Plan to Named
     Executives.

(2)  Includes only those perquisites which are, in the aggregate, greater than
     or equal to the lesser of $50,000 or 10% of annual salary and bonus.

(3)  Represents options awarded under our various stock option plans.

(4)  Includes insurance premiums paid by our company in the amounts of $20,000,
     $20,000 and $20,000 with respect to two life insurance policies for the
     benefit of Mr. O'Donnell, including a whole-life policy and a hybrid policy
     in fiscal years 2001, 2000 and 1999, respectively. Also includes $7,500,
     $7,500 and $7,500 in premiums paid by our company with respect to health
     insurance for the benefit of Mr. O'Donnell and contributions of $5,100,
     $5,000 and $4,800 to our company's 401(k) plan in fiscal years 2001, 2000
     and 1999, respectively.

                                       61
<PAGE>

(5)  Includes contributions in the amounts of $5,100, $5,000 and $4,800 by our
     company to its 401(k) plan for the benefit of Mr. Thompson and insurance
     premiums in the amounts of $9,846, $9,639 and $9,558 paid by our company
     with respect to term life insurance and health insurance for the benefit of
     Mr. Thompson in fiscal years 2001, 2000 and 1999, respectively.

(6)  Includes contributions in the amounts of $5,100, $5,000 and $4,800 by our
     company to its 401(k) plan for the benefit of Mr. Aebli and insurance
     premiums in the amounts of $17,585, $16,754 and $13,285 paid by our company
     with respect to term life insurance and health insurance for the benefit of
     Mr. Aebli in fiscal years 2001, 2000 and 1999, respectively.

(7)  Includes contributions in the amounts of $5,100, $5,000 and $4,800 by our
     company to its 401(k) plan for the benefit of Mr. Wussow and insurance
     premiums in the amounts of $10,724, $10,353 and $9,413 paid by our company
     with respect to term life insurance and health insurance for the benefit of
     Mr. Wussow in fiscal years 2001, 2000 and 1999, respectively.

(8)  Mr. Blake joined Artesyn Technologies, in August 2000.

(9)  Includes insurance premiums in the amounts of $8,065 and $3,125 paid by our
     company with respect to term life insurance and health insurance for the
     benefit of Mr. Blake in fiscal years 2001 and 2000, respectively.

Stock Option Grants In Last Fiscal Year

The following table sets forth certain information concerning stock options
granted to the Named Executives in fiscal year 2001.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                  Percentage of
                                                  Total Options
                          Number of Securities      Granted to      Exercise                 Grant Date
                           Underlying Options      Employees in     Price Per   Expiration    Present
      Name                      Granted(#)        Fiscal Year(%)(1) Share($)      Date       Value($)(2)
-------------------------------------------------------------------------------------------------------
<S>                            <C>                    <C>            <C>        <C>           <C>
Joseph M. O'Donnell              7,500                0.28           $11.16     03/27/06      $50,929
                                 7,500                0.28            10.09     03/28/06       46,079
                                 7,500                0.28            10.44     03/29/06       47,648
                                 7,500                0.28            10.81     03/30/06       49,360
                                70,000                2.58             9.19     04/04/06      438,942
                                70,000                2.58             7.20     10/24/06      342,332
                                ------                ----                                    -------
                               170,000                6.28                                    975,290
-------------------------------------------------------------------------------------------------------
Richard J. Thompson              7,500                0.28            10.38     03/22/06       47,363
                                 7,500                0.28            10.09     03/28/06       46,079
                                45,000                1.66             9.19     04/04/06      282,177
                                45,000                1.66             5.37     10/16/06      164,138
                                ------                ----                                    -------
                               105,000                3.88                                    539,757
-------------------------------------------------------------------------------------------------------
Robert J. Aebli                 15,000                0.55             9.19     04/04/06       94,059
                                20,000                0.74             7.20     10/24/06       83,576
                                ------                ----                                    -------
                                35,000                1.29                                    177,635
-------------------------------------------------------------------------------------------------------
Norman C. Wussow                20,000                0.74             9.19     04/04/06      125,412
                                20,000                0.74             5.37     10/16/06       72,950
                                ------                ----                                    -------
                                40,000                1.48                                    198,362
-------------------------------------------------------------------------------------------------------
Kenneth E. Blake                20,000                0.74             9.19     04/04/06      125,412
                                20,000                0.74             5.37     10/16/06       72,950
                                ------                ----                                    -------
                                40,000                1.48                                    198,362
-------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Represents the percentage of options granted to all employees of our
     company in fiscal year 2001.

                                       62
<PAGE>

(2)  Based upon the Black-Scholes option pricing model adopted for use in
     valuing executive stock options. The actual value, if any, a Named
     Executive may realize will depend upon the excess of the market price of
     our common stock over the exercise price on the date the option is
     exercised. There is, therefore, no assurance that the value realized by a
     Named Executive will be at or near the value estimated by the Black-Scholes
     model. The estimated values under the model are based upon certain
     assumptions which we believe are reasonable, such as a risk-free rate of
     return of 4.5%, stock price volatility of 94%, future dividend yield of 0%
     and expected life of 3.9 years. The values do not take into account certain
     features of the stock plans which may affect such values, such as
     conditions to exercisability and nontransferability.

Options Exercised in Last Fiscal Year and Fiscal Year-End Option Values Table

The following table sets forth certain information with respect to stock options
exercised by the Named Executives in fiscal year 2001 and certain information
with respect to exercisable and non-exercisable stock options held on December
28, 2001 by the Named Executives. The table also includes the value of
"in-the-money" stock options which represents the spread between the exercise
price of the existing stock options and the year-end trading price of our common
stock.

<TABLE>
<CAPTION>
                                                 ------------------------------------------------------------
                                                      Number of Securities
                                                     Underlying Unexercised         Value of In-The-Money
                                                  Options Held on December 28,   Options Held on December 28,
                                                              2001 (#)                  2001 (1)($)
-------------------------------------------------------------------------------------------------------------
                         Shares        Value
                      Acquired on     Realized                       Not                           Not
       Name           Exercise(#)         ($)       Exercisable   Exercisable    Exercisable   Exercisable
-------------------------------------------------------------------------------------------------------------
<S>                            <C>          <C>         <C>           <C>         <C>             <C>
Joseph M. O'Donnell            -0-          -0-         654,615       273,750     $1,594,169      $150,675
-------------------------------------------------------------------------------------------------------------
Richard J. Thompson            -0-          -0-         267,562       191,250        137,900       179,213
-------------------------------------------------------------------------------------------------------------
Robert J. Aebli                -0-          -0-          87,929        50,000        103,350        42,638
-------------------------------------------------------------------------------------------------------------
Norman C. Wussow               -0-          -0-          40,279        75,000            -0-        79,650
-------------------------------------------------------------------------------------------------------------
Kenneth E. Blake               -0-          -0-             -0-        80,000            -0-        79,650
-------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Based upon the closing price of our common stock on December 28, 2001 of
     $9.27.

Employment Arrangements

The Compensation and Stock Option Committee approved an employment agreement,
dated as of January 1, 2000, between our Company and Mr. O'Donnell (the
"O'Donnell Agreement"). The O'Donnell Agreement provides that effective February
1, 2000, Mr. O'Donnell is to receive a base salary at the rate of $522,000 per
year, which amount is subject to adjustment. Effective February 1, 2001, Mr.
O'Donnell's salary was increased to $560,000. In addition, the O'Donnell
Agreement provides that Mr. O'Donnell is eligible to receive an incentive
payment each year of employment in an amount equal to up to 170% of his base
salary for such year. Mr. O'Donnell is also eligible for additional payments in
the discretion of the Compensation and Stock Option Committee awarded in
accordance with the terms of our Executive Incentive Plan. Mr. O'Donnell is also
entitled to reimbursement of certain health, disability and life insurance
benefits. Our Company also has agreed to cause Mr. O'Donnell to be nominated as
a director throughout the term of his employment. The O'Donnell Agreement's
initial term expired on December 31, 2000, but is renewable each successive year
thereafter for an additional one-year term unless either party provides written
notice of termination. No such notice of termination was provided by either
party. Mr. O'Donnell is currently being paid pursuant to the terms of the
O'Donnell Agreement.

The Compensation and Stock Option Committee also approved an employment
agreement between our Company and Richard J. Thompson, Vice President and Chief
Financial Officer of our Company, dated as of January 1, 2000 (the "Thompson
Agreement"). The Thompson Agreement provides that effective February 1, 2000,
Mr. Thompson is to receive a base salary at the rate of $275,000 per year, which
amount is subject to adjustment. Effective February 1, 2001, Mr. Thompson's
salary was increased to $300,000. In addition, the Thompson Agreement provides
that Mr. Thompson is eligible to receive an incentive payment each year of
employment in an amount equal to up to 104% of his base salary for such year.
Mr. Thompson is also

                                      63
<PAGE>

eligible for additional payments in the discretion of the Compensation and Stock
Option Committee awarded in accordance with the terms of our Executive Incentive
Plan. Under the terms of the Thompson Agreement, Mr. Thompson is also entitled
to reimbursement of health, disability and life insurance benefits. The Thompson
Agreement's initial term expired on December 31, 2000, but is renewable each
successive year thereafter for an additional one-year term unless either party
provides written notice of termination. No such notice of termination was
provided by either party. Mr. Thompson is currently being paid pursuant to the
terms of the Thompson Agreement.

Upon any event of earlier termination of either of the O'Donnell Agreement or
the Thompson Agreement, each of Mr. O'Donnell and/or Mr. Thompson, as the case
may be, is entitled to receive his respective base salary through the date of
termination. In the event of either of Mr. O'Donnell's and/or Mr. Thompson's
death or "disability" (as defined in the respective employment agreement), each
of Mr. O'Donnell and/or Mr. Thompson, as the case may be, is entitled to receive
his respective base salary for an additional year from the date of termination
plus the full incentive payment under our Executive Incentive Plan to which he
would have been entitled if the termination had occurred at the end of the
calendar year during which such termination occurred (the "Full Incentive
Payment"), except that payments of base salary for the additional year will be
offset by certain company-sponsored insurance benefits payable during such
period. In the event that either of Mr. O'Donnell's or Mr. Thompson's employment
is terminated by our Company without "cause" (as defined in the respective
employment agreement) or by either of Mr. O'Donnell or Mr. Thompson due to our
Company's "substantial breach" (as defined in the respective employment
agreement), each of Mr. O'Donnell and/or Mr. Thompson, as the case may be, is
entitled to receive his respective base salary plus the Full Incentive Payment
through the date of termination plus an amount equal to the product of his
respective base salary and the Full Incentive Payment multiplied by two, payable
over a 24-month period provided that the last 12 monthly payments shall not be
made if either of Mr. O'Donnell or Mr. Thompson, as the case may be, is found to
be in breach of certain non-disclosure, non-compete or non-solicitation
agreements. Messrs. O'Donnell and Thompson are each also entitled to receive
reimbursement of expenses of outplacement-related services up to $45,000. In the
event of our company's termination of either of Mr. O'Donnell's and/or Mr.
Thompson's, as the case may be, without "cause", or termination of either
agreement by Mr. O'Donnell or Mr. Thompson due to our company's "substantial
breach" following a "change of control" (as defined in the respective employment
Agreement), each of Mr. O'Donnell and/or Mr. Thompson, as the case may be, is
entitled to receive within 10 days from the date of termination (a) a lump-sum
payment equal to the product of the sum of his respective base salary and the
Full Incentive Payment multiplied by three and (b) an amount to cover certain
excise taxes that may be incurred by Mr. O'Donnell and/or Mr. Thompson as a
result of payment received by either of them following such "change of control".
In the event our company does not renew either Agreement, each of Mr. O'Donnell
and/or Mr. Thompson, as the case may be, shall generally be entitled to receive
his respective base salary and Full Incentive Pay for an additional two years
from the date of termination.

Certain options granted to the Named Executives become immediately exercisable
in the event of a "change of control" and certain other options become
immediately exercisable if a Named Executive's employment is terminated within
six months after a "change of control" of our Company pursuant to the terms of
the stock option plan under which the options were granted.

Compensation of Directors

Directors who are not employees of our Company ("Outside Directors") are
compensated for their services by payment of an annual fee of $24,000 plus
$1,500 per day for each Board of Directors' meeting attended, $750 for each
telephonic Board of Directors' meeting attended and $1,000 per day for each
committee meeting attended (and an additional $250 per day for each committee
meeting at which such person acted as chairman) with a maximum payment of $3,500
per day for attendance at meetings of the Board of Directors and committees and
acting as chairman at meetings of committees of the Board of Directors.

During fiscal year 2001, options to purchase 10,000 shares of common stock were
granted by Artesyn to each of the Outside Directors at an exercise price equal
to the fair market value of our common stock on such grant date pursuant to our
Outside Directors' Plan. Under such plan, each Outside Director is granted an
option, exercisable over 10 years, to purchase 10,000 shares of our common stock
each time that such person is elected or re-elected by the shareholders to serve
as a director of our company if such Outside Director then owns a prescribed
amount of common stock.

                                      64
<PAGE>

An Outside Director who had served as a director prior to August 15, 1996, and
serves as a director for five or more years is entitled to receive certain
annual benefits under our Outside Directors' Retirement Plan. The annual
benefits commence on the later of such Outside Director's retirement from the
Board of Directors or attainment of age 70 and continue for a number of years
equal to the number of years the Outside Director served on our Board of
Directors. Effective January 1, 2000, the base amount of such benefit is
$24,000, adjusted pursuant to a cost of living index to each Outside Director's
particular retirement date. Once a director has begun to receive the benefits as
so adjusted, no further adjustments will be made for the remainder of the period
of time such Outside Director receives the benefit.

Compensation Committee Interlocks and Insider Participation

The Compensation and Stock Option Committee consists of Phillip A. O'Reilly,
Bert Sager, and Lewis Solomon, each of whom is an Outside Director. None of such
committee members are, or were ever, executive officers or employees of our
Company. During the last fiscal year, none of the executive officers of our
company served on the board of directors or on the compensation committee of any
other entity, any of whose executive officers served on the Board of Directors
of our Company.

Compensation And Stock Option Committee Report On Executive Compensation

The Compensation and Stock Option Committee is responsible for establishing the
overall philosophy and strategy of our company's executive compensation program
and overseeing the executive compensation plans developed to execute our
Company's compensation strategy.

Our Company's Executive Compensation Strategy

Our Company's executive compensation program has been designed to promote
shareholder interests and to:

     .    Link key executives' compensation to our company's business
          objectives;

     .    Promote human resource goals to attract, hire and retain quality
          talent;

     .    Reward teamwork and individual performance for achieving annual
          business results;

     .    Balance short and long-term considerations through compensation for
          achievement of annual goals that are consistent with long-term
          objectives; and

     .    Provide motivation to key executives to excel by offering competitive
          incentive and total compensation.

It is our Company's intention to ensure that all compensation paid to its
executives is tax deductible under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). Although Section 162(m) of the Code imposes
limits on deductibility for certain non-approved compensation to certain
executives exceeding $1 million per year, our company, as a result of the
structure of the compensation paid to its executives, does not currently
anticipate any limitations of this deduction.

Compensation of Other Executive Officers

Our Company's executive compensation program includes two principal elements:
annual cash compensation and long-term awards. Our company uses survey data of
comparable companies in its industry with comparable revenue levels in assessing
cash compensation and long-term awards. This evaluation also considers
competitive data of our company's Selected Peer Group included in the Stock
Performance Graph set forth below.

Annual cash compensation includes both base salaries and annual incentive awards
pursuant to our company's Executive Incentive Plan. Executives' base salaries
are evaluated each year based upon an assessment of market data of comparable
companies. Subject to the applicable terms of any employment agreement,
executives are eligible for adjustments in base salary based upon an assessment
of individual performance and changes in principal job duties and
responsibilities. In fiscal year 2001, based upon assessments of the individual
performances, our Company awarded an increase in base salary to Messrs.
O'Donnell, Thompson, Aebli, Wussow, and Blake.

                                       65
<PAGE>

Executives are eligible to receive annual incentive awards under the Executive
Incentive Plan. Each executive participating in the plan has a targeted annual
incentive award based upon competitive practice which represents a stated
percentage of the executive's base salary. The performance of executives with
corporate-wide responsibilities is evaluated based upon the achievement of
corporate financial targets measured by our Company's net income and revenue
growth. The performance of executives with divisional and/or subsidiary
responsibility is evaluated based upon the achievement of divisional or
subsidiary financial targets measured by divisional net income, revenue growth
and cash flow. The financial targets for fiscal year 2001 were developed from
our company's annual planning process. The Compensation and Stock Option
Committee reviews and approves the targets each year based upon fairness, degree
of difficulty and reasonableness. Further, our Company must achieve a minimum
net income performance threshold before corporate executives are entitled to
receive a financial target payout under the Executive Incentive Plan. There may
be no incentive payout if our company is not profitable on a company-wide basis.

Aggregate annual incentive awards are limited to no more than 10% of our
Company's net income, excluding extraordinary items, before total after-tax cost
of the aggregate executive annual incentive payout, unless otherwise approved by
the Compensation and Stock Option Committee and Board of Directors.

Long-term incentive compensation includes payments under the 2000 Performance
Equity Plan. The 2000 Performance Equity Plan permits our Company to grant
non-qualified stock options to selected executives at an exercise price no less
than the fair market value of the common stock on the date of grant.

Each year the Compensation and Stock Option Committee reviews and approves
annual salaries, annual incentive awards, grants of long-term incentives and the
performance targets and criteria established for both the annual and long-term
incentive plans. In addition, the Compensation and Stock Option Committee
reviews the performance of our Company and its divisions and subsidiaries and
exercises the final authority in approving the payout of executive incentive
awards. During fiscal year 2001, the Compensation and Stock Option Committee
engaged executive compensation consultants and used compensation data for
comparable companies to support its decisions.

In the beginning of fiscal year 2001, the Compensation and Stock Option
Committee reviewed and approved the financial targets to be included in the
fiscal year 2001 Executive Incentive Plan for the Chief Executive Officer and
our Company's other executive officers. Based upon the Compensation and Stock
Option Committee's review of our company's performance and the Chief Executive
Officer and our company's other executive officers following conclusion of the
2001 fiscal year, we did not grant awards to the Chief Executive Officer and our
other executive officers who had been with our Company for the entire fiscal
year 2001 under the 2001 Executive Incentive Plan.

Determination of Compensation for the Chief Executive Officer

Mr. O'Donnell's base salary during fiscal year 2001 was increased to $560,000.
The increased base salary of Mr. O'Donnell was based largely upon an assessment
of market data of comparable companies, as described above. On April 4, 2001 and
October 24, 2001, our Company, pursuant to the 2000 Performance Equity Plan,
granted Mr. O'Donnell non-qualified stock options each to purchase 70,000 shares
of common stock at an exercise price of $9.188 and $7.20 per share,
respectively. The terms of these options are for 58 months from the date of
grant and are exercisable as follows: (i) 50% vesting any time after the second
anniversary of the date of grant if the closing price of a share of common stock
equals or exceeds 115% of the exercise price for any 20 of 30 consecutive
trading days after the date of such grant, (ii) 100% vesting any time after the
third anniversary if the closing price of a share of common stock equals or
exceeds 130% of the exercise price per share for any 20 of 30 consecutive
trading days after the date of such grant and (iii) to the extent not previously
exercisable, 100% after 58 months from the date of grant. In addition, Mr.
O'Donnell received non-qualified stock options each to purchase 7,500 shares of
common stock on March 27, 2001, March 28, 2001, March 29, 2001 and March 30,
2001, at exercise prices of $11.16, $10.09, $10.44 and $10.81, respectively,
each pursuant to our company's Executive Ownership Program pursuant to which
participants are eligible to receive stock option grants based on certain stock
ownership positions in our Company's common stock. The terms of these options
are for five years from the date of issue and are exercisable as follows: (i)
50% vesting any time after the first anniversary of the date of issue, and (ii)
the remaining 50% vesting any time after second anniversary of the date of
issue.

                                       66
<PAGE>

Members of the Compensation and Stock Option Committee:

   Phillip A. O'Reilly, Chairman
   Bert Sager
   Lewis Solomon

Stock Performance Graph

The line graph below compares the cumulative total stockholder return (assuming
reinvestment of dividends) on our Company's common stock, over the most recent
five-year period up to and including December 31, 2001 with the cumulative total
return of companies on the Russell 2000(R) Index and the S&P SmallCap Electrical
Components and Equipment Index (the "Electrical Components and Equipment
Index"), a published line-of-business index. In the preceding fiscal year we had
compared the cumulative total shareholder return on our company's common stock
with the S&P SmallCap Electrical Equipment Index; however, this index is no
longer tracked or published. In light of our Company's continuing focus on its
power conversion business, the Electrical Components and Equipment Index, which
includes our Company's common stock in its constituency, was selected because we
believe this index provides a meaningful comparison to our Company's
performance.

                             CUMULATIVE TOTAL RETURN

Based on an investment of $100 and reinvestment of dividends beginning on
                               December 31, 1996

[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]

<TABLE>
<CAPTION>
                                         Dec-96   Dec-97   Dec-98   Dec-99   Dec-00   Dec-01
<S>                                       <C>      <C>      <C>      <C>      <C>      <C>
Artesyn Technologies, Inc.                $100     $116     $72      $108     $81      $48

Russell 2000                              $100     $121     $116     $139     $133     $135

S&P SmallCap Electrical Components &      $100     $117     $115     $186     $204     $167
Equipment Index
</TABLE>

                                       67
<PAGE>

ITEM 12.   Security Ownership
           ------------------

Security Ownership of Certain Beneficial Owners

The following table sets forth, as of the close of business on March 5, 2002,
certain information as to the shareholders which are known by us to beneficially
own more than 5% of our common stock (based solely upon filings by said holders
with the SEC on Schedule 13D or Schedule 13G pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended :

<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------
            Name and Address                         Number of Shares       Percent of
           of Beneficial Owner                     Beneficially Owned(1)   Common Stock
 ---------------------------------------------------------------------------------------
<S>                                                    <C>                     <C>
 Finestar International Limited(2)                     6,095,454(2)            13.7%
    c/o ABN Amro Management Services (Hong Kong)
Limited
    18/F Lincoln House
    Taikoo Place, 979 King's Road
    Quarry Bay, Hong Kong
 Bruce Cheng(2)
 Delta Electronics, Inc.(2)
    186 Ruey Kuang Road
    Neihu, Taipei 114
    Taiwan, R.O.C.
 ---------------------------------------------------------------------------------------
 Mellon Financial Corporation(3)                       4,058,049              10.60%
 The Boston Company, Inc.(4)
 The Boston Company Asset Management, LLC(5)
    c/o Mellon Financial Corporation
    One Mellon Center
    Pittsburgh, PA  15258
 ---------------------------------------------------------------------------------------
    Dalton, Greiner, Hartman, Maher & Co.              2,425,245                6.3%
    565 Fifth Avenue, Suite 2101
    New York, NY  10017
 ---------------------------------------------------------------------------------------
</TABLE>

(1)  Beneficial ownership has been determined in accordance with Rule 13d-3
     under the Securities Exchange Act of 1934, as amended.

(2)  Finestar International Limited, a British Virgin Islands corporation,
     purchased a 3% convertible note in the principal amount of $50,000,000
     (which note is convertible into shares of our common stock), and a warrant
     to acquire 1,550,000 shares of our Company's common stock. Finestar is
     deemed the beneficial owner of 6,095,454 shares of our common stock that
     may be issued upon the conversion of the note and the exercise of the
     warrant. Mr. Bruce Cheng is the sole director and member of Finestar and as
     such has sole voting and dispositive power. Mr. Cheng is the founder, chief
     executive officer and chairman of Delta Electronics, Inc., a Taiwanese
     corporation and a global power supply electronic component and video
     display manufacturer. The note, the warrant and the common stock underlying
     the note and the warrant are transferable among Finestar, Mr. Cheng, Delta
     Electronics, Inc. and their respective direct or indirect affiliates. See
     Item 13 - Certain Relationships and Related Transactions and Item 7 -
     Management's Discussion and Analysis of Financial Condition and Results of
     Operation: Risk Factors That May Affect Future Results.

(3)  Mellon Financial Corporation, a parent holding company, is deemed to hold
     4,058,049 shares of our common stock; it has sole voting power of 3,486,599
     shares, shared voting power of 403,800 shares, sole dispositive power of
     4,053,105 shares and shared dispositive power of 4,944 shares of our common
     stock. The Boston Company, Inc. and The Boston Company Asset Management,
     LLC are direct or indirect subsidiaries of Mellon Financial Corporation.

                                      68
<PAGE>

(4)  The Boston Company, Inc., a parent holding company, is deemed to hold
     3,381,900 shares of our common stock; it has sole voting power of 2,836,300
     shares, shared voting power of 403,800 shares, and sole dispositive power
     of 3,381,900 shares of our common stock. Shares beneficially owned by
     Boston Safe Advisors, Inc., TBC Asset Management, Inc., Boston Safe Deposit
     and Trust Company and Franklin Portfolio Associates are beneficially owned
     by The Boston Company, Inc., as a holding company.

(5)  The Boston Company Asset Management, LLC, an investment adviser, is deemed
     to hold 2,534,400 shares of our common stock; it has sole voting power of
     1,988,800 shares, shared voting power of 403,800 shares, and sole
     dispositive power of 2,534,400 shares of our common stock. Shares
     beneficially owned by Boston Safe Advisors, Inc., TBC Asset Management,
     Inc., Boston Safe Deposit and Trust Company and Franklin Portfolio
     Associates are beneficially owned by The Boston Company, Inc., as a holding
     company.

Ownership by Management

The following table sets forth, as of the close of business on March 5, 2002,
certain information concerning beneficial ownership of our common stock by each
of the Named Executives (as defined above), and all directors and executive
officers as a group (based solely upon information furnished by such persons):

                                                 Number of Shares
                                                   Beneficially      Percent of
Name                                               Owned (1)(2)     Common Stock
----                                             ----------------   ------------

Lawrence J. Matthews                                 982,056(3)         2.6%
Joseph M. O'Donnell                                    828,378          2.2%
Ronald D. Schmidt                                    701,923(4)         1.8%
John M. Steel                                        624,556(5)         1.6%
Richard J. Thompson                                  371,352(6)         1.0%
Bert Sager                                           303,925(7)           *
Phillip A. O'Reilly                                  181,721(8)           *
Robert J. Aebli                                        101,359            *
Norman C. Wussow                                        86,835            *
Stephen A. Ollendorff                                   72,100            *
Dr. Fred C. Lee                                         65,104            *
Edward S. Croft, III                                    61,881            *
Lewis Solomon                                           60,000            *
A. Eugene Sapp, Jr                                      50,500            *
Kenneth E. Blake                                         5,336            *
                                                 -------------------------------
All directors and executive officers as a group
(17 persons )                                       4,581,494          11.9%

*    Represents less than 1%.

(1)  Beneficial ownership has been determined in accordance with Rule 13d-3
     under the Securities Exchange Act of 1934, as amended.

(2)  Includes the following shares of common stock subject to currently
     exercisable options and/or that may be acquired upon the exercise of
     options within 60 days after March 5, 2002: Mr. Matthews-40,000; Mr.
     O'Donnell-687,615; Mr. Schmidt-30,000; Mr. Thompson-293,812; Mr.
     Sager-90,000; Mr. O'Reilly-90,000; Mr. Aebli-87,929; Mr. Wussow-55,279; Mr.
     Ollendorff-60,000; Dr. Lee-40,000; Mr. Croft-40,000; Mr. Solomon-50,000;
     Mr. Sapp-40,000; and all directors and executive officers as a group (17
     persons) - 1,674,635.

                                       69
<PAGE>

(3)  Includes 40,000 shares, which are owned of record by the Lawrence J. and
     Barbara M. Matthews Charitable Remainder Unitrust, of which Mr. Matthews
     and his spouse are beneficiaries and retain the right to appoint and
     dismiss the trustee.

(4)  Includes 17,926 shares, which are owned of record by Mr. Schmidt's wife,
     with respect to which Mr. Schmidt disclaims beneficial ownership, and
     267,000 shares, which are owned by the Schmidt Family Limited Partnership,
     a limited partnership of which Mr. Schmidt is a general partner.

(5)  Includes 266,000 shares, which are owned of record by Mr. Steel's wife,
     with respect to which Mr. Steel disclaims beneficial ownership.

(6)  Includes 900 shares which are held in trust by Mr. Thompson for his
     daughters.

(7)  Includes 2,080 shares which are beneficially owned by Mr. Sager's wife as
     the trustee under a trust for Mrs. Sager's mother, with respect to which
     Mr. Sager disclaims beneficial ownership, and 153,860 shares which are
     owned by Sager Holdings Limited Partnership, a limited partnership of which
     Mr. Sager is both a limited partner and a principal shareholder of the
     corporate general partner.

(8)  Includes 81,721 shares owned by the O'Reilly Family LLC (of which Mr.
     O'Reilly is the manager), which company is owned by the O'Reilly Family
     Trust (a family trust created by Mr. O'Reilly).

ITEM 13. Certain Relationships and Related Transactions

Certain Relationships

Mr. Ollendorff, a director of our Company, was Of Counsel to the law firm of
Kirkpatrick & Lockhart LLP during fiscal year 2001. Kirkpatrick & Lockhart LLP
acted as counsel for our Company in fiscal year 2001 and received fees in such
fiscal year for various legal services rendered to our Company.

Transactions with Finestar International Limited

3% Convertible Note
-------------------

On January 14, 2002, we entered into a Securities Purchase Agreement, pursuant
to which we sold a 3% subordinated convertible note in the amount of
$50,000,000, due January 15, 2007, to Finestar International Limited, a British
Virgin Islands corporation.

Conversion. The note is convertible into common stock at a conversion price
----------
equal to (i) the amount of principal to be so converted divided by (ii) 11.00.
The conversion price and the number of shares received upon conversion may be
adjusted in the event of stock splits, stock dividends, combinations and
recapitalizations. The note also provides for adjustments to the conversion
price if we issue any of our shares of common stock at a price per share less
than the conversion price of the note, subject to certain exclusions. Those
exclusions include any shares issued by us: (i) upon conversion of the note
and/or in connection with the issuance and exercise of the warrant; (ii) upon
exercise of stock option grants and stock purchase rights approved by a majority
of the Board of Directors pursuant to plans approved by our shareholders; (iii)
upon the conversion or the exercise of convertible or exercisable securities in
existence prior to January 15, 2002; (iv) in connection with acquisitions and
commercial relationships (provided, however, that the purpose of such
transaction is not capital raising) and (v) in connection with the satisfaction
of any earn-out or contingent payment obligation we have arising out of an
acquisition consummated prior to January 15, 2002.

In addition, the note provides that the actual number of shares of common stock
to be issued to Finestar is subject to applicable restrictions imposed on any
such issuance by Nasdaq Marketplace Rules or by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

                                       70
<PAGE>

Interest. The convertible note bears interest at the rate of 3% per annum.
--------
Interest is payable in cash semi-annually, net of applicable withholding tax,
with the first payment due on June 15, 2002.

Redemption. The convertible note is subject to redemption, at our election, at a
----------
redemption price of 100% of the principal amount, together with accrued and
unpaid interest to the redemption date plus any remaining interest that would
have been payable had the note remained outstanding until January 15, 2007.
However, we cannot redeem the convertible note prior to January 15, 2005 and
thereafter unless (i) a shelf registration statement with respect to the resale
by the holder of the note has been declared effective, and (ii) the use of the
shelf registration has not been suspended on the date notice of redemption is
given, and (iii) the registration will remain effective and not suspended
through the date of redemption and for 45 days thereafter, or (iv) the shares of
common stock issuable upon conversion of the note are freely tradeable under
Rule 144(k) under the Securities Act of 1933, as amended.

Right to Require Repurchase. Finestar has the right to require us to repurchase
---------------------------
the entire convertible note or a portion of the convertible note (i) at any time
on or after January 15, 2005 or (ii) in the event of a change of control. The
repurchase price equals the sum of the accrued and unpaid interest on the
convertible note to the date of payment plus (a) in the case of a repurchase
pursuant to a change of control, 115% of the principal amount of the note
outstanding, or (b) in the case of repurchase other than pursuant to a change of
control, 100% of the principal amount of the portion of the convertible note to
be repurchased. Change of control is defined as the acquisition by any person of
beneficial ownership, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of our capital stock, entitling
such person to exercise 50% or more of the total voting power of all shares of
capital stock entitled to vote generally in the elections of directors.

Events of Default. An "event of default" under the convertible note will occur
-----------------
if, among other things, we (i) default in the payment of any principal, interest
or premium when it becomes due for a period of three business days or (ii)
default in the performance of obligations with respect to the conversion of the
note for a period of five business days, or (iii) fail to give notice of a
change of control as required by the note or (iv) fail to perform in any
material respect an agreement or obligation, or materially breach any of our
representations or warranties, under the note.

Warrant. In connection with the Securities Purchase Agreement, we also issued a
-------
five-year warrant to Finestar to purchase up to 1,550,000 shares of our common
stock. The exercise price per share of our common stock is equal to $11.50. The
exercise price and the number of shares received upon exercise may be adjusted
in the event of stock splits, stock dividends, combinations, recapitalizations
and certain other dilutive issuances by us. The warrant expires on January 15,
2007. The following is a summary of certain material terms of the warrant and is
not intended to be complete and is qualified in its entirety by the warrant
itself which is incorporated by reference herein.

The warrant also provides for adjustments to the exercise price if we issue any
of our shares of common stock at a price per share less than the exercise price
of the note, subject to certain customary exclusions. Those customary exclusions
include any shares issued by us: (i) upon conversion of the note and/or in
connection with the issuance and exercise of the warrant; (ii) upon the exercise
of stock option grants and stock purchase rights approved by a majority of the
Board of Directors pursuant to plans approved by our shareholders; (iii) upon
the conversion or the exercise of convertible or exercisable securities in
existence prior to January 15, 2002; (iv) in connection with acquisitions and
commercial relationships (provided, however, that the purpose of such
transaction is not capital raising) and (v) in connection with the satisfaction
of any earn-out or contingent payment obligation we have arising out of an
acquisition consummated prior to January 15, 2002.

In addition, the warrant provides that the actual number of shares of common
stock to be issued to Finestar is subject to applicable restrictions imposed on
any such issuances by Nasdaq Marketplace Rules or by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

Registration Rights
-------------------

In the registration rights agreement with Finestar that we executed in
connection with the Securities Purchase Agreement, we agreed to file with the
SEC a registration statement for the resale of the shares of common stock
issuable upon conversion of the convertible note and the exercise of the
warrant. The registration rights agreement also provides Finestar with demand
registration rights and piggyback registration rights customary for a

                                      71
<PAGE>

transaction of this type. We filed a Registration Statement on Form S-3 with the
SEC on January 25, 2002 in order to register 6,095,454 shares of common stock
that may be issued upon full conversion of the note and the full exercise of the
warrant. This Registration Statement is currently under review by the SEC.

Under the registration rights agreement with Finestar, we are required to use
our best efforts to register for resale the shares of our common stock
underlying the note and warrant. If the registration statement is not declared
effective by April 5, 2002 or does not remain effective, our Company shall be
required to pay additional interest under the note for the period during which
the registration statement is not effective a rate per annum equal to an
additional nine percent (9%) of the principal amount due under the convertible
note.

Also in connection with the Finestar transaction, see Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operation: Risk
Factors That May Affect Future Results.

PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
         ---------------------------------------------------------------

(a)  Financial Statements, Financial Statement Schedules and Exhibits

     (1) Financial Statements

The following consolidated financial statements of Artesyn Technologies, Inc.
and subsidiaries are filed as part of this Form 10-K:

<TABLE>
<CAPTION>
     Description                                                                          Page
     -----------                                                                          ----

<S>                                                                                        <C>
     Report of Independent Certified Public Accountants                                    31

     Consolidated Statements of Operations                                                 32

     Consolidated Statements of Financial Condition                                        33

     Consolidated Statements of Cash Flows                                                 34

     Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)       35

     Notes to Consolidated Financial Statements                                            37

     (2) Financial Statement Schedules

The following information is filed as part of this Form 10-K:

     Report of Independent Certified Public Accountants On Schedule                        77

     Schedule II - Valuation and Qualifying Accounts                                       78
</TABLE>

Schedules other than the one listed above have been omitted because they are
either not required or not applicable, or because the required information has
been included in the consolidated financial statements or notes thereto.

                                       72
<PAGE>

     (3)  Exhibits Required by Item 601 of Regulation S-K

Exhibit #      Description
---------      -----------
2.1       Agreement and Plan of Merger by and between Zytec Corporation,
          Computer Products Inc. and CPI Acquisition Corp. dated as of September
          2, 1997 - incorporated by reference to Exhibit 2.1 of Registrant's
          Registration Statement on Form S-4 filed on September 25, 1997.

2.2       Agreement on the Sale, Purchase and Transfer of Shares dated as of
          July 22, 1997 - incorporated by reference to Exhibit 2 of Registrant's
          Registration Statement on Form 8-K filed on August 6, 1997.

2.3       Asset Purchase Agreement among RT Acquisition Florida Corp., RTP Corp.
          and Computer Products Inc. dated as of July 5, 1997 - incorporated by
          reference to Exhibit 10.33 of Registrant's Quarterly Report on Form
          10-Q for the quarterly period ended July 4, 1997.

3.1       By-laws of the Company, as amended, effective October 16, 1990 -
          incorporated by reference to Exhibit 3.2 of Registrant's Registration
          Statement on Form S-4, filed with the Commission on September 25,
          1997, as amended.

3.3       Articles of amendment to articles of Incorporation of the Company -
          incorporated by reference to Exhibit 3.1 of Registrant's Current
          Report on Form 8-K filed on May 6, 1998.

3.4       Articles of amendment to articles of Incorporation of the Company, as
          amended on December 22, 1998 - incorporated by reference to Exhibit
          3.4 of Registrant's Annual Report on Form 10-K for the fiscal year
          ended January 1, 1999.

4.1       Amended and Restated Rights Agreement, dated as of November 21, 1998,
          between the Company and The Bank of New York as Rights Agent,
          including the form of Right Certificate and the Summary of Rights to
          Purchase Preferred Shares attached thereto as exhibits B and C,
          respectively - incorporated by reference to Exhibit 4.1 of
          Registrant's Current Report on Form 8-K filed with the Commission on
          December 22, 1998.

10.1      Grant Agreement, dated June 19, 1981, as supplemented, by and among
          the Industrial Development Authority of Ireland, Power Products Ltd.
          and Computer Products, Inc. - incorporated by reference to Exhibit
          10.2 of Registrant's Annual Report on Form 10-K for the fiscal year
          ended December 31, 1982.

10.2      Indenture between Industrial Development Authority of Ireland and
          Power Products Ltd. - incorporated by reference to Exhibit 10.3 of
          Registrant's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1982.

10.3     Lease for facilities of Boschert, Incorporated located in Milpitas,
         California - incorporated by reference to Exhibit 10.14 of Registrant's
         Annual Report on Form 10-K for the fiscal year ended January 3, 1986.

10.4     Letter Amendment to Lease for facilities of Boschert, Incorporated,
         dated January 9, 1991 located in Milpitas, California - incorporated by
         reference to Exhibit 10.8 of Registrant's Annual Report on Form 10-K
         for the fiscal year ended December 28, 1990.

10.5      Sublease for facilities of Boschert, Incorporated located in Milpitas,
          California - incorporated by reference to Exhibit 10.8 of Registrant's
          Annual Report on Form 10-K for the fiscal year ended January 1, 1988.

10.6      Sublessee Estoppel Certificate to Sublease for facilities of Boschert,
          Incorporated, dated February 4, 1991, located in Milpitas, California-
          incorporated by reference to Exhibit 10.10 of Registrant's Annual
          Report on Form 10-K for the fiscal year ended December 28, 1990.

10.7      1990 Outside Directors' Stock Option Plan - incorporated by reference
          to Exhibit 10.27 of Registrant's Annual Report on Form 10-K for the
          fiscal year ended December 28, 1990.

                                       73
<PAGE>

10.11     Employment Agreement, dated as of January 1, 2000, by and between
          Artesyn Technologies, Inc., a Florida Corporation, and Joseph M.
          O'Donnell - incorporated by reference to Exhibit 10.1 of the
          Registrant's Quarterly Report on Form 10-Q for the quarterly period
          ended June 30, 2000.

10.12     Employment Agreement, dated as of January 1, 2000, by and between
          Artesyn Technologies, Inc., a Florida Corporation, and Richard J.
          Thompson - incorporated by reference to Exhibit 10.2 of the
          Registrant's Quarterly Report on Form 10-Q for the quarterly period
          ended June 30, 2000.

10.13     Grant Agreement, dated October 26, 1994, by and among the Industrial
          Development Authority of Ireland, Power Products Ltd. and Computer
          Products, Inc. - incorporated by reference to Exhibit 10.43 of
          Registrant's Annual Report on Form 10-K for the fiscal year ended
          December 30, 1994.

10.14     1996 Employee Stock Purchase Plan - incorporated by reference to
          Exhibit 10.45 of Registrant's Annual Report on Form 10-K for the
          fiscal year ended December 29, 1995.

10.15     Performance Equity Plan as amended - incorporated by reference to
          Exhibit 10.46 of Registrant's Annual Report on Form 10-K for the
          fiscal year ended December 29, 1995.

10.16     Executive Stock Ownership Plan - incorporated by reference to Exhibit
          10.49 of Registrant's Annual Report on Form 10-K for the fiscal year
          ended December 29, 1995.

10.18     Agreement by and between Superior Investments I, Inc. and the Company
          dated January 22, 1996 regarding the leasing of certain premises and
          real property located in Broomfield, Colorado - incorporated by
          reference to Exhibit 10.27 to Form 10-K of Zytec Corporation for the
          year ended December 31, 1995. (File No. 0-22428).

10.21     Rental Agreement by and between Schrack Elektronik Aktiengesellschaft
          and IMMORENT-Weiko Grundverwertungsgesellschaft m.b.H. dated March 14,
          1985 (English translation) regarding the leasing of certain real
          property located in Kindberg, Austria - incorporated by reference to
          Exhibit 10.70 to Zytec Corporation's Registration Statement on Form
          S-1 (File No. 33-68822).

10.22     Real Estate Lease Agreement by and between IMMORENT - Weiko
          Grundverwertungsge-sellschaft m.b.H. and Schrack Elektronik
          Aktiengesellschaft dated December 16, 1984 (English translation)
          regarding the leasing of certain real property located in Kindberg,
          Austria - incorporated by reference to Exhibit 10.71 to Zytec
          Corporation's Registration Statement on Form S-1 (File No. 33-68822).

10.23     Lease (Rental) Agreement by and between Schrack Telecom AG and Schrack
          Power Supply Gesellschaft m.b.H. dated February 19, 1991 (English
          translation) regarding the leasing of certain property located in
          Kindberg, Austria - incorporated by reference to Exhibit 10.72 to
          Zytec Corporation's Registration Statement on Form S-1 (File No.
          33-68822).

10.24     Sublease (Subrental) Agreement by and between Schrack Power Supply
          Gesellschaft m.b.H. and Schrack Power Supply Gesellschaft m.b.H. dated
          February 14, 1991 (English translation) regarding the leasing of
          certain property located in Kindberg, Austria - incorporated by
          reference to Exhibit 10.73 to Zytec Corporation's Registration
          Statement on Form S-1 (File No. 33-68822).

10.25     Sublease (Subrental) Agreement by and between Schrack Power Supply
          Gesellschaft m.b.H. and Schrack Telecom AG dated February 14, 1991
          (English translation) regarding the leasing of certain property
          located in Kindberg, Austria - incorporated by reference to Exhibit
          10.74 to Zytec Corporation's Registration Statement on Form S-1 (File
          No. 33-68822).

10.26     Third Addendum to Lease Agreement between Zytec Corporation and
          Superior Investments I, Inc. dated May 23, 1997 - incorporated by
          reference to Exhibit 10.2 to Form 10-Q of Zytec Corporation for the
          quarter ended June 29, 1997.

                                       74
<PAGE>

10.27     Fourth Addendum to Lease Agreement between Zytec Corporation and
          Superior Investments I, Inc. dated June 27, 1997- incorporated by
          reference to Exhibit 10.3 to Form 10-Q of Zytec Corporation for the
          quarter ended June 29, 1997.

10.28     1990 Outside Directors Stock Option Plan as amended March 8, 1999 -
          incorporated by reference to Exhibit 4.1 of Registrant's Registration
          Statement on Form S-8 filed with the Commission on August 13, 1999.

10.29     Outside Directors' Retirement Plan effective October 17, 1989, as
          amended January 25, 1994, August 15, 1996, January 29, 1998 and
          October 28, 1999, incorporated by reference to Exhibit 10.31 of the
          Registrant's Annual Report on Form 10-K for the period ended December
          31, 1999.

10.30     Stock Purchase Agreement, dated July 31, 2000, by and among Artesyn
          Technologies, Inc., Artesyn North America, Inc., and AzCore
          Technologies, Inc. - incorporated by reference to Exhibit 10.1 of the
          Registrant's Quarterly Report on Form 10-Q for the quarterly period
          ended September 29, 2000.

10.31     Product Development and Technology Transfer Agreement, dated May 12,
          2000, between Artesyn North America, Inc. a Delaware Corporation, and
          E-Power Co., Ltd., a company organized and existing under the laws of
          the People's Republic of China - incorporated by reference to Exhibit
          10.2 of the Registrant's Quarterly Report on Form 10-Q for the
          quarterly period ended September 29, 2000.

10.32     Credit Agreement dated January 23, 2001, among and between Artesyn
          Technologies, Inc., and certain of its subsidiaries, Bank of America,
          Inc., The Bank of Nova Scotia, Suntrust Bank, First Union National
          Bank, and Banc of America LLC. - incorporated by reference to Exhibit
          10.1 of the Registrant's Current Report on Form 8-K, filed with the
          Commission on January 30, 2001.

10.33     Share Purchase Agreement dated March 24, 2000, between and among
          Artesyn Communications Products UK Ltd., and Zozma Investments
          Limited, and David Noble - incorporated by reference to Exhibit 10.33
          of Registrant's Annual Report of Form 10-K for the period ended
          December 29, 2000.

10.34     Stock Purchase Agreement dated January 12, 2001, by and among Artesyn
          Communications Products, Inc. and Real-Time Digital, Inc. -
          incorporated by reference to Exhibit 10.1 of the Registrant's
          Quarterly Report on Form 10-Q for the quarterly period ended March 30,
          2001.

10.35     Waiver and First Amendment to Credit Agreement, dated as of October
          12, 2001, entered into by and among Artesyn Technologies, Inc., a
          Florida Corporation, as a borrower, Artesyn Cayman LP, a Cayman
          Islands exempted limited partnership, Artesyn North America, Inc., a
          Delaware Corporation and Artesyn Technologies Communication Products,
          Inc., a Wisconsin Corporation, as the initial Subsidiary Borrowers,
          the financial institutions party to the Credit Agreement, as Lenders
          and Bank of America, N.A., as Administrative Agent, Swing Line Lender
          and L/C Issuer - incorporated by reference to Exhibit 10.1 of the
          Registrant's Quarterly Report on Form 10-Q for the quarterly period
          ended September 28, 2001.

10.36     Securities Purchase Agreement dated January 14, 2002 by and between
          Artesyn Technologies, Inc. and Finestar International Limited -
          incorporated by reference to Exhibit 4.1 of the Registrant's Current
          Report on Form 8-K/A, filed with the Commission on January 24, 2002.

10.37     3% Convertible Note due January 15, 2007 issued by Artesyn
          Technologies, Inc. to Finestar International Limited - Incorporated by
          reference to Exhibit 4.2 of the Registrant's Current Report on Form
          8-K/A, filed with the Commission on January 24, 2002.

10.38     Warrant to Purchase Shares of common stock of Artesyn Technologies,
          Inc. dated January 15, 2002 issued by Artesyn Technologies, Inc. to
          Finestar International Limited - Incorporated by reference to Exhibit
          4.3 of Registrant's Current Report on Form 8-K/A, filed with the
          Commission on January 24, 2002.

                                       75
<PAGE>

10.39     Registration Rights Agreement dated January 15, 2002 by and between
          Artesyn Technologies, Inc. and Finestar International Limited -
          Incorporated by reference to Exhibit 4.4 of the Registrant's Current
          Report on Form 8-K/A, filed with the Commission on January 24, 2002.

10.40     Stock Purchase Agreement, dated November 20, 2001, by and among
          Artesyn Solutions, Inc., Artesyn North America, Inc. and Solectron
          Global Services, Inc.

10.41     Amendment to Stock Purchase Agreement, dated November 20, 2001, by and
          among Artesyn Solutions, Inc., Artesyn North America, Inc. and
          Solectron Global Services, Inc.

10.42     Waiver and Second Amendment to Credit Agreement, dated as of December
          3, 2001, entered into by and among Artesyn Technologies Inc., a
          Florida Corporation, as a borrower, Artesyn Cayman LP, a Cayman
          Islands exempted limited partnership, Artesyn North America, Inc., a
          Delaware Corporation and Artesyn Technologies Communications Products,
          Inc., a Wisconsin Corporation, as the initial Subsidiary Borrowers,
          the financial institutions party to the Credit Agreement, as Lenders
          and Bank of America, N.A., as Administrative Agent, Swing Line Lender
          and L/C Issuer.

10.43     Waiver and Third Amendment to Credit Agreement, dated January 15,
          2002, by and among Artesyn Technologies, Inc., Artesyn Cayman LP,
          Artesyn North America, Inc., Artesyn Technologies Communication
          Products, Inc., the financial institutions party to the Credit
          Agreement, as Lenders and Bank of America, N.A., as Administrative
          Agent, Swingline Lender, and L/C Issuer - Incorporated by reference to
          Exhibit 10 of the Registrant's Current Report on Form 8-K, filed with
          the Commission on January 18, 2002.

21        List of subsidiaries of the Company.

23        Consent of Arthur Andersen LLP.

(b)      Reports on Form 8-K
         -------------------

     During the quarter ended December 28, 2001, we filed the following current
     reports on Form 8-K:

               a)   A current report of Form 8-K was filed on December 7, 2001
                    announcing the sale of Artesyn's repair and logistics
                    business unit, Artesyn Solutions, Inc., to Solectron
                    Corporation. An extension of the waiver on Artesyn's credit
                    agreement was also announced.

                                       76
<PAGE>

         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE
         --------------------------------------------------------------

To Artesyn Technologies, Inc.:

We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of Artesyn Technologies,
Inc. and subsidiaries and have issued our report thereon dated January 21, 2002.
Our audits were made for the purpose of forming an opinion on those consolidated
financial statements taken as a whole. The schedule listed in Item 14(a)(2) is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP


Fort Lauderdale, Florida,
  January 21, 2002.

                                       77
<PAGE>

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended on theFriday Nearest December 31 ($000s)

<TABLE>
<CAPTION>
--------------------------------------   -----------      -------------------------    ---------------------        ----------
              COLUMN A                     COLUMN B              COLUMN C                    COLUMN D                COLUMN E
--------------------------------------   -----------      -------------------------    ---------------------        ----------
                                                          -------------------------
                                                                  Additions
--------------------------------------   -----------      -------------------------    ---------------------        ----------
                                          Balance at      Charged to     Charged to          Deductions             Balance at
                                          Beginning        Costs &          Other      ---------------------          End of
             Description                  of Period        Expenses       Accounts     Description    Amount          Period
--------------------------------------   -----------      ----------     ----------    ---------------------        ----------
<S>                                        <C>             <C>             <C>             <C>        <C>            <C>
Fiscal Year 2001:
Reserve deducted from asset to
   which it applies:
Allowance for doubtful
   accounts                                $ 3,571         $ 2,059            --           (1)        $1,490         $ 4,140
Inventory valuation reserve                 23,844          31,722                         (1)        18,354          37,212
Valuation allowance for deferred tax
   assets                                    2,342             568            --                          --           2,910

Fiscal Year 2000:
Reserve deducted from asset to
   which it applies:
Allowance for doubtful
   accounts                                $ 2,737         $ 2,409            --           (1)        $1,575         $ 3,571

Inventory valuation reserve                 15,554          13,519                         (1)         5,229          23,844
Valuation allowance for deferred tax
   assets                                       --              --         2,342                          --           2,342

Fiscal Year 1999:
Reserve deducted from asset to
  which it applies:
Allowance for doubtful
   accounts                                 $1,875          $  890            --           (1)        $   28         $ 2,737
Inventory valuation reserve                 12,445           9,436            --           (1)         6,327          15,554
</TABLE>

(1)  The reduction relates to charge-offs.

                                       78
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                                      ARTESYN TECHNOLOGIES, INC.
                                                      --------------------------
                                                            (Company)


Dated:  March 8, 2002                            By:  Joseph M. O'Donnell
                                                      --------------------------
                                                      Joseph M. O'Donnell
                                                      Co-Chairman of the Board,
                                                      President and Chief
                                                      Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Company in the
capacities and on the dates indicated.

Signature                    Title                             Date


/s/Joseph M. O'Donnell        Co-Chairman of the Board,         March 8, 2002
--------------------------    President and Chief Executive
Joseph M. O'Donnell           Officer, Director


/s/ Ronald D. Schmidt         Co-Chairman of the Board          March 8, 2002
--------------------------
Ronald D. Schmidt


/s/ Richard J. Thompson       Vice President-Finance,           March 8, 2002
--------------------------    Chief Financial Officer,
Richard J. Thompson           and Secretary


/s/ Edward S. Croft           Director                          March 8, 2002
--------------------------
Edward S. Croft, III


/s/ Dr. Fred C. Lee           Director                          March 8, 2002
--------------------------
Dr. Fred C. Lee


/s/ Lawrence J. Mattews       Director                          March 8, 2002
--------------------------
Lawrence J. Matthews


/s/Stephen A. Ollendorff      Director                          March 8, 2002
--------------------------
Stephen A. Ollendorff

                                       79
<PAGE>

/s/ Phillip A. O'Reilly       Director                          March 8, 2002
--------------------------
Phillip A. O'Reilly


/s/ Bert Sager                Director                          March 8, 2002
--------------------------
Bert Sager


/s/ A. Eugene Sapp            Director                          March 8, 2002
--------------------------
A. Eugene Sapp, Jr.


/s/ Lewis Solomon             Director                          March 8, 2002
--------------------------
Lewis Solomon


/s/ John M. Steel             Director                          March 8, 2002
--------------------------
John M. Steel

                                       80
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
No.                   Description
----------------------------------------------------------------------------------------
<S>      <C>
10.40    Stock  Purchase  Agreement dated November 20, 2001, by and among Artesyn Solutions, Inc., Artesyn North America, Inc. and
         Solectron Global Services, Inc.

10.41    Amendment to Stock Purchase Agreement dated November 20, 2001, by and among Artesyn Solutions, Inc., Artesyn North America,
         Inc. and Solectron Global Services, Inc.

10.42    Waiver and Second  Amendment  to Credit  Agreement,  dated as of December 3, 2001,  by and among  Artesyn  Technologies
         Inc., a Florida Corporation,  as a borrower, Artesyn Cayman LP, a Cayman Islands exempted limited partnership,  Artesyn
         North  America,  Inc., a Delaware  Corporation  and Artesyn  Technologies  Communications  Products,  Inc., a Wisconsin
         Corporation,  as the initial Subsidiary Borrowers, the financial institutions party to the Credit Agreement, as Lenders
         and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

10.43    Waiver and Third Amendment to Credit Agreement, dated January 15, 2002,
         by and among Artesyn Technologies, Inc., Artesyn Cayman LP, Artesyn
         North America, Inc., Artesyn Technologies Communication Products, Inc.,
         the financial institutions party to the Credit Agreement, as Lenders
         and Bank of America, N.A., as Administrative Agent, Swingline Lender,
         and L/C Issuer - incorporated by reference to Exhibit 10 of the
         Registrant's Current Report on Form 8-K, filed with the Commission on
         January 18, 2002.

21       List of subsidiaries of the Company.

23       Consent of Arthur Andersen LLP.
</TABLE>

                                       81