##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark one)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 24, 2004



OR



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



For the transition period from  to



Commission File No. 0-4466



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Artesyn Technologies, Inc.

(Exact name of registrant as specified in its charter)



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Florida

(State or other jurisdiction of incorporation or organization)



|                                                 |  |                                            
|------------------------------------------------ |  | -------------------------------------------
|59-1205269                                       |  | 7900 Glades Road, Suite 500, Boca Raton, FL
|(I.R.S. Employer Identification Number)          |  | (Address of principal executive offices)   
|                                                 | 
|(561) 451-1000                                   |  | 33434                                      
|(Registrants phone number, including area code) |  | (Zip Code)                                 



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



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



The number of shares of Common Stock, $.01 par value per share, of the Registrant issued
and outstanding as of October 22, 2004 was 39,252,301 shares.



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##### Table of Contents

Artesyn Technologies, Inc.



Index to Form 10-Q



|           |  |                                                                                                                                                      |  |           
|---------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|           |  |                                                                                                                                                     
|           |  |                                                                                                                                                      |  | PageNumber
|           |  |                                                                                                                                                     
|PART I.    |  | Financial Information                                                                                                                                |  |           
|           |  |                                                                                                                                                     
|Item 1.    |  | Condensed Consolidated Financial Statements:                                                                                                         |  |           
|           |  |                                                                                                                                                     
|           |  | Condensed Consolidated Balance Sheets - As of September 24, 2004 (unaudited) and December 26, 2003                                                   |  | 3         
|           |  |                                                                                                                                                     
|           |  | Condensed Consolidated Statements of Operations (unaudited) - For the Thirteen and Thirty-Nine Weeks Ended September 24, 2004 and September 26, 2003 |  | 4         
|           |  |                                                                                                                                                     
|           |  | Condensed Consolidated Statements of Cash Flows (unaudited) - For the Thirty-Nine Weeks Ended September 24, 2004 and September 26, 2003              |  | 5         
|           |  |                                                                                                                                                     
|           |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                     |  | 6-13      
|           |  |                                                                                                                                                     
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                |  | 14-20     
|           |  |                                                                                                                                                     
|Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                           |  | 20        
|           |  |                                                                                                                                                     
|Item 4.    |  | Controls and Procedures                                                                                                                              |  | 20        
|           |  |                                                                                                                                                     
|PART II.   |  | Other Information                                                                                                                                    |  |           
|           |  |                                                                                                                                                     
|Item 1.    |  | Legal Proceedings                                                                                                                                    |  | 20        
|           |  |                                                                                                                                                     
|Item 6.    |  | Exhibits                                                                                                                                             |  | 21        
|          
|Signatures



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Artesyn Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands except share data)

|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                    |  | September 24,2004 |         |   | December 26,2003 |  
|                                                                                                                                                    |  | (unaudited)       |         |   |                  |  
|Assets                                                                                                                                              |  |                   |         |   |                  |   |         |  
|Current Assets                                                                                                                                      |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                           |  | $                 | 98,121  |   |                  | $ | 94,215  |  
|Accounts receivable, net of allowances of $2,291 in 2004 and $2,831 in 2003                                                                         |  |                   | 59,039  |   |                  |   | 54,196  |  
|Inventories                                                                                                                                         |  |                   | 52,447  |   |                  |   | 44,047  |  
|Prepaid expenses and other current assets                                                                                                           |  |                   | 1,938   |   |                  |   | 2,753   |  
|Deferred income taxes                                                                                                                               |  |                   | 11,526  |   |                  |   | 11,526  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total current assets                                                                                                                                |  |                   | 223,071 |   |                  |   | 206,737 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Property, Plant & Equipment, Net                                                                                                                    |  |                   | 66,468  |   |                  |   | 64,210  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Other Assets                                                                                                                                        |  |                   |         |   |                  |   |         |  
|Goodwill                                                                                                                                            |  |                   | 21,051  |   |                  |   | 20,806  |  
|Deferred income taxes                                                                                                                               |  |                   | 2,156   |   |                  |   | 19,211  |  
|Other assets                                                                                                                                        |  |                   | 18,655  |   |                  |   | 5,712   |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total other assets                                                                                                                                  |  |                   | 41,862  |   |                  |   | 45,729  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total Assets                                                                                                                                        |  | $                 | 331,401 |   |                  | $ | 316,676 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Liabilities and Shareholders Equity                                                                                                                |  |                   |         |   |                  |   |         |  
|Current Liabilities                                                                                                                                 |  |                   |         |   |                  |   |         |  
|Accounts payable                                                                                                                                    |  | $                 | 54,130  |   |                  | $ | 47,994  |  
|Accrued and other current liabilities                                                                                                               |  |                   | 50,844  |   |                  |   | 49,224  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total current liabilities                                                                                                                           |  |                   | 104,974 |   |                  |   | 97,218  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Long-Term Liabilities                                                                                                                               |  |                   |         |   |                  |   |         |  
|Convertible subordinated debt                                                                                                                       |  |                   | 90,000  |   |                  |   | 90,000  |  
|Deferred income taxes                                                                                                                               |  |                   | 5,685   |   |                  |   | 5,693   |  
|Other long-term liabilities                                                                                                                         |  |                   | 5,130   |   |                  |   | 9,728   |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total long-term liabilities                                                                                                                         |  |                   | 100,815 |   |                  |   | 105,421 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                                                   |  |                   | 205,789 |   |                  |   | 202,639 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Commitments and Contingencies                                                                                                                       |  |                   |         |   |                  |   |         |  
|Shareholders Equity                                                                                                                                |  |                   |         |   |                  |   |         |  
|Preferred stock, par value $0.01 per share; 1,000,000 shares authorized; none issued or outstanding                                                 |  |                   |        |   |                  |   |        |  
|Common stock, par value $0.01 per share; 80,000,000 shares authorized; 39,241,651 shares issued and outstanding in 2004 (38,755,365 shares in
2003) |  |                   | 392     |   |                  |   | 387     |  
|Additional paid-in capital                                                                                                                          |  |                   | 131,465 |   |                  |   | 129,169 |  
|Retained earnings (accumulated deficit)                                                                                                             |  |                   | 563     |   |                  |   | (8,041  | )
|Accumulated other comprehensive loss                                                                                                                |  |                   | (6,808  | ) |                  |   | (7,478  | )
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total shareholders equity                                                                                                                          |  |                   | 125,612 |   |                  |   | 114,037 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total Liabilities and Shareholders Equity                                                                                                          |  | $                 | 331,401 |   |                  | $ | 316,676 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  

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



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##### Table of Contents

Artesyn Technologies, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands except per share data)



|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|---------------------------------------------------------------- |  | -------------------- | ------- | - | ----------------------- | - | ------ | ----------------- |  | - | ----------------- | - |  | - | ------- | -
|                                                                 |  | Thirteen Weeks Ended |         |   | Thirty-Nine Weeks Ended |  
|                                                                 |  | September 24,2004    |         |   | September 26,2003       |   |        | September 24,2004 |  |   | September 26,2003 |  
|Sales                                                            |  | $                    | 107,013 |   |                         | $ | 88,035 |                   |  | $ | 309,023           |   |  | $ | 257,534 |  
|Cost of sales                                                    |  |                      | 79,379  |   |                         |   | 69,798 |                   |  |   | 230,443           |   |  |   | 210,560 |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Gross profit                                                     |  |                      | 27,634  |   |                         |   | 18,237 |                   |  |   | 78,580            |   |  |   | 46,974  |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Operating expenses                                               |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Selling, general and administrative                              |  |                      | 11,486  |   |                         |   | 9,843  |                   |  |   | 33,173            |   |  |   | 28,830  |  
|Research and development                                         |  |                      | 10,696  |   |                         |   | 8,625  |                   |  |   | 30,769            |   |  |   | 25,397  |  
|Restructuring and related charges                                |  |                      |        |   |                         |   | 1,433  |                   |  |   |                  |   |  |   | 5,037   |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Total operating expenses                                         |  |                      | 22,182  |   |                         |   | 19,901 |                   |  |   | 63,942            |   |  |   | 59,264  |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Operating income (loss)                                          |  |                      | 5,452   |   |                         |   | (1,664 | )                 |  |   | 14,638            |   |  |   | (12,290 | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Other income (expense)                                           |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Loss on debt extinguishment                                      |  |                      |        |   |                         |   | (3,095 | )                 |  |   |                  |   |  |   | (3,723  | )
|Interest expense, net                                            |  |                      | (1,166  | ) |                         |   | (1,207 | )                 |  |   | (3,692            | ) |  |   | (3,168  | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Income (loss) before for income taxes                            |  |                      | 4,286   |   |                         |   | (5,966 | )                 |  |   | 10,946            |   |  |   | (19,181 | )
|                                                                 |  |                      |         |  
|Provision (benefit) for income taxes                             |  |                      | 677     |   |                         |   | (722   | )                 |  |   | 2,342             |   |  |   | (2,323  | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Net income (loss)                                                |  | $                    | 3,609   |   |                         | $ | (5,244 | )                 |  | $ | 8,604             |   |  | $ | (16,858 | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Earnings (loss) per share                                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Basic                                                            |  | $                    | 0.09    |   |                         | $ | (0.14  | )                 |  | $ | 0.22              |   |  | $ | (0.44   | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Diluted                                                          |  | $                    | 0.09    |   |                         | $ | (0.14  | )                 |  | $ | 0.22              |   |  | $ | (0.44   | )
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Weighted average common and common equivalent shares outstanding |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Basic                                                            |  |                      | 39,210  |   |                         |   | 38,709 |                   |  |   | 39,029            |   |  |   | 38,542  |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Diluted                                                          |  |                      | 51,064  |   |                         |   | 38,709 |                   |  |   | 39,890            |   |  |   | 38,542  |  
|                                                                 |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  



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



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Artesyn Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)



|                                                                                                 |  |                         |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------ |  | ----------------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                 |  | Thirty-Nine Weeks Ended |        
|                                                                                                 |  | September 24, 2004      |         |   | September 26,2003 |  
|Operating Activities                                                                             |  |                         |         |   |                   |   |         |  
|Net income (loss)                                                                                |  | $                       | 8,604   |   |                   | $ | (16,858 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:         |  |                         |         |   |                   |   |         |  
|Depreciation and amortization                                                                    |  |                         | 16,549  |   |                   |   | 17,496  |  
|Loss on debt extinguishment                                                                      |  |                         |        |   |                   |   | 3,723   |  
|Other non-cash items                                                                             |  |                         | 9,315   |   |                   |   | 868     |  
|Changes in operating assets and liabilities:                                                     |  |                         |         |   |                   |   |         |  
|Accounts receivable                                                                              |  |                         | (6,423  | ) |                   |   | 2,635   |  
|Inventories                                                                                      |  |                         | (12,272 | ) |                   |   | 6,397   |  
|Prepaid expenses and other assets                                                                |  |                         | 805     |   |                   |   | (436    | )
|Accounts payable and accrued liabilities                                                         |  |                         | 4,235   |   |                   |   | 862     |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Net Cash Provided by Operating Activities                                                        |  |                         | 20,813  |   |                   |   | 14,687  |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Investing Activities                                                                             |  |                         |         |   |                   |   |         |  
|Purchases of property, plant & equipment                                                         |  |                         | (18,440 | ) |                   |   | (4,246  | )
|Proceeds from sale of property, plant & equipment                                                |  |                         | 877     |   |                   |   | 524     |  
|Earn-out payments related to acquisitions                                                        |  |                         | (714    | ) |                   |   | (4,259  | )
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Net Cash Used in Investing Activities                                                            |  |                         | (18,277 | ) |                   |   | (7,981  | )
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Financing Activities                                                                             |  |                         |         |   |                   |   |         |  
|Proceeds from issuance of convertible senior subordinated notes due 2010, net of financing costs |  |                         |        |   |                   |   | 86,275  |  
|Principal payments on convertible debt                                                           |  |                         |        |   |                   |   | (50,000 | )
|Principal payments on debt and capital leases                                                    |  |                         |        |   |                   |   | (23,509 | )
|Proceeds from issuance of long-term debt, net of financing costs                                 |  |                         |        |   |                   |   | 9,439   |  
|Proceeds from exercises of stock options                                                         |  |                         | 1,433   |   |                   |   | 104     |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Net Cash Provided by Financing Activities                                                        |  |                         | 1,433   |   |                   |   | 22,309  |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Effect of Exchange Rate Changes on Cash and Cash Equivalents                                     |  |                         | (63     | ) |                   |   | 1,745   |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Increase in Cash and Cash Equivalents                                                            |  |                         | 3,906   |   |                   |   | 30,760  |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Cash and Cash Equivalents, Beginning of Period                                                   |  |                         | 94,215  |   |                   |   | 65,001  |  
|                                                                                                 |  |                         |         |   |                   |   |         |  
|Cash and Cash Equivalents, End of Period                                                         |  | $                       | 98,121  |   |                   | $ | 95,761  |  
|                                                                                                 |  |                         |         |   |                   |   |         |  



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



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



1. Basis of Presentation



The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for
interim financial reporting and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures required by United States generally accepted accounting principles for complete financial statements
have been condensed or omitted.



In the opinion of management, the accompanying
Condensed Consolidated Financial Statements include all adjustments (consisting of normal recurring items) considered necessary to present fairly the consolidated financial position, results of operations and cash flows of Artesyn Technologies, Inc.
The results of operations for the thirteen and thirty-nine weeks ended September 24, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year 2004. In addition, these Condensed Consolidated Financial
Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our 2003 Annual Report on Form 10-K.



For purposes of clarity, as used herein, the terms we, us, our, and Artesyn refer to Artesyn Technologies, Inc. and its
subsidiaries (unless the context indicates another meaning).



2. Earnings
Per Share



Basic earnings per share are calculated by dividing income
(loss) available to shareholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding
during each period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options (calculated using the treasury stock method) and common stock potentially issuable upon conversion of our convertible subordinated
debt (calculated using the if-converted method). Shares related to the outstanding Finestar warrants were excluded from the computation of diluted earnings per share due to their anti-dilutive effect for the respective periods.



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share information):



|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|-------------------------------------------------------------------- |  | -------------------- | ------ | ------------------ | ----------------------- | ------ | ------------------ |  | ------------------ | ------ |  | - | ------- | -
|                                                                     |  | Thirteen Weeks Ended |        |                    | Thirty-Nine Weeks Ended |       
|                                                                     |  | September 24, 2004   |        | September 26, 2003 |                         |        | September 24, 2004 |  | September 26, 2003 |       
|Numerator:                                                           |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Numerator for basic earnings per share - net income (loss)           |  | $                    | 3,609  |                    | $                       | (5,244 | )                  |  | $                  | 8,604  |  | $ | (16,858 | )
|Effect of potential common shares:                                   |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Convertible subordinated debt                                        |  |                      | 856    |                    |                         |       |                    |  |                    |       |  |   |        |  
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Numerator for diluted earnings per share - net income (loss)         |  | $                    | 4,465  |                    | $                       | (5,244 | )                  |  | $                  | 8,604  |  | $ | (16,858 | )
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Denominator:                                                         |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Denominator for basic earnings per share - weighted average shares   |  |                      | 39,210 |                    |                         | 38,709 |                    |  |                    | 39,029 |  |   | 38,542  |  
|Effect of employee stock options:                                    |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Employee stock options                                               |  |                      | 693    |                    |                         |       |                    |  |                    | 861    |  |   |        |  
|Effect of potential common shares:                                   |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Convertible subordinated debt                                        |  |                      | 11,161 |                    |                         |       |                    |  |                    |       |  |   |        |  
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Denominator for diluted earnings per share - weighted average shares |  |                      | 51,064 |                    |                         | 38,709 |                    |  |                    | 39,890 |  |   | 38,542  |  
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Basic earnings per share                                             |  | $                    | 0.09   |                    | $                       | (0.14  | )                  |  | $                  | 0.22   |  | $ | (0.44   | )
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  
|Diluted earnings per share                                           |  | $                    | 0.09   |                    | $                       | (0.14  | )                  |  | $                  | 0.22   |  | $ | (0.44   | )
|                                                                     |  |                      |        |                    |                         |        |                    |  |                    |        |  |   |         |  



3. Inventories



The components of inventories are as follows ($000s):



|                |  |                   |        |                  |   |       
|--------------- |  | ----------------- | ------ | ---------------- | - | ------
|                |  | September 24,2004 |        | December 26,2003
|Raw materials   |  | $                 | 20,676 |                  | $ | 17,184
|Work-in-process |  |                   | 10,475 |                  |   | 8,446 
|Finished goods  |  |                   | 21,296 |                  |   | 18,417
|                |  |                   |        |                  |   |       
|                |  | $                 | 52,447 |                  | $ | 44,047
|                |  |                   |        |                  |   |       



4. Accrued Liabilities



The components of accrued and other current liabilities are as follows
($000s):



|                                        |  |                    |        |                  |   |       
|--------------------------------------- |  | ------------------ | ------ | ---------------- | - | ------
|                                        |  | September 24, 2004 |        | December 26,2003
|Accrued and other current liabilities:  |  |                    |        |                  |   |       
|Compensation and benefits               |  | $                  | 15,152 |                  | $ | 14,780
|Income taxes payable                    |  |                    | 8,355  |                  |   | 9,949 
|Warranty reserve                        |  |                    | 7,334  |                  |   | 7,854 
|Restructuring reserve (current portion) |  |                    | 6,180  |                  |   | 5,552 
|Other                                   |  |                    | 13,823 |                  |   | 11,089
|                                        |  |                    |        |                  |   |       
|                                        |  | $                  | 50,844 |                  | $ | 49,224
|                                        |  |                    |        |                  |   |       



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



At September 24, 2004 and December 26, 2003, other accrued liabilities consisted primarily of accruals for professional fees, consulting, commissions, interest, deferred
income and other taxes.



The components of other long-term liabilities are as
follows ($000s):



|                             |  |                    |       |                  |   |      
|---------------------------- |  | ------------------ | ----- | ---------------- | - | -----
|                             |  | September 24, 2004 |       | December 26,2003
|Other long-term liabilities: |  |                    |       |                  |   |      
|Restructuring reserve        |  | $                  | 3,897 |                  | $ | 8,662
|Directors pension plan      |  |                    | 1,233 |                  |   | 1,066
|                             |  |                    |       |                  |   |      
|                             |  | $                  | 5,130 |                  | $ | 9,728
|                             |  |                    |       |                  |   |      



5. Restructuring and Related
Charges



We implemented restructuring plans over the past three years to
ensure that our cost structure matches our anticipated level of demand. The restructuring plans included a reduction of approximately 1,900 positions worldwide and the charges recorded were primarily comprised of related severance and benefits.
Write-off of fixed assets and costs associated with a reduction in excess capacity were also included in the charges. We expect to pay most of the remaining restructuring liabilities during 2004 with the exception of those related to facility
closures. The liabilities related to facility closures contain continuing lease obligations, the longest of which extends to 2008. The 2004 activity related to restructuring charges are presented in the following table ($000s):



|                                              |  |                                             |        |              |   |        |                                              |  |   |       
|--------------------------------------------- |  | ------------------------------------------- | ------ | ------------ | - | ------ | -------------------------------------------- |  | - | ------
|                                              |  | RestructuringLiabilities atDecember 26,2003 |        | AccrualUsage |   |        | RestructuringLiabilities atSeptember 24,2004
|Employee termination costs                    |  | $                                           | 1,462  |              | $ | (572   | )                                            |  | $ | 890   
|Liability for payback of developmental grants |  |                                             | 3,080  |              |   | (33    | )                                            |  |   | 3,047 
|Facility closures                             |  |                                             | 9,672  |              |   | (3,532 | )                                            |  |   | 6,140 
|                                              |  |                                             |        |              |   |        |                                              |  |   |       
|                                              |  | $                                           | 14,214 |              | $ | (4,137 | )                                            |  | $ | 10,077
|                                              |  |                                             |        |              |   |        |                                              |  |   |       



The liability for payback of
developmental grants relates to the workforce reduction at our Ireland location. We were granted developmental funds by the Irish government subject to the condition that we maintain a work force of at least 300 employees at the facility in Ireland.
Our restructuring actions at the facility have resulted in a headcount significantly below 300 employees, triggering an obligation to repay the grants. In September 2003, we signed an agreement to repay 1.2 million (equivalent to $1.5 million)
to the Irish government over the next four years, with repayment of the remaining liability contingent based on certain future requirements. Approximately $0.4 million is classified as current as of September 24, 2004, with the additional amount
recorded in long-term liabilities.



No material restructuring expenses have
been recorded in 2004. For the thirteen and thirty-nine weeks ended September 26, 2003, the restructuring expense was $1.4 million and $5.0 million, respectively.



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



6. Convertible Debt



Convertible debt consists of $90.0 million of 5.5% Convertible Senior Subordinated Notes. The notes bear interest at 5.5%, payable semi-annually on February 15 and August 15 of each year, and mature on August 15, 2010
at 100% of their principal amount plus accrued and unpaid interest. On or after August 15, 2008, we have the ability to redeem some or all of the notes at 100% of their principal plus accrued and unpaid interest.



7. Credit Agreement



In March 2003, we entered into a five-year, $35.0 million asset-based credit facility with Fleet Capital Corporation. While there are no
borrowings outstanding at this time, the facility currently would bear interest at LIBOR plus 2.0% or the banks Prime Rate plus 0.25%. Our asset-based facility is secured by our domestic assets, including a pledge of the stock of our domestic
subsidiaries and 65% of the stock of certain of our foreign subsidiaries.



On
the date the credit agreement was completed, we used $19.0 million of cash on hand to pay off the amounts outstanding on our previous credit facility. The remaining unamortized balance of deferred financing costs capitalized in connection with the
previous credit facility of $0.6 million was written off in the first quarter of 2003 as a loss on debt extinguishment.



8. Income Taxes



In the thirteen and thirty-nine weeks ended September 24, 2004, an income tax provision of 15.8% and 21.4%, respectively, of the pretax income was recorded compared to a benefit of 12.1% in the same periods in 2003.
The difference between the tax rates is the result of several factors, including the profit recorded in the 2004 periods compared to a loss in the 2003 periods, the change in the statutory tax rate in Austria in the second quarter of 2004, the
distribution of profits and losses between tax jurisdictions and losses incurred in locations where there are valuation allowances that prevented us from recording deferred tax assets.



We have recorded deferred tax assets for net operating loss carryforwards in certain locations. We continually evaluate whether our deferred
tax assets will be realized, and record a valuation allowance where appropriate. If we continue to experience losses or elect to cease operations in certain tax jurisdictions, we may need to record additional valuation allowances in the appropriate
jurisdiction, and our effective tax rate could change significantly.



Artesyn
regularly evaluates its tax contingencies in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies. In the third quarter of 2004, certain tax accruals that related to a prior periods
tax return were no longer required and resulted in the reversal of a related tax reserve of $2.5 million.



In the second quarter of 2004, we executed an inter-company sale of assets, resulting in the establishment of a deferred charge asset associated with previously recorded deferred tax assets in our Austrian tax
jurisdiction. The asset, which totaled approximately $14.2 million, was recorded in long-term assets and is amortized over its useful life, ranging from 5 to 15 years. Long-term deferred tax assets were reduced by a corresponding amount when the
asset was established. As of September 24, 2004, the deferred charge asset included in long-term assets amounted to $13.6 million, net of amortization.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



9. Business Segments and Geographic Information



We are 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 conversion 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 software. We sell products directly to Original Equipment Manufacturers and also to a network of industrial and retail distributors throughout the world. Our principal markets are in the United States, Europe and Asia-Pacific, with the
United States being the largest based on sales. Sales are made in U.S. dollars and certain European currencies.



Corporate expenses include items related to compliance, litigation and other corporate administration. After a reassessment in the second quarter of 2004 due to a change
in segment management, these expenses are no longer considered when management is evaluating the performance of the two segments or when resource allocation decisions are made. Accordingly, corporate expenses are no longer allocated to our
reportable segments and we have restated the segment information for the current and prior year.



The tables below present information about reported segments: ($000s)



|                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|----------------------- |  | -------------------- | ------- | - | ----------------------- | - | ------ | ----------------- |  | - | ----------------- | - |  | - | ------- | -
|                        |  | Thirteen Weeks Ended |         |   | Thirty-Nine Weeks Ended |  
|                        |  | September 24,2004    |         |   | September 26,2003       |   |        | September 24,2004 |  |   | September 26,2003 |  
|Sales                   |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Power Conversion        |  | $                    | 86,696  |   |                         | $ | 75,890 |                   |  | $ | 258,052           |   |  | $ | 227,020 |  
|Communications Products |  |                      | 20,317  |   |                         |   | 12,145 |                   |  |   | 50,971            |   |  |   | 30,514  |  
|                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Total                   |  | $                    | 107,013 |   |                         | $ | 88,035 |                   |  | $ | 309,023           |   |  | $ | 257,534 |  
|                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Operating Income (Loss) |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Power Conversion        |  | $                    | 1,522   |   |                         | $ | (2,053 | )                 |  | $ | 8,063             |   |  | $ | (10,923 | )
|Communications Products |  |                      | 6,753   |   |                         |   | 2,585  |                   |  |   | 14,556            |   |  |   | 5,743   |  
|Corporate               |  |                      | (2,823  | ) |                         |   | (2,196 | )                 |  |   | (7,981            | ) |  |   | (7,110  | )
|                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  
|Total                   |  | $                    | 5,452   |   |                         | $ | (1,664 | )                 |  | $ | 14,638            |   |  | $ | (12,290 | )
|                        |  |                      |         |   |                         |   |        |                   |  |   |                   |   |  |   |         |  



|                        |  |                          |         |                        |   |        
|----------------------- |  | ------------------------ | ------- | ---------------------- | - | -------
|                        |  | As of September 24, 2004 |         | As ofDecember 26, 2003
|Assets                  |  |                          |         |                        |   |        
|Power Conversion        |  | $                        | 218,000 |                        | $ | 220,973
|Communications Products |  |                          | 55,327  |                        |   | 44,763 
|Corporate               |  |                          | 58,074  |                        |   | 50,940 
|                        |  |                          |         |                        |   |        
|Total                   |  | $                        | 331,401 |                        | $ | 316,676
|                        |  |                          |         |                        |   |        



10. Legal Proceedings



On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against
us in the United States District Court of Massachusetts alleging that we infringed on a U.S. patent entitled Optimal Resetting of The Transformers Core in Single Ended Forward Converters. The plaintiff has alleged that it is the
owner of the patent and that we have 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. § 284. We have challenged the validity of the patent and have denied the infringement claims. Based on the district courts claim construction rulings in early 2003, we reached an
agreement with VLT on a stipulated judgment, which the court entered on May 31, 2003.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



In the stipulation, VLT agreed that, under the courts construction, most of the Artesyn products that were originally accused of infringement (representing over 90%
of the accused sales volume) did not infringe the patent. In exchange, we agreed that, under the courts claim construction, the patent is valid and enforceable, and one category of its products (representing less than 10% of the accused sales)
did infringe the patent, prior to its expiration in February of 2002. Due to the patent expiration, the parties agree that no current Artesyn products can infringe.



The respective parties each appealed the stipulated judgment, including the district courts claim construction to the United States
Court of Appeals for the Federal Circuit. On May 24, 2004, the Federal Circuit affirmed the rulings of the District Court. The Federal Circuit recently denied both parties petitions for rehearing of that decision. VLT, however, subsequently
filed a motion in which it requested the Federal Circuit to reconsider its rulings in light of the courts actions in an unrelated case that VLT claimed could affect the decision in our case.



The Federal Circuit denied VLTs petition, and remanded the case back to the District
Court. The only issue pending at the District Court following the Federal Circuits decision is what, if any, are the damages owed by us to VLT on the limited sales of the remaining category of our products that infringe under the stipulated
judgment.



Certain of VLTs claims relate to technology that we licensed
from Galaxy Power, Inc. in 1994. As part of the license agreement, Galaxy agreed to indemnify and defend us against any and all claims that use of the licensed know-how infringes any patent. Galaxy, however, has denied our requests to cover or share
in the defense costs in the VLT case. Accordingly, on April 9, 2004, we filed a complaint against Galaxy in the United States District Court, seeking reimbursement of defense costs we have paid to date, as well as future defense costs and any
ultimate liability to VLT. Galaxy filed its answer and asserted affirmative defenses and three counterclaims: (I) breach of contract for failure to pay the final installment due under the agreement (which we are holding to set off against our
damages for Galaxys breach); (II) abuse of process; and (III) violation of Massachusetts General Laws Chapter 93A. We have filed a motion to dismiss counts II and III for failure to state a claim upon which relief may be granted. Galaxy has
withdrawn counts II and III without prejudice and the court has set a discovery schedule.



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.



11. Stock-Based Compensation



We apply Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees and related interpretations in accounting for stock-based
compensation for employees and non-employee directors. In accordance with APB No. 25, as the exercise price of our stock options equals the market price of the underlying stock on the date of grant, no compensation cost has been recognized for our
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 as amended by SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, and has been determined as if we had accounted for our 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:



|                        |  |                         |   |  |                    |  
|----------------------- |  | ----------------------- | - |  | ------------------ | -
|                        |  | Thirty-Nine Weeks Ended |  
|                        |  | September 24, 2004      |   |  | September 26, 2003 |  
|Risk-free interest rate |  | 3.2                     | % |  | 2.2                | %
|Dividend yield          |  |                        |   |  |                   |  
|Expected volatility     |  | 79                      | % |  | 95                 | %
|Expected life           |  | 3.4 years               |   |  | 3.3 years          |  



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



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



|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|------------------------------------ |  | ----------- |  | -------------------- | ------ | - | ----------------------- | - | ------ | ------------------ |  | - | ------------------ | - |  | - | ------- | -
|                                     |  |             |  | Thirteen Weeks Ended |        |   | Thirty-Nine Weeks Ended |  
|                                     |  |             |  | September 24,2004    |        |   | September 26, 2003      |   |        | September 24, 2004 |  |   | September 26, 2003 |  
|Net income (loss):                   |  | As reported |  | $                    | 3,609  |   |                         | $ | (5,244 | )                  |  | $ | 8,604              |   |  | $ | (16,858 | )
|Pro forma expense, net of tax effect |  |             |  |                      | (1,063 | ) |                         |   | (1,247 | )                  |  |   | (2,759             | ) |  |   | (4,609  | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|                                     |  | Pro forma   |  | $                    | 2,546  |   |                         | $ | (6,491 | )                  |  | $ | 5,845              |   |  | $ | (21,467 | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|Earnings (loss) per share-basic      |  | As reported |  | $                    | 0.09   |   |                         | $ | (0.14  | )                  |  | $ | 0.22               |   |  | $ | (0.44   | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|                                     |  | Pro forma   |  | $                    | 0.06   |   |                         | $ | (0.17  | )                  |  | $ | 0.15               |   |  | $ | (0.56   | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|Earnings (loss) per share-diluted    |  | As reported |  | $                    | 0.09   |   |                         | $ | (0.14  | )                  |  | $ | 0.22               |   |  | $ | (0.44   | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  
|                                     |  | Pro forma   |  | $                    | 0.06   |   |                         | $ | (0.17  | )                  |  | $ | 0.15               |   |  | $ | (0.56   | )
|                                     |  |             |  |                      |        |   |                         |   |        |                    |  |   |                    |   |  |   |         |  



The effects of applying SFAS 123 in
this pro forma disclosure are not necessarily indicative of future results.



12. Comprehensive Income (Loss)



Comprehensive income (loss)
was $4.3 million and ($5.2) million for the thirteen weeks ended September 24, 2004 and September 26, 2003, respectively. For the thirty-nine weeks ended September 24, 2004 and September 26, 2003, comprehensive income (loss) was $9.3 million and
($14.3) million, respectively. Total comprehensive income (loss) is primarily comprised of net income (loss) and adjustments for foreign currency translation.



13. Product Warranty



We record estimated product warranty costs as revenues are recognized. Warranty expense is generally determined by calculating the historical relationship between sales and warranty costs and by applying the
calculation to the current periods sales. Warranty expense is also recorded based on specific warranty claims.



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)



Changes in our product warranty liability are as follows ($000s):



|                                     |  |                         |        |   |                    |   |        |  
|------------------------------------ |  | ----------------------- | ------ | - | ------------------ | - | ------ | -
|                                     |  | Thirty-Nine Weeks Ended |       
|                                     |  | September 24, 2004      |        |   | September 26, 2003 |  
|Balance, beginning of period         |  | $                       | 7,854  |   |                    | $ | 5,378  |  
|Warranties charged during the period |  |                         | 1,782  |   |                    |   | 4,323  |  
|Settlements made during the period   |  |                         | (2,302 | ) |                    |   | (2,246 | )
|                                     |  |                         |        |   |                    |   |        |  
|Balance, end of period               |  | $                       | 7,334  |   |                    | $ | 7,455  |  
|                                     |  |                         |        |   |                    |   |        |  



14. Goodwill Impairment Assessment



In accordance with the provisions of SFAS No. 142, we assess goodwill for
impairment using a two-step approach on an annual basis, in August of each year, or more frequently if indicators of impairment exist. SFAS No. 142 states that potential impairment exists if the fair value of a reporting unit is less than the
carrying value of the assets of that unit. The amount of the impairment to recognize, if any, is calculated as the amount by which the carrying value of goodwill exceeds its implied fair value.



Our 2004 annual assessment was performed in August 2004. The reporting units on which the
goodwill assessment was performed were determined to be at our segment level. The results of the assessment are that the fair value of each reporting unit exceeds the carrying value of the assets in that unit. Therefore, in accordance with our
assessment no impairment exists.



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##### Table of Contents

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



The following should be read in conjunction with the condensed consolidated financial statements and related notes included in this quarterly report on Form 10-Q. 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. Forward-looking
statements typically use words or phrases such as estimate, plans, projects, anticipates, continuing, ongoing, expects, believes, or words of similar
import. We caution readers that a number of important factors, including those identified in the most recently filed annual report on Form 10-K, as well as factors discussed in 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. Forward-looking statements included in this Form 10-Q 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, we assume no obligation to update any forward-looking statements.



Results of Operations



Overview



We are a leading
designer and manufacturer of advanced power conversion products and board level computing solutions embedded in communications systems. We provide products to Original Equipment Manufacturers, or OEMs, and distributors predominantly in the
communications industry. Our operations are global, with design, manufacturing and sales organizations in North America, Europe and Asia.



We earned $0.09 per share in the third quarter of 2004, a significant improvement from the $0.14 per share loss in the third quarter of 2003. For the first nine months of
2004, we earned $0.22 per share, compared to a loss of $0.44 per share in the same period in 2003. The improvement in net income resulted from higher revenue, reflecting a recovery in our end markets, improved sales mix and manufacturing cost
reductions.



Revenue in the third quarter of 2004 was $107.0 million, an
increase of 22% from $88.0 million in the third quarter of 2003. For the first nine months of 2004, revenue was $309.0 million, a 20% increase from $257.5 million in the corresponding period in 2003. The increases between both periods are the result
of demand improvements across all of our end markets and, in particular, from wireless communications. Revenue increased $1.5 million sequentially in the third quarter of 2004 compared to the second quarter due to improved demand from our telecom
customers.



Gross profit increased in the third quarter of 2004 to $27.6
million, or 25.8% of revenue, compared to $18.2 million, or 20.7% of revenue, in the same quarter of 2003. For the first nine months of 2004, gross profit was $78.6 million, or 25.4% of revenue, compared to $47.0 million, or 18.3% of revenue in the
comparable period in 2003. The gross profit improvement is attributable to the increased revenue over the prior year, an improved sales mix of higher margin products, and manufacturing cost reductions resulting primarily from our past restructuring
actions.



Our cash balance as of September 24, 2004 was $98.1 million, an
increase of $3.9 million from the end of 2003. The increase in cash and cash equivalents resulted from cash flow from operations offset by cash used in investing activities, mainly for capital expenditures for production equipment.



Our orders amounted to $101.9 million and $314.3 million in the third quarter and for the
first nine months of 2004, respectively. The level of orders we have recorded, our current level of backlog and forecast information of our customers product requirements indicate revenue likely will be flat in the fourth quarter of 2004
compared to the third quarter.



14



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##### Table of Contents

Consolidated



Sales. The following table summarizes revenue by business segment for the thirteen and thirty-nine weeks ended September 24, 2004 in comparison with the same
periods in 2003 (in millions, except percentages):



|                        |  |                      |       |                   |   |                         |                   |         |                   |   |       |  |   |       |  |   
|----------------------- |  | -------------------- | ----- | ----------------- | - | ----------------------- | ----------------- | ------- | ----------------- | - | ----- |  | - | ----- |  | --
|                        |  | Thirteen Weeks Ended |       | %Change           |   | Thirty-Nine Weeks Ended |                   | %Change
|                        |  | September 24,2004    |       | September 26,2003 |   |                         | September 24,2004 |         | September 26,2003 |  
|Power Conversion        |  | $                    | 86.7  |                   | $ | 75.9                    |                   | 14      |                   | $ | 258.0 |  | $ | 227.0 |  | 14
|Communications Products |  |                      | 20.3  |                   |   | 12.1                    |                   | 68      |                   |   | 51.0  |  |   | 30.5  |  | 67
|                        |  |                      |       |                   |   |                         |                   |         |                   |   |       |  |   |       |  |   
|Total                   |  | $                    | 107.0 |                   | $ | 88.0                    |                   | 22      |                   | $ | 309.0 |  | $ | 257.5 |  | 20
|                        |  |                      |       |                   |   |                         |                   |         |                   |   |       |  |   |       |  |   



The increase in revenue in the
thirteen and thirty-nine weeks ended September 24, 2004 compared to the same periods in 2003 (approximately $19.0 million and $51.5 million, respectively) reflects higher sales across all end markets. The increase in revenue from our wireless and
server and storage customers is driven by the continued recovery in the marketplace as companies increased their spending on telecommunications and information technology infrastructure.



Orders booked in the third quarter of 2004 were $101.9 million, which represents a $4.3 million or 4.1% decrease from the amount recorded in
the second quarter of the year. This decrease resulted from a change in the ordering practices of a key customer as well as the fluctuations in the market demand. We continue to expect, based on our level of customer orders and product demand
forecasts from our customers, that the level of technology spending, a key indicator of our future performance, will continue to be higher in 2004 in comparison with 2003, driven by the need to replace aging equipment and expand wireless networks.



Gross Profit. Below is a comparison of gross profit and gross profit as
a percent of revenue for the thirteen and thirty-nine weeks ended September 24, 2004 compared to the same periods in 2003 (in millions, except percentages):



|                                     |  |                      |      |   |                   |   |                         |   |                   |         |  |                   |      |   |  |   |      |   |  |   
|------------------------------------ |  | -------------------- | ---- | - | ----------------- | - | ----------------------- | - | ----------------- | ------- |  | ----------------- | ---- | - |  | - | ---- | - |  | --
|                                     |  | Thirteen Weeks Ended |      |   | %Change           |   | Thirty-Nine Weeks Ended |   |                   | %Change
|                                     |  | September 24,2004    |      |   | September 26,2003 |   |                         |   | September 24,2004 |         |  | September 26,2003 |      |  
|Gross Profit                         |  | $                    | 27.6 |   |                   | $ | 18.2                    |   |                   | 52      |  | $                 | 78.6 |   |  | $ | 47.0 |   |  | 67
|Gross Profit as a percent of revenue |  |                      | 25.8 | % |                   |   | 20.7                    | % |                   |         |  |                   | 25.4 | % |  |   | 18.3 | % |  |   



The increase in gross profit for the
thirteen and thirty-nine weeks ended September 25, 2004 in comparison with the same periods in 2003 was due to higher revenue, the positive effect of sales mix, and the manufacturing cost reductions due to past restructuring actions.



The effect of higher revenue and positive sales mix contributed approximately $7.0 million
and $17.3 million to the increase in the gross profit in the thirteen and thirty-nine weeks ended September 24, 2004, respectively. The positive sales mix is due to the increase in revenue from our higher-margin DC/DC power supplies and embedded
board products from our Communications Products segment.



Manufacturing cost
reductions resulting from our past restructuring actions contributed to the increase in gross profit of approximately $1.2 million and $8.1 million in the thirteen and thirty-nine weeks ended September 24, 2004, respectively. The restructuring
actions, reflecting the closures of our Kindberg, Austria and Youghal, Ireland manufacturing facilities to reduce excess capacity and lower manufacturing costs, were largely complete at the end of 2003.



15



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##### Table of Contents

We expect the gross profit and gross profit as a percentage of revenue to continue to be favorably impacted by the
revenue increase, positive sales mix as well as the effect of the restructuring actions in the fourth quarter of 2004 in comparison with the fourth quarter of 2003.



Operating Expenses. Operating expenses for the thirteen and thirty-nine weeks ended September 24, 2004 compared to the same periods
in the prior year are as follows (in millions, except percentages):



|                                  |  |                      |      |                    |   |      |                         |      |                    |  |   |      |  |   |      |  |      |  
|--------------------------------- |  | -------------------- | ---- | ------------------ | - | ---- | ----------------------- | ---- | ------------------ |  | - | ---- |  | - | ---- |  | ---- | -
|                                  |  | Thirteen Weeks Ended |      | %Change            |   |      | Thirty-Nine Weeks Ended |      | %Change            | 
|                                  |  | September 24, 2004   |      | September 26, 2003 |   |      | September 24, 2004      |      | September 26, 2003 | 
|Selling, general & administrative |  | $                    | 11.5 |                    | $ | 9.9  |                         | 16   |                    |  | $ | 33.2 |  | $ | 28.8 |  | 15   |  
|Research & development            |  |                      | 10.7 |                    |   | 8.6  |                         | 24   |                    |  |   | 30.8 |  |   | 25.4 |  | 21   |  
|Restructuring & related charges   |  |                      |     |                    |   | 1.4  |                         | (100 | )                  |  |   |     |  |   | 5.0  |  | (100 | )
|                                  |  |                      |      |                    |   |      |                         |      |                    |  |   |      |  |   |      |  |      |  
|Total operating expenses          |  | $                    | 22.2 |                    | $ | 19.9 |                         | 12   |                    |  | $ | 64.0 |  | $ | 59.2 |  | 8    |  
|                                  |  |                      |      |                    |   |      |                         |      |                    |  |   |      |  |   |      |  |      |  



The increase in selling, general and
administrative expenses in the thirteen and thirty-nine weeks ended September 24, 2004 compared to the same periods in 2003, is due to increases in consulting expenses related to efforts to comply with new regulatory standards (approximately $0.5
million and $1.1 million, respectively), additional selling expenses necessary to support our increased revenue (approximately $0.5 million and $1.2 million, respectively), and lower gains associated with foreign exchange rates (approximately $0.1
million and $0.6 million, respectively).



Research and development expenses for
both the thirteen and thirty-nine weeks ended September 24, 2004 in comparison to the same periods in 2003 increased due to investments made to support revenue growth and fund new technology research primarily in DC/DC and digital control projects
in our Power Conversion segment and Advanced Telecommunications Computing Architecture (ATCA) in our Communications Products segment. We believe a strong investment in research and development is vital to our ability to provide our customers with
technically advanced, low-cost products. As a result, we plan to maintain our research and development spending for the remainder of 2004 at its current relationship with revenue.



Interest Expense, net. Interest expense, net for the thirteen and thirty-nine week periods ended September 24, 2004 compared to the
same periods in the prior year is as follows (in millions, except percentages):



|                      |  |                      |      |   |                    |   |                         |   |                    |         |  |                    |      |   |  |   |      |   |  |    
|--------------------- |  | -------------------- | ---- | - | ------------------ | - | ----------------------- | - | ------------------ | ------- |  | ------------------ | ---- | - |  | - | ---- | - |  | ---
|                      |  | Thirteen Weeks Ended |      |   | %Change            |   | Thirty-Nine Weeks Ended |   |                    | %Change
|                      |  | September 24, 2004   |      |   | September 26, 2003 |   |                         |   | September 24, 2004 |         |  | September 26, 2003 |      |  
|Interest expense      |  | $                    | 1.5  |   |                    | $ | 1.3                     |   |                    | 15      |  | $                  | 4.4  |   |  | $ | 3.5  |   |  | 26 
|Less: Interest income |  |                      | (0.3 | ) |                    |   | (0.1                    | ) |                    | 200     |  |                    | (0.7 | ) |  |   | (0.3 | ) |  | 133
|                      |  |                      |      |   |                    |   |                         |   |                    |         |  |                    |      |   |  |   |      |   |  |    
|Net interest expense  |  | $                    | 1.2  |   |                    | $ | 1.2                     |   |                    | 0       |  | $                  | 3.7  |   |  | $ | 3.2  |   |  | 16 
|                      |  |                      |      |   |                    |   |                         |   |                    |         |  |                    |      |   |  |   |      |   |  |    



The increase in interest expense in
the third quarter and first nine months of 2004 compared to the same periods in the preceding year is due to the higher level of debt in 2004. The additional borrowings and the higher interest rate associated with our convertible debt issuance in
August 2003 compared to the debt issued to Finestar International is expected to result in higher interest expense in 2004 compared to 2003.



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Provision (Benefit) for Income Taxes. Below is a comparison of the provision (benefit) for income tax and
effective tax rate for the thirteen and thirty-nine weeks ended September 24, 2004 in comparison with the same periods in 2003 (in millions, except percentages):



|                                     |  |                      |     |   |                   |   |                         |   |                   |         |  |                   |     |   |  |   |      |   |  |    
|------------------------------------ |  | -------------------- | --- | - | ----------------- | - | ----------------------- | - | ----------------- | ------- |  | ----------------- | --- | - |  | - | ---- | - |  | ---
|                                     |  | Thirteen Weeks Ended |     |   | %Change           |   | Thirty-Nine Weeks Ended |   |                   | %Change
|                                     |  | September 24,2004    |     |   | September 26,2003 |   |                         |   | September 24,2004 |         |  | September 26,2003 |     |  
|Provision (benefit) for income taxes |  | $                    | 0.7 |   |                   | $ | (0.7                    | ) |                   | 200     |  | $                 | 2.3 |   |  | $ | (2.3 | ) |  | 200
|Effective tax rate                   |  |                      | 16  | % |                   |   | 12                      | % |                   |         |  |                   | 21  | % |  |   | 12   | % |  |    



The difference in the 2004 and 2003
tax rates is due to the distribution of profits and losses by jurisdiction, adjustments to valuation allowances on deferred tax assets recorded at various locations, Austrian tax rate change and the expiration of certain tax accruals in the third
quarter of 2004.



Net Income (Loss). The net income (loss) recorded for
the thirteen and thirty-nine weeks ended September 24, 2004 compared to the same periods in the previous year is a result of the factors disclosed above.



Power Conversion



Results for the Power Conversion segment in the thirteen and thirty-nine weeks ended September 24, 2004 in comparison with the same periods in the prior year are as follows (in millions, except percentages):



|                        |  |                      |      |                   |         |      |                         |                   |     |                   |   |       |  |   |       |   |  |    
|----------------------- |  | -------------------- | ---- | ----------------- | ------- | ---- | ----------------------- | ----------------- | --- | ----------------- | - | ----- |  | - | ----- | - |  | ---
|                        |  | Thirteen Weeks Ended |      |                   | %Change |      | Thirty-Nine Weeks Ended |                   |     | %Change          
|                        |  | September 24,2004    |      | September 26,2003 |         |      |                         | September 24,2004 |     | September 26,2003 |   |      
|Revenue                 |  | $                    | 86.7 |                   | $       | 75.9 |                         |                   | 14  |                   | $ | 258.0 |  | $ | 227.0 |   |  | 14 
|Operating income (loss) |  |                      | 1.5  |                   |         | (2.1 | )                       |                   | 171 |                   |   | 8.1   |  |   | (10.9 | ) |  | 174



Increased sales across all end
markets, particularly to wireless customers, are the reason for the increase in revenue in Power Conversion in the third quarter (approximately $10.8 million) and the first nine months of 2004 (approximately $31.0 million). As companies have
increased spending on technology infrastructure, revenues from all of our end markets have increased in comparison with 2003, reversing trends experienced in previous years.



Operating income increased in the third quarter and the first nine months of 2004 compared with the same periods in 2003 due to the increase
in revenue in 2004 (approximately $1.8 million and $5.3 million, respectively) and the manufacturing cost reductions ($1.2 million and $8.1 million for the thirteen and thirty-nine weeks ended September 26, 2004, respectively). The favorable effects
of increased revenue and manufacturing cost reductions were somewhat offset by increased engineering expenses related to the higher level of new product introductions, higher selling expenses, reflecting an investment in sales infrastructure and
personnel and higher general and administrative expenses to support increased revenue growth as well as to comply with the new regulatory standards.



Communications Products



Results for the Communications Products segment in the thirteen and thirty-nine weeks ended September 24, 2004 in comparison with the same periods in the prior year are
as follows (in millions, except percentages):





|                 |  |                      |      |                   |   |                         |                   |         |                   |   |      |  |   |      |  |    
|---------------- |  | -------------------- | ---- | ----------------- | - | ----------------------- | ----------------- | ------- | ----------------- | - | ---- |  | - | ---- |  | ---
|                 |  | Thirteen Weeks Ended |      | %Change           |   | Thirty-Nine Weeks Ended |                   | %Change
|                 |  | September 24,2004    |      | September 26,2003 |   |                         | September 24,2004 |         | September 26,2003 |  
|Revenue          |  | $                    | 20.3 |                   | $ | 12.1                    |                   | 68      |                   | $ | 51.0 |  | $ | 30.5 |  | 67 
|Operating income |  |                      | 6.8  |                   |   | 2.6                     |                   | 162     |                   |   | 14.6 |  |   | 5.7  |  | 156



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New product introductions and increased sales of existing products drove the increase in revenue in our Communications
Products segment in the third quarter (approximately $8.2 million) and the first nine months (approximately $20.5 million) of 2004 compared with the same periods in 2003. The increase is due to the recovery of the wireless market sector in 2004 and
gain in market share.



The improvement in operating income in the third quarter
and the first nine months of 2004 compared with the same periods in 2003 is primarily attributable to the increase in revenue and better plant utilization. The increase in revenue attributed approximately $5.2 million and $12.0 million for the
thirteen and thirty-nine weeks ended September 24, 2004, respectively, to the increase in the operating income. The favorable effects of the revenue increase and improvement in plant utilization were somewhat offset by increased engineering expenses
related to ATCA new product development and higher selling expenses, reflecting an investment in sales personnel.



Liquidity and Capital Resources



The following table presents selected financial statement information as of the end of the third quarter of 2004 compared to the end of 2003 (in millions, except
statistical data):



|                                     |  |                        |      |                       |   |     
|------------------------------------ |  | ---------------------- | ---- | --------------------- | - | ----
|                                     |  | As ofSeptember 24,2004 |      | As ofDecember 26,2003
|Cash and cash equivalents            |  | $                      | 98.1 |                       | $ | 94.2
|Convertible subordinated debt        |  |                        | 90.0 |                       |   | 90.0
|                                     |  |                        |      |                       |   |     
|Cash, net of debt                    |  | $                      | 8.1  |                       | $ | 4.2 
|                                     |  |                        |      |                       |   |     
|Working Capital Statistics:          |  |                        |      |                       |   |     
|Days of sales outstanding            |  |                        | 50   |                       |   | 50  
|Days of inventory on-hand            |  |                        | 60   |                       |   | 52  
|Days of accounts payable outstanding |  |                        | 62   |                       |   | 57  



The primary sources of cash currently
available to us are cash on hand, cash from operations and funds available under our revolving credit facility. These amounts are available to finance capital expenditures, fund working capital needs, and pay interest on our outstanding convertible
senior subordinated debt.



Our cash and cash equivalents increased from $94.2
million at the end of 2003 to $98.1 million at the end of the third quarter of 2004. The primary source of cash was net income adjusted for non-cash expenses.



Cash Flows from Operating Activities.During the first nine months of 2004, our cash flows from operating activities served as
a source of cash of $20.8 million. Net income adjusted for non-cash expenses, which include the effect of depreciation and amortization, was the primary source of cash, providing us with $34.5 million in operating cash in the period. Increases in
accounts payable and accruals also contributed as a source of cash ($4.2 million), offset by increases in inventory ($12.3 million) and accounts receivable ($6.4 million).



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Overall working capital performance was consistent with the level recorded at the end of 2003. While the balance in
accounts receivable increased in 2004 due to the higher level of sales, our Days Sales Outstanding remained consistent with 2003. Days of Inventory On-Hand at the end of the third quarter increased from the end of 2003 due to the strategic purchase
of long lead-time components and materials to support increases in demand. The increased level of component purchases is also reflected in an increase in accounts payable, partially offsetting the cash flow effect of the change in inventory and
accounts receivable.



Looking forward, we do not expect to generate a
significant amount of cash from working capital as our anticipated higher level of demand will require additional investments in inventory and accounts receivable during the year. Accordingly, net income adjusted for non-cash expenses is expected to
be the primary contributor to cash from operations during the remainder of 2004 as it has been in the first nine months of the year.



Cash Flows from Investing Activities. Cash flows from investing activities reflect a net cash use of $18.3 million in the first nine months of 2004, comprised
primarily of capital expenditures ($18.4 million).



Trends in design require a
higher number of surface-mounted components in our products. These trends, combined with the expectation of higher demand, require an increase in the number of automated surface mount lines, automated test equipment and other related production
equipment we currently utilize. As a result, our capital expenditures are expected to increase to approximately $25 to $28 million for the fiscal year 2004 compared to $7.1 million recorded in 2003.



Cash Flows from Financing Activities. In the first nine months of 2004, cash flows
from financing activities were a source of cash of $1.4 million, resulting primarily from the exercise of stock options.



In the third quarter of 2003, we completed the placement to qualified institutional investors of $90.0 million of 5.5% convertible senior subordinated notes due 2010. Net
proceeds from the issuance of convertible senior subordinated notes in the third quarter of 2003 were approximately $86.3 million. The placement was completed in order to replace previously outstanding debt and to provide us with additional
long-term working capital. There are no financial covenant requirements associated with the 5.5% convertible senior subordinated notes.



In March 2003, we entered into a new five-year, $35.0 million senior revolving credit facility with Fleet Capital Corporation. For additional information on the terms of
this asset-based credit facility, please see Note 7 of the Condensed Consolidated Financial Statements. While the total availability under the facility is limited to $35.0 million, the actual amount available to be borrowed is based on our level of
qualifying domestic accounts receivable and inventory, which is subject to changing business conditions. Generally, as our level of qualifying accounts receivable and inventory increases, our availability increases up to the prescribed limit and
vice-versa. As of the end of the third quarter of 2004, our outstanding balance on the revolving credit facility was zero, and our availability was $22.3 million.



In addition to other affirmative and negative covenants customary for asset-based credit facilities, we are also subject to an EBITDA
covenant that is triggered if the amount available to be borrowed under the facility plus cash deposited with the designated bank falls below $20.0 million. As of the end of the third quarter of 2004, the availability and the cash deposited were
above the prescribed limit, and we were not subject to the additional covenant.



Our sources of cash include the cash we currently have on hand, the availability we maintain on our asset-based credit facility and cash expected to be generated from operations. We believe that our sources of cash are sufficient to cover
our anticipated operating expenses, capital expenditures, restructuring requirements and interest payments for the next twelve months.



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From a long-term perspective, our sources of cash are expected to remain the same. We are dependent on generating cash
from operations as our primary long-term source of cash. We would be required to identify other long-term sources of cash if we were not able to generate cash from operations or if we decided to take on a strategic initiative, such as an
acquisition, which would require cash. We continually evaluate options with respect to additional financing, including the sale of debt or equity instruments and portions of the business. Any such financing or sale transactions could have an adverse
effect on our stock price and could dilute our shareholders ownership interest in our company.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



We are exposed to the impact of interest rate changes and foreign currency fluctuations in the normal course of business. For additional details related to our exposure to changes in interest rates and fluctuations in
the value of foreign currencies, please refer to Item 7A of our 2003 Annual Report on Form 10-K.



Item 4. Controls and Procedures



As of September
24, 2004 our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Securities
Exchange Act of 1934, as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 24, 2004, our disclosure controls and procedures were effective in ensuring that material information
required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, including ensuring that
such material information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



During the period covered by this report, there were no changes in our internal control over
financial reporting.



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



On February 8, 2001,
VLT, Inc. and Vicor Corporation filed a suit against us in the United States District Court of Massachusetts alleging that we infringed on U.S. Reissue Patent No. 36,098 entitled Optimal Resetting of The Transformers Core in Single Ended
Forward Converters. As of September 24, 2004, the matter has not been resolved.



For additional detail with respect to the VLT/Vicor suit, please refer to Note 10 of the Condensed Consolidated Financial Statements in Item 1 of this report.



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.



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Item 6. Exhibits



|            |  |                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                        
|31.1        |  | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|            | 
|31.2        |  | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|            | 
|32.1        |  | Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURE



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



|                       |  |                            |  |                        
|---------------------- |  | -------------------------- |  | -----------------------
|                       |  | Artesyn Technologies, Inc.
|                       |  |                           
|Date: November 3, 2004 |  |                            |  |                        
|                       |  | By:                        |  | /s/ Richard J. Thompson
|                       |  |                            |  | Richard J. Thompson    
|                       |  |                            |  | Vice President Finance 
|                       |  |                            |  | Chief Financial Officer



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Exhibit Index



|            |  |                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                            
|31.1        |  | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|            | 
|31.2        |  | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                
|            | 
|32.1        |  | Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|            | 
|32.2        |  | Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



23