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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 30, 2005



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 Exchange Act).    Yes  x    No ̈



Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act.):    Yes ̈No  x



The number of shares of Common Stock, $.01 par
value per share, of the Registrant issued and outstanding as of October 28, 2005 was 39,866,051 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 30, 2005 (unaudited) and December 31, 2004                                                  |  | 3         
|              |  |                                                                                                                                                    
|              |  | Condensed Consolidated Statements of Operations (unaudited) For the Thirteen and Thirty-Nine Weeks Ended September 30, 2005 and September 24, 2004 |  | 4         
|              |  |                                                                                                                                                    
|              |  | Condensed Consolidated Statements of Cash Flows (unaudited) - For the Thirty-Nine Weeks Ended September 30, 2005 and September 24, 2004             |  | 5         
|              |  |                                                                                                                                                    
|              |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                    |  | 6-14      
|              |  |                                                                                                                                                    
|Item 2.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                               |  | 15-22     
|              |  |                                                                                                                                                    
|Item 3.       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                          |  | 22        
|              |  |                                                                                                                                                    
|Item 4.       |  | Controls and Procedures                                                                                                                             |  | 22        
|              |  |                                                                                                                                                    
|Item 5.       |  | Other Information                                                                                                                                   |  | 22        
|              |  |                                                                                                                                                    
|PART II.      |  | Other Information                                                                                                                                   |  |           
|              |  |                                                                                                                                                    
|Item 1.       |  | Legal Proceedings                                                                                                                                   |  | 23        
|              |  |                                                                                                                                                    
|Item 6.       |  | Exhibits                                                                                                                                            |  | 23        
|              | 
|Signature     |  | 24                                                                                                                                                 
|              | 
|Exhibit Index |  | 25                                                                                                                                                 



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements



Artesyn Technologies, Inc.

Condensed Consolidated Balance Sheets

(Amounts in Thousands, Except Share Data)



|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                    |  | September 30,2005 |         |   | December 31,2004 |  
|                                                                                                                                                    |  | (unaudited)       |         |   |                  |  
|Assets                                                                                                                                              |  |                   |         |   |                  |   |         |  
|Current Assets:                                                                                                                                     |  |                   |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                           |  | $                 | 58,845  |   |                  | $ | 84,811  |  
|Marketable debt securities                                                                                                                          |  |                   | 42,180  |   |                  |   | 21,125  |  
|Accounts receivable, net of allowances of $1,279 in 2005 and $1,633 in 2004                                                                         |  |                   | 65,337  |   |                  |   | 61,352  |  
|Inventories                                                                                                                                         |  |                   | 47,969  |   |                  |   | 50,320  |  
|Prepaid expenses and other current assets                                                                                                           |  |                   | 2,215   |   |                  |   | 1,380   |  
|Deferred income taxes                                                                                                                               |  |                   | 9,137   |   |                  |   | 9,137   |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total current assets                                                                                                                                |  |                   | 225,683 |   |                  |   | 228,125 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Property, Plant & Equipment, Net                                                                                                                    |  |                   | 57,465  |   |                  |   | 66,124  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Other Assets:                                                                                                                                       |  |                   |         |   |                  |   |         |  
|Goodwill, net                                                                                                                                       |  |                   | 20,843  |   |                  |   | 22,107  |  
|Deferred income taxes                                                                                                                               |  |                   | 4,067   |   |                  |   | 4,155   |  
|Other assets                                                                                                                                        |  |                   | 19,951  |   |                  |   | 21,128  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total other assets                                                                                                                                  |  |                   | 44,861  |   |                  |   | 47,390  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total Assets                                                                                                                                        |  | $                 | 328,009 |   |                  | $ | 341,639 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Liabilities and Shareholders Equity                                                                                                                |  |                   |         |   |                  |   |         |  
|Current Liabilities:                                                                                                                                |  |                   |         |   |                  |   |         |  
|Accounts payable                                                                                                                                    |  | $                 | 50,145  |   |                  | $ | 54,958  |  
|Accrued and other current liabilities                                                                                                               |  |                   | 38,840  |   |                  |   | 52,838  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total current liabilities                                                                                                                           |  |                   | 88,985  |   |                  |   | 107,796 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Long-Term Liabilities:                                                                                                                              |  |                   |         |   |                  |   |         |  
|Convertible subordinated debt                                                                                                                       |  |                   | 90,000  |   |                  |   | 90,000  |  
|Deferred income taxes                                                                                                                               |  |                   | 6,082   |   |                  |   | 5,598   |  
|Other long-term liabilities                                                                                                                         |  |                   | 3,729   |   |                  |   | 4,269   |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total long-term liabilities                                                                                                                         |  |                   | 99,811  |   |                  |   | 99,867  |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total liabilities                                                                                                                                   |  |                   | 188,796 |   |                  |   | 207,663 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|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; 39,839,351 shares issued and outstanding in 2005 (39,304,957 shares in
2004) |  |                   | 398     |   |                  |   | 393     |  
|Additional paid-in capital                                                                                                                          |  |                   | 135,317 |   |                  |   | 131,787 |  
|Retained earnings                                                                                                                                   |  |                   | 11,873  |   |                  |   | 5,832   |  
|Accumulated other comprehensive loss                                                                                                                |  |                   | (8,375  | ) |                  |   | (4,036  | )
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total shareholders equity                                                                                                                          |  |                   | 139,213 |   |                  |   | 133,976 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  
|Total Liabilities and Shareholders Equity                                                                                                          |  | $                 | 328,009 |   |                  | $ | 341,639 |  
|                                                                                                                                                    |  |                   |         |   |                  |   |         |  



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



3



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##### Table of Contents

Artesyn Technologies, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(Amounts in Thousands, Except Per
Share Data)



|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|---------------------------------------------------------------- |  | -------------------- | ------- | - | ----------------------- | - | ------- | ----------------- |  | - | ----------------- | - |  | - | ------- | -
|                                                                 |  | Thirteen Weeks Ended |         |   | Thirty-Nine Weeks Ended |  
|                                                                 |  | September 30,2005    |         |   | September 24,2004       |   |         | September 30,2005 |  |   | September 24,2004 |  
|Sales                                                            |  | $                    | 101,952 |   |                         | $ | 107,013 |                   |  | $ | 312,469           |   |  | $ | 309,023 |  
|Cost of Sales                                                    |  |                      | 77,291  |   |                         |   | 79,379  |                   |  |   | 236,091           |   |  |   | 230,443 |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Gross Profit                                                     |  |                      | 24,661  |   |                         |   | 27,634  |                   |  |   | 76,378            |   |  |   | 78,580  |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Operating Expenses                                               |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Selling, general and administrative                              |  |                      | 9,203   |   |                         |   | 11,486  |                   |  |   | 29,682            |   |  |   | 33,173  |  
|Research and development                                         |  |                      | 11,220  |   |                         |   | 10,696  |                   |  |   | 33,887            |   |  |   | 30,769  |  
|Restructuring and other charges                                  |  |                      | 351     |   |                         |   |        |                   |  |   | 3,668             |   |  |   |        |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Total operating expenses                                         |  |                      | 20,774  |   |                         |   | 22,182  |                   |  |   | 67,237            |   |  |   | 63,942  |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Operating Income                                                 |  |                      | 3,887   |   |                         |   | 5,452   |                   |  |   | 9,141             |   |  |   | 14,638  |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Other Expense                                                    |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Interest expense, net                                            |  |                      | (791    | ) |                         |   | (1,166  | )                 |  |   | (2,796            | ) |  |   | (3,692  | )
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Income Before Provision for Income Taxes                         |  |                      | 3,096   |   |                         |   | 4,286   |                   |  |   | 6,345             |   |  |   | 10,946  |  
|                                                                 |  |                      |         |  
|Provision (Benefit) for Income Taxes                             |  |                      | (924    | ) |                         |   | 677     |                   |  |   | 304               |   |  |   | 2,342   |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Net Income                                                       |  | $                    | 4,020   |   |                         | $ | 3,609   |                   |  | $ | 6,041             |   |  | $ | 8,604   |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Earnings Per Share                                               |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|                                                                 |  |                      |         |  
|Basic                                                            |  | $                    | 0.10    |   |                         | $ | 0.09    |                   |  | $ | 0.15              |   |  | $ | 0.22    |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Diluted                                                          |  | $                    | 0.09    |   |                         | $ | 0.09    |                   |  | $ | 0.15              |   |  | $ | 0.22    |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Weighted Average Common and Common Equivalent Shares Outstanding |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Basic                                                            |  |                      | 39,774  |   |                         |   | 39,210  |                   |  |   | 39,586            |   |  |   | 39,029  |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Diluted                                                          |  |                      | 51,700  |   |                         |   | 51,064  |                   |  |   | 40,354            |   |  |   | 39,890  |  
|                                                                 |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  



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 Cash Flows

(unaudited)

(Amounts in Thousands)



|                                                                                  |  |                         |          |   |                   |   |         |  
|--------------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ----------------- | - | ------- | -
|                                                                                  |  | Thirty-Nine Weeks Ended |         
|                                                                                  |  | September 30,2005       |          |   | September 24,2004 |  
|Operating Activities                                                              |  |                         |          |   |                   |   |         |  
|Net income                                                                        |  | $                       | 6,041    |   |                   | $ | 8,604   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                         |          |   |                   |   |         |  
|Depreciation and amortization                                                     |  |                         | 16,767   |   |                   |   | 16,549  |  
|Other non-cash items                                                              |  |                         | 5,847    |   |                   |   | 9,315   |  
|Changes in operating assets and liabilities, net of acquisitions:                 |  |                         |          |   |                   |   |         |  
|Accounts receivable                                                               |  |                         | (6,991   | ) |                   |   | (6,423  | )
|Inventories                                                                       |  |                         | (624     | ) |                   |   | (12,272 | )
|Prepaid expenses and other assets                                                 |  |                         | (801     | ) |                   |   | 805     |  
|Accounts payable and accrued liabilities                                          |  |                         | (14,515  | ) |                   |   | 4,235   |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Net Cash Provided by Operating Activities                                         |  |                         | 5,724    |   |                   |   | 20,813  |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Investing Activities                                                              |  |                         |          |   |                   |   |         |  
|Purchases of property, plant & equipment                                          |  |                         | (9,740   | ) |                   |   | (18,440 | )
|Proceeds from sale of property, plant & equipment                                 |  |                         | 147      |   |                   |   | 877     |  
|Purchases of available for sale securities                                        |  |                         | (104,040 | ) |                   |   |        |  
|Proceeds from sale and maturities of available for sale securities                |  |                         | 83,101   |   |                   |   |        |  
|Issuance of loan to related party                                                 |  |                         | (1,000   | ) |                   |   |        |  
|Earn-out payments related to acquisitions                                         |  |                         |         |   |                   |   | (714    | )
|                                                                                  |  |                         |          |   |                   |   |         |  
|Net Cash Used in Investing Activities                                             |  |                         | (31,532  | ) |                   |   | (18,277 | )
|                                                                                  |  |                         |          |   |                   |   |         |  
|Financing Activities                                                              |  |                         |          |   |                   |   |         |  
|Principal payments of debt and capital leases                                     |  |                         | (196     | ) |                   |   |        |  
|Proceeds from exercises of stock options                                          |  |                         | 2,234    |   |                   |   | 1,433   |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Net Cash Provided by Financing Activities                                         |  |                         | 2,038    |   |                   |   | 1,433   |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Effect of Exchange Rate Changes on Cash and Cash Equivalents                      |  |                         | (2,196   | ) |                   |   | (63     | )
|                                                                                  |  |                         |          |   |                   |   |         |  
|(Decrease) Increase in Cash and Cash Equivalents                                  |  |                         | (25,966  | ) |                   |   | 3,906   |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Cash and Cash Equivalents, Beginning of Period                                    |  |                         | 84,811   |   |                   |   | 94,215  |  
|                                                                                  |  |                         |          |   |                   |   |         |  
|Cash and Cash Equivalents, End of Period                                          |  | $                       | 58,845   |   |                   | $ | 98,121  |  
|                                                                                  |  |                         |          |   |                   |   |         |  



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 30, 2005

(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 30, 2005 are not necessarily indicative of the results that may be expected
for the entire fiscal year 2005. In addition, these Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our 2004 Annual Report on Form 10-K filed with the
Securities and Exchange Commission (SEC) on March 16, 2005.



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. Recent Accounting Pronouncements



In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) 123R, Share-Based Payments. This statement replaces SFAS 123, and supersedes Accounting Principles Board Opinion (APB) 25. SFAS 123R eliminates the intrinsic value
method under APB 25 as an alternative method of accounting for stock-based awards. The new standard requires that the compensation cost relating to share-based payment be recognized in financial statements at fair value. SFAS 123R also revises the
fair value-based method of accounting for share-based payment liabilities, forfeitures and modifications of stock-based awards and clarifies SFAS 123s guidance in several areas, including measuring fair value, classifying an award as equity or
as a liability and attributing compensation cost to reporting periods. In April 2005, the SEC delayed the implementation of SFAS 123R for public companies until the first annual period beginning after June 15, 2005. We are required to adopt
SFAS 123R by the beginning of fiscal year 2006, using a modified version of prospective application or may elect to apply a modified version of retrospective application. We expect that the adoption of this statement will have a material impact on
our financial results. We have not yet determined the method of adoption or the effect of adopting SFAS 123R, and we have not determined whether the adoption will result in future expenses that are similar to the current pro forma disclosures under
SFAS 123.



In November 2004, the FASB issued SFAS 151, Inventory Costs
 an Amendment of Accounting Research Bulletin 43, Chapter 4. This standard provides clarification that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be recognized as current-period charges.
Additionally, this standard requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this standard are effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. We are required to adopt SFAS 151 by the beginning of fiscal year 2006. The adoption of this standard is not expected to have a material impact on our financial statements.



3. Earnings Per Share



Basic earnings per share is calculated by dividing income available to shareholders by the weighted-average number of common shares
outstanding during each period. Diluted earnings per share is



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to
Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



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 and shares of
restricted common stock (calculated using the treasury stock method).



Certain
shares under the Companys stock-based compensation programs and warrants were excluded from the diluted earnings per share computation because their effect was antidilutive for the thirteen and thirty-nine weeks ended September 30, 2005
and September 24, 2004. Additionally, we have excluded shares related to common stock potentially issuable upon the conversion of our senior subordinated debt because their effect was antidilutive for the thirty-nine weeks ended
September 30, 2005 and September 24, 2004. The weighted average shares excluded from the diluted earnings per share totaled 1.4 million and 15.4 million shares for the thirteen and thirty-nine weeks ended September 30, 2005,
respectively, and 3.5 million and 16.3 million shares for the same periods in 2004.



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 30,2005    |        | September 24,2004       |   | September 30,2005 |  | September 24,2004
|Numerator:                                                           |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Numerator for basic earnings per share - net income                  |  | $                    | 4,020  |                         | $ | 3,609             |  | $                 | 6,041  |  | $ | 8,604 
|Effect of potential common shares:                                   |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Convertible subordinated debt                                        |  |                      | 846    |                         |   | 856               |  |                   |       |  |   |      
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Numerator for diluted earnings per share - net income                |  |                      | 4,866  |                         |   | 4,465             |  |                   | 6,041  |  |   | 8,604 
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Denominator:                                                         |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Denominator for basic earnings per share - weighted average shares   |  |                      | 39,774 |                         |   | 39,210            |  |                   | 39,586 |  |   | 39,029
|Effect of employee stock options                                     |  |                      | 728    |                         |   | 693               |  |                   | 754    |  |   | 861   
|Effect of employee restricted shares                                 |  |                      | 37     |                         |   |                  |  |                   | 14     |  |   |      
|Effect of potential common shares:                                   |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Convertible subordinated debt                                        |  |                      | 11,161 |                         |   | 11,161            |  |                   |       |  |   |      
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Denominator for diluted earnings per share - weighted average shares |  |                      | 51,700 |                         |   | 51,064            |  |                   | 40,354 |  |   | 39,890
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Basic earnings per share                                             |  | $                    | 0.10   |                         | $ | 0.09              |  | $                 | 0.15   |  | $ | 0.22  
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       
|Diluted earnings per share                                           |  | $                    | 0.09   |                         | $ | 0.09              |  | $                 | 0.15   |  | $ | 0.22  
|                                                                     |  |                      |        |                         |   |                   |  |                   |        |  |   |       



We issued 129,669 and 80,836 shares of
common stock in the thirty-nine weeks ended September 30, 2005 and September 24, 2004, respectively, to match the contributions of employees participating in our 401(k) savings plan as approved by the Board of Directors. Additionally, we
issued 415,225 and 405,450 shares during the thirty-nine weeks ended September 30, 2005 and September 24, 2004, respectively, upon the exercise of employee stock options.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



4. Inventories



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



|                |  |                   |        |                  |   |       
|--------------- |  | ----------------- | ------ | ---------------- | - | ------
|                |  | September 30,2005 |        | December 31,2004
|Raw materials   |  | $                 | 21,014 |                  | $ | 19,736
|Work-in-process |  |                   | 8,246  |                  |   | 8,722 
|Finished goods  |  |                   | 18,709 |                  |   | 21,862
|                |  |                   |        |                  |   |       
|                |  | $                 | 47,969 |                  | $ | 50,320
|                |  |                   |        |                  |   |       



5. Accrued Liabilities



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



|                                        |  |                   |        |                  |   |       
|--------------------------------------- |  | ----------------- | ------ | ---------------- | - | ------
|                                        |  | September 30,2005 |        | December 31,2004
|Accrued and other current liabilities:  |  |                   |        |                  |   |       
|Compensation and benefits               |  | $                 | 12,349 |                  | $ | 16,006
|Income taxes payable                    |  |                   | 9,384  |                  |   | 10,868
|Warranty reserve                        |  |                   | 5,068  |                  |   | 6,933 
|Restructuring reserve (current portion) |  |                   | 3,344  |                  |   | 5,806 
|Other                                   |  |                   | 8,695  |                  |   | 13,225
|                                        |  |                   |        |                  |   |       
|                                        |  | $                 | 38,840 |                  | $ | 52,838
|                                        |  |                   |        |                  |   |       



As of September 30, 2005 and
December 31, 2004, other accrued liabilities consisted primarily of accruals for professional and consulting fees, commissions, interest, deferred income and non-income taxes.



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



|                             |  |                   |       |                  |   |      
|---------------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                             |  | September 30,2005 |       | December 31,2004
|Other long-term liabilities: |  |                   |       |                  |   |      
|Restructuring reserve        |  | $                 | 2,374 |                  | $ | 3,252
|Directors pension plan      |  |                   | 1,004 |                  |   | 1,017
|Other long-term liabilities  |  |                   | 351   |                  |   |     
|                             |  |                   |       |                  |   |      
|                             |  | $                 | 3,729 |                  | $ | 4,269
|                             |  |                   |       |                  |   |      



6. Restructuring and Other Charges



During the second quarter of 2005, we initiated a company-wide review of
operating expenses, which resulted in implementation of certain restructuring actions targeted to reduce costs.



In April 2005, we announced the reduction of approximately 30 operational and administrative positions company-wide, the majority of which related to our Power Conversion
segment. This action resulted in restructuring and other charges of $0.9 million incurred in 2005. The headcount reductions and related payments were largely complete by the end of the third quarter.



In June 2005, we implemented actions designed to streamline our manufacturing costs, which
includes the planned closure of our facility in Tatabanya, Hungary. Since opening the Power Conversion manufacturing facility in 2001, our customers have reassessed their regional sourcing needs, resulting in an under-utilized facility. The products
currently being produced in Hungary will be outsourced to a third party global electronics manufacturing services provider.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



We account for termination benefit costs in accordance with SFAS 112, Employers Accounting for Postemployment Benefits, if an on-going benefit
arrangement is presumed to exist or in accordance with SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, for costs related to a one-time benefit arrangement.



The closure of the Hungarian factory primarily involves termination of the factory workforce
and disposal of the facility, equipment and other fixed assets. The workforce reduction related to the planned closure of the Hungary facility includes approximately 430 positions (250 direct labor, 160 indirect labor and 20 administrative). The
charges in connection with the closure of our Hungarian manufacturing facility are expected to amount to $4.1 million (approximately $1.7 million relates to employee termination costs and $2.4 million relates to facility closure costs), of which
$0.4 million and $2.8 million were incurred during the thirteen and thirty-nine weeks ended September 30, 2005, respectively. The outsourcing arrangement and the headcount reductions are expected to be complete by the end of fiscal 2005 and the
disposal of the balance of our assets, primarily consisting of land and the factory building, is expected to be completed in 2006.



In connection with our actions, we assessed the long-term assets, including the building, land, equipment and other fixed assets used by our Hungarian manufacturing
facility, for impairment in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. As a result of this assessment, certain assets, mostly comprised of machinery and equipment, were written down to their
fair value. The fair value was determined based on market prices charged for similar assets, which approximate estimated proceeds on disposal. The resulting impairment charge of $1.3 million was recorded in the second quarter of 2005 and included in
restructuring and other charges.



The components of the restructuring and other
charges related to the actions implemented in 2005, along with the related activity, are presented in the following table ($000s):



|                           |  |                                             |      |               |   |          |                                              |   |        |   |  |   |        |   |  |   |      
|-------------------------- |  | ------------------------------------------- | ---- | ------------- | - | -------- | -------------------------------------------- | - | ------ | - |  | - | ------ | - |  | - | -----
|                           |  | RestructuringLiabilities atDecember 31,2004 |      | 2005 Activity |   |          |                                             
|                           |  | RestructuringCharge                         |      | Reductions    |   |          | RestructuringLiabilities atSeptember 30,2005
|                           |  |                                             | Cash |               |   | Non-Cash |                                              |  
|Employee termination costs |  | $                                           |     |               | $ | 2,186    |                                              | $ | (974   | ) |  | $ |       |   |  | $ | 1,212
|Facility closures          |  |                                             |     |               |   | 1,482    |                                              |   | (169   | ) |  |   | (1,313 | ) |  |   |     
|                           |  |                                             |      |               |   |          |                                              |   |        |   |  |   |        |   |  |   |      
|                           |  | $                                           |     |               | $ | 3,668    |                                              | $ | (1,143 | ) |  | $ | (1,313 | ) |  | $ | 1,212
|                           |  |                                             |      |               |   |          |                                              |   |        |   |  |   |        |   |  |   |      



Beginning in 2001, we implemented
several restructuring plans to streamline our operations to ensure that our cost structure matches the anticipated level of demand for our products. These restructuring plans included closures of several operating and administrative facilities and a
reduction of approximately 1,900 positions worldwide. As of September 30, 2005, the remaining liabilities related to facility closures consisted of continuing lease obligations, the longest of which extends to 2008. Additionally, as of
September 30, 2005, almost all affected employees have been terminated pursuant to our restructuring plans. The remaining terminations and associated termination payments will be made during 2005.



As a result of our restructuring plans, we reduced the workforce at our Ireland location,
which gave rise to a 2.5 million (equivalent to $3.0 million as of September 30, 2005) liability for repayment of developmental grants from the Irish government. The development funds were subject to the condition that we maintain a
workforce of at least 300 employees at our facility in Ireland. Our restructuring actions at that facility resulted in a headcount significantly below 300 employees, triggering an obligation to



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Artesyn Technologies, Inc.

Notes to
Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



repay
the grants. In September 2003, we signed an agreement to repay 1.2 million (equivalent to $1.4 million as of September 30, 2005) to the Irish government over the next four years, with repayment of the remaining liability contingent upon
maintaining future workforce levels through 2009. Repayment due in the first quarter of 2006 of approximately $0.4 million is classified as a current liability as of September 30, 2005, with the remaining payments of $2.2 million recorded in
other long-term liabilities. If we maintain current employee levels through 2009, repayment of approximately $1.5 million will be forgiven.



Restructuring charges incurred in 2005 pursuant to previous restructuring actions were not significant. The restructuring activity mostly related to cash payments to
settle remaining obligations and is presented in the following table ($000s):



|                                              |  |                                             |       |              |   |        |                                                |  |   |      
|--------------------------------------------- |  | ------------------------------------------- | ----- | ------------ | - | ------ | ---------------------------------------------- |  | - | -----
|                                              |  | RestructuringLiabilities atDecember 31,2004 |       | 2005Activity |   |        | RestructuringLiabilities at September 30, 2005
|Employee termination costs                    |  | $                                           | 852   |              | $ | (199   | )                                              |  | $ | 653  
|Liability for payback of developmental grants |  |                                             | 3,386 |              |   | (755   | )                                              |  |   | 2,631
|Facility closures                             |  |                                             | 4,820 |              |   | (3,598 | )                                              |  |   | 1,222
|                                              |  |                                             |       |              |   |        |                                                |  |   |      
|                                              |  | $                                           | 9,058 |              | $ | (4,552 | )                                              |  | $ | 4,506
|                                              |  |                                             |       |              |   |        |                                                |  |   |      



7. 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.



8. 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.



9. Income Taxes



In the thirteen and thirty-nine weeks ended September 30, 2005, an income tax benefit
of 29.8% and provision of 4.8%, respectively, of pre-tax income was recorded, compared to an income tax provision of 15.8% and 21.4% in the same periods in 2004. The difference between the tax rates is the result of several factors, including the
geographical distribution of profits and losses by jurisdiction, the tax effect of restructuring and other charges and the impact of discrete tax items, due to reversal of certain tax accruals no longer required.



We have recorded deferred tax assets for net operating loss carry-forwards in certain
locations. We continually evaluate whether our deferred tax assets will be realized, and record valuation allowances 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.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



We realized a tax benefit adjustment of $1.9 million and $2.5 million in the third quarter of 2005 and 2004, respectively, from the reversal of certain discrete tax
contingency accruals related to prior tax years that were no longer required. Additionally, in the third quarter of 2005 we realized a $0.3 million tax expense to adjust estimates related to the prior year tax return filed. Artesyn regularly
evaluates its tax contingencies in accordance with SFAS 5, Accounting for Contingencies.



In 2004, we executed an inter-company sale of intangible assets. As a result of this transaction, a prepaid asset associated with previously recorded deferred tax assets in our Austrian tax jurisdiction was
established, and the related long-term deferred tax assets were reduced by a corresponding amount. The components of the prepaid asset of $17.4 million are amortized to the income tax provision over their useful lives, ranging from 5 to 15 years,
corresponding to the lives of the related intangible assets for tax return purposes. The prepaid asset, included in long-term assets, amounted to $15.2 million and $16.2 million, net of amortization, as of September 30, 2005 and
December 31, 2004, respectively.



10. Business Segments and Geographic
Information



We are organized into two business segments, Power Conversion
and Embedded Systems (previously referred to as Communication Products). All of our products are designed and manufactured to meet the system needs of Original Equipment Manufacturers (OEMs) in voice and data communications applications
including computing, enterprise networking, wireless infrastructure and telecommunications.



Our Power Conversion segment designs and manufactures a broad range of power conversion products including AC/DC converters and on-board DC/DC converters as well as power systems including rectifiers and DC/DC power
delivery systems used in wireless infrastructure and RF amplification system applications.



The Embedded Systems segment designs and manufactures embedded board level products and protocol software for applications including central processing units and wide area network input/output boards.



We sell products directly to OEMs 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 and Europe being the largest based on sales. Sales are made in U.S. dollars and certain European currencies.



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



|                        |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|----------------------- |  | -------------------- | ------- | - | ----------------------- | - | ------- | ----------------- |  | - | ----------------- | - |  | - | ------- | -
|                        |  | Thirteen Weeks Ended |         |   | Thirty-Nine Weeks Ended |  
|                        |  | September 30,2005    |         |   | September 24,2004       |   |         | September 30,2005 |  |   | September 24,2004 |  
|Sales                   |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Power Conversion        |  | $                    | 85,218  |   |                         | $ | 86,696  |                   |  | $ | 258,667           |   |  | $ | 258,052 |  
|Embedded Systems        |  |                      | 16,734  |   |                         |   | 20,317  |                   |  |   | 53,802            |   |  |   | 50,971  |  
|                        |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Total                   |  | $                    | 101,952 |   |                         | $ | 107,013 |                   |  | $ | 312,469           |   |  | $ | 309,023 |  
|                        |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Operating Income (Loss) |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Power Conversion        |  | $                    | 1,578   |   |                         | $ | 1,522   |                   |  | $ | (263              | ) |  | $ | 8,063   |  
|Embedded Systems        |  |                      | 4,679   |   |                         |   | 6,753   |                   |  |   | 15,722            |   |  |   | 14,556  |  
|Corporate               |  |                      | (2,370  | ) |                         |   | (2,823  | )                 |  |   | (6,318            | ) |  |   | (7,981  | )
|                        |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  
|Total                   |  | $                    | 3,887   |   |                         | $ | 5,452   |                   |  | $ | 9,141             |   |  | $ | 14,638  |  
|                        |  |                      |         |   |                         |   |         |                   |  |   |                   |   |  |   |         |  



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



11. Legal Proceedings



On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against us in the United States District Court for the District of Massachusetts alleging that we infringed on a U.S. patent entitled
Optimal Resetting of The Transformers Core in Single Ended Forward Converters. By agreement, Vicor Corporation subsequently withdrew as plaintiff. VLT 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. VLT seeks damages, including royalties, lost profits, interest, attorneys fees and increased damages under 35 U.S.C. § 284.
Originally, we challenged the validity of the patent and denied the infringement claims but have since reached an agreement with VLT on a stipulated judgment, after the Court ruled on the scope of the patent.



In the stipulated judgment, 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 our 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 constructions, 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 and subsequently denied all motions for
rehearing and reconsideration and remanded the case back to the District Court. The only issue pending at the District Court following the Federal Circuit Courts decision is what, if any, damages are owed by us to VLT on the limited sales of
the remaining category of our products that infringe the patent under the stipulated judgment. At the present time, we are unable to predict the outcome of this matter or ultimate liability owed by us for damages, if any.



On September 30, 2005, Power-One, Inc. filed a suit against us in the United States
District Court for the Eastern District of Texas, Marshall Division, for patent infringement. Power-One, Inc. alleges that our DPL20C Point of Load (POL) converter product infringes on two patents concerning digital power management. The
lawsuit seeks monetary damages and a permanent injunction that would prohibit us from manufacturing the converter. We believe that we have defenses to the suit and we intend to assert them vigorously. At the present time, we are unable to predict
the outcome of this matter or ultimate liability owed by us for damages, if any.



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.



12. Stock-Based Compensation



We apply APB 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 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.



In June 2005, our Compensation and Stock Option Committee approved granting
shares of restricted (non-vested) common stock in lieu of most employee stock option grants. Stock option grants will be limited to key executives and are not expected to be significant in the future. In the second quarter of 2005, we issued
approximately 260,000 shares of restricted stock, which will vest ratably over three years, with 33% vested at each anniversary date. Restricted shares of stock issued in the third quarter of 2005 were not material. Compensation expense related to
the issuance of restricted stock was not material for the thirteen and thirty-nine weeks ended September 30, 2005.



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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



Pro forma information regarding net income and earnings per share is required by SFAS 123, Accounting for Stock-Based Compensation as amended by SFAS 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, assuming no expected dividends and the following weighted-average assumptions (there were no option grants during the thirteen weeks ended
September 30, 2005):



|                        |  |                                  |  |                   |                         |  |                   |   |  |                   |  
|----------------------- |  | -------------------------------- |  | ----------------- | ----------------------- |  | ----------------- | - |  | ----------------- | -
|                        |  | Stock options granted during the | 
|                        |  | Thirteen Weeks Ended             |  |                   | Thirty-Nine Weeks Ended | 
|                        |  | September 30,2005                |  | September 24,2004 |                         |  | September 30,2005 |   |  | September 24,2004 |  
|Risk-free interest rate |  |                                 |  | 3.2               | %                       |  | 3.7               | % |  | 3.3               | %
|Expected volatility     |  |                                 |  | 79                | %                       |  | 65                | % |  | 79                | %
|Expected life           |  |                                 |  | 3.4 years         |                         |  | 4.4 years         |   |  | 3.6 years         |  



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



|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|------------------------------------ |  | -------------------- | ----- | - | ----------------------- | - | ------ | ----------------- |  | - | ----------------- | - |  | - | ------ | -
|                                     |  | Thirteen Weeks Ended |       |   | Thirty-Nine Weeks Ended |  
|                                     |  | September 30,2005    |       |   | September 24,2004       |   |        | September 30,2005 |  |   | September 24,2004 |  
|Net income:                          |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|As reported                          |  | $                    | 4,020 |   |                         | $ | 3,609  |                   |  | $ | 6,041             |   |  | $ | 8,604  |  
|Pro forma expense, net of tax effect |  |                      | (518  | ) |                         |   | (1,063 | )                 |  |   | (1,481            | ) |  |   | (2,759 | )
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|Pro forma                            |  | $                    | 3,502 |   |                         | $ | 2,546  |                   |  | $ | 4,560             |   |  | $ | 5,845  |  
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|Earnings per share-basic             |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|As reported                          |  | $                    | 0.10  |   |                         | $ | 0.09   |                   |  | $ | 0.15              |   |  | $ | 0.22   |  
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|Pro forma                            |  | $                    | 0.09  |   |                         | $ | 0.06   |                   |  | $ | 0.12              |   |  | $ | 0.15   |  
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|Earnings per share-diluted           |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|As reported                          |  | $                    | 0.09  |   |                         | $ | 0.09   |                   |  | $ | 0.15              |   |  | $ | 0.22   |  
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  
|Pro forma                            |  | $                    | 0.08  |   |                         | $ | 0.06   |                   |  | $ | 0.11              |   |  | $ | 0.15   |  
|                                     |  |                      |       |   |                         |   |        |                   |  |   |                   |   |  |   |        |  



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



13. Comprehensive Income



Comprehensive
income was $3.6 million and $1.7 million for the thirteen and thirty-nine weeks ended September 30, 2005, respectively, and $4.3 million and $9.3 million for the same periods ended September 24, 2004. Total comprehensive income is
comprised primarily of net income and the effects of foreign currency translation adjustments, net of tax where applicable.



14. 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. Where appropriate, warranty expense is also recorded based on specific warranty claims.



13



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##### Table of Contents

Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2005

(unaudited)



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



|                                     |  |                         |        |   |                   |   |        |  
|------------------------------------ |  | ----------------------- | ------ | - | ----------------- | - | ------ | -
|                                     |  | Thirty-Nine Weeks Ended |       
|                                     |  | September 30,2005       |        |   | September 24,2004 |  
|Balance, beginning of period         |  | $                       | 6,933  |   |                   | $ | 7,854  |  
|Warranties charged during the period |  |                         | 1,301  |   |                   |   | 1,782  |  
|Settlements made during the period   |  |                         | (3,166 | ) |                   |   | (2,302 | )
|                                     |  |                         |        |   |                   |   |        |  
|Balance, end of period               |  | $                       | 5,068  |   |                   | $ | 7,334  |  
|                                     |  |                         |        |   |                   |   |        |  



Our warranty provision includes an
estimate for warranty claims based on settlement history, as well as specific amounts for known claims. Once a warranty claim is known, the time period to settle the claim varies depending on the product, customer replacement timing and other
factors. Our warranty provisions have decreased for the nine months ended September 30, 2005, compared to the nine months ended September 24, 2004, as a result of improved warranty claim experience. The amount of settlements increased in
2005 versus 2004 as a result of the timing of the customer replacement plan related to specific known claims.



15. Goodwill Impairment Assessment



In
accordance with the provisions of SFAS 142, Goodwill and Other Intangible Assets, 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 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 2005 annual
assessment was performed in August 2005. 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.



16. Related Party Transactions



In June
2005, we entered into a loan agreement with our subcontract manufacturer partner in China, Zhongshan Carton Box General Factory Co., Ltd. (Carton Box). The loan is to be disbursed in three $1.0 million installments through January 2006
and bears annual interest of 4.0%. The loan and the related interest will be repaid over a five-year term beginning in July 2006 through a deduction from the monthly processing fees owed by Artesyn to Carton Box. The first loan installment of $1.0
million was issued in the third quarter of 2005. As of September 30, 2005, the current portion of the loan receivable of $0.2 million is included in prepaid expenses and other current assets, with the remaining long-term portion included in
other assets.



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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, forecasts, 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 our other reports filed with the SEC, 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 Quarterly Report on 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
supplier of power conversion equipment and embedded computing solutions. Our products are designed and manufactured to meet the system needs of OEMs in voice and data communications applications, including server and storage, enterprise networking,
wireless infrastructure and telecommunications. We have a global presence in North America, Europe, and Asia, including five manufacturing facilities and nine design centers.



We earned $0.09 per diluted share during the third quarter of 2005, which was equal to the earnings per share for the third quarter of 2004
and an increase of $0.09 per share compared to the second quarter of 2005. The increase in net income per share compared to the second quarter of 2005 reflects reduction in restructuring and other charges and a favorable tax adjustment recorded in
the third quarter of 2005. For the first nine months of 2005, we earned $0.15 per share, a $0.07 decrease from $0.22 per share for the same period during 2004. Net income decreased during the first nine months of 2005 compared to the same period in
2004 primarily due to restructuring and other charges and unfavorable sales mix.



Revenue during the third quarter of 2005 was $102.0 million, a 5% decrease from $107.0 million for the same quarter of 2004 due to lower demand in both of our segments. Our Power Conversion segment was negatively impacted by weak customer
demand in the server and storage sector and programs going end of life with no program replacements during the quarter. We expect the replacement programs to begin production in the first quarter of 2006. The Embedded Systems segments revenue
decrease reflects delays in 3G deployments and a one-time sale in the third quarter of 2004 for which there was no offsetting revenue in 2005. We expect these delayed 3G orders for embedded systems to materialize in the first quarter of 2006.



For the first nine months of 2005 revenue was $312.5 million, representing a
$3.4 million or 1% increase compared to the same period in 2004. The increase reflects stronger sales in our Embedded Systems segment during 2005.



Compared to the second quarter of 2005, our revenue decreased $6.1 million, reflecting reduced sales in our Power Conversion segment from weak customer demand in the
server and storage sector, reduced sales in our distribution channel and a customer software compatibility issue on a newly introduced rectifier, partly offset by slightly improved sales in our embedded systems segment.



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Gross profit decreased in the third quarter of 2005 to $24.7 million, or 24.2% of revenue, compared to $27.6 million, or
25.8% of revenue, in the third quarter of 2004 due to reduced sales and unfavorable product mix. Our product mix was impacted by reduced sales in our higher-margin Embedded Systems segment. For the first nine months of 2005, gross profit was $76.4
million, a $2.2 million decrease compared to the same period in 2004. The gross profit decrease is attributed to sales of lower margin products to our server and storage customers in the Power Conversion segment.



During the second quarter of 2005, we initiated a company-wide review of operating expenses,
which resulted in implementation of certain restructuring actions targeted to reduce costs. The actions included headcount reductions throughout the company, as well as the decision to close our under-utilized manufacturing facility in Tatabanya,
Hungary. These actions resulted in restructuring and other charges of $0.4 million and $3.7 million included in the results for the thirteen and thirty-nine weeks ended September 30, 2005, respectively.



During the third quarters of 2005 and 2004, we recorded tax benefit adjustments on reversals
of certain discrete tax contingency accruals related to prior tax years of $1.6 million and $2.5 million, respectively.



Consolidated



Sales. The following table summarizes revenue by business segment for the thirteen and thirty-nine weeks ended September 30, 2005 in comparison with the same periods in 2004 (in millions, except
percentages):



|                 |  |                      |       |                   |   |        |                         |     |                   |  |                   |       |        |   |       |  |   |  
|---------------- |  | -------------------- | ----- | ----------------- | - | ------ | ----------------------- | --- | ----------------- |  | ----------------- | ----- | ------ | - | ----- |  | - | -
|                 |  | Thirteen Weeks Ended |       |                   |   |        | Thirty-Nine Weeks Ended |     |                   | 
|                 |  | September 30,2005    |       | September 24,2004 |   | Change |                         |     | September 30,2005 |  | September 24,2004 |       | Change |  
|Power Conversion |  | $                    | 85.2  |                   | $ | 86.7   |                         | (2  | )%                |  | $                 | 258.7 |        | $ | 258.0 |  | 0 | %
|Embedded Systems |  |                      | 16.8  |                   |   | 20.3   |                         | (17 | )%                |  |                   | 53.8  |        |   | 51.0  |  | 5 | %
|                 |  |                      |       |                   |   |        |                         |     |                   |  |                   |       |        |   |       |  |   |  
|Total            |  | $                    | 102.0 |                   | $ | 107.0  |                         | (5  | )%                |  | $                 | 312.5 |        | $ | 309.0 |  | 1 | %
|                 |  |                      |       |                   |   |        |                         |     |                   |  |                   |       |        |   |       |  |   |  



The decrease in revenue of $5.0
million in the thirteen weeks ended September 30, 2005 compared to the same period in 2004 reflects lower sales in both of our segments.



Our Power Conversion segment experienced a decrease in sales to server and storage customers due to reduced demand and products going end of life with no replacement
programs to offset the decrease in revenue. The decrease in the Embedded Systems segment in the third quarter of 2005 was a result of delays in 3G rollouts and no offset to a large one-time customer order placed during the third quarter of 2004.



Revenue increased by $3.5 million for the thirty-nine weeks ended
September 30, 2005 compared to the same period in 2004, reflecting a strong demand for our embedded systems in the first quarter of 2005, resulting from deployment of 2.5G and 3G networks, and the introduction of related new products.



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##### Table of Contents

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 30, 2005 compared to the same periods in 2004 (in millions, except percentages):



|                                     |  |                      |      |   |                   |   |      |                         |  |     |                   |  |   |                   |   |  |        |      |   |  |    |   
|------------------------------------ |  | -------------------- | ---- | - | ----------------- | - | ---- | ----------------------- |  | --- | ----------------- |  | - | ----------------- | - |  | ------ | ---- | - |  | -- | --
|                                     |  | Thirteen Weeks Ended |      |   |                   |   |      | Thirty-Nine Weeks Ended |  |     |                   | 
|                                     |  | September 30,2005    |      |   | September 24,2004 |   |      | Change                  |  |     | September 30,2005 |  |   | September 24,2004 |   |  | Change |     
|Gross profit                         |  | $                    | 24.7 |   |                   | $ | 27.6 |                         |  | (11 | )%                |  | $ | 76.4              |   |  | $      | 78.6 |   |  | (3 | )%
|Gross profit as a percent of revenue |  |                      | 24.2 | % |                   |   | 25.8 | %                       |  |     |                   |  |   | 24.4              | % |  |        | 25.4 | % |  |    |   



The gross profit decreased by $2.9
million for the thirteen weeks ended September 30, 2005 compared to the same period in 2004.



The decrease in gross profit during the third quarter is due to lower revenue and the negative effect of sales mix. Unfavorable sales mix reflects a reduction in sales in the Embedded Systems segment, which typically
includes higher margin products. The sales from this segment accounted for 16% of our total sales in the third quarter of 2005 compared to 19% during the same period in 2004.



Despite an increase in revenue, gross profit decreased by $2.2 million during the thirty-nine weeks ended September 30, 2005 in
comparison with the same period in 2004. The decrease is due to unfavorable sales mix in Power Conversion on sales of lower margin products in the server and storage sector.



Operating Expenses. Operating expenses for the thirteen weeks and thirty-nine weeks ended September 30, 2005 compared to the
same periods in the prior year are as follows (in millions, except percentages):



|                                  |  |                      |      |                   |   |        |                         |     |                   |  |                   |      |        |   |      |  |     |   
|--------------------------------- |  | -------------------- | ---- | ----------------- | - | ------ | ----------------------- | --- | ----------------- |  | ----------------- | ---- | ------ | - | ---- |  | --- | --
|                                  |  | Thirteen Weeks Ended |      |                   |   |        | Thirty-Nine Weeks Ended |     |                   | 
|                                  |  | September 30,2005    |      | September 24,2004 |   | Change |                         |     | September 30,2005 |  | September 24,2004 |      | Change |  
|Selling, general & administrative |  | $                    | 9.2  |                   | $ | 11.5   |                         | (20 | )%                |  | $                 | 29.6 |        | $ | 33.2 |  | (11 | )%
|Research & development            |  |                      | 11.2 |                   |   | 10.7   |                         | 5   | %                 |  |                   | 33.9 |        |   | 30.8 |  | 10  | % 
|Restructuring & other charges     |  |                      | 0.4  |                   |   |       |                         | 100 | %                 |  |                   | 3.7  |        |   |     |  | 100 | % 
|                                  |  |                      |      |                   |   |        |                         |     |                   |  |                   |      |        |   |      |  |     |   
|Total operating expenses          |  | $                    | 20.8 |                   | $ | 22.2   |                         | (6  | )%                |  | $                 | 67.2 |        | $ | 64.0 |  | 5   | % 
|                                  |  |                      |      |                   |   |        |                         |     |                   |  |                   |      |        |   |      |  |     |   



The decrease in selling, general and
administrative expenses for the thirteen and thirty-nine weeks ended September 30, 2005 compared to the same periods in 2004 is due to reduced executive incentive award accruals on weaker than anticipated financial performance, lower consulting
expenses for various tax, legal and regulatory services and reduced salary expenses due to capitalization of internally developed software upgrade costs. Additionally, included in the administrative costs for the thirty-nine weeks ended
September 30, 2005 is a reduction of $0.9 million recorded in the first quarter of 2005 for recovery of expenses under an indemnification from a previous technology license agreement.



Research and development expenses for the thirteen and thirty-nine weeks ended
September 30, 2005 increased by $0.5 million and $3.1 million, respectively, in comparison to the same periods in 2004. This increase was due to technology investments made to support revenue growth, including funding of Advanced Telecom
Computing Architecture (AdvancedTCA®) development in our Embedded Systems segment, the expansion of our design center in Asia and the offering of new products in our wireless communications sector. We expect our research and
development spending to remain at approximately 10% of revenue for the remainder of the year.



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Operating expenses for the thirteen and the thirty-nine weeks ended September 30, 2005 include $0.4 million and $3.7
million of restructuring expenses related to restructuring plans implemented in the second quarter of 2005. These restructuring actions included headcount reductions, primarily in the Power Conversion segment, and a planned closure of our
manufacturing facility in Tatabanya, Hungary with outsourcing of production to a global Electronics Manufacturing Services (EMS) provider.



Among the factors that contributed to our decision to close the Hungarian factory were requests of our wireless OEM customers to move production closer to their end
customers, which would have resulted in significant under-utilization of our factory, and unfavorable fluctuations in exchange rates between the U.S. Dollar and the Hungarian Forint, which led to significant margin pressures.



The outsourcing arrangement of our Hungarian manufacturing operations to the EMS provider is
expected to be complete by the end of fiscal year 2005 and the disposal of the balance of our assets, primarily consisting of land and the factory building, is expected to be complete in 2006. We expect that the outsourcing arrangement and the
closure of our Hungarian manufacturing facility will result in a reduction of approximately $6.0 million in our cost of sales in 2006. For more information relating to the restructuring actions, please see Note 6 to the Condensed Consolidated
Financial Statements.



Interest Expense, net. Interest expense, net for
the thirteen and thirty-nine weeks ended September 30, 2005 compared to the same periods in the prior year is as follows (in millions, except percentages):



|                      |  |                      |      |   |                   |   |      |                         |  |     |                   |  |   |                   |   |  |        |      |   |  |     |   
|--------------------- |  | -------------------- | ---- | - | ----------------- | - | ---- | ----------------------- |  | --- | ----------------- |  | - | ----------------- | - |  | ------ | ---- | - |  | --- | --
|                      |  | Thirteen Weeks Ended |      |   |                   |   |      | Thirty-Nine Weeks Ended |  |     |                   | 
|                      |  | September 30,2005    |      |   | September 24,2004 |   |      | Change                  |  |     | September 30,2005 |  |   | September 24,2004 |   |  | Change |     
|Interest expense      |  | $                    | 1.5  |   |                   | $ | 1.5  |                         |  | 0   | %                 |  | $ | 4.4               |   |  | $      | 4.4  |   |  | 0   | % 
|Less: Interest income |  |                      | (0.7 | ) |                   |   | (0.3 | )                       |  | 133 | %                 |  |   | (1.6              | ) |  |        | (0.7 | ) |  | 129 | % 
|                      |  |                      |      |   |                   |   |      |                         |  |     |                   |  |   |                   |   |  |        |      |   |  |     |   
|Net interest expense  |  | $                    | 0.8  |   |                   | $ | 1.2  |                         |  | (33 | )%                |  | $ | 2.8               |   |  | $      | 3.7  |   |  | (24 | )%
|                      |  |                      |      |   |                   |   |      |                         |  |     |                   |  |   |                   |   |  |        |      |   |  |     |   



The decrease in net interest expense
in the third quarter and the first nine months of 2005 compared to the same periods in the preceding year is due to higher interest income reflecting increased interest rates and a higher balance of marketable securities in 2005.



Provision for Income Taxes. Below is a comparison of the (benefit) provision for
income tax and effective tax rate for the thirteen and thirty-nine weeks ended September 30, 2005 in comparison with the same periods in 2004 (in millions, except percentages):



|                                     |  |                      |      |    |                   |   |     |                         |  |      |                   |  |   |                   |   |  |        |     |   |  |     |   
|------------------------------------ |  | -------------------- | ---- | -- | ----------------- | - | --- | ----------------------- |  | ---- | ----------------- |  | - | ----------------- | - |  | ------ | --- | - |  | --- | --
|                                     |  | Thirteen Weeks Ended |      |    |                   |   |     | Thirty-Nine Weeks Ended |  |      |                   | 
|                                     |  | September 30,2005    |      |    | September 24,2004 |   |     | Change                  |  |      | September 30,2005 |  |   | September 24,2004 |   |  | Change |    
|(Benefit) provision for income taxes |  | $                    | (0.9 | )  |                   | $ | 0.7 |                         |  | (229 | )%                |  | $ | 0.3               |   |  | $      | 2.3 |   |  | (87 | )%
|Effective tax rate                   |  |                      | (30  | )% |                   |   | 16  | %                       |  |      |                   |  |   | 5                 | % |  |        | 21  | % |  |     |   



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The difference in the 2005 and 2004 tax rates is due to the distribution of profits and losses by jurisdiction and
adjustments to valuation allowances on deferred tax assets recorded in various jurisdictions. Additionally, included in the tax (benefit) provision for the thirteen weeks ended September 30, 2005 and September 24, 2004 are reversals of
certain discrete tax contingency accruals and other adjustments related to prior tax years of $1.6 million and $2.5 million, respectively.



Net Income.Net income recorded for the thirteen and thirty-nine weeks ended September 30, 2005 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 30, 2005 in comparison with the same periods in the prior year are as follows (in millions, except percentages):



|                        |  |                      |      |                   |   |        |                         |    |                   |  |   |                   |   |        |   |       |  |      |   
|----------------------- |  | -------------------- | ---- | ----------------- | - | ------ | ----------------------- | -- | ----------------- |  | - | ----------------- | - | ------ | - | ----- |  | ---- | --
|                        |  | Thirteen Weeks Ended |      |                   |   |        | Thirty-Nine Weeks Ended |    |                   | 
|                        |  | September 30,2005    |      | September 24,2004 |   | Change |                         |    | September 30,2005 |  |   | September 24,2004 |   | Change |  
|Revenue                 |  | $                    | 85.2 |                   | $ | 86.7   |                         | (2 | )%                |  | $ | 258.7             |   |        | $ | 258.0 |  | 0    | % 
|Operating income (loss) |  |                      | 1.6  |                   |   | 1.5    |                         | 7  | %                 |  |   | (0.3              | ) |        |   | 8.1   |  | (104 | )%



In the third quarter of 2005 revenue
was negatively impacted by lower sales to our server and storage customers due to several programs reaching their end of life. Revenue for the first nine months of 2005 increased slightly compared to the same period for 2004 as a result of sales of
our new rectifier products to wireless customers and standard products through our distribution channel, offset by reduced end customer demand in the server and storage sector and programs going end of life with no program replacements during the
quarter.



Excluding restructuring charges of $0.4 million, operating income
increased in the third quarter of 2005 compared to the same period in 2004 by $0.5 million mainly due to reduced general and administrative expenses. General and administrative expenses decreased by $1.1 million due to lower expenses related to
management incentive awards as a result of weaker than anticipated financial performance and lower salary expenses from capitalization of compensation costs related to internal use software. The impact of reduced general and administrative expenses
was partly offset by reduced margins due to the lower revenue and increased research and development costs due to expansion of our design center in Asia and headcount additions to support development of new products for our customers.



During the first nine months of 2005, operating income (excluding restructuring and other
charges of $3.5 million) decreased by $4.9 million compared with the same period in 2004. The decrease in operating income reflects erosion in the margins on sales of server and storage products and $2.3 million increase in research and development
costs due to expansion of our design center in Asia, as well as the additional costs related to development of new products. The decrease in operating income was partly offset by reduced general and administrative expenses of $1.9 million mainly due
to lower management incentive award expense and lower salary expenses from capitalization of compensation costs related to internal use software.



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##### Table of Contents

Embedded Systems



Results for the Embedded Systems segment in the thirteen and thirty-nine weeks ended September 30, 2005 in comparison with the same periods in the prior year are
as follows (in millions, except percentages):



|                 |  |                      |      |                   |   |        |                         |     |                   |  |                   |      |        |   |      |  |   |  
|---------------- |  | -------------------- | ---- | ----------------- | - | ------ | ----------------------- | --- | ----------------- |  | ----------------- | ---- | ------ | - | ---- |  | - | -
|                 |  | Thirteen Weeks Ended |      |                   |   |        | Thirty-Nine Weeks Ended |     |                   | 
|                 |  | September 30,2005    |      | September 24,2004 |   | Change |                         |     | September 30,2005 |  | September 24,2004 |      | Change |  
|Revenue          |  | $                    | 16.8 |                   | $ | 20.3   |                         | (17 | )%                |  | $                 | 53.8 |        | $ | 51.0 |  | 5 | %
|Operating income |  |                      | 4.7  |                   |   | 6.8    |                         | (31 | )%                |  |                   | 15.7 |        |   | 14.6 |  | 8 | %



Revenue decreased $3.5 million in the
third quarter of 2005 compared to the same quarter of 2004 primarily as a result of delays of 3G rollouts and no offset to a large one-time customer order placed during the third quarter of 2004. Despite the decline in the third quarter, revenue
increased in the first nine months of 2005 compared to the same period in 2004 due to growth in the first quarter of 2005 as communications service providers increased their spending on wireless infrastructure to support the deployment of 2.5G and
3G networks.



The changes in operating income for the thirteen and thirty-nine
weeks ended September 30, 2005 compared with the same periods in the prior year are a result of fluctuations in revenue between the periods and reduced executive incentive award accruals and headcount reduction. Operating income was also
impacted by an $0.8 million increase in research and development expenses during the thirty-nine weeks ended September 30, 2005 compared to the same period of 2004 for development of new products.



Liquidity and Capital Resources



The following table presents selected financial statement information as of the end of the
third quarter of 2005 compared to the end of 2004 (in millions, except statistical data):



|                                                            |  |                        |       |   |                        |   |       |  
|----------------------------------------------------------- |  | ---------------------- | ----- | - | ---------------------- | - | ----- | -
|                                                            |  | As ofSeptember 30,2005 |       |   | As of December 31,2004 |  
|Cash and cash equivalents                                   |  | $                      | 58.8  |   |                        | $ | 84.8  |  
|Short-term marketable debt securities                       |  |                        | 42.2  |   |                        |   | 21.1  |  
|Convertible subordinated debt                               |  |                        | (90.0 | ) |                        |   | (90.0 | )
|                                                            |  |                        |       |   |                        |   |       |  
|Cash and short-term marketable debt securities, net of debt |  | $                      | 11.0  |   |                        | $ | 15.9  |  
|                                                            |  |                        |       |   |                        |   |       |  
|Working Capital Statistics:                                 |  |                        |       |   |                        |   |       |  
|Days of sales outstanding                                   |  |                        | 58    |   |                        |   | 50    |  
|Days of inventory on-hand                                   |  |                        | 56    |   |                        |   | 55    |  
|Days of accounts payable outstanding                        |  |                        | 59    |   |                        |   | 60    |  



Our cash and cash equivalents
decreased from $84.8 million at the end of 2004 to $58.8 million at the end of the third quarter of 2005, with $20.9 million used to purchase additional short-term marketable debt securities. Cash provided by net income and adjusted for non-cash
expenses was consumed by working capital, equipment purchases and investments in additional marketable short-term debt securities.



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Cash Flows from Operating Activities.During the first nine months of 2005, our cash flows from operating
activities served as a source of cash of $5.7 million. Net income adjusted for non-cash expenses, which includes the effect of depreciation and amortization and various provisions and reserves, was the primary source of cash, providing us with $28.7
million in operating cash in the period. This cash inflow from net income was offset by an increase in accounts receivable ($7.0 million) and decreases in accounts payable and accruals ($14.5 million). The accounts receivable increase reflects
higher days of sales outstanding. The decreases in accounts payable and accrual balances includes approximately $3.3 million in restructuring and $3.4 million in bonus and other compensation payments made during 2005.



Overall working capital performance was below the level recorded at the end of 2004. Our days
of sales outstanding was above the 2004 level by eight days due to a combination of factors, including longer terms granted to customers as a result of competitive pressures, a shift in sales mix towards wireless infrastructure customers who have
longer terms on average, and timing issues. We continue to remain focused on working capital management and expect to reduce our days of sales outstanding in the fourth quarter.



Days of inventory on-hand and days of accounts payable outstanding at the end of the third quarter remained relatively flat with the levels
at the end of 2004.



Cash Flows from Investing Activities. Cash flows
from investing activities reflect a net cash use of $31.5 million in the first nine months of 2005, primarily comprised of net purchases of short-term marketable debt securities ($20.9 million) to maximize our investment income and capital
expenditures ($9.7 million) to support our product design and manufacturing requirements. Cash flows from investing activities also included a $1.0 million loan to our subcontract manufacturer partner in China. For more information on this loan,
please see Note 16 to the Condensed Consolidated Financial Statements.



Cash
Flows from Financing Activities. In the first nine months of 2005, cash flows from financing activities were a source of $2.0 million cash, resulting primarily from the exercise of stock options.



Our convertible debt consists of $90.0 million of 5.5% convertible senior subordinated notes
due in 2010. There are no financial covenant requirements associated with the convertible senior subordinated notes. For additional information regarding our convertible debt, please see Note 7 of the Condensed Consolidated Financial Statements.



We currently have a five-year, $35.0 million senior revolving credit facility
with Fleet Capital Corporation, which expires in March 2008. While the total availability under the facility is $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. As of the end of the third quarter of 2005, our outstanding balance on the revolving credit facility was zero, and our availability was $21.6 million. In addition to other affirmative and negative
covenants customary for asset-based credit facilities, we are also subject to an earning before interest, tax, depreciation and amortization 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 2005, the availability and the cash deposited were above the prescribed limit, and therefore we were not subject to the additional covenant. For additional
information on the terms of this asset-based credit facility, please see Note 8 of the Condensed Consolidated Financial Statements.



Our sources of cash are the cash and marketable debt securities we currently have on hand, the availability under our asset-based credit facility and cash generated from
operations. These amounts are available to finance capital expenditures, fund working capital needs and pay interest on our outstanding convertible senior subordinated debt. We expect to generate cash from operations in 2005, but if our results are
significantly below our expectations, we believe that our other sources of cash are sufficient to cover our operating expenses, capital expenditures, restructuring requirements and interest payments for the next twelve months. If we are not able to
generate cash from operations for a sustained period of time,



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we would, after our cash on hand and available line of credit were depleted, need to identify additional sources of cash. These sources could include
additional issuances of debt or equity, or sales of equipment or portions of the business.



From a long-term perspective, our sources of cash are expected to remain the same. We depend 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 pursue 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 2004 Annual Report on Form 10-K.



Item 4. Controls and Procedures



We have
performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and
procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls
and procedures were effective as of September 30, 2005 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms.



There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.



Item 5. Other Information



As previously
announced, the Company is working with Lehman Brothers to evaluate strategic alternatives for the Company and that process continues. The Company will not have any further announcement on this subject unless and until a definitive agreement with
another party is reached or the Company chooses to terminate pursuing such an evaluation.



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##### Table of Contents

PART II. OTHER INFORMATION



Item 1. Legal Proceedings



On
September 30, 2005, Power-One, Inc. filed a suit against us in the United States District Court for the Eastern District of Texas, Marshall Division, for patent infringement. Power-One, Inc. alleges that our DPL20C POL converter product
infringes on two patents concerning digital power management. The lawsuit seeks monetary damages and a permanent injunction that would prohibit us from manufacturing the converter. We believe that we have defenses to the suit and we intend to assert
them vigorously.



Item 6. Exhibits





|            |  |                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                        
|10.36       |  | Severance Agreement, dated as of October 21, 2005, by and between Artesyn Technologies, Inc. and Gary Larsen.                                          
|            | 
|10.37       |  | Amended and Restated Severance Agreement, dated October 21, 2005, by and among Artesyn Technologies, Inc. and Scott McCowan.                           
|            | 
|10.38       |  | Amended and Restated Severance Agreement, dated October 21, 2005, by and among Artesyn Technologies, Inc. and Ken Blake.                               
|            | 
|10.39       |  | Third Amended and Restated Employment Agreement, dated as of October 21, 2005, by and between Artesyn Technologies, Inc., and Joseph M. ODonnell.     
|            | 
|10.40       |  | Form of Restricted Stock Award Agreement, by and between Artesyn Technologies, Inc. and participating employees.                                       
|            | 
|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 9, 2005 |  |                            |  |                             
|                       |  |                           
|                       |  | By:                        |  | /s/ Gary Larsen             
|                       |  |                            |  | Gary Larsen                 
|                       |  |                            |  | Vice President - Finance and
|                       |  |                            |  | Chief Financial Officer     



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                            
|10.36       |  | Severance Agreement, dated as of October 21, 2005, by and between Artesyn Technologies, Inc. and Gary Larsen.                                          
|            | 
|10.37       |  | Amended and Restated Severance Agreement, dated October 21, 2005, by and among Artesyn Technologies, Inc. and Scott McCowan.                           
|            | 
|10.38       |  | Amended and Restated Severance Agreement, dated October 21, 2005, by and among Artesyn Technologies, Inc. and Ken Blake.                               
|            | 
|10.39       |  | Third Amended and Restated Employment Agreement, dated as of October 21, 2005, by and between Artesyn Technologies, Inc., and Joseph M. ODonnell.     
|            | 
|10.40       |  | Form of Restricted Stock Award Agreement, by and between Artesyn Technologies, Inc. and participating employees.                                       
|            | 
|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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