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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

Commission File No. 0-4466

Artesyn Technologies, Inc.

(Exact name of Registrant as specified in its charter)

(561) 451-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

Common Stock Purchase Rights

(Title of each class)

     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 (the “Exchange Act”) during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ          No o

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

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

      The aggregate market value of common stock held by non-affiliates of the registrant as of June 25, 2004, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $332 million.

      As of February 18, 2005, 39,475,651 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of our proxy statement for the annual meeting of shareholders to be held on June 2, 2005 are incorporated by reference into Part III hereof.

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      This Form 10-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. We caution readers that a number of important factors, including those identified in the section entitled “Risk Factors that May Affect Future Results” as well as factors discussed in our other reports filed with the Securities and Exchange Commission, could affect our actual results and cause them to differ materially from those expressed in the forward-looking statements. Forward-looking statements typically use words or phrases such as “estimate,” “plans,” “projects,” “anticipates,” “continuing,” “ongoing,” “expects,” “believes,” or words of similar import. Forward-looking statements included in this Form 10-K are made only as of the date hereof, based on information available as of the date hereof, and subject to applicable law to the contrary, we assume no obligation to update any forward-looking statements.

PART I

     Overview

      Artesyn Technologies, Inc. is a leading supplier of power conversion equipment and embedded computing solutions. Our products are designed and manufactured to meet the system needs of Original Equipment Manufacturers (“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. Headquartered in Boca Raton, Florida and founded in 1968 as Computer Products, Inc., our company was renamed Artesyn Technologies, Inc. following our merger with Zytec Corporation in 1997.

      Our operations are organized into two business segments: Power Conversion and Communications Products. The Power Conversion segment designs and manufactures a broad range of power conversion products including AC/DC converters, on-board DC/DC converters and point-of-load (“PoL”) converters. Additionally, we design and manufacture specific use power systems, such as rectifiers and DC/DC power delivery systems used in wireless infrastructure and radio frequency (“RF”) amplification system applications. Revenue from this business segment in 2004 was $354.6 million, representing 83% of our total sales. The Communications Products segment designs and manufactures embedded board level products and protocol software for computing applications, including central processing units (“CPUs”) and wide area network input/output (“WANI/O”) boards. The embedded board business had revenues in 2004 of $74.8 million or 17% of our total sales.

     Strategic Direction: Empowering Communications

      Our mission is to be the best supplier of products and services to our global communications customers at the lowest total cost of ownership. To fulfill our mission, we have developed the following strategic goals:

      Focus on faster growth markets within the communications industry. According to research compiled by various research firms, the market for power conversion and embedded computing systems is estimated at $20 billion in revenues in 2005. We focus on four sectors within the communications industry that we believe have faster growth rates than the industry on average in server and storage, enterprise networking, wireless infrastructure and telecommunications.

      Increase market share with existing customers and grow emerging customer base. We have long-standing relationships with our existing core customers, who are leaders within their market sectors. We will continue to cultivate these relationships, with the goal of capturing a higher percentage of our customers’ business, by meeting more of our customers’ power conversion and

embedded systems requirements. Additionally, we have a sales force that is dedicated to forming and fostering relationships with emerging customers in our target market sectors.

      Expand product offerings to high growth segments. We will continue to seek complementary market sectors for our product designs, as well as new product segments within our core market sectors by leveraging our technical know-how and knowledge of customer and industry sector needs. For example, the revenues generated in 2004 from DC/DC converters designed specifically for OEMs in the RF power amplification systems relate to a new product segment entered into during the last half of 2003. We have also expanded our product lines within the wireless infrastructure market sector with embedded energy systems, rectifiers and site solution offerings. In each case, we have either modified existing technology, or created products with new technology, to achieve a lower cost power conversion solution for our customers.

      Invest in technology to create new leading-edge solutions for customers and to expand our product lines. Our continued research and development investment in our Power Conversion and Communications Products segments is instrumental in our ability to introduce leading-edge products to our customers. We are committed to creating new products using technologies that meet open standard protocols and architectures. The research investments in our Power Conversion segment are focused on developing new AC/DC and DC/DC products within the distributed power architecture (“DPA”) framework. This includes investments in new technologies such as digital power management, and in new product families within our Typhoon^tm standard DC/DC converter series, including PoL converters. New technologies and products for our Communications Products segment include expanding our CPU board offerings with Intel-based CPU’s, increasing use of the Linux operating system and creating new products that meet the Advanced Telecom Computing Architecture (AdvancedTCA®) and Advanced Mezzanine Card (AdvancedMC^tm) standards.

      Leverage manufacturing and operating infrastructure to support growth. We completed a series of restructuring actions in 2003 designed to reduce our manufacturing capacity and lower our operating expense structure. We have consolidated manufacturing facilities in mostly low-cost locations and believe we have sufficient manufacturing capacity to support expected growth with modest investment in plant and equipment. Our selling, administrative and engineering organizations are scalable to support higher levels of business activity. We believe these actions and our infrastructure will allow us to meet our customers’ increasing needs while improving our profitability.

Power Conversion

      The Power Conversion segment represents our largest business, accounting for 83%, 88% and 91% of our total sales in 2004, 2003 and 2002, respectively. Our products within this segment consist of custom and standard power conversion solutions, including AC/DC power supplies, DC/DC power converters and power delivery systems.

      Power supplies are an essential element in the supply, regulation and distribution of electrical power in all electronic systems. To operate, these systems require a steady supply of electrical power at one or more voltage levels. AC/DC power supplies convert an alternating current (“AC”) from a primary source, such as a wall outlet or utility grid, into a precisely controlled direct current (“DC”). DC/DC converters modify an existing DC voltage to another DC voltage level to meet the distinct power needs of the devices they are powering.

      Our products are used in complex communications systems such as mid- to high-end servers, data storage devices, routers, hubs, high-speed modems, access concentrators, RF power amplification systems, base station controllers and base station transceivers. These applications require power systems that deliver multiple operating voltages with higher levels of capability and reliability than those used in consumer applications.

      According to various research firms, global consumption of OEM switching power supplies is projected to be approximately $17 billion in 2005. We primarily sell switching power supplies to OEMs within the four core market sectors of the communications industry discussed above. The power conversion industry is extremely competitive and fragmented and is made up of more than 1,000 companies ranging from billion-dollar multinationals to sole proprietors. In 2003, we were one of only eight power supply manufacturers in the world with annual sales greater than $300 million and were ranked as the seventh largest OEM power supply manufacturer.

      Our products are components and sub-systems of our customers’ products; therefore, our revenue is dependent on the success of our customers’ products and services. Our customers are impacted by macroeconomic and industry trends, primarily corporate spending on information technology infrastructure and capital spending by communication services providers. In the late 1990’s through 2000 the demand for our power conversion products increased, as communications markets experienced rapid growth due to the expansion of the Internet, increase of networks within corporations and the growing demand for wireless services requiring greater and more reliable power.

      Following that period of rapid growth, the communications industry contracted sharply in 2001, 2002 and, to a lesser extent, in the first half of 2003, as consumers of computing and communications equipment became more conservative with their capital investment plans. This contraction negatively affected our performance, as excess capacity throughout the power conversion industry put downward pressure on power supply prices and profit margins. Most companies in the power conversion industry experienced substantial operating losses and implemented restructuring actions to reduce capacity. The downward trend ended in the second half of 2003, as evidenced by revenue growth reported across the power conversion industry.

      Electronic devices are generally becoming more complex, particularly within the communications industry. Each generation of microprocessors, digital signal processors (“DSPs”), field programmable gate arrays (“FPGAs”) and memory chips require progressively more powerful, energy efficient and smaller power solutions. These requirements are driving the following key trends in the demand for power conversion products:

      These trends have contributed to the shift to DPA systems. Traditionally, electronic systems have used centralized power architectures, in which one centralized AC/DC power supply delivers multiple output voltage levels to individual components requiring a low voltage direct current. With the increasing demands for lower semiconductor operating voltages, faster operating speeds, higher efficiency levels and more efficient heat distribution, a centralized AC/DC solution limits both technically and economically the power requirements for today’s newest generation of complex semiconductors.

      The move to DPA addresses the increasing number of different and lower voltage regulation requirements in today’s electronic systems. A DPA design incorporates multiple power processing or conversion locations distributed throughout the system. Typically, in a DPA design, a “front-end” AC/DC power supply is used to convert an incoming AC voltage to an intermediate-level DC voltage, which is then fed to multiple DC/DC converters to generate the lower, regulated voltage requirements needed to power the semiconductor or peripheral load. The DC/DC converters are

located throughout the system near the device that uses power, improving response time and heat distribution. Other advantages of a DPA are that it is upgradeable, flexible and expandable, and enables the use of off-the-shelf products to shorten the time-to-market.

      As a global provider of power conversion equipment, we differentiate ourselves from the competition in the following ways:

      Global sales and engineering organized by customers. Our sales and engineering divisions are aligned by the market sectors and the customers we serve. The Power Conversion segment is organized into three global business units each focused on a specific customer group: server and storage, as well as enterprise networking customers, telecommunications and wireless customers, and “emerging” customers, as well as customers in segments outside of our core communications base.

      We believe that our sales and engineering structure allows us to form close relationships with our customers and provide better service by anticipating market and customer specific requirements. Additionally, by concentrating on specific markets, we are able to leverage our investments in applications and design engineering resources to better serve our customers.

      Industry leading technology development. Many of our design sites are strategically positioned in close proximity to our customer design locations to maximize communication in the design and development of new technologies to meet our customers’ increasing needs. Our industry-recognized engineers have demonstrated an expertise in designing power solutions for the entire spectrum of power conversion architectures. We continue to grow our base of engineers globally to meet our development needs, while maintaining a high retention level of engineers we currently employ. Our research is focused on high-density front-end AC/DC technologies, digital power management, PoL converters and other DPA applications, which we believe have the greatest potential for growth.

      Broad product line. The hundreds of products we currently offer range from two-watt DC/DC converters to several kilowatt AC/DC front ends and rectifiers. Customers can utilize our off-the-shelf standard products or request a modified or custom solution for their unique power needs. Our product line offers a complete DPA solution, including the AC/DC front-end, intermediate DC/DC converters and PoL modules. Our ability to provide a complete power solution is critical in establishing our position as one of a limited number of strategic suppliers, as our customers move towards reducing the number of approved vendors.

      Low cost global manufacturing structure. While we have a manufacturing presence in several locations worldwide, the majority of our products are produced at our low-cost China and Hungary facilities. Our manufacturing base in China is well established, with over 20 years of operations on the Mainland. Our manufacturing facilities are experienced in implementing the initial manufacture of new products designed at our engineering locations around the world. To support our manufacturing operations, we developed a global supply chain, which is focused on securing better leverage of our component costs and on coordinating the commonality of component usage in our products.

      Our power conversion solutions are offered to customers through standard products, modified-standard products and custom products. Standard products, manufactured based on standard design topologies and offered to customers off-the-shelf, provide for rapid time-to-market and minimal risk due to the proven design. These products are ideal for low-to-moderate volume applications or for application-specific requirements. Modified-standard products are derived from an existing product to meet a particular customer’s special requirements. Custom products are

developed specifically for a single customer and are tailored to particular performance, capability and cost requirements.

      Our product lines are classified as either an AC/DC or DC/DC power supply:

      Commercially we have aligned our sales, application engineering and design resources by the market sectors and customers we serve.

      Our Power Conversion segment is organized into three global strategic business units:

      Each group has dedicated sales people and is supported by applications engineers knowledgeable in both power technology and our customers’ product applications. Additionally, both ECG and CIG have design teams strategically located near our customers’ design locations to customize or create new products to meet their specific requirements, time-to-market and required price points.

      MSP’s in-house regional sales team oversees our network of external manufacturers’ representatives. These representatives are part of an independent sales force that manages sales for emerging customers, some key accounts in remote locations and customers outside of our core communications market. Our MSP sales force also manages sales of our power supplies to stocking distributors, including Arrow Electronics and Avnet, and works closely with the contract manufacturers who provide manufacturing services to our customers.

      In addition to our global business units, our Power Conversion segment includes a regional Asia-Pacific Group serving customers located in Asia, as well as the Asian operations of our global customers.

      A typical power supply generally consists of the combination of printed circuit boards along with a number of attached electronic and magnetic components. In many cases, these components can be combined on a sheet metal chassis that provides a structure for the finished product. The production of our power supplies involves the assembly of these components and circuit boards utilizing highly automated surface mount technology, or SMT. The number of components in our products ranges from under 50 components in a low-end PoL module to over 3,200 components in a high-end AC/DC converter.

      Product quality and responsiveness to customers’ needs are critical to our ability to successfully compete in our industry. We emphasize quality and reliability in both the design and manufacture of our products. In addition to testing throughout the design and manufacturing process, we test and/or burn-in, as needed, many of the products we ship using automated equipment and customer-approved processes. We conform to ISO 14001 standards in our Hungary and China factories, ISO 90001 standards in our North America factories and to OSHAS 18001 safety standards in China.

      Our four manufacturing facilities are located in China, Hungary, Germany and the United States. During 2002 and 2003, we closed three manufacturing facilities and consolidated production in China and Hungary, our low cost manufacturing locations. The reduction in capacity through the factory closures and the demand increases during 2004 have increased our utilization to approximately 90% of total capacity.

Communications Products

      The Communications Products segment represents 17%, 12% and 9% of our total sales in 2004, 2003 and 2002, respectively. This segment designs and manufactures CPU boards and WAN I/O boards bundled with software protocols that are embedded into communication infrastructure systems. These communications systems are configured using various hardware and software components, often from multiple suppliers, to produce applications for telecommunications and wireless infrastructures. The systems using our boards and software may either be proprietary or based on open standards such as AdvancedTCA® or CompactPCI^tm.

      Typical applications for our embedded CPU boards control and monitor the signaling and transfer of outgoing and incoming calls within wireless and land line communications networks. Our bundled WAN I/O boards are primarily used to enable a call, either voice or data, from a wireless handset to a voice network or to the Internet.

      The worldwide embedded systems market includes proprietary embedded systems and products built by telecommunications equipment and wireless infrastructure suppliers and is estimated to be over $3 billion in revenues in 2005. The embedded systems industry is competitive and is made up of approximately 50 companies.

      Several emerging trends that are expected to drive growth in the embedded systems market, particularly for products based on open standards, include:

      As a global provider of board level solutions incorporated into embedded communications systems, we differentiate ourselves from the competition as follows:

      Global sales and engineering organized by customers. We have aligned our sales and engineering resources to target the top equipment makers in the telecommunications and wireless infrastructure sectors. We believe this sales and engineering structure allows us to form close relationships with our customers and provide better service by anticipating market and customer-specific requirements. With the downsizing of our customers’ internal resources, strong relationships are critical as our customers see companies like ours as an extension of their engineering capabilities.

      Industry leading technology development using open standards. We have engineers on staff dedicated to the design and development of new technologies that will meet our customers’ increasing demands. As a result, we are well known in the industry for our AdvancedTCA® development and related technologies.

      Time to market. We have demonstrated the ability to quickly bring a new product from conception to design and into production. Our product development and new product introduction processes are rigorous and entail a high level of cross-functional coordination. This allows us to consistently meet or exceed customer expectations for new product releases.

      The main product lines of our Communications Products segment are T1 and E1 WAN I/O boards, CPU boards and other specialized hardware/software subsystems embedded in communication infrastructure systems. Applications of our WAN I/O boards interconnect voice and data communications between computers over long distances, and are used to provide links and to carry data from wireless networks to land line telephone networks or to the Internet. Our CPU boards control and monitor activities of high-speed line interface cards, as well as coordinate the activities of an entire rack of interface boards.

      Our products are employed in a wide range of worldwide telecommunications and data communications networks, such as gateway/routers, switching, call processing and wireless communications infrastructure. Our products are designed and manufactured to worldwide industry standards primarily using open systems technology such as PCI, CompactPCI^tm, as well as recently-developed AdvancedTCA® and AdvancedMC^tm and can be supplied off-the-shelf or customized to meet customers’ specific cost and performance requirements. Many of these products are integrated into hardware/ software bundles used in a range of applications.

      Our Communications Products segment has two primary types of protocol software — control software and data software. Both types of protocol software, which comprise our SpiderWare^tm product line, are bundled with different interface boards to provide a subsystem for our customers’ communications infrastructure applications.

      We believe that our SpiderWare^tm products and our development in AdvancedTCA® and AdvancedMC^tm will provide us with significant opportunities in telecommunications as these technologies gain market and customer acceptance.

      The Communications Products sales force is divided into Global Accounts, aligned to support the 10 largest telecommunications equipment and wireless infrastructure suppliers, and Key Accounts, a separate sales group targeting emerging companies.

      A typical Global Accounts team includes dedicated sales people, supported by applications engineers, serving a customer with both standard off-the-shelf product and custom designs. The Key Accounts group has regionally based account managers overseeing external manufacturers’ representatives. This group uses standard products to develop viable solutions that meet the needs of emerging companies.

      The Communications Products segment manufactures CPU boards and WAN I/O boards, primarily employing SMT technology in production. A printed circuit board that has been manufactured to our specifications is processed through an SMT line where electronic components, which can include microchip processors, are assembled on to the board. The SMT equipment places the parts according to our design based on customers’ requirements. The number of components incorporated into our boards ranges from 300 components on a low-end T1 or E1 interface board to over 2,500 components on a high-end bundled hardware/software subsystem. All of our products in the Communications Products segment are manufactured at our facility in Madison, Wisconsin.

Customers

      Our current customer list is made up of world-class organizations within the communications industry with whom we have developed long-standing relationships based on the quality, reliability and efficiency of our products. The following table is a breakdown of sales within our core market sectors:

      A large percentage of our sales are made to a small group of customers, with our ten largest customers representing 72%, 71% and 73% of our total sales in 2004, 2003 and 2002, respectively.

However, we currently participate in more than 100 separate projects, limiting our exposure to the failure or cancellation of any one project. Our ten largest customers (in alphabetical order) are Alcatel, Cisco, Dell, Hewlett-Packard, IBM, Lucent, Motorola, Nokia, Nortel and Sun Microsystems. The table below shows the percent of total sales generated from customers having more than 10% of sales over the last three years:

Suppliers

      We maintain a network of suppliers for our components and other materials used in the manufacture of products within our Power Conversion and Communications Products segments. We typically design products using materials readily available from several sources and attempt to minimize our use of single-source components. We procure materials based upon our enterprise resource planning system and use a combination of forecasts, customer purchase orders and formal purchase agreements to create our materials requirements plan. The number of components in one of our products can range from less than 50 on some small power products to over 3,200 components on some of our AC/ DC power supplies and high-end communications products subsystems.

      Our procurement of parts include common parts — those that are used widely in the electronics industry — and unique parts — those that are specifically manufactured for a given customer product. We occasionally use components or other materials from a single source when introducing new technology and products to the market. In these situations, we typically seek to establish long-term relationships with these suppliers to assure continued supply.

      We are focused on increasing our supplier-managed inventories, whereby the supplier holds the inventory in a location near our factory and we pull the inventory as needed for production. This arrangement allows us to reduce our inventory while ensuring a continued supply of raw materials and components for our manufacturing process. In 2004, approximately 60% of our materials and components were purchased from supplier-managed inventory.

Backlog

      Sales are generally made pursuant to purchase orders rather than long-term contracts. Backlog consists of purchase orders on hand with delivery dates scheduled within the next six months and three months of forecasted demand for products under vendor managed inventory agreements with customers. Order backlog at December 31, 2004 was $87.0 million as compared to $86.7 million at December 26, 2003. We expect to ship substantially all of the December 31, 2004 backlog in the first six months of 2005.

Research and Development

      We maintain an active research and development department, which is engaged in the development of new products and technologies, devising solutions for our clients and modifying and improving existing products. We believe that the percentage of our spending for research and development in relation to revenue is among the highest in our industry, reflecting our commitment to maintain our level of timely introduction of new technology and products. Expenditures for research and development during fiscal years 2004, 2003 and 2002 were $41.1 million, $34.3 million and $34.3 million, respectively. These amounts represented nearly 10% of revenue for each of the respective periods presented.

Intellectual Property Matters

      We believe that our future success is primarily dependent upon the technical competence and creative skills of our personnel, rather than upon any patent or other proprietary rights. However, we have protected certain products with patents where appropriate and have defended, and will continue to defend, our rights under these patents. We currently maintain 41 patents related to technology included in the products we sell.

Competition

      The industry in which we compete is highly competitive and characterized by customer expectations for continually improved product performance, shorter manufacturing cycles and lower prices. These trends result in frequent introductions of new products with added capabilities and features and continuous improvements in the relative price/performance of the products.

      Our principal competitors include Acbel Polytech (Taiwan), Delta Electronics (Taiwan and Thailand), Emerson Electric, Invensys (UK), Lite-On (Taiwan), Motorola, Power-One and Tyco International. Our broad strategies to deal with competition include, but are not limited to, an on-going commitment to investment in research and development, continual reduction of our product costs, maintaining and expanding our relationships with customers in the growth sectors of our industry, and offering a broad range of products to meet our customers’ applications needs.

Employees

      We presently have approximately 1,500 permanent employees, as well as approximately 4,700 temporary employees and contractors, the majority of which work at our facility in China. We believe our ability to successfully conduct our present and proposed activities is dependent on retaining qualified engineers and technicians. We have not, to date, experienced difficulty in attracting and retaining sufficient engineering and technical personnel to meet our needs and business objectives. Additionally, none of our domestic employees are covered by collective bargaining agreements.

Environmental Matters

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

Company Website and Access to Company Filings

      If you would like any additional information on the business, please visit our website at www.artesyn.com. Information contained in our website, however, is not part of this Form 10-K. All annual reports, quarterly reports, current reports and all amendments to these reports are available free of charge as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission through our website.

      We currently occupy approximately 1.5 million square feet of office and manufacturing space worldwide, some of which we own and maintain. All facilities are in good condition and are adequate for their current intended use. We maintain the following facilities:

      All facilities listed in the table above operate within the Power Conversion segment, except the corporate headquarters in Boca Raton, Florida and the Communications Products facilities in Madison, Wisconsin and in Edinburgh, Scotland. The facilities described above provide us with enough capacity to meet our current needs. In addition to the above locations, we have leased sales/engineering offices within the Power Conversion segment located in or near Austin, Texas; Milpitas, California; Tokyo, Japan; and Paris, France. The Communications Products segment has six sales offices in the United States located in Illinois, Florida, Missouri, California and Maryland.

      On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against us in the United States District Court of Massachusetts alleging that we infringed on a U.S. patent entitled “Optimal Resetting of The Transformer’s Core in Single Ended Forward Converters.” 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’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.

      No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2004.

PART II

      Our common stock is traded on The NASDAQ Stock Market^SM under the symbol ATSN. The following table shows the high and low prices for our common stock, as reported by The NASDAQ Stock Market^SM, for each of the four quarters of fiscal years 2004 and 2003:

      To date, we have not paid any cash dividends on our common stock. The Board of Directors presently intends to retain all of our earnings for use in our business and does not anticipate paying cash dividends in the foreseeable future. In addition, the payment of dividends is prohibited by our current credit agreement.

      As of February 18, 2005, there were approximately 18,375 shareholders consisting of record holders and individual participants in security position listings.

      The following table sets forth information regarding shares issued under equity compensation plans as of December 31, 2004:

      The following table sets forth certain selected financial information:

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

Introduction

      We are a leading supplier of power conversion 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.

      Our business is organized into two business segments, Power Conversion and Communications Products. The Power Conversion segment designs and manufactures a broad range of power conversion products including AC/DC, on-board DC/DC and PoL converters. Additionally, we design and manufacture specific use power systems such as rectifiers and DC/DC power delivery systems used in the wireless infrastructure and RF amplification system applications. The Communications Products segment designs and manufactures embedded board level products and protocol software for applications, including CPUs and WAN I/O boards.

      Our products are components and sub-systems of our customers’ products, and accordingly, our revenue is dependent on the success of our customers’ products and services. Our customers’ success is impacted by macroeconomic and industry trends, primarily corporate spending on information technology and capital spending by communications services providers.

      The market sectors in which we sell our products are extremely competitive. In evaluating our products, customers consider quality, reliability, technology, service and cost relative to our competitors. The trend towards DPA systems is the technological shift having the greatest impact in our Power Conversion segment. We invest heavily in PoL and other DPA technologies in order to grow our competitive advantage in this area. In our Communications Products segment, telecommunications equipment and wireless infrastructure manufacturers are increasingly utilizing open standards in their products. We have responded by investing in the development of new products that meet open standards, such as AdvancedTCA®. In order to meet the cost requirements of our customers, we have consolidated our production in low-cost countries.

      We generate cash through net income, efficient working capital and capital equipment management and equity and debt financing transactions.

      We are financed through a mixture of equity and debt. We took actions in 2003 to lengthen the maturity of our debt and to allow us more flexibility to invest in our business. Our debt is in the form of 5.5% Convertible Senior Subordinated Notes due in 2010 and an asset-based senior revolving credit facility, the availability under which is determined in accordance with a borrowing base calculation using domestic accounts receivable and inventory.

2004 Overview

      Following the severe downturn in the communications market in 2002 and 2001, we initiated restructuring activities to lower operating costs, which were largely complete in 2003. Beginning in late 2003 and throughout 2004 the end markets resumed growth. To accommodate this growth, we set four objectives: maintain profitability throughout the year, grow market share, enter new communications market segments and continue to invest in industry leading technology. These goals were achieved during 2004 as outlined below:

      Maintain profitability. We achieved profitability during the fourth quarter of 2003 and continued to incrementally grow earnings each sequential quarter in 2004. Key contributors to earnings growth were increased revenues, driven by new product introductions and improvement in end market demand, as well as improved gross margins. Net income increased from $1.9 million in the first quarter of 2004 to $5.3 million in the fourth quarter. In 2004, net income was $13.9 million, an increase of $29.5 million from the net loss reported in 2003. Gross margins, as a percentage of revenue, increased from 19.4% in 2003 to 25.5% in 2004, due to a favorable sales mix, lower incremental costs on higher production volumes and manufacturing cost reductions, resulting from the prior years’ restructuring actions.

      The improvement in profitability contributed to the increase in operating cash flow to $30.5 million in 2004. After funding $22.1 million of capital expenditures to expand production capacity, our cash and marketable securities increased $11.7 million to $105.9 million at the end of 2004.

      Grow market share. We consider revenue growth to be the most meaningful indicator of market share gains. With revenue growth of 20% in 2004, our fastest growth was in the wireless infrastructure sector, which grew to 27% of revenue in 2004 from 25% in 2003. Server and storage sector accounted for 43% of our revenues, distribution and other was 17%, and telecommunications and networking was 13% in 2004.

      Enter new market segments. In 2004, we successfully entered the power rectification and power amplification product segments, winning several large programs with major customers. Products for these new segments will be introduced into production in early 2005 with shipments starting in the second half of 2005.

      Continue investments in technology. To continue our leadership position within our core market sectors, it is necessary to invest in new technologies for future products. During 2004, we invested $41.1 million or nearly 10% of revenue in research and development, consistent with our 2003 spending. This included spending on development of AdvancedTCA® products for embedded systems products, as well as a communications protocol for digitally controlled and monitored products within the Power Conversion segment.

      A total of 68 new product models, including 31 new PoL modules, were introduced in 2004, across the Power Conversion and Communications Products segments, further expanding the large selection of innovative products available to our customers.

      Our performance in 2004 strengthened our competitive position within our target market sectors and further improved our financial condition. Our goals for 2005 are similar to 2004, as we continue to focus on the faster growth markets within the communications industry, increasing market share with our significant customers and expanding our customer base.

Critical Accounting Policies

      We have identified the policies outlined below as critical to our business operations and to the understanding of our results of operations. The listing is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by United States generally accepted accounting principles, with no need for management’s judgment in their application. The impact and any associated risk related to these

policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Inventories

      We value our inventory at the lower of the actual cost to purchase and/or manufacture the inventory or its current estimated market value. We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and production requirements for the next twelve months. Demand for our products can fluctuate significantly, and we consult with our sales and customer service organizations in order to determine the projections for each component and finished good. Due to the magnitude of the value of our inventory, unanticipated changes to our forecast or product lifecycles could result in adjustment to the provision for excess and obsolete inventory that is material to our results. The estimate of inventory reserves is critical in both of our segments.

      At December 31, 2004, our inventory reserve balance was $19.7 million, representing 28% of the value of our gross inventory. This compares with $23.7 million, or 35% of gross inventory, at the end of 2003. The decrease in the reserve balance in 2004 is due to the disposal of obsolete inventory, offset by additional inventory provisions based on reductions in forecasted demand for certain products.

Warranties

      The terms of the warranties we offer to our customers vary depending upon the specific product and terms of the customer purchase agreement. Our standard warranties require us to repair or replace defective products returned to us during the warranty period at no cost to the customer. At the time of sale, we record an estimate for warranty-related costs based on our actual historical return rates and communications of warranty related matters from our customers. Changes in such estimates can have a material effect on net income. The estimate of warranty obligations is critical in both segments.

      The reserve is determined by first comparing the historical relationship between warranty costs, which are made up of labor and materials required to repair the parts returned, and revenue over the prior two years to calculate a rate. The rate is then applied to shipments under warranty using a sliding scale, based on historical return patterns. The reserve also includes specific large exposures that are probable and can be reasonably estimated. We have recognized expenses related to warranty costs of $2.1 million, $5.2 million and $3.9 million in 2004, 2003 and 2002, respectively. Our warranty costs have historically been within our expectations and the provisions established.

Goodwill

      We adopted Statement of Financial Accounting Standards (“SFAS”) 142 “Goodwill and Other Intangible Assets” on December 29, 2001. Under SFAS 142, we assess goodwill using a two-step approach on an annual basis in August of each year, our selected measurement date, 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.

      Management’s assumptions about future sales and cash flows on which the fair value estimate is based require significant judgment as prices and volumes fluctuate due to changing business conditions. The impact of recognizing a goodwill impairment charge was material to our results of operations in 2002 and could be material in the future to our consolidated financial results.

      Our updated assessment of impairment of goodwill in 2004 and 2003 concluded that impairment did not exist in those periods. During 2002, based on business conditions at that time, as a result of this assessment, we recognized an impairment loss of $51.9 million. For additional information on the assessment and impairment, please refer to Note 19 of our Consolidated Financial Statements.

      The balance of goodwill was $22.1 million and $20.8 million as of December 31, 2004 and December 26, 2003, respectively. We will continue to assess the impairment of goodwill in accordance with SFAS 142 in future periods.

Accounting for Income Taxes

      As part of the process of preparing our Consolidated Financial Statements, we are required to calculate our income taxes in each of the jurisdictions in which we operate. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.

      We compute our annual tax provision based on statutory tax rates and planning opportunities available in the various jurisdictions in which we earn income. We establish reserves for income tax contingencies, in accordance with SFAS 5, “Accounting for Contingencies,” when it becomes probable that a tax return position may not be successfully defended if challenged by taxing authorities. These contingencies are adjusted based on facts and circumstances, such as the settlement of tax audits, changes in tax regulations and the expiration of statutes of limitations. While it is difficult to predict the outcome or the timing of a resolution to any particular tax contingency, we believe that the recorded amounts reflect the probable outcome of any known tax items. Favorable resolutions of contingencies are recognized as a reduction to our tax provision in the period of resolution.

      Deferred tax assets and liabilities result from the differing treatment of items for tax and accounting purposes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance. Factors considered in assessing the requirement for a valuation allowance are the carry-forward period of our net operating losses, historical and expected future taxable income by jurisdiction and tax planning strategies.

      Due to uncertainties related to our ability to utilize some of the net operating loss carry-forwards before they expire, we recorded a valuation allowance of $16.2 million and $12.4 million as of December 31, 2004 and December 26, 2003, respectively. Net deferred tax assets were $7.7 million and $25.0 million, net of the valuation allowance, at the end of 2004 and 2003, respectively.

Results of Operations

      Sales. The following table summarizes revenue by business segment in comparison to previous periods (in millions):

      In 2004, revenue grew across all of our market sectors due to improved end-user demand and increased market share with our existing customers. Revenue increased sequentially from $96.5 million in the first quarter to $120.4 million in the fourth quarter of 2004.

      Power Conversion revenue increased $40.2 million in 2004 primarily due to higher sales to customers in the server and storage sector. The higher sales were driven by increased end-user demand, as corporations raised spending on information technology infrastructure after several years of constrained expenditures, and market share gains at our larger server and storage customers. Market share gains resulted from our ability to meet accelerated development schedules required to support several large customer programs and successful introduction of new products in 2004, including higher power density AC/DC front-end power supplies.

      In our Communications Products segment, revenue increased $32.3 million in 2004 compared to prior year due to recovery of the wireless infrastructure market sector and market share gains at our larger wireless infrastructure customers. Our customers benefited from increased spending by communications service providers on wireless infrastructure due to the deployment of 2.5G and 3G networks. We realized market share gains as our larger wireless infrastructure customers outsourced development of certain embedded systems to us and we have started to ship the resulting new products. In the past, our customers would have designed and manufactured many of the embedded systems internally.

      The increase in revenue in 2003 compared to 2002 was due primarily to higher sales to wireless infrastructure and telecommunications customers in our Communications Products segment, as our customers experienced an increase in end-user demand. This was partly offset by a decrease in sales to server and storage customers in our Power Conversion segment, reflecting a slowdown in demand for information technology infrastructure in the first half of 2003.

      Gross Profit. Below is a comparison of gross profit and gross profit as a percentage of revenue for 2004, 2003 and 2002 (in millions):

      The increase in gross profit in 2004 of $40.3 million, compared to 2003, was primarily due to higher revenue partly offset by price concession to customers, the positive effect of sales mix and manufacturing cost reductions.

      Higher revenue and favorable sales mix contributed approximately $32.0 million to the gross profit increase in 2004. Sales mix reflects growth of our Communications Products segment, which includes higher margin software content and a historically higher pricing structure than Power Conversion, and accounted for 17% of our total sales in 2004 compared to 12% in 2003. Manufacturing cost reductions resulting from our past restructuring actions contributed approximately $8.4 million to the increase in gross profit in 2004. The restructuring actions, reflecting the closures of our Kindberg, Austria and Youghal, Ireland factories to reduce excess capacity and lower manufacturing costs, were substantially complete at the end of 2003.

      The increase in gross profit in 2003 compared to 2002 was due to manufacturing cost reductions resulting from our restructuring actions, the positive effect of sales mix and a $15.5 million charge for increased excess and obsolete inventory reserves recorded in 2002. The charge resulted from a refinement in our estimate of excess and obsolete inventory resulting from industry trends toward shorter product lifecycles and other factors.

      Operating Expenses. Operating expenses for 2004, 2003 and 2002 are as follows (in millions):

      The increase in selling, general and administrative expenses (“SG&A”) in 2004 was primarily due to increases in expenses related to compliance with new regulatory standards, and increases in bonuses and sales commissions due to growth in revenues and profitability improvements in 2004.

      SG&A increased by $2.3 million in 2003 compared to prior year due to the effect of changes in foreign currency exchange rates of $4.7 million, offset by a $2.4 million decrease in costs due to restructuring actions. These restructuring actions, which are discussed below, were intended to reduce infrastructure and personnel and to maintain the proper relationship between operating expenses and revenue.

      Research and development expenses increased in 2004 in order to support revenue growth and new technology investments, including digital control in Power Conversion and AdvancedTCA® in Communications Products. As a percentage of revenue, research and development expenses were 10% in each of the periods presented. We believe a strong commitment to invest in research and development activities is vital to our ability to provide our customers with technologically capable, low-cost product alternatives. As a result, we expect the level of research and development expenses in 2005 to maintain its current relationship with revenue.

      Restructuring and related charges are discussed below in “Restructuring and Related Charges” and goodwill impairment charges are discussed below in “Impairment of Goodwill.”

      Restructuring and Related Charges. Pursuant to our restructuring plans, we recorded restructuring charges of $5.6 million and $27.3 million in 2003 and 2002, respectively. Restructuring charges recorded in 2004 were not significant.

      The amounts recorded in 2003 relate to transfer of manufacturing functions to our China facility and further consolidation of our business in Europe. Charges included $2.2 million for employee termination costs and $3.4 million related to facility closures.

      Restructuring charges recorded in 2002 included amounts related to the closure of our Kindberg, Austria and Youghal, Ireland manufacturing facilities. Charges were comprised of $9.9 million for employee termination expenses, $14.9 million related to facility closures and $2.5 million to record a liability for payback of development grants in Ireland. For additional information on our restructuring actions, please see Note 7 of our Consolidated Financial Statements.

      Impairment of Goodwill. On December 29, 2001, we adopted SFAS 142, “Goodwill and Other Intangible Assets.” With the adoption of SFAS 142, goodwill is no longer subject to amortization but is subject to an annual impairment test.

      Our annual assessment of the fair value of our reporting units was performed in 2004 and 2003 in accordance with SFAS 142, with no impairment being recognized as a result of these assessments.

      Due to adverse business conditions in our end markets, our impairment tests performed in the third quarter of 2002 indicated that an impairment existed and we recognized a goodwill impairment loss in the Power Conversion segment for $35.0 million and the Communications Products segment

for $16.9 million. The total impairment charge of $51.9 million is included in operating expenses in 2002.

      Loss on Debt Extinguishment. Losses on debt extinguishment were $3.7 million and $0.6 million in 2003 and 2002, respectively. In conjunction with the placement of our 5.5% convertible notes in 2003, a portion of the net proceeds from the placement was used to pay off our then outstanding $50.0 million subordinated convertible note to Finestar International Ltd. (“Finestar”). The losses on debt extinguishment were comprised of the accretion of the remaining debt discount related to the transactions with Finestar ($2.4 million), along with the write-off of the remaining unamortized debt issuance costs ($0.7 million). For additional information on the placement of convertible debt completed in 2003 and the transaction with Finestar, please see Note 9 of the Consolidated Financial Statements.

      In March 2003, we entered into an asset-based revolving credit facility with Fleet Capital Corporation, which replaced our prior revolving credit facility. Loss on debt extinguishment in 2003 also includes $0.6 million in expense related to the write-off of unamortized debt issuance costs in association with our previous credit agreement.

      During the fourth quarter of 2002, we entered into an agreement to amend the revolving credit facility in place at that time. One of the results of this amendment was a reduction in the overall availability/borrowing capacity under the agreement. We recorded debt extinguishment expenses of $0.6 million at the time related to the reduction in the facility’s capacity.

      Interest Expense, net. Interest expense, net is detailed as follows (in millions):

      As discussed above, the promissory note previously outstanding with Finestar was paid off in the third quarter of 2003. As a result of the placement of convertible notes in 2003, the $50.0 million note outstanding with Finestar at 3% was replaced with $90.0 million of notes at 5.5%. The additional borrowings and the higher interest rate resulted in a higher interest expense in 2004 compared to 2003.

      The reduction in interest expense in 2003 compared to 2002 was primarily the result of the reduced level of borrowings. We entered 2003 with substantially lower borrowings on our revolving credit facility compared to the beginning of 2002. During the first quarter of 2003, we replaced our then existing revolving credit facility with a $35.0 million, five-year revolving asset-based credit facility with Fleet Capital Corporation. Using cash generated from operations, the outstanding debt on our credit facility was further reduced to zero at the end of 2003, compared to $23.0 million at the end of 2002.

      Provision (Benefit) for Income Taxes. Below is a comparison of the provision (benefit) for income tax and effective tax rate for 2004, 2003 and 2002 (in millions):

      The difference in the 2004 and 2003 tax rates was due to the distribution of profits and losses by jurisdiction, adjustments to valuation allowances on deferred tax assets recorded at various locations, changes in tax regulations and a $2.5 million benefit in 2004 from the release of a tax contingency accrual upon expiration of the statute of limitations.

      The difference in the 2003 and 2002 tax rates was the result of losses in certain tax jurisdictions that require a valuation allowance for the related deferred tax benefits and non-deductibility of the majority of the goodwill impairment loss.

      Net Income (Loss). The net income (loss) recorded in each of the last three years was as follows (in millions, except per share data):

      In comparison to 2003, the increase in net income in 2004 resulted from the increased gross profit due to higher revenue, favorable product mix and manufacturing cost reductions.

      In comparison to 2002, the improvement in net loss in 2003 resulted from the goodwill impairment loss, the additional excess and obsolete inventory charges and the significantly higher restructuring charges that were recorded in 2002. In addition, the higher gross profit in 2003 as a result of manufacturing cost savings contributed to the improvement.

Power Conversion

      Results for the Power Conversion segment in 2004 compared with prior years are as follows (in millions):

      The increase in revenue in the Power Conversion segment recorded in 2004 compared to prior year was primarily attributable to higher sales to our server and storage customers. Demand improved as corporations increased spending on information technology infrastructure, reversing trends experienced in previous years.

      Operating income increased $20.2 million in 2004 compared to 2003 as a result of higher revenues and manufacturing cost reductions, partly offset by increased research and development expenses. Higher revenues contributed approximately $13.4 million, including the favorable impact of lower marginal costs achieved through greater utilization of our factories. Manufacturing cost reductions resulting from our past restructuring actions increased operating income by approximately $8.4 million in 2004. Research and development costs increased $4.3 million in 2004 to support revenue growth and investment in new technologies, such as digital control. While research and development costs increased in 2004, the relationship of such costs to our revenue remained consistent with 2003.

      The decrease in revenue recorded in 2003 compared to 2002 was primarily the result of lower sales to our server and storage customers, somewhat offset by increased sales to distribution customers. The decline in server and storage revenue reflected lower demand from corporations for information technology infrastructure, occurring in the first half of 2003. We expanded our sales staff and distribution networks in the U.S. and Europe, resulting in the growth in sales to distribution customers in 2003.

      The primary reason for the lower operating loss in 2003 is a reduction in charges compared to the prior year. Operating income in 2002 included a $35.0 million charge for goodwill impairment, an

excess and obsolete inventory charge ($15.0 million) and restructuring charges in excess of the amount recorded in 2003 ($20.8 million). The remaining improvement was due to manufacturing costs savings from the restructuring actions implemented in 2003.

Communications Products

      Results for the Communications Products segment in 2004 compared with prior years are as follows (in millions):

      Revenue increased in our Communications Products segment in 2004 compared to prior year primarily due to higher sales to our wireless infrastructure customers. The increased sales reflect a recovery of demand in the wireless infrastructure market sector and market share gains at our larger customers.

      The increase in revenue in 2003 compared to 2002 is primarily the result of higher sales to our wireless infrastructure and telecommunications customers. Sales of existing products grew as our customers responded to improved end-user demand.

      The effect of higher revenue contributed $18.6 million to the increase in operating income in 2004, partly offset by $2.5 million in higher research and development costs to support revenue growth and fund development of products designed to meet AdvancedTCA® standards.

      Operating income improved $28.2 million in 2003 from the operating loss reported in 2002 due to the reduction in charges and the effect of higher revenue of approximately $6.0 million. A goodwill impairment charge of $16.9 million and restructuring charges of $0.9 million were recorded in 2002.

Liquidity and Capital Resources

      The following table presents selected financial statement information for each of the past three years (in millions, except statistical data):

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

      Our cash and cash equivalents decreased from $94.2 million at the end of 2003 to $84.8 million at the end of 2004. However, a portion of our cash was used to purchase marketable debt securities, of which $21.1 million was held at the end of 2004. Cash and marketable securities

increased in total by $11.7 million in 2004. The primary source of cash in 2004 was net income, adjusted for non-cash expenses.

      Cash Flows from Operating Activities. During 2004, our cash flows from operating activities served as a source of cash of $30.5 million. Net income, adjusted for non-cash expenses, which include the effect of depreciation and amortization and various provisions and reserves, was the primary source of cash, providing us with $43.5 million in operating cash during the year. Increases in accounts receivable ($7.5 million) and inventories ($9.9 million), due to the higher level of sales, partly reduced cash provided by operating activities.

      Overall working capital performance was consistent with the level recorded at the end of 2003. A small increase in days of inventory on-hand is due to the increase in the 2004 finished goods inventory levels maintained at local hubs for our major customers. Over the past three years, we have significantly improved our working capital performance as evidenced by the reduction in days of inventory on-hand and the increase in days of accounts payable outstanding. Looking forward, we anticipate only modest improvement in our accounts receivable and accounts payable performance, as we believe we are operating at a close to optimal level for our industry.

      Cash Flows from Investing Activities. Cash flows from investing activities reflect a net cash use of $43.3 million in 2004, comprised primarily of capital expenditures ($22.1 million) and investments in short-term marketable debt securities ($21.3 million). The increase in our capital expenditures in 2004 was inline with our prior expectations as the trends in design resulted in a higher number of surface-mounted components in our products, which combined with the higher demand, dictated an increase in the number of SMT lines, automated test equipment and other related production equipment we currently utilize.

      In 2004, we began to invest our excess cash that is not required to meet short-term operating needs in marketable debt securities. Our investment policy is to protect the value of our investment portfolio and minimize principal risk by earning returns based on current interest rates. Our investments at December 31, 2004 consisted primarily of corporate, government and municipal debt securities with remaining contractual maturities of less than one year.

      In the first quarter of 2004, we paid the remaining $0.7 million of contingent consideration for the acquisition of AzCore Technologies, Inc. In 2003, we made deferred or contingent payments related to the acquisitions of Spider Software Limited and AzCore of approximately $4.3 million. All deferred and contingent obligations related to past acquisitions have been satisfied. For additional information on our acquisitions, see Note 8 of the Consolidated Financial Statements.

      Cash Flows from Financing Activities. In 2004, cash flows from financing activities were a source of cash of $1.8 million. The primary source of cash was the exercise of stock options.

      On August 13, 2003, we completed an initial placement to qualified institutional investors of $75.0 million of our 5.5% convertible senior subordinated notes due 2010, and on August 27, 2003, we completed the sale of an additional $15.0 million. Net proceeds from the issuance of convertible senior subordinated notes in the third quarter of 2003 were approximately $86.3 million of notes. The placement was completed in order to replace the $50 million convertible note that had previously been issued to Finestar and to provide us with additional long-term working capital. The promissory note with Finestar was to mature in 2007 and contained a provision that allowed either party to redeem the note in January 2005. The new convertible debt issuance has an extended maturity date and the possibility of redemption on the part of the holder is removed. There is no financial covenant requirements associated with the 5.5% convertible senior subordinated notes. For additional information on the terms of the notes, please see Note 9 of the Consolidated Financial Statements.

      On January 15, 2002, we received an investment by Finestar, an entity controlled by Mr. Bruce Cheng, founder and chairman of Delta Electronics, a leading global power supply, electronic component and video display manufacturer and one of our competitors. After the first closing of our

August 2003 placement of 5.5% convertible senior subordinated notes due 2010, we fully paid the convertible subordinated note outstanding with Finestar. Additionally, because the Finestar note has been paid in full, the shares of our common stock underlying the convertible note are no longer issuable upon conversion or subject to the registration statement on Form S-3 filed in connection with the Finestar transaction.

      On March 28, 2003, we entered into a five-year, $35.0 million senior revolving credit facility with Fleet Capital Corporation. The asset-based facility replaced our prior senior revolving credit facility that was due to expire in March 2004. For additional information on the terms of our new asset-based credit facility, please see Note 10 of the Consolidated Financial Statements. On the day the agreement was completed, we used $19.0 million of cash on hand to pay off the amounts outstanding under our previous credit facility. We then borrowed $10.5 million on the new facility, resulting in a net reduction of total outstanding borrowings of $8.5 million. While the total availability under the facility may be as high as $35.0 million, the amount available to be borrowed is based on our level of qualifying domestic accounts receivable and inventory, which is subject to changing business conditions. Generally, as our level of qualifying accounts receivable and inventory increases, our availability increases up to the prescribed limit. As of the end of 2004, our outstanding balance on the revolving credit facility was zero, and our availability was $20.1 million.

      In addition to other affirmative and negative covenants customary for asset-based credit facilities, we are also subject to an EBITDA covenant that is triggered if the amount available to be borrowed plus cash deposited with Fleet Bank falls below $20.0 million. As of the end of the year, the availability and the cash deposited with Fleet were above the prescribed limit, and we were not subject to the additional covenant. Up to $5.0 million of the facility’s capacity can be used for letters of credit.

      Our sources of cash are the cash we currently have on hand, the availability under on our asset-based credit facility and cash generated from net income. We are expecting to generate cash from net income in 2005, but if our projections 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, 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, sales of equipment or portions of the business.

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

      The following is a summary of future payments under contractual obligations as of December 31, 2004 (in millions):

Risk Factors That May Affect Future Results

      The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes. 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 involves risks and uncertainties. Forward-looking statements typically use words or phrases such as “estimate,” “plans,” “projects,” “anticipates,” “continuing,” “ongoing,” “expects,” “believes,” or words of similar import. We caution readers that a number of important factors, as well as factors discussed in our other reports filed with the Securities and Exchange Commission, could affect our actual results and cause them to differ materially from those expressed in the forward-looking statements. Forward-looking statements included in this form 10-K are made only as of the date hereof, based on information available as of the date hereof, and subject to applicable law to the contrary, we assume no obligation to update any forward looking-statements.

      The markets for our products are characterized by rapidly changing technologies, changing customer demands, evolving industry standards, frequent new product introductions and, in some cases, short product life cycles. The development of new, technically advanced products is a complex and uncertain process requiring high levels of innovation and investment, as well as an accurate anticipation of technological and market trends. To respond to the needs of our customers in the communications industry, we must continuously develop new and more advanced products at lower prices. We are making significant investments in next generation technologies, but there can be no assurance that these investments will lead to additional revenue and profitability. Our inability to properly assess developments in the communications industry or to anticipate the needs of our customers could cause us to lose business with our current customers and prevent us from obtaining new customers. Additionally, because our products are incorporated into our customers’ products as components or sub-systems, our future profitability depends on the success of our customers’ products and the health of the communications industry in general.

      We operate in an industry where quality, reliability, stability, product capability and other factors influence our customers’ decisions to purchase our products. Because of the highly competitive nature of our industry, the price of our products is also a factor, and it could become a more important factor the more competitive our industry becomes. The competitive nature of our industry could result in price reductions, reduced profit margins and loss of market share, each of which would adversely affect our business, operating results and financial condition. Our strategies to manage the competition include, but are not limited to, maintaining an appropriate level of investment in research and development and sustaining and expanding relationships with our customers in the high-growth sectors of our industry; however, there can be no assurance that such strategies will be effective.

      In 2004, approximately 79% of our total sales were from products manufactured in China and Europe. The closure of our facilities in Austria and Ireland in 2003 has concentrated our manufacturing capacity of our Power Conversion segment to our low-cost facilities in China and Hungary. The cost structure of these facilities and its relationship to our customers’ expectations for the price of our products makes our future success dependent on the ability to efficiently utilize our foreign manufacturing locations. International operations, however, are subject to inherent risks, including unexpected changes in regulatory requirements and tariffs, interruptions in air or sea transportation, political or economic changes, difficulties in staffing and managing foreign operations, foreign currency exchange rates and potentially adverse tax consequences, any or all of which could adversely affect our ability to manufacture our products and deliver those products to our customers.

      Our ten largest customers accounted for 72% of our total sales for the 2004 fiscal year, with sales to Dell Computer and IBM accounting for approximately 13% and 11% of our total 2004 sales, respectively. The telecommunications industry has recently experienced a consolidation of both U.S. and non-U.S. companies, as evidenced by the merger of AT&T Wireless and Cingular. As a result of these factors, it is possible that in fiscal 2005 and subsequent years an even greater percentage of our revenues will be attributable to a limited number of large service providers than in the past years. While we are “designed in” to and derive revenue from several distinct products with each customer, we do not have long-term contracts with customers and decisions by a small number of our customers to defer their purchasing decisions or to purchase products elsewhere could have a material adverse effect on our business, operating results and financial condition. The majority of our customers maintain a second source for the products they purchase from us and therefore could shift their purchases to another vendor.

      In addition, if we were to experience an unanticipated catastrophic quality issue (i.e., a product or design failure), or even a less than catastrophic but significant issue, with one of our customers (especially one of our two largest customers) that threatened our relationship with that customer, the competitive nature of our industry could allow that customer to terminate its relationship with us and move its business to one of our competitors. Furthermore, a majority of our largest customers customarily dual source their major programs, meaning that they purchase comparable products or components from two sources to ensure a reliable supply of component parts for their products. If we were to experience supply or quality issues on a dual sourced program, the customer could choose to move a greater percent of their orders to the secondary source without significant disruption to their supply chain.

      Our current manufacturing capabilities are inline with the level of production we expect over the near term. If demand were to increase drastically from our expectations, we would be forced to add additional production capacity on very short notice. If our capacity constraints keep us from fulfilling customers’ orders, it could have a material adverse effect on our results from operations.

      International sales have been, and are expected to continue to be, an important component of our total sales. In 2004, international sales represented 40% of our total sales. Because our customers do business in international locations, our future success is dependent on our continued growth and our ability to administer our sales operations in foreign markets. The success and profitability of our international operations is subject to inherent risks, including unexpected changes in regulatory requirements and tariffs, increased import duties, interruptions in air or sea transportation, political or economic changes, difficulties in managing foreign operations, longer payment cycles, problems in collecting accounts receivable, foreign currency exchange rates and potentially adverse tax consequences, any or all of which could adversely affect our operations.

      As a result of the custom nature of certain of our manufactured products, components used in the manufacture of our products are currently obtained from a limited number of suppliers, and a small percentage of components are purchased from a single vendor. Should any of our suppliers have significant issues in designing or manufacturing our components in accordance with quality specifications or related regulations, there could be a disruption in our supply chain while we resolve the issues or transition to a different vendor. A change in suppliers, which could take several months to properly transition, could cause a delay in manufacturing, additional manufacturing costs and a possible loss of sales that could adversely affect our future operating results and financial position.

      The amount available for borrowing under our senior credit facility is calculated as a percentage of our domestic accounts receivable and inventory that meet certain criteria as set forth in the credit agreement, minus reserves as determined by our lender. Our lender maintains the right to change the advance rates and eligibility criteria for our domestic accounts receivable and inventory and the discretion to change or institute new reserves against our availability. Accordingly, the amount available for borrowing under our senior credit facility may be reduced due to the reduction in the amount of our eligible assets resulting from changing market conditions, and the application of or changes to eligibility criteria, as well as the reduction of advance rates and/or the increase or change in reserve amounts, which may be imposed at the discretion of our lender. These factors could have the result of reducing the amount we may borrow under the facility at a time when we have a need to borrow additional amounts or requiring repayments under the facility at a time when we do not have adequate cash flow to make such repayments or when such repayments may not be in our best interest due to the economic climate and/or our financial condition at that time. These consequences could negatively impact our liquidity and such impact could be material. As of December 31, 2004, however, there were no amounts outstanding under our asset-based revolving credit facility.

      Our senior credit facility may restrict our ability to enter into certain corporate transactions (including, among other things, the disposition of assets, making certain capital expenditures and

forming or acquiring subsidiaries) unless we obtain the prior written consent of Fleet Capital Corporation. Because we cannot guarantee that Fleet Capital Corporation will, in all circumstances, provide consent for the specific purposes for which we intend, our ability to enter into certain corporate transactions, to the extent that we may require capital in addition to our cash and investments on hand, may be prohibited or delayed.

      Our principal competitors include Acbel Polytech (Taiwan), Delta Electronics (Taiwan and Thailand), Emerson Electric, Invensys (UK), Lite-On (Taiwan), Power-One, Tyco International and Motorola. If our competitors consolidate, they would likely create entities with increased market share, customer bases, proprietary technology, marketing expertise and sales forces and would likely have increased purchasing leverage for acquiring raw materials. Such a development may create stronger competitors, which could adversely affect our ability to compete in the markets we serve.

      We have, from time to time, received, and may in the future receive, communications from third parties asserting that our products or technology infringe on a third party’s patent or other intellectual property rights. Such claims have resulted in litigation in the past, and could result in litigation in the future. If we do not prevail in any such litigation, our business may be adversely affected, depending on the technology at issue. In addition, our industry is characterized by uncertain and conflicting intellectual property claims and, in some instances, vigorous protection and pursuit of intellectual property rights or positions, which have on occasion resulted in protracted and expensive litigation. We cannot make the assurance that intellectual property claims will not be made against us in the future or that we will not be prohibited from using our technologies subject to any such claims or that we will not be required to obtain licenses and make corresponding royalty payments. In addition, the necessary management attention to, and legal costs associated with, litigation could have a material adverse effect on our business, operating results and financial condition.

      We generally rely on patents and trade secret laws to establish and maintain proprietary rights in some of our technology and products, and such protections may become more important in our industry. While we have been issued a number of patents and other patent applications are currently pending, there can be no assurance that any of the patents will not be challenged, invalidated or circumvented, or that any rights granted under these patents will, in fact, provide us with competitive advantages. In addition, there can be no assurance that patents will be issued from pending applications, or that claims on future patents will be broad enough to protect our technology. Also, the laws of some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. Litigation may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Litigation could result in substantial costs and diversion of resources and could have a significant adverse effect on our operating results.

      Our operations are subject to laws, regulations, government policies and product certification requirements worldwide. Changes in such laws, regulations, policies or requirements in the United States or in other countries in which we operate or sell our products could result in the need to modify products and could affect the demand for our products, which may involve substantial costs or delays in sales and could have an adverse effect on our future operating results. For instance, in January of 2003 the European Union issued Directive 2002/95/EC of the European Parliament and of the Council, which restricts the use of certain hazardous substances in electrical and electronic equipment. This legislation is effective beginning July 1, 2006. In addition, several of our customers that operate in the regions not affected by this regulation have nevertheless chosen to comply with its provisions to reduce the hazardous impacts on the environment. In order to comply with this legislation, we have identified alternative materials and manufacturing processes that have successfully passed our qualification and reliability testing. While we expect to be fully compliant with this legislation within the required timeline, failure to achieve compliance could negatively impact our revenue.

      If we lose one or more members of senior management, or if we cannot attract and retain qualified management or technical personnel, our operating results could be adversely affected. Our capacity to develop and implement new technology depends on our ability to employ personnel with highly technical skills. Competition for such qualified technical personnel is intense due to the relatively limited number of engineers available.

      At December 31, 2004, we had $90 million of outstanding debt as reflected on our consolidated balance sheet included in this filing. We may incur additional indebtedness in the future and the terms of the outstanding convertible notes do not restrict our future issuance of indebtedness. Our level of indebtedness will have several important effects on our future operations, including, without limitation:

      Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which will be subject to the success of the marketing of our products, general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control. If we are not able to generate sufficient cash flow from operations in the future to service our debt, we may be required, among other things:

      Such measures might not be sufficient to enable us to service our debt. In addition, any such financing, refinancing or sale of assets might not be available on economically favorable terms.

      Our convertible notes issued in 2003 include a provision that the note holders have the right to tender the notes and request that the notes be repurchased if a “change of control” occurs. Should a “change of control” occur, no assurance can be given that we will have sufficient funds available to purchase notes that are tendered for repurchase or that we will be able to arrange financing on favorable terms. A failure to repurchase the tendered notes constitutes an event of default under the indenture.

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

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

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

      As of December 31, 2004, we had reserved the following shares of our common stock for issuance:

      The issuances of some or all of this reserved common stock would dilute our existing stockholders.

      We are exposed to the impact of interest rate changes and foreign currency fluctuations. In the past, we have managed our interest rate risk on variable rate debt instruments through the use of interest rate swaps, pursuant to which, we exchanged our floating rate interest obligations for fixed rates. The fixing of the interest rates offsets our exposure to the uncertainty of floating interest rates during the term of the debt.

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

      It is our policy to enter into foreign currency and interest rate transactions only to the extent considered necessary to meet the objectives, as stated above. We do not enter into foreign currency or interest rate transactions for speculative purposes. Gains or losses that result from changes in foreign currency rates are recorded at the time they are incurred. These gains or losses were not material in 2004 and 2003. In 2002, we recorded a gain on foreign exchange transactions of $5.2 million. We currently have no hedging instruments outstanding.

Management’s Report on Internal Control Over Financial Reporting

      Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2004 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.

      Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and Shareholders

Artesyn Technologies, Inc.

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Artesyn Technologies, Inc. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Artesyn Technologies Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

      In our opinion, management’s assessment that Artesyn Technologies, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Artesyn Technologies, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Artesyn Technologies, Inc. as of December 31, 2004 and December 26, 2003, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for the fiscal years ended December 31, 2004, December 26, 2003 and December 27, 2002 and our report dated March 15, 2005 expressed an unqualified opinion thereon.

West Palm Beach, Florida

March 15, 2005

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Artesyn Technologies, Inc.

      We have audited the accompanying consolidated balance sheets of Artesyn Technologies, Inc. and Subsidiaries (the Company) as of December 31, 2004 and December 26, 2003, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for the fiscal years ended December 31, 2004, December 26, 2003 and December 27, 2002. Our audits also included the financial statement schedule for the years ended December 31, 2004, December 26, 2003 and December 27, 2002 listed in the index at item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

      In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Artesyn Technologies, Inc. and Subsidiaries at December 31, 2004 and December 26, 2003, and the consolidated results of their operations and their cash flows for the fiscal years ended December 31, 2004, December 26, 2003 and December 27, 2002, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Artesyn Technologies, Inc.’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2005 expressed an unqualified opinion thereon.

West Palm Beach, Florida

March 15, 2005

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME (LOSS)

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

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Organization. Artesyn Technologies, Inc. (Nasdaq: ATSN), a Florida corporation formed in 1968, is primarily engaged in the design, development, manufacture and sale of power conversion products and embedded computing solutions within the communications industry.

      Basis of Presentation. The accompanying consolidated financial statements include the accounts of Artesyn Technologies, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

      For purposes of clarity, as used herein, the terms “we,” “us,” “our,” “the Company,” and “Artesyn” mean Artesyn Technologies, Inc. and its subsidiaries (unless the context indicates another meaning).

      Fiscal Year. Our fiscal year ends on the Friday nearest December 31, which results in a 52- or 53-week year. The fiscal year ended December 31, 2004 is comprised of 53 weeks. The fiscal years ended December 26, 2003 and December  27, 2002 are comprised of 52 weeks. The upcoming fiscal year will be 52 weeks in length and will end on December 30, 2005.

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

      Marketable Debt Securities. Short-term investments at December 31, 2004 primarily consist of corporate, government and municipal debt securities with maturities of less than one year from the balance sheet date. All marketable debt securities are held in the Company’s name and deposited with a major financial institution. The Company’s policy is to invest in marketable debt securities with a minimum rating of single A or above from a nationally recognized credit rating agency. At December 31, 2004, all of the Company’s marketable debt securities were classified as available-for-sale and were carried at fair market value with unrealized gains and losses, net of taxes, reported in accumulated other comprehensive loss. We do not recognize changes in the fair value of investments in income unless a decline in value is considered other-than-temporary. For further information see Note 6.

      Trade Receivables. Trade receivables are stated on our Consolidated Balance Sheets at historical cost, which approximates fair value. We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customers’ credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain an allowance for estimated credit losses based upon our historical experience and specific customer collection issues that we have identified. Trade receivables are evaluated and written off against the allowance if they are determined to be uncollectible.

      Inventories. Inventories are stated at the lower of cost or market, on a first-in, first-out basis. We perform on-going evaluations of the recovery of our inventory and provisions are made to reduce excess or obsolete inventories to market based on current and expected demand for the finished product and the components used to manufacture it. Finished goods and work-in-process inventories include material, labor and manufacturing overhead.

      Property, Plant & Equipment. Property, plant and equipment is stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. The depreciable lives range from two to fifteen years for machinery and equipment, fifteen to thirty years for buildings and building improvements and two to ten years for furniture and fixtures. Leasehold improvements are depreciated over the remaining applicable lease term, or their estimated useful

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

lives, whichever is shorter. Major renewals and improvements are capitalized, while maintenance, repairs and minor renewals not expected to extend the life of an asset beyond its normal useful life are expensed as incurred.

      Impairment of Long-Lived Assets. We periodically evaluate whether events or changes in circumstances have occurred that may warrant revision of the estimated useful lives of our long-lived assets to be held and used, or whether the remaining balance of long-lived assets to be held and used should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of long-lived assets to be held and used to determine whether impairment has occurred. Impairment is recorded if the carrying value of the asset is determined to be in excess of its fair value. No impairment was recorded for assets held and used during any of the years presented. (See Note 7 for asset disposals related to restructuring activities).

      Goodwill. The excess of purchase price over net identifiable assets of companies acquired is reported as goodwill. As prescribed by Statement of Financial Accounting Standards (“SFAS”) 142, which we adopted in the first quarter of 2002, goodwill is not amortized but is instead tested annually for potential impairment. Potential impairment exists if the fair value of a reporting unit to which goodwill has been allocated, is less than the carrying value of that reporting 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.

      We assess goodwill at our segment level (see Note 15). We do not assess goodwill at a more distinct level because there were no business units below the segment level where discrete financial information is available that were regularly reviewed by segment management and exhibited separate economic characteristics from the other components of the operating segment.

      Foreign Currency Translation. The functional currency of certain of our Asian subsidiaries is predominantly the US dollar, as their transactions are generally denominated in US dollars. The assets and liabilities of these Asian subsidiaries are remeasured into US dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at average exchange rates for the period. The functional currency of our European and certain of our Asian subsidiaries is each entity’s local currency. Assets and liabilities are translated from their functional currency into US dollars using exchange rates in effect at the balance sheet date. Equity is translated using historical exchange rates. Income and expense items are translated using average exchange rates for the period. The effect of exchange rate fluctuations on the translation of foreign currency assets and liabilities into US dollars is included in accumulated other comprehensive loss. Foreign exchange transaction gains included in the results of operations were $5.2 million in 2002. Foreign exchange amounts were not significant for the years ending December 31, 2004 and December 26, 2003.

      Revenue Recognition. We recognize revenue when the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is probable. For sales including software products, we typically have no installation, maintenance or other obligations related to the software, and accordingly, revenue is recognized as the products are shipped and the customer accepts title.

      The Company may enter into revenue arrangements to sell products (hardware and software) and services in which we are obligated to deliver to our customers multiple products and/or services. For those products which require additional services, revenue related to those services is deferred and recognized as the services are performed in accordance with Statement of Position (“SOP”) 97-2 “Software Revenue Recognition” and related interpretations.

ARTESYN TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Sales are comprised of gross revenues less provisions for expected customer returns and other sales allowances. The related reserves for these provisions are included in “Accounts Receivable, net of allowances” in the accompanying consolidated balance sheets. We establish provisions for estimated returns and sales allowances concurrently with the recognition of revenue based on a variety of factors including actual return and sales allowance history and projected economic conditions. We continually monitor customer inventory levels and make adjustments to these provisions when we believe they are not adequate to cover anticipated returns or allowances.

      All costs associated with shipping and handling are recognized in cost of sales.

      Product Warranty. We record estimated product warranty costs, included in cost of sales, in the period in which the related revenues are recognized. Warranty expense is generally estimated based on the historical warranty costs. The estimates used in the calculation are periodically evaluated by management and appropriate adjustments, if any, to the estimates used are made prospectively based on such periodic evaluation.

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