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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

For the quarterly period ended September 24, 2004

OR

For the transition period from              to             

Commission File No. 0-4466

Artesyn Technologies, Inc.

(Exact name of registrant as specified in its charter)

Florida

(State or other jurisdiction of incorporation or organization)

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

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

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

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Artesyn Technologies, Inc.

Index to Form 10-Q

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Artesyn Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands except share data)

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

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Artesyn Technologies, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands except per share data)

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

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Artesyn Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

1. Basis of Presentation

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

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

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

2. Earnings Per Share

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

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

3. Inventories

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

4. Accrued Liabilities

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

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

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

5. Restructuring and Related Charges

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

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

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

6. Convertible Debt

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

7. Credit Agreement

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

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

8. Income Taxes

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

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

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

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

9. Business Segments and Geographic Information

We are organized in two industry segments, Power Conversion and Communications Products. Power Conversion is engaged in the business of designing and manufacturing power supplies and power conversion products for the communications, wireless, transmission and computing markets. Those same markets are serviced by the Communications Products segment, which provides WAN interfaces, CPU boards, DSP solutions and protocol software. We sell products directly to Original Equipment Manufacturers and also to a network of industrial and retail distributors throughout the world. Our principal markets are in the United States, Europe and Asia-Pacific, with the United States being the largest based on sales. Sales are made in U.S. dollars and certain European currencies.

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

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

10. Legal Proceedings

On February 8, 2001, VLT, Inc. and Vicor Corporation filed a suit against us in the United States District Court of Massachusetts alleging that we infringed on a U.S. patent entitled “Optimal Resetting of The Transformer’s Core in Single Ended Forward Converters.” The plaintiff has alleged that it is the owner of the patent and that we have manufactured, used or sold electronic power converters with reset circuits that fall within the claims of the patent. The suit requests that we pay damages, including royalties, lost profits, interest, attorneys’ fees and increased damages under 35 U.S.C. § 284. We have challenged the validity of the patent and have denied the infringement claims. Based on the district court’s claim construction rulings in early 2003, we reached an agreement with VLT on a stipulated judgment, which the court entered on May 31, 2003.

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

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

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

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

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

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

11. Stock-Based Compensation

We apply Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for stock-based compensation for employees and non-employee directors. In accordance with APB No. 25, as the exercise price of our stock options equals the market price of the underlying stock on the date of grant, no compensation cost has been recognized for our fixed stock option plans. Pro forma information regarding net income (loss) and earnings (loss) per share is required by SFAS No. 123, “Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” and has been determined as if we had accounted for our employee and outside directors stock-based compensation plans under the fair value method. The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

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

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

12. Comprehensive Income (Loss)

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

13. Product Warranty

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

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Artesyn Technologies, Inc.

Notes to Condensed Consolidated Financial Statements

September 24, 2004

(unaudited)

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

14. Goodwill Impairment Assessment

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

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

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

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

Results of Operations

Overview

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

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

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

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

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

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

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Consolidated

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

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

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

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

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

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

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

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

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