<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended September 30, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to __________.
Commission file number: 000-26966
ADVANCED ENERGY INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 84-0846841
- --------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
1625 SHARP POINT DRIVE, FORT COLLINS, CO 80525
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (970) 221-4670
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 .
--- ---
As of November 12, 1999, there were 28,191,462 shares of the Registrant's Common
Stock, par value $0.001 per share, outstanding.
<PAGE> 2
ADVANCED ENERGY INDUSTRIES, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION
<TABLE>
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets-
September 30, 1999 and December 31, 1998 3
Consolidated Statement of Operations-
Three months and nine months ended September 30, 1999 and 1998 4
Consolidated Statement of Cash Flows-
Nine months ended September 30, 1999 and 1998 5
Notes to consolidated financial statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 20
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 21
ITEM 5. OTHER INFORMATION 21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 21
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,261 $ 12,295
Marketable securities - trading 17,329 15,839
Accounts receivable, net 37,176 15,604
Income tax receivable 539 3,576
Inventories 23,465 21,412
Other current assets 1,377 797
Deferred income tax assets, net 4,768 4,112
-------- --------
Total current assets 95,915 73,635
-------- --------
PROPERTY AND EQUIPMENT, net 15,565 15,320
OTHER ASSETS:
Deposits and other 1,110 1,007
Goodwill and intangibles, net 7,550 8,586
Demonstration and customer service equipment, net 2,487 2,487
-------- --------
Total assets $122,627 $101,035
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade $ 11,414 $ 5,675
Accrued payroll and employee benefits 5,908 2,983
Other accrued expenses 1,898 2,074
Customer deposits 474 66
Accrued income taxes payable 1,508 567
Current portion of long-term debt 613 211
-------- --------
Total current liabilities 21,815 11,576
-------- --------
LONG-TERM LIABILITIES:
Long-term debt 203 326
-------- --------
Total liabilities 22,018 11,902
-------- --------
STOCKHOLDERS' EQUITY 100,609 89,133
-------- --------
Total liabilities and stockholders' equity $122,627 $101,035
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
3
<PAGE> 4
ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
-------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
SALES $ 51,142 $ 26,292
COST OF SALES 28,598 18,317
-------- --------
Gross profit 22,544 7,975
-------- --------
OPERATING EXPENSES:
Research and development 6,935 5,722
Sales and marketing 4,187 3,255
General and administrative 3,715 2,353
Restructuring charge -- 1,000
-------- --------
Total operating expenses 14,837 12,330
-------- --------
INCOME (LOSS) FROM OPERATIONS 7,707 (4,355)
OTHER INCOME (EXPENSE) 1,131 (214)
-------- --------
Net income (loss) before income taxes 8,838 (4,569)
PROVISION (BENEFIT) FOR INCOME TAXES 3,303 (1,089)
-------- --------
NET INCOME (LOSS) $ 5,535 $ (3,480)
======== ========
BASIC EARNINGS (LOSS) PER SHARE $ 0.20 $ (0.13)
======== ========
DILUTED EARNINGS (LOSS) PER SHARE $ 0.20 $ (0.13)
======== ========
BASIC WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 27,048 26,585
======== ========
DILUTED WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 28,318 26,585
======== ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1999 1998
--------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
SALES $ 125,385 $ 102,142
COST OF SALES 71,450 72,046
--------- ---------
Gross profit 53,935 30,096
--------- ---------
OPERATING EXPENSES:
Research and development 19,545 17,951
Sales and marketing 11,471 10,331
General and administrative 9,673 7,980
Restructuring charge -- 1,000
--------- ---------
Total operating expenses 40,689 37,262
--------- ---------
INCOME (LOSS) FROM OPERATIONS 13,246 (7,166)
OTHER INCOME 1,148 13
--------- ---------
Net income (loss) before income taxes 14,394 (7,153)
PROVISION (BENEFIT) FOR INCOME TAXES 5,555 (1,422)
--------- ---------
NET INCOME (LOSS) $ 8,839 $ (5,731)
========= =========
BASIC EARNINGS (LOSS) PER SHARE $ 0.33 $ (0.22)
========= =========
DILUTED EARNINGS (LOSS) PER SHARE $ 0.31 $ (0.22)
========= =========
BASIC WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 26,940 26,536
========= =========
DILUTED WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING 28,172 26,536
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
4
<PAGE> 5
ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
---------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................................... $ 8,839 $ (5,731)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities --
Depreciation and amortization ........................................ 5,511 4,886
Provision for deferred income taxes .................................. (656) 289
Amortization of deferred compensation ................................ -- 34
Loss on disposal of property and equipment ........................... 1 39
Earnings from marketable securities, net ............................. (418) (544)
Writedown of stock investment ........................................ 200 300
Changes in operating assets and liabilities --
Accounts receivable-trade, net ..................................... (21,807) 15,495
Related parties and other receivables .............................. 235 1,408
Inventories ........................................................ (2,053) 8,226
Other current assets ............................................... (605) (191)
Deposits and other ................................................. (303) (173)
Demonstration and customer service equipment ....................... (481) (572)
Accounts payable, trade ............................................ 5,739 (9,269)
Accrued payroll and employee benefits .............................. 2,925 (1,477)
Customer deposits and other accrued expenses ....................... 232 (584)
Income taxes payable/receivable .................................... 3,978 (2,734)
-------- --------
Net cash provided by operating activities ....................... 1,337 9,402
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities ....................................... (3,000) (1,000)
Sale of marketable securities ........................................... 1,928 2,500
Purchase of stock investment ............................................ -- (1,000)
Purchase of property and equipment, net ................................. (4,215) (4,565)
Acquisition of assets of Fourth State Technology, Inc. .................. -- (2,500)
-------- --------
Net cash used in investing activities ........................... (5,287) (6,565)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable ............................................. 1,358 2,201
Repayment of notes payable and capital lease obligations ................ (1,079) (6,616)
Proceeds from sale of common stock ...................................... 2,960 393
Proceeds from stockholders' notes receivable ............................ -- 67
-------- --------
Net cash provided by (used in) financing activities ............. 3,239 (3,955)
-------- --------
EFFECT OF CURRENCY TRANSLATION ON CASH .................................... (323) (115)
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS ..................................... (1,034) (1,233)
CASH AND CASH EQUIVALENTS, beginning of period ............................ 12,295 12,041
-------- --------
CASH AND CASH EQUIVALENTS, end of period .................................. $ 11,261 $ 10,808
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest .................................................. $ 89 $ 240
======== ========
Cash paid for income taxes, net ......................................... $ 2,048 $ 2,320
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
5
<PAGE> 6
ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND MANAGEMENT OPINION
In the opinion of management, the accompanying unaudited consolidated
balance sheets and statements of operations and cash flows contain all
adjustments, consisting only of normal recurring items, necessary to present
fairly the financial position of Advanced Energy Industries, Inc., a Delaware
corporation, and its wholly owned subsidiaries (the "Company") at September 30,
1999 and December 31, 1998, the results of the Company's operations for the
three- and nine-month periods ended September 30, 1999 and 1998, and the results
of the Company's cash flows for the nine-month periods ended September 30, 1999
and 1998.
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles. The financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
(2) ACQUISITIONS
RF Power Products-- On October 8, 1998, RF Power Products, Inc. ("RFPP"), a
New Jersey-based designer and manufacturer of radio frequency power systems,
matching networks and peripheral products primarily for original equipment
manufacturers in the semiconductor capital equipment, commercial coating, flat
panel display and analytical instrumentation markets, was merged with and into a
wholly owned subsidiary of the Company. The Company issued approximately 4
million shares of its common stock to the former shareholders of RFPP. Each
share of RFPP common stock was exchanged for 0.32857 of one share of the
Company's common stock. In addition, outstanding RFPP stock options were
converted at the same exchange factor into options to purchase in the aggregate
approximately 148,000 shares of the Company's common stock on the same terms and
conditions as the prior RFPP options at exercise prices adjusted based upon the
exchange factor.
The merger constituted a tax-free reorganization and has been accounted for
as a pooling of interests under Accounting Principles Board Opinion No. 16.
Accordingly, all prior period consolidated financial statements presented have
been restated to include the combined balance sheet, statements of operations
and cash flows of RFPP as though it had always been part of the Company. RFPP's
year-end was November 30, and therefore, the combined statement of operations
for the first nine months of 1998 includes RFPP's results for the three and
nine-month periods ended August 31, 1998, and the combined statement of cash
flows for the first nine months of 1998 includes RFPP's cash flows for the
nine-month period ending August 31, 1998.
In connection with the merger, the Company recorded in the fourth quarter of
1998 a charge to operating expenses of $2,742,000 for direct merger-related
costs. There were no transactions between the Company and RFPP prior to the
combination, and immaterial adjustments were recorded to conform RFPP's
accounting policies to those of the Company. Certain reclassifications were made
to conform the RFPP prior period financial statements to the Company's
presentations. On April 5, 1999, the name of RF Power Products, Inc. was changed
to Advanced Energy Voorhees, Inc.
FST-- Effective September 3, 1998, the Company acquired substantially all of
the assets of Fourth State Technology, Inc. ("FST"), a privately held,
Texas-based designer and manufacturer of process controls used to monitor and
analyze data in the RF process. The purchase price consisted of $2.5 million in
cash,
6
<PAGE> 7
assumption of a $113,000 liability, and an earn-out provision which is based on
profits over the three-year period after the effective date of the acquisition.
Approximately $2.6 million of the purchase price was allocated to intangible
assets. The results of operations of FST are included within the accompanying
consolidated financial statements from the date of acquisition.
Tower-- Effective August 15, 1997, the Company acquired all of the
outstanding stock of Tower Electronics, Inc. ("Tower"), a Minnesota-based
designer and manufacturer of custom, high-performance switchmode power supplies
used principally in the telecommunications, medical and non-impact printing
industries. The purchase price consisted of $14.5 million in cash and a $1.5
million non-interest-bearing promissory note issued to the seller (the "Note"),
which was paid in full during August 1998. Total consideration, including
applicable imputed interest on the Note, equaled $15,889,000. The acquisition
resulted in a one-time charge of $3,080,000 for the write off of in-process
research and development costs acquired as a result of the transaction.
Acquisition costs totaled approximately $209,000.
(3) ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Domestic $ 20,434 $ 8,295
Foreign 16,769 7,128
Allowance for doubtful accounts (555) (582)
-------- --------
Trade accounts receivable $ 36,648 $ 14,841
Related parties -- 221
Other 528 542
-------- --------
Total accounts receivable $ 37,176 $ 15,604
======== ========
</TABLE>
(4) INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Parts and raw materials $14,249 $13,212
Work in process 3,338 1,934
Finished goods 5,878 6,266
------- -------
Total inventories $23,465 $21,412
======= =======
</TABLE>
7
<PAGE> 8
(5) STOCKHOLDERS' EQUITY
Stockholders' equity consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PAR VALUE)
<S> <C> <C>
Common stock, $0.001 par value, 40,000 and 30,000 shares
authorized; 27,089 and 26,725 shares issued and
outstanding at September 30, 1999 and December 31,
1998, respectively $ 27 $ 27
Additional paid-in capital 63,341 60,381
Retained earnings 37,978 29,139
Accumulated other comprehensive loss (737) (414)
--------- ---------
Total stockholders' equity $ 100,609 $ 89,133
========= =========
</TABLE>
(6) ACCOUNTING STANDARDS
Comprehensive Income (Loss) -- In June 1997, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income,"
which establishes rules for the reporting of comprehensive income (loss) and its
components. Comprehensive income (loss) for the Company consists of net income
(loss) and foreign currency translation adjustments as presented below. The
adoption of SFAS No. 130 in fiscal 1998 had no impact on total stockholders'
equity. Prior year financial statements have been reclassified to conform to the
SFAS No. 130 requirements.
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
----------------- -----------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Net income (loss), as reported $ 8,839 $(5,731)
Adjustment to arrive at comprehensive net income:
Cumulative translation adjustment (323) (115)
------- -------
Comprehensive net income (loss) $ 8,516 $(5,846)
======= =======
</TABLE>
Segment Reporting -- In June 1997, the FASB issued SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information," which requires a
public business enterprise to report financial and descriptive information about
its reportable operating segments. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision-maker in deciding how to
allocate resources and in assessing performance. SFAS No. 131 was effective for
the Company beginning fiscal 1998. Management operates and manages its business
of supplying power conversion and control systems as one operating segment, as
their products have similar economic characteristics and production processes.
Derivative Hedging Activities -- In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments and
for hedging activity. SFAS No. 133, as amended by SFAS No. 137 in June 1999, is
effective for the Company for all periods in fiscal year 2001. SFAS No. 133
requires all derivatives to be recorded on the balance sheet as either an asset
or liability and measured at their fair value. Changes in the derivative's fair
value will be recognized currently in earnings unless specific hedging
accounting criteria are met. SFAS No. 133 also establishes uniform hedge
accounting criteria for all derivatives. The Company has not yet evaluated the
impact that the adoption of SFAS No. 133 will have on the financial statements.
(7) SUBSEQUENT EVENTS
Purchase of a majority ownership in Litmas Corporation. - As of September
30, 1999, the Company owned a 36% ownership in the outstanding preferred and
common stock of Litmas Corporation ("Litmas"),
8
<PAGE> 9
a North Carolina-based manufacturer of plasma abatement systems and high-density
plasma sources for the semiconductor capital equipment industry. The Company
paid $1,000,000 for this 36% ownership interest which has a remaining book value
of $200,000 at September 30, 1999. On October 1, 1999, the Company acquired an
additional 20% ownership in Litmas for $175,000 in cash and 12,791 shares of the
Company's common stock, to bring the Company's total ownership of Litmas to 56%.
Litmas will now be a consolidated majority owned subsidiary of the Company.
Public Offerings of Common Stock and Convertible Subordinated Notes -- On
November 10, 1999, the Company completed a public offering of one million shares
of its common stock at $39 per share. In that offering, six of the Company's
stockholders also sold an aggregate of two million shares of the Company's
common stock at $39 per share. The selling stockholders have granted the
underwriters of that offering an over-allotment option to purchase up to an
additional four hundred fifty thousand shares of common stock at $39 per share.
The three million four hundred fifty thousand shares subject to the offering,
including the over-allotment option, were registered with the Securities and
Exchange Commission on a registration statement on Form S-3, which was declared
effective on November 4, 1999. Also on November 10, 1999, the Company completed
a public offering of $120 million principal amount of 5 1/4% convertible
subordinated notes due 2006. The Company has granted the underwriters of that
offering an over-allotment option to purchase up to an additional $15 million
principal amount of such convertible notes. $115 million principal amount of
notes, including the $15 million principal amount of convertible notes subject
to the over-allotment option, was registered with the Securities and Exchange
Commission on a registration statement on Form S-3, which was declared effective
on November 4, 1999. An additional $20 million principal amount of convertible
notes was registered on a separate registration statement on Form S-3, which
became effective under the rules of the Securities and Exchange Commission on
November 5, 1999.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
The following discussion may contain, in addition to historical information,
forward-looking statements, within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. For example, statements relating to the Company's beliefs,
expectations and plans are forward-looking statements, as are statements that
certain actions, conditions or circumstances will continue or occur.
Forward-looking statements involve risks and uncertainties. As a result, the
Company's actual results may differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences or prove any forward-looking statements, by hindsight, to be overly
optimistic or unachievable, include, but are not limited to the following: the
significant fluctuations in the Company's quarterly operating results, the
volatility of the semiconductor and semiconductor capital equipment industries,
timing and success of integration of recent and potential future acquisitions,
supply constraints and technological changes. For a discussion of these and
other factors that may impact the Company's realization of its forward-looking
statements, see the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, Part I "Cautionary Statements - Risk Factors" and the other
documents and information filed by the Company with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Sales
The Company sells power conversion and control systems primarily to the
semiconductor capital equipment, data storage and industrial markets in the
United States, to the flat panel display and data storage markets in Japan, and
to the data storage and industrial markets in Europe. The Company also sells
spare parts and repair services worldwide through its global support
organization.
Sales for the third quarter of 1999 were $51.1 million, an increase of 95%
from third quarter of 1998 sales of $26.3 million. The increase was attributable
primarily to semiconductor capital equipment customers in the United States,
including the Company's largest customer in that market, and to a lesser extent
to increased sales to flat panel display manufacturers in Japan and
entertainment data storage manufacturers in Europe.
From the third quarter of 1998 to the third quarter of 1999, sales to the
data storage equipment market increased moderately. Within that industry, sales
to the entertainment customer group increased significantly, offsetting a
decrease in sales to the computer
10
<PAGE> 11
customer group. Sales to the flat panel display market, predominantly in Japan,
were significantly higher than the comparable period last year, while sales to
industrial markets were relatively flat.
Sales for the third quarter of 1999 were up 23% from second quarter of 1999
sales of $41.5 million. This increase was due primarily to higher sales to
semiconductor capital equipment manufacturers in the United States, while the
other markets the Company serves also showed increases.
The following tables summarize net sales and percentages of net sales by
customer type for the Company for the three-month periods ended September 30,
1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1999 1998
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
Semiconductor capital equipment $32,383 $10,760
Data storage 5,878 4,982
Flat panel display 2,759 980
Industrial 7,241 7,354
Customer service technical support 2,881 2,216
------- -------
$51,142 $26,292
======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1999 1998
--------- ----------
<S> <C> <C>
Semiconductor capital equipment 63.3% 40.9%
Data storage 11.5 19.0
Flat panel display 5.4 3.7
Industrial 14.2 28.0
Customer service technical support 5.6 8.4
------ ------
100.0% 100.0%
====== ======
</TABLE>
The following tables summarize net sales and percentages of net sales by
geographic region for the Company for the three-month periods ended September
30, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1999 1998
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
United States and Canada $37,135 $17,486
Europe 8,094 7,004
Asia Pacific 5,835 1,664
Rest of world 78 138
------- -------
$51,142 $26,292
======= =======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1999 1998
--------- --------
<S> <C> <C>
United States and Canada 72.6% 66.5%
Europe 15.8 26.6
Asia Pacific 11.4 6.4
Rest of world 0.2 0.5
----- -----
100.0% 100.0%
===== =====
</TABLE>
11
<PAGE> 12
Gross Margin
The Company's gross margin for the third quarter of 1999 was 44.1%, up from
30.3% in the third quarter of 1998. The improvement in gross margin from the
third quarter of 1998 to the third quarter of 1999 was due to improved material
costs and more favorable absorption of manufacturing overhead from the higher
sales base. The Company's gross margin for the third quarter of 1999 was
unchanged from 44.1% in the second quarter of 1999.
Research and Development
The Company's research and development expenses are incurred researching new
technologies, developing new products and improving existing product designs.
Research and development expenses for the third quarter of 1999 were $6.9
million, up from $5.7 million in the comparable period in 1998, representing an
increase of 21%. The increase was attributable to higher spending for payroll,
materials and supplies and purchased services. As a percentage of sales,
research and development expenses decreased to 13.6% in the third quarter of
1999 from 21.8% in the third quarter of 1998, reflecting the higher sales base
in 1999.
The Company believes continued research and development investment for
development of new products is critical to the Company's ability to serve new
and existing markets. Since the Company's inception, research and development
costs generally have been internally funded and all have been expensed as
incurred.
Sales and Marketing
Sales and marketing expenses support domestic and international sales and
marketing activities which include personnel, trade shows, advertising, and
other marketing activities. Sales and marketing expenses for the third quarter
of 1999 were $4.2 million, up from $3.3 million in the third quarter of 1998,
representing an increase of 29%. The increase was attributable to higher
spending for payroll, materials and supplies and travel. As a percentage of
sales, sales and marketing expenses decreased to 8.2% in the third quarter of
1999 from 12.4% in the third quarter of 1998, reflecting the higher sales base
in 1999.
General and Administrative
General and administrative expenses support the worldwide financial,
administrative, information systems and human resources functions of the
Company. General and administrative expenses for the third quarter of 1999 were
$3.7 million, up from $2.4 million in the third quarter of 1998, representing an
increase of 58%. The increase was attributable to higher payroll, purchased
services and travel expenses. As a percentage of sales, general and
administrative expenses decreased to 7.3% in the third quarter of 1999 from 8.9%
in the third quarter of 1998, reflecting the higher sales base in 1999.
12
<PAGE> 13
One-time Charges
In August 1998, the Company announced a restructuring plan to respond to the
downturn in the semiconductor capital equipment market. The plan included a
reduction of workforce of 128 people, the closure of one facility in the
Company's Fort Collins, Colorado campus, and the abandonment of plans to
construct a new manufacturing facility in Fort Collins. Other reductions in
workforce at the Voorhees facility were effected during 1998. The Company took a
one-time charge of $1.0 million for the restructuring in the third quarter of
1998. There were no one-time charges in the third quarter of 1999.
Other Income (Expense)
Other income (expense) consists primarily of interest income and expense,
foreign exchange gains and losses, and other non-operating expenses. Other
income for the third quarter of 1999 was $1.1 million, attributable primarily to
$1.0 million of foreign currency gain. In the comparable period in 1998, other
expense was $214,000.
The Company has experienced fluctuations in foreign currency exchange rates,
particularly against the Japanese yen. Beginning in 1997, the Company entered
into various forward foreign exchange contracts as a hedge against currency
fluctuations in the yen. The Company will continue to evaluate various methods
to minimize the effects of currency fluctuations.
Provision for Income Taxes
The Company had an income tax provision of $3.3 million for the third
quarter of 1999, compared to an income tax benefit of $1.1 million for the third
quarter of 1998. The estimated effective tax rate for the third quarter of 1999
was 37.4%, compared to an effective income tax benefit rate of 23.8% for the
third quarter of 1998. The higher effective consolidated tax rate for the third
quarter of 1999 was attributed to losses recorded at the Company's Advanced
Energy Voorhees, Inc. and Advanced Energy Japan K.K. subsidiaries in the third
quarter of 1998 for which minimal tax benefit was recorded, and a greater share
of the Company's taxable income derived from countries with higher effective tax
rates. The Company adjusts its provision rates for income taxes periodically,
based upon the anticipated tax status of all of its foreign and domestic
entities.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Sales
Sales for the first nine months of 1999 were $125.4 million, an increase of
23% from sales of $102.1 million in the first nine months of 1998. The increase
was attributable to an increase in sales to semiconductor capital equipment
customers, which was partially offset by decreases in sales to customers in
industrial markets.
13
<PAGE> 14
The following tables summarize net sales and percentages of net sales by
customer type for the Company for the nine-month periods ended September 30,
1999 and 1998:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Semiconductor capital equipment $ 76,237 $ 51,580
Data storage 14,918 14,142
Flat panel display 6,318 4,749
Industrial 20,986 26,235
Customer service technical support 6,926 5,436
-------- --------
$125,385 $102,142
======== ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
-------- --------
<S> <C> <C>
Semiconductor capital equipment 60.8% 50.5%
Data storage 11.9 13.9
Flat panel display 5.0 4.6
Industrial 16.8 25.7
Customer service technical support 5.5 5.3
----- -----
100.0% 100.0%
===== =====
</TABLE>
The following tables summarize net sales and percentages of net sales by
geographic region for the Company for the nine-month periods ended September 30,
1999 and 1998:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
United States and Canada $ 90,588 $ 74,567
Europe 20,065 19,839
Asia Pacific 14,292 7,378
Rest of world 440 358
-------- --------
$125,385 $102,142
======== ========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998
-------- --------
<S> <C> <C>
United States and Canada 72.2% 73.0%
Europe 16.0 19.4
Asia Pacific 11.4 7.2
Rest of world 0.4 0.4
----- -----
100.0% 100.0%
===== =====
</TABLE>
Gross Margin
The Company's gross margin for the first nine months of 1999 was 43.0%, up
from 29.5% in the comparable period in 1998. The improvement in gross margin was
primarily a result of the Company's efforts to reduce material costs and a more
favorable absorption of manufacturing overhead costs from the higher sales base.
Research and Development
Research and development expenses for the first nine months of 1999 were
$19.5 million, up from $18.0 million in the comparable period in 1998,
representing an increase of 9%. This increase was attributable to higher
spending for materials and supplies, payroll and travel. As a percentage of
sales, research and development expenses
14
<PAGE> 15
decreased to 15.6% in the first nine months of 1999 from 17.6% in the comparable
period of 1998.
Sales and Marketing
Sales and marketing expenses for the first nine months of 1999 were $11.5
million, up from $10.3 million in the comparable period in 1998, representing an
increase of 11%. This increase was attributable to higher spending for payroll,
materials and supplies and travel. As a percentage of sales, sales and marketing
expenses decreased to 9.1% in the first nine months of 1999 from 10.1% in the
comparable period of 1998.
General and Administrative
General and administrative expenses for the first nine months of 1999 were
$9.7 million, up from $8.0 million in the comparable period in 1998,
representing an increase of 21%. This increase was attributable to higher
payroll, travel, and the effect of goodwill amortization of the acquisition of
assets of FST, which were acquired in September 1998. As a percentage of sales,
general and administrative expenses decreased slightly to 7.7% in the first nine
months of 1999 from 7.8% in the comparable period of 1998.
One-time Charges
The Company took a one-time charge of $1.0 million for the restructuring in
the first nine months of 1998. These charges related to a reduction in workforce
of 128 people and the closure of one facility in the Company's Fort Collins,
Colorado campus, and the abandonment of plans to construct a new manufacturing
facility in Fort Collins.
Other Income
Other income for the first nine months of 1999 was $1.1 million,
attributable primarily to $0.9 million of foreign currency gain. In the
comparable period in 1998, other income was $13,000.
Provision for Income Taxes
The income tax provision was $5.6 million for the first nine months of 1999,
compared to an income tax benefit of $1.4 million for the first nine months of
1998. The estimated effective tax rate was 38.6% for the first nine months of
1999 compared to an effective income tax benefit rate of 19.9% for the first
nine months of 1998. The higher effective consolidated tax rate for the first
nine months of 1999 was attributed to losses recorded at the Company's Advanced
Energy Voorhees, Inc. and Advanced Energy Japan K.K. subsidiaries during the
first nine months of 1998 for which minimal tax benefit was recorded and a
greater share of the Company's taxable income derived from countries with higher
effective tax rates.
15
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations, acquired
equipment and met its working capital requirements through borrowings under its
revolving line of credit, long-term loans secured by property and equipment,
cash flow from operations and proceeds from equity offerings.
Operating activities provided cash of $1.3 million in the first nine months
of 1999, primarily as a result of net income, depreciation and amortization,
increases in accounts payable and increased accruals for payroll, employee
benefits and income taxes, offset by increases in accounts receivable and
inventories. In the comparable period in 1998, operating activities provided
cash of $9.4 million, primarily as a result of depreciation and amortization and
decreases in accounts receivable and inventories, offset by the net loss,
decreases in accounts payable and decreased accruals for payroll, employee
benefits and income taxes. As previously mentioned, sales in the third quarter
of 1999 increased 95% over the same quarter in 1998, resulting in a much higher
level of accounts receivable as of September 30, 1999, which had the effect of
substantially reducing operating cash flow during the nine-month period ended
September 30, 1999. The Company expects future receivable and inventory balances
to fluctuate with net sales. The Company provides just-in-time deliveries to
certain of its customers and may be required, under certain contracts or
agreements, to maintain minimum levels of inventory to satisfy its customers'
delivery requirements. Any increase of such inventory levels will require the
use of cash to finance the inventory.
Investing activities used cash of $5.3 million in the first nine months of
1999, and included the purchase of property and equipment for $4.2 million and
$1.1 million of net purchases of marketable securities. Investing activities
used cash of $6.6 million in the first nine months of 1998, and included the
purchase of property and equipment for $4.6 million, the acquisition of assets
of Fourth State Technology, Inc. for $2.5 million and the purchase of a stock
investment in a start-up company for $1.0 million, offset by net sales of $1.5
million of marketable securities.
Financing activities in the first nine months of 1999 provided cash of $3.2
million and consisted primarily of proceeds from the exercise of employee stock
options and sale of common stock through the Company's employee stock purchase
plan ("ESPP") of $3.0 million and net increases in notes payable and capital
lease obligations of $279,000. Financing activities in the comparable period in
1998 used cash of $4.0 million and consisted primarily of the net payment of
notes payable and capital lease obligations of $4.4 million, partially offset by
proceeds from the exercise of employee stock options and sale of common stock
through the Company's ESPP of $0.4 million.
The Company plans to spend approximately $6.0 million through the remainder
of 1999 and first nine months of 2000 for the acquisition of manufacturing and
test equipment and furnishings. Further, the Company continues to implement its
management systems software, including the replacement of existing systems in
its
16
<PAGE> 17
domestic and foreign locations. The Company expects to continue to implement its
management system software through the year 2000.
As of September 30, 1999, the Company had working capital of $74.1 million.
The Company's sources of available funds as of September 30, 1999 consisted of
$11.3 million of cash and cash equivalents, $17.3 million of marketable
securities, and a credit facility consisting of a $30.0 million revolving line
of credit, of which none was outstanding as of September 30, 1999. Advances
under the revolving line of credit bear interest at either the prime rate (8.25%
at October 31, 1999) minus 1.25% or the LIBOR 360-day rate (6.2500% at October
31, 1999) plus 150 basis points, at the Company's option. All advances under the
revolving line of credit will be due and payable on December 7, 2000.
Indebtedness of up to $10 million may be converted into a 3-year term loan prior
to that date.
The Company believes that its cash and cash equivalents, marketable
securities, cash flow from operations and available borrowings, including the
recent public offerings of common stock and convertible subordinated notes, will
be sufficient to meet the Company's working capital needs for the next twelve
months. From time to time, the Company may raise capital through additional
equity or debt financing in order to take advantage of favorable market
conditions or to fund material capital equipment purchases or desired expansion.
The Company has considered, and will continue to consider, possible acquisitions
of businesses or entities which the Company believes could create synergies or
opportunities for the Company. On October 1, 1999, the Company acquired a
controlling interest in Litmas Corporation, in which it previously owned a
minority interest. No agreement or understanding with respect to any other
future acquisition has been reached. If the Company were to undertake one or
more acquisitions, the Company may require additional funds, which may be
provided by the sale of equity or debt securities. There can be no assurance
that additional funding will be available when required or that it will be
available on terms acceptable to the Company.
YEAR 2000 PROGRAM
The Year 2000 problem is the result of computer programs that rely on
two-digit date codes, instead of four-digit date codes, to indicate the year.
These computer programs, which are unable to interpret the date code "00" as the
year 2000, may not be able to perform computations and decision-making functions
after December 31, 1999 and could cause computer systems to malfunction.
The Company has developed a multi-phase program for Year 2000 information
systems compliance that consists of the following:
o Assessment of the Company's corporate systems and operations that
could be affected by the Year 2000 problem;
o Remediation of non-compliant systems and components; and
17
<PAGE> 18
o Testing of systems and components following remediation.
The Company has focused its Year 2000 review on three areas:
o information technology (IT) system applications;
o non-IT systems, including engineering and manufacturing
applications; and
o relationships with third parties.
The Company completed assessment of its IT and non-IT systems at all of its
facilities. The Company believes that its enterprise-wide software system, which
is installed at the Fort Collins facility and certain other facilities, is Year
2000 compliant. This belief is based significantly on discussions with and
representations by the vendor of such software. The Company has been, and will
continue to be, in contact with the vendor to obtain any additional revisions or
upgrades issued by the vendor to ensure that such enterprise-wide software
remains Year 2000 compliant. The Company also has conducted its own tests on the
enterprise-wide software to verify the vendor's representations.
Following completion of the assessment phase, the Year 2000 team identified
those non-compliant systems that it considers "mission critical." Remediation
and testing of the mission critical IT systems have been completed. During the
third quarter of 1999, the Company completed remediation and testing of:
o mission critical IT systems at the Fridley facility;
o mission critical non-IT systems at all of its facilities; and
o non-compliant systems that are not mission critical.
The Company is examining its relationships with third parties whose Year
2000 compliance could have a material effect on its operations. The Company
considers third party suppliers and customers to pose its greatest Year 2000
risk because the failure of these persons to become Year 2000 compliant in a
timely manner, if at all, could result in the Company's inability to obtain
components in a timely manner, reductions in the quality of components obtained,
reductions, delays or cancellations of customer orders or delays in payments by
customers for products shipped. In addition, conversions by third parties to
become Year 2000 compliant might not be compatible with the Company's systems.
Any or all of these events could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company has circulated questionnaires to, and has actively solicited
feedback from, its significant suppliers and customers with respect to their
Year 2000 compliance programs and status. Based on the results of these efforts,
the Company believes that its principal customers and all of its key suppliers
are either Year 2000 compliant or are implementing plans to become Year 2000
compliant in a timely manner. The Company continues to pursue additional
information about its suppliers' and customers' Year 2000 readiness in order to
assess the risks involved in relying on them.
18
<PAGE> 19
In what the Company believes to be its most reasonably likely worst case
Year 2000 scenario, the Company would be unable to obtain electronic components
from its suppliers because of their failure to become Year 2000 compliant. The
Company may be unable to manufacture components internally or redesign its
systems to accommodate different components. The Company continues to review its
options for contingency plans to limit the potential impact of any Year 2000
failures. In particular, the Company is reviewing the capabilities of its
current and potential component suppliers to ensure that the components most
critical to production of the Company's systems are not sole-sourced. See the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, Part
I "Cautionary Statements - Risk Factors--Supply Constraints and Dependence on
Sole and Limited Source Suppliers."
Although the Company is continuing to assess Year 2000 costs, to date the
Company has not incurred material costs related to its Year 2000 program, and
the Company does not expect the costs associated with its Year 2000 projects to
have a material effect on its financial results. The Company expects to spend
less than five percent of its total annual IT budget on Year 2000 costs. The
Company has not identified any IT projects that have been deferred due to its
Year 2000 efforts. The Company's current estimates of the impact of the Year
2000 problem on its operations and financial results do not include costs or
time that may be incurred as a result of any suppliers' or customers' failures
to become Year 2000 compliant on a timely basis. In addition, we cannot predict
whether any litigation will be brought against the Company as a result of any
supplier's or customer's failure to become Year 2000 compliant on a timely basis
or claiming that the Company's products are not Year 2000 compliant or
otherwise. The Company believes that its products are Year 2000 ready.
The foregoing beliefs and expectations are forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act, as described under the caption "Special Note on Forward-Looking Statements"
above. Our forward-looking statements regarding our Year 2000 program and
expectations are based in large part on certain statements and representations
made by persons outside the Company, any of which statements or representations
ultimately could prove to be inaccurate.
19
<PAGE> 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
INTEREST RATE RISK
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio and long-term debt obligations.
The Company generally does not use derivative financial instruments in
connection with its investment portfolio. The Company generally places its
investments with high credit quality issuers, by policy is averse to principal
loss and seeks to protect and preserve its invested funds by limiting default
risk, market risk and reinvestment risk. As of September 30, 1999, the Company's
investments consisted of equities, municipal bonds and notes, and mutual funds.
The Company has invested in a start-up company and may in the future make
additional investments in start-up companies that develop products which the
Company believes may provide future benefits. The current start-up investment
and any future start-up investments will be subject to all of the risks inherent
in investing in companies that are not established.
The Company's interest expense is sensitive to changes in the general level
of U.S. interest rates with respect to its bank facility of which no balance was
outstanding as of September 30, 1999. The Company's other debt is fixed rate in
nature and mitigates the impact of fluctuations in interest rates. The fair
value of the Company's debt approximates the carrying amount at September 30,
1999. Management believes the potential effects of near-term changes in interest
rates on the Company's debt is not material.
FOREIGN CURRENCY EXCHANGE RATE RISK
The Company transacts business in various foreign countries. Its primary
foreign currency cash flows are generated in countries in Asia and Europe.
Beginning in 1997, the Company entered into various forward foreign exchange
contracts as a hedge against currency fluctuations in the yen. The Company will
continue to evaluate various methods to minimize the effects of currency
fluctuations.
Several European countries have adopted, and others are expected to adopt, a
Single European Currency (the "euro") as of January 1, 1999 with a transition
period continuing through January 1, 2002. As of November 1, 1999, eleven of the
fifteen member countries of the European Union (the "participating countries")
established fixed conversion rates between their existing sovereign currencies
and the euro. For three years after the introduction of the euro, the
participating countries can perform financial transactions in either the euro or
their original local currencies. This will result in a fixed exchange rate among
the participating countries, whereas the euro (and the participating countries'
currencies in tandem) will continue to float freely against the U.S. dollar and
other currencies of non-participating countries. While the Company does not
expect the introduction of the euro currency to have a significant impact on the
Company's revenues or results of operations, the Company is unable to determine
what effects, if any, the currency change in Europe will have on competition and
competitive pricing in the affected regions.
20
<PAGE> 21
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any material legal proceedings that are
expected to have a material effect on its business, financial conditions,
results of operations, assets or property.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.1 Agreement and Plan of Reorganization, dated as of June 1,
1998, by and among the Company, Warpspeed, Inc., a wholly owned
subsidiary of the Company, and RF Power Products, Inc.(1)
3.1 The Company's Restated Certificate of Incorporation, as
amended(10)
3.2 The Company's By-laws(2)
4.1 Form of Specimen Certificate for the Company's Common
Stock(2)
4.2 Indenture dated November 1, 1999 between State Street Bank and
Trust Company of California, N.A., as trustee, and the Company
(including form of 5 1/4% Convertible Subordinated Note due
2006)(3)
4.3 The Company hereby agrees to furnish to the SEC, upon
request, a copy of the instruments which define the rights of
holders of long-term debt of the Company. None of such
instruments not included as exhibits herein represents long-term
debt in excess of 10% of the consolidated total assets of the
Company.
21
<PAGE> 22
10.1 Comprehensive Supplier Agreement, dated May 18, 1998, between
Applied Materials Inc. and the Company(1)+
10.2 Purchase Order and Sales Agreement, dated July 1, 1993,
amended September 16, 1995 between Lam Research Corporation and
the Company(2)+
10.3 Purchase Agreement, dated November 1, 1995, between Eaton
Corporation and the Company(4)+
10.4 Loan and Security Agreement, dated August 15, 1997, among
Silicon Valley Bank, Bank of Hawaii and the Company(5)
10.5 Loan Agreement dated December 8, 1997, by and among Silicon
Valley Bank, as Servicing Agent and a Bank, and Bank of Hawaii,
as a Bank, and the Company, as borrower(6)
10.6 Lease, dated June 12, 1984, amended June 11, 1992, between
Prospect Park East Partnership and the Company for property in
Fort Collins, Colorado(2)
10.7 Lease, dated March 14, 1994, as amended, between Sharp Point
Properties, L.L.C., and the Company for property in Fort Collins,
Colorado(2)
10.8 Lease, dated May 19, 1995, between Sharp Point Properties,
L.L.C. and the Company for a building in Fort Collins,
Colorado(2)
10.9 Lease Agreement, dated March 18, 1996, and amendments dated
June 21, 1996 and August 30, 1996, between RF Power Products,
Inc., and Laurel Oak Road, L.L.C. for property in Voorhees, New
Jersey(7)
10.10 Form of Indemnification Agreement(2)
10.11 Employment Agreement, dated June 1, 1998, between RF Power
Products, Inc., and Joseph Stach(9)
10.12 1995 Stock Option Plan, as amended and restated(9)*
10.13 1995 Non-Employee Directors' Stock Option Plan(9)*
10.14 License Agreement, dated May 13, 1992 between RF Power
Products and Plasma-Therm, Inc.(8)
10.15 Lease Agreement dated March 18, 1996 and amendments dated June
21, 1996 and August 30, 1996 between RF Power Products, Inc. and
Laurel Oak Road, L.L.C. for office, manufacturing and warehouse
space at 1007 Laurel Oak Road, Voorhees, New Jersey(7)
10.16 Direct Loan Agreement dated December 20, 1996 between RF Power
Products, Inc. and the New Jersey Economic Development
Authority(7)
10.17 Lease, dated April 15, 1998, between Cross Park Investors,
Ltd., and the Company for property in Austin, Texas(1)
10.18 Lease, dated April 15, 1998, between Cameron Technology
Investors, Ltd., and the Company for property in Austin, Texas(1)
27.1 Financial Data Schedule for the nine-month period ended
September 30, 1999.
(b) No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 1999.
- ---------------
(1) Incorporated by reference to the Company's quarterly Report on Form
10-Q for the quarter ended June 30, 1998 (File No. 0-26966), filed
August 7, 1998.
22
<PAGE> 23
(2) Incorporated by reference to the Company's Registration Statement
on Form S-1 (File No. 33-97188), filed September 20, 1995, as
amended.
(3) Incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-87455), filed September 21, 1999, as
amended.
(4) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (File No. 0-26966), filed
March 28, 1996, as amended.
(5) Incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-34039), filed August 21, 1997, as
amended.
(6) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (File No. 0-26966), filed
March 24, 1998.
(7) Incorporated by reference to RF Power Products' Annual Report on
Form 10-K for the fiscal year ended November 30, 1996 (File No.
0-20229), filed February 25, 1997.
(8) Incorporated by reference to RF Power Products' Registration
Statement on Form 10 (File No. 0-020229), filed May 19, 1992 as
amended.
(9) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1998 (File No. 0-26966), filed
March 24, 1999.
(10) Incorporated by reference to the Company's quarterly Report on Form
10-Q for the quarter ended June 30, 1999 (File No. 0-26966), filed
July 28, 1999.
* Compensation Plan
+ Confidential treatment has been granted for portions of this
agreement.
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVANCED ENERGY INDUSTRIES, INC.
/s/ Richard P. Beck
--------------------------------------
Richard P. Beck
Senior Vice President, Chief November 12, 1999
Financial Officer, Assistant Secretary
and Director (Principal Financial Officer
and Principal Accounting Officer)
24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization, dated as of
June 1, 1998, by and among the Company, Warpspeed,
Inc., a wholly owned subsidiary of the Company, and
RF Power Products, Inc.(1)
3.1 The Company's Restated Certificate of Incorporation,
as amended(10)
3.2 The Company's By-laws(2)
4.1 Form of Specimen Certificate for the Company's
Common Stock(2)
4.2 Indenture dated November 1, 1999 between State
Street Bank and Trust Company of California, N.A.,
as trustee, and the Company (including form of
5 1/4% Convertible Subordinated Note due 2006)(3)
4.3 The Company hereby agrees to furnish to the SEC,
upon request, a copy of the instruments which define
the rights of holders of long-term debt of the
Company. None of such instruments not included as
exhibits herein represents long-term debt in excess
of 10% of the consolidated total assets of the
Company.
10.1 Comprehensive Supplier Agreement, dated May 18,
1998, between Applied Materials Inc. and the
Company(1)+
10.2 Purchase Order and Sales Agreement, dated July 1,
1993, amended September 16, 1995 between Lam
Research Corporation and the Company(2)+
10.3 Purchase Agreement, dated November 1, 1995, between
Eaton Corporation and the Company(4)+
10.4 Loan and Security Agreement, dated August 15, 1997,
among Silicon Valley Bank, Bank of Hawaii and the
Company(5)
10.5 Loan Agreement dated December 8, 1997, by and among
Silicon Valley Bank, as Servicing Agent and a Bank,
and Bank of Hawaii, as a Bank, and the Company, as
borrower(6)
10.6 Lease, dated June 12, 1984, amended June 11, 1992,
between Prospect Park East Partnership and the
Company for property in Fort Collins, Colorado(2)
10.7 Lease, dated March 14, 1994, as amended, between
Sharp Point Properties, L.L.C., and the Company for
property in Fort Collins, Colorado(2)
10.8 Lease, dated May 19, 1995, between Sharp Point
Properties, L.L.C. and the Company for a building in
Fort Collins, Colorado(2)
10.9 Lease Agreement, dated March 18, 1996, and
amendments dated June 21, 1996 and August 30, 1996,
between RF Power Products, Inc., and Laurel Oak
Road, L.L.C. for property in Voorhees, New Jersey(7)
10.10 Form of Indemnification Agreement(2)
10.11 Employment Agreement, dated June 1, 1998, between RF
Power Products, Inc., and Joseph Stach(9)
10.12 1995 Stock Option Plan, as amended and restated(9)*
10.13 1995 Non-Employee Directors' Stock Option Plan(9)*
10.14 License Agreement, dated May 13, 1992 between RF
Power Products and Plasma-Therm, Inc.(8)
10.15 Lease Agreement dated March 18, 1996 and amendments
dated June 21, 1996 and August 30, 1996 between RF
Power Products, Inc. and Laurel Oak Road, L.L.C. for
office, manufacturing and warehouse space at 1007
Laurel Oak Road, Voorhees, New Jersey(7)
10.16 Direct Loan Agreement dated December 20, 1996
between RF Power Products, Inc. and the New Jersey
Economic Development Authority(7)
10.17 Lease, dated April 15, 1998, between Cross Park
Investors, Ltd., and the Company for property in
Austin, Texas(1)
</TABLE>
<PAGE> 26
<TABLE>
<S> <C>
10.18 Lease, dated April 15, 1998, between Cameron
Technology Investors, Ltd., and the Company for
property in Austin, Texas(1)
27.1 Financial Data Schedule for the nine-month period
ended September 30, 1999.
</TABLE>
- ---------------
(1) Incorporated by reference to the Company's quarterly Report on Form
10-Q for the quarter ended June 30, 1998 (File No. 0-26966), filed
August 7, 1998.
(2) Incorporated by reference to the Company's Registration Statement
on Form S-1 (File No. 33-97188), filed September 20, 1995, as
amended.
(3) Incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-87455), filed September 21, 1999, as
amended.
(4) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 (File No. 0-26966), filed
March 28, 1996, as amended.
(5) Incorporated by reference to the Company's Registration Statement
on Form S-3 (File No. 333-34039), filed August 21, 1997, as
amended.
(6) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (File No. 0-26966), filed
March 24, 1998.
(7) Incorporated by reference to RF Power Products' Annual Report on
Form 10-K for the fiscal year ended November 30, 1996 (File No.
0-20229), filed February 25, 1997.
(8) Incorporated by reference to RF Power Products' Registration
Statement on Form 10 (File No. 0-020229), filed May 19, 1992 as
amended.
(9) Incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1998 (File No. 0-26966), filed
March 24, 1999.
(10) Incorporated by reference to the Company's quarterly Report on Form
10-Q for the quarter ended June 30, 1999 (File No. 0-26966), filed
July 28, 1999.
* Compensation Plan
+ Confidential treatment has been granted for portions of this
agreement.
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