Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-37378
686,503 Shares
Advanced Energy Industries, Inc.
Common Stock
This prospectus relates to the public offering, which is not
being underwritten, of up to 686,503 shares of our common stock
by the selling stockholders identified in this prospectus. The
prices at which the stockholders may sell the shares will be
determined by the prevailing market for the shares or in
negotiated transactions. We will not receive any proceeds from
the sale of shares offered under this prospectus.
Our common stock is traded on the Nasdaq National Market
under the symbol "AEIS." The last reported sale price on August 2,
2000 was $43.5625.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS TO
READ ABOUT IMPORTANT FACTORS YOU SHOULD CONSIDER BEFORE
PURCHASING SHARES OF THE COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER
REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is August 3, 2000
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TABLE OF CONTENTS
Page
Advanced Energy Industries, Inc. ................. 3
Risk Factors ..................................... 5
Cautionary Note on Forward-Looking Statements .... 13
Use of Proceeds .................................. 14
Selling Stockholders ............................. 14
Plan of Distribution ............................. 15
Where You Can Find More Information .............. 17
Incorporation by Reference ....................... 17
Legal Matters .................................... 18
Experts .......................................... 18
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We have not authorized any person to make a statement that
differs from what is in this prospectus. If any person does make
a statement that differs from what is in this prospectus, you
should not rely on it. This prospectus is not an offer to sell,
nor is it seeking an offer to buy, these securities in any state
in which the offer or sale is not permitted. The information in
this prospectus is complete and accurate as of its date, but the
information may change after that date.
ADVANCED ENERGY INDUSTRIES, INC.
OVERVIEW
We design, manufacture and support power conversion and
control systems. These systems are important components of
industrial manufacturing equipment that modifies surfaces or
deposits or etches thin film layers on computer chips, CDs, flat
panel displays such as computer screens, DVDs, windows,
eyeglasses, solar panels and other products. Our systems refine,
modify and control the raw electrical power from a utility and
convert it into power that is uniform and predictable. This
allows manufacturing equipment to produce and deposit very thin
films at an even thickness on a mass scale.
The ongoing demand for improvements in the performance,
capacity and speed of computer chips, flat panel displays and
other products drives manufacturers to develop more advanced
technology to produce thinner, more consistent and more precise
layers of film. Thin film production processes enable
manufacturers to control and alter the electrical, magnetic,
optical and mechanical characteristics of materials. Our systems
are used primarily in plasma-based thin film production
processes. Plasma is commonly created by applying enough
electrical force to a gas at reduced pressure to separate
electrons from their parent atoms. Plasma-based process
technology was developed to address the limitations of wet
chemistry and thermal process technologies and to enable new
applications. Plasma-based processes are inherently more
controllable and more accurate for many applications than other
thin film production processes because of the electrical
characteristics of plasma.
We market and sell our systems primarily to large, global
original equipment manufacturers of semiconductor, flat panel
display, data storage and other industrial thin film
manufacturing equipment. We have sold our systems worldwide to
more than 100 OEMs and directly to more than 500 end-users. Our
principal customers include Applied Materials, Balzers, Eaton,
Lam Research, Novellus, Singulus and ULVAC. The semiconductor
capital equipment industry accounted for approximately 59% of our
total sales in 1997, 49% in 1998, 61% in 1999 and 62% in the
first three months of 2000.
We incorporated in Colorado in 1981 and reincorporated in
Delaware in 1995. Our main offices are located at 1625 Sharp
Point Drive, Fort Collins, Colorado 80525, and our telephone
number is (970) 221-4670.
RECENT DEVELOPMENTS
In April 2000, we acquired Noah Holdings, Inc. ("Noah"), a
privately-held manufacturer of solid state temperature control
systems used to control process temperatures during semiconductor
manufacturing. We believe that this acquisition will enable us
to increase our product offerings and provide more value to our
customers.
On July 6, 2000, we entered into an agreement to acquire
Engineering Measurements Company, a publicly-held manufacturer of
electronic and electro-mechanical precision instruments for
measuring and controlling the flow of liquids, steam and gases.
Subject to numerous terms and conditions, we expect that this merger
will be completed in the fourth quarter of 2000.
On July 21, 2000, we entered into an agreement to acquire
Sekidenko, Inc., a privately-held manufacturer of optical fiber
temperature measurement and control solutions for the semiconductor
and related industries. Subject to numerous terms and conditions,
we expect that this merger will be completed in August 2000.
STRATEGY
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We have achieved a market leadership position in the
semiconductor equipment, flat panel display and data storage
industries by applying our large base of expertise in the
interaction between plasma-based processes and power conversion
and control systems to design highly precise, customized power
conversion and control systems that provide a wide range of power
frequencies for plasma-based thin film processes. Our strategy
is to continue to build upon our leadership positions in these
industries while exploring other emerging markets. We believe
our five key growth opportunities are:
EXPANDING LEADERSHIP IN OUR CORE MARKETS. We believe we are
the market share leader in the semiconductor capital equipment,
data storage and flat panel display markets. We plan to continue
to increase our penetration in these three markets by introducing
new products and solutions for our existing customers and
targeting new customers, but our primary focus will continue to
be on the semiconductor capital equipment market. For example,
in the semiconductor capital equipment market we believe that
significant opportunities exist for us to introduce new products
for processes or applications such as:
* etch applications using radio frequency power;
* gas abatement;
* on-line measurement of power characteristics; and
* copper electroplating.
PROVIDING INTEGRATED SOLUTIONS FOR CUSTOMERS. We believe
that customers want solutions that improve process control and
yield, and decrease their total cost and time to market. We are
developing integrated systems to provide more complete solutions
that meet our customers' plasma-based process requirements. We
are identifying currently fragmented applications of technology
involving significant power, measurement and control content, and
developing integrated, high performance, robust and cost-
effective solutions for these applications.
TARGETING EMERGING APPLICATIONS. We are targeting emerging
applications that have the potential to benefit from more
efficient and reliable use of power in manufacturing processes
for telecommunications networking equipment, automotive parts,
tools, architectural glass and other industrial products.
PURSUING ACQUISITIONS TO FUEL GROWTH. We actively seek
complementary technologies and companies as a means to expand our
presence in existing and emerging markets and to provide
integrated solutions for customers and potential customers. We
have acquired and integrated four companies in the last two
years. We continually evaluate companies whose products and
technologies could enhance our system level capabilities.
CAPITALIZING ON WORLDWIDE INFRASTRUCTURE. Our principal
customers are large, global OEMs that require that their
suppliers have a well-developed worldwide infrastructure. We
plan to continue to take advantage of and expand our established
global infrastructure, operating skills and comprehensive product
portfolio to better serve these customers and to attract new
customers with international support needs.
SALES AND MARKETING
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We sell our systems primarily through direct sales personnel
to customers in the United States, Europe and Asia, and through
distributors in China, France, Israel, Italy, Singapore, and
Sweden. Sales outside the United States represented 23% of our
total sales during 1997, 28% in 1998, 29% in 1999 and 31% in the
first three months of 2000. We maintain sales and service
offices across the United States in California, Colorado,
Massachusetts, Minnesota, New Jersey and Texas. We maintain
sales and service offices outside the United States in Germany,
Japan, South Korea, the United Kingdom and Taiwan.
RF POWER PRODUCTS ACQUISITION
In October 1998, we acquired RF Power Products, which
designs, manufactures and supports radio frequency (RF) power
conversion and control systems consisting of generators and
matching networks. Generators provide RF power and matching
networks provide control over power flow to the customers'
equipment. We believe our ability to offer an expanded line of
RF systems to our existing customer base has strengthened those
relationships. We sell these products principally to
semiconductor capital equipment manufacturers. We also sell
similar systems to capital equipment manufacturers in the flat
panel display and thin film data storage industries and are
exploring applications for these systems in other industries.
RISK FACTORS
Investing in our common stock involves a high degree of
risk. You should carefully consider the risks and uncertainties
described below and the other information in this prospectus and
in the documents incorporated by reference before deciding
whether to purchase our common stock.
RISKS RELATED TO OUR BUSINESS
OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT
FLUCTUATIONS, WHICH COULD NEGATIVELY IMPACT OUR FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND STOCK PRICE.
Our quarterly operating results have fluctuated
significantly and we expect them to continue to experience
significant fluctuations. Downward fluctuations in our quarterly
results have historically resulted in decreases in the price of
our common stock. Quarterly operating results are affected by a
variety of factors, many of which are beyond our control. These
factors include:
* changes or slowdowns in economic conditions in the
semiconductor and semiconductor capital equipment industries
and other industries in which our customers operate;
* the timing and nature of orders placed by major customers;
* customer cancellations of previously placed orders and
shipment delays;
* pricing competition from our competitors;
* component shortages resulting in manufacturing delays;
* changes in customers' inventory management practices;
* the introduction of new products by us or our competitors;
and
* costs incurred by responding to specific feature requests by
customers.
In addition, companies in the semiconductor capital
equipment industry and other electronics companies experience
pressure to reduce costs. Our customers exert pressure on us to
reduce our prices, shorten delivery times and extend payment
terms. These pressures could lead to significant changes in our
operating results from quarter to quarter.
In the past, we have incurred charges and costs related to
events such as acquisitions, restructuring and storm damages.
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The occurrence of similar events in the future could adversely
affect our operating results in the applicable quarter.
Our operating results in one or more future quarters may
fall below the expectations of analysts and investors. In those
circumstances, the trading price of our securities would likely
decrease.
THE SEMICONDUCTOR AND SEMICONDUCTOR CAPITAL EQUIPMENT INDUSTRIES
ARE HIGHLY VOLATILE AND OUR OPERATING RESULTS ARE AFFECTED TO A
LARGE EXTENT BY EVENTS IN THOSE INDUSTRIES.
The semiconductor industry historically has been highly
volatile and has experienced periods of oversupply resulting in
significantly reduced demand for semiconductor fabrication
equipment, which includes our systems. During downturns, some of
our customers have drastically reduced their orders to us and
have implemented substantial cost reduction programs. Sales to
customers in the semiconductor capital equipment industry
accounted for 59% of our total sales in 1997, 49% in 1998, 61% in
1999 and 62% in the first three months of 2000. We expect that
we will continue to depend significantly on the semiconductor and
semiconductor capital equipment industries for the foreseeable
future.
A rapid decrease in demand for our products can occur with
limited advance notice because we supply subsystems to equipment
manufacturers and make a substantial and increasing proportion of
our shipments on a just-in-time basis. This decrease in demand
can adversely impact our business and financial results
disproportionately because of its unanticipated nature.
A SIGNIFICANT PORTION OF OUR SALES ARE CONCENTRATED AMONG A FEW
CUSTOMERS.
Our four largest customers accounted for 51% of our total
sales in 1997, 47% in 1998, 53% in 1999 and 54% in the first
quarter of 2000. Our largest customer accounted for 31% of our
total sales in 1997, 23% in 1998, 32% in 1999 and 36% in the
first quarter of 2000. The loss of any of these customers or a
material reduction in any of their purchase orders would have a
material adverse effect on our business, financial condition and
results of operations.
THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE.
We face substantial competition, primarily from established
companies, some of which have greater financial, marketing and
technical resources than we do. Our primary competitors are ENI,
a subsidiary of Astec (BSR) plc, Applied Science and Technology
(ASTeX), Huettinger, Shindingen, Kyosan, Comdel and Daihen. We
expect that our competitors will continue to develop new products
in direct competition with ours, improve the design and
performance of their systems and introduce new systems with
enhanced performance characteristics.
To remain competitive, we need to continue to improve and
expand our systems and system offerings. In addition, we need to
maintain a high level of investment in research and development
and expand our sales and marketing efforts, particularly outside
of the United States. We may not be able to make the
technological advances and investments necessary to remain
competitive.
New products developed by competitors or more efficient
production of their products could increase pressure on the
pricing of our systems. In addition, electronics companies,
including companies in the semiconductor capital equipment
industry, have been facing pressure to reduce costs. Either of
these factors may require us to make significant price reductions
to avoid losing orders. Further, our current and prospective
customers consistently exert pressure on us to lower prices,
shorten delivery times and improve the capability of our systems.
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Failure to respond adequately to such pressures could result in a
loss of customers or orders.
WE MAY NOT BE ABLE TO INTEGRATE OUR ACQUISITIONS.
We have experienced significant growth through acquisitions
and continue to actively pursue acquisition opportunities. Our
acquisitions to date generally have been in markets in which we
have limited experience. We may not be able to compete
successfully in these markets or might not be able to operate the
acquired businesses efficiently. Our business and results of
operations could be adversely affected if integrating these
acquisitions results in substantial costs, delays or other
operational or financial problems.
Future acquisitions could place additional strain on our
operations and management. Our ability to manage future
acquisitions will depend on our success in:
* evaluating new markets and investments;
* monitoring operations;
* controlling costs;
* integrating acquired operations and personnel;
* maintaining effective quality controls; and
* expanding our internal management, technical and accounting
systems.
Also, in connection with future acquisitions we may issue
equity securities which could be dilutive, incur debt, recognize
substantial one-time expenses or create goodwill or other
intangible assets that could result in significant amortization
expense.
WE ARE GROWING AND MAY BE UNABLE TO MANAGE OUR GROWTH EFFECTIVELY.
We have been experiencing a period of growth and expansion.
This growth and expansion is placing significant demands on our
management and our operating systems. We need to continue to
improve and expand our management, operational and financial
systems, procedures and controls, including accounting and other
internal management systems, quality control, delivery and
service capabilities.
In order to manage our growth, we may also need to spend
significant amounts of cash to:
* fund increases in expenses;
* acquire additional facilities and equipment;
* take advantage of unanticipated opportunities, such as major
strategic alliances or other special marketing opportunities,
acquisitions of complementary businesses or assets, or the
development of new products; or
* otherwise respond to unanticipated developments or
competitive pressures.
If we do not have enough cash on hand, cash generated from
our operations or cash available under our credit facility to
meet these cash requirements, we will need to seek alternative
sources of financing to carry out our growth and operating
strategies. We may not be able to raise needed cash on terms
acceptable to us, or at all. Financings may be on terms that are
dilutive or potentially dilutive. If alternative sources of
financing are required but are insufficient or unavailable, we
will be required to modify our growth and operating plans to the
extent of available funding.
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SHORTAGES OF COMPONENTS NECESSARY FOR OUR PRODUCT ASSEMBLY CAN
DELAY OUR SHIPMENTS.
Manufacturing our power conversion and control systems
requires numerous electronic components. Dramatic growth in the
electronics industry has significantly increased demand for these
components, particularly in the first quarter of 2000. This
demand has resulted in periodic shortages and allocations of
needed components, and we expect to experience additional
shortages and allocations from time to time. Shortages and
allocations could cause shipping delays for our systems,
adversely affecting our results of operations. Shipping delays
also could damage our relationships with current and prospective
customers.
OUR DEPENDENCE ON SOLE AND LIMITED SOURCE SUPPLIERS COULD AFFECT
OUR ABILITY TO MANUFACTURE PRODUCTS AND SYSTEMS.
We rely on sole and limited source suppliers for some of our
components and subassemblies that are critical to the
manufacturing of our systems. This reliance involves several
risks, including the following:
* the potential inability to obtain an adequate supply of
required components;
* reduced control over pricing and timing of delivery of
components; and
* the potential inability of our suppliers to develop
technologically advanced products to support our growth and
development of new systems.
We believe that in time we could obtain and qualify
alternative sources for most sole and limited source parts or
could manufacture the parts ourselves. Seeking alternative
sources or commencing internal manufacture of the parts could
require us to redesign our systems, resulting in increased costs
and likely shipping delays. We may be unable to manufacture the
parts internally or redesign our systems, which could result in
further costs and shipping delays. These increased costs would
decrease our profit margins if we could not pass the costs to our
customers. Further, shipping delays could damage our
relationships with current and potential customers and have a
material adverse effect on our business and results of
operations.
WE ARE HIGHLY DEPENDENT ON OUR INTELLECTUAL PROPERTY BUT MAY NOT
BE ABLE TO PROTECT IT ADEQUATELY.
Our success depends in part on our proprietary technology.
We attempt to protect our intellectual property rights through
patents and non-disclosure agreements. However, we might not be
able to protect our technology, and competitors might be able to
develop similar technology independently. In addition, the laws
of certain foreign countries might not afford our intellectual
property the same protection as do the laws of the United States.
For example, our intellectual property is not protected by
patents in several countries in which we do business, and we have
limited patent protection in certain other countries. The costs
of applying for patents in foreign countries and translating the
applications into foreign languages require us to select
carefully the inventions for which we apply for patent protection
and the countries in which we seek such protection. Generally,
we have concentrated our efforts to obtain international patents
in the United Kingdom, Germany, France, Italy and Japan because
there are other manufacturers and developers of power conversion
and control systems in those countries, as well as customers for
those systems. Our inability or failure to obtain adequate
patent protection in a particular country could have a material
adverse effect on our ability to compete effectively in that
country.
Our patents also might not be sufficiently broad to protect
our technology, and any existing or future patents might be
challenged, invalidated or circumvented. Additionally, our
rights under our patents may not provide meaningful competitive
advantages.
We do not believe that any of our products are infringing
any patents or proprietary rights of others, although
infringements may exist or might occur in the future. Litigation
may be necessary to enforce patents issued to us, to protect our
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trade secrets or know-how, to defend ourselves against claimed
infringement of the rights of others or to determine the scope
and validity of the proprietary rights of others. Litigation
could result in substantial cost and diversion of our efforts.
Moreover, an adverse determination in any litigation could cause
us to lose proprietary rights, subject us to significant
liabilities to third parties, require us to seek licenses or
alternative technologies from third parties or prevent us from
manufacturing or selling our products. Any of these events could
have a material adverse effect on our business, financial
condition and results of operations.
WE MUST CONSTANTLY DEVELOP AND SELL NEW SYSTEMS IN ORDER TO KEEP
UP WITH RAPID TECHNOLOGICAL CHANGES.
The markets for our systems and the markets in which our
customers compete are characterized by ongoing technological
developments and changing customer requirements. We must
continue to improve existing systems and to develop new systems
that keep pace with technological advances and meet the needs of
our customers in order to succeed. We might not be able to
continue to improve our
systems or develop new systems. The systems we do develop might
not be cost-effective or introduced in a timely manner. Developing
and introducing new systems may involve significant and uncertain
costs. Our business, financial condition and results of operations,
as well as our customer relationships, could be adversely affected
if we fail to develop or introduce improved systems and new systems
in a timely manner.
WE MUST ACHIEVE DESIGN WINS TO RETAIN OUR EXISTING CUSTOMERS AND
TO OBTAIN NEW CUSTOMERS.
The constantly changing nature of semiconductor fabrication
technology causes equipment manufacturers to continually design
new systems. We often must work with these manufacturers early
in their design cycles to modify our equipment to meet the
requirements of the new systems. Manufacturers typically choose
one or two vendors to provide the power conversion equipment for
use with the early system shipments. Selection as one of these
vendors is called a design win. It is critical that we achieve
these design wins in order to retain existing customers and to
obtain new customers.
We typically must customize our systems for particular
customers to use in their equipment to achieve design wins. This
customization increases our research and development expenses and
can strain our engineering and management resources. These
investments do not always result in design wins.
Once a manufacturer chooses a power conversion and control
system for use in a particular product, it is likely to retain
that system for the life of that product. Our sales and growth
could experience material and prolonged adverse effects if we
fail to achieve design wins. In addition, design wins do not
always result in substantial sales or profits.
We believe that equipment manufacturers often select their
suppliers based on factors such as long-term relationships.
Accordingly, we may have difficulty achieving design wins from
equipment manufacturers who are not currently customers. In
addition, we must compete for design wins for new systems and
products of our existing customers, including those with whom we
have had long-term relationships.
OUR EFFORTS TO BE RESPONSIVE TO CUSTOMERS MAY LEAD TO THE
INCURRENCE OF COSTS THAT ARE NOT READILY RECOVERABLE.
We may incur manufacturing overhead and other costs, many of
which are fixed, to meet anticipated customer demand.
Accordingly, operating results could be adversely affected if
orders or revenues in a particular period or for a particular
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system do not meet expectations.
We often require long lead times for development of our
systems during which times we must expend substantial funds and
management effort. We may incur significant development and
other expenses as we develop our systems without realizing
corresponding revenue in the same period, or at all.
OUR SUCCESS DEPENDS UPON OUR ABILITY TO ATTRACT AND RETAIN KEY
PERSONNEL.
Our success depends upon the continued efforts of our senior
management team and our technical, marketing and sales personnel.
These employees may voluntarily terminate their employment with
us at any time. Our success also depends on our ability to
attract and retain additional highly qualified management,
technical, marketing and sales personnel. The process of hiring
employees with the combination of skills and attributes required
to carry out our strategy can be extremely competitive and time-
consuming. We may not be able to successfully retain existing
personnel or identify, hire and integrate new personnel. If we
lose the services of key personnel for any reason, including
retirement, or are unable to attract additional qualified
personnel, our business, financial condition and results of
operations could be materially and adversely affected.
WE CONDUCT MANUFACTURING AT ONLY A FEW SITES.
We conduct the majority of our manufacturing at our
facilities in Fort Collins, Colorado and in Voorhees, New Jersey.
We also conduct manufacturing for one customer in Austin, Texas.
Tower Electronics, a subsidiary, conducts manufacturing only at
its facility in Fridley, Minnesota. Noah, a subsidiary, conducts
manufacturing only at its facility in San Jose, California. Each
facility generally manufactures different systems. In July 1997,
a severe rainstorm in Fort Collins caused substantial damage to
our Fort Collins facilities and to some equipment and inventory.
The damage caused us to stop manufacturing at that facility
temporarily and prevented us from resuming full production there
until mid-September 1997. Our insurance policies did not cover
all of the costs that we incurred in connection with the
rainstorm. Future natural or other uncontrollable occurrences at
any of our primary manufacturing facilities that negatively
impact our manufacturing processes may not be fully covered by
insurance and could have a material adverse effect on our
operations and results of operations.
WE HAVE LIMITED EXPERIENCE IN MAINTAINING MULTIPLE MANUFACTURING
FACILITIES.
The acquisitions of Tower Electronics in 1997, RF Power
Products in 1998, and Noah in 2000 provided us with manufacturing
facilities located outside of our facilities in Fort Collins,
Colorado. Accordingly, we have limited experience in maintaining
multiple manufacturing locations. Substantial costs and delays
could result if we fail to effectively manage and integrate our
geographically separate facilities.
WE MIGHT NOT BE ABLE TO COMPETE SUCCESSFULLY IN INTERNATIONAL
MARKETS OR TO MEET THE SERVICE AND SUPPORT NEEDS OF OUR
INTERNATIONAL CUSTOMERS.
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Our customers increasingly require service and support on a
worldwide basis as the markets in which we compete become
increasingly globalized. We maintain sales and service offices
in Germany, Japan, South Korea, the United Kingdom, and Taiwan.
Sales to customers outside the United States accounted for
23% of our total sales in 1997, 28% in 1998, 29% in 1999 and 31%
in the first three months of 2000, and we expect international
sales to continue to represent a significant portion of our
future sales. International sales are subject to various risks,
including:
* currency fluctuations;
* governmental controls;
* political and economic instability;
* barriers to entry;
* trade restrictions;
* changes in tariffs and taxes; and
* longer payment cycles.
In particular, the Japanese market has historically been
difficult for non-Japanese companies, including us, to penetrate.
Providing support services for our systems on a worldwide
basis also is subject to various risks, including:
* our ability to hire qualified support personnel;
* maintenance of our standard level of support; and
* differences in local customers and practices.
Our international activities are also subject to the
difficulties of managing overseas distributors and
representatives and managing foreign subsidiary operations.
We cannot assure you that we will be successful in
addressing any of these risks.
FLUCTUATIONS IN THE CURRENCY EXCHANGE RATE BETWEEN THE U.S.
DOLLAR AND FOREIGN CURRENCIES COULD ADVERSELY AFFECT OUR
OPERATING RESULTS.
A portion of our sales is subject to currency exchange risks
as a result of our international operations. We have experienced
fluctuations in foreign currency exchange rates, particularly
against the Japanese yen. Beginning in 1997, we entered into
various forward foreign exchange contracts as a hedge against
currency fluctuations in the yen. We have not employed hedging
techniques with respect to any other currencies. Our current or
any future hedging techniques might not protect us adequately
against sudden or substantial currency fluctuations.
WE MUST MAINTAIN MINIMUM LEVELS OF CUSTOMIZED INVENTORY TO
SUPPORT CERTAIN CUSTOMER DELIVERY REQUIREMENTS.
We must keep a relatively large number and variety of
customized systems in our inventory to meet client delivery
requirements because a substantial proportion of our business
involves the just-in-time shipment of systems. Our inventory may
become obsolete as we develop new systems and as our customers
develop new systems. Inventory obsolescence could have a
material adverse effect on our financial condition and results of
operations.
WE ARE SUBJECT TO NUMEROUS GOVERNMENTAL REGULATIONS.
We are subject to federal, state, local and foreign
regulations, including environmental regulations and regulations
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relating to the design and operation of our power conversion and
control systems. We must ensure that our systems meet certain
safety and emissions standards, many of which vary across the
states and countries in which our systems are used. For example,
the European Union has published directives specifically relating
to power supplies. We must comply with these directives in order
to ship our systems into countries that are members of the
European Union. In the past, we have invested significant
resources to redesign our systems to comply with these
directives. We believe we are in compliance with current
applicable regulations, directives and standards and have
obtained all necessary permits, approvals and authorizations to
conduct our business. However, compliance with future
regulations, directives and standards could require us to modify
or redesign certain systems, make capital expenditures or incur
substantial costs. If we do not comply with current or future
regulations, directives and standards:
* we could be subject to fines;
* our production could be suspended; or
* we could be prohibited from offering particular systems in
specified markets.
WE MAY INVEST IN START-UP COMPANIES AND COULD LOSE OUR ENTIRE
INVESTMENT.
We have a majority interest in a start-up company and may
invest in other start-up companies that develop products and
technologies which we believe may provide us with future
benefits. These investments may not provide us with any benefit,
and we may not achieve any economic return on any of these
investments. Our investments in these start-up companies are
subject to all of the risks inherent in investing in companies
that are not established. We could lose all or any part of our
investments in these companies.
WE LEASE OUR FORT COLLINS, COLORADO FACILITIES AND A CONDOMINIUM
FROM ENTITIES IN WHICH TWO INDIVIDUALS WHO ARE INSIDERS AND MAJOR
STOCKHOLDERS HAVE FINANCIAL INTERESTS.
We lease our executive offices and manufacturing facilities
in Fort Collins, Colorado from Prospect Park East Partnership and
from Sharp Point Properties, LLC. Douglas S. Schatz, our Chairman
and Chief Executive Officer, holds a 26.7% interest in each of
the leasing entities. G. Brent Backman, a member of our board of
directors, holds a 6.6% interest in each of the leasing entities.
Aggregate rental payments under such leases for 1999 totaled
approximately $1.7 million. We also lease a condominium in
Breckenridge, Colorado to provide rewards and incentives to our
customers, suppliers and employees. We lease the condominium
from AEI Properties, a partnership in which Mr. Schatz holds a
60% interest and Mr. Backman holds a 40% interest. Aggregate
rental payments under the condominium lease for 1999 totaled
approximately $36,000. As of July 31, 2000, Mr. Schatz owns
approximately 39% of our common stock, and Mr. Backman owns
approximately 4% of our common stock.
RISKS RELATED TO OUR COMMON STOCK
THE MARKET PRICE OF OUR STOCK HAS BEEN AND WILL LIKELY CONTINUE
TO BE HIGHLY VOLATILE.
The stock market generally and the market for technology
stocks in particular have experienced significant price and
volume fluctuations, which often have been unrelated or
disproportionate to the operating performance of such companies.
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From our IPO in November 1995 through July 31, 2000, the closing
prices of our common stock on the Nasdaq National Market have
ranged from $3.50 to $73.25. The market for our common stock
likely will continue to be subject to similar fluctuations. Many
factors could cause the trading price of our common stock to
fluctuate substantially, including the following:
* future announcements concerning our business, our customers
or our competitors;
* variations in our operating results;
* announcements of technological innovations;
* introduction of new products or changes in product pricing
policies by us, our competitors or our customers;
* changes in earnings estimates by securities analysts or
announcements of operating results that are not aligned with
the expectations of analysts and investors;
* economic and competitive conditions in the industries in
which our customers operate; and
* general stock market trends.
OUR EXECUTIVE OFFICERS AND DIRECTORS OWN A SIGNIFICANT PERCENTAGE
OF OUR OUTSTANDING COMMON STOCK, WHICH COULD ENABLE THEM TO
CONTROL OUR BUSINESS AND AFFAIRS.
Our executive officers and directors owned approximately 47%
of our outstanding common stock outstanding as of July 31, 2000.
Douglas S. Schatz, our Chairman and Chief Executive Officer,
owned approximately 39% of our common stock outstanding as of July
31, 2000. These stockholdings give our executive officers and
directors collectively, and Mr. Schatz individually, significant
voting power. Depending on the number of shares that abstain or
otherwise are not voted, our executive officers and directors
collectively, and Mr. Schatz individually, may be able to elect
all of the members of our board of directors and to control our
business and affairs for the foreseeable future.
ANTITAKEOVER PROVISIONS LIMIT THE ABILITY OF A PERSON OR ENTITY
TO ACQUIRE CONTROL OF US.
Our certificate of incorporation and bylaws include
provisions which:
* allow the board of directors to issue preferred stock with
rights senior to those of the common stock without any vote
or other action by the holders of the common stock;
* limit the right of our stockholders to call a special
meeting of stockholders; and
* impose procedural and other requirements that could make it
difficult for stockholders to effect certain corporate
actions.
In addition, we are subject to the anti-takeover provisions
of the Delaware General Corporation Law. Any of these provisions
could delay or prevent a person or entity from acquiring control
of us. The effect of these provisions may be to limit the price
that investors are willing to pay in the future for our
securities. These provisions might also discourage potential
acquisition proposals or could diminish the opportunities for our
stockholders to participate in a tender offer, even if the
acquisition proposal or tender offer is at a price above the then
current market price for our common stock.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by
reference in this prospectus discuss our plans and strategies for
our business or make other forward-looking statements, as this
term is defined in the Private Securities Litigation Reform Act.
The words "anticipates", "believes", "estimates", "expects",
"plans", "intends" and similar expressions are intended to
identify these forward-looking statements, but are not the
exclusive means of identifying them. These forward-looking
statements reflect the current views of our management. However,
various risks, uncertainties and contingencies could cause our
actual results, performance or achievements to differ materially
from those expressed in, or implied by, these statements,
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including the following:
* the success or failure of our efforts to implement our
business strategy; and
* the other risks and uncertainties discussed under the
heading "Risk Factors" and elsewhere in this prospectus and
in the documents incorporated by reference.
We do not have any obligation to update publicly any forward-
looking statements, whether as a result of new information,
future events or otherwise. You should carefully consider the
information set forth under the heading "Risk Factors" and
elsewhere in this prospectus and in the documents incorporated by
reference. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in, implied by
or incorporated by reference in this prospectus might not occur.
USE OF PROCEEDS
All of the shares of our common stock are being sold by the
selling stockholders. We will not receive any proceeds from the
sale of these shares.
SELLING STOCKHOLDERS
The following table sets forth the names of the selling
stockholders and the number of shares being registered for sale
as of the date of the prospectus and sets forth the number of
shares of common stock known by us to be beneficially owned by
each of the selling stockholders as of August 2, 2000. None of
the selling stockholders has had a material relationship with the
Company within the past three years other than as a result of the
ownership of the shares or other securities of Advanced Energy.
The shares offered by this prospectus may be offered from time to
time by the selling stockholders.
Pursuant to an acquisition of Noah on April 5, 2000, we
issued 686,503 shares of common stock to the selling
stockholders. As part of the acquisition, we undertook a
contractual obligation, by the terms of the Agreement and Plan of
Reorganization, to file a registration statement covering the
resale of the shares issued in such acquisition through the
filing of this Form S-3.
The selling stockholders, with the exception of Hultquist
Capital LLC, have entered into an Escrow and Indemnity Agreement
with Advanced Energy, dated April 5, 2000, under which the shares
being registered may only be offered, pledged, transferred, sold
or otherwise disposed of according to the following schedule: 90%
as of the date that financial results covering at least 30 days of
combined operations of Noah and Advanced Energy have been publicly
disclosed pursuant to a report filed by Advanced Energy with the
SEC, and 10% as of April 5, 2001 reduced by the amount of any
outstanding claims under the indemnity provisions of the Escrow and
Indemnity Agreement.
All information contained in the table below is based upon
information provided to us by the selling stockholders, and we
have not independently verified this information. We are not able
to estimate the amount of shares that will be held by the selling
stockholders after the completion of this offering because the
selling stockholders may offer all or some of their shares and
because there currently are no agreements, arrangements or
understandings with respect to the sale of any of their shares.
The following table assumes that all of the shares being
registered will be sold. The selling stockholders are not making
any representation that any shares covered by the prospectus will
be offered for sale. The selling stockholders reserve the right
to accept or reject, in whole or in part, any proposed sale of
shares.
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Number of Shares Number of Shares
Name Beneficially Owned Registered
Robert W. Higgins 334,969 334,969
Galex Research (1) 121,907 121,907
Valentin Balter 81,271 81,271
Duane Allan Kogler 10,983 10,983
PacTech/Noah
Investments LLC 54,913 54,913
PacTech Partners LLC 28,902 28,902
Jerauld J. Cutini 8,237 8,237
Peter Adams 5,491 5,491
Oliver Janssen 18,108 18,108
Gary Hultquist 16,735 16,735
Hultquist Capital
LLC(2) 4,947 4,947
(1) Boris Atlas, who is an employee of a Noah, a subsidiary of
Advanced Energy, is a partner in Galex Research, a
California general partnership.
(2) Both Oliver Janssen and Gary Hultquist are members of
Hultquist Capital LLC.
Robert W. Higgins, Duane Allan Kogler, and Peter Adams are
employed by Noah, a subsidiary of Advanced Energy.
This prospectus also covers any additional shares of common
stock that become issuable in connection with the shares being
registered by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without
the receipt of consideration which results in an increase in the
number of our outstanding shares of common stock.
PLAN OF DISTRIBUTION
We are registering all 686,503 shares on behalf of the
selling stockholders named in the table above. All of the shares
originally were issued by us in connection with our acquisition
of Noah. We will not receive proceeds from this offering. The
selling stockholders may sell the shares from time to time,
subject to certain restrictions. The selling stockholders will
act independently of us in making decisions with respect to the
timing, manner and size of each sale.
The sales may be made on the Nasdaq National Market or
otherwise, at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated
transactions. The selling stockholders may effect such
transactions by selling the shares to or through broker-dealers.
The shares may be sold by one or more of, or a combination of,
the following:
* a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate
the transaction,
* purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus,
* an exchange distribution in accordance with the rules of
such exchange,
* ordinary brokerage transactions and transactions in which
the broker solicits purchasers, and
* in privately negotiated transactions.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of
distribution. In effecting sales, broker-dealers engaged by the
selling stockholders may arrange for other broker-dealers to
participate in the resales.
The selling stockholders may enter into hedging transactions
with broker-dealers in connection with distributions of the
shares or otherwise. In such transactions, broker-dealers may
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engage in short sales of the shares in the course of hedging the
positions they assume with the selling stockholders.
The selling stockholders also may sell shares short and
redeliver the shares to close out such short positions. The
selling stockholders may enter into option or other transactions
with broker-dealers which require the delivery to the broker-
dealer of the shares. The broker-dealer may then resell or
otherwise transfer such shares pursuant to this prospectus. The
selling stockholders also may loan or pledge the shares to a
broker-dealer. The broker-dealer may sell the shares so loaned,
or upon a default the broker-dealer may sell the pledged shares
pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the
form of commissions, discounts or concessions from the selling
stockholders. Broker-dealers or agents may also receive
compensation from the purchasers of the shares for whom they act
as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess
of customary commissions and will be in amounts to be negotiated
in connection with the sale. Broker-dealers or agents and any other
participating broker-dealers or the selling stockholders
may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act of 1933 in connection with sales of the
shares. Accordingly, any such commission, discount or concession
received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because a selling
stockholder may be deemed to be an "underwriter" within the
meaning of Section 2(11) of the Securities Act, each selling
stockholders will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities
covered by this prospectus which qualify for sale pursuant to
Rule 144 promulgated under the Securities Act may be sold under
Rule 144 rather than pursuant to this prospectus. The selling
stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters
or broker-dealers regarding the sale of their securities. There
is no underwriter or coordinating broker acting in connection
with the proposed sale of shares by the selling stockholders.
The shares will be sold only through registered or licensed
brokers or dealers if required under applicable state securities
laws. In addition, in certain states the shares may not be sold
unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The selling stockholders will be subject to applicable
provisions of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, which provisions may limit the timing of
purchases and sales of any of the common stock by the selling
stockholders. The foregoing may affect the marketability of such
securities.
We will make copies of this prospectus available to the
selling stockholders and have informed them of the need for
delivery of copies of this prospectus to purchasers at or prior
to the time of any sale of the shares.
We will file a supplement to this prospectus, if required,
pursuant to Rule 424(b) under the Securities Act upon being
notified by any selling stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such
supplement will disclose:
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* the name of the selling stockholders and of the
participating broker-dealer(s),
* the number of shares involved,
* the price at which such shares were sold,
* the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable,
* that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by
reference in this prospectus, and
* other facts material to the transaction.
We will bear all costs, expenses and fees in connection with
the registration of the shares. The selling stockholders will
bear all commissions and discounts, if any, attributable to the
sales of the shares.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act,
relating to the common stock being offered. This prospectus
is filed as part of the registration statement. Other parts of
the registration statement are omitted from this prospectus.
Statements made in this prospectus concerning the contents
of any contract or other document are not necessarily complete. For a
more complete description of the matter involved, you should read
the entire contract or other document, which has been filed as an
exhibit to the registration statement.
We are required by the Exchange Act to file reports, proxy
statements and other information with the SEC. You may read and copy
such reports, proxy statements and other information at the SEC's
public reference facilities:
Washington D.C. New York Chicago
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, NW Suite 1300 500 West Madison Street
Room 1024 New York, NY 10048 Suite 1400
Washington, D.C. Chicago, IL 60661-2511
20549
You may call 1-800-SEC-0330 for further information about
the public reference facilities. For a fee, the SEC will send
copies of any of our filings to you. In addition, our filed
reports, proxy statements and other information are contained in
the Internet web site maintained by the SEC. The address is
http://www.sec.gov.
Our common stock is quoted on the Nasdaq National Market
under the symbol "AEIS", and our SEC filings can also be read at
the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the
information we file with it, which means we can disclose
important information to you by referring you to those documents.
The information incorporated by reference is considered to be a
part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14
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or 15(d) of the Exchange Act until all of the securities
registered in this offering are sold:
1. Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000, filed April 18, 2000 (File #000-26966).
2. Our Annual Report on Form 10-K for the year ended December
31, 1999, filed March 20, 2000 (File #000-26966).
3. Our Definitive Proxy Statement filed March 21, 2000 (File
#000-26966).
4. The description of our common stock contained in our
Registration Statement on Form 8-A filed October 12,1995,
and any amendment or report filed for the purpose of
updating such description.
You may request a copy of these filings, at no cost, by
writing us at the following address:
Advanced Energy Industries, Inc.
1625 Sharp Point Drive
Fort Collins, Colorado 80525
Attention: Richard P. Beck
or by calling Investor Relations at (970) 221-4670.
LEGAL MATTERS
The validity of the common stock has been passed upon for us
by Thelen Reid & Priest LLP, San Francisco, California.
EXPERTS
The financial statements and schedules incorporated by
reference in this prospectus have been audited by Arthur Andersen
LLP, independent public accountants, as set forth in their
reports as of and for the years ended December 31, 1999 and 1998.
In the report for the year ended December 31, 1997, that firm
states that with respect to certain subsidiaries its opinion is
based on the reports of other independent public accountants.
The financial statements and supporting schedules referred to
above have been incorporated by reference herein in reliance upon
the authority of those firms as experts in giving said reports.
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