<PAGE> 1
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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 June 30, 2000.
[ ] 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)
DELAWARE 84-0846841
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1625 SHARP POINT DRIVE, FORT COLLINS, CO 80525
---------------------------------------- -----------------------------------
(Address of principal executive offices) (Zip Code)
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 July 31, 2000, there were 29,243,096 shares of the Registrant's Common
Stock, par value $0.001 per share, outstanding.
<PAGE> 2
ADVANCED ENERGY INDUSTRIES, INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets-
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations -
Three months and six months ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows -
Six months ended June 30, 2000 and 1999 5
Notes to consolidated financial statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 18
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 20
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 20
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>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
---------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................................... $ 17,790 $ 20,303
Marketable securities - trading .................................... 201,221 186,440
Accounts receivable, net ........................................... 53,528 44,759
Income tax receivable .............................................. 149 1,353
Inventories ........................................................ 33,910 26,456
Other current assets ............................................... 1,610 1,707
Deferred income tax assets, net .................................... 3,668 3,668
---------- ----------
Total current assets ........................................... 311,876 284,686
---------- ----------
PROPERTY AND EQUIPMENT, net .......................................... 18,938 17,295
OTHER ASSETS:
Deposits and other ................................................. 517 535
Goodwill and intangibles, net ...................................... 9,460 9,783
Demonstration and customer service equipment, net .................. 2,598 2,352
Deferred debt issuance costs, net .................................. 4,090 4,410
---------- ----------
Total assets ................................................... $ 347,479 $ 319,061
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable trade ............................................. $ 15,826 $ 15,020
Accrued payroll and employee benefits .............................. 8,368 7,448
Other accrued expenses ............................................. 2,820 2,759
Customer deposits .................................................. 441 804
Accrued income taxes payable ....................................... 1,843 1,266
Current portion of capital lease obligations and long-term debt .... 2,292 2,535
Accrued interest payable on convertible subordinated notes ......... 886 886
---------- ----------
Total current liabilities ...................................... 32,476 30,718
---------- ----------
LONG-TERM LIABILITIES:
Capital lease obligations and notes payable, net of current
portion .......................................................... 1,143 1,263
Convertible subordinated notes payable ............................. 135,000 135,000
---------- ----------
136,143 136,263
---------- ----------
Total liabilities .............................................. 168,619 166,981
---------- ----------
MINORITY INTEREST .................................................... 44 128
---------- ----------
STOCKHOLDERS' EQUITY ................................................. 178,816 151,952
---------- ----------
Total liabilities and stockholders' equity ..................... $ 347,479 $ 319,061
========== ==========
</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 STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
---------- ----------
<S> <C> <C>
SALES ...................................................... $ 80,586 $ 43,272
COST OF SALES .............................................. 41,247 24,326
---------- ----------
Gross profit ............................................ 39,339 18,946
---------- ----------
OPERATING EXPENSES:
Research and development ................................. 8,100 6,831
Sales and marketing ...................................... 5,049 4,062
General and administrative ............................... 5,323 3,548
Merger costs ............................................. 2,333 --
---------- ----------
Total operating expenses ................................ 20,805 14,441
---------- ----------
INCOME FROM OPERATIONS ..................................... 18,534 4,505
OTHER INCOME (EXPENSE) ..................................... 734 31
---------- ----------
Net income before income taxes and minority interest .... 19,268 4,536
PROVISION FOR INCOME TAXES ................................. 7,305 1,759
MINORITY INTEREST IN NET LOSS .............................. (67) --
---------- ----------
NET INCOME ................................................. $ 12,030 $ 2,777
========== ==========
BASIC EARNINGS PER SHARE ................................... $ 0.41 $ 0.10
========== ==========
DILUTED EARNINGS PER SHARE ................................. $ 0.40 $ 0.10
========== ==========
BASIC WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING ........... 29,214 27,275
========== ==========
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING ......... 30,443 28,504
========== ==========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
SALES ...................................................... $ 150,837 $ 77,205
COST OF SALES .............................................. 77,797 44,583
---------- ----------
Gross profit ............................................ 73,040 32,622
---------- ----------
OPERATING EXPENSES:
Research and development ................................. 15,906 12,696
Sales and marketing ...................................... 10,679 7,430
General and administrative ............................... 10,547 6,848
Merger costs ............................................. 2,333 --
---------- ----------
Total operating expenses ................................ 39,465 26,974
---------- ----------
INCOME FROM OPERATIONS ..................................... 33,575 5,648
OTHER INCOME (EXPENSE) ..................................... 925 (42)
---------- ----------
Net income before income taxes and minority interest .... 34,500 5,606
PROVISION FOR INCOME TAXES ................................. 12,515 2,272
MINORITY INTEREST IN NET LOSS .............................. (84) --
---------- ----------
NET INCOME ................................................. $ 22,069 $ 3,334
========== ==========
BASIC EARNINGS PER SHARE ................................... $ 0.76 $ 0.12
========== ==========
DILUTED EARNINGS PER SHARE ................................. $ 0.73 $ 0.12
========== ==========
BASIC WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING ........... 29,114 27,222
========== ==========
DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING ......... 30,425 28,433
========== ==========
</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 STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
2000 1999
(UNAUDITED) (UNAUDITED)
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 22,069 $ 3,334
Adjustments to reconcile net income to net cash provided by operating
activities --
Depreciation and amortization ...................................... 4,565 3,625
Amortization of deferred debt issuance costs ....................... 320 --
Minority interest .................................................. (84) --
Stock issued for services rendered ................................. 2,430 --
Provision for deferred income taxes ................................ -- 537
(Gain) loss on disposal of property and equipment .................. (90) 4
Earnings from marketable securities, net ........................... (4,781) (299)
Writedown of LITMAS investment ..................................... -- 200
Changes in operating assets and liabilities --
Accounts receivable-trade, net ................................... (8,287) (15,312)
Related parties and other receivables ............................ (482) 152
Inventories ...................................................... (7,454) (2,198)
Other current assets ............................................. 98 (803)
Deposits and other ............................................... (514) (1)
Demonstration and customer service equipment ..................... (614) (103)
Accounts payable, trade .......................................... 771 5,279
Accrued payroll and employee benefits ............................ 921 1,723
Customer deposits and other accrued expenses ..................... (304) (69)
Income taxes payable/receivable, net ............................. 1,781 1,602
---------- ----------
Net cash provided by (used in) operating activities ........... 10,345 (2,329)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities transactions .................................... (10,000) 1,928
Proceeds from sale of equipment ....................................... 150 --
Purchase of property and equipment, net ............................... (5,011) (3,093)
---------- ----------
Net cash used in investing activities ......................... (14,861) (1,165)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change from notes payable and capital lease obligations ........... (363) 1,616
Proceeds from common stock transactions ............................... 3,032 1,812
---------- ----------
Net cash provided by financing activities ..................... 2,669 3,428
---------- ----------
EFFECT OF CURRENCY TRANSLATION ON CASH .................................. (666) (860)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS ................................... (2,513) (926)
CASH AND CASH EQUIVALENTS, beginning of period .......................... 20,303 12,324
---------- ----------
CASH AND CASH EQUIVALENTS, end of period ................................ $ 17,790 $ 11,398
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ................................................ $ 3,780 $ 201
========== ==========
Cash paid for income taxes, net ....................................... $ 12,066 $ 308
========== ==========
</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 June 30, 2000
and December 31, 1999, and the results of the Company's operations for the
three- and six-month periods ended June 30, 2000 and 1999, and cash flows for
the six month periods ended June 30, 2000.
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, 1999.
(2) ACQUISITIONS
NOAH HOLDINGS, INC. - On April 6, 2000, Noah Holdings, Inc. ("Noah"), a
privately held, California-based manufacturer of solid state temperature control
systems used to control process temperatures during semiconductor manufacturing,
was merged with a wholly owned subsidiary of the Company. The Company issued
approximately 687,000 shares of its common stock to the former shareholders of
Noah, including approximately 33,000 shares issued for a financial advisory fee
for Noah, which was accounted for as merger costs of the acquisition. Each share
of Noah common stock was exchanged for 0.0577 of one share of the Company's
common stock. In addition, outstanding Noah stock options were converted into
options to purchase approximately 29,000 shares of the Company's common stock.
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 Noah as though it had always been part of the Company. There
were no transactions between the Company and Noah prior to the combination, and
immaterial adjustments were recorded to conform Noah's accounting policies.
Certain reclassifications were made to conform the Noah financial statements to
the Company's presentations. The results of operations for the separate
companies and combined amounts presented in the consolidated financial
statements follow:
6
<PAGE> 7
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Sales:
Pre-merger
Advanced Energy .................................................. $ 67,171 $ 74,243
Noah ............................................................. 3,080 2,962
Post-merger ........................................................ 80,586 --
---------- ----------
Consolidated .................................................... $ 150,837 $ 77,205
========== ==========
Net income:
Pre-merger
Advanced Energy .................................................. $ 9,996 $ 3,304
Noah ............................................................. 43 30
Post-merger ........................................................ 14,363 --
Merger costs ....................................................... (2,333) --
---------- ----------
Consolidated .................................................... $ 22,069 $ 3,334
========== ==========
</TABLE>
LITMAS -- During 1998 the Company acquired a 29% ownership interest in
LITMAS, a privately held, North Carolina-based start-up company that designs and
manufactures plasma gas abatement systems and high-density plasma sources. The
purchase price consisted of $1 million in cash. On October 1, 1999, the Company
acquired an additional 27.5% interest in LITMAS for an additional $560,000. The
purchase price consisted of $385,000 in the Company's common stock and $175,000
in cash. The acquisition was accounted for using the purchase method of
accounting and resulted in $523,000 allocated to intangible assets as goodwill.
The results of operations of LITMAS have been consolidated in the accompanying
consolidated financial statements from the date the controlling interest of
56.5% was acquired.
AEV -- On October 8, 1998, RF Power Products, Inc., since renamed Advanced
Energy Voorhees, Inc. ("AEV"), a New Jersey-based designer and manufacturer of
radio frequency power systems, matching networks and peripheral products
primarily for original equipment providers in the semiconductor capital
equipment, commercial coating, flat panel display and analytical instrumentation
markets, was merged with a wholly owned subsidiary of the Company. The Company
issued approximately 4 million shares of its common stock to the former
shareholders of AEV. In addition, outstanding AEV stock options were converted
into options to purchase approximately 148,000 shares of the Company's common
stock. 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 were
restated to include the combined balance sheet, statements of operations and
cash flows of AEV as though it had always been part of the Company.
FST -- On 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,
assumption of a $113,000 liability, and an earn-out provision, which is based on
profits over a twelve-quarter period beginning October 1, 1998. During the
fourth quarter of 1999 and the first six months of 2000, the Company accrued
$240,000 and $36,000, respectively, to intangible assets as a result of the
earn-out provision being met during those periods. Approximately $2.6 million of
the initial 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.
7
<PAGE> 8
(3) MARKETABLE SECURITIES - TRADING
MARKETABLE SECURITIES - TRADING consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Commercial paper ..................................................... $ 151,263 $ 118,894
Municipal bonds and notes ............................................ 39,989 67,453
Money market mutual funds ............................................ 9,969 93
---------- ----------
Total marketable securities .......................................... $ 201,221 $ 186,440
========== ==========
</TABLE>
(4) ACCOUNTS RECEIVABLE - TRADE
ACCOUNTS RECEIVABLE - TRADE consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Domestic ............................................................. $ 25,250 $ 20,126
Foreign .............................................................. 26,559 23,391
Allowance for doubtful accounts ...................................... (582) (577)
---------- ----------
Trade accounts receivable ............................................ 51,227 42,940
Related parties ...................................................... 139 32
Other ................................................................ 2,162 1,787
---------- ----------
Total accounts receivable ............................................ $ 53,528 $ 44,759
========== ==========
</TABLE>
(5) INVENTORIES
INVENTORIES consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Parts and raw materials .............................................. $ 22,375 $ 17,512
Work in process ...................................................... 4,532 2,526
Finished goods ....................................................... 7,003 6,418
---------- ----------
Total inventories .................................................... $ 33,910 $ 26,456
========== ==========
</TABLE>
(6) STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
2000 DECEMBER 31,
(UNAUDITED) 1999
----------- ------------
(IN THOUSANDS, EXCEPT PAR VALUE)
<S> <C> <C>
Common stock, $0.001 par value, 40,000 shares authorized;
29,237 and 28,881 shares issued and outstanding at
June 30, 2000 and December 31, 1999, respectively ................ $ 29 $ 29
Additional paid-in capital ........................................... 112,155 106,694
Retained earnings .................................................... 68,188 46,119
Accumulated other comprehensive loss ................................. (1,556) (890)
---------- ----------
Total stockholders' equity ........................................... $ 178,816 $ 151,952
========== ==========
</TABLE>
8
<PAGE> 9
(7) ACCOUNTING STANDARDS
COMPREHENSIVE INCOME -- 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 and its components.
Comprehensive income for the Company consists of net income 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>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
(UNAUDITED) (UNAUDITED)
---------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Net income, as reported .............................................. $ 22,069 $ 3,334
Adjustment to arrive at comprehensive net income:
Cumulative translation adjustment .................................. (666) (860)
---------- ----------
Comprehensive net income ............................................. $ 21,403 $ 2,474
========== ==========
</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.
REVENUE RECOGNITION -- In December 1999 the staff of the Securities and
Exchange Commission issued its Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition." SAB No. 101 provides guidance on the measurement and
timing of revenue recognition in financial statements of public companies.
Changes in accounting policies to apply the guidance of SAB No. 101 must be
adopted by recording the cumulative effect of the change in the fiscal quarter
ending December 31, 2000. Management does not believe that the adoption of SAB
No. 101 will have a material effect on the Company's financial position or
results of operations.
(8) CONVERTIBLE SUBORDINATED NOTES PAYABLE
In November 1999 the Company issued $135 million of convertible subordinated
notes payable at 5.25%. These notes mature November 15, 2006, with interest
payable on May 15th and November 15th each year beginning May 15, 2000. Net
proceeds to the Company were approximately $130.5 million, after deducting $4.5
million of offering costs, which have been capitalized and are being amortized
over a period of 7 years. Holders of the notes may convert the notes at any time
into shares of the Company's common stock, at $49.53 per share. The Company may
convert the notes on or after November 19, 2002 at a redemption price of 103.00%
times the principal amount, and may convert at successively lesser amounts
thereafter until November 15, 2006, at which time the Company may convert at a
redemption price equal
9
<PAGE> 10
to the principal amount. At June 30, 2000, $0.9 million of interest expense was
accrued as a current liability, and there had been no conversion of notes into
the Company's common stock.
(9) SUBSEQUENT EVENTS
On July 6, 2000, the Company entered into a definitive agreement to acquire
Engineering Measurements Company ("EMCO") in an exchange of stock. The
shareholders and option holders of EMCO will receive approximately 900,000
shares of Advanced Energy common stock in the transaction, which is subject to
approval by EMCO's stockholders and certain other conditions. The Company
believes the acquisition will be accounted for as a pooling of interests, and
will operate EMCO as a wholly owned subsidiary. EMCO, a Longmont, Colorado-based
company, manufactures electronic and electromechanical precision instruments for
measuring and controlling the flow of liquids, steam and gases.
On July 24, 2000, the Company entered into a definitive agreement to acquire
Sekidenko, Inc. ("Sekidenko") in an exchange of stock. The Company believes the
acquisition will be accounted for as a pooling of interests, and will operate
Sekidenko as a wholly owned subsidiary. Sekidenko, a Vancouver, Washington-based
company, is a supplier of optical fiber thermometers to the semiconductor
capital equipment industry.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SPECIAL NOTE ON FORWARD LOOKING STATEMENTS
The following discussion contains, 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 our beliefs, expectations and
plans are forward-looking statements, as are statements that certain actions,
conditions or circumstances will occur or continue. Forward-looking statements
involve risks and uncertainties. As a result, our 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:
o the significant fluctuations in our quarterly operating results;
o the volatility of the semiconductor and semiconductor capital equipment
industries;
o timing and success of integration of recent and potential future
acquisitions; and
o supply constraints and technological changes.
For a discussion of these and other factors that may impact our realization of
our forward-looking statements, see our Annual Report on Form 10-K for the year
ended December 31, 1999, Part I "Cautionary Statements - Risk Factors."
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
SALES
We sell power conversion and control systems and plasma gas abatement
systems primarily to the semiconductor capital equipment, data storage and
emerging markets in the United States, to the flat panel display and data
storage markets in Japan, and to data storage and emerging markets in Europe. We
also sell spare parts and repair services worldwide through our customer service
and technical support organization.
Sales were $43.3 million in the second quarter of 1999 and $80.6 million in
the second quarter of 2000, representing an increase of 86%. The second quarter
of 2000 achieved a record quarterly level of sales for us and was the sixth
consecutive quarter of sales growth. Our sales in the second quarter of 2000
continued to reflect the recovery in the
11
<PAGE> 12
semiconductor capital equipment industry from the severe downturn of 1998. The
recovery, which was attributable to capacity expansion and increased investment
in advanced technology by the semiconductor industry, resulted in increased
demand for our systems from manufacturers of semiconductor capital equipment,
including our largest customer. Our experience has shown that our sales to
semiconductor capital equipment customers is dependent on the volatility of that
industry, as a result of sudden changes in semiconductor supply and demand, and
rapid technological advances in both semiconductor devices and wafer fabrication
processes.
Our sales in the second quarter of 2000 when compared to the second quarter
of 1999 were also higher because of increased sales to the data storage, flat
panel display and emerging markets. Sales to the flat panel display industry
were significantly higher due to increased demand by that industry in Japan.
Sales to the data storage industry were significantly higher due to increased
sales to that industry's entertainment customer group and to its computer
customer group. We also achieved significantly higher sales of customer service
and technical support. These increases to all our industries also resulted in
higher sales to all our major geographic regions, including the United States,
Asia Pacific and Europe.
The following tables summarize net sales and percentages of net sales by
customer type for us for the three-month periods ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------
2000 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Semiconductor capital equipment .................. $ 56,413 $ 27,345
Data storage ..................................... 7,089 4,437
Flat panel display ............................... 6,138 2,342
Emerging markets ................................. 7,302 6,704
Customer service technical support ............... 3,644 2,444
---------- ----------
$ 80,586 $ 43,272
========== ==========
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
Semiconductor capital equipment .................. 70% 63%
Data storage ..................................... 9 10
Flat panel display ............................... 8 5
Emerging markets ................................. 9 16
Customer service technical support ............... 4 6
---------- ----------
100% 100%
========== ==========
</TABLE>
The following tables summarize net sales and percentages of net sales by
geographic region for us for the three-month periods ended June 30, 2000 and
1999:
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------
2000 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
United States and Canada ......................... $ 57,425 $ 32,249
Europe ........................................... 12,420 6,311
Asia Pacific ..................................... 10,655 4,668
Rest of world .................................... 86 44
---------- ----------
$ 80,586 $ 43,272
========== ==========
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
---------------------------
2000 1999
---------- ----------
<S> <C> <C>
United States and Canada ..................... 71% 74%
Europe ....................................... 16 15
Asia Pacific ................................. 13 11
Rest of world ................................ -- --
---------- ----------
100% 100%
========== ==========
</TABLE>
GROSS MARGIN
Our gross margin was 43.8% in the second quarter of 1999 and 48.8% in the
second quarter of 2000. The improvement was due to more favorable absorption of
manufacturing overhead from the higher sales base, lower material costs, and
lower costs of customer service and technical support. We intend to add new
facilities in Fort Collins, Colorado in the fourth quarter of 2000, which could
adversely impact absorption of overhead.
RESEARCH AND DEVELOPMENT EXPENSES
We invest in research and development to investigate new technologies,
develop new products, and improve existing product designs. Our research and
development expenses were $6.8 million in the second quarter of 1999 and $8.1
million in the second quarter of 2000, representing an increase of 19%. The
increase is primarily due to increases in payroll, depreciation, and higher
infrastructure costs for new product development. As a percentage of sales,
research and development expenses decreased from 15.8% in the second quarter of
1999 to 10.1% in the second quarter of 2000 because of the higher sales base.
We believe continued research and development investment for development of
new systems is critical to our ability to serve new and existing markets. Since
our inception, the majority of our research and development costs have been
internally funded and all have been expensed as incurred.
SALES AND MARKETING EXPENSES
Our 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 were $4.1 million in
the second quarter of 1999 and $5.0 million in the second quarter of 2000,
representing a 24% increase. The increase is primarily due to higher payroll,
promotion, distribution and depreciation costs incurred as we continue to
increase our sales management and product management capabilities. As a
percentage of sales, sales and marketing expenses decreased from 9.4% in the
second quarter of 1999 to 6.3% in the second quarter of 2000 because of the
higher sales base.
13
<PAGE> 14
GENERAL AND ADMINISTRATIVE EXPENSES
Our general and administrative expenses support our worldwide financial,
administrative, information systems and human resources functions. General and
administrative expenses were $3.5 million in the second quarter of 1999 and $5.3
million in the second quarter of 2000, representing a 50% increase. The increase
is primarily due to higher spending for payroll and purchased services. As a
percentage of sales, general and administrative expenses decreased from 8.2% in
the second quarter of 1999 to 6.6% in the second quarter of 2000 because of the
higher sales base.
We continue to implement our management system software, including the
replacement of existing systems in our domestic and foreign locations. We expect
that charges related to training and implementation of the new software will
continue through 2000.
ONE-TIME CHARGES
On April 6, 2000, Advanced Energy acquired Noah Holdings, Inc. ("Noah") in
a merger that was accounted for as a pooling of interests. This merger involved
the exchange of approximately 687,000 shares of Advanced Energy common stock for
the privately held common stock of Noah. In addition, outstanding Noah stock
options were converted into options to purchase approximately 29,000 shares of
our common stock. As part of the business combination, we took a one-time charge
of $2.3 million in the second quarter of 2000 for merger costs, which cannot be
capitalized and are generally nondeductible for income tax purposes. We expect
to incur additional operating expenses during 2000 related to consolidating and
integrating operations of this business combination.
OTHER INCOME (EXPENSE)
Other income consists primarily of interest income and expense, foreign
exchange gains and other miscellaneous items. Other income was $31,000 in the
second quarter of 1999. Other income was $734,000 in the second quarter of 2000,
primarily due to net interest income from marketable securities we hold and
foreign currency gains.
PROVISION FOR INCOME TAXES
The income tax provision for the second quarter of 1999 was $1.8 million and
represented an effective tax rate of 39%. The income tax provision for the
second quarter of 2000 was $7.3 million and represented an effective tax rate of
38%. We have implemented several strategic tax reduction initiatives to reduce
our overall effective rate, and we adjust our income taxes periodically based
upon the anticipated tax status of all foreign and domestic entities.
14
<PAGE> 15
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
SALES
Sales were $77.2 million for the first six months of 1999 and $150.8 million
for the first six months of 2000. The increase was attributable to increased
sales to all the industries to which we sell, and also included increases to all
of our geographic regions.
The following tables summarize net sales and percentages of net sales by
customer type for us for the six-month periods ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Semiconductor capital equipment .................. $ 102,193 $ 46,816
Data storage ..................................... 14,137 9,040
Flat panel display ............................... 10,863 3,559
Emerging markets ................................. 16,143 13,745
Customer service technical support ............... 7,501 4,045
---------- ----------
$ 150,837 $ 77,205
========== ==========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------- ----------
<S> <C> <C>
Semiconductor capital equipment .................. 68% 61%
Data storage ..................................... 9 12
Flat panel display ............................... 7 4
Emerging markets ................................. 11 18
Customer service technical support ............... 5 5
---------- ----------
100% 100%
========== ==========
</TABLE>
The following tables summarize net sales and percentages of net sales by
geographic region for us for the six-month periods ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
United States and Canada ......................... $ 106,434 $ 56,193
Europe ........................................... 23,637 12,193
Asia Pacific ..................................... 20,479 8,457
Rest of world .................................... 287 362
---------- ----------
$ 150,837 $ 77,205
========== ==========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------- ----------
<S> <C> <C>
United States and Canada ......................... 71% 73%
Europe ........................................... 16 16
Asia Pacific ..................................... 13 11
Rest of world .................................... -- --
---------- ----------
100% 100%
========== ==========
</TABLE>
GROSS MARGIN
Our gross margin was 42.3% in the first six months of 1999 and 48.4% in the
first six months of 2000. The improvement was due to more favorable absorption
of
15
<PAGE> 16
manufacturing overhead from the higher sales base, and from lower costs of
customer service and technical support.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses were $12.7 million in the first six months
of 1999 and $15.9 million in the first six months of 2000, representing an
increase of 25%. The increase is primarily due to increases in payroll,
materials and supplies, depreciation and higher infrastructure costs for new
product development. As a percentage of sales, research and development expenses
decreased from 16.4% in the first six months of 1999 to 10.5% in the first six
months of 2000 because of the higher sales base.
SALES AND MARKETING EXPENSES
Sales and marketing expenses were $7.4 million in the first six months of
1999 and $10.7 million in the first six months of 2000, representing a 44%
increase. The increase is primarily due to higher payroll, promotion and
distribution costs. As a percentage of sales, sales and marketing expenses
decreased from 9.6% in the first six months of 1999 to 7.1% in the first six
months of 2000 because of the higher sales base.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $6.8 million in the first six
months of 1999 and $10.5 million in the first six months of 2000, representing a
54% increase. The increase is primarily due to higher spending for payroll and
purchased services. As a percentage of sales, general and administrative
expenses decreased from 8.9% in the first six months of 1999 to 7.0% in the
first six months of 2000 because of the higher sales base.
OTHER INCOME (EXPENSE)
Other income was $925,000 in the first six months of 2000, primarily due to
net interest income from marketable securities we hold, partially offset by
foreign currency losses.
PROVISION FOR INCOME TAXES
The income tax provision for the first six months of 1999 was $2.3 million
and represented an effective tax rate of 41%. The income tax provision for the
first six months of 2000 was $12.5 million and represented an effective tax rate
of 36%. We have implemented several strategic tax reduction initiatives to
reduce our overall effective rate, and we adjust our income taxes periodically
based upon the anticipated tax status of all foreign and domestic entities.
16
<PAGE> 17
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations, acquired equipment and
met our working capital requirements through borrowings under our revolving line
of credit, long-term loans secured by property and equipment, cash flow from
operations and proceeds from underwritten public offerings of our common stock
and convertible subordinated debt.
Operating activities used cash of $2.3 million in the first six months of
1999, primarily as a result of increases in accounts receivable and inventories,
partially offset by net income, depreciation and amortization, increases in
accounts payable and increased accruals for payroll, employee benefits and
income taxes. Operating activities provided cash of $10.3 million in the first
six months of 2000, primarily as a result of net income, depreciation and
amortization, partially offset by increases in accounts receivable and
inventories. We expect future receivable and inventory balances to fluctuate
with net sales. We provide just-in-time deliveries to certain of our customers
and may be required to maintain higher levels of inventory to satisfy our
customers' delivery requirements. Any increase in our inventory levels will
require the use of cash to purchase the inventory.
Investing activities used cash of $1.2 million in the first six months of
1999, and included the purchase of property and equipment for $3.1 million
offset by a decrease of marketable securities of $1.9 million. Investing
activities used cash of $14.9 million in the first six months of 2000, and
included the purchase of marketable securities of $10.0 million and the purchase
of property and equipment for $5.0 million, partially offset by proceeds from
the sale of equipment of $150,000.
Financing activities provided cash of $3.4 million in the first six months
of 1999, and consisted primarily of $1.8 million from the exercise of employee
stock options and sale of common stock through our employee stock purchase plan
("ESPP") and $1.6 million of net changes in notes payable and capital lease
obligations. Financing activities provided cash of $2.7 million in the first six
months of 2000, and included $3.0 million from the exercise of employee stock
options and sale of common stock through our ESPP, partly offset by $363,000 of
net changes in notes payable and capital lease obligations.
We plan to spend approximately $11 million through the remainder of 2000 for
the acquisition of equipment, leasehold improvements and furnishings, with
depreciation expense projected to be $4.1 million.
As of June 30, 2000, we had working capital of $279.4 million. Our principal
sources of liquidity consisted of $17.8 million of cash and cash equivalents,
$201.2 million of marketable securities, and a credit facility consisting of a
$30.0 million revolving line of credit, with options to convert up to $10.0
million to a three-year term loan. Advances
17
<PAGE> 18
under the revolving line of credit bear interest at either the prime rate (9.5%
at July 31, 2000) minus 1.25% or the LIBOR 360-day rate (7.08% at July 31, 2000)
plus 150 basis points, at our option. All advances under the revolving line of
credit will be due and payable in December 2000. As of June 30, 2000 there was
an advance outstanding of $1.9 million on our line of credit by our Japanese
subsidiary, Advanced Energy Japan K.K. We also have a line of credit of $1.9
million of which $94,000 was outstanding at June 30, 2000.
We believe that our cash and cash equivalents, marketable securities, cash
flow from operations and available borrowings, will be sufficient to meet our
working capital needs through at least the end of 2001. After that time, we may
require additional equity or debt financing to address our working capital,
capital equipment or expansion needs. In addition, any significant acquisitions
we make may require additional equity or debt financing to fund the purchase
price, if paid in cash. There can be no assurance that additional funding will
be available when required or that it will be available on terms acceptable to
us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
Our exposure to market risk for changes in interest rates relates primarily
to our investment portfolio and long-term debt obligations. We generally place
our investments with high credit quality issuers and by policy are averse to
principal loss and seek to protect and preserve our invested funds by limiting
default risk, market risk and reinvestment risk. As of June 30, 2000, our
investments consisted of commercial paper and municipal bonds and money market
mutual funds.
Our interest expense is sensitive to changes in the general level of U.S.
interest rates with respect to our bank facilities of which $2.0 million was
outstanding as of June 30, 2000. Our other debt, including our convertible
subordinated notes, is fixed rate in nature and mitigates the impact of
fluctuations in interest rates. The fair value of our debt approximates the
carrying amount at June 30, 2000. We believe the potential effects of near-term
changes in interest rates on our debt is not material.
FOREIGN CURRENCY EXCHANGE RATE RISK
We transact business in various foreign countries. Our primary foreign
currency cash flows are generated in countries in Asia and Europe. We have
entered into various forward foreign exchange contracts as a hedge against
currency fluctuations in the Japanese yen. We will continue to evaluate various
methods to minimize the effects of currency fluctuations.
18
<PAGE> 19
Eleven European countries have adopted a Single European Currency (the
"euro") as of January 1, 1999 with a transition period continuing through
January 1, 2002. As of January 1, 1999, these 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. Although we do not expect the
introduction of the euro currency to have a significant impact on our revenues
or results of operations, we are unable to determine what effects, if any, the
currency change in Europe will have on competition and competitive pricing in
the affected regions.
OTHER RISK
We have invested in start-up companies and may in the future make additional
investments in start-up companies that develop products which we believe may
provide future benefits. The current and any future start-up investments will be
subject to all of the risks inherent in investing in companies that are not
established.
19
<PAGE> 20
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not aware of any legal proceedings that are expected to have a
material effect on our business, 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
We held our 2000 Annual Meeting of Stockholders on Wednesday, May 10, 2000,
to vote on two proposals. Proxy statements were sent to all shareholders. The
first proposal was for the election of the following eight people as directors:
Douglas S. Schatz, G. Brent Backman, Richard P. Beck, Hollis L. Caswell, Ph.D.,
Arthur A. Noeth, Elwood Spedden, Gerald Starek and Arthur Zafiropoulo. All eight
directors were elected with the following votes tabulated:
<TABLE>
<CAPTION>
TOTAL VOTE FOR TOTAL VOTE WITHHELD
NAME OF DIRECTOR EACH DIRECTOR FROM EACH DIRECTOR
---------------- -------------- -------------------
<S> <C> <C>
Mr. Schatz 24,217,511 152,913
Mr. Backman 24,217,511 152,913
Mr. Beck 24,217,511 152,913
Dr. Caswell 24,217,285 153,139
Mr. Noeth 24,342,710 27,714
Mr. Spedden 24,342,829 27,595
Mr. Starek 24,342,929 27,495
Mr. Zafiropoulo 24,342,912 27,512
</TABLE>
20
<PAGE> 21
The second proposal was for the ratification of the appointment of
independent auditors for the year 2000. The appointment of the current auditors,
Arthur Andersen LLP, was ratified, with the following votes tabulated:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
24,363,003 4,802 2,619
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 The Company's Restated Certificate of Incorporation, as amended(1)
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(4)+
10.2 Purchase Order and Sales Agreement, dated October 12, 1999, between
Lam Research Corporation and the Company(3)
10.3 Purchase Agreement, dated November 1, 1995, between Eaton
Corporation and the Company(5)+
10.4 Loan and Security Agreement, dated August 15, 1997, among Silicon
Valley Bank, Bank of Hawaii and the Company(6)
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(7)
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)
21
<PAGE> 22
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(8)
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.(10)
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(8)
10.16 Direct Loan Agreement dated December 20, 1996 between RF Power
Products, Inc. and the New Jersey Economic Development Authority(8)
10.17 Lease, dated April 15, 1998, between Cross Park Investors, Ltd., and
the Company for property in Austin, Texas(4)
10.18 Lease, dated April 15, 1998, between Cameron Technology Investors,
Ltd., and the Company for property in Austin, Texas(4)
10.19 Agreement and Plan of Reorganization, dated April 5, 2000, between
the Registrant, Noah Holdings, Inc. and AE Cal Merger Sub, Inc.(11)
10.20 Escrow and Indemnity Agreement, dated April 5, 2000, between the
Registrant, the former stockholders of Noah Holdings, Inc. and
Commercial Escrow Services, Inc.(11)
10.21 Agreement and Plan of Reorganization, dated July 21, 2000, by and
among the Company, Mercury Merger Corporation, a wholly owned
subsidiary of the Company, Sekidenko, Inc., and Dr. Ray R. Dils
10.22 Agreement and Plan of Reorganization, dated July 6, 2000, by and
among the Company, Flow Acquisition Corporation, a wholly owned
subsidiary of the Company, and Engineering Measurements Company
27.1 Financial Data Schedule for the six-month period ended June 30, 2000
27.2 Financial Data Schedules as restated for the year ended December 31,
1998, the three-month period ended March 31, 1999, the six-month
period ended June 30, 1999, the nine-month period ended September
30, 1999 and the year ended December 31, 1999
27.3 Financial Data Schedule as restated for the three-month period ended
March 31, 2000
22
<PAGE> 23
----------
(1) 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.
(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 Annual Report on Form 10-K
for the year ended December 31, 1999 (File No. 0-26966), filed March
20, 2000.
(4) 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.
(5) 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.
(6) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 333-34039), filed August 21, 1997, as amended.
(7) 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.
(8) 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.
(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 RF Power Products' Registration Statement
on Form 10 (File No. 0-020229), filed May 19, 1992 as amended.
(11) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 333-37378), filed May 19, 2000.
* Compensation Plan
+ Confidential treatment has been granted for portions of this
agreement.
(b) No reports on Form 8-K were filed by the Company during the quarter ended
June 30, 2000.
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 Financial August 4, 2000
Officer, Assistant Secretary and
Director (Principal Financial Officer
and Principal Accounting Officer)
24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
3.1 The Company's Restated Certificate of Incorporation, as amended(1)
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(4)+
10.2 Purchase Order and Sales Agreement, dated October 12, 1999, between Lam
Research Corporation and the Company(3)
10.3 Purchase Agreement, dated November 1, 1995, between Eaton Corporation
and the Company(5)+
10.4 Loan and Security Agreement, dated August 15, 1997, among Silicon
Valley Bank, Bank of Hawaii and the Company(6)
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(7)
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(8)
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.(10)
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(8)
10.16 Direct Loan Agreement dated December 20, 1996 between RF Power
Products, Inc. and the New Jersey Economic Development Authority(8)
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.17 Lease, dated April 15, 1998, between Cross Park Investors, Ltd., and
the Company for property in Austin, Texas(4)
10.18 Lease, dated April 15, 1998, between Cameron Technology Investors,
Ltd., and the Company for property in Austin, Texas(4)
10.19 Agreement and Plan of Reorganization, dated April 5, 2000, between the
Registrant, Noah Holdings, Inc. and AE Cal Merger Sub, Inc.(11)
10.20 Escrow and Indemnity Agreement, dated April 5, 2000, between the
Registrant, the former stockholders of Noah Holdings, Inc. and
Commercial Escrow Services, Inc.(11)
10.21 Agreement and Plan of Reorganization, dated July 21, 2000, by and among
the Company, Mercury Merger Corporation, a wholly owned subsidiary of
the Company, Sekidenko, Inc., and Dr. Ray R. Dils
10.22 Agreement and Plan of Reorganization, dated July 6, 2000, by and among
the Company, Flow Acquisition Corporation, a wholly owned subsidiary of
the Company, and Engineering Measurements Company
27.1 Financial Data Schedule for the six-month period ended June 30, 2000
27.2 Financial Data Schedules as restated for the year ended December 31,
1998, the three-month period ended March 31, 1999, the six-month period
ended June 30, 1999, the nine-month period ended September 30, 1999 and
the year ended December 31, 1999
27.3 Financial Data Schedule as restated for the three-month period ended
March 31, 2000
</TABLE>
----------
(1) 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.
(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 Annual Report on Form 10-K
for the year ended December 31, 1999 (File No. 0-26966), filed March
20, 2000.
(4) 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.
(5) 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.
(6) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 333-34039), filed August 21, 1997, as amended.
(7) 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.
(8) 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.
(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 RF Power Products' Registration Statement
on Form 10 (File No. 0-020229), filed May 19, 1992 as amended.
(11) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 333-37378), filed May 19, 2000.
* Compensation Plan
+ Confidential treatment has been granted for portions of this
agreement.
