927003--3/28/2006--ADVANCED_ENERGY_INDUSTRIES

related topics

{customer, product, revenue}

{property, intellectual, protect}

{product, market, service}

{competitive, industry, competition}

{operation, international, foreign}

{gas, price, oil}

{debt, indebtedness, cash}

{financial, litigation, operation}

Raw material, part, component and subassembly shortages, exacerbated by our dependence on sole and limited source suppliers, could affect our ability to manufacture products and systems and could delay our shipments. A significant portion of our sales is concentrated among a few customers. We generally have no written long-term contracts with our customers requiring them to purchase any specified quantities from us. If we are unable to adjust our business strategy successfully for some of our product lines to reflect the increasing price sensitivity on the part of our customers, our business and financial condition could be harmed. The markets in which we operate are highly competitive. Our competitive position could be weakened if we are unable to convince end users to specify that our products be used in the equipment sold by our customers. We must achieve design wins to retain our existing customers and to obtain new customers, although design wins achieved do not necessarily result in substantial sales. Our ability to borrow under our revolving line of credit may be restricted if we do not maintain compliance with certain financial covenants. Restrictions in our ability to borrow under our revolving line of credit could limit our flexibility in reacting to periods of increasing demand and amplify our vulnerability to general adverse economic and industry conditions. We might not be able to compete successfully in international markets or meet the service and support needs of our international customers. Unfavorable currency exchange rate fluctuations may lead to lower operating margins, or may cause us to raise prices which could result in reduced sales. Changes in the value of the Chinese yuan could impact the cost of our operation in Shenzhen, China. We are highly dependent on our intellectual property. Intellectual property rights are difficult to enforce in China. We have been, and in the future may again be, involved in patent litigation. Patent litigation is costly and could result in further restrictions on our ability to sell certain products or an inability to prevent others from using technology we have developed.

Full 10-K form ▸

927003--3/28/2006--ADVANCED_ENERGY_INDUSTRIES_INC