For more information, contact:

Richard Beck Advanced Energy Industries, Inc. 9704076204 dick.beck@aei.com

Cathy Kawakami Advanced Energy Industries, Inc. 9704076732 cathy.kawakami@aei.com

Advanced Energy Reports Record Fourth Quarter and Full-Year Results

FORT COLLINS, Colo., Feb. 8-- Advanced Energy (Nasdaq: AEIS)today reported financial results for the fourth quarter and full-year period ended December 31, 2000. Advanced Energy is an industry-leading provider of critical technology solutions for the manufacture of semiconductors, data storage products, and flat panel displays.

 

Fourth Quarter Review
For the fourth quarter, revenues were a record $102.7 million, up 57.0 percent from $65.4 million for the fourth quarter of 1999, and up 6.6 percent from $96.3 million for the third quarter of 2000. The company's prior year results have been restated to reflect the April 6, 2000 acquisition of Noah Holdings and the August 18, 2000 acquisition of Sekidenko, Inc., using the pooling of interests method of accounting.

"We are pleased to report our fifth consecutive quarter of record revenues and net income, as well as record results for the full year 2000," said Doug Schatz, Chairman and Chief Executive Officer. "Continued market share gains and expansion of our product and technology portfolio were important contributors to our record financial performance in 2000.

"Advanced Energy has made considerable progress in expanding beyond our core product offering to become an integrated supplier of critical solutions that build on our foundation of market leadership in power conversion and control. Our acquisitions of Noah Holdings and Sekidenko in 2000, and EMCO in early 2001, add essential technologies to our offering that enable our OEM customers to have more control over the increasingly complex semiconductor manufacturing process," said Mr. Schatz.

Net income for the 2000 fourth quarter was $27.4 million, or $0.83 per diluted share, which includes a $7.6 million extraordinary item, net of income taxes, related to the company's buy-back of a portion of its convertible subordinated notes.

Net income before the extraordinary item in the fourth quarter of 2000 was $19.8 million, or $0.61 per diluted share. This compares to net income of $16.5 million, or $0.51 per diluted share for the third quarter of 2000 excluding one-time charges related to the Sekidenko acquisition, restructuring charges and a gain on an investment. This also compares to net income of $8.5 million, or $0.27 per diluted share for the fourth quarter of 1999. Cash earnings per share for the fourth quarter 2000 were $0.86.

The fourth quarter increase in net income also benefited from a lower effective tax rate of 31.5 percent, compared to the annualized effective tax rate of 35 percent. At the previously expected tax rate of 34 percent, earnings per diluted share from operations would have been $0.58 for the fourth quarter excluding the extraordinary item, the minority interest and assuming no conversion of the subordinated notes. This compares to net income of $8.5 million, or $0.27 per diluted share, in the year ago period.

Full Year Review
For the 2000 twelve-month period, revenues were $359.8 million compared with $202.8 million for the year ago period, and increase of 77.4 percent. Gross profit for the 2000 twelve-month period was $176.5 million, or 49.0 percent, an improvement compared with $92.2 million or 45.5 percent for the twelve-month 1999 period. Net income for the 2000 twelve-month period was $68.0 million, or $2.10 per diluted share, compared with $19.1 million, or $0.62 per diluted share, for the twelve-month period ended December 31, 1999. Cash earnings per share for the year 2000 were $2.29. Operating net income excluding merger and restructuring costs, the one-time gain and the extraordinary item was $60.9 million, or $1.88 per diluted share for the full year 2000.

 

"The year 2001 will be challenging given the limited visibility within the semiconductor and semiconductor equipment industry. We do expect a pause in capacity-driven purchases, as the semiconductor manufacturers work off their excess inventories. We remain optimistic about the industry's twelve-to-eighteen month outlook. The current industry cycle includes significant opportunities for technology-driven equipment purchases, including the transition to 300mm wafer processing and use of new materials such as copper and low-k dielectrics. We believe we will continue to gain market share and benefit from the technology purchases," said Mr. Schatz.

 

"Given the revised industry outlook for semiconductor and semiconductor equipment revenue in the coming quarters, we are readjusting our near-term forecast for the first half of 2001. We anticipate first quarter 2001 revenues in the range of $83 million to $86 million and earnings per share in the $0.25 to $0.28 range. We anticipate the second quarter to be flat and within these same ranges. We believe this forecast better reflects the anticipated reduced industry outlook with current visibility, and that we are in a pause in the growth cycle," said Mr. Schatz.

 

Fourth Quarter and Year-End Conference Call

 

Management will host a conference call on Thursday, February 8, 2001 at 9:30 am Eastern time to discuss the financial results. You may access this conference call by dialing 800-982-3472. For a replay of this teleconference, please call 703-925-2533, passcode 4853062. The replay will be available through Thursday, February 15, 2001. There will also be a webcast available at www.advanced-energy.com.

 

About Advanced Energy

 

Advanced Energy is a global leader in the development, marketing, and support of integrated technology solutions that are central in the manufacture of semiconductors, data storage products, and flat panel displays as well as other mission-critical power applications. AE's comprehensive suite of custom subsystems for vacuum processing includes power conversion and control solutions, process monitoring and machine control tools, ion-beam sources, dynamic temperature control and measurement products, mass flow systems, and plasma abatement technologies. AE's URL is www.advanced-energy.com.

 

Safe Harbor Statement

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the companies' reasonable judgments with respect to future events, but are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Among the factors that could cause such different results include: the possibility of changes to our current outlook for industry growth and market share gains, our expected benefits from acquisitions, our ability to integrate acquired companies' operations successfully, the integration of the acquired companies' operations could result in unanticipated costs or substantial diversion of management's attention, and the company's ability to successfully manage its rapid growth.

 

Actual results may differ materially from the forward-looking statements which, by their nature, are subject to risk and uncertainties including fluctuations in quarterly and annual revenues, operating results, the volatility and cyclicality of the semiconductor and semiconductor capital equipment industries, and other risks detailed from time to time in the company's form 10-K, forms 10-Q and other reports and statements as filed with the SEC. The company assumes no obligation to update the information in this release. Free copies of this and other documents are available from the SEC at www.sec.gov or Advanced Energy at 1625 Sharp Point Drive, Fort Collins, CO 80525; 970-221-4670.

 CONSOLIDATED INCOME STATEMENT
(in thousands except per share data)
Quarter Ended       Year Ended
December 31,       December 31,
2000      1999      2000      1999
(unaudited) (unaudited) (audited) (audited)
Sales                              $102,736   $65,441  $359,782  $202,849
Cost of sales                        52,138    33,692   183,329   110,647
Gross profit                         50,598    31,749   176,453    92,202
Operating expenses:
Research and development        10,668     8,103    36,996    28,326
Sales and marketing              6,629     6,117    24,101    18,325
General and administrative       6,376     4,533    24,573    16,225
Restructuring charges               --        --     1,000        --
Merger costs                        --        --     4,583        --
Income from operations               26,925    12,996    85,200    29,326
Other income (expense)                1,036       522     7,485     1,550
Net income before income taxes,
minority interest and
extraordinary item               27,961    13,518    92,685    30,876
Provision for income taxes            8,076     4,994    32,241    11,741
Minority interest in net income         106        69        20        69
Net income before extraordinary
item                                19,779     8,455    60,424    19,066
Extraordinary item net of taxes       7,610        --     7,610        --
Net income                          $27,389    $8,455   $68,034   $19,066
Net earnings per share before
extraordinary item:
Basic                               $0.63     $0.28     $1.93     $0.64
Diluted                             $0.61     $0.27     $1.86     $0.62
Earnings per share from
extraordinary item:
Basic                               $0.24       $--     $0.24       $--
Diluted                             $0.22       $--     $0.24       $--
Net earnings per share:
Basic                               $0.87     $0.28     $2.17     $0.64
Diluted                             $0.83     $0.27     $2.10     $0.62
Basic weighted-average common
shares outstanding              31,517    30,595    31,336    29,706
Diluted weighted-average common
shares outstanding              34,078    31,816    32,425    30,934
ADDITIONAL INFORMATION - Pro forma
without merger and restructuring
costs, gain on sale of investment
and extraordinary item:
Pro forma net income without
merger and restructuring costs,
gain on sale of investment and
extraordinary item                 $19,779    $8,455   $60,888   $19,066
Pro forma basic earnings per share    $0.63     $0.28     $1.94     $0.64
Pro forma fully diluted earnings
per share                            $0.61     $0.27     $1.88     $0.62
ADDITIONAL INFORMATION - EBITDA:
Earnings including extraordinary
gain before interest, taxes
depreciation and amortization,
assuming no dilution from
convertible notes                   $41,606   $15,770  $112,337   $38,569
Pretax cash diluted EPS               $1.30     $0.50     $3.46     $1.25
After tax cash diluted EPS*            0.86      0.33      2.29      0.82
*Calculated based on a 34% rate
CONSOLIDATED BALANCE SHEET
(in thousands)
December  December
31,       31,
2000      1999
ASSETS                             (audited) (audited)
Current Assets:
Cash and cash equivalents      $31,716   $21,043
Marketable securities -
trading                       157,811   186,440
Accounts receivable             76,545    46,471
Notes receivable                 2,472        --
Income tax receivable               74     1,453
Inventories                     45,266    28,410
Other current assets             2,508     1,803
Deferred income tax assets,
net                             5,773     3,753
Total current assets                322,165   289,373
Property and equipment, net          24,101    17,699
Goodwill and intangibles, net         9,890    11,040
Investments                           1,824        --
Deferred debt issuance costs          2,261     4,410
Other assets                          3,884     2,911
Total assets                       $364,125  $325,433
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable, trade        $18,250   $15,702
Other current liabilities       16,210    11,450
Accrued income taxes payable     6,213     1,266
Current portion of long-term
debt                            1,337     2,585
Accrued interest payable on
convertible subordinated
notes                             529       886
Total current liabilities            42,539    31,889
Long-term Liabilities:
Capital leases and notes
payable                          1,043     1,427
Convertible subordinated notes
payable                         81,600   135,000
Total long-term liabilities          82,643   136,427
Total liabilities                   125,182   168,316
Minority interest                       145       128
Stockholders' equity                238,798   156,989
Total liabilities and
stockholders' equity              $364,125  $325,433
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Year Ended December 31,
2000              1999
(audited)        (audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                   $68,034           $19,066
Depreciation and amortization                 11,122             8,437
Gain on repayment of convertible debt        (12,176)               --
Earnings from marketable securities,
net                                          (9,471)           (1,724)
Accounts receivable and notes
receivable                                  (32,546)          (30,128)
Inventories                                  (16,856)           (4,882)
Accounts payable, trade                        2,548             9,171
Income taxes                                  12,921             4,088
Other                                         (1,072)            6,340
Net cash provided by operating
activities                                 22,504            10,368
CASH FLOWS FROM INVESTING ACTIVITIES:
Marketable securities                         38,100          (168,877)
Proceeds from sale of investment               4,464                --
Proceeds from sale of equipment                  150                --
Purchase of property and equipment,
net                                         (14,062)           (7,168)
Purchase of technology                          (981)               --
Other                                            -                (175)
Net cash provided by (used in)
investing activities                       27,671          (176,220)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change from notes payable and
capital lease obligations                    (1,632)            1,667
Proceeds from convertible debt, net               --           130,509
Repayment of convertible debt, net           (40,795)               --
Proceeds from common stock
transactions                                  4,915            42,320
Net cash (used in) provided by
financing activities                      (37,512)          174,496
EFFECT OF CURRENCY TRANSLATION ON CASH
FLOW                                           (1,990)             (476)
INCREASE IN CASH AND CASH EQUIVALENTS           10,673             8,168
CASH AND EQUIVALENTS, beginning of
period                                         21,043            12,875
CASH AND EQUIVALENTS, end of period            $31,716           $21,043

For further information please contact Richard Beck, 970-407-6204, dick.beck@aei.com, or Cathy Kawakami, 970-407-6732, cathy.kawakami@aei.com, both of Advanced Energy Industries, Inc.

SOURCE Advanced Energy Industries, Inc.
Web site: http: //www.aei.com

CONTACT: Richard Beck, 970-407-6204, dick.beck@aei.com, or Cathy Kawakami, 970-407-6732, cathy.kawakami@aei.com, both of Advanced Energy Industries, Inc.