For more information, contact:

Richard Beck
Advanced Energy Industries, Inc.
970.407.6204
dick.beck@aei.com
Cathy Kawakami
Advanced Energy Industries, Inc.
970.407.6732
cathy.kawakami@aei.com


Advanced Energy Reports 2001 Second Quarter Results
FORT COLLINS, Colo., July 11, 2001 Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the 2001 second quarter and six-month period ended June 30, 2001. Advanced Energy is an industry-leading provider of technology solutions for the manufacture of semiconductors, data storage products, and flat panel displays.

For the second quarter of 2001, revenues were $46.2 million, down 46 percent compared to $85.7 million in the second quarter of 2000 and down 38 percent from revenue of $74.7 million in the first quarter of 2001.

The results for the second quarter of 2001 include charges related to a writedown of goodwill, a restructuring charge and a writedown related to the disposal of excess, obsolete and warranty inventory. Pro forma net loss for the second quarter of 2001, excluding the effect of these charges, was $4.9 million, or $0.15 per diluted share. The company’s gross margin, excluding the effect of these charges, declined to 32 percent for the second quarter of 2001, as a result of the lower revenue base.

“Our financial results continue to be adversely affected by the global slowdown in demand for capital equipment,” said Doug Schatz, chairman and chief executive officer. “At this point, we do not have evidence from our customer base that there will be any significant change in order demand over the remainder of 2001. Although we have limited visibility regarding revenue levels, we do expect to see improvements in our operating margins during the third quarter once the full effect of our cost containment actions is realized.”

“Longer term, the fundamentals of our core markets remain strong. We continue to leverage our market leadership in power conversion into other critical technology areas such as temperature management, temperature sensing and gas delivery and management. We believe these initiatives are gaining traction and will more than double our total available market opportunity, based on a June 2001 VLSI Research study. We are working closely with our OEM and end user customers to develop solutions with added capabilities that will improve their manufacturing results for current technology requirements and beyond,” said Mr. Schatz.

During the second quarter of 2001, Advanced Energy terminated operations of two non-strategic product lines as part of the recent restructuring. The company took a charge of $3.6 million in goodwill related to the dissolution of the Tower Electronics subsidiary and a charge of $1.8 million in goodwill related to the dissolution of the Fourth State Technology division. The company does intend to fulfill outstanding orders for existing customers. The company also announced two reductions in force during the second quarter of 2001, which resulted in a charge of $614,000 in restructuring and severance costs.

Actual net loss for the 2001 second quarter was $14.5 million or $0.46 per diluted share and includes the effects of the charges described above, in addition to a $7.1 million writedown of excess, obsolete and warranty inventory charges that was included in cost of goods sold. This compares to net income of $13.1 million or $0.40 per diluted share in the second quarter of 2000 and net income of $5.1 million or $0.16 per diluted share in the first quarter of 2001.

For the first six months of 2001, revenues were $120.9 million compared to $160.7 million for the first six months of 2000. Actual gross profit for the 2001 six-month period was $39.0 million, or 32 percent, compared to $79.0 million or 49 percent for the first six months of 2000.

Actual net loss for the 2001 six-month period was $9.5 million, or $0.30 per diluted share, compared with net income $24.4 million, or $0.75 per diluted share, for the six-month period ended June 30, 2000.

While the company has very low visibility on future order levels due to the current operating environment, it anticipates lower third quarter revenues in the $43 million to $46 million range, and a third quarter loss per share in the $0.16 to $0.