For more information, contact:

Mike El-Hillow
Advanced Energy Industries, Inc.
970.407.6570
mike.el-hillow@aei.com
Cathy Kawakami
Advanced Energy Industries, Inc.
970.407.6732
cathy.kawakami@aei.com

Advanced Energy Reports Third Quarter 2002 Results
Fort Collins, Colorado (October 17, 2002)—Advanced Energy (Nasdaq: AEIS) today reported financial results for the third quarter ended September 30, 2002. Advanced Energy is a leading global provider of critical components and sub-systems used in the production of semiconductors, flat panel displays, data storage products and other advanced applications.

Revenue for the third quarter of 2002 increased 83 percent to $70.7 million, compared to third quarter 2001 revenue of $38.7 million. Revenue for the third quarter of 2002 increased 4 percent compared to second quarter 2002 revenue of $67.9 million. Revenue for the second and third quarters of 2002 includes contributions from the Aera Japan Ltd. and Dressler HF Technik GmbH acquisitions

Net loss for the third quarter of 2002 was $5.6 million or $0.17 per share including restructuring charges of $3.2 million (on a pretax basis) or $0.07 per share related to the cost reduction actions announced on August 14, 2002. This compares to the third quarter 2001 net loss of $7.5 million, or $0.24 per share, and the second quarter 2002 net loss of $5.1 million, or $0.16 per share.

Sales for the nine months ended September 30, 2002 were $181.5 million compared to $159.6 million for the first nine months of 2001. Net loss for the 2002 nine-month period was $19.5 million, or $0.61 per share, compared to a net loss of $16.9 million, or $0.53 per share, for the 2001 nine-month period.

Doug Schatz, chairman, president and chief executive officer, said, “Orders continued to be somewhat stable throughout most of the third quarter and we achieved financial results within our expectations. We experienced strength in mass flow control sales to both end users and OEMs, as well as a pick up in demand from our flat panel display OEM customers. This quarter also marked a number of design wins in oxide etch, photoresist strip and PVD applications, further solidifying our market lead for both current and next generation processing tools.”

Based on information currently available, the Company expects fourth quarter revenues in the $53 million to $55 million range and an operating loss per share of $0.28 to $0.30.

“As we enter the fourth quarter, activity throughout the industry is decreasing. We are evaluating the company’s cost structure to further reduce our break-even point, below the $70 million revenue level that we planned for the first quarter of 2003, to the $55 million to $60 million revenue level if industry conditions do not improve,” said Mr. Schatz.

Third Quarter 2002 Conference Call

Management will host a conference call today, Thursday, October 17, 2002 at 5:00 pm Eastern time to discuss the financial results. You may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-679-7720. For a replay of this teleconference, please call 706-645-9291, code 5677868. The replay will be available through Thursday, October 24, 2002. 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 components and sub-systems critical to plasma-based manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other applications that require precise thin-film processes.

AE offers a comprehensive line of technology solutions in power, flow and thermal management, plasma and ion beam sources, and integrated process monitoring and control to original equipment manufacturers (OEMs) and end-users around the world.

AE operates in regional centers in North America, Asia and Europe, and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, AE is a publicly-held company traded on Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com .

Safe Harbor Statement

This press release contains certain forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the volatility and cyclicality of the semiconductor and semiconductor capital equipment industries, fluctuations in quarterly and annual revenues and operating results, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, our ability to successfully integrate acquired companies' operations, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements, as filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at www.sec.gov. Copies may also be obtained by contacting Advanced Energy's investor relations at 970-407-6732. The company assumes no obligation to update the information in this press release.

    CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
(in thousands except per share data)
Three Months Ended    Nine Months Ended
September 30,      September 30,
2002     2001      2002       2001
Sales                                $70,674  $38,722  $181,454  $159,607
Cost of sales                         44,074   27,686   117,168   109,567
Gross profit                          26,600   11,036    64,286    50,040
Operating expenses:
Research and development         12,185   10,967    36,020    34,396
Sales and marketing               9,738    5,694    25,201    18,286
General and administrative        7,245    4,817    21,073    16,636
Restructuring charges             3,220      --      3,220       614
Impairment of investments and
advances                           --     1,221       --      1,221
Litigation damages and expenses
(recoveries)                       --       --      5,313    (1,500)
Goodwill impairment                 --       --        --      5,446
Total operating expenses      32,388   22,699    90,827    75,099
Loss from operations                  (5,788) (11,663)  (26,541)  (25,059)
Other (expense) income                (2,797)    (711)   (3,370)     (594)
Net loss before income taxes and
minority interest                    (8,585) (12,374)  (29,911)  (25,653)
Benefit for income taxes              (3,005)  (4,704)  (10,469)   (8,568)
Minority interest in net loss            --      (188)      --       (148)
Net loss                             $(5,580) $(7,482) $(19,442) $(16,937)
Basic and diluted net loss per share  $(0.17)  $(0.24)   $(0.61)   $(0.53)
Basic and diluted weighted-average
common shares outstanding            32,073   31,784    31,994    31,673
ADDITIONAL INFORMATION - Pro forma
without exceptional items:
Pro forma net loss without
exceptional items                   $(3,344) $(6,733) $(16,672)  $(7,463)
Pro forma basic and diluted loss per
share                                $(0.10)  $(0.21)   $(0.52)   $(0.24)
ADDITIONAL INFORMATION - EBITDA:
Loss before interest, taxes,
depreciation and amortization         $(684) $(8,056)  $(8,797) $(13,778)
Pretax EBITDA diluted EPS             $(0.02)  $(0.25)   $(0.27)    $0.44
After tax EBITDA diluted EPS          $(0.01)  $(0.16)   $(0.18)    $0.29
THE PRO FORMA AMOUNTS HAVE BEEN
ADJUSTED TO ELIMINATE THE
FOLLOWING:
Excess, obsolete and warranty
inventory charges                       --       --        --      7,116
Restructuring charges                  3,220      --      3,220       614
Impairment of investments and
advances                                --     1,221       --      1,221
Litigation damages (recoveries)          --       --      5,313    (1,500)
Goodwill impairment                      --       --        --      5,446
Foreign exchange loss (gain)             220      --     (4,272)      --
Income tax effect                     (1,204)    (472)   (1,491)   (3,423)
$2,236     $749    $2,770    $9,474
EBITDA RECONCILIATION
Loss before income taxes and
minority interest                    (8,585) (12,374)  (29,911)  (25,653)
Interest income                         (749)  (1,302)   (2,465)   (4,418)
Interest expense                       3,164    1,893     9,652     4,415
Depreciation and amortization          5,486    3,727    13,927    11,878
$(684) $(8,056)  $(8,797) $(13,778)
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands)
September 30,      December 31,
2002              2001
ASSETS
Current Assets:
Cash and cash equivalents                 $87,253           $81,955
Marketable securities                     101,715           190,023
Accounts receivable                        50,625            30,812
Income tax receivable                      19,651            15,862
Inventories                                67,379            45,248
Other current assets                        6,712             4,178
Deferred income tax assets, net            12,712            11,200
Total current assets                           346,047           379,278
Property and equipment, net                     43,543            31,095
Deposits and other                               4,139             6,482
Goodwill and intangibles, net                   89,851            23,072
Demonstration and customer service
equipment                                       5,635             4,532
Deferred debt issuance costs                     4,731             5,736
Total assets                                  $493,946          $450,195
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable                    $21,279           $10,231
Other current liabilities                  22,897            14,778
Current portion of long-term
debt                                      16,670             1,130
Accrued interest payable on
convertible subordinated notes             2,219             2,696
Total current liabilities                       63,065            28,835
Long-term Liabilities:
Senior borrowings                           11,184               --
Capital leases                               1,173               --
Convertible subordinated notes
payable                                   206,600           206,600
Deferred income tax liability,
net                                        10,382               415
Total long-term liabilities                    229,339           207,015
Total liabilities                              292,404           235,850
Stockholders' equity                           201,542           214,345
Total liabilities and stockholders'
equity                                       $493,946          $450,195
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September 30,
2002              2001
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES                         $(16,948)           $5,753
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES                           26,825           (12,932)
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES                           (4,759)          122,165
EFFECT OF CURRENCY TRANSLATION ON
CASH                                              180               981
INCREASE IN CASH AND CASH EQUIVALENTS            5,298           115,967
CASH AND EQUIVALENTS, beginning of
period                                         81,955            31,716
CASH AND EQUIVALENTS, end of period            $87,253          $147,683

Source: Advanced Energy