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 Fourth Quarter and Year-End 2004 Results
FORT COLLINS, Colo., Feb 17, 2005—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the fourth quarter and year ended December 31, 2004. Advanced Energy provides a comprehensive suite of process-centered solutions critical to the production of semiconductors, flat panel displays, data storage products, architectural glass and other advanced thin film product applications.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO)

Fourth Quarter 2004 Review

For the 2004 fourth quarter, sales were $88.4 million, up 18 percent compared to $74.7 million in the fourth quarter of 2003, and down 6 percent compared to $93.6 million in sales for the third quarter of 2004.

The fourth quarter 2004 net loss was $23.0 million, or $0.70 per share. Included in the fourth quarter 2004 net loss are $19.8 million in pre-tax charges primarily attributable to increased excess and obsolete inventory reserves, a change in an accounting estimate related to demonstration equipment, employee severance and termination costs, and intangible asset impairments.

The fourth quarter 2003 net loss was $2.4 million, or $0.08 per share, and the third quarter 2004 net loss was $1.1 million or $0.03 per share.

Full-Year 2004 Review

Full-year 2004 sales were $395.3 million, a 51 percent increase compared to $262.4 million in sales for the full-year 2003. The net loss for the 2004 full-year period was $12.7 million, or $0.39 per share, compared to a net loss of $44.2 million, or $1.37 per share for the full-year 2003.

Doug Schatz, chairman, president and chief executive officer of Advanced Energy, said, "Revenue for the fourth quarter was above our expectations based on strong sales to the flat panel display market. This week, we formally announced Summit(TM), a revolutionary product targeted at advanced processing applications, including next generation flat panel display manufacturing. Summit(TM) has had a successful introduction to the marketplace, contributing to the 94 percent year-over-year increase in sales to the flat panel display market."

"Semiconductor-related business continues to decline in the near term, although recently announced capital expenditure budget increases by large chip manufacturers could suggest improving trends later in the year," said Mr. Schatz. "We are continuing to take the appropriate actions to ensure we are well positioned to respond quickly to changing market dynamics."

Mr. Schatz continued, "We expect first quarter 2005 sales to be $83 million to $85 million, a 4 percent to 6 percent decline quarter over quarter. Despite the lower anticipated revenue level, we expect to return to operating profitability in the first quarter, as we begin to realize the initial cost benefits from our global manufacturing and supply-base initiatives."

Fourth Quarter and Year-End 2004 Conference Call

Management will host a conference call today, Thursday, February 17, 2005 at 5:00 pm Eastern time to discuss Advanced Energy's 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, and enter the pass code 7663016. The replay will be available through Thursday, February 24, 2005. There will also be a webcast available at www.advanced-energy.com.

About Advanced Energy

Advanced Energy is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other advanced product applications.

Leveraging a diverse product portfolio and technology leadership, Advanced Energy creates solutions that maximize process impact, improve productivity and lower the cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, and plasma and ion beam sources for original equipment manufacturers (OEMs) and end-users around the world.

Advanced Energy 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, Advanced Energy is a publicly held company traded on the 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, including the company's expectations with respect to Advanced Energy's financial results for the first quarter of 2005. Forward-looking statements are 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, semiconductor capital equipment and flat panel display industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, the Company's successful completion of key initiatives such as the worldwide manufacturing realignment and the shift to Asian-based suppliers, 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 from Advanced Energy's website at www.advanced-energy.com or by contacting Advanced Energy's investor relations at 970-221-4670. The company assumes no obligation to update the information in this press release.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     (in thousands, except per share data)

                                  Three Months Ended           Year Ended
                                December 31,   September 30,  December 31,
                               2004      2003      2004      2004      2003

     Sales                   $88,399   $74,731   $93,550   $395,305  $262,402
     Cost of sales            73,836    48,100    63,810    275,626   174,455
     Gross profit             14,563    26,631    29,740    119,679    87,947

     Operating expenses:
       Research and
        development           12,746    12,750    12,576     51,541    51,647
       Selling, general
        and administrative    12,494    11,345    14,382     54,767    49,339
       Amortization of
        intangible assets        538     1,199     1,092      3,925     4,612
       Restructuring charges   3,670     1,018      (165)     3,912     4,306
       Demonstration
        equipment charge       3,752        --        --      3,752        --
       Impairment of
        intangible assets      3,326        --        --      3,326     1,175
          Total operating
           expenses           36,526    26,312    27,885    121,223   111,079

     (Loss) income from
      operations             (21,963)      319     1,855     (1,544)  (23,132)

     Other expense, net       (1,690)   (1,957)   (1,994)    (7,256)   (9,308)
     Loss before income
      taxes                  (23,653)   (1,638)     (139)    (8,800)  (32,440)

     Benefit (provision)
      for income taxes           648      (801)     (997)    (3,947)  (11,801)

     Net loss               $(23,005)  $(2,439)  $(1,136)  $(12,747) $(44,241)

     Basic and diluted
      loss per share          $(0.70)   $(0.08)   $(0.03)    $(0.39)   $(1.37)

     Basic and diluted
      weighted-average
      common shares
      outstanding             32,698    32,433    32,674     32,649    32,271



     The following condensed consolidated statements of operations excluding
     certain (charges) benefits are presented to aid in understanding the
     operating results of Advanced Energy Industries, Inc.  These condensed
     consolidated statements of  operations are not in accordance with
     generally accepted accounting  principals (GAAP) in the United States of
     America and may be different from similar measures used by other
     companies.  The statement below presents adjusted net income that is
     GAAP net income, adjusted to exclude certain charges and benefits, and
     adjusted gross profit that is GAAP gross profit, adjusted to exclude
     inventory write-downs for excess and obsolete inventory.  Reconciliations
     from these non-GAAP financial measures to the most directly comparable
     measures reported under GAAP are included at the bottom of this
     statement.  The inclusion of the charges and benefits herein does not
     necessarily indicate that such events will not recur in the future.

     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     EXCLUDING CERTAIN (CHARGES) BENEFITS
     (in thousands, except per share data)

                                             Three Months Ended
                                         December 31,   September 30,
                                             2004           2004

    Sales                                  $88,399        $93,550
    Cost of sales                           64,797         63,810
    Gross profit (Non-GAAP)                 23,602         29,740

    Operating expenses:
      Research and development              12,746         12,576
      Selling, general and administrative   12,494         14,382
      Amortization of intangible assets        538          1,092
      Restructuring charges                     --             --
      Demonstration equipment charge            --             --
      Impairment of intangible assets           --             --
         Total operating expenses           25,778         28,050

    (Loss) income from operations
     (Non-GAAP)                             (2,176)         1,690

    Other expense, net                      (1,690)        (1,994)
    Loss before income taxes                (3,866)          (304)

    Provision for income taxes (Non-GAAP)     (654)          (997)

    Net loss excluding certain
     (charges) benefits (Non-GAAP)         $(4,520)       $(1,301)

    Basic and diluted loss per share
     (Non-GAAP)                             $(0.14)        $(0.04)



     A reconciliation of our gross profit and net loss excluding certain
     (charges) benefits to the most directly comparable measures under
     generally accepted accounting principals in the United States of America
     is presented below:

     Gross profit excluding certain
      (charges) benefits (Non-GAAP)        $23,602        $29,740
        Inventory write-down (1)            (9,039)            --
     Gross profit (GAAP)                   $14,563        $29,740

     Net loss excluding certain
      (charges) benefits (Non-GAAP)        $(4,520)       $(1,301)

        Inventory write-down (1)            (9,039)
        Employee severance and
         termination costs (2)              (3,670)           165
        Change in estimated life of
         demonstration and evaluation
         equipment (3)                      (3,752)
        Impairment of intangible
         assets (4)                         (3,326)
     Total (charges) benefits              (19,787)           165
     Adjustment to provision for
      income taxes                           1,302
     Net loss (GAAP)                      $(23,005)       $(1,136)

    Basic and diluted loss per
     share (GAAP)                           $(0.70)        $(0.03)

    Basic and diluted weighted-average
     common shares outstanding              32,698         32,674

     (1)  The inventory write-down is primarily due to the product lifecycle
          management program, discontinuance of certain products in select
          markets, the product mix shift from 200mm wafers to 300mm wafers,
          and the expected continued slowdown in the semiconductor industry.

     (2)  The employee severance and termination costs consist of costs
          associated with the involuntary severance of approximately
          225 employees at the Fort Collins facility.  The need to reduce
          headcount in Fort Collins resulted primarily from the transfer of a
          substantial portion of manufacturing operations to Shenzhen, China.
          Additional charges are expected in the first half of 2005, primarily
          related to employees in the Hajiochi, Japan facility.

     (3)  As a result of the continuing process of obtaining and analyzing
          historical data and the Company's fiscal year 2005 operating plan
          for use of current and future demonstration equipment, the Company
          has made a change in the estimated useful life of the demonstration
          equipment from two years to zero years.  The Company's policy going-
          forward is to record sales and marketing expense for the
          demonstration equipment as it is placed into service at our
          customers' or potential customers' location.

     (4)  The intangible asset impairment charge relates to assets acquired in
          conjunction with the acquisitions of Aera and Dressler and were
          considered for impairment in conjunction with the Company's
          restructuring activities and 2005 operating plan.



     CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     (in thousands)

                                              December 31,      December 31,
                                                  2004              2003
     ASSETS

     Current Assets:
       Cash and cash equivalents                $38,404           $41,522
       Marketable securities, available
        for sale                                 69,578            93,370
       Accounts receivable, net                  72,053            61,927
       Inventories, net                          73,224            65,703
       Other current assets                       6,140             5,637
     Total current assets                       259,399           268,159

     Property and equipment, net                 44,746            44,725

     Deposits and other                           6,468             5,951
     Goodwill and intangibles, net               80,308            88,943
     Demonstration and customer service
      equipment, net                              2,968             3,934
     Deferred debt issuance costs, net            2,086             3,019

     Total assets                              $395,975          $414,731

     LIABILITIES AND STOCKHOLDERS' EQUITY

     Current Liabilities:
       Trade accounts payable                   $17,683           $23,066
       Other accrued expenses                    28,615            28,216
       Current portion of capital leases
        and senior borrowings                     3,726             8,582
       Accrued interest payable on
        convertible subordinated notes            2,460             2,460
     Total current liabilities                   52,484            62,324

     Long-term Liabilities:
       Capital leases and senior borrowings       4,679             6,168
       Deferred income tax liabilities, net       3,709             4,672
       Convertible subordinated notes
        payable                                 187,718           187,718
       Other long-term liabilities                2,407             2,015
     Total long-term liabilities                198,513           200,573

     Total liabilities                          250,997           262,897

     Stockholders' equity                       144,978           151,834
     Total liabilities and
      stockholders' equity                     $395,975          $414,731



     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
     (in thousands)

                                                     Year Ended December 31,
                                                       2004           2003

     NET CASH USED IN OPERATING ACTIVITIES          $(11,378)      $(12,986)

     NET CASH PROVIDED BY (USED IN)
      INVESTING ACTIVITIES                            12,329         (8,590)

     NET CASH USED IN FINANCING ACTIVITIES            (5,191)        (8,608)

     EFFECT OF CURRENCY TRANSLATION ON CASH            1,122          1,518
     DECREASE IN CASH AND CASH EQUIVALENTS            (3,118)       (28,666)
     CASH AND EQUIVALENTS, beginning of period        41,522         70,188
     CASH AND EQUIVALENTS, end of period             $38,404        $41,522