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 First Quarter 2005 Results

Posts Net Income of $0.02 Per Share; Generates $13 Million in Cash

FORT COLLINS, Colo., April 21—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the first quarter ended March 31, 2005. Advanced Energy offers a comprehensive suite of process-centered solutions critical to the production of semiconductors, flat panel displays, data storage products, architectural glass and other advanced product applications.

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

For the 2005 first quarter, sales were $86.1 million, down 17.6% from first quarter 2004 sales of $104.5 million, and down 2.6% from fourth quarter 2004 sales of $88.4 million. Gross margin was 33.8% of sales in the first quarter of 2005 compared to 36.8% in the first quarter of 2004, and 16.5% in the fourth quarter of 2004.

First quarter 2005 net income was $734,000, or $0.02 per diluted share, compared to first quarter 2004 net income of $6.9 million or $0.21 per diluted share. This compares to a net loss of $23.0 million, or $0.70 per share in the fourth quarter of 2004.

The first quarter 2005 results include $1.3 million of restructuring charges related to employee severance and termination costs. The first quarter 2004 results include $220,000 in restructuring charges related to employee severance and termination costs, and approximately $1.0 million in pre-tax gains resulting from the sale of certain marketable securities and the sale of the Company's thermal control business. The fourth quarter 2004 results include $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 first quarter results reflect significant sequential improvement in gross margin, net income and cash generation ahead of plan. Our return to profitability demonstrates that our transition plans are on track. We anticipate the completion of our global manufacturing and supply base transitions over the next six to nine months. We believe these strategic initiatives provide us with a unique competitive advantage that will enable our continued innovation on many levels," stated Doug Schatz, chairman, president and chief executive officer of Advanced Energy.

"Despite initial trend improvements in end user capacity and inventory levels, we continue to take a cautious outlook on the level of near term semiconductor industry demand. As a result, we anticipate second quarter revenue in the $86 million to $90 million range, and earnings per share in the range of $0.03 to $0.05," said Mr. Schatz.

First Quarter Conference Call

Management will host a conference call today, Thursday, April 21, 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 5004166. The replay will be available through Thursday, April 28, 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 second 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
                                                March 31,      December 31,
                                             2005       2004       2004

    Sales                                  $86,140   $104,487    $88,399
    Cost of sales                           57,065     66,073     73,836
    Gross profit                            29,075     38,414     14,563

    Operating expenses:
      Research and development              11,015     13,410     12,746
      Selling, general and administrative   12,901     13,804     16,246
      Amortization of intangible assets        547      1,170        538
      Restructuring charges                  1,262        220      3,670
      Impairment of intangible assets           --         --      3,326
        Total operating expenses            25,725     28,604     36,526

    Income (loss) from operations            3,350      9,810    (21,963)

    Other expense, net                      (2,087)    (1,155)    (1,690)
    Income (loss) before income taxes        1,263      8,655    (23,653)
    (Provision) benefit for income taxes      (529)    (1,731)       648
    Net income (loss)                         $734     $6,924   $(23,005)

    Basic earnings (loss) per share          $0.02      $0.21     $(0.70)

    Diluted earnings (loss) per share        $0.02      $0.21     $(0.70)

    Basic weighted-average
     common shares outstanding              32,755     32,581     32,698

    Diluted weighted-average
     common shares outstanding              32,878     33,593     32,698



     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
                                                      March 31, December 31,
                                                        2005       2004

    Sales                                              $86,140   $88,399
    Cost of sales                                       57,065    64,797
    Gross profit (Non-GAAP)                             29,075    23,602

    Operating expenses:
      Research and development                          11,015    12,746
      Selling, general and administrative               12,901    12,494
      Amortization of intangible assets                    547       538
      Restructuring charges                                 --        --
      Demonstration equipment charge                        --        --
      Impairment of intangible assets                       --        --
        Total operating expenses                        24,463    25,778

    Income (loss) from operations (Non-GAAP)             4,612    (2,176)

    Other expense, net                                  (2,087)   (1,690)
    Income (loss) before income taxes                    2,525    (3,866)
    Provision for income taxes (Non-GAAP)               (1,057)     (654)
    Net income (loss) excluding certain
     (charges) benefits (Non-GAAP)                      $1,468   $(4,520)

    Basic earnings (loss) per share (Non-GAAP)           $0.04    $(0.14)
    Diluted earnings (loss) per share (Non-GAAP)         $0.04    $(0.14)



     A reconciliation of our gross profit and net income (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)                               $29,075   $23,602
      Inventory write-down (1)                              --    (9,039)
    Gross profit (GAAP)                                $29,075   $14,563


    Net income (loss) excluding certain (charges)
     benefits (Non-GAAP)                                $1,468   $(4,520)

      Inventory write-down (1)                              --    (9,039)
      Employee severance and termination costs (2)      (1,262)   (3,670)
      Change in estimated life of demonstration
       and evaluation equipment (3)                         --    (3,752)
      Impairment of intangible assets (4)                   --    (3,326)
    Total (charges) benefits                            (1,262)  (19,787)
    Adjustment to provision for income taxes               528     1,302
    Net income (loss) (GAAP)                              $734  $(23,005)

    Basic earnings (loss) per share (GAAP)               $0.02    $(0.70)
    Diluted earnings (loss) per share (GAAP)             $0.02    $(0.70)

    Basic weighted-average common shares outstanding    32,755    32,698
    Diluted weighted-average common shares outstanding  32,878    32,698

     (1) The inventory write-down in the fourth quarter of 2004 was 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 fourth quarter 2004 and first quarter 2005 employee severance and
         termination costs consist primarily 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.

     (3) During the fourth quarter of 2004, 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 made a change in the estimated
         useful life of the demonstration equipment from two years to zero
         years.  The Company's policy since this change 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 fourth quarter 2004 intangible asset impairment charge related 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)
                                                    March 31,   December 31,
                                                       2005          2004
    ASSETS

    Current Assets:
      Cash and cash equivalents                      $51,366        $38,404
      Marketable securities, available for sale       70,016         69,578
      Accounts receivable, net                        69,852         72,053
      Inventories, net                                66,168         73,224
      Other current assets                             3,546          6,140
    Total current assets                             260,948        259,399

    Property and equipment, net                       43,802         44,746

    Deposits and other                                 6,789          6,468
    Goodwill and intangibles, net                     76,209         80,308
    Demonstration and customer service equipment,
     net                                               3,359          2,968
    Deferred debt issuance costs, net                  1,811          2,086

    Total assets                                    $392,918       $395,975

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities:
      Trade accounts payable                         $24,368        $17,683
      Other accrued expenses                          24,754         28,615
      Current portion of capital leases and
       senior borrowings                               3,067          3,726
      Accrued interest payable on convertible
       subordinated notes                              1,810          2,460
    Total current liabilities                         53,999         52,484

    Long-term Liabilities:
      Capital leases and senior borrowings             3,960          4,679
      Deferred income tax liabilities, net             1,656          3,709
      Convertible subordinated notes payable         187,718        187,718
      Other long-term liabilities                      2,250          2,407
    Total long-term liabilities                      195,584        198,513

    Total liabilities                                249,583        250,997

    Stockholders' equity                             143,335        144,978
    Total liabilities and stockholders' equity      $392,918       $395,975



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

                                                  Three Months Ended March 31,
                                                       2005           2004

    NET CASH PROVIDED BY (USED IN)
     OPERATING ACTIVITIES                            $18,140        $(4,344)

    NET CASH (USED IN) PROVIDED
     BY INVESTING ACTIVITIES                          (3,355)         8,003

    NET CASH USED IN FINANCING ACTIVITIES             (1,051)        (1,588)

    EFFECT OF CURRENCY TRANSLATION ON CASH              (772)           403
    INCREASE IN CASH AND CASH EQUIVALENTS             12,962          2,474
    CASH AND EQUIVALENTS, beginning of period         38,404         41,522
    CASH AND EQUIVALENTS, end of period              $51,366        $43,996