For more information, contact:

Lawrence D. Firestone
Advanced Energy Industries, Inc.
970.407.6570
lawrence.firestone@aei.com
Annie Leschin/Brooke Deterline
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com
 
ADVANCED ENERGY ANNOUNCES 2007 THIRD QUARTER FINANCIAL RESULTS
Fort Collins, Colo., October 24, 2007—Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today announced financial results for the third quarter ended September 30, 2007. Sales were $90.5 million for the third quarter of 2007, consistent with the Company’s revised guidance given on August 30, 2007. This represented a decrease of 16.0% from $107.7 million in the third quarter of 2006, and a sequential decline of 12.1% compared to $103.0 million in the second quarter of 2007.

Gross margin for the third quarter was 40.6%, down from 43.7% in the third quarter of 2006, and down from 43.6% in the second quarter of 2007. This was primarily due to lower revenues, an additional charge of $2.2 million to cost of goods sold, and costs related to the transition of manufacturing from Stolberg, Germany to China. The additional charges were related to a change in the estimate of warranty expense for two products, which resulted in a 2.4% reduction in gross margin. The company also incurred a net charge of $1.4 million related to a foreign exchange loss during the quarter, as the Yen and Euro strengthened relative to the US dollar. Net income for the third quarter of 2007 was $5.9 million, or $0.13 per diluted share, compared to $17.0 million, or $0.38 per diluted share in the third quarter of 2006, and $11.7 million or $0.25 in the second quarter of 2007.

“Our revenue was in line with our pre announcement due to the weakness in the semiconductor equipment market. The gross margin did not meet our objective due to the increased warranty expense. In the near term we expect to see continued softness in the semiconductor equipment and flat panel display markets with modest growth in our other markets,” said Dr. Hans Betz, president and chief executive officer of Advanced Energy. “We made additional progress in the strategic diversification of our business notably with the successful introduction of our Solaron™ inverter product line."

Fourth Quarter 2007 Guidance

The Company anticipates fourth quarter 2007 results to be within the following ranges:

• Sales of $86 million to $90 million.

• Earnings per share of $0.12 to $0.14

Third Quarter 2007 Conference Call

Management will host a conference call today, Wednesday, October 24, 2007 at 5:00 pm eastern daylight 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)-634-7937. Participants will need to provide a conference passcode 20284265. For a replay of this teleconference, please call (800)-642-1687 or (706) 645-9291, and enter the passcode 20284265. The replay will be available through October 27, 2007. A webcast will also be available on the Investor Relations webpage at http://ir.advanced-energy.com.

About Advanced Energy®

Advanced Energy® develops innovative power and control technologies that drive high-growth, plasma thin-film manufacturing processes worldwide, including semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications. Advanced Energy also develops grid connect inverters for the solar energy market.

The Company’s expectations with respect to financial results for the fourth quarter of 2007 are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 industries the company serves, the timing of orders received from customers, the company's ability to realize cost improvement benefits from the global operations initiatives underway, the company’s dependence on sole and limited source suppliers, fluctuating currency rates, and unanticipated changes to management's estimates, reserves or allowances. These and other risks are described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements 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 970-407-6555. Forward-looking statements are made and based on information available to the company on the date of this press release. 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       Nine Months Ended
                                September 30,    June 30,     September 30,
                               2007      2006      2007      2007     2006
 
    Sales                     $90,492  $107,688  $103,049  $300,863 $306,209
    Cost of sales              53,765    60,674    58,094   170,873  175,885
    Gross profit               36,727    47,014    44,955   129,990  130,324
 
    Operating expenses:
     Research and development  12,937    11,345    12,911    37,883   32,608
     Selling, general and
      administrative           15,537    16,856    15,414    46,169   45,502
     Amortization of
      intangible assets           201       453       202       727    1,383
     Restructuring charges        556        31       158     3,505       91
        Total operating
         expenses              29,231    28,685    28,685    88,284   79,584
 
    Income from operations      7,496    18,329    16,270    41,706   50,740
 
    Other income, net             308     1,044     1,505     3,367    3,617
    Income from continuing
     operations before income
     taxes                      7,804    19,373    17,775    45,073    54,357
    Provision for income taxes (1,948)   (2,381)   (6,108)  (14,879)   (6,580)
     Income from continuing
      operations                5,856    16,992    11,667    30,194    47,777
 
    Gain on sale of
     discontinued assets          -         -         -         -         138
 
     Income from discontinued
      operations                  -         -         -         -         138
 
    Net income                 $5,856   $16,992   $11,667   $30,194   $47,915
 
    Net income per basic share
     Income from continuing
      operations                $0.13     $0.38     $0.26     $0.67     $1.07
     Income from discontinued
      operations                 $-        $-        $-        $-       $0.00
     Basic earnings per share   $0.13     $0.38     $0.26     $0.67     $1.07
 
    Net income per diluted
      share
     Income from continuing
      operations                $0.13     $0.38     $0.25     $0.66     $1.06
     Income from discontinued
      operations                 $-        $-        $-        $-       $0.00
     Diluted earnings per
      share                     $0.13     $0.38     $0.25     $0.66     $1.06
 
    Basic weighted-average
     common shares
     outstanding               45,248    44,762    45,161    45,117    44,679
 
    Diluted weighted-average
     common shares
     outstanding               45,761    45,166    45,992    45,696    45,168
 
 
 
    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    (in thousands)
 
                                           September 30,      December 31,
                                                2007              2006
 
    ASSETS
 
    Current assets:
     Cash and cash equivalents                 $76,878           $58,240
     Marketable securities                     108,154            85,978
     Accounts receivable, net                   69,704            74,794
     Inventories, net                           57,388            52,778
     Deferred income taxes                      21,740            24,434
     Assets held for sale                        1,345               -
     Other current assets                        5,877             4,503
    Total current assets                       341,086           300,727
 
    Property and equipment, net                 30,677            33,571
 
    Deposits and other                           8,296             2,640
    Goodwill and intangibles, net               67,013            65,584
    Customer service equipment, net                939               832
    Deferred income tax assets, net              4,222             8,549
 
    Total assets                              $452,233          $411,903
 
 
    LIABILITIES AND STOCKHOLDERS' EQUITY
 
    Current liabilities:
     Trade accounts payable                    $15,578           $16,310
     Other accrued expenses                     28,488            36,619
    Total current liabilities                   44,066            52,929
 
    Long-term liabilities                        9,851             3,184
 
    Total liabilities                           53,917            56,113
 
    Stockholders' equity                       398,316           355,790
    Total liabilities and stockholders'
     equity                                   $452,233          $411,903

SOURCE Advanced Energy Industries, Inc. - 10/24/2007

CONTACT:
Lawrence D. Firestone,
+1-970-407-6570, lawrence.firestone@aei.com, or
Annie Leschin or Brooke Deterline,
+1-970-407-6555, ir@aei.com, all of Advanced Energy Industries, Inc.
Web site: http://www.advanced-energy.com