For more information, contact:

Lawrence D. Firestone
Advanced Energy Industries, Inc.
970.407.6570
lawrence.firestone@aei.com
Annie Leschin
Advanced Energy Industries, Inc.
970.407.6555
ir@aei.com

Advanced Energy Announces Record Bookings and Revenues for the Second Quarter 2010
FORT COLLINS, Colo., July 21, 2010—Advanced Energy Industries, Inc. (Nasdaq GM: AEIS) today announced financial results for the second quarter ended June 30, 2010. Total sales for the second quarter were $115.2 million, representing an all-time high for the company in a single quarter and producing earnings of $0.31 per diluted share. The results highlighted in this release include our Aera® mass flow controller business that is currently being divested, as well as the inclusion of two months of operating results from PV Powered.

“We had an outstanding second quarter, with $154 million in bookings and $115 million in revenue, including PV Powered and the flow business. As our semiconductor revenues continued to grow, the semiconductor industry demonstrated its momentum again this quarter,” said Dr. Hans Betz, chief executive officer.

"Our recent acquisition of PV Powered contributed significantly to our higher inverter revenues and backlog, which we anticipate will provide momentum for the second half of 2010. PV Powered also contributed to our bottom line, delivering a profitable second quarter ahead of expectations and making the acquisition immediately accretive. The addition of this excellent team and product line to our Solaron inverter business positions us to forge ahead and take the leading position in the US market for inverters and expand orldwide.”

"Additionally, today we announced that we are divesting our flow business. We see this move as a crucial part of our corporate strategy to focus the company on becoming the market leader in power conversion and capitalize on future growth opportunities.”

Semiconductor sales rose 9.9% sequentially to $53.5 million, representing 46.4% of total sales for the quarter. Sales to the non-semiconductor thin film markets increased 87.2% sequentially to $35.9 million, representing 31.2% of total sales for the quarter. Inverter sales grew substantially with the addition of PV Powered to $14.4 million to 12.5% of total sales compared to $2.3 million in the first quarter. Service revenue was flat sequentially at $11.4 million, representing 9.9% of total sales for the quarter.

Bookings for the second quarter, including $15.3 million for the mass flow controller business, hit a record of $154.3 million, or a 60.0% increase, compared to $96.7 million in the first quarter of 2010, resulting in a book-to-bill ratio of 1.34:1 for the second quarter. Ending backlog for the second quarter increased 52.0% sequentially to $123.6 million, including $14.4 million for the flow business, compared to $81.3 million at the end of the first quarter of 2010.

Advanced Energy also announced that it has entered into an agreement to sell its flow business, related product lines and all related assets including the real property in Japan to Hitachi Metals, Ltd. for $44 million in cash, subject to an adjustment based on inventory balance at closing. The company anticipates this transaction will close in the third quarter of 2010 subject to satisfaction of customary closing conditions.

As a result of this transaction, the financial results for our flow business will be recorded in discontinued operations on a net basis beginning with the second quarter 2010. These amounts are revenue of $15.1 million, gross profit of $5.3 million, operating expenses of $1.7 million and net income of $2.2 million, or $0.05 per diluted share in the quarter ended June 30, 2010. Comparable results for the flow business for the second quarter of 2009 were revenues of $3.7 million, gross profit of $0.6 million, operating expenses of $1.3 million and a net loss of $0.4 million, or $0.01 per diluted share. For comparative purposes, the financial results discussed below assume the adjustments for the divestiture have been made.

Excluding the flow business, sales for the second quarter of 2010 increased 43.6% to $100.1 million from $69.7 million in the first quarter of 2010, and up substantially from $31.9 million in the second quarter of 2009.

Gross margin for the second quarter was 44.5%, compared with 41.9% in the first quarter of 2010, as a result of higher revenues and leverage from overhead absorption. This compares to gross margin of 22.8% in the same period last year.

Operating expenses for the second quarter increased to $31.5 million. This increase was significantly driven by the addition of approximately two months of operating costs associated with the acquisition of PV Powered, including an additional $767,000 of amortization of acquired intangible assets.

Second quarter net income from continuing operations was $11.5 million or $0.26 per diluted share, compared to net income from continuing operations of $4.9 million or $0.11 per diluted share in the first quarter of 2010. In the same period a year ago, net loss from continuing operations was $16.0 million or a loss of $0.38 per share.

Cash, cash equivalents and investments were $128.9 million at the end of the second quarter, versus $163.4 million in the first quarter reflecting the $35 million payment for the PV Powered acquisition.

Third Quarter 2010 Guidance
The Company anticipates third quarter 2010 results from continuing operations, without revenues from the flow business, to be within the following ranges:
• Sales of $130.0 million to $140.0 million
• Earnings per share of $0.36 to $0.44

Announcement of Agreement to Sell Aera Flow Controller and Related Product Lines to Hitachi Metals, Ltd.
This earnings release should be read in conjunction with our press release regarding the sale of the Aera flow business transaction dated July 21, 2010.

Second Quarter 2010 Conference Call
Management will host a conference call tomorrow, Thursday July 22, 2010, at 8:30 a.m. Eastern Daylight Time to discuss Advanced Energy's financial results. Domestic callers may access this conference call by dialing (888) 713-4717. International callers may access the call by dialing (816) 650-2836. Participants will need to provide a conference pass code 86106130. For a replay of this teleconference, please call (800) 642-1687 or (706) 645-9291, and enter the pass code 86106130. The replay will be available through 12:00 a.m. Eastern Daylight Time, July 24, 2010. A webcast will also be available on the Investor Relations web page at http://ir.advanced-energy.com.

About Advanced Energy
Advanced Energy (NASDAQ: AEIS - News) is a global leader in innovative power and control technologies for high-growth, thin-film manufacturing and solar-power generation. Advanced Energy is headquartered in Fort Collins, Colorado, with dedicated support and service locations around the world. For more information, go to www.advanced-energy.com.

Forward-Looking Language
The Company’s expectations with respect to guidance to financial results for the third quarter ending September 30, 2010 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 effects of global macroeconomic conditions upon demand for our products, the volatility and cyclicality of the industries the company serves, particularly the semiconductor industry, the timing of orders received from customers, the company's ability to realize cost improvement benefits, 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.advancedenergy.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.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
                     
    Three Months Ended   Six Months Ended
    June 30,   March 31,   June 30,
    2010   2009   2010   2010   2009
                     
Sales   $ 100,107     $ 31,898     $ 69,687     $ 169,794     $ 60,996  
Cost of sales     55,548       24,616      

40,480

      96,028       47,644  
Gross profit     44,559       7,282       29,207       73,766       13,352  
      44.5 %     22.8 %     41.9 %     43.4 %     21.9 %
Operating expenses:                    
Research and development     13,515       10,308       11,143       24,658       20,965  
Selling, general and administrative     17,183       9,359       12,228       29,411       17,923  
Impairment of goodwill     -       -       -       -       63,260  
Amortization of intangible assets     767       -       -       767       102  
Restructuring charges     -       739       -       -       4,135  
Total operating expenses     31,465       20,406       23,371       54,836       106,384  
                     
Income (loss) from operations     13,094       (13,124 )     5,836       18,930       (93,032 )
Other income, net     220       627       386       606       909  
Income (loss) from operations before income taxes     13,314       (12,497 )     6,222       19,536       (92,123 )
Provision (benefit) for income taxes     1,857       3,110       1,371       3,228       2,602  
Net income (loss) from continuing operations   $ 11,457     $ (15,607 )   $ 4,851     $ 16,308     $ (94,725 )
                     
Basic earnings (loss) per share   $ 0.27     $ (0.37 )   $ 0.12     $ 0.38     $ (2.26 )
Diluted earnings (loss) per share   $ 0.26     $ (0.37 )   $ 0.11     $ 0.38     $ (2.26 )
                     
Basic weighted-average common shares outstanding     42,806       41,948       42,074       42,440       41,915  
Diluted weighted-average common shares outstanding     43,327       41,948       42,680       43,004       41,915  
                     
GAIN (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES   $ 2,162     $ (427 )   $ 1,366     $ 3,529     $ (1,072 )
                     
BASIC EARNINGS (LOSS) PER SHARE   $ 0.05     $ (0.01 )   $ 0.03     $ 0.08     $ (0.03 )
DILUTED EARNINGS (LOSS) PER SHARE   $ 0.05     $ (0.01 )   $ 0.03     $ 0.08     $ (0.03 )
                     
NET INCOME (LOSS)   $ 13,619     $ (16,034 )   $ 6,217     $ 19,836     $ (95,797 )
                     
BASIC EARNINGS (LOSS) PER SHARE   $ 0.32     $ (0.38 )   $ 0.15     $ 0.47     $ (2.29 )
DILUTED EARNINGS (LOSS) PER SHARE   $ 0.31     $ (0.38 )   $ 0.15     $ 0.46     $ (2.29 )
                     
BASIC WEIGHTED--AVERAGE COMMON SHARES OUTSTANDING     42,806       41,948       42,074       42,440       41,915  
DILUTED WEIGHTED--AVERAGE COMMON SHARES OUTSTANDING     43,327       41,948       42,680       43,004       41,915  
                                         
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
         
    June 30,   December 31,
    2010   2009
         
ASSETS        
         
Current assets:        
Cash and cash equivalents   $ 116,795   $ 133,106
Marketable securities     12,066     44,401
Accounts receivable, net     75,175     50,267
Inventories, net     54,515     28,567
Deferred income taxes     9,183     9,223
Income taxes receivable     3,245     -
Assets held for sale     32,276     26,460
Other current assets     7,532     5,641
Total current assets     310,787     297,665
         
Property and equipment, net     22,244     18,687
         
Deposits and other     8,814     9,295
Goodwill and intangibles, net     98,139     -
Deferred income tax assets, net     20,268     19,479
Total assets   $ 460,252   $ 345,126
         
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Current liabilities:        
Accounts payable   $ 35,549   $ 23,802
Other accrued expenses     30,750     24,055
PVP Contingent liability     38,967     -
Liabilities of business held for sale     1,493     1,477
Total current liabilities     106,759     49,335
         
Long-term liabilities     42,860     17,457
         
Total liabilities     149,619     66,791
         
Stockholders' equity     310,633     278,335
Total liabilities and stockholders' equity   $ 460,252   $ 345,126
             
RECONCILIATION OF CONSOLIDATED STATEMENTS OF OPERATIONS (LOSS) FOR DISCONTINUED OPERATIONS
(in thousands)
 
    March 31, 2010   June 30, 2010
    Consolidated  

Discontinued
Operations

 

Adjusted Q1
2010

  Consolidated  

Discontinued
Operations

 

Adjusted Q2
2010

Total sales   $ 81,552   $ 11,865   $ 69,687   $ 115,191   $ 15,084   $ 100,107
Cost of sales   48,444   7,964   40,480   65,302   9,754   55,548
Gross profit   33,108   3,901   29,207   49,889   5,330   44,559
OPERATING EXPENSES:                    
R&D   11,590   447   11,143   13,959   444   13,515
Selling, general and administrative   13,283   1,054   12,228   18,342   1,159   17,183
Intangible amortization   122   122   -   891   124   767
Total Operating Expenses   24,995   1,623   23,371   33,192   1,727   31,465
Operating Income   8,113   2,278   5,836   16,697   3,603   13,094
Other Income (Expense)   386   -   386   220   -   220
Pre-tax income   8,499   2,278   6,222   16,917   3,603   13,314
Provision for income taxes   2,282   911   1,371   3,299   1,442   1,857
Net Income   $ 6,217   $ 1,367   $ 4,851   $ 13,618   $ 2,161   $ 11,457
Diluted Earnings per Share   $ 0.15   $ 0.03   $ 0.11   $ 0.31   $ 0.05   $ 0.26