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Mike El-Hillow
Advanced Energy Industries, Inc.
Cathy Kawakami
Advanced Energy Industries, Inc.
Advanced Energy Reports Third Quarter 2003 Results
FORT COLLINS, Colo., Oct. 16—Advanced Energy (Nasdaq: AEIS) today reported financial results for the third quarter ended September 30, 2003.

Revenue for the third quarter of 2003 decreased 3 percent to $68.6 million, compared to third quarter 2002 revenue of $70.7 million. Revenue for the third quarter of 2003 increased 9 percent compared to second quarter 2003 revenue of $62.9 million.

Net loss for the third quarter of 2003 was $27.4 million or $0.85 per share including pre-tax charges of $2.2 million related to restructuring charges and an intangible asset impairment, and a non-cash charge of $22.4 million related to the Company's net deferred tax asset. The third quarter 2003 net loss compares to the third quarter 2002 net loss of $5.6 million or $0.17 per share, and the second quarter 2003 net loss of $5.8 million or $0.18 per share.

Sales for the nine months ended September 30, 2003 were $187.7 million compared to $181.5 million for the first nine months of 2002. Net loss for the 2003 nine-month period was $41.8 million, or $1.30 per share, compared to a net loss of $19.4 million, or $0.61 per share for the 2002 nine-month period.

Doug Schatz, chairman, president and chief executive officer, said, "The third quarter results met our expectations for moderate sequential improvement based on improving order trends and share gains in several end markets. Sales to the flat panel display, data storage and architectural glass markets all posted double-digit growth sequentially. Our technology lead is being validated across our end markets through continued design wins and share gains in both our power and flow product lines.

"We are continuing to see modestly improving industry conditions. However, based on the fact that the fourth quarter will include industry-wide shutdowns, including three weeks at AE, we anticipate a fourth quarter sales level similar to that of the third quarter," said Mr. Schatz.

Based on information currently available, the Company expects fourth quarter revenues to be relatively flat compared to the third quarter of 2003, and a loss per share range of $0.14 to $0.16, which assumes no tax benefit from the loss.


Third Quarter 2003 Conference Call

Management will host a conference call today, Thursday, October 16, 2003 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 8360203. The replay will be available through Thursday, October 23, 2003. There will also be a webcast available at .

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, AE creates solutions that maximize process impact, improve productivity and lower cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, plasma and ion beam sources, and integrated process monitoring and control for 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 the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: .

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, the timing of orders received from our customers, our ability to execute on the cost reduction initiatives currently underway, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q as well as other reports and statements, as filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at . 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.


                    (in thousands, except per share data)

                                        Three Months Ended   Nine Months Ended
                                         September 30,         September 30,
                                           2003     2002      2003      2002

     Sales                                $68,567  $70,674  $187,671  $181,454
     Cost of sales                         45,474   44,074   126,355   117,168
     Gross profit                          23,093   26,600    61,316    64,286

    Operating expenses:
         Research and development         12,979   12,185    38,897    36,020
         Sales and marketing               7,329    9,738    23,920    25,201
         General and administrative        6,340    7,245    17,487    21,073
         Restructuring charges             1,011    3,220     3,288     3,220
         Impairment of intangible
          assets                           1,175      --      1,175       --
         Litigation damages                   --      --         --    5,313
              Total operating expenses    28,834   32,388    84,767    90,827

    Loss from operations                  (5,741)  (5,788)  (23,451)  (26,541)

    Other (expense) income, net           (2,261)  (2,797)   (7,351)   (3,370)
    Loss before income taxes              (8,002)  (8,585)  (30,802)  (29,911)
    (Provision) benefit for income
     taxes                               (19,436)   3,005   (11,000)   10,469
    Net loss                            $(27,438) $(5,580) $(41,802) $(19,442)

     Basic and diluted net loss per
      share                               $(0.85)  $(0.17)   $(1.30)   $(0.61)

     Basic and diluted weighted-average
      common shares outstanding           32,286   32,073    32,217    31,994

                                (in thousands)

                                               September 30,      December 31,
                                                   2003              2002


    Current Assets:
         Cash and cash equivalents                 $33,004           $70,188
         Marketable securities                     103,376           102,159
         Accounts receivable                        53,967            43,885
         Income tax receivable                      14,089            14,720
         Inventories                                58,579            57,306
         Other current assets                        6,727             6,828
         Deferred income tax assets, net                --            17,510
    Total current assets                           269,742           312,596

    Property and equipment, net                     43,426            41,178

     Deposits and other                              5,451             5,181
     Goodwill and intangibles, net                  87,051            86,601
     Deferred debt issuance costs                    3,266             4,091
     Demonstration and customer service
      equipment, net                                 4,250             6,086
     Total assets                                 $413,186          $455,733


    Current Liabilities:
         Trade accounts payable                    $21,023           $16,055
         Other current liabilities                  28,975            31,064
         Current portion of capital
          leases and senior borrowings              12,882            15,197
         Accrued interest payable on
          convertible subordinated notes             1,810             2,338
    Total current liabilities                       64,690            64,654

    Long-term Liabilities:
        Capital leases and senior
         borrowings                                  7,506            10,665
        Other long-term liabilities                    697               694
        Deferred income tax liability, net           3,777             8,663
        Convertible subordinated notes
         payable                                   187,718           187,718
     Total long-term liabilities                   199,698           207,740

     Total liabilities                             264,388           272,394

    Stockholders' equity                           148,798           183,339
    Total liabilities and stockholders'
     equity                                       $413,186          $455,733

                                (in thousands)

                                               Nine Months Ended September 30,
                                                     2003             2002

      OPERATING ACTIVITIES                         (19,507)          (20,173)

      BY INVESTING ACTIVITIES                      (13,904)           28,677

      FINANCING ACTIVITIES                          (4,905)           (4,759)

      IN CASH AND CASH                               1,132             1,553

     EQUIVALENTS                                   (37,184)            5,298
    CASH AND EQUIVALENTS, beginning of
     period                                         70,188            81,955
    CASH AND EQUIVALENTS, end of period            $33,004           $87,253