For more information, contact:

Mike El-Hillow
Advanced Energy Industries, Inc.
Cathy Kawakami,
Advanced Energy Industries, Inc.

Advanced Energy Reports Third Quarter 2004 Results
FORT COLLINS, Colo., Oct. 21—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the third quarter ended September 30, 2004. 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.


For the 2004 third quarter, revenues were $93.6 million, up 36 percent compared to $68.6 million for the third quarter of 2003, and down 14 percent compared to revenues of $108.9 million for the second quarter of 2004. The third quarter 2004 net loss of $1.1 million, or $0.03 per share, compares to the third quarter 2003 net loss of $27.4 million, or $0.85 per share. Net income for the second quarter of 2004 was $4.5 million, or $0.13 per diluted share.

Revenue for the nine months ended September 30, 2004 was $306.9 million versus $187.7 million for the first nine months of 2003. Net income for the 2004 nine-month period was $10.3 million, or $0.31 per diluted share, compared to a net loss for the 2003 nine-month period of $41.8 million, or $1.30 per share.

Doug Schatz, chairman and chief executive officer, said, "Our third quarter results reflect the downward trend in semiconductor capital equipment and data storage spending that we discussed on our second quarter 2004 conference call. We expect this weakness to continue in the near term, but depending on the shape of the industry cycle, there could be growth drivers for increased capital investment during 2005. However, this is primarily dependent on macroeconomic factors that are difficult to estimate and predict.

"We are focused on what we can control, specifically, driving continued technology leadership and improved efficiencies throughout the organization. Today, we announced a realignment of our manufacturing organization that will reduce our Fort Collins workforce by approximately 200 employees over the next nine months. Once the transition is complete, the Fort Collins facility will focus on new product design and launch programs, low volume manufacturing and advanced manufacturing processes," continued Mr. Schatz.

"This is a difficult decision that affects many of our local employees. However, it is a necessary step in our worldwide manufacturing realignment designed to enhance our ability to deliver higher quality products with shorter lead times at lower cost. We continue to provide value and innovation to our customers, while taking necessary steps to align our company with the industry environment both near and long term," continued Mr. Schatz.

For the fourth quarter of 2004, the Company expects the business environment to continue to decline based on the cautious spending outlook from major semiconductor end users and OEMs. The Company anticipates fourth quarter revenue to be $82.5 million to $85.0 million, or down approximately 9 to 12 percent relative to the third quarter, and a loss per share range of $0.15 to $0.20.

Third Quarter Conference Call

Management will host a conference call today, Thursday, October 21, 2004 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 6231808. The replay will be available through Thursday, October 28, 2004. 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, 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:

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 fourth quarter of 2004. 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 and semiconductor capital equipment industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, Advanced Energy's ability to successfully integrate acquired companies' operations, 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 Copies may also be obtained from Advanced Energy's website at 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.



    (in thousands, except per share data)

                                       Three Months Ended   Nine Months Ended
                                           September 30,       September 30,
                                          2004      2003      2004      2003

    Sales                               $93,550   $68,567  $306,906  $187,671
    Cost of sales                        63,810    45,474   201,790   126,355
    Gross profit                         29,740    23,093   105,116    61,316

    Operating expenses:
         Research and development        12,576    12,979    38,795    38,897
         Sales and marketing              8,332     7,329    24,381    23,920
         General and administrative       6,050     5,198    17,892    14,074
         Amortization of intangible
          assets                          1,092     1,142     3,387     3,413
         Restructuring charges             (165)    1,011       242     3,288
         Intangible asset impairment                1,175               1,175
              Total operating expenses   27,885    28,834    84,697    84,767

    Income (loss) from operations         1,855    (5,741)   20,419   (23,451)

    Other expense, net                   (1,994)   (2,261)   (5,566)   (7,351)
    (Loss) income before income taxes      (139)   (8,002)   14,853   (30,802)
    Provision for income taxes             (997)  (19,436)   (4,595)  (11,000)
    Net (loss) income                   $(1,136) $(27,438)  $10,258  $(41,802)

    Basic (loss) earnings per share      $(0.03)   $(0.85)    $0.31    $(1.30)

    Diluted (loss) earnings per share    $(0.03)   $(0.85)    $0.31    $(1.30)

    Basic weighted-average common
     shares outstanding                  32,674    32,286    32,633    32,217
    Diluted weighted-average common
     shares outstanding                  32,674    32,286    33,233    32,217

    (in thousands)

                                             September 30,      December 31,
                                                  2004              2003


    Current Assets:
         Cash and cash equivalents                 $38,584           $41,522
         Marketable securities, available
          for sale                                  74,203            93,370
         Accounts receivable, net                   73,954            61,927
         Inventories                                91,054            65,703
         Other current assets                        5,592             5,637
    Total current assets                           283,387           268,159

    Property and equipment, net                     45,788            44,725

    Deposits and other                               6,067             5,951
    Goodwill and intangibles, net                   80,362            88,943
    Demonstration and customer service
     equipment, net                                  4,984             3,934
    Deferred debt issuance costs, net                2,321             3,019

    Total assets                                  $422,909          $414,731


    Current Liabilities:
         Trade accounts payable                    $31,946           $23,066
         Other accrued expenses                     26,502            28,216
         Current portion of capital
          leases and senior borrowings               3,965             8,582
         Accrued interest payable on
          convertible subordinated notes             1,810             2,460
    Total current liabilities                       64,223            62,324

    Long-term Liabilities:
        Capital leases and senior
         borrowings                                  4,882             6,168
        Deferred income tax liabilities,
         net                                         2,339             4,672
        Convertible subordinated notes
         payable                                   187,718           187,718
        Other long-term liabilities                  2,053             2,015
    Total long-term liabilities                    196,992           200,573

    Total liabilities                              261,215           262,897

    Stockholders' equity                           161,694           151,834
    Total liabilities and stockholders'
     equity                                       $422,909          $414,731

    (in thousands)

                                           Nine Months Ended     September 30,
                                                   2004               2003

    NET CASH USED IN OPERATING ACTIVITIES          $(7,053)          $(19,507)

     INVESTING ACTIVITIES                            8,712            (13,904)

    NET CASH USED IN FINANCING ACTIVITIES           (4,515)            (4,905)

     CASH                                              (82)             1,132
    DECREASE IN CASH AND CASH EQUIVALENTS           (2,938)           (37,184)
    CASH AND EQUIVALENTS, beginning of
     period                                         41,522             70,188
    CASH AND EQUIVALENTS, end of period            $38,584            $33,004