For more information, contact:

Lawrence D. Firestone
Advanced Energy Industries, Inc.

Advanced Energy Announces 2006 Third Quarter Financial Results

Gross Margin Increases to 43.7%, Cash Increases $22.7 Million Sequentially

FORT COLLINS, Colo., Oct. 25—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today announced financial results for the third quarter ended September 30, 2006. Sales were $107.7 million for the third quarter of 2006, up 3.0% compared to $104.6 million for the second quarter of 2006, and up 36.7% compared to $78.8 million for the third quarter of 2005. Gross profit was $47.0 million, or 43.7% of sales, compared to $44.8 million, or 42.8% of sales, in the second quarter of 2006, and $28.9 million, or 36.7% of sales in the third quarter of 2005.

Third quarter 2006 income from operations was $18.3 million or 17.0% of sales, compared to $19.2 million, or 18.4% of sales, in the second quarter of 2006. This compares to third quarter 2005 income from operations of $2.2 million, or 2.8% of sales. Third quarter 2005 income from operations includes a $3.0 million litigation settlement expense.

Third quarter 2006 net income was $17.0 million, or $0.38 per diluted share, compared to $18.2 million, or $0.40 per diluted share, in the second quarter of 2006, and compared to a net loss of $3.9 million, or a net loss of $0.10 per share in the third quarter of 2005.

Dr. Hans Betz, president and chief executive officer of Advanced Energy, said, "Sales continued at record levels in the third quarter, driven by continued strength in sales to semiconductor and advanced products customers. Within the advanced products category, sales to solar panel customers increased 42% sequentially as our strategy to grow our presence in this market continues to progress. Our operational focus drove additional efficiency gains, highlighted by a 90 basis point sequential improvement in gross margin. Cash increased by $22.7 million in the third quarter."

Dr. Betz continued, "As you have seen from our guidance, following four quarters of increasing sales to the semiconductor industry, we expect semiconductor levels to decrease modestly in the fourth quarter as semiconductor manufacturers carefully manage inventory levels. We expect growing demand in our emerging markets, such as solar and architectural glass, as these markets continue their capital investment cycle to adopt leading edge technology. We will leverage the strength of our financial model, combined with technology innovation and optimized global operations, to pursue an expanding set of opportunities within core and emerging markets."

Fourth Quarter 2006 Guidance

The Company anticipates fourth quarter sales in the range of $101 million to $105 million, and earnings per share in the range of $0.33 to $0.36.

Third Quarter 2006 Conference Call

Management will host a conference call today, Wednesday, October 25, 2006 at 5:00 pm Eastern 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 7811538. The replay will be available through November 1, 2006. There will also be a webcast available on the Investor Relations webpage at

About Advanced Energy

Advanced Energy is a global leader in the development and support of technologies critical to high-technology, high-growth manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, 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 Global Market under the symbol AEIS. For more information, please visit our corporate website:

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 2006 as well as other matters discussed in this news release that are not purely historical data. 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 we serve including the semiconductor capital equipment and flat panel display industries, the timing of orders received from our customers, our ability to realize cost improvement benefits from the manufacturing initiatives underway, and unanticipated changes to our 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 . Copies may also be obtained from Advanced Energy's website at or by contacting Advanced Energy's investor relations at 970-221-4670. Forward-looking statements are made and based on information available to us on the date of this press release. 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,    June 30,    September 30,
                               2006     2005      2006      2006      2005

    Sales                    $107,688  $78,757  $104,571  $306,209  $245,095
    Cost of sales              60,674   49,835    59,811   175,885   158,205
    Gross profit               47,014   28,922    44,760   130,324    86,890

    Operating expenses:
         Research and
          development          11,345    9,610    10,804    32,608    30,085
         Selling, general
          and administrative   16,856   13,421    14,241    45,502    39,960
         Amortization of
          intangible assets       453      504       453     1,383     1,569
          charges                  31      210        31        91     2,540
          settlement               --    3,000        --        --     3,000
              Total operating
               expenses        28,685   26,745    25,529    79,584    77,154

    Income from operations     18,329    2,177    19,231    50,740     9,736

    Other income (expense),
     net                        1,044   (4,796)      741     3,617    (7,602)
    Income from continuing
     operations before
     income taxes              19,373   (2,619)   19,972    54,357     2,134
    Provision for income
     taxes                     (2,381)  (1,584)   (1,947)   (6,580)   (3,543)
    Income from continuing
     operations                16,992   (4,203)   18,025    47,777    (1,409)

    Gain on sale of
     discontinued assets           --       --       138       138     2,645
    Results of discontinued
     operations                    --      312        --        --     1,556

    Income from discontinued
     operations                    --      312       138       138     4,201

    Net income                $16,992  $(3,891)  $18,163   $47,915    $2,792

    Net income per basic
    Income from continuing
     operations                 $0.38   $(0.11)    $0.40     $1.07    $(0.04)
    Income from discontinued
     operations                   $--    $0.01       $--       $--     $0.12
    Basic earnings per share    $0.38   $(0.10)    $0.41     $1.07     $0.08

    Net income per diluted
    Income from continuing
     operations                 $0.38   $(0.11)    $0.40     $1.06    $(0.04)
    Income from discontinued
     operations                   $--    $0.01       $--       $--     $0.12
    Diluted earnings per share  $0.38   $(0.10)    $0.40     $1.06     $0.08

    Basic weighted-average
     common shares
     outstanding               44,762   38,366    44,704    44,679    34,639

    Diluted weighted-average
     common shares
     outstanding               45,166   38,366    45,108    45,168    34,932

    (in thousands)

                                           September 30,      December 31,
                                               2006              2005

    Current assets:
         Cash and cash equivalents            $52,789          $52,874
         Marketable securities                 63,939            6,811
         Accounts receivable, net              74,864           68,992
         Inventories                           58,079           56,199
         Other current assets                   5,463            6,773
    Total current assets                      255,134          191,649

    Property and equipment, net                33,602           39,294

    Deposits and other                          1,829            3,808
    Goodwill and intangibles, net              68,720           69,843
    Customer service equipment, net             1,476            2,407
    Deferred income tax assets, net             6,109            3,116

    Total assets                             $366,870         $310,117


    Current liabilities:
         Trade accounts payable               $19,669          $22,028
         Other accrued expenses                31,273           23,977
         Current portion of capital
          leases and senior borrowings            616            2,011
    Total current liabilities                  51,558           48,016

    Long-term liabilities:
        Capital leases and senior
         borrowings                               226            2,179
        Other long-term liabilities             1,690            2,492
    Total long-term liabilities                 1,916            4,671

    Total liabilities                          53,474           52,687

    Stockholders' equity                      313,396          257,430
    Total liabilities and stockholders'
     equity                                  $366,870         $310,117