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

AE Reports Fourth Quarter 2002 Results

FORT COLLINS, Colo., Feb. 13, 2003—Advanced Energy (Nasdaq: AEIS) today reported financial results for the fourth quarter and year ended December 31, 2002. Advanced Energy is a leading global provider of critical solutions used in the production of semiconductors, flat panel displays, data storage products and other advanced applications.


Fourth Quarter Review

For the 2002 fourth quarter, revenues were $57.4 million, up 69 percent from $34.0 million for the fourth quarter of 2001, and down 19 percent from $70.7 million for the third quarter of 2002. Amounts for 2001 exclude the impact of the acquisitions of Aera and Dressler.

The net loss for the fourth quarter 2002 was $22.0 million, or $0.68 per share, compared to the fourth quarter 2001 net loss of $14.4 million, or $0.45 per share and compared to the third quarter 2002 net loss of $5.6 million, or $0.17 per share. Included in the Company's fourth quarter 2002 results is $22.7 million in net charges (before taxes) relating to excess and obsolete inventory, product transition and warranty costs, restructuring charges, an extraordinary gain related to the buyback of a portion of the Company's convertible bonds, and other pre-tax items. The majority of the charges were the result of the further downturn in the semiconductor industry, and the transition to new generation technology products as the Company continues an aggressive product life cycle management program.

Full Year Review

For the full year 2002, revenues were $238.9 million, compared with $193.6 million for the full year 2001, a 23 percent increase. Net loss for the full year 2002 was $41.4 million, or $1.29 per share, compared to the net loss of $31.4 million or $0.99 per share for the full year 2001.

The Company's results of operations for 2002 reflect the acquisition of Aera Japan Ltd. in January 2002 and the acquisition of Dressler HF Technik GmbH in April 2002. Excluding the 2002 revenue attributable to these acquisitions, revenue for the full year 2002 would have been flat year-over- year.

Doug Schatz, chairman and chief executive officer, said, "As we had anticipated, the semiconductor industry experienced continued softening in order patterns during the fourth quarter, resulting in a sequential decline in our revenue. Sales to the flat panel display market showed strength due to the continued investment in manufacturing equipment for the newest size of glass panels. Despite an overall difficult business environment, we continue to work with our customers closely, and have made inroads into new product platforms with both our power systems and our other product groups. Our commitment to investing in research and development is critical to advancing additional projects, and in maintaining our technology lead as we collaborate with our customers to create even deeper partnerships."

Mr. Schatz said, "We expect relatively flat industry conditions in the near term. We are making significant progress in re-engineering our business model so that we align our breakeven level with a $55 million to $60 million quarterly trough revenue range by the fourth quarter of 2003, in order to target profitability throughout these dynamic industry cycles. We are changing our manufacturing infrastructure for increased efficiency and lower cost. This plan involves the relocation of several domestic manufacturing sites to our Fort Collins, Colorado location, and next steps include moving selected power and mass flow production lines to a new facility in China, while pursuing an aggressive outsourcing program with Asian suppliers.

"Based on the information we have today, we anticipate first quarter revenue in the $54 to $57 million range and a loss per share range of $0.21 to $0.26 that reflects our anticipation of incremental improvement from the changes we are making to reduce our cost structure," said Mr. Schatz.

Fourth Quarter and Year-End Conference Call

Management will host a conference call today, Thursday, February 13, 2003 View Report