For more information, contact:

Richard Beck Advanced Energy Industries 970/407-6204

Catherine Roberts Financial Relations Board/San Francisco 415/986-1591

Advanced Energy Reduce Workforce, Takes One-Time Charge Due to Market Conditions; Expects Lower Sales And Loss For Third Quarter

FORT COLLINS, Colorado (August 13, 1998)—Advanced Energy Industries, Inc. (Nasdaq: AEIS) has embarked on a broad restructuring program involving the layoff of 128 positions and a non-recurring charge of about $1.8 million in the third quarter of 1998 due to a significant downturn in semiconductor business. As a result of lower semiconductor customer demand, the Company estimates revenues of approximately $20 million and a net loss from operations between 12-15 cents per share for the third quarter which will end on September 30, 1998.

 

The Company also announced today it laid off 14% of its total workforce, including 106 full-time hourly and salaried positions, or about 12% of its continuous workforce, and 22 temporary positions, or 40% of its temporary workforce, as part of the restructuring. Approximately 763 full-time continuous and 33 temporary positions remain in the Company’s workforce.

Additionally, two of the six facilities comprising the Advanced Energy Fort Collins campus will be closed down. With the shut down of these buildings and severance pay for the laid off workforce, Advanced Energy will take a $1.8 million non-recurring charge against third quarter 1998 earnings. The restructuring plan will take approximately $7.5 million out of the Company’s annual cost base.

Douglas S. Schatz, president and chief executive officer, said that poor Asian financial conditions continue to impact orders from semiconductor capital equipment manufacturers. “Semiconductor equipment customers have reduced capital spending and delayed orders due to tough economic times in Asia compounded by DRAM overcapacity and weak PC sales. We believe this restructuring plan will better align us with the current market environment and resulting lower customer demand, which we expect to persist at least through the remainder of 1998. While our visibility on when conditions might improve remains impaired, we continue to look forward to a stronger competitive position in the eventual market recovery, enabling us to reinstate our workforce and restore all production lines,” he said.

Schatz said, “We are using this market downturn as an opportunity to form even closer alliances with our customer base to help them in solving their production process problems, while we develop new products and technologies across industries.” Schatz added that orders have already been taken for a new, non-semiconductor product that will be released in the fourth quarter. “This downturn in the semiconductor equipment industry has not threatened our market or technology leadership and we will continue to invest in research and development to further enhance our customers’ productivity,” he said.

Safe Harbor Statement
Except for any historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties, including the achievement of goals established by the Company to improve gross margin and maintain operating expenses in line with revenue, continued sales growth in non-semiconductor areas, and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports, including the Company’s recent Prospectus, Form 10-K and Forms 10-Q. The Company continues to be susceptible to fluctuations in quarterly and annual revenues and operating results. The Company assumes no obligation to update the information in this release.

About the Company
Advanced Energy Industries, Inc. was founded in 1981 and is the leading manufacturer of power delivery systems that are critical in the manufacturing of semiconductors, data storage media, flat panel displays, and other products using thin-film technology. Within its comprehensive product portfolio of direct current (DC), low/mid-frequency and radio frequency (RF) solutions, the Company sells hundreds of different products critical in applications ranging from compact disks, digital video disks, flat panel displays, the most popular logic semiconductor devices, among many