For more information, contact:

Mike El-Hillow Advanced Energy Industries, Inc. 970.407.6570

Cathy Kawakami Advanced Energy Industries, Inc. 970.407.6732 cathy.kawakami@aei.com

Advanced Energy Announces Operational Changes and Cost Reductions

FORT COLLINS, Colo., August 14, 2002—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today announced changes in operations designed to reduce redundancies and better align the Company’s recently acquired mass flow controller business within its operating framework. The plan includes manufacturing and facilities consolidations, related headcount reductions of approximately 100 individuals, or 7% of the workforce, and stringent discretionary spending restrictions.

 

The major operational change is the elimination within the next ninety days of the Austin, Texas manufacturing facility for the Aera-brand mass flow controller products. The Hachioji, Japan facility is able to support business levels significantly higher than current demand and will assume all manufacturing for the mass flow controller business. The Texas location will continue as a support, service and sales office.

Doug Schatz, chairman and chief executive officer said, “We acquired Aera in January 2002, and stated then that Aera’s worldwide operations would be assessed over a six-month period to identify operational synergies and opportunities for improved efficiency. We believe these changes significantly improve operating and financial efficiency, reinforce product line focus and allow the Company to continue to provide our customers with technologically superior and highly valued products at the lowest possible cost.

“While we will begin to realize cost savings immediately, the actions will ultimately reduce operating expenses by approximately $4.0 million per quarter, beginning in the first quarter of 2003, the first full quarter after the plan has been completed. These expense reductions, which are also prudent during these uncertain economic times, will enable us to meet our goal for operating profitability at the $70 million to $72 million quarterly revenue level when fully implemented,” said Mr. Schatz.

The Company expects the cost of these changes to be approximately $3.0 million, related primarily to severance and lease termination costs. As stated in the July 22, 2002 quarterly financial release, the Company expects revenue in the $68 million to $70 million range for the third quarter of 2002, and a loss per share of $0.10 to $0.12, before charges related to the cost reduction plan.

About Advanced Energy
Advanced Energy is a global leader in the development, marketing and support of components and sub-systems critical to plasma-based manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other applications that require precise thin-film processes. AE offers a comprehensive line of technology solutions in power, flow and thermal management, plasma and ion beam sources, and integrated process monitoring and control to 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 Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com.

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, fluctuations in quarterly and annual revenues and operating results, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, our 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 http://www.sec.gov. 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.