AEIS Advanced Energy Industries Inc

Advanced Energy Reports Second Quarter 2005 Results Gross Margin and Operating Margin Improvements Continue FORT COLLINS, Colo., July 28 /PRNewswire-FirstCall/ -- Advanced Energy Industries, Inc. (NASDAQ:AEIS) today reported financial results for the second quarter ended June 30, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO) For the 2005 second quarter, sales were $87.4 million, up 1.4 percent compared to first quarter 2005 sales of $86.1 million and down 19.7 percent from second quarter 2004 sales of $108.9 million. Gross margin was 36.7 percent of sales in the second quarter of 2005 compared to 33.8 percent in the first quarter of 2005 and 34.0 percent in the second quarter of 2004. Net income for the second quarter was $5.9 million, or $0.18 cents per diluted share. Income from continuing operations was $3.3 million, or $0.10 per diluted share, compared to net income of $734,000, or $0.02 per diluted share in the first quarter of 2005 and net income of $4.5 million or $0.13 per diluted share in the second quarter of 2004. Included in the second quarter 2005 income from continuing operations is a $1.1 million, or $0.03 per diluted share, after-tax gain from the sale of certain marketable securities. During the quarter, the Company sold its EMCO industrial flow product line resulting in income from discontinued operations of $2.6 million, or $0.08 per diluted share. Revenue for the six months ended June 30, 2005 was $173.5 million versus $213.4 million for the first six months of 2004. Income from continuing operations for the 2005 six-month period was $4.0 million, or $0.12 per diluted share, compared to net income for the 2004 six-month period of $11.4 million, or $0.35 per diluted share. Doug Schatz, chairman, president and chief executive officer of Advanced Energy, said, "The second quarter results continue to demonstrate the significant improvements we have made to our operating model. Gross margin improved nearly three percentage points from the first quarter as we continue to realize benefits from our China manufacturing, localized supply chain programs and improvements resulting from the global restructuring actions. Operating income increased approximately 60 percent compared to the first quarter of 2005 on slightly increased sequential sales, and was 6.2 percent of sales compared to 3.9 percent in the first quarter of 2005. In 2005, we have improved the balance sheet by generating cash from operations of over $30 million and by reducing inventory by approximately $14 million." Mr. Schatz continued, "We have a renewed focus on profitable opportunities centered on our core technologies and have realigned our manufacturing infrastructure to benefit from lower-cost regions while maintaining product launch expertise at key sites. The manufacturing transition is in its final stages, and currently over 75 percent of our power product and mass flow control manufacturing volume is shipping from our Shenzhen, China location. We believe our China manufacturing facility provides us with a highly differentiated competitive position that enables us to better serve our global customer base with our high quality, innovative products." "Our customers continue to take a cautious view of the near-term demand environment based on the anticipated timing of end user orders, and we anticipate third quarter revenue in the $81 million to $86 million range, the upper end of which is essentially flat with the second quarter if we adjust for the sale of EMCO. We anticipate earnings per share in the range of $0.05 to $0.09 based on continued financial performance improvement," said Mr. Schatz. Second Quarter Conference Call Management will host a conference call today, Thursday, July 28, 2005 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 7356654. The replay will be available through Thursday, August 4, 2005. There will also be a webcast available at http://www.advanced-energy.com/. 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: http://www.advanced-energy.com/. 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 third quarter of 2005. 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, semiconductor capital equipment and flat panel display industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, the Company's successful completion of key initiatives such as the worldwide manufacturing realignment and the shift to Asian-based suppliers, 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 from Advanced Energy's website at http://www.advanced-energy.com/ 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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, March 31, June 30, 2005 2004 2005 2005 2004 Sales $87,386 $108,869 $86,140 $173,526 $213,356 Cost of sales 55,338 71,907 57,065 112,403 137,980 Gross profit 32,048 36,962 29,075 61,123 75,376 Operating expenses: Research and development 11,016 12,809 11,015 22,031 26,219 Selling, general and administrative 13,993 14,087 12,901 26,894 27,891 Amortization of intangible assets 518 1,125 547 1,065 2,295 Restructuring charges 1,068 187 1,262 2,330 407 Total operating expenses 26,595 28,208 25,725 52,320 56,812 Income from operations 5,453 8,754 3,350 8,803 18,564 Other expense, net (719) (2,417) (2,087) (2,806) (3,572) Income from continuing operations before income taxes 4,734 6,337 1,263 5,997 14,992 Provision for income taxes (1,430) (1,867) (529) (1,959) (3,598) Income from continuing operations 3,304 4,470 734 4,038 $11,394 Gain on sale of discontinued assets 2,645 -- -- 2,645 $-- Provision for income taxes -- -- -- -- -- Income from discontinued operations 2,645 -- -- 2,645 -- Net Income $5,949 $4,470 $734 $6,683 $11,394 Net income per basic share Income from continuing operations $0.10 $0.14 $0.02 $0.12 $0.35 Income from discontinued operations 0.08 -- -- 0.08 -- Basic earnings per share $0.18 $0.14 $0.02 $0.20 $0.35 Net income per diluted share Income from continuing operations $0.10 $0.13 $0.02 $0.12 $0.34 Income from discontinued operations 0.08 -- -- 0.08 -- Diluted earnings per share $0.18 $0.13 $0.02 $0.20 $0.34 Basic weighted-average common shares outstanding 32,797 32,644 32,755 32,776 32,612 Diluted weighted-average common shares outstanding 33,094 33,187 32,878 32,986 33,435 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands) June 30, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $67,216 $38,404 Marketable securities, available for sale 70,571 69,578 Accounts receivable, net 67,089 72,053 Inventories, net 59,021 73,224 Other current assets 2,774 6,140 Total current assets 266,671 259,399 Property and equipment, net 41,814 44,746 Deposits and other 4,219 6,468 Goodwill and intangibles, net 72,838 80,308 Demonstration and customer service equipment, net 3,306 2,968 Deferred debt issuance costs, net 1,536 2,086 Deferred income tax assets, net 849 -- Total assets $391,233 $395,975 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $21,163 $17,683 Other accrued expenses 25,587 28,615 Current portion of capital leases and senior borrowings 2,721 3,726 Accrued interest payable on convertible subordinated notes 2,460 2,460 Total current liabilities 51,931 52,484 Long-term liabilities: Capital leases and senior borrowings 3,280 4,679 Deferred income tax liabilities, net -- 3,709 Convertible subordinated notes payable 187,718 187,718 Other long-term liabilities 2,169 2,407 Total long-term liabilities 193,167 198,513 Total liabilities 245,098 250,997 Stockholders' equity 146,135 144,978 Total liabilities and stockholders' equity $391,233 $395,975 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Six Months Ended June 30, 2005 2004 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $32,423 $(271) NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (24) 4,117 NET CASH USED IN FINANCING ACTIVITIES (1,663) (4,814) EFFECT OF CURRENCY TRANSLATION ON CASH (1,924) (46) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 28,812 (1,014) CASH AND EQUIVALENTS, beginning of period 38,404 41,522 CASH AND EQUIVALENTS, end of period $67,216 $40,508 http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO http://photoarchive.ap.org/ DATASOURCE: Advanced Energy Industries, Inc. CONTACT: Mike El-Hillow, Executive Vice President, Chief Financial Officer, +1-970-407-6570, , or Cathy Kawakami, Director, Corporate and Investor Relations, +1-970-407-6732, , both of Advanced Energy Industries, Inc. Web site: http://www.advanced-energy.com/

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