Advanced Energy Reports Fourth Quarter and Year-End 2005 Results

Feb 16, 2006, 00:00 ET from Advanced Energy Industries, Inc.

    FORT COLLINS, Colo., Feb. 16 /PRNewswire-FirstCall/ -- Advanced Energy
 Industries, Inc. (Nasdaq:   AEIS) today reported financial results for the
 fourth quarter and year ended December 31, 2005.
     For the 2005 fourth quarter, sales were $80.4 million, up 2.1 percent
 compared to $78.8 million in the third quarter of 2005, and down 5.2 percent
 compared to $84.8 million in the fourth quarter of 2004.  Gross profit was
 $30.2 million, or 37.6 percent of sales for the fourth quarter of 2005,
 compared to $28.9 million, or 36.7 percent of sales in the third quarter of
 2005, and $13.3 million, or 15.7 percent of sales in the fourth quarter of
     Income from continuing operations was $5.0 million, or $0.11 per diluted
 share, in the fourth quarter of 2005, compared to a loss from continuing
 operations of $4.2 million, or $0.11 per share, in the third quarter of 2005,
 and a loss from continuing operations of $23.3 million, or $0.71 per share, in
 the fourth quarter of 2004.  Fourth quarter 2005 income from continuing
 operations reflects a tax rate of 21 percent, which is lower than the
 Company's anticipated tax rate of 40 percent due to the mix of foreign and
 domestic income in the respective taxing jurisdictions, allowing the
 utilization of the net operating loss carryforwards.
     During the fourth quarter 2005, the Company sold its IKOR technology
 assets, resulting in income from discontinued operations of $5.0 million, or
 $0.11 per diluted share.  Net income from discontinued operations in the third
 quarter of 2005 was $312,000, or $0.01 per diluted share, and $340,000, or
 $0.01 per diluted share in the fourth quarter of 2004.
     Fourth quarter 2005 net income was $10.0 million, or $0.22 per diluted
 share, compared to a net loss of $3.9 million, or $0.10 per share in the third
 quarter of 2005, and a net loss of $23.0 million, or $0.70 per share in the
 fourth quarter of 2004.
     The third quarter 2005 net loss included a $3.0 million litigation
 settlement, $2.1 million related to the early retirement of the convertible
 debt, and a non-cash charge of $1.1 million related to the write-off of
 deferred debt issuance costs.  Included in the fourth quarter 2004 net loss
 were $19.8 million in pre-tax charges primarily attributable to increased
 excess and obsolete inventory reserves, a change in an accounting estimate
 related to demonstration equipment, employee severance and termination costs,
 and intangible asset impairments.
     Dr. Hans Betz, president and chief executive officer of Advanced Energy,
 said, "We continue to improve our gross margin even on relatively flat
 sequential sales volumes," said Dr. Betz.  "Incremental operating margin above
 our $66 million break even level was approximately 44 percent, and we expect
 additional improvements throughout the year as we continue to benefit from the
 increasing capability of our worldwide manufacturing operations."
     Sales for the 2005 fiscal year were $325.5 million, a 14.5 percent
 decrease compared to net sales of $380.5 million in fiscal year 2004.  Net
 income for the year was $12.8 million, or $0.34 per diluted share, compared to
 net loss of $12.7 million, or $0.39 per share in fiscal year 2004.  Net income
 from continuing operations was $3.6 million, or $0.10 per diluted share, in
 fiscal year 2005, compared to a loss from continuing operations of
 $14.7 million, or $0.45 per share, in fiscal year 2004.
     "We are currently experiencing increased demand for our innovative
 portfolio of solutions that enable advanced processing," said Dr. Betz.
 "During the fourth quarter, we made progress in further penetrating emerging
 opportunities in the solar market with both our DC and RF power platforms, and
 in flat panel display with our RF technology for a new etch application.  We
 are well-positioned to apply our technology leadership and worldwide
 manufacturing excellence to a diverse set of high-growth, high-profitability
     Dr. Betz continued, "Based on improving order trends, we currently expect
 first quarter 2006 sales to be $88 million to $91 million.  We anticipate
 earnings per share in the $0.17 to $0.19 range, including estimated
 stock-based compensation expense of $600,000, or $0.01 per diluted share after
 tax, due to our adoption of SFAS 123(R) in the first quarter of 2006."
     Fourth Quarter and Year-End 2005 Conference Call
     Management will host a conference call today, Thursday, February 16, 2006
 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 4199312. The
 replay will be available through Thursday, February 23, 2006.  There will also
 be a webcast available at, and on the investor
 relations page 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
     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:
     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 first quarter of 2006.  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, 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 .  Copies may also be obtained
 from Advanced Energy's website at 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.
     (in thousands, except per share data)
                                 Three Months Ended             Years Ended
                             December 31,    September 30,      December 31,
                           2005       2004       2005         2005       2004
     Sales               $80,387    $84,811    $78,756     $325,482   $380,537
     Cost of sales        50,196     71,536     49,834      208,401    265,911
     Gross profit         30,191     13,275     28,922      117,081    114,626
       Research and
        development        9,635     11,987      9,610       39,720     49,004
        general and
        administrative    13,671     12,305     13,421       53,631     54,174
       Amortization of
        assets               481        538        504        2,050      3,925
        charges              166      3,670        210        2,706      3,912
        settlement            --         --      3,000        3,000         --
        charge                --      3,752         --           --      3,752
       Impairment of
        assets                --      3,326         --           --      3,326
          expenses        23,953     35,578     26,745      101,107    118,093
     Income (loss)
      from operations      6,238    (22,303)     2,177       15,974     (3,467)
     Other income
      (expense), net         123     (1,690)    (4,796)      (7,479)    (7,256)
     Income (loss)
      from continuing
      operations before
      income taxes         6,361    (23,993)    (2,619)       8,495    (10,723)
      (benefit) for
      income taxes        (1,330)       648     (1,584)      (4,873)    (3,947)
       Income (loss)
        from continuing
        operations         5,031    (23,345)    (4,203)       3,622    (14,670)
     Gain on sale of
      assets               5,210         --         --        7,855         --
     Results of
      operations            (216)       340        312        1,340      1,923
     Provision for
      income taxes            --         --         --           --         --
       Income from
        operations         4,994        340        312        9,195      1,923
     Net income (loss)   $10,025   $(23,005)   $(3,891)     $12,817   $(12,747)
     Net income (loss)
      per basic share
       Income (loss)
        from continuing
        operations         $0.11     $(0.71)    $(0.11)       $0.10     $(0.45)
       Income from
        operations         $0.11      $0.01      $0.01        $0.25      $0.06
       Basic earnings
        (loss) per share   $0.23     $(0.70)    $(0.10)       $0.35     $(0.39)
     Net income (loss)
      per diluted share
       Income (loss)
        from continuing
        operations         $0.11     $(0.71)    $(0.11)       $0.10     $(0.45)
       Income from
        operations         $0.11      $0.01      $0.01        $0.25      $0.06
       Diluted earnings
        (loss) per share   $0.22     $(0.70)    $(0.10)       $0.34     $(0.39)
      common shares
      outstanding         44,416     32,698     38,366       37,084     32,649
      common shares
      outstanding         44,902     32,698     38,366       37,434     32,649
     (in thousands)
                                                    December 31,   December 31,
                                                        2005           2004
     Current assets:
       Cash and cash equivalents                      $52,874        $38,404
       Marketable securities                            6,811         69,578
       Accounts receivable, net                        68,992         72,053
       Inventories, net                                56,199         73,224
       Other current assets                             6,773          6,140
     Total current assets                             191,649        259,399
     Property and equipment, net                       39,294         44,746
     Deposits and other                                 3,808          6,468
     Goodwill and intangibles, net                     69,843         80,308
     Customer service equipment, net                    2,407          2,968
     Deferred debt issuance costs, net                     --          2,086
     Deferred income tax assets, net                    3,116             --
     Total assets                                    $310,117       $395,975
     Current liabilities:
       Trade accounts payable                         $22,028        $17,683
       Other accrued expenses                          23,977         28,615
       Current portion of capital leases and
        senior borrowings                               1,216          3,726
       Accrued interest payable on
        convertible subordinated notes                     --          2,460
     Total current liabilities                         47,221         52,484
     Long-term liabilities:
       Capital leases and senior borrowings             2,974          4,679
       Deferred income tax liabilities, net                --          3,709
       Convertible subordinated notes payable              --        187,718
       Other long-term liabilities                      2,492          2,407
     Total long-term liabilities                        5,466        198,513
     Total liabilities                                 52,687        250,997
     Stockholders' equity                             257,430        144,978
     Total liabilities and stockholders' equity      $310,117       $395,975
     (in thousands)
                                                      Years Ended  December 31,
                                                         2005          2004
      OPERATING ACTIVITIES                             $36,051      $(11,378)
     NET CASH PROVIDED BY INVESTING ACTIVITIES          67,032        12,329
     NET CASH USED IN FINANCING ACTIVITIES             (85,972)       (5,191)
     EFFECT OF CURRENCY TRANSLATION ON CASH             (2,641)        1,122
     CASH AND EQUIVALENTS, beginning of period          38,404        41,522
     CASH AND EQUIVALENTS, end of period               $52,874       $38,404

SOURCE Advanced Energy Industries, Inc.