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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 1998.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

For the transition period from __________ to __________.

Commission file number: 0-26966

ADVANCED ENERGY INDUSTRIES, INC.

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(Exact name of registrant as specified in its charter)

DELAWARE 84-0846841

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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1625 SHARP POINT DRIVE, FORT 80525
COLLINS, CO

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(Address of principal executive (Zip Code)
offices)

Registrant's telephone number, including area code: (970) 221-4670

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---

As of April 30, 1998, there were 22,535,862 shares of the Registrant's Common
Stock, par value $0.001 per share, outstanding.

ADVANCED ENERGY INDUSTRIES, INC.
FORM 10-Q
INDEX

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets-
March 31, 1998 and December 31, 1997 3

Consolidated Statements of Operations-
Three months ended March 31, 1998 and 1997 4

Consolidated Statements of Cash Flows-
Three months ended March 31, 1998 and 1997 5

Notes to consolidated financial statements 6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 14

ITEM 2. CHANGES IN SECURITIES 14

ITEM 3. DEFAULTS UPON SENIOR SECURITIES 14

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14

ITEM 5. OTHER INFORMATION 14

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
----------- ------------

ASSETS

CURRENT ASSETS:
Cash and cash equivalents.......................... $ 11,539 $ 11,470
Marketable securities - trading.................... 17,821 20,174
Accounts receivable, net........................... 26,328 28,386
Inventories........................................ 23,086 26,243
Other current assets............................... 2,060 2,472
Deferred income tax assets, net.................... 2,755 2,836
--------- ---------
Total current assets.......................... 83,589 91,581
--------- ---------

PROPERTY AND EQUIPMENT, net.......................... 13,177 11,331

OTHER ASSETS:
Deposits and other................................. 910 500
Goodwill, net...................................... 6,860 7,112
Demonstration and customer service equipment, net.. 1,912 1,719
--------- ---------
Total assets.................................. $106,448 $112,243
--------- ---------
--------- ---------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable trade............................. $ 7,970 $ 12,045
Accrued payroll and employee benefits.............. 4,665 5,243
Other accrued expenses............................. 1,321 1,327
Customer deposits.................................. 60 226
Accrued income taxes payable....................... 1,852 2,734
Current portion of long-term debt.................. 2,563 3,298
--------- ---------
Total current liabilities..................... 18,431 24,873
--------- ---------

LONG-TERM LIABILITIES:
Long-term debt..................................... 10 22
--------- ---------
Total liabilities............................. 18,441 24,895
--------- ---------

STOCKHOLDERS' EQUITY................................. 88,007 87,348
--------- ---------
Total liabilities and stockholders' equity.... $106,448 $112,243
--------- ---------
--------- ---------

The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.

ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

QUARTER ENDED MARCH 31,
--------------------------
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------

SALES.............................................. $36,670 $20,667
COST OF SALES...................................... 25,543 13,158
------- -------
Gross profit..................................... 11,127 7,509
------- -------
OPERATING EXPENSES:
Research and development......................... 4,642 2,821
Sales and marketing.............................. 2,996 1,799
General and administrative....................... 2,153 1,248
------- -------
Total operating expenses........................ 9,791 5,868
------- -------
INCOME FROM OPERATIONS............................. 1,336 1,641
OTHER INCOME (EXPENSE)............................. 149 (387)
------- -------
Net income before income taxes.................. 1,485 1,254
PROVISION FOR INCOME TAXES......................... 564 489
------- -------
NET INCOME......................................... $ 921 $ 765
------- -------
------- -------

BASIC EARNINGS PER SHARE........................... $ 0.04 $ 0.04
------- -------
------- -------
DILUTED EARNINGS PER SHARE......................... $ 0.04 $ 0.04
------- -------
------- -------
BASIC WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING..................................... 22,501 21,271
------- -------
------- -------
DILUTED WEIGHTED-AVERAGE COMMON SHARES
OUTSTANDING..................................... 23,124 21,735
------- -------
------- -------

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.

ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

THREE MONTHS ENDED MARCH 31,
-----------------------------
1998 1997
(UNAUDITED) (UNAUDITED)
----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 921 $ 765
Adjustments to reconcile net income to net cash provided by operating
activities --
Depreciation and amortization............................................ 1,250 798
Provision for deferred income taxes...................................... 81 --
Amortization of deferred compensation.................................... 12 12
Earnings from marketable securities, net................................. (147) --
Changes in operating assets and liabilities --
Accounts receivable-trade, net......................................... 1,256 (2,702)
Related parties and other receivables.................................. 802 (174)
Inventories............................................................ 3,157 (2,221)
Other current assets................................................... 412 146
Deposits and other..................................................... 90 21
Demonstration and customer service equipment........................... (466) 367
Accounts payable, trade................................................ (4,075) 2,300
Accrued payroll and employee benefits.................................. (578) 194
Customer deposits and other accrued expenses........................... (172) (342)
Income taxes payable................................................... (882) (89)
-------- -------
Net cash provided by (used in) operating activities................. 1,661 (925)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease of marketable securities........................................... 2,500 --
Purchase of property and equipment, net..................................... (2,571) (315)
Purchase of preferred stock of Litmas....................................... (500) --
-------- -------
Net cash used in investing activities............................... (571) (315)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and capital lease obligations.................... (747) (300)
Proceeds from sale of common stock.......................................... 25 11
-------- -------
Net cash used in financing activities............................... (722) (289)
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EFFECT OF CURRENCY TRANSLATION ON CASH FLOW................................... (299) 82
-------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. 69 (1,447)
CASH AND CASH EQUIVALENTS, beginning of period................................ 11,470 11,231
-------- -------
CASH AND CASH EQUIVALENTS, end of period...................................... $ 11,539 $ 9,784
-------- -------
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest...................................................... $ 3 $ 39
-------- -------
-------- -------
Cash paid for income taxes.................................................. $ 1,340 $ --
-------- -------
-------- -------

The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.

ADVANCED ENERGY INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION AND MANAGEMENT OPINION

In the opinion of management, the accompanying unaudited consolidated
balance sheets and statements of operations and cash flows contain all
adjustments, consisting only of normal recurring items, necessary to present
fairly the financial position of Advanced Energy Industries, Inc., a Delaware
corporation, and its wholly owned subsidiaries (the "Company") at March 31,
1998, and the results of their operations and cash flows for the three-month
periods ended March 31, 1998 and March 31, 1997.

The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles. The financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's
latest Annual Report on Form 10-K for the year ended December 31, 1997.

(2) ACQUISITION

Effective August 15, 1997, the Company acquired all of the outstanding
stock of Tower Electronics, Inc., a Minnesota-based designer and manufacturer
of custom, high-performance switchmode power supplies used principally in the
telecommunications, medical and non-impact printing industries. The purchase
price consisted of $14.5 million in cash and a $1.5 million
non-interest-bearing promissory note to the seller (the "Note"), payable in
August 1998. Total consideration, including the effect of imputing interest
on the Note, equaled $15,889,000. The acquisition was accounted for using the
purchase method of accounting and resulted in a one-time charge of $3,080,000
for in-process research and development acquired as a result of the
transaction. Acquisition costs totaled approximately $209,000.

The results of operations of Tower are included within the accompanying
consolidated financial statements.

(3) UNDERWRITTEN PUBLIC OFFERING

In October 1997, the Company effected an underwritten offering of its
common stock. In connection with this offering, 1,000,000 shares of common
stock were sold at a price of $31 per share, providing gross proceeds of
$31,000,000. Offering costs and underwriters' commissions totaled $2,276,000.

(4) ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
----------- ------------
(IN THOUSANDS)

Domestic...................................... $ 15,111 $16,724
Foreign....................................... 10,209 9,854
Allowance for doubtful accounts............... (426) (428)
--------- ---------
Trade accounts receivable..................... $24,894 $26,150
Related parties............................... 581 893
Other......................................... 853 1,343
--------- ---------
Total accounts receivable..................... $26,328 $28,386
--------- ---------
--------- ---------

(5) INVENTORIES

Inventories consisted of the following:

MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
----------- ------------
(IN THOUSANDS)

Parts and raw materials....................... $15,740 $18,549
Work in process............................... 2,768 2,542
Finished goods................................ 4,578 5,152
--------- ---------
Total inventories............................. $23,086 $26,243
--------- ---------
--------- ---------

(6) EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share," which requires companies to present basic
earnings per share ("EPS") and diluted EPS, instead of the primary and
fully-diluted EPS that were previously required. The new standard is
effective for the Company in fiscal 1997 and all prior periods have been
retroactively adjusted. Basic EPS is computed by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding during the period. The computation of diluted EPS is similar to
the computation of basic EPS except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if dilutive potential common shares had been issued.

(7) STOCKHOLDERS' EQUITY

Stockholders' equity consisted of the following:

MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
----------- ------------
(IN THOUSANDS. EXCEPT PAR VALUE)

Common stock, $0.001 par value, 30,000
shares authorized; 22,525 and 22,493
shares issued and outstanding at March 31,
1998 and December 31, 1997, respectively.... $ 23 $ 22
Additional paid-in capital....................... 52,649 52,625
Retained earnings................................ 36,348 35,427
Deferred compensation............................ (22) (34)
Cumulative translation adjustment................ (991) (692)
------- -------
Total stockholders' equity....................... $88,007 $87,348
------- -------
------- -------

(8) COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," which is required to be adopted by the Company in
fiscal 1998. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. SFAS 130 establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general-purpose financial statements. The Company adopted SFAS
130 in the first quarter of fiscal 1998.

QUARTER ENDED QUARTER ENDED
MARCH 31, 1998 MARCH 31, 1997
(UNAUDITED) (UNAUDITED)
-------------- --------------
(IN THOUSANDS)

Net income, as reported........................... $921 $765
Adjustment to arrive at comprehensive net income:
Cumulative translation adjustment............... (299) 82
-------- ---------
Comprehensive net income.......................... $622 $847
-------- ---------
-------- ---------

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion contains, in addition to historical
information, forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve
risks and uncertainties. As a result, the Company's actual results may differ
materially from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are
not limited to, those discussed below and in the Company's 1997 Annual Report
on Form 10-K.

In particular, the Company believes that the factors described in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997
Part I "CAUTIONARY STATEMENTS -- RISK FACTORS" could impact forward-looking
statements made herein or in future written or oral releases and by
hindsight, prove such statements to be overly optimistic and unachievable.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

SALES

Sales for the first quarter of 1998 were $36.7 million, an increase of
77% from first quarter of 1997 sales of $20.7 million. The increase in sales
between such periods has resulted from increased unit sales of the Company's
systems. Sales for the first quarter of 1998 also include sales by the
Company's wholly owned subsidiary Tower Electronics, Inc. ("Tower"), which
was acquired as of August 15, 1997. Almost half of the increase in sales was
attributable to domestic semiconductor equipment customers, primarily the
Company's largest customer. Sales to the data storage market increased
significantly, particularly to the Company's largest customer in that
industry. Sales to the flat panel display industry also increased from the
comparable period last year. Sales to customers in the United States and
Europe increased significantly from the comparable quarter in 1997, while the
growth in sales to Japan and the Pacific Rim were less substantial. The
growth in this region was due to increased sales to data storage customers in
Japan.

Sales for the first quarter of 1998 were down 20% from fourth quarter
1997 sales of $46.0 million. This decrease was due primarily to decreased
demand from the semiconductor capital equipment and data storage industries.

GROSS MARGIN

The Company's gross margin for the first quarter of 1998 was 30.3%, down
from 36.3% in the comparable period in 1997 and down from 37.6% in the fourth
quarter of 1997. The decrease in gross margin from the first quarter of 1997
to the first quarter of 1998 was due primarily to higher raw material costs,
unfavorable absorption of manufacturing overhead resulting from lower than
anticipated production volumes, and an additional provision of $1.5 million
for excess and obsolete materials. During the first quarter of 1998, raw
materials were returned from outsource vendors and became excess following a
decline in orders; these raw materials could become obsolete as new products
are introduced. Offsetting this was a decrease in customer service costs as a
percentage of sales.

The decrease in gross margin from the fourth quarter of 1997 to the
first quarter of 1998 was due primarily to unfavorable absorption of
manufacturing overhead and to the provision for excess and obsolete materials
described above. During the fourth quarter of 1997, the Company expanded into
a new manufacturing facility to accommodate the anticipated growth in the
semiconductor capital equipment market. The growth in the semiconductor
equipment industry did not materialize as expected and resulted in an
over-capacity situation. The Company has initiated cost reduction measures,
including a 10% reduction in executive salaries and certain scheduled
mandatory time off for all personnel, except those in critical functions, in
anticipation of continued softness in the semiconductor equipment and data
storage markets. Other cost-reducing initiatives are being considered.
However, the Company expects that underutilization of manufacturing capacity
will continue to negatively impact gross margins until sales improve.

RESEARCH AND DEVELOPMENT

The Company's research and development expenses are incurred researching
new technologies, developing new products and improving existing product
designs. Research and development expenses for the first quarter of 1998 were
$4.6 million, an increase of 65% from $2.8 million in the comparable period
in 1997. The increase in expenses was primarily a result of increased
spending for payroll and materials and supplies for new product development.
As a percentage of sales, research and development expenses decreased
slightly to 12.6% in the first quarter of 1998 from 13.7% in the first
quarter of 1997, reflecting the higher sales base.

The Company believes that continued research and development investment
is essential to ongoing development of new products, which, in turn, is
critical to the Company's ability to achieve design wins and otherwise
compete in the various industries it serves. Since inception, all research
and development costs have been internally funded and expensed.

SALES AND MARKETING

Sales and marketing expenses support domestic and international sales
and marketing activities that include personnel, trade shows, advertising,
and other marketing activities. Sales and marketing expenses for the first
quarter of 1998 were $3.0 million, compared to $1.8 million in the first
quarter of 1997, representing an increase of 67%. The increase was primarily
due to higher payroll costs and materials and supplies expense incurred as
the Company continues to strengthen its sales management and product
management teams. Additionally, the Company has increased spending in an
effort to develop worldwide applications engineering capabilities. As a
percentage of sales, sales and marketing expenses decreased slightly to 8.2%
in the first quarter of 1998 from 8.7% in the first quarter of 1997,
reflecting the higher sales base.

GENERAL AND ADMINISTRATIVE

General and administrative expenses support the worldwide financial,
administrative, information systems and human resources functions of the
Company. General and administrative expenses for the first quarter of 1998
were $2.2 million, compared to $1.2 million in the first quarter of 1997. The
increase in general and administrative spending was primarily a result of
increases in payroll and purchased services expenses incurred to provide
support services for the increased level of sales. Additionally, $0.3 million
of general and administrative costs for the first quarter of 1998 is
attributable to amortization of goodwill. As a percentage of sales, general
and administrative expenses decreased slightly to 5.9% in the first quarter
of 1998 from 6.0% in the first quarter of 1997, reflecting the Company's
effort to contain general and administrative expenses as sales grow.

The Company continues to implement its management system software,
including the replacement of existing systems in its foreign locations. The
Company expects that charges related to training and implementation of the
software will continue through 1998, particularly for the foreign locations.

OTHER INCOME (EXPENSE)

Other income (expense) consists primarily of foreign exchange gains and
losses and interest income and expense. Other income for the first quarter of
1998 was $0.1 million, primarily due to $0.2 million of interest income from
marketable securities. In the comparable period in 1997, other expense was
$0.4 million, primarily due to a foreign currency exchange loss.

The Company experienced fluctuations in foreign currency exchange rates
during 1997 and the first quarter of 1998, particularly against the Japanese
yen. As a hedge against currency fluctuations in the yen, the Company entered
into various forward foreign exchange contracts during 1997 to mitigate the
effect of potential depreciation in that

currency. The Company continues to evaluate various policies to minimize the
effects of currency fluctuations.

PROVISION FOR INCOME TAXES

The income tax provision of $0.6 million for the first quarter of 1998
represented an estimated effective rate of 38.0% compared to an effective
income tax rate for the year 1997 of 39.2%. The tax rate for 1997 was higher
primarily due to charges resulting from the acquisition of Tower that were
not deductible. The Company adjusts its provision for income taxes
periodically, based upon the anticipated tax status of all of its foreign and
domestic entities.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations, acquired
equipment and met its working capital requirements through cash flow from
operations, borrowings under its revolving line of credit, long-term loans
secured by property and equipment, and, since November 1995, proceeds from
underwritten public offerings.

Operations provided cash of $1.7 million in the first three months of
1998, primarily as a result of net income, depreciation, amortization, and
decreases in accounts receivable and inventories, partially offset by
decreases in accounts payable. In the comparable period in 1997, operations
used cash of $0.9 million, primarily as a result of increases in accounts
receivable and inventories, partially offset by net income, depreciation and
increases in accounts payable.

Investing activities used cash of $0.6 million in the first three months
of 1998, as a result of the purchase of property and equipment for $2.6
million and preferred stock of Litmas, Inc. ("Litmas") for $0.5 million,
partially offset by a decrease of marketable securities of $2.5 million. In
the comparable period in 1997, investing activities used cash of $0.3 million
due to the purchase of property and equipment.

Financing activities used cash of $0.7 million in the first three months
of 1998 and $0.3 million in the comparable period of 1997. In both periods
presented the cash used was due primarily to repayment of notes payable and
capital lease obligations.

The Company plans to spend approximately $3.0 million through the
remainder of 1998 for the acquisition of manufacturing and test equipment and
furnishings, including the provision of equipment to a new manufacturing
facility in Austin, Texas, to accommodate the Company's largest customer in
the semiconductor capital equipment industry. The Company also plans to
invest an additional $0.25 million in preferred stock of Litmas in each of
the second and third quarters of 1998.

As of March 31, 1998, the Company had working capital of $65.2 million.
The Company's principal sources of liquidity consisted of $11.5 million of
cash and cash equivalents, $17.8 million of marketable securities, and a
credit facility consisting of a $30.0 million revolving line of credit, with
options to convert up to $10.0 million to a three-year term loan. Advances
under the revolving line of credit bear interest at either the prime rate
(8.5% at April 30, 1998) minus 1.25% or the LIBOR 360-day rate (5.96875% at
April 30, 1998) plus 150 basis points, at the Company's option. All advances
under the revolving line of credit will be due and payable in December 2000;
however, there were no advances outstanding as of March 31, 1998.

The Company believes that its cash and cash equivalents, marketable
securities, cash flow from operations and available borrowings, will be
sufficient to meet the Company's working capital needs through the end of
1998. After that time, the Company may require additional equity or debt
financing to address its working capital, capital equipment, or expansion
needs. In addition, any significant acquisitions by the Company may require
additional equity or debt financings to fund the purchase price, if paid in
cash. There can be no assurance that additional funding will be available
when required or that it will be available on terms acceptable to the Company.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings in the ordinary
course of its business to the best of its knowledge.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:
2.1 Share Purchase Agreement, dated August 11, 1997, among Roger C.
Hertel, Tower Electronics, Inc. and the Company(1)

3.1 The Company's Restated Certificate of Incorporation(2)

3.2 The Company's By-laws(2)

4.1 Form of Specimen Certificate for the Company's Common Stock(2)

4.2 The Company hereby agrees to furnish to the SEC, upon request, a
copy of the instruments which define the rights of holders of long-
term debt of the Company. None of such instruments not included as
exhibits herein represents long-term debt in excess of 10% of the
consolidated total assets of the Company.

10.1 Master Purchase Order and Sales Agreement, dated January 1, 1990,
between Applied Materials Inc. and the Company(2)+

10.2 Purchase Order and Sales Agreement, dated July 1, 1993, amended
September 16, 1995 between Lam Research Corporation and the
Company(2)+

10.3 Purchase Agreement, dated November 1, 1995, between Eaton
Corporation and the Company(3)+

10.4 Amended and Restated Loan and Security Agreement, dated as of
November 17, 1995, between Silicon Valley Bank and the Company(2)

10.5 Loan and Security Agreement, dated August 15, 1997, among Silicon
Valley Bank, Bank of Hawaii and the Company(4)

10.6 Loan Agreement dated December 8, 1997, by and among Silicon Valley
Bank, as Servicing Agent and a Bank, and Bank of Hawaii, as a Bank,
and the Company, as borrower(5)

10.7 Equipment Line of Credit, dated July 11, 1994, between Silicon
Valley Bank and the Company(2)

10.8 Master Lease Purchase Agreement, dated January 20, 1989, as amended,
between MetLife Capital Corporation and the Company(2)

10.9 Lease Purchase Agreement, dated June 11, 1992, between MetLife
Capital Corporation and the Company(2)

10.10 Master Equipment Lease, dated July 15, 1993, as amended, between
KeyCorp Leasing Ltd. and the Company(2)

10.11 Lease, dated June 12, 1984, amended June 11, 1992, between Prospect
Park East Partnership and the Company for property in Fort Collins,
Colorado(2)

10.12 Lease, dated March 14, 1994, as amended, between Sharp Point
Properties, L.L.C., and the Company for property in Fort Collins,
Colorado(2)

10.13 Lease, dated May 19, 1995, between Sharp Point Properties, L.L.C.
and the Company for a building in Fort Collins, Colorado(2)

10.14 Form of Indemnification Agreement(2)

10.15 1995 Stock Option Plan, as amended and restated(5)*

10.16 Employee Stock Purchase Plan(2)*

10.17 1995 Non-Employee Directors' Stock Option Plan(2)*

21.1 Subsidiaries of the Company(4)

27.1 Financial Data Schedule for the three-month period ended March 31,
1998.

27.2 Financial Data Schedule as restated for the year ended December 31,
1996; the three-month period ended March 31, 1997; the six-month
period ended June 30, 1997; and the nine-month period ended
September 30, 1997, respectively.

27.3 Financial Data Schedule as restated for the year ended December 31,
1995; the three-month period ended March 31, 1996; the six-month
period ended June 30, 1996; and the nine-month period ended
September 30, 1996, respectively.

(b) No reports on Form 8-K were filed or required to be filed by the Company
during the three-month period ended March 31, 1998.

_______________

(1) Incorporated by reference to the Company's Current Report on Form 8-K
(File No. 0-26966), dated August 15, 1997, filed August 19, 1997, as
amended.

(2) Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 33-97188), filed September 20, 1995, as amended.

(3) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996 (File No. 0-26966), filed March
21, 1997, as amended.

(4) Incorporated by reference to the Company's Registration Statement on
Form S-3 (File No. 333-34039), filed August 21, 1997, as amended.

(5) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 0-26966), filed March
24, 1998.

* Compensation Plan

+ Confidential treatment has been granted for portions of this
agreement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

ADVANCED ENERGY INDUSTRIES, INC.

/s/ Richard P. Beck
-------------------

Vice President, Chief Financial May 14, 1998
Officer, Assistant Secretary and
Director (Principal Financial Officer
and Principal Accounting Officer)

EXHIBIT INDEX

2.1 Share Purchase Agreement, dated August 11, 1997, among Roger C.
Hertel, Tower Electronics, Inc. and the Company(1)