Energy in Control

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Energy in Control

• Ken Oshman, Chairman CEO
• Bea Yormark, President COO

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Forward-Looking Statements

• This presentation was prepared as of November 7,
  2007 and contains forward-looking statements
• These forward-looking statements speak only as to
  managements current expectations
• Forward-looking statements involve risks and
  uncertainties
• For a complete description of risks, please refer
  to our current SEC reports on file
• This presentation includes non-GAAP measures of
  financial performance, which are not meant to be
  considered in isolation or as a substitute for
  their GAAP counterparts. A reconciliation
  between these measures can be found
  athttp//www.echelon.com/company/press/Q32007Ear
  nRel.htm, andhttp//www.echelon.com/company/press
  /Q42006EarnRel.htm
• Echelon disclaims any obligation to update or
  revise forward-looking statements

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Overview of Todays Presentation

• Profile Overview
• Situation Analysis
• Growth Strategy
• Recent Developments
• Financial Overview

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Echelon Profile

• Founded 1988
• About 300 employees
• Experienced management teamand board of
  directors
• Includes founders of ROLM, Apple Computer,
  StrataCom
• Strong, focused patent portfolio
• Over 100 patents issued/pending
• Strong balance sheet
• No debt, approximately 124 million in cash
  securities
• Revenue
• 2005 - 74.4M
• 2006 - 57.3M
• 2007 - 138M (analysts estimate)

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Overview
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Company Overview

• A networking infrastructure company
• Pioneering machine-to-machine (M2M) and embedded
  Internet technologies
• Providing standards-based hardware and software
  products
• A green tech company in a green era
• Enabling energy efficiencies throughout its
  product lines
• Two Product Lines
• LONWORKS Infrastructure
• NES Networked Energy Services

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Echelons Product Lines

• The LONWORKS Platform
• Microprocessor components, software, and system
  products for OEM manufacturers and system
  integrators that enable sensing, monitoring and
  automation systems
• Green buildings with smart heating/air-conditionin
  g that react to real-time tenant needs and
  current weather conditions
• Municipal lighting systems brighten or dim to
  improve safety, slow traffic, optimize
  maintenance and conserve energy
• The NES System for Smart Metering
• Smart electric meters, data concentrators, and
  system software used by utilities for next
  generation metering, grid optimization, and the
  delivery of multiple services
• Automatically report electricity consumption,
  identify outages, report theft, remotely connect
  re-connect service
• Enable maximum energy efficiency through managing
  the available energy to avoid blackouts, reduce
  the need for more generation, monitor power
  quality

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The LONWORKS Platform

• Built on an enduring platform for control
  automation, sensing and monitoring
• Adopted by thousands of companies worldwide
• Honeywell, Fujitsu, Group Schneider, Siemens, US
  Army Corps of Engineers, New York City Mass
  Transit Authority, McDonalds, etc.
• Embedded in millions of devices worldwide
• Adopted as a multi-industry, multi-national
  standard
• Used in almost every application imaginable
• Ideal for energy management applications
• Monitor and Control consumption
• Devices, Buildings, Homes, Municipalities,
  Countries

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NES Networked Energy Services

• Next generation utility metering solution
• Enables direct access to consumption information
  by the utility lower cost, higher service to
  consumers
• System deployments in Sweden, the Netherlands,
  Australia, Austria
• Over 24 active pilot projects worldwide

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NES SystemOpen Architecture
Secure communications between meters and
concentrators
AnyIPWAN
Power Line Communications
BPLGSMGRPSFiberWiMax
Web ServiceIntegration
LONWORKS, ModBus, M-bus communications to homes
and equipment
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Company Strategy

• To expand worldwide demand for LONWORKS networks
  by concentrating on those core vertical markets
  building, industrial and transportation
  businesses, utility and home automation in
  which we have a large customer base. And, to
  penetrate significantly the global markets for
  smart networked energy systems, now evolving
  rapidly as a result of energy efficiency
  awareness.In each product line, we identify
  market needs and continually undertake product
  development efforts to meet those needs.

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Situation Analysis
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Overall Situation Analysis

• Echelon is focused on revenue growth
  profitability
• Expanding technology portfolio to open new
  markets
• Growing existing markets
• Aggressively controlling costs
• Anticipate non-GAAP profitability in Q4 2007

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LONWORKS Infrastructure Snapshot

• Energy management a key driver inthe
  infrastructure business
• New markets emerging
• Managed street lighting
• Oslo, Bremen, Koln, Yangtze River Delta
• Retail chains
• Fast food, clothing, banking
• Sensor networks
• Buildings Homes
• Industrial
• Home automation

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LONWORKS Products Delivering Green

• Energy efficiency IS an alternative fuel source -
  TODAY
• LONWORKS networks enable energy efficiency
• Building automation delivers 10-70 electricity
  reduction
• Street lighting systems deliver 50 electricity
  reduction
• Industrial applications deliver 20 electricity
  reduction
• Home control of sleep state electricity use can
  save homeowners 30 or more per year, per product

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LONWORKS Products

• Technology enhancements
• The i.LON IP/web services platform integrates
  business and control networks unifies multiple
  protocols under the LONWORKS platform provides
  web access to individual devices
• Street lighting, system control supervision
  energy services
• The Pyxos platform extends our control solutions
  to sensor networks, in-machine controls,
  industrial markets
• Extends existing customer applications
• Working with partners to increase high-end
  application performance
• Leveraging partners
• Echelon Digital Home Alliance

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NES Snapshot

• Over 1 million meters awarded
• Australia Integral Energy
• Austria LINZ STROM, Stadtwerke Feldkirch
• Netherlands Nuon
• Sweden Vattenfall E.ON
• Russia EAC
• Denmark ELRO
• Aggressive partner activity
• Existing partners Eltel Networks, EVB Energie,
  FAE, Ferranti Computer Systems, Goerlitz,
  Sitronics, Telvent, Ubitronix
• Targeting additional partners for new markets
• Leveraging LONWORKS infrastructure business
• Telvent Powered by Echelon street lighting
  solution
• Product enhancements
• Data concentrator, system software, meter
  revisions

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Whats Driving the Growth?
Energy Management and Momentum from Key Wins
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Key Wins Building Momentum

• McDonalds Corporation
• Kitchen of the Future
• Improved operations, flexible restaurant design,
  energy efficiency
• EnerNOC
• virtual utilities for reducing demand on the
  grid
• Danish utility
• 50,000 homes, WiMAX WAN
• Russian utility
• 90,000 homes, 275,000 potential
• Duke utility of the future
• First North American pilot

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Energy Driving Synergy

• LINZ STROM NES System
• Smart metering
• Communicates with in-home LONWORKS network
• Communicates with LONWORKS streetlighting system

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We Have Built a New Paradigm for Energy Metering

• Networked smart meters are to existingelectro-mec
  hanical meters as mobile phonesare to rotary
  phones
• Advanced metering infrastructure is anetworked
  platform
• Future proof investment
• Intelligent meters
• Provide additional services and data
• Integral part of intelligent systems
• Designed to grow with the utility and its
  customers

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The Market is Responding to the Paradigm Echelon
Created

• In a short time, Echelon has
• Become a change agent for utilities moving to
  smart grids
• Won tenders for over 1 million meters
• Ramped meter production rapidly to meet demand
• Garnered the greatest asset possible happy
  utilities with NES installations

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Summary
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The New Key Driver

• Energy
• Fueling smart metering by utilities
• Increasing opportunities for theNES System
• Raising the value of theDigital Home Alliance
• Expanding the call for visibility of Green
  Buildings
• Increasing need for buildings to participate in
  demand response programs
• Making LONWORKS based control systems more
  valuable
• Creating new market opportunities
• Street lighting emerging due to proven energy
  savings
• Retail, convenience, and quick-serve small
  markets moving to energy efficiency remote
  monitoring
• McDonalds Kitchen of the Future

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Echelon is Well Positioned

• We provide technology and products serving both
  the smart metering and control networking markets
• Our customers create control solutions everyday,
  in every industry, around the globe
• Our NES System is a market leading solution for
  smart metering
• Energy management is now a key benefit for many
  of these systems
• We are enabling smart energy management

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Financials
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Consolidated Balance Sheets
December 31, 2006 December 31, 2005(in
thousands)
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Consolidated Balance Sheets
September 30, 2007 December 31, 2006(in
thousands)
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Statements of Operations - GAAP
Twelve Months Ended December 31, 2006 and
December 31, 2005 (in thousands, except per
share data)
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Statements of Operations - GAAP
Nine Months Ended September 30, 2007 and
September 30, 2006 (in thousands, except per
share data)
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Statements of Operations Non-GAAP
Twelve Months Ended December 31, 2006 and
December 31, 2005 (in thousands, except per
share data)
32
Statements of Operations Non-GAAP
Nine Months Ended September 30, 2007 and
September 30, 2006 (in thousands, except per
share data)
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Thank You