ADVA AG Optical Networking 2000 Annual Shareholders Meeting

1
ADVA AG Optical Networking2000 Annual
Shareholders Meeting

• Brian L. Protiva, Chief Strategy Officer
• Andreas G. Rutsch, Chief Financial Officer
• May 24, 2000
• Munich, Germany

2
Highlights

• Leading global provider of optical networking
  solutions
• Pioneer in the DWDM market
• Dynamic growth and acquisition strategy
• Clearly differentiated from competitors
• technology/products
• distribution
• management

3
Optical networking market

• Challenge
• exploding amounts of data traffic
• fiber exhaustion and insufficient transmission
  capacity
• new telecommunications networks
• customer requirement for wavelength
  management/scalable network architectures

• Solution
• Dense Wavelength Division Multiplexing (DWDM) and
  intelligent optical networking solutions
• Virtual Fiber to maximize bandwidth of
  installed fiber

4
Optical networking market
2000 Market Size 3.5 Billion USD Market
Growth 21 CAGR 2000-2003
Long Haul (WAN)
Metro (MAN)
2000 Market Size 200 Million USD Market
Growth 100-300 CAGR 2000-2003
Metro Access
2000 Market Size 150 Million USD Market
Growth 100-300 CAGR 2000-2003
Enterprise (SAN/LAN)
Note market size and growth estimates based on
1999 and 2000 studies by Pioneer Consulting, RHK
and Ovum
5
Optical networking market

• Driving factors
• disaster recovery
• mergers and cooperation of companies
• data center services
• distributed offices and outsourced IT
• Convergence of enterprise and carrier networks
• delivery of traditional enterprise services by
  carriers
• significant revenue opportunities for carriers
  and equipment providers

6
Product portfolio
Metro ring
Carrier Networks
Enterprise Networks
Access ring
Access ring

• Carrier Networks (CO)
• FSP-I
• FSP 3000

• Enterprise Networks (CPE)
• FSP-II
• DiskLink
• Cellware product family

7
Product strategy
Networking Software Element Management System
seamless network management
Optical IAD
Metro Access Core
Optical Cross-Connect
complementary technologies - independent platforms
SAN
Video
8
Distribution Strategy

• Blue chip OEM partners and strategic distributors
• OEMs Cisco, Alcatel
• VARs Inrange, StorageTek, Controlware
• End-user customers
• more than 200 enterprises
• 14 telecommunication carriers
• Carrier competence center (C3) team
• focuses expertise of ADVAs sales product
  marketing teams
• drives product strategy
• Strong global presence
• 7 sales offices worldwide

9
Strategy

• Superior organic growth
• first-to-market with cost-efficient solutions
• introduction of FSP 3000
• expansion of blue-chip VAR OEM channels
• Cisco OEM agreement
• winning of 3-year Bell Atlantic contract
• increasing global presence
• opening of Tokyo office

10
Strategy

• Aggressive acquisition-oriented growth
• Storage Area Networks Ltd. (UK)
• storage area network router solutions
• purchase price 83 million USD
• Cellware GmbH (Berlin)
• integrated access devices, video solutions
• purchase price 23.4 million Euro
• strategic investment in OptXCon Inc.
• optical cross connects

11
Q1 2000 financial highlights
thousands of Euro, except earnings per share and
number of employees unaudited, according to U.S.
GAAP
12
Q1 2000 financial highlights
Sales (thousands of Euro, U.S. GAAP)
Operating income (thousands of Euro, U.S. GAAP)
Net profit (thousands of Euro, U.S. GAAP)
13
1999 financial highlights
thousands of Euro, except earnings per share and
number of employees fully audited according to
U.S. GAAP
14
Sales per product
15
Sales per geographic region
16
1999 financial highlights
Operating income (thousands of Euro, U.S. GAAP)
Net profit (thousands of Euro, U.S. GAAP)
Earnings per share (EPS) (Euro, U.S. GAAP)
0.42
0.10
17
Human resources
ADVA employees worldwide December 31, 1999 -
total 132
ADVA employees worldwide December 31, 1998 -
total 75
Management, administration, finance, IT
Apprentices
Management, administration, finance, IT
Apprentices
RD
RD
Sales, service, marketing, product marketing
Sales, service, marketing, product marketing
Quality management
Quality management
Procurement and production
Procurement and production
18
Human resources

• Strategic change in leadership

Brian L. Protiva Chief Strategy Officer
Stephan Offermanns Chief Operating Officer
Brian McCann Chief Sales Marketing Officer
Andreas G. Rutsch Chief Financial Officer

• sales
• marketing
• product marketing

• production
• logistics
• quality
• IT
• procurement

• strategy
• research development

• corporate finance/MA
• controlling/treasury
• investor relations
• personnel
• legal affairs

19
Stock performance
Euro
20
2000 annual shareholders meeting

• Increase in capital stock from corporate funds
• increase in common stock from EUR 5 million to
  EUR 30 million
• stock split in the ratio of 15
• Creation of additional approved capital
• increase in equity capital by up to EUR 14
  million
• up to EUR 3 million for cash contributions
• up to EUR 10 million for assets
• Stock option program 2000