Investor Day Presentation, Sept 2012
 

Investor Day Presentation, Sept 2012

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Investor Day Presentation, Sept 2012 Investor Day Presentation, Sept 2012 Presentation Transcript

  • Analyst & Investor Day September 19, 2012 Martinsried/Munich, Germany
  • DisclaimerFORWARD-LOOKING STATEMENTSThis presentation contains forward-looking statements with words such as “believes”, “anticipates” and“expects” to describe expected revenues and earnings, anticipated demand for optical networking solutions,internal estimates and liquidity. These forward-looking statements involve a number of unknown risks,uncertainties and other factors that could cause actual results to differ materially. Unknown risks,uncertainties and other factors are discussed in the ‘risk report’ section of ADVA Optical Networking’s annualreport 2011.CONSOLIDATED PRO FORMA FINANCIAL RESULTSADVA Optical Networking provides consolidated pro forma financial results in this presentation solely assupplemental financial information to help investors and the financial community make meaningfulcomparisons of ADVA Optical Networking’s operating results from one financial period to another. ADVAOptical Networking believes that these pro forma consolidated financial results are helpful because theyexclude non-cash charges related to the stock option programs and amortization and impairment of goodwilland acquisition-related intangible assets, which are not reflective of the company’s operating results for theperiod presented. This pro forma information is not prepared in accordance with IFRS and should not beconsidered a substitute for historical information presented in accordance with IFRS. 2 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Agenda• 02:00pm – 03:30pm: Brian Protiva – CEO• 03:30pm – 03:45pm: Coffee Break/Q&A• 03:45pm – 04:30pm: Product Demo• 04:30pm – 04:45pm: Coffee Break• 04:45pm – 05:45pm: Jaswir Singh – CFO & COO• 05:45pm – 06:00pm: Coffee Break/Q&A• 07:30pm – 09:30pm: Dinner – Vorstand, all attendees3 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Brian Protiva, CEO4 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • ADVA Optical NetworkingThe Best of Both WorldsSeptember, 2012
  • Our Environment6 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Executive Team Brian Protiva CEO Quality Management Human Resources Jaswir Christoph Christian Singh Glingener Unterberger CFO & COO CTO CSMOKey responsibility: Operational execution Technology innovation Revenue growth Experienced and stable leadership team7 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Crisis? What Crisis?Chinas economy has $122,100,000,000,000 Euro Crisisgrown at its slowest US unfunded liabilities pace in three years by Dec 31, 2012 The global boundary conditions will remain difficult for some time8 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • The Telecom Market Competition Profitability Globalization New Services Regulation Differentiation Profitable growth is a challenge9 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • The State Of Our Industry Cloud Consumer Services Devices Enterprises Content Service Providers Carriers Systems Components Partly cloudy. But: the network is the foundation for all10 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • What Does It Take To Win? ? Strength to innovate • Innovation • Speed • Trusted Partner Speed to outperform11 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Growth Data 2008 – 2012F CAGR: 12% 140% ADVA Optical Networking 120% CAGR: 4.2% 100% Market 80% LH WDM Metro WDM 60% EAD 40% 20% 0% 2008 2009 2010 2011 2012F Consistent multi-year performance12 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • ADVA Optical Networking Today Our History • 18 years of innovation Our Performance • 19% revenue CAGR since 1995, 12% in the last 4 years Our Innovation Strength • 570 engineers at year-end 2011, up 15% per year on average over the last 4 years Our US Focus • 38% revenue today; target 50% by 2015 “Our mission is to be the trusted partner for innovative Optical+Ethernet transport solutions that ADVANCE next-generation networks for data, storage, voice and video services.” Your trusted partner for speed and innovation13 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Global Presence Headquarter Office Representative Richardson Atlanta Munich Meiningen Berlin Singapore Shenzhen14 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Strength To Innovate For Growth Markets15 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Growth Is In Mobility 7 6 Mobility 5 Subscribers (billions) 4 3 2 1 0 08 09 10 11 12 13 14 15 Mobile Mobile Broadband Fixed Broadband Mobile communication has become a way of life16 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • What Matters?Service Intelligence FSP 150Service Assurance FSP 150CC FSP 150EG-X Demarcation Aggregation Service EdgeTiming Excellence Backhaul with synchronization & timing to support LTE17 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Mobile Backhaul Innovation FSP 150 >15 MBH customers, > 900 gateway units shipped18 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Our Ethernet Innovation 1 The Foundation for Business Ethernet Services The industry’s leading Carrier Ethernet implementation • Connectivity & Resiliency with accurate HW-based OAM/PM • Out-of-Service Testing & In-Service Monitoring • Aggregation for efficient hand off • Plug&Play installation, Service provisioning & monitoring 2 Ethernet Wholesale Efficient inter-carrier handoff (E-NNI) 3 SONET/SDH Replacement Enable a seamless transition towards Ethernet • TDMoE (CES/PWE3) and TDMoE 4 Mobile Backhaul The solution for wholesale and integrated approaches • The leading clock recovery / synchronization service with assurance • Security solutions for mobile backhaul • Mobile backhaul optimization • Data and Sync transparent virtual dark fiber backhaul19 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Growth Is In Data Centers Peak requests 262 200k+ per second Data Centers 102 40 14 2.9 Q4 06 Q4 07 Q4 08 Q4 09 Q4 10 Total number of objects stored in amazon S3, in billion Datacenter traffic will grow by 5 times by 2015 to 5 zettabytes20 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • What Matters?Highest Availability FSP 3000Lowest LatencyMaximum Security Primary Data Center Backup Data Center Growth, security and resource consumption are primary pain points21 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Data Center Innovation FSP 3000 More than 50% of our 10G connectivity sales are now encrypted; 100G metro extremely successful, winning us new business22 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Our Enterprise Innovation 1 DC Connectivity (Enterprises, Government) Enable secure & versatile lowest latency connectivity • Leading support of Storage / HPC and Ethernet • Lowest latency on the market • Unique Security Suite • Enable Infrastructure as a Service (IaaS) 2 DC Connectivity (Web2.0, Internet eXchanges) Provide the market leading high capacity DC connectivity solution • Efficient transport for 1GbE to 100 GbE • Cost efficient, assured Ethernet DC access • Enable Infrastructure as a Service (IaaS) 3 Dedicated Solutions Media L1 video networking Utilities Operational networks 4 Research & Education Innovative connectivity for institutes, universities, schools • Scalable and open optical connectivity23 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Growth Is In Cloud Infrastructure 70 $5 OTT Video 60 Cloud Services Price per port per Gbps (US$k) $4 50 Exabytes/month (trillions) 40 $3 30 $2 20 $1 10 0 $0 2009 2010 2011 2012 2013 2014 Exabytes/month Cost of SP equipment change per year Massive data centers have changed traffic patterns24 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • What Matters?From Access to Core FSP 3000Service ManagementMulti-Layer Transport Access Metro Core Agile optical network with end-to-end SLA assurance is the foundation25 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Infrastructure Innovation FSP 3000 “ADVA Optical Networking’s relationship with Juniper provides its entry into the core optical network market and the tier 1 operator market …” Rick Talbot, Current Analysis, July 2011 The agile optical network with end-to-end SLA assurance is the foundation26 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Our Infrastructure Innovation 1 Optical Access and Backhaul A scalable and transparent FTTx infrastructure solution • Optimum cost/fiber/energy/rack usage • Scalable passive and active solutions • Optojack™ last mile supervision • Dedicated optical & Ethernet edge gateway solutions 2 Metro Provide the market leading flexible metro solution • Highly scalable optical layer • Focus on OTN and POT access and aggregation • Integrated optical & Ethernet solutions (150/3000) • Innovative demarcation and passive solutions • Evolution to Software Defined Optical Networks (SDON) 3 Core Agile Core Select and Core Express Solutions • Scalable, efficient optical layer with self-monitoring • Optimized OTN solutions • Industry leading control plane – evolution to Openflow • Evolution to Software Defined Optical Networks (SDON) • Packet optical networking via partnership27 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Outlook: SDN And Openflow • Software Defined Networking (SDN) • SDN virtualizes the network infrastructure – the natural step beyond virtualization of servers and storage • Virtualization has appealed to network managers for some time; consequently, SDN is a strategy of substantial global interest. • OpenFlow • Has emerged as one of the world’s most popular SDN protocols, particularly among data centers for Web 2.0 companies • One solution for the control of cloud computing, storage, and networking resources with a single, unified API* *Application Programming Interface • The Vision • With a single instruction, the controller can jointly create virtual machines, and reserve computing, networking and storage resources in a virtual slice. OpenFlow is seen as a native interface for SDN28 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Multi-Layer Operation Today Application Network Control NE Software NE Hardware Packet switch/router Network Element (NE) w comprehensive management & control SW SW content: high Network Control NE Software NE Hardware Optical Network Elements (NE) w. lean Network Management (NM) and embedded Control Plane SW content: medium/low Individual, proprietary management solutions leading to a non-integrated, costly mode of operation29 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • SDN Changes The Software Content Application Transport Applications Network Control NE Software NE Hardware Generalized flow forwarding engine with standardized Openflow IF Network Intelligence SW content: medium/low NE Software NE Hardware Constraint-aware agile optical network acting as a large, geographically dispersed switch with standardized Openflow IF SW: new opportunities at app layer Higher layer equipment risks commoditization New opportunities for optical networks through additional software content30 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • SDN Leadership Agile Optical Networking • Extremely scalable and flexible optical layer • Forward looking control and management concepts • Integration with higher network layers (e.g. Juniper) Scalability, flexibility and automation for ultimate performance31 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • CTO Organization Engineering Product Line Network Management Management Christoph Lifecycle Glingener Metro Core Management CTO Advanced Metro Technology Access New Product Ethernet Introduction Access System Processes Verification Test Thought leadership and innovation32 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Speed To Be The Trusted Partner For Our Customers33 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Our Broad And Loyal Customer Base Operators Enterprises R&E Leveraging our speed and innovation to build trust with enterprises, carriers and partners around the globe34 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Go-To-Market Strategy OEM Solutions integration NMS integration CUSTOMER Long relationships DIRECT Regional focus Vertical segments Long relationships VAR e.g. Three-pronged distribution model to flexibly address customer needs35 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Revenue by Channel Partner 2011 2012 FC Direct 21% 19% 30% 51% 24% 55% OEM VAR NEW! Good mix between direct and indirect (OEM & VAR partners) business; Strengthening VARs through new partner program36 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Regional Focus North America Grow carrier business further and penetrate additional enterprise verticals Europe Growth in carrier infrastructure and mobile backhaul; expansion to new enterprise verticals APAC From managed services to carrier infrastructure (mobile backhaul, metro + long-haul infrastructure) Emerging Markets Grow business via regional partners + direct touch sales force into new territories We are leveraging our partner landscape and experience with carrier AND enterprise customers37 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Strategic Sales Initiatives 2.0 Processes & Service Efficiency Business Increase Software Growth engine efficiency Ethernet Improve margins AttackStrategic Increase marketPartnership share Top 10 New Top 10 Named Cust. program account Global Accts Strategic Sales Initiatives (SSI) drive revenue and lower cost of sales38 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • SSI: Juniper-ADVA Partnership PTX5000 MX/T-series Qfabric MX-series OTS1000 FSP 3000 FSP 3000 FSP 150 Efficient, integrated and aligned solutions39 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • SSI: Attacking Ethernet Opportunities Content distribution Business applications – ERP, CRM TelePresence Online trading Core banking applications Broadcasting FSP 150 Family PoS and ATM applications As transport converges on Ethernet, so do services.Leverage Ethernet as growth opportunity and expand into networking solutions.40 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Marketing Strategy Technical Partners Marketing Market Customers Live Events Building a strong community around our brand Technology Media PR & Online Analysts Awareness and demand creation via efficient multipliers and personal touch41 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • CSMO Organization Applications & Solutions Management APAC Marketing Christian Unterberger British Technical Telecom Business support CSMO Sales Customer facing Customer Europe Operations Sales Emerging Operations Markets Tools and North Processes America Revenue growth – building a community based on trust42 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Our ADVAntage Trusted Partner Speed for CustomersOptical+Ethernet • High qualityInnovation • Operational excellence • Responsive team • Financial stability • Customized delivery• World-class engineering team • 24/7 worldwide• Focused on latest technology• Unconstrained networking ADVA Optical Networking has a unique combination of customer focus and innovation43 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Q&A44 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • 3.30pm – 3.45pm Coffee Break45 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • 3.45pm – 4.30pm Product Demo46 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • 4.30pm – 4.45pm Coffee Break47 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Jaswir Singh CFO & COO48 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Global Operations49 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Operations Vision And Structured Project Initiatives Vision Strategic Focus Strategic Initiatives Growth & 1. Exploit ADVA Optical Networking’s growth to achieve Profitability accelerated cost reductions in the areas of direct materials, contract manufacturing, freight and distribution cost. Operations will bea customer-centric Optical+Ethernet  Provide highest quality products at market leadingorganization that is Innovation order fulfillment service levels (on time to commitagile and adaptive and order lead times) to our customers, while in exceeding reducing inventory and working capital needs. expectations and Operational 1. Integrate processes successively and ways of inspiring working across all ADVA sites to increase operational Excellence confidence of all effectiveness. stakeholders 2. Help standardize manufacturing requirements for our products and consolidate contract manufacturing supplier base. People  Motivate, educate and nurture our team to achieve high levels of performance, personal growth and job satisfaction. All strategic initiatives driven by operations are aligned with the ADVA Efficiency Engine (AEE) 50 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • COO Organization Jaswir Singh Jaswir Singh CFO & COO CFO & COO Operations Finance Sites Functions Supply Norcross, York, Operations S&OP EMSMeiningen, Shenzhen, Chain Georgia, United Engineering Process and Manage- Germany China Manage- USA Kingdom & Projects Inventory ment ment 51 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Manufacturing And Distribution Sites With Functions EuropeOperationsEngineering York Meiningen & Projects (26) (175) China Munich (4) SupplyChain Mgmt USA Atlanta (27) Flextronics, Sanmina-SCI, Shenzhen, CN S&OP Timisoara, ROProcess and Shenzhen (12) InventoryEMS Mgmt Operations/Dist Headquarter EMS/CM supplier 52 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Finance53 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • CFO Organization Jaswir Singh Jaswir Singh CFO & COO COO CFO & Finance Operations Commercial Decision Management Support EMEA North America Accounting Tax S&M Operations Investor Relations APAC & Treasury Legal R&D G&A Information Technology Travel Group Facilities Internal Audit Business Systems54 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • CFO Organization Vision The CFO team enables and influences quality decisions that are in the best interest of ADVA Optical Networking through the provision of timely and relevant business information to all stakeholders, whilst ensuring all ethical and statutory standards are met. CFO organization has grown into global team that is dynamic, professional, efficient and scalable55 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Annual IFRS Revenues And Pro Forma Profitability Revenues and Pro Forma Gross Profit (millions of EUR, % of revenues) +25%* +7%* +7%* 291.7 310.9 232.8 +21%* +10%* +9%* 100.0 121.2 133.5 (42.9%) (41.6%) (42.9%) 2009 2010 2011 Pro Forma Operating Income** (millions of EUR, % of revenues) +30%* +118%* 17.3 13.3 (5.6%) n.a.* (4.6%) 6.1 (2.6%) 2009 2010 2011 * Growth vs. previous year. ** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets.56 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Quarterly IFRS Revenues And Pro Forma Profitability Revenues and Pro Forma Gross Profit*** (millions of EUR, % of revenues) +5%* +11% * +2%* +5%* -2%* 77.8 79.3 83.4 81.7 85.9 +17%* +8%* -3%* +9%* +4%* 29.7** 30.9** 33.3** 32.3** 35.1** (38.1%) (39.0%) (40.0%) (39.5%) (40.9%) (43.0%) (43.5%) (43.9%) (43.6%) (45.4%) Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Pro Forma Operating Income*** +36%* (millions of EUR, % of revenues) +53%* +56%* -40%* +286% * 3.5 5.5 7.4 4.5 6.8 (4.5%) (6.9%) (8.9%) (5.5%) (8.0%) Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012* Growth vs. previous quarter.** Amortization for capitalized development projects is presented as cost of goods sold from 2012. Prior period information has been adjusted accordingly, by reclassification of amortization from research and development expenses to cost of goods sold. The percentages in red represent pro forma gross margins prior to reclassification.*** Pro forma operating income is calculated prior to non-cash charges related to the stock option programs and amortization and impairment of goodwill and acquisition-related intangible assets. 57 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • IFRS Profitability EUR million Q2 2011 Q3 2011 Q4 2011 Q1 2011 Q2 2012 Pro Forma Operating Income 3.5 5.5 7.4 4.5 6.8 (4.5%) (6.9%) (8.9%) (5.5%) (8.0%) Operating Income 2.4 4.4 6.7 3.5 5.9 (3.1%) (5.6%) (8.0%) (4.3%) (6.9%) Net Income 0.8 9.7 8.7 4.0 5.1 (1.1%) (12.3%) (10.4%) (5.0%) (5.9%) Diluted EPS in EUR 0.02 0.20 0.18 0.08 0.10 Margins, in % of Revenues 13 11 9 8.0% 7 6.9% 5 5.9% 3 1 -1 -3 -5 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 201258 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Cash And Net Liquidity EUR million Cash & Cash Equivalents Financial Liabilities and Lease Obligations Net Liquidity 69.96550 40.83520 5-10-25 -29.1-40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012All-time high quarter-end cash and net liquidity positions at the end of Q2 2012, demonstrating financial strength and operational flexibility 59 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Working Capital Metrics Days Sales Outstanding (DSOs) Days Payable Outstanding (DPOs)* Inventory Turns*100 6.0 5.8 90 5.6 5.6 80 5.4 70 5.2 5.0 60 56 4.8 50 54 4.6 40 4.4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 Healthy working capital metrics with DPOs > DSOs* Amortization for capitalized development projects is presented as cost of goods sold from 2012. Prior period information has been adjusted accordingly, by reclassification of amortization from research and development expenses to cost of goods sold. As prior period values for DPOs (defined as average accounts payable / cost of goods sold) and inventory turns (defined as cost of goods sold / average inventories) are affected by this reclassification as well, these values have also been adjusted. 60 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Revenues Per Region Quarterly Development of Regional Revenues (millions of EUR, % of total) EMEA Americas Asia-Pacific 85.9 83.4 81.7 77.8 79.3 2% 6% 6% 6% 5% 29% 32% 38% 38% 38% 63% 56% 69% 56% 56% Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 EMEA remains most significant revenue contributor, Q2 2012 revenues impacted by significant investments in carrier infrastructure and enterprise solutions in EMEA and the Americas61 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • IFRS Consolidated Cash Flow Statement EUR million Q1 2012 Q2 2012 Net cash provided by operating activities 13.6 12.7 Net cash used for investing activities -8.3 -8.6 Net cash provided by (used for) financing activities 1.0 -0.3 Net effect of foreign currency translation -1.4 2.1 Net change in cash and cash equivalents 4.9 5.9 Cash and cash equivalents at beginning of period 59.1 64.0 at end of period 64.0 69.9 Free cash flow* 11.2 10.6* Free cash flow = Net cash provided by operating activities ./. capital expenditures for property, plant and equipment, finance leases and intangible assets not related to development activities.62 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Financing Financial Liabilities • Maturity structure as of Sep 30, 2012 (E) Financial liabilities Balance on Maturity by maturity Sep. 30, after (in millions of EUR) 2012E Interest terms (a) 2012 2013 2013 IKB Deutsche Industriebank # Bank loans 1.1 Fixed rate, subsidized - 0.3 0.8 2.5 Fixed rate, subsidized - 0.4 2.1 # Bonded loan 14.0 Floating rate, based on 3M EURIBOR - 14.0 - Portigon (WestLB) 11.4 Floating rate, based on bonded loan 3M EURIBOR - - 11.4 Total financial liabilities 29.0 - 14.7 14.3 (a) Key covenants: ADVA Optical Networking Group year-end debt/equity ratio ≤ 3 and quarter-end net liquidity ≥ EUR 8 million. • Depending on 2012 operating cash flow, in early 2013 we will start to seek refinancing for EUR 14 million bonded loan due in Q3 2013 Credit Lines • EUR 8 million, unchanged from the end of 2011, with EUR 2 million each provided by Deutsche Bank, BayernLB, DZBank and Portigon (WestLB) • WestLB line maturing in March 2013, we will seek to replace • All lines undrawn at current63 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Guidance Q3 2012 • Revenues between EUR 82 million and EUR 87 million • Pro forma operating margin between 4% and 8% of revenues* • ADVA Optical Networking will continue to perform detailed quarterly reviews of the expected business development in respect of all intangible assets, including capitalized research and development expenses; these reviews may result in non-cash impairment charges * Excluding any potential impairment charges.64 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Investor Relations Overview (I/II) Recent Investor Activities Planned Investor Activities Sep-Oct • Investor roadshows and conferences inJul 19 • Release of Q2 2012 IFRS financials and Europe and America: London, Munich, guidance for Q3 2012 Brussels • Updates to financial analysts Sep 19 • Annual Analyst & Investor Day, Munich, GermanyJul-Aug • Institutional investors met in Europe and Oct 23 • Release of Q3 2012 IFRS financials and America: Frankfurt, New York, Boston guidance for Q4 2012 • Updates to financial analysts Stockholder Structure Financial Analyst Coverage As of Aug 31, 2012: 47,704,260 shares outstanding As of Aug 31, 2012 Recommendation/ Last Last • ADVA Management 1.6% Institution target price update change 18.1% • DWS (D) 8.4% Arete Buy (€7.50) Mar 3, 11  (€6.70) • Capital (US) 2.9% Berenberg Buy (€6.50) Jul 19, 12  (€6.50) • DnB NOR (NOR) 2.6% • Fidelity (US) Close Brothers Seydler Buy (€6.00) Jul 19, 12  (€6.00) • ING (NL) Deutsche Bank Buy (€6.50) Jul 19, 12  (€6.50) • Pictet (CH) DZBank Buy (€6.30) Jul 19, 12  (€6.00) • Polar (UK) 81.9% Edison Investment Research n.a. (€6.27) Aug 28, 12 (Initiation) • SVM Asset (UK) 66.4%, • Swedbank (S) below Hauck & Aufhäuser Buy (€6.20) Jul 3, 12  (€6.20) Free float • DEKA (D) 1.5% LBBW Buy (€6.40) Jul 11, 12  (€6.40) EGORA Group • UBS (CH) each Silvia Quandt Bank Buy (€7.30) Feb 24, 11  (€4.80) • Union Inv. (D) Ø € 6.31 • Baring Asset (UK) Recommendations in light grey are outdated; outdated target prices • Other inst. inv. have not been included in average target price calculation. • Retail inv. Source: LionShare, as of Aug 31, 2012. 65 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Investor Relations Overview (II/II)Share Price and Trading Volume DevelopmentTrading volume Sep 1, 2011 – Sep 15, 2012 Share pricein thousand FWB Xetra data in € Ø daily trading volume (in shares) • 1 month: 103,805 • 6 months: 251,190 • 12 months: 248,091 Share price in EUR • Current (Sep 14) 5.28 • 52 week high 5.59 • 52 week low 3.08Financial Analyst IFRS Estimates As of Sep 15, 2012 Excludes outdated estimates (x%) = % of revenues FY 2011 Q3 2012 FY 2012 FY 2013 ADVA Ø analyst Ø analyst Ø analyst EUR m Actual guidance estimate estimate estimate Revenues 310.9 82 - 87 86.6 345.0 385.4 (0.9%) (+10.9%) (+11.7%) Pro forma 17.3 3.3 – 7.0 6.6 25.7 31.0 op. inc. (5.6%) (4% - 8%) (7.6%) (7.4%) (8.0%) Net 16.9 3.9 17.7 19.3 income (5.4%) (4.5%) (5.1%) (5.0%) 66 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • In Summary67 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • How we ADd VAlue OPERATIONAL EXCELLENCE Profitable THOUGHT growth LEADERSHIP FOCUS ONGROWTH MARKETS Loyal customer Differentiated technology Expanding opportunities ADVA Optical Networking is a thought leader in developing intelligent network infrastructure for high-growth markets68 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Q&A69 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • 5.45pm – 6.00pm Coffee Break70 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • 7.30pm – 9.30pm: Dinner w/Vorstand Spatenhaus an der Oper Residenzstrasse 12 80333 Munich spatenhaus@kuffler.de T. +49 89 290 706 0 Directions: U 3/6 Marienplatz or Odeonsplatz U 4/5 Odeonsplatz Subway Marienplatz Strassenbahn Nr. 19 Nationaltheater (opera house)71 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
  • Thank you Investor Relations Wolfgang Guessgen t +49 89 89 06 65 940 wguessgen@advaoptical.com www.advaoptical.com