Investor Day Presentation, Sept 2012

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<ul><li> 1. Analyst &amp; Investor Day September 19, 2012 Martinsried/Munich, Germany</li></ul><p> 2. DisclaimerFORWARD-LOOKING STATEMENTSThis presentation contains forward-looking statements with words such as believes, anticipates andexpects 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 Networkings 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 Networkings 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 companys 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. 3. Agenda 02:00pm 03:30pm: Brian Protiva CEO 03:30pm 03:45pm: Coffee Break/Q&amp;A 03:45pm 04:30pm: Product Demo 04:30pm 04:45pm: Coffee Break 04:45pm 05:45pm: Jaswir Singh CFO &amp; COO 05:45pm 06:00pm: Coffee Break/Q&amp;A 07:30pm 09:30pm: Dinner Vorstand, all attendees3 2012 ADVA Optical Networking. All rights reserved. Confidential. 4. Brian Protiva, CEO4 2012 ADVA Optical Networking. All rights reserved. Confidential. 5. ADVA Optical NetworkingThe Best of Both WorldsSeptember, 2012 6. Our Environment6 2012 ADVA Optical Networking. All rights reserved. Confidential. 7. Executive TeamBrian ProtivaCEOQuality Management Human Resources Jaswir Christoph ChristianSingh GlingenerUnterbergerCFO &amp; COO CTO CSMOKey responsibility: Operational executionTechnology innovation Revenue growthExperienced and stable leadership team7 2012 ADVA Optical Networking. All rights reserved. Confidential. 8. Crisis? What Crisis?Chinas economy has $122,100,000,000,000Euro Crisisgrown at its slowestUS unfunded liabilities pace in three years by Dec 31, 2012The global boundary conditions will remain difficult for some time8 2012 ADVA Optical Networking. All rights reserved. Confidential. 9. The Telecom MarketCompetition ProfitabilityGlobalizationNew Services RegulationDifferentiationProfitable growth is a challenge9 2012 ADVA Optical Networking. All rights reserved. Confidential. 10. The State Of Our Industry CloudConsumerServices Devices Enterprises Content ServiceProviders CarriersSystems ComponentsPartly cloudy. But: the network is the foundation for all10 2012 ADVA Optical Networking. All rights reserved. Confidential. 11. What Does It Take To Win?? Strength to innovate Innovation Speed Trusted PartnerSpeed to outperform11 2012 ADVA Optical Networking. All rights reserved. Confidential. 12. Growth Data 2008 2012FCAGR: 12% 140%ADVA Optical Networking 120%CAGR: 4.2% 100%Market 80%LH WDMMetro WDM 60%EAD 40% 20%0%2008 20092010 20112012F Consistent multi-year performance12 2012 ADVA Optical Networking. All rights reserved. Confidential. 13. 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 2015Our 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. 14. Global PresenceHeadquarterOfficeRepresentative RichardsonAtlanta Munich Meiningen BerlinSingapore Shenzhen14 2012 ADVA Optical Networking. All rights reserved. Confidential. 15. Strength To Innovate For Growth Markets15 2012 ADVA Optical Networking. All rights reserved. Confidential. 16. Growth Is In Mobility76 Mobility5 Subscribers (billions)4321008 0910 11 12 1314 15Mobile Mobile Broadband Fixed BroadbandMobile communication has become a way of life16 2012 ADVA Optical Networking. All rights reserved. Confidential. 17. What Matters?Service Intelligence FSP 150Service AssuranceFSP 150CCFSP 150EG-XDemarcation AggregationService EdgeTiming ExcellenceBackhaul with synchronization &amp; timing to support LTE17 2012 ADVA Optical Networking. All rights reserved. Confidential. 18. Mobile Backhaul Innovation FSP 150&gt;15 MBH customers, &gt; 900 gateway units shipped18 2012 ADVA Optical Networking. All rights reserved. Confidential. 19. Our Ethernet Innovation 1 The Foundation for Business Ethernet Services The industrys leading Carrier Ethernet implementation Connectivity &amp; Resiliency with accurate HW-based OAM/PM Out-of-Service Testing &amp; In-Service Monitoring Aggregation for efficient hand off Plug&amp;Play installation, Service provisioning &amp; 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. 20. Growth Is In Data Centers Peak requests 262200k+ per secondData Centers 10240 142.9 Q4 06Q4 07Q4 08Q4 09 Q4 10 Total number of objects stored in amazon S3, in billionDatacenter traffic will grow by 5 times by 2015 to 5 zettabytes20 2012 ADVA Optical Networking. All rights reserved. Confidential. 21. What Matters?Highest AvailabilityFSP 3000Lowest LatencyMaximum Security Primary Data Center Backup Data CenterGrowth, security and resource consumption are primary pain points21 2012 ADVA Optical Networking. All rights reserved. Confidential. 22. 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. 23. Our Enterprise Innovation 1DC Connectivity (Enterprises, Government) Enable secure &amp; versatile lowest latency connectivityLeading support of Storage / HPC and EthernetLowest latency on the marketUnique Security SuiteEnable Infrastructure as a Service (IaaS) 2DC 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) 3Dedicated Solutions Media L1 video networking Utilities Operational networks 4Research &amp; Education Innovative connectivity for institutes, universities, schools Scalable and open optical connectivity23 2012 ADVA Optical Networking. All rights reserved. Confidential. 24. Growth Is In Cloud Infrastructure70 $5OTT Video60 Cloud ServicesPrice per port per Gbps (US$k) $450 Exabytes/month (trillions)40 $330 $220 $110 0 $02009 20102011201220132014 Exabytes/monthCost of SP equipment change per yearMassive data centers have changed traffic patterns24 2012 ADVA Optical Networking. All rights reserved. Confidential. 25. What Matters?From Access to Core FSP 3000Service ManagementMulti-Layer TransportAccessMetroCore Agile optical network with end-to-end SLA assurance is the foundation25 2012 ADVA Optical Networking. All rights reserved. Confidential. 26. Infrastructure InnovationFSP 3000 ADVA Optical Networkings 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. 27. Our Infrastructure Innovation 1Optical 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 &amp; Ethernet edge gateway solutions 2Metro Provide the market leading flexible metro solution Highly scalable optical layer Focus on OTN and POT access and aggregation Integrated optical &amp; Ethernet solutions (150/3000) Innovative demarcation and passive solutions Evolution to Software Defined Optical Networks (SDON) 3Core 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. 28. 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 worlds 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. 29. Multi-Layer Operation TodayApplication Network ControlNE Software NE HardwarePacket switch/router Network Element (NE) w comprehensive management &amp; control SWSW content: highNetwork Control NE SoftwareNE Hardware Optical Network Elements (NE)w. lean Network Management (NM) and embedded Control Plane SW content: medium/lowIndividual, proprietary management solutions leading to a non-integrated, costly mode of operation29 2012 ADVA Optical Networking. All rights reserved. Confidential. 30. SDN Changes The Software ContentApplication Transport ApplicationsNetwork ControlNE SoftwareNE Hardware Generalized flow forwarding engine with standardized Openflow IF Network IntelligenceSW content: medium/low NE Software NE Hardware Constraint-aware agile optical network acting as a large, geographically dispersed switchwith standardized Openflow IFSW: 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. 31. 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. 32. CTO OrganizationEngineering Product Line Network Management ManagementChristophLifecycle Glingener MetroCore ManagementCTOAdvancedMetro Technology Access New Product Ethernet Introduction Access SystemProcesses Verification TestThought leadership and innovation32 2012 ADVA Optical Networking. All rights reserved. Confidential. 33. Speed To Be The Trusted PartnerFor Our Customers33 2012 ADVA Optical Networking. All rights reserved. Confidential. 34. Our Broad And Loyal Customer Base OperatorsEnterprisesR&amp;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. 35. Go-To-Market Strategy OEM Solutions integrationNMS integration CUSTOMER Long relationships DIRECT Regional focusVertical segments Long relationships VAR e.g. Three-pronged distribution model to flexibly address customer needs35 2012 ADVA Optical Networking. All rights reserved. Confidential. 36. Revenue by Channel Partner20112012 FCDirect 21% 19% 30% 51% 24% 55%OEM VARNEW! Good mix between direct and indirect (OEM &amp; VAR partners) business;Strengthening VARs through new partner program36 2012 ADVA Optical Networking. All rights reserved. Confidential. 37. Regional Focus North AmericaGrow carrier business further and penetrateadditional enterprise verticals EuropeGrowth in carrier infrastructure and mobilebackhaul; expansion to new enterprise verticals APACFrom managed services to carrier infrastructure(mobile backhaul, metro + long-haul infrastructure) Emerging MarketsGrow business via regional partners + direct touchsales 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. 38. Strategic Sales Initiatives 2.0Processes &amp;Service EfficiencyBusinessIncreaseSoftwareGrowth engine efficiencyEthernetImprove marginsAttackStrategic Increase marketPartnership shareTop 10 New Top 10 NamedCust. program accountGlobalAccts Strategic Sales Initiatives (SSI) drive revenue and lower cost of sales38 2012 ADVA Optical Networking. All rights reserved. Confidential. 39. SSI: Juniper-ADVA Partnership PTX5000MX/T-seriesQfabricMX-series OTS1000 FSP 3000FSP 3000 FSP 150 Efficient, integrated and aligned solutions39 2012 ADVA Optical Networking. All rights reserved. Confidential. 40. SSI: Attacking Ethernet Opportunities Content distribution Business applications ERP, CRM TelePresence Online trading Core banking applications BroadcastingFSP 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. 41. Marketing Strategy TechnicalPartners MarketingMarket Customers Live Events Building a strong community around our brand Technology MediaPR &amp; Online Analysts Awareness and demand creation via efficient multipliers and personal touch41 2012 ADVA Optical Networking. All rights reserved. Confidential. 42. CSMO Organization Applications &amp; Solutions ManagementAPACMarketing Christian UnterbergerBritishTechnicalTelecom Business support CSMOSalesCustomer facing CustomerEurope Operations Sales Eme...</p>