ADVA AG Optical Networking2000 Annual Shareholders’ Meeting

Brian L. Protiva, Chief Strategy Officer Andreas G. Rutsch, Chief Financial Officer

May 24, 2000Munich, 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

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Backbone

Metro ring

Access ringAccess ringOADM

OADM

OADM

OADMOADM

OADM

CPE CPECPE

O-BLSR 2/4 Fiber Ring

O-BLSR 2/4 Fiber Ring

O-UPSR O-UPSR

Central OfficeCentral Office

Long Haul(WAN)

Enterprise(SAN/LAN)

Metro(MAN)

Metro Access

2000 Market Size:$200 Million USDMarket Growth:

100-300% CAGR 2000-2003

2000 Market Size:$150 Million USDMarket Growth:

100-300% CAGR 2000-2003

2000 Market Size:$3.5 Billion USDMarket Growth:

21% CAGR 2000-2003

Note: market size and growth estimates based on 1999 and 2000 studies by Pioneer Consulting, RHK and Ovum

Optical networking market

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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

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Product portfolio

Metro ring

Access ringAccess ring

Carrier Networks (CO)• FSP-I

• FSP 3000

Enterprise Networks (CPE)• FSP-II

• DiskLink

• Cellware product family

Carrier Networks

Enterprise Networks

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Product strategy

Optical IADMetro Access

CoreOptical Cross-

Connect

Networking SoftwareElement Management System

SAN Video

seamless network management

complementary technologies - independent platforms

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End-User Customers

0

50

100

150

200

250

1997 1998 1999

Europe Americas Asia-Pacific

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 ADVA’s sales &

product marketing teams• drives product strategy

• Strong global presence• 7 sales offices worldwide

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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

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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

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Q1 2000 financial highlights

Q1 2000 Q1 1999 % growth

Sales 10,297 3,628 183.8%Operating income (EBIT) 554 - 20 -Profit before tax (EBT) 635 - 38 -Net profit 362 - 38 -Diluted earnings per share (EPS) 0.07 - 0.01 -Number of employees 151 83 81.9%Total assets 43,662 35,478 23.1%Total shareholders' equity 33,769 30,364 11.9%

*thousands of Euro, except earnings per share and number of employees*unaudited, according to U.S. GAAP

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Q1 2000 financial highlights

3628

10297

Q1 1999 Q1 2000

Sales(thousands of Euro, U.S. GAAP)

362

-38

Q1 1999 Q1 2000

Operating income(thousands of Euro, U.S. GAAP)

Net profit(thousands of Euro, U.S. GAAP)

554

-20

Q1 1999 Q1 2000

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1999 financial highlights

1999 1998 % growth

Sales 23,558 11,441 105.9%Operating income (EBIT) 1,925 639 201.3%Profit before tax (EBT) 2,184 596 266.4%Net profit 2,165 521 315.5%Diluted earnings per share (EPS) 0.42 0.10 320.0%Number of employees 132 75 76.0%Total assets 40,351 5,435 642.4%Total shareholders' equity 33,412 725 4509%

*thousands of Euro, except earnings per share and number of employees*fully audited according to U.S. GAAP

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Sales per product

1998 Sales11.4 Million Euro

OCM 411%

OCM 857%

OCM 162%

Others30%

1999 Sales23.6 Million Euro

OCM 416%

OCM 826%

OCM 1612%

FSP-I14%

FSP-I I30%

Others2%

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Sales per geographic region

1998 Sales11.4 Million Euro

Europe67%

America25%

Asia-Pacific

8%

1999 Sales23.6 Million Euro

Europe62%

America31%

Asia-Pacific

7%

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1999 financial highlights

639

1925

1998 1999

Operating income(thousands of Euro, U.S. GAAP)

1998 1999

Net profit(thousands of Euro, U.S. GAAP)

Earnings per share (EPS)(Euro, U.S. GAAP)

2165

521

1998 1999

0.10

0.42

17

ADVA employees worldwideDecember 31, 1999 - total 132

42

43

6

21

164

R&D

Procurement and production

Quality management

Sales, service, marketing, product

marketing

Management, administration,

finance, ITApprentices

Human resources

ADVA employees worldwideDecember 31, 1998 - total 75

17

273

11

13

4 R&D

Procurement and production

Quality management

Sales, service, marketing, product

marketing

Management, administration,

finance, IT

Apprentices

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Human resources

• Strategic change in leadership

Brian L. ProtivaChief Strategy Officer

Stephan OffermannsChief Operating

Officer

Brian McCannChief Sales &

Marketing Officer

Andreas G. RutschChief Financial Officer

•sales•marketing•product marketing

•production• logistics•quality• IT•procurement

•strategy•research &

development

•corporate finance/M&A•controlling/treasury• investor relations•personnel• legal affairs

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Stock performance

ADVA vs. NEMAX 50 Index

0

200

400

600

800

1.000

29.03.99 29.07.99 29.11.99 29.03.00

Euro

Stock informationNumber of sharesoutstanding

5,157,725

Share price(December 31, 2000)

EUR 180

Share price(May 22, 2000)

EUR 495

Performance since IPO 1,446%

Market capitalization(December 31, 2000)

EUR 900 million

Market capitalization(May 22, 2000)

EUR 2.5 billion

Free float 27.5%

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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 1:5

• 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