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Investor Day Presentation, Sept 2012
- 2. Disclaimer
FORWARD-LOOKING STATEMENTS
This 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 annual
report 2011.
CONSOLIDATED PRO FORMA FINANCIAL RESULTS
ADVA Optical Networking provides consolidated pro forma financial results in this presentation solely as
supplemental financial information to help investors and the financial community make meaningful
comparisons of ADVA Optical Networking’s operating results from one financial period to another. ADVA
Optical Networking believes that these pro forma consolidated financial results are helpful because they
exclude non-cash charges related to the stock option programs and amortization and impairment of goodwill
and acquisition-related intangible assets, which are not reflective of the company’s operating results for the
period presented. This pro forma information is not prepared in accordance with IFRS and should not be
considered 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&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 attendees
3 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 6. Our Environment
6 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 7. Executive Team
Brian Protiva
CEO
Quality Management
Human Resources
Jaswir Christoph Christian
Singh Glingener Unterberger
CFO & COO CTO CSMO
Key responsibility: Operational execution Technology innovation Revenue growth
Experienced and stable leadership team
7 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 8. Crisis? What Crisis?
China's economy has $122,100,000,000,000 Euro Crisis
grown at its slowest US unfunded liabilities
pace in three years by Dec 31, 2012
The global boundary conditions will remain difficult for some time
8 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 9. The Telecom Market
Competition Profitability
Globalization New Services
Regulation Differentiation
Profitable growth is a challenge
9 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 10. 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 all
10 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 11. What Does It Take To Win?
?
Strength to innovate
• Innovation
• Speed
• Trusted Partner
Speed to outperform
11 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 12. 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 performance
12 © 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 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 innovation
13 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 14. Global Presence
Headquarter
Office
Representative
Richardson Atlanta Munich Meiningen Berlin Singapore Shenzhen
14 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 15. Strength To Innovate
For Growth Markets
15 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 16. 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 life
16 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 17. What Matters?
Service Intelligence
FSP 150
Service Assurance FSP 150CC
FSP 150EG-X
Demarcation Aggregation Service Edge
Timing Excellence
Backhaul with synchronization & timing to support LTE
17 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 18. Mobile Backhaul Innovation
FSP 150
>15 MBH customers, > 900 gateway units shipped
18 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 19. 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 backhaul
19 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 20. 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 zettabytes
20 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 21. What Matters?
Highest Availability
FSP 3000
Lowest Latency
Maximum Security
Primary Data Center Backup Data Center
Growth, security and resource consumption are primary pain points
21 © 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 business
22 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 23. 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 connectivity
23 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 24. 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 patterns
24 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 25. What Matters?
From Access to Core
FSP 3000
Service Management
Multi-Layer Transport
Access Metro Core
Agile optical network with end-to-end SLA assurance is the foundation
25 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 26. 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 foundation
26 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 27. 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 partnership
27 © 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 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 SDN
28 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 29. 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 operation
29 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 30. 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 content
30 © 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 performance
31 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 32. 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 innovation
32 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 33. Speed
To Be The Trusted Partner For Our Customers
33 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 34. 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 globe
34 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 35. 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 needs
35 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 36. 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 program
36 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 37. 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 customers
37 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 38. Strategic Sales Initiatives 2.0
Processes &
Service Efficiency
Business Increase
Software Growth engine efficiency
Ethernet Improve margins
Attack
Strategic Increase market
Partnership share
Top 10
New
Top 10
Named Cust.
program
account
Global
Accts
Strategic Sales Initiatives (SSI) drive revenue and lower cost of sales
38 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 39. SSI: Juniper-ADVA Partnership
PTX5000 MX/T-series Qfabric MX-series
OTS1000 FSP 3000 FSP 3000 FSP 150
Efficient, integrated and aligned solutions
39 © 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
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.
- 41. 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 touch
41 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 42. 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 trust
42 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 43. Our ADVAntage
Trusted
Partner
Speed
for Customers
Optical+Ethernet
• High quality
Innovation
• 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 innovation
43 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 44. Q&A
44 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 45. 3.30pm – 3.45pm
Coffee Break
45 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 46. 3.45pm – 4.30pm
Product Demo
46 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 47. 4.30pm – 4.45pm
Coffee Break
47 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 48. Jaswir Singh
CFO & COO
48 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 50. 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 be
a customer-centric Optical+Ethernet Provide highest quality products at market leading
organization that is Innovation order fulfillment service levels (on time to commit
agile 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.
- 51. COO Organization
Jaswir
Singh
Jaswir Singh
CFO & COO
CFO & COO
Operations Finance
Sites Functions
Supply
Norcross, York, Operations S&OP EMS
Meiningen, 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.
- 52. Manufacturing And Distribution Sites
With Functions
Europe
Operations
Engineering York Meiningen
& Projects (26) (175)
China
Munich
(4)
Supply
Chain Mgmt
USA
Atlanta (27)
Flextronics, Sanmina-SCI, Shenzhen, CN
S&OP Timisoara, RO
Process and Shenzhen (12)
Inventory
EMS Mgmt
Operations/Dist
Headquarter
EMS/CM supplier
52 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 53. Finance
53 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 54. 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
Systems
54 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 55. 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 scalable
55 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 56. 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.
- 57. 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.
- 58. 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 2012
58 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 59. Cash And Net Liquidity
EUR million Cash & Cash Equivalents
Financial Liabilities and Lease Obligations
Net Liquidity
69.9
65
50
40.8
35
20
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 2012
All-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.
- 60. 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.
- 61. 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 Americas
61 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 62. 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.
- 63. 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 current
63 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 64. 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.
- 65. Investor Relations Overview (I/II)
Recent Investor Activities Planned Investor Activities
Sep-Oct • Investor roadshows and conferences in
Jul 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,
Germany
Jul-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.
- 66. Investor Relations Overview (II/II)
Share Price and Trading Volume Development
Trading volume Sep 1, 2011 – Sep 15, 2012 Share price
in 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 3.08
Financial 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.
- 67. In Summary
67 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 68. How we ADd VAlue
OPERATIONAL
EXCELLENCE
Profitable
THOUGHT
growth
LEADERSHIP
FOCUS ON
GROWTH MARKETS
Loyal
customer
Differentiated
technology
Expanding
opportunities
ADVA Optical Networking is a thought leader in developing
intelligent network infrastructure for high-growth markets
68 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 69. Q&A
69 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 70. 5.45pm – 6.00pm
Coffee Break
70 © 2012 ADVA Optical Networking. All rights reserved. Confidential.
- 71. 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.
- 72. Thank you
Investor Relations
Wolfgang Guessgen
t +49 89 89 06 65 940
wguessgen@advaoptical.com
www.advaoptical.com