ADVA AG Optical Networking to Acquire Storage Area Networks Ltd.; ADVA Also Announces Successful Fourth Quarter With Its Preliminary 1999 Financial Results.

Business Editors/Technology Writers

RAMSEY, N.J.--(BUSINESS WIRE)--Feb. 29, 2000

ADVA AG Optical Networking (Neuer Markt: ADV) today announced the signing of a definitive agreement to acquire Storage Area Networks Ltd., a leading privately-held U.K.-based designer and manufacturer of intelligent storage area network (SAN) gateways. This acquisition strengthens ADVA's leadership position in the enterprise and metro access optical networking market by adding complementary products to ADVA's Fiber Service Platform (FSP) portfolio. In addition, Storage Area Networks provides ADVA with in-depth knowledge about switching and routing technology for SAN applications, handling Fibre Channel (FC) protocol traffic, and transmitting information over longer distances to remote storage facilities.

Under the terms of the agreement, the acquisition will be made at a total purchase price of approximately $83 million (U.S. dollars). The purchase price will be paid in shares of common stock in ADVA to be issued in exchange for all outstanding shares and options of Storage Area Networks. This acquisition is subject to various closing conditions, including approval of the acquisition by ADVA's Supervisory Board. A closing in the second quarter of 2000 is anticipated.

"This is an important first acquisition in ADVA's growth strategy, which complements and strengthens our leadership position in the enterprise and metro access optical networking market," said Brian L. Protiva, ADVA's chief strategy officer. "By adding Storage Area Networks' technology to our Dense Wavelength Division Multiplexing (DWDM) and intelligent optical networking solutions, we are now not only able to offer full wire-speed transparent Fibre Channel optical channels up to 30 kilometers, but also a high-performance switching product that enables enterprises to send local FC network information over high-speed optical, Internet Protocol (IP) or Asynchronous Transfer Mode (ATM) network to remote storage facilities located anywhere in the world. SAN is a vital application to enterprise businesses today, as the exponentially-growing amount of mission-critical information needs to be transferred to remote back-up locations for storage."

Brian McCann, president of ADVA Optical Networking, Inc., added, "The acquisition of Storage Area Networks allows our customers to expand on the wavelength services being deployed on our FSP solutions. Carrier customers can now offer higher data-transfer rates for Fibre Channel services beyond 30 kilometers, while enterprise customers can achieve the performance and flexibility required to implement a corporate-wide SAN. This acquisition underscores our strategy of offering focused business solutions with a building-block approach, tied together in seamless network management and application provisioning software. Each building block can be added when or where the business case is justified."

Storage Area Networks' technology and products provide important switching capabilities and Wide Area Network (WAN) extension with ATM and IP protocols to enterprises transmitting mission-critical information to remote storage locations. Storage Area Networks' first-generation DiskLink product, DiskLink SCSI, provides very high performance switching between Small Computer System Interface (SCSI) and ATM, with support for SCSI 1, SCSI 2 and Ultra SCSI, and 155Mbit/s ATM WAN connections. It allows full, transparent SCSI networking, over any distance, at close to full SCSI bus speed across ATM circuits. It allows host computers (servers etc.) to connect to remote SCSI storage devices (disks, tapes, etc.) exactly as if those devices were connected to the host's local SCSI bus - even where those devices are actually located hundreds or thousands of miles distant from the host. The second-generation product, DiskLink FC, adds support for local FC networks, ATM links at 622Mbit/s (OC-12) and Gigabit Ethernet for IP. DiskLink FC also features enhanced management via Simple Network Management Protocol and Web browser (http) support.

In other company news, ADVA today announced preliminary, unaudited 1999 financial results. Sales in the fourth quarter of 1999 totaled 8.442 million Euro ($8.273 million U.S.), an increase of 155% over sales in the fourth quarter of 1998 of 3.311 million Euro ($3.244 million U.S.). Full-year sales in 1999 totaled 23.558 million Euro ($23.086 million U.S.), an increase of 106% over full-year sales in 1998 of 11.441 million Euro ($11.212 million U.S.). Operating profits in the fourth quarter of 1999 totaled 1.121 million Euro ($1.098 million U.S.), or 13.3% of sales. This was an increase of 230% over fourth quarter operating profits in 1998 of 0.340 million Euro ($333,200 U.S.). Full-year operating profits in 1999 totaled 1.925 million Euro ($1.886 million U.S.), or 8.2% of sales. This was an increase of 103% over full-year operating profits in 1998 of 0.949 million Euro ($930,020 U.S.). Final audited 1999 results, further financial guidance on the acquisition of SAN, and the company's annual report will be released on March 28, 2000.

About ADVA AG Optical Networking

ADVA AG Optical Networking is a global leader in optical networking. Since its foundation in 1994, ADVA has specialized in the design, development and delivery of cost-effective optical networking solutions. Its products are implemented in both private and public networks, including Data Centers, Storage Area Networks (SAN), and Metropolitan Area Networks (MAN) for fiber-based data services to the enterprise. Products and services are distributed via a global network of strategic business partners. The company currently has an installed base of more than 200 service providers and private enterprise customers. ADVA is headquartered in Munich, Germany, with a production and R&D facility in Meiningen and sales offices in Bristol, United Kingdom; Paris, France; Ramsey, New Jersey, USA; and Tokyo, Japan. Visit www.advaoptical.com for more information about ADVA Optical Networking.

About Storage Area Networks Ltd.

Storage Area Networks Ltd. designs and manufactures the DiskLink family of intelligent SAN gateways, and is located in Cambridge, U.K. The DiskLink range provides unlimited extension for SCSI and Fibre Channel storage devices over both local and wide area networks using ATM and Gigabit Ethernet, allowing organizations to transparently access information in secure remote locations. More information about SAN can be found on its Web site at www.san.com.

The statements contained in this press release that are not purely historical are forward-looking statements. Such forward-looking statements include, but are not limited to, the statements regarding the likelihood of the closing of the acquisition of Storage Area Networks Ltd. and the accuracy of the preliminary 1999 financial results. Such forward-looking statements involve risks that could cause actual results to differ significantly from anticipated results. Risks that could cause actual results to differ significantly from such forward-looking statements include, but are not limited to, those contained in the international offering circular released at the time of ADVA AG Optical Networking's initial public offering on March 29, 1999.

Published by ADVA AG Optical Networking, Martinsried / Munich and Meiningen, Germany.