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Disclosure Documents INVESTORS ARE URGED TO READ THE PROXY STATEMENT-PROSPECTUS RELATING TO THE PROPOSED CIENA/CATENA NETWORKS, INC. TRANSACTION AND THE INFORMATION STATEMENT-PROSPECTUS RELATING TO THE PROPOSED CIENA/INTERNET PHOTONICS, INC. TRANSACTION THAT CIENA EXPECTS TO FILE WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. THE PROXY STATEMENT-PROSPECTUS AND THE INFORMATION STATEMENT PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC BY CIENA MAY BE OBTAINED, WHEN THEY BECOME AVAILABLE, FOR FREE AT THE SEC’S WEB SITE, WWW.SEC.GOV. THE PROXY STATEMENT-PROSPECTUS, THE INFORMATION STATEMENT-PROSPECTUS AND THESE OTHER DOCUMENTS MAY ALSO BE OBTAINED FOR FREE FROM CIENA, OR WITH RESPECT TO THE TRANSACTION THAT INVOLVES IT, FROM EITHER CATENA NETWORKS OR INTERNET PHOTONICS. REQUESTS TO CIENA MAY BE DIRECTED TO CIENA, 1201 WINTERSON RD., LINTHICUM, MD, 21090-2205, ATTENTION: INVESTOR RELATIONS. REQUESTS TO CATENA MAY BE DIRECTED TO: CATENA NETWORKS, INC., 307 LEGGET DRIVE, KANATA, ON, K2K 3C8, ATTENTION: KEVIN FORBES, VP OF FINANCE. REQUESTS TO INTERNET PHOTONICS MAY BE DIRECTED TO: INTERNET PHOTONICS, INC., 1030 BROAD STREET, SHREWSBURY, NJ 07702, ATTENTION: STEVE WASZAK, CHIEF FINANCIAL OFFICER. CIENA, its directors, executive officers and certain other members of management and employees may be soliciting proxies from Catena stockholders. Catena Networks, Inc., its directors, executive officers and certain other members of management and employees may be soliciting proxies from Catena stockholders.
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Forward-Looking Statements
This presentation includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this broadcast include statements about future financial and operating results, expected revenue growth, the expected state of the telecom industry and the proposed CIENA/Catena Networks, Inc. and CIENA/Internet Photonics, Inc. transactions. These statements are based on our expectations and are naturally subject to uncertainty and changes in circumstances. Actual results could vary materially from these expectations. More detailed information about the risks involved in investing in CIENA’s stock are set forth in CIENA’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2004. CIENA is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
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Agenda
• Where we were
• What changed?
• CIENA: Beyond optical
• CIENA’s Transformation: Beyond the product portfolio
5
Core Network
CoreStream™
CoreDirector™
CIENA Led the Optical Core Revolution
Acq’d Lightera,January, 1999
2000 - 20032000 - 2003
Cap
ex$
/ Mbp
s
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA 2000 - 20032000 - 2003
Cap
ex$
/ Mbp
s
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA 2000 - 20032000 - 2003
Cap
ex$
/ Mbp
s
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA 2000 - 20032000 - 2003
Cap
ex$
/ Mbp
s
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA 2000 - 20032000 - 2003
Cap
ex$
/ Gb/
s
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA 2000 - 20032000 - 2003
Cap
ex
Long Haul DWDM TransportLong Haul DWDM Transport
1996 - 20001996 - 2000
$25$25
$5$5
$50$50
CAPEXCAPEX OPEXOPEX REVENUEREVENUE
$ M
illio
ns$
Mill
ions
43%43%
36%36%16%16%
Core Optical SwitchingCore Optical Switching
0100200300400500600700
99%99%
CAPEXCAPEX TraditionalTraditionalCIENACIENA
Success driven by disruptive economics
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Core Network
CoreStream™
CoreDirector™
CIENA’s Optical Portfolio Expansion
Metro Network
MetroDirectorK2™
Access Network
ONLINE Edge
ONLINE™ Metro
Acq’d CyrasDec 2000
Acq’d ONIJune 2002
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What Changed?
• The core is no longer the primary challenge.
• Carriers shifting emphasis from CAPEX/OPEX reduction to top-line growth.
• Protecting voice revenues remains a priority.
• Service providers looking for strategic partners to deliver profitable broadband services originating from the edge.
• Large enterprises taking on increased network responsibility.
ServiceDistribution
Network
Long-HaulNetwork
AtlantaCO
LinthicumAlpharetta
ServiceDistribution
NetworkBaltimore
$18 / Mbps$650 / Mbps $650 / Mbps
Relative costof capital
equipment
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The Optical Market
* Plus or minus $500M.**Plus or minus $700M.
The total optical networking market consists of optical switches, core/metro/access DWDM, ADMs, DCSs, and next-generation metro switches. Sources: Based on industry analyst & CIENA estimates.
2000 = $27.0B2001 = $20.6B2002 = $9.4B
CIENA Proprietary and Confidential
0
5000
10000
15000
20000
25000
30000
2000 2001 2002 2003 2004 2005
$ M
illio
n
2000 = $27.0B2001 = $20.6B2002 = $9.4B2003 = $6.8B*2004 = $6.8B**2005 = $6.8B**
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Network Philosophy
Converge functionality to reduce CAPEX
Control network to reduce OPEX
Capture revenues by increasing service bundle
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Core Network
CoreDirector™
Capturing Services Revenue
Metro Network
MetroDirectorK2™
Access Network
ONLINE Edge
ONLINE™ Metro
Voice/video/DSL Services
VoD/HDTVServices
ATM/FR/MPLSServices
IPServices
Private LineServices
StorageServices
EthernetServices
An intelligent optical core enables an all-service network, but CIENA’s portfolio
lacked service delivery platforms customers needed to capture new
revenue growthCoreStream™
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CIENA’s Acquisition/Partnership Goals
1. Expand addressable market with service delivery platforms
2. Leverage core leadership/strengths
3. Leverage customer base/relationships
4. Improve CIENA’s business model– Drive revenue growth
– Improve gross margins
– Push toward sustained profitability
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Disciplined Acquisition Strategy
Candidates should:– Be disruptive to existing network economics
– Fit with CIENA’s network vision
– Have adjacency (via customer or technology)
– Deliver good margin profile
– Have channel fit or provide new channel
– Have visible path to #3+ market share in growth market
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DN™ 7
Core Network
CoreDirector™
Metro Network
MetroDirectorK2™
Access Network
ONLINE Edge
ONLINE™ Metro
Voice/video/DSL Services
VoD/HDTVServices
ATM/FR/MPLSServices
IPServices
Private LineServices
StorageServices
EthernetServices
Acq’d WaveSmithJune 2003
CoreStream™
Capturing Services Revenue
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Disciplined Acquisition Strategy - WaveSmith
Acquisition/Partner candidates should:– Be disruptive to existing network economics
– Fit with CIENA’s network vision
– Have adjacency (via customer or technology)
– Deliver good margin profile
– Have channel fit or provide new channel
– Have visible path to #3+ market share in growth market
MultiService Switching
Applications: DSL Aggregation, VoD, ATM,
Frame Relay
Revenue per $ of CapEx
150%increase
Traditional DN
15
DN™ 7
Core Network
CoreDirector™
Metro Network
MetroDirectorK2™
Access Network
ONLINE Edge
ONLINE™ Metro
Voice/video/DSL Services
VoD/HDTVServices
ATM/FR/MPLSServices
IPServices
Private LineServices
StorageServices
EthernetServices
CN™ 2000
Acq’d AkaraAug 2003
CoreStream™
Capturing Services Revenue
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Disciplined Acquisition Strategy - Akara
SONET/SDH Storage
Traditional CN 2000
230%increase
Applications Storage extension, Access WDM,
Low-Cost Ethernet Transport
Revenue per $ of CapEx
Acquisition/Partner candidates should:– Be disruptive to existing network economics
– Fit with CIENA’s network vision
– Have adjacency (via customer or technology)
– Deliver good margin profile
– Have channel fit or provide new channel
– Have visible path to #3+ market share in growth market
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DN™ 7 Catena
Internet Photonics
PacketWave™ (Luminous)
ST™ (Laurel)
Core Network
CoreDirector™
Metro Network
MetroDirectorK2™
Access Network
ONLINE Edge
ONLINE™ Metro
Voice/video/DSL Services
VoD/HDTVServices
ATM/FR/MPLSServices
IPServices
Private LineServices
StorageServices
EthernetServices
CN™ 2000
Laurel PartnershipSept 2003
Luminous PartnershipSept 2003
CoreStream™
Capturing Services Revenue
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Background
• A leading innovator in the broadband access market • Founded: December 1998• Offices in Kanata, ON and RTP, NC• ~250 employees• Customers
– Three RBOCs (including Bell South)– Major IOCs– CLECs
• Products– CNX-5 – CN1000– CN1000FX
Yankee Group: Overall broadband equipment revenues in the access area will present a
market opportunity in excess of $7.5 billion
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Background
• A leading supplier of carrier-grade optical Ethernet transport and switching solutions • Founded: 2000• Offices in Shrewsbury, NJ and Marlborough, MA• ~110 employees• Customers
– Six of the top ten U.S. cable operators (including Cablevision, Adelphia)– Carriers such as TDS Metrocom deploying Ethernet private-line services
• Products– LightStack MXA– LightStack MX– LightStack GSLAM– LightHandler
Infonetics Research: Worldwide Ethernet services market will grow from approximately
$2.9 billion in 2003 to $7.5 billion by 2007.
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Transaction Highlights
• 77.5 million shares of CIENA common stock
• Value: approximately $486.7 million• Catena shareholder approval req’d • Both subject to customary
clearances
• Anticipated closing: by the end of CIENA’s fiscal Q3
• 24.4 million shares of CIENA common stock
• Value: approximately $150 million
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CIENA’s Transformation: Beyond the Product Portfolio
• Shifting investment to access/service delivery from core– Goal of reducing ongoing opex (exclusive of Catena/IPI) by
10% to 20% in FY ‘04
– 2002-2003 investments will enable us to maintain core leadership
• Manufacturing nearly 100% outsourced– Currently working to consolidate contract manufacturers
• Services business restructured to profitability• Sales force revamped to include skills/experience required
for broader portfolio• 30+ channel partners developed to target enterprise
opportunities/new geographies
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Transforming CIENA to Encompass Broadband Service Delivery
CAPEX/OPEX Savings
From (2003)
High Quality/Low VolumesDirect Sales Only
Service Revenues
Low Cost/High VolumesChannels/Enterprise Pull
Value Proposition
Competencies
Core Optical Broadband Edge & AccessTechnologies
FY ’02$361 million
FY ’03$283 million
Core Networking
Metro NetworkingData Networking/Service DeliverySolutions & Software
Service/Tech Support
FY ’01$1.6 billion
FY ’04(stated goal
prior to Catena & IPI)
To Include (2005)
T.B.D.