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8-K - FORM 8-K - JUNIPER NETWORKS INC | f58994e8vk.htm |
Exhibit 99.1
Investor Relations:
Kathleen Bela
Juniper Networks
(408) 936-7804
kbela@juniper.net
Kathleen Bela
Juniper Networks
(408) 936-7804
kbela@juniper.net
Media Relations:
David Shane
Juniper Networks
(408) 936-4872
dshane@juniper.net
David Shane
Juniper Networks
(408) 936-4872
dshane@juniper.net
Cindy Ta
Juniper Networks
(408) 936-6131
cta@juniper.net
Juniper Networks
(408) 936-6131
cta@juniper.net
JUNIPER NETWORKS REPORTS PRELIMINARY FIRST QUARTER
2011 FINANCIAL RESULTS
2011 FINANCIAL RESULTS
| Revenue: $1,102 million, up 21% year-over-year and down 7% sequentially | ||
| Operating Margin: 16.1% GAAP; 22.3% non-GAAP | ||
| GAAP Net Income Per Share: $0.24 diluted | ||
| Non-GAAP Net Income Per Share: $0.32 diluted, up 19% year-over-year and down 24% sequentially |
SUNNYVALE, Calif., April 19, 2011 - Juniper Networks (NYSE: JNPR) today reported preliminary
financial results for the three months ended March 31, 2011.
Net
revenues for the first quarter of 2011 increased 21% on a year-over-year basis to $1,102
million. The Company posted GAAP net income of $130 million, or $0.24 per diluted share, and
non-GAAP net income
of $178 million, or $0.32 per diluted share for the first quarter of 2011. GAAP net income
includes half a cent dilutive impact from net interest expense related to the $1 billion dollars of
senior notes we issued during the quarter. Non-GAAP net income per diluted share increased 19%
compared to the first quarter of 2010 and decreased 24% compared to last quarter. The
reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately
following the Net Revenues by Market table below.
Juniper delivered solid results in the first quarter and continued to build on market
momentum, said Kevin Johnson, chief executive officer at Juniper Networks. We are executing on
our innovation roadmap with new solutions that define our vision of
the new network. Innovation is at the core of
our multi-year growth agenda.
Junipers operating margin for the first quarter of 2011 decreased to 16.1% on a GAAP basis
from 19.1% in the fourth quarter of 2010, and decreased from 17.6% in the prior year first quarter.
As anticipated, non-GAAP operating margin for the first quarter of 2011 decreased to 22.3% on a non-GAAP basis from
24.5% in the fourth quarter of 2010, and decreased from 23.2% in the prior year first quarter.
For the
first quarter of 2011, Juniper generated cash from operations of
approximately $240 million. Net cash from operations for the same quarter in 2010 was
$258 million before litigation
settlement payments of $169 million, which were incurred as charges against the Companys fourth
quarter of 2009 results. As a result of the litigation settlement payments, net cash from
operations for the first quarter of 2010 was $89 million.
Capital expenditures as well as depreciation and amortization expense during the first quarter
of 2011 were
Page 1 of 15
$54 million
and $41 million, respectively.
The first quarter was a very solid start to the year, with Juniper generating strong revenue
and earnings growth, said Robyn Denholm, chief financial officer at Juniper Networks. Our
innovation engine was in high gear as we positioned sales and marketing resources to capture the
opportunity ahead and continue to perform at levels consistent with our long-term financial
targets.
Outlook
The overall demand environment for both the Service Provider and Enterprise markets looks healthy
across all regions. Our outlook for the June quarter includes any
anticipated impact to our business
from the recent events in Japan.
| Juniper estimates revenue for the second quarter ending June 30, 2011 to be in the range of $1.130 billion to $1.180 billion, which represents a year over year increase of approximately 16% to 21%. | ||
| Juniper estimates that its non-GAAP gross margin will remain in its targeted range of between 66% and 68% in the second quarter. | ||
| Juniper estimates that its non-GAAP operating expenses will be lower as a percent of revenue, but will increase sequentially on a dollar basis. As a result, Juniper expects its non-GAAP operating margin for the second quarter will be 22.5%, plus or minus 0.5%. | ||
| Juniper estimates that its non-GAAP net income per share will range between $0.31 and $0.34 on a diluted basis, assuming a slight increase in share count and estimated non-GAAP tax rate of 26.5%. The non-GAAP EPS estimate includes a dilutive impact of approximately one and a half cents, $0.015, per share due to net interest expense from our debt. |
All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets,
share-based compensation expenses, acquisition related charges, restructuring charges, litigation
settlement charges, gain or loss on equity investments, non-recurring income tax adjustments,
valuation allowance on deferred tax assets, and income tax effect of non-GAAP exclusions. A
reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a
forward-looking basis.
Conference Call Web Cast
Juniper Networks will host a conference call web cast today, April 19, 2011 at 2:00 p.m.
(Pacific Time), to be broadcast live over the Internet at:
http://www.juniper.net/company/investor/conferencecall.html.
To participate via telephone, in the U.S. the toll free dial-in number is 877-407-8033;
outside of the U.S. dial +1-201-689-8033. Please call ten minutes prior to the scheduled conference
call time. The webcast replay of the conference call will be archived on the Juniper Networks
website until June 14, 2011.
About Juniper Networks
Juniper Networks is in the business of network innovation. From devices to data centers, from
consumers to cloud providers, Juniper Networks delivers the software, silicon and systems that
transform the experience and economics of networking. Additional information can be found at
Juniper Networks (www.juniper.net).
Juniper Networks and Junos are registered trademarks of Juniper Networks, Inc. in the United
States and other countries. The Juniper Networks and Junos logos are trademarks of Juniper
Networks, Inc. All other trademarks, service marks, registered trademarks, or registered service
marks are the property of their respective owners.
Statements in this release concerning Juniper Networks business outlook, economic and market
outlook, future financial and operating results, and overall future prospects are forward-looking
statements that involve a number of
uncertainties and risks. Actual results or events could differ materially from those anticipated in
those forward-looking statements as a result of certain factors, including: general economic
conditions globally or regionally; business and economic conditions in the networking industry;
changes in overall technology spending; the network capacity requirements of communication service
providers; contractual terms that may result in the deferral of
Page 2 of 15
revenue; increases in and the
effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain
constraints; ability to establish and maintain relationships with distributors, resellers and other
partners; variations in the expected mix of products sold; changes in customer mix; changes in
geography mix; customer and industry analyst perceptions of Juniper Networks and its technology,
products and future prospects; delays in scheduled product availability; market acceptance of
Juniper Networks products and services; rapid technological and market change; adoption of
regulations or standards affecting Juniper Networks products, services or the networking industry;
the ability to successfully acquire, integrate and manage businesses and technologies; product
defects, returns or vulnerabilities; the ability to recruit and retain key personnel; significant
effects of tax legislation and judicial or administrative interpretation of tax regulations;
currency fluctuations; litigation; and other factors listed in Juniper Networks most recent report
on Form 10-K filed with the Securities and Exchange Commission. All statements made in this press
release are made only as of the date set forth at the beginning of this release. Juniper Networks
undertakes no obligation to update the information in this release in the event facts or
circumstances subsequently change after the date of this press release.
Juniper Networks believes that the presentation of non-GAAP financial information provides
important supplemental information to management and investors regarding financial and business
trends relating to the companys financial condition and results of operations. For further
information regarding why Juniper Networks believes that these non-GAAP measures provide useful
information to investors, the specific manner in which management uses these measures, and some of
the limitations associated with the use of these measures, please refer to the discussion below.
Page 3 of 15
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net revenues: |
||||||||
Product |
$ | 877,440 | $ | 721,201 | ||||
Service |
224,172 | 191,417 | ||||||
Total net revenues |
1,101,612 | 912,618 | ||||||
Cost of revenues: |
||||||||
Product |
265,746 | 222,381 | ||||||
Service |
99,981 | 78,216 | ||||||
Total cost of revenues |
365,727 | 300,597 | ||||||
Gross margin |
735,885 | 612,021 | ||||||
Operating expenses: |
||||||||
Research and development |
261,979 | 206,994 | ||||||
Sales and marketing |
246,291 | 192,375 | ||||||
General and administrative |
44,924 | 43,138 | ||||||
Amortization of purchased intangible assets |
1,544 | 1,137 | ||||||
Restructuring |
(347 | ) | 8,105 | |||||
Acquisition-related charges |
4,101 | | ||||||
Total operating expenses |
558,492 | 451,749 | ||||||
Operating income |
177,393 | 160,272 | ||||||
Other (expense) income, net |
(6,462 | ) | 1,459 | |||||
Income before income taxes and noncontrolling interest |
170,931 | 161,731 | ||||||
Income tax provision (benefit) |
41,271 | (2,879 | ) | |||||
Consolidated net income |
129,660 | 164,610 | ||||||
Adjust for net loss (income) attributable to noncontrolling interest |
90 | (1,495 | ) | |||||
Net income attributable to Juniper Networks |
$ | 129,750 | $ | 163,115 | ||||
Net income per share attributable to Juniper Networks common stockholders: |
||||||||
Basic |
$ | 0.24 | $ | 0.31 | ||||
Diluted |
$ | 0.24 | $ | 0.30 | ||||
Shares used in computing net income per share: |
||||||||
Basic |
530,789 | 521,141 | ||||||
Diluted |
548,825 | 536,718 | ||||||
Page 4 of 15
Juniper Networks, Inc.
Share-Based Compensation by Category
(in thousands)
(unaudited)
Share-Based Compensation by Category
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cost of revenues Product |
$ | 948 | $ | 1,105 | ||||
Cost of revenues Service |
3,919 | 3,494 | ||||||
Research and development |
22,330 | 16,986 | ||||||
Sales and marketing |
13,226 | 11,728 | ||||||
General and administrative |
8,616 | 7,248 | ||||||
Total |
$ | 49,039 | $ | 40,561 | ||||
Juniper Networks, Inc.
Share-Based Compensation Related Payroll Tax by Category
(in thousands)
(unaudited)
Share-Based Compensation Related Payroll Tax by Category
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Cost of revenues Product |
$ | 271 | $ | 71 | ||||
Cost of revenues Service |
835 | 165 | ||||||
Research and development |
3,074 | 755 | ||||||
Sales and marketing |
3,386 | 432 | ||||||
General and administrative |
419 | 97 | ||||||
Total |
$ | 7,985 | $ | 1,520 | ||||
Page 5 of 15
Juniper Networks, Inc.
Net Revenues by Reportable Segment
(in thousands)
(unaudited)
Net Revenues by Reportable Segment
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Infrastructure: |
||||||||
Routers Product |
$ | 609,540 | $ | 482,519 | ||||
Routers Service |
139,375 | 118,945 | ||||||
Infrastructure Revenue Routers |
748,915 | 601,464 | ||||||
Switches Product |
99,037 | 73,608 | ||||||
Switches Service |
6,777 | 3,624 | ||||||
Infrastructure Revenue Switches |
105,814 | 77,232 | ||||||
Total Infrastructure Revenue |
$ | 854,729 | $ | 678,696 | ||||
Service Layer Technologies: |
||||||||
Service Layer Technologies Product |
$ | 168,863 | $ | 165,074 | ||||
Service Layer Technologies Service |
78,020 | 68,848 | ||||||
Total Service Layer Technologies Revenue |
$ | 246,883 | $ | 233,922 | ||||
Total Revenue |
$ | 1,101,612 | $ | 912,618 | ||||
Juniper Networks, Inc.
Net Revenues by Geographic Region
(in thousands)
(unaudited)
Net Revenues by Geographic Region
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Americas |
$ | 581,615 | $ | 488,468 | ||||
Europe, Middle East, and Africa |
299,851 | 264,057 | ||||||
Asia Pacific |
220,146 | 160,093 | ||||||
Total |
$ | 1,101,612 | $ | 912,618 | ||||
Juniper Networks, Inc.
Net Revenues by Market
(in thousands)
(unaudited)
Net Revenues by Market
(in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Service Provider |
$ | 742,177 | $ | 593,249 | ||||
Enterprise |
359,435 | 319,369 | ||||||
Total |
$ | 1,101,612 | $ | 912,618 | ||||
Page 6 of 15
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2011 | 2010 | |||||||||||
GAAP Cost of revenues Product |
$ | 265,746 | $ | 222,381 | ||||||||
Share-based compensation expense |
C | (948 | ) | (1,105 | ) | |||||||
Share-based compensation related payroll tax |
C | (271 | ) | (71 | ) | |||||||
Amortization of purchased intangible assets |
A | (5,198 | ) | (25 | ) | |||||||
Acquisition-related charges |
A | (960 | ) | | ||||||||
Non-GAAP Cost of revenues Product |
258,369 | 221,180 | ||||||||||
GAAP Cost of revenues Service |
99,981 | 78,216 | ||||||||||
Share-based compensation expense |
C | (3,919 | ) | (3,494 | ) | |||||||
Share-based compensation related payroll tax |
C | (835 | ) | (165 | ) | |||||||
Non-GAAP Cost of revenues Service |
95,227 | 74,557 | ||||||||||
GAAP Gross margin Product |
611,694 | 498,820 | ||||||||||
Share-based compensation expense |
C | 948 | 1,105 | |||||||||
Share-based compensation related payroll tax |
C | 271 | 71 | |||||||||
Amortization of purchased intangible assets |
A | 5,198 | 25 | |||||||||
Acquisition-related charges |
A | 960 | | |||||||||
Non-GAAP Gross margin Product |
619,071 | 500,021 | ||||||||||
GAAP Product gross margin as a % of product revenue |
69.7 | % | 69.2 | % | ||||||||
Share-based compensation expense as a % of product revenue |
C | 0.2 | % | 0.1 | % | |||||||
Share-based compensation related payroll tax as a % of product revenue |
C | | % | | % | |||||||
Amortization of purchased intangible assets as a % of product revenue |
A | 0.6 | % | | % | |||||||
Acquisition-related charges as a % of product revenue |
A | 0.1 | % | | % | |||||||
Non-GAAP Product gross margin as a % of product revenue |
70.6 | % | 69.3 | % | ||||||||
GAAP Gross margin Service |
124,191 | 113,201 | ||||||||||
Share-based compensation expense |
C | 3,919 | 3,494 | |||||||||
Share-based compensation related payroll tax |
C | 835 | 165 | |||||||||
Non-GAAP Gross margin Service |
$ | 128,945 | $ | 116,860 | ||||||||
GAAP Service gross margin as a % of service revenue |
55.4 | % | 59.1 | % | ||||||||
Share-based compensation expense as a % of service revenue |
C | 1.7 | % | 1.8 | % | |||||||
Share-based compensation related payroll tax as a % of service revenue |
C | 0.4 | % | 0.1 | % | |||||||
Non-GAAP Service gross margin as a % of service revenue |
57.5 | % | 61.0 | % | ||||||||
Page 7 of 15
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2011 | 2010 | |||||||||||
GAAP Gross margin |
$ | 735,885 | $ | 612,021 | ||||||||
Share-based compensation expense |
C | 4,867 | 4,599 | |||||||||
Share-based compensation related payroll tax |
C | 1,106 | 236 | |||||||||
Amortization of purchased intangible assets |
A | 5,198 | 25 | |||||||||
Acquisition-related charges |
A | 960 | | |||||||||
Non-GAAP Gross margin |
748,016 | 616,881 | ||||||||||
GAAP Gross margin as a % of revenue |
66.8 | % | 67.1 | % | ||||||||
Share-based compensation expense as a % of revenue |
C | 0.4 | % | 0.5 | % | |||||||
Share-based compensation related payroll tax as a % of revenue |
C | 0.1 | % | | % | |||||||
Amortization of purchased intangible assets as a % of revenue |
A | 0.5 | % | | % | |||||||
Acquisition-related charges as a % of revenue |
A | 0.1 | % | | % | |||||||
Non-GAAP Gross margin as a % of revenue |
67.9 | % | 67.6 | % | ||||||||
GAAP Research and development expense |
261,979 | 206,994 | ||||||||||
Share-based compensation expense |
C | (22,330 | ) | (16,986 | ) | |||||||
Share-based compensation related payroll tax |
C | (3,074 | ) | (755 | ) | |||||||
Non-GAAP Research and development expense |
236,575 | 189,253 | ||||||||||
GAAP Sales and marketing expense |
246,291 | 192,375 | ||||||||||
Share-based compensation expense |
C | (13,226 | ) | (11,728 | ) | |||||||
Share-based compensation related payroll tax |
C | (3,386 | ) | (432 | ) | |||||||
Non-GAAP Sales and marketing expense |
229,679 | 180,215 | ||||||||||
GAAP General and administrative expense |
44,924 | 43,138 | ||||||||||
Share-based compensation expense |
C | (8,616 | ) | (7,248 | ) | |||||||
Share-based compensation related payroll tax |
C | (419 | ) | (97 | ) | |||||||
Non-GAAP General and administrative expense |
35,889 | 35,793 | ||||||||||
GAAP Operating expense |
558,492 | 451,749 | ||||||||||
Share-based compensation expense |
C | (44,172 | ) | (35,962 | ) | |||||||
Share-based compensation related payroll tax |
C | (6,879 | ) | (1,284 | ) | |||||||
Amortization of purchased intangible assets |
A | (1,544 | ) | (1,137 | ) | |||||||
Restructuring |
B | 347 | (8,105 | ) | ||||||||
Acquisition-related charges |
A | (4,101 | ) | | ||||||||
Non-GAAP Operating expense |
$ | 502,143 | $ | 405,261 | ||||||||
Page 8 of 15
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2011 | 2010 | |||||||||||
GAAP Operating income |
$ | 177,393 | $ | 160,272 | ||||||||
Share-based compensation expense |
C | 49,039 | 40,561 | |||||||||
Share-based compensation related payroll tax |
C | 7,985 | 1,520 | |||||||||
Amortization of purchased intangible assets |
A | 6,742 | 1,162 | |||||||||
Restructuring |
B | (347 | ) | 8,105 | ||||||||
Acquisition-related charges |
A | 5,061 | | |||||||||
Non-GAAP Operating income |
245,873 | 211,620 | ||||||||||
GAAP Operating margin |
16.1 | % | 17.6 | % | ||||||||
Share-based compensation expense as a % of revenue |
C | 4.5 | % | 4.4 | % | |||||||
Share-based compensation related payroll tax as a % of revenue |
C | 0.7 | % | 0.2 | % | |||||||
Amortization of purchased intangible assets as a % of revenue |
A | 0.6 | % | 0.1 | % | |||||||
Restructuring as a % of revenue |
B | | % | 0.9 | % | |||||||
Acquisition-related charges as a % of revenue |
A | 0.4 | % | | % | |||||||
Non-GAAP Operating margin |
22.3 | % | 23.2 | % | ||||||||
GAAP Other income (expense), net |
(6,462 | ) | 1,459 | |||||||||
Gain on equity investments |
B | (62 | ) | | ||||||||
Non-GAAP Other income and (expense), net |
(6,524 | ) | 1,459 | |||||||||
GAAP Income tax provision |
41,271 | (2,879 | ) | |||||||||
Non-recurring income tax benefit |
B | | 54,069 | |||||||||
Income tax effect of non-GAAP exclusions |
B | 20,658 | 13,977 | |||||||||
Non-GAAP Provision for income tax |
61,929 | 65,167 | ||||||||||
Non-GAAP Income tax rate |
25.9 | % | 30.6 | % | ||||||||
Non-GAAP Income before income taxes and noncontrolling interest* |
$ | 239,349 | $ | 213,079 | ||||||||
* | Consists of non-GAAP operating income plus non-GAAP net other income and expense. |
Page 9 of 15
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited)
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited)
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2011 | 2010 | |||||||||||
GAAP Net income attributable to Juniper Networks |
$ | 129,750 | $ | 163,115 | ||||||||
Share-based compensation expense |
C | 49,039 | 40,561 | |||||||||
Share-based compensation related payroll tax |
C | 7,985 | 1,520 | |||||||||
Amortization of purchased intangible assets |
A | 6,742 | 1,162 | |||||||||
Restructuring |
B | (347 | ) | 8,105 | ||||||||
Acquisition-related charges |
A | 5,061 | | |||||||||
Gain on equity investments |
B | (62 | ) | | ||||||||
Non-recurring income tax adjustments |
B | | (54,069 | ) | ||||||||
Income tax effect of non-GAAP exclusions |
B | (20,658 | ) | (13,977 | ) | |||||||
Non-GAAP Net income |
$ | 177,510 | $ | 146,417 | ||||||||
Non-GAAP Net income per share: |
||||||||||||
Basic |
D | $ | 0.33 | $ | 0.28 | |||||||
Diluted |
D | $ | 0.32 | $ | 0.27 | |||||||
Shares used in computing non-GAAP net income per share: |
||||||||||||
Basic |
D | 530,789 | 521,141 | |||||||||
Diluted |
D | 548,825 | 536,718 | |||||||||
GAAP Net income attributable to Juniper Networks as a % of revenue |
11.8 | % | 17.9 | % | ||||||||
Share-based compensation expense as a % of revenue |
C | 4.5 | % | 4.4 | % | |||||||
Share-based compensation related payroll tax as a % of revenue |
C | 0.7 | % | 0.2 | % | |||||||
Amortization of purchased intangible assets as a % of revenue |
A | 0.6 | % | 0.1 | % | |||||||
Restructuring as a % of revenue |
B | | % | 0.9 | % | |||||||
Acquisition-related charges as a % of revenue |
A | 0.5 | % | | % | |||||||
Non-recurring income tax adjustments as a % of revenue |
B | | % | (5.9 | )% | |||||||
Income tax effect of non-GAAP exclusions as a % of revenue |
B | (2.0 | )% | (1.6 | )% | |||||||
Non-GAAP Net income as a % of revenue |
16.1 | % | 16.0 | % | ||||||||
Page 10 of 15
Discussion of Non-GAAP Financial Measures
The table above includes the following non-GAAP financial measures from our Preliminary Condensed Consolidated Statements of Operations: cost of product revenue; cost of
service revenue; product gross margin, product gross margin as a percentage of product revenue;
service gross margin; service gross margin as a percentage of service revenue; gross margin; gross
margin as a percentage of revenue; research and development expense; sales and marketing expense;
general and administrative expense; operating expense; operating income; operating margin; net
other income and expense; income before income taxes and noncontrolling interest; provision for
income taxes; income tax rate; net income; net income per share and net income as a percentage of
revenue. These measures are not presented in accordance with, nor are they a substitute for U.S.
generally accepted accounting principles or GAAP. In addition, these measures may be different from
non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The
non-GAAP financial measures used in the table above should not be considered in isolation from
measures of financial performance prepared in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP financial measures as an
analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the
exclusion of items that are recurring and will be reflected in our financial results for the
foreseeable future.
We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and
assessing the overall performance of our business, in making operating decisions, forecasting and
planning for future periods, and determining payments under compensation programs. We consider the
use of the non-GAAP measures presented above to be helpful in assessing the performance of the
continuing operation of our business. By continuing operations we mean the ongoing revenue and
expenses of the business excluding certain items that render comparisons with prior periods or
analysis of on-going operating trends more difficult, such as expenses not directly related to the
actual cash costs of development, sale, delivery or support of our products and services, or
expenses that are reflected in periods unrelated to when the actual amounts were incurred or paid.
Consistent with this approach, we believe that disclosing non-GAAP financial measures to the
readers of our financial statements provides such readers with useful supplemental data that, while
not a substitute for financial measures prepared in accordance with GAAP, allows for greater
transparency in the review of our financial and operational performance. In addition, we have
historically reported non-GAAP results to the investment community and believe that continuing to
provide non-GAAP measures provides investors with a tool for comparing results over time. In
assessing the overall health of our business for the periods covered by the table above and, in
particular, in evaluating the financial line items presented in the table above, we have excluded
items in the following three general categories, each of which are described below:
Acquisition-Related Charges, Other Items, and Share-Based Compensation Related Items. We also
provide additional detail below regarding the shares used to calculate our non-GAAP net income per
share. Notes identified for line items in the table above correspond to the appropriate note
description below.
Note A: Acquisition-Related Charges. We exclude certain expense items resulting from
acquisitions including the following, when applicable: (i) amortization of purchased intangible
assets associated with our acquisitions; (ii) compensation related to acquisitions; and (iii)
acquisition-related charges. The amortization of purchased intangible assets associated with our
acquisitions results in our recording expenses in our GAAP financial statements that were already
expensed by the acquired company before the acquisition and for which we have not expended cash.
Moreover, had we internally developed the products acquired, the amortization of intangible assets,
and the expenses of uncompleted research and development would have been expensed in prior periods.
Accordingly, we analyze the performance of our operations in each period without regard to such
expenses. In addition, acquisitions result in non-continuing operating expenses, which would not
otherwise have been incurred by us in the normal course of our business operations. For example, we
have incurred deferred compensation charges related to assumed options and transition and
integration costs such as retention bonuses and acquisition-related milestone payments to acquired
employees. We believe that providing non-GAAP information for acquisition-related expense items in
addition to the corresponding GAAP information allows the users of our financial statements to
better review and understand the historic and current results of our continuing operations, and
also facilitates comparisons to less acquisitive peer companies.
Note B: Other Items. We exclude certain other items that are the result of either
unique or unplanned events including the following, when applicable: (i) restructuring and related
costs; (ii) impairment charges; (iii) gain or loss on legal settlement, net of related transaction
costs; (iv) retroactive impacts of certain tax settlements; (v) significant effects of tax
legislation and judicial or administrative interpretation of tax regulations; (vi) gain or loss on
equity investments; and (vii) the income tax effect on our financial statements of excluding items
related to our non-GAAP financial measures. It is difficult to estimate the amount or timing of
these items in advance. Restructuring and impairment charges result from events, which arise from
unforeseen circumstances, which often occur outside of the ordinary course of continuing
operations. Although these events are reflected in our GAAP financials, these unique transactions
may limit the comparability of our on-going operations with prior and future periods. In the case
of legal settlements, these gains or losses are recorded in the period in which the matter is
concluded or resolved even though the subject matter of the underlying dispute may relate to
multiple or different periods. As such, we believe that these expenses do not accurately reflect
the underlying performance of our continuing operations for the period in which they are incurred.
Similarly, the retroactive impacts of certain tax settlements and significant effects of
retroactive tax legislation are unique events that occur in periods that are generally unrelated to
the level of business activity to which such settlement or legislation applies. We believe this
limits comparability with prior periods and that these expenses do not accurately reflect the
underlying performance of our continuing business operations for the period in which they are
incurred. Whether we realize gains or losses on equity investments is based primarily on the
performance and market value of those independent companies. Accordingly, we believe that these
gains and losses do not reflect the underlying performance of our continuing operations. We also
believe providing financial information with and without the income tax effect of excluding items
related to our non-GAAP financial measures provide our management and users of the financial
statements with better clarity regarding the on-going performance and future liquidity of our
business. Because of these factors, we assess our operating performance both with these amounts
included and excluded, and by providing this information, we believe the users of our financial
statements are better able to understand the financial results of what we consider our continuing
operations.
Note C: Share-Based Compensation Related Items. We provide non-GAAP information
relative to our expense for share-based compensation and related payroll tax. We began to include
share-based compensation expense in our GAAP financial measures in accordance with Financial
Page 11 of 15
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation (FASB ASC Topic 718), in January 2006. Because of varying
available valuation methodologies, subjective assumptions and the variety of award types, which
affect the calculations of share-based compensation, we believe that the exclusion of share-based
compensation allows for more accurate comparisons of our operating results to our peer companies.
Further, we believe that excluding share-based compensation expense allows for a more accurate
comparison of our financial results to previous periods during which our equity-based awards were
not required to be reflected in our income statement. Share-based compensation is very different
from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. For
example, the expense associated with a $10,000 bonus is equal to exactly $10,000 in cash regardless
of when it is awarded and who it is awarded by. In contrast, the expense associated with an award
of an option for 1,000 shares of stock is unrelated to the amount of compensation ultimately
received by the employee; and the cost to the company is based on a share-based compensation
valuation methodology and underlying assumptions that may vary over time and that does not reflect
any cash expenditure by the company because no cash is expended. Furthermore, the expense
associated with granting an employee an option is spread over multiple years unlike other
compensation expenses which are more proximate to the time of award or payment. For example, we may
be recognizing expense in a year where the stock option is significantly underwater and is not
going to be exercised or generate any compensation for the employee. The expense associated with an
award of an option for 1,000 shares of stock by us in one quarter may have a very different expense
than an award of an identical number of shares in a different quarter. Finally, the expense
recognized by us for such an option may be very different than the expense to other companies for
awarding a comparable option, which makes it difficult to assess our operating performance relative
to our competitors. Similar to share-based compensation, payroll tax on stock option exercises is
dependent on our stock price and the timing and exercise by employees of our share-based
compensation, over which our management has little control, and as such does not correlate to the
operation of our business. Because of these unique characteristics of share-based compensation and
the related payroll tax, management excludes these expenses when analyzing the organizations
business performance. We also believe that presentation of such non-GAAP information is important
to enable readers of our financial statements to compare current period results with periods prior
to the adoption of FASB ASC Topic 718.
Note D: Non-GAAP Net Income Per Share Items. We provide basic non-GAAP net income per
share and diluted non-GAAP net income per share. The basic non-GAAP net income per share amount was
calculated based on our non-GAAP net income and the weighted-average number of shares outstanding
during the reporting period. The diluted non-GAAP income per share included additional dilution
from potential issuance of common stock, except when such issuances would be anti-dilutive.
Page 12 of 15
Juniper Networks, Inc.
Preliminary Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
Preliminary Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 2,944,383 | $ | 1,811,887 | ||||
Short-term investments |
493,557 | 474,514 | ||||||
Accounts receivable, net of allowances |
471,012 | 596,622 | ||||||
Deferred tax assets, net |
160,032 | 161,535 | ||||||
Prepaid expenses and other current assets |
235,443 | 169,812 | ||||||
Total current assets |
4,304,427 | 3,214,370 | ||||||
Property and equipment, net |
516,445 | 493,881 | ||||||
Long-term investments |
645,609 | 535,178 | ||||||
Restricted cash |
102,125 | 119,346 | ||||||
Purchased intangible assets, net |
143,506 | 121,803 | ||||||
Goodwill |
3,927,280 | 3,927,807 | ||||||
Other long-term assets |
54,308 | 55,466 | ||||||
Total assets |
$ | 9,693,700 | $ | 8,467,851 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 228,275 | $ | 292,270 | ||||
Accrued compensation |
188,736 | 256,746 | ||||||
Accrued warranty |
38,320 | 35,931 | ||||||
Deferred revenue |
733,249 | 660,264 | ||||||
Income taxes payable |
25,651 | 25,000 | ||||||
Other accrued liabilities |
189,513 | 201,765 | ||||||
Total current liabilities |
1,403,744 | 1,471,976 | ||||||
Long-term debt |
998,923 | | ||||||
Long-term deferred revenue |
217,024 | 224,165 | ||||||
Long-term income tax payable |
101,630 | 103,823 | ||||||
Other long-term liabilities |
75,530 | 59,087 | ||||||
Total
liabilities |
2,796,851 | 1,859,051 | ||||||
Total equity |
6,896,849 | 6,608,800 | ||||||
Total liabilities and equity |
$ | 9,693,700 | $ | 8,467,851 | ||||
Page 13 of 15
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Preliminary Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Consolidated net income |
$ | 129,660 | $ | 164,610 | ||||
Adjustments to reconcile consolidated net income to net cash from
operating activities: |
||||||||
Depreciation and amortization |
40,758 | 35,269 | ||||||
Share-based compensation |
47,586 | 40,561 | ||||||
Excess tax benefits from share-based compensation |
(39,041 | ) | (20,520 | ) | ||||
Deferred income taxes |
1,503 | (12,471 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
125,610 | 55,718 | ||||||
Prepaid expenses and other assets |
(59,372 | ) | (11,150 | ) | ||||
Accounts payable |
(58,468 | ) | (14,125 | ) | ||||
Accrued compensation |
(66,510 | ) | (19,847 | ) | ||||
Accrued litigation settlements |
| (169,330 | ) | |||||
Income tax payable |
38,099 | (1,088 | ) | |||||
Other accrued liabilities |
13,981 | 4,620 | ||||||
Deferred revenue |
65,844 | 36,299 | ||||||
Net cash provided by operating activities |
239,650 | 88,546 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment, net |
(53,972 | ) | (37,807 | ) | ||||
Purchases of trading investments |
(2,495 | ) | (1,245 | ) | ||||
Purchases of available-for-sale investments |
(437,773 | ) | (447,716 | ) | ||||
Proceeds from sales of available-for-sale investments |
193,301 | 224,514 | ||||||
Proceeds from maturities of available-for-sale investments |
126,260 | 235,960 | ||||||
Payment for business acquisition, net of cash and cash equivalents acquired |
(28,573 | ) | | |||||
Changes in restricted cash |
| (1,550 | ) | |||||
Purchases of privately-held equity investments, net |
(5,972 | ) | (4,773 | ) | ||||
Net cash used in investing activities |
(209,224 | ) | (32,617 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of common stock |
264,113 | 118,920 | ||||||
Purchases and retirement of common stock |
(205,171 | ) | (76,225 | ) | ||||
Issuance of long-term debt |
991,556 | | ||||||
Change in customer financing arrangements |
12,531 | 2,082 | ||||||
Excess tax benefits from share-based compensation |
39,041 | 20,520 | ||||||
Return of capital to noncontrolling interest |
| (2,000 | ) | |||||
Net cash provided by financing activities |
1,102,070 | 63,297 | ||||||
Net increase in cash and cash equivalents |
1,132,496 | 119,226 | ||||||
Cash and cash equivalents at beginning of period |
1,811,887 | 1,604,723 | ||||||
Cash and cash equivalents at end of period |
$ | 2,944,383 | $ | 1,723,949 | ||||
Page 14 of 15
Juniper Networks, Inc.
Cash, Cash Equivalents, and Investments
(in thousands)
(unaudited)
Cash, Cash Equivalents, and Investments
(in thousands)
(unaudited)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Cash and cash equivalents |
$ | 2,944,383 | $ | 1,811,887 | ||||
Short-term investments |
493,557 | 474,514 | ||||||
Long-term investments |
645,609 | 535,178 | ||||||
Total |
$ | 4,083,549 | $ | 2,821,579 | ||||
Page 15 of 15