- Revenue: $941.5 million, up 2% from Q4'08
- Operating Margin: 18.6% GAAP; 24.4% non-GAAP
- GAAP Net Income Per Share: $0.24 diluted
- Non-GAAP Net Income Per Share: $0.32 flat from Q4'08
- Revenue: $3.32 billion, down 7% from 2008
- Operating Margin: 14.5% GAAP; 20.2% non-GAAP
- GAAP Net Income Per Share: $0.42 diluted
- Non-GAAP Net Income Per Share: $0.92 diluted, down 22% from 2008
From devices to data centers, from consumers to the cloud, Juniper Networks delivers innovative software, silicon and systems that transform the experience and economics of networking. The company serves more than 30,000 customers and partners worldwide, and generated more than $3 billion in revenue over the last year. Additional information can be found at 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 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 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-Q 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 company's 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.
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Net revenues:
Product $ 739,096 $ 745,860 $ 2,567,992 $ 2,910,960
Service 202,358 177,633 747,920 661,416
----------- ----------- ----------- -----------
Total net revenues 941,454 923,493 3,315,912 3,572,376
Cost of revenues:
Product 234,756 230,610 841,722 867,595
Service 81,865 73,660 316,080 298,371
----------- ----------- ----------- -----------
Total cost of
revenues 316,621 304,270 1,157,802 1,165,966
----------- ----------- ----------- -----------
Gross margin 624,833 619,223 2,158,110 2,406,410
Operating expenses:
Research and
development 187,210 180,134 741,708 731,151
Sales and marketing 204,875 206,054 734,038 782,940
General and
administrative 41,196 37,971 159,459 144,837
Amortization of
purchased
intangible assets 1,157 5,190 10,416 43,508
Restructuring
charges 3,212 -- 19,463 --
Other charges 12,000 -- 13,000 9,000
----------- ----------- ----------- -----------
Total operating
expenses 449,650 429,349 1,678,084 1,711,436
----------- ----------- ----------- -----------
Operating income 175,183 189,874 480,026 694,974
Interest and other
income, net 347 8,232 6,928 48,749
Loss on equity
investments (2,251) (13,333) (5,562) (14,832)
----------- ----------- ----------- -----------
Income before income
taxes and
noncontrolling
interest* 173,279 184,773 481,392 728,891
Provision for income
taxes 44,093 52,297 258,111 217,142
----------- ----------- ----------- -----------
Consolidated net income $ 129,186 $ 132,476 $ 223,281 $ 511,749
Plus: Net loss
attributable to
noncontrolling
interest* 1,771 -- 1,771 --
----------- ----------- ----------- -----------
Net income attributable
to Juniper Networks $ 130,957 $ 132,476 $ 225,052 $ 511,749
=========== =========== =========== ===========
Net income per share
attributable to
Juniper Networks
common stockholders:
Basic $ 0.25 $ 0.25 $ 0.43 $ 0.96
=========== =========== =========== ===========
Diluted $ 0.24 $ 0.25 $ 0.42 $ 0.93
=========== =========== =========== ===========
Shares used in
computing net income
per share:
Basic 523,200 527,634 523,603 530,337
=========== =========== =========== ===========
Diluted 538,887 534,817 534,015 551,433
=========== =========== =========== ===========
* Reflects noncontrolling interest in a joint venture.
Juniper Networks, Inc.
Stock-Based Compensation by Category
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Cost of revenues - Product $ 1,074 $ 727 $ 3,906 $ 2,952
Cost of revenues - Service 3,192 2,240 11,705 9,249
Research and development 15,294 12,042 59,282 46,963
Sales and marketing 11,070 9,475 41,930 36,228
General and administrative 7,584 4,770 22,836 12,741
---------- ---------- ---------- ----------
Total $ 38,214 $ 29,254 $ 139,659 $ 108,133
========== ========== ========== ==========
Juniper Networks, Inc.
Stock-Based Compensation Related Payroll Tax by Category
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2009 2008 2009 2008
--------- ---------- ---------- ----------
Cost of revenues - Product $ (23) $ 1 $ 25 $ 65
Cost of revenues - Service (70) 2 75 202
Research and development (407) 16 133 679
Sales and marketing (155) 140 514 1,705
General and administrative 4 1 85 112
--------- ---------- ---------- ----------
Total $ (651) $ 160 $ 832 $ 2,763
========= ========== ========== ==========
Juniper Networks, Inc.
Net Revenues by Reportable Segment
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Infrastructure - Product $ 562,978 $ 586,945 $ 1,959,198 $ 2,301,844
Infrastructure - Service 132,363 115,349 482,437 424,012
----------- ----------- ----------- -----------
Total Infrastructure $ 695,341 $ 702,294 $ 2,441,635 $ 2,725,856
=========== =========== =========== ===========
Service Layer Technologies
- Product $ 176,118 $ 158,915 $ 608,794 $ 609,116
Service Layer Technologies
- Service 69,995 62,284 265,483 237,404
----------- ----------- ----------- -----------
Total Service Layer
Technologies $ 246,113 $ 221,199 $ 874,277 $ 846,520
=========== =========== =========== ===========
Total Infrastructure and
Service Layer Technologies $ 941,454 $ 923,493 $ 3,315,912 $ 3,572,376
=========== =========== =========== ===========
Juniper Networks, Inc.
Net Revenues by Geographic Region
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Americas $ 514,482 $ 481,158 $ 1,687,857 $ 1,766,225
Europe, Middle East, and
Africa 254,899 274,384 953,218 1,077,654
Asia Pacific 172,073 167,951 674,837 728,497
----------- ----------- ----------- -----------
Total $ 941,454 $ 923,493 $ 3,315,912 $ 3,572,376
=========== =========== =========== ===========
Juniper Networks, Inc.
Net Revenues by Market
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Service Provider $ 639,269 $ 634,868 $ 2,197,069 $ 2,568,159
Enterprise 302,185 288,625 1,118,843 1,004,217
----------- ----------- ----------- -----------
Total $ 941,454 $ 923,493 $ 3,315,912 $ 3,572,376
=========== =========== =========== ===========
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAAP Cost of revenues -
Product $ 234,756 $ 230,610 $ 841,722 $ 867,595
Stock-based compensation
expense C (1,074) (727) (3,906) (2,952)
Stock-based compensation
related payroll tax C 23 (1) (25) (65)
Amortization of purchased
intangible assets A (904) (1,369) (5,011) (5,476)
--------- --------- --------- ---------
Non-GAAP Cost of revenues -
Product 232,801 228,513 832,780 859,102
========= ========= ========= =========
GAAP Cost of revenues -
Service 81,865 73,660 316,080 298,371
Stock-based compensation
expense C (3,192) (2,240) (11,705) (9,249)
Stock-based compensation
related payroll tax C 70 (2) (75) (202)
--------- --------- --------- ---------
Non-GAAP Cost of revenues -
Service 78,743 71,418 304,300 288,920
========= ========= ========= =========
GAAP Gross margin - Product 504,340 515,250 1,726,270 2,043,365
Stock-based compensation
expense C 1,074 727 3,906 2,952
Stock-based compensation
related payroll tax C (23) 1 25 65
Amortization of purchased
intangible assets A 904 1,369 5,011 5,476
--------- --------- --------- ---------
Non-GAAP Gross margin -
Product 506,295 517,347 1,735,212 2,051,858
========= ========= ========= =========
GAAP Product gross margin as
a % of product revenue 68.2% 69.1% 67.2% 70.2%
Stock-based compensation
expense as a % of product
revenue C 0.2% 0.1% 0.2% 0.1%
Stock-based compensation
related payroll tax as a %
of product revenue C -- -- -- --
Amortization of purchased
intangible assets as a % of
product revenue A 0.1% 0.2% 0.2% 0.2%
--------- --------- --------- ---------
Non-GAAP Product gross margin
as a % of product revenue 68.5% 69.4% 67.6% 70.5%
========= ========= ========= =========
GAAP Gross margin - Service 120,493 103,973 431,840 363,045
Stock-based compensation
expense C 3,192 2,240 11,705 9,249
Stock-based compensation
related payroll tax C (70) 2 75 202
--------- --------- --------- ---------
Non-GAAP Gross margin -
Service 123,615 106,215 443,620 372,496
========= ========= ========= =========
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- ------------------------
2009 2008 2009 2008
--------- --------- ----------- -----------
GAAP Service gross
margin as a % of
service revenue 59.5% 58.5% 57.7% 54.9%
Stock-based compensation
expense as a % of
service revenue C 1.6% 1.3% 1.6% 1.4%
Stock-based compensation
related payroll tax as
a % of service revenue C -- -- -- --
--------- --------- ----------- -----------
Non-GAAP Service gross
margin as a % of
service revenue 61.1% 59.8% 59.3% 56.3%
========= ========= =========== ===========
GAAP Gross margin $ 624,833 $ 619,223 $ 2,158,110 $ 2,406,410
Stock-based compensation
expense C 4,266 2,967 15,611 12,201
Stock-based compensation
related payroll tax C (93) 3 100 267
Amortization of
purchased intangible
assets A 904 1,369 5,011 5,476
--------- --------- ----------- -----------
Non-GAAP Gross margin 629,910 623,562 2,178,832 2,424,354
========= ========= =========== ===========
GAAP Gross margin as a %
of revenue 66.4% 67.1% 65.1% 67.4%
Stock-based compensation
expense as a % of
revenue C 0.4% 0.3% 0.4% 0.3%
Stock-based compensation
related payroll tax as
a % of revenue C -- -- -- --
Amortization of
purchased intangible
assets as a % of
revenue A 0.1% 0.1% 0.2% 0.2%
--------- --------- ----------- -----------
Non-GAAP Gross margin as
a % of revenue 66.9% 67.5% 65.7% 67.9%
========= ========= =========== ===========
GAAP Research and
development expense 187,210 180,134 741,708 731,151
Stock-based compensation
expense C (15,294) (12,042) (59,282) (46,963)
Stock-based compensation
related payroll tax C 407 (16) (133) (679)
--------- --------- ----------- -----------
Non-GAAP Research and
development expense 172,323 168,076 682,293 683,509
========= ========= =========== ===========
GAAP Sales and marketing
expense 204,875 206,054 734,038 782,940
Stock-based compensation
expense C (11,070) (9,475) (41,930) (36,228)
Stock-based compensation
related payroll tax C 155 (140) (514) (1,705)
--------- --------- ----------- -----------
Non-GAAP Sales and
marketing expense 193,960 196,439 691,594 745,007
========= ========= =========== ===========
GAAP General and
administrative expense 41,196 37,971 159,459 144,837
Stock-based compensation
expense C (7,584) (4,770) (22,836) (12,741)
Stock-based compensation
related payroll tax C (4) (1) (85) (112)
--------- --------- ----------- -----------
Non-GAAP General and
administrative expense 33,608 33,200 136,538 131,984
========= ========= =========== ===========
GAAP Operating expense 449,650 429,349 1,678,084 1,711,436
Stock-based compensation
expense C (33,948) (26,287) (124,048) (95,932)
Stock-based compensation
related payroll tax C 558 (157) (732) (2,496)
Amortization of
purchased intangible
assets A (1,157) (5,190) (10,416) (43,508)
Restructuring charges B (3,212) -- (19,463) --
Other charges - legal
settlement B (12,000) -- (13,000) (9,000)
--------- --------- ----------- -----------
Non-GAAP Operating
expense $ 399,891 $ 397,715 $ 1,510,425 $ 1,560,500
========= ========= =========== ===========
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAAP Operating income $ 175,183 $ 189,874 $ 480,026 $ 694,974
Stock-based compensation
expense C 38,214 29,254 139,659 108,133
Stock-based compensation
related payroll tax C (651) 160 832 2,763
Amortization of purchased
intangible assets A 2,061 6,559 15,427 48,984
Restructuring charges B 3,212 -- 19,463 --
Other charges - legal
settlement B 12,000 -- 13,000 9,000
--------- --------- --------- ---------
Non-GAAP Operating income 230,019 225,847 668,407 863,854
========= ========= ========= =========
GAAP Operating margin 18.6% 20.6% 14.5% 19.5%
Stock-based compensation
expense as a % of revenue C 4.1% 3.2% 4.2% 3.0%
Stock-based compensation
related payroll tax as a %
of revenue C (0.1)% -- 0.1% 0.1%
Amortization of purchased
intangible assets as a %
of revenue A 0.2% 0.7% 0.5% 1.3%
Restructuring charges as a
% of revenue B 0.3% -- 0.5% --
Other charges - legal
settlement as a % of
revenue B 1.3% -- 0.4% 0.3%
--------- --------- --------- ---------
Non-GAAP Operating margin 24.4% 24.5% 20.2% 24.2%
========= ========= ========= =========
GAAP Other income and
expense, net (1,904) (5,101) 1,366 33,917
Loss on equity investments B 2,251 13,333 5,562 14,832
--------- --------- --------- ---------
Non-GAAP Other income and
expense, net 347 8,232 6,928 48,749
========= ========= ========= =========
GAAP Provision for income
tax 44,093 52,297 258,111 217,142
Non-recurring income tax
charge B -- -- (56,683) --
Valuation allowance on
deferred tax assets B -- -- (61,755) --
Income tax effect of
non-GAAP exclusions B 14,394 12,765 45,892 44,692
--------- --------- --------- ---------
Non-GAAP Provision for
income tax 58,487 65,062 185,565 261,834
========= ========= ========= =========
Non-GAAP Income tax rate 25.4% 27.8% 27.5% 28.7%
========= ========= ========= =========
Non-GAAP Income before
income taxes and
noncontrolling interest* $ 230,366 $ 234,079 $ 675,335 $ 912,603
========= ========= ========= =========
* Consists of non-GAAP operating income plus non-GAAP net other income and
expense.
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2009 2008 2009 2008
--------- --------- --------- ---------
GAAP Net income
attributable to Juniper
Networks $ 130,957 $ 132,476 $ 225,052 $ 511,749
Stock-based compensation
expense C 38,214 29,254 139,659 108,133
Stock-based compensation
related payroll tax C (651) 160 832 2,763
Amortization of
purchased intangible
assets A 2,061 6,559 15,427 48,984
Restructuring charges B 3,212 -- 19,463 --
Other charges - legal
settlement B 12,000 -- 13,000 9,000
Loss on equity
investments B 2,251 13,333 5,562 14,832
Non-recurring income tax
charge B -- -- 56,683 --
Valuation allowance on
deferred tax assets B -- -- 61,755 --
Income tax effect of
non-GAAP exclusions B (14,388) (12,765) (45,886) (44,692)
--------- --------- --------- ---------
Non-GAAP Net income $ 173,656 $ 169,017 $ 491,547 $ 650,769
========= ========= ========= =========
Non-GAAP Net income per
share:
Basic D $ 0.33 $ 0.32 $ 0.94 $ 1.23
========= ========= ========= =========
Diluted D $ 0.32 $ 0.32 $ 0.92 $ 1.18
========= ========= ========= =========
Shares used in computing
non-GAAP net income per
share:
Basic D 523,200 527,634 523,603 530,337
========= ========= ========= =========
Diluted D 538,887 534,817 534,015 551,433
========= ========= ========= =========
GAAP Net income
attributable to Juniper
Networks as a % of
revenue 13.9% 14.3% 6.8% 14.3%
Stock-based compensation
expense as a % of
revenue C 4.1% 3.2% 4.2% 3.0%
Stock-based compensation
related payroll tax as
a % of revenue C (0.1)% -- -- 0.1%
Amortization of
purchased intangible
assets as a % of
revenue A 0.2% 0.7% 0.5% 1.4%
Restructuring charges as
a % of revenue B 0.3% -- 0.5% --
Other charges - legal
settlement as a % of
revenue B 1.3% -- 0.4% 0.3%
Loss on equity
investments B 0.2% 1.4% 0.2% 0.4%
Non-recurring income tax
charge as a % of
revenue B -- -- 1.7% --
Valuation allowance on
deferred tax assets as
a % of revenue B -- -- 1.9% --
Income tax effect of
non-GAAP exclusions as
a % of revenue B (1.5)% (1.3)% (1.4)% (1.3)%
--------- --------- --------- ---------
Non-GAAP Net income as a
% of revenue 18.4% 18.3% 14.8% 18.2%
========= ========= ========= =========
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 tables 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
Expenses, Other Items, and Stock-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 Expenses. 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: Stock-Based Compensation Related Items. We provide non-GAAP
information relative to our expense for stock-based compensation and
related payroll tax. We began to include stock-based compensation expense
in our GAAP financial measures in accordance with Financial 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 stock-based compensation, we believe that the exclusion of stock-based
compensation allows for more accurate comparisons of our operating results
to our peer companies. Further, we believe that excluding stock-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. Stock-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 stock-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 stock-based
compensation, payroll tax on stock option exercises is dependent on our
stock price and the timing and exercise by employees of our stock-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 stock-based compensation and the related payroll
tax, management excludes these expenses when analyzing the organization's
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.
Juniper Networks, Inc.
Preliminary Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31, December 31,
2009 2008
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,604,723 $ 2,019,084
Short-term investments 570,522 172,896
Accounts receivable, net of allowances 458,652 429,970
Deferred tax assets, net 142,641 145,230
Prepaid expenses and other current assets 48,744 49,026
------------- -------------
Total current assets 2,825,282 2,816,206
Property and equipment, net 455,651 436,433
Long-term investments 483,505 101,415
Restricted cash 53,732 43,442
Purchased intangible assets, net 13,834 28,861
Goodwill 3,658,602 3,658,602
Long-term deferred tax assets, net 3,800 71,079
Other long-term assets 35,425 31,303
------------- -------------
Total assets $ 7,529,831 $ 7,187,341
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 242,591 $ 249,854
Accrued compensation 176,551 160,471
Accrued warranty 38,199 40,090
Deferred revenue 571,652 459,749
Income taxes payable 35,781 33,047
Other accrued liabilities 142,526 113,399
------------- -------------
Total current liabilities 1,207,300 1,056,610
Long-term deferred revenue 181,937 130,514
Long-term income tax payable 170,245 78,164
Other long-term liabilities 37,531 20,648
Commitments and contingencies
Juniper Networks stockholders' equity:
Common stock, $0.00001 par value 5 5
Additional paid-in capital 9,060,089 8,811,497
Accumulated other comprehensive loss (1,433) (4,245)
Accumulated deficit (3,128,472) (2,905,852)
------------- -------------
Total Juniper Networks stockholders'
equity 5,930,189 5,901,405
Noncontrolling interest 2,629 --
------------- -------------
Total equity 5,932,818 5,901,405
------------- -------------
Total liabilities and stockholders' equity $ 7,529,831 $ 7,187,341
============= =============
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Twelve Months Ended
December 31,
----------------------------
2009 2008
------------- -------------
Cash flows from operating activities:
Consolidated net income $ 223,281 $ 511,749
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 148,373 172,453
Stock-based compensation 139,659 108,133
Loss on equity investments 5,529 14,832
Change in excess tax benefits from
share-based compensation (3,510) (40,182)
Deferred income taxes 69,868 14,314
Other non-cash charges -- 613
Changes in operating assets and
liabilities:
Accounts receivable, net (28,682) (50,211)
Prepaid expenses and other assets (8,487) (539)
Accounts payable (2,422) 19,770
Accrued compensation 16,079 1,761
Income tax payable 44,517 49,554
Other accrued liabilities 28,566 (4,062)
Deferred revenue 163,326 76,994
------------- -------------
Net cash provided by operating
activities 796,097 875,179
Cash flows from investing activities:
Purchases of property and equipment, net (153,101) (164,604)
Purchases of available-for-sale investments (1,461,532) (474,007)
Proceeds from sales of available-for-sale
investments 285,379 130,237
Proceeds from maturities of
available-for-sale investments 398,435 369,114
Changes in restricted cash (11,276) (8,094)
Purchases of minority equity investments, net (6,205) (2,458)
------------- -------------
Net cash used in investing activities (948,300) (149,812)
Cash flows from financing activities:
Proceeds from issuance of common stock 164,207 119,450
Purchases and retirement of common stock (453,888) (604,700)
Net proceeds from customer financing
arrangements 19,613 22,963
Redemption of convertible debt -- (288)
Change in excess tax benefit from employee
stock option plans 3,510 40,182
Proceeds from noncontrolling interest 4,400 --
------------- -------------
Net cash used in financing activities (262,158) (422,393)
------------- -------------
Net (decrease) increase in cash and cash
equivalents (414,361) 302,974
Cash and cash equivalents at beginning of
period 2,019,084 1,716,110
------------- -------------
Cash and cash equivalents at end of period $ 1,604,723 $ 2,019,084
============= =============
Supplemental disclosure of cash flow
information
Cash paid for interest $ 5,417 $ 5,224
Cash paid for taxes $ 139,969 $ 147,999
Supplemental disclosure of non-cash investing
and financing activities:
Common stock issued in connection with
conversion of the Senior Notes $ -- $ 399,208
Juniper Networks, Inc.
Cash, Cash Equivalents, Trading, and Available-For-Sale Investments
(in thousands)
(unaudited)
December 31, December 31,
2009 2008
-------------- --------------
Cash and cash equivalents $ 1,604,723 $ 2,019,084
Short-term investments 570,522 172,896
Long-term investments 483,505 101,415
-------------- --------------
Total $ 2,658,750 $ 2,293,395
============== ==============
Contact Information: Investor Relations: Kathleen Bela Juniper Networks, Inc. (408) 936-7804 kbela@juniper.net Media Relations: Melanie Branon Juniper Networks, Inc. (408) 936-2632 mbranon@juniper.net