- Revenue: $1.190 billion, up 26% from Q4'09 and up 18% from Q3'10
- Operating Margin: 19.1% GAAP; 24.5% non-GAAP
- GAAP Net Income Per Share: $0.35 diluted
- Non-GAAP Net Income Per Share: $0.42 diluted, up 31% from Q4'09 and Q3'10 (including approximately $0.03 per share favorable impact due to the extension of R&D tax credit)
- Revenue: $4.093 billion, up 23% from 2009
- Operating Margin: 18.8% GAAP; 24.0% non-GAAP
- GAAP Net Income Per Share: $1.15 diluted
- Non-GAAP Net Income Per Share: $1.32 diluted, up 43% from 2009
- Juniper estimates revenue for the first quarter ending March 31, 2011 to be in the range of $1.060 billion to $1.110 billion, which equates to approximately 19% growth year-over-year at the mid-point of the range.
- Juniper estimates that its non-GAAP gross margin will remain in its targeted range of between 66% and 68% in the first quarter.
- Juniper estimates that its non-GAAP operating expenses will be higher as a percent of revenue but approximately flat with the prior quarter on a dollar basis. As a result, Juniper expects its non-GAAP operating margin for the first quarter will be 22.0%, plus or minus 0.5%.
- Juniper estimates that its non-GAAP net income per share will range between $0.30 and $0.33 on a diluted basis, assuming a flat share count and estimated non-GAAP tax rate of 28.5%. The non-GAAP EPS estimate includes the impact of recent acquisitions of approximately $0.02 per share.
Juniper Networks will host a conference call web cast today, January 25, 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 April 14, 2011. About Juniper Networks
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. 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 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, ------------------------ ------------------------ 2010 2009 2010 2009 ----------- ----------- ----------- ----------- Net revenues: Product $ 962,209 $ 739,096 $ 3,258,651 $ 2,567,992 Service 227,732 202,358 834,615 747,920 ----------- ----------- ----------- ----------- Total net revenues 1,189,941 941,454 4,093,266 3,315,912 Cost of revenues: Product 299,699 234,756 1,000,865 841,722 Service 98,241 75,452 350,654 290,987 ----------- ----------- ----------- ----------- Total cost of revenues 397,940 310,208 1,351,519 1,132,709 ----------- ----------- ----------- ----------- Gross margin 792,001 631,246 2,741,747 2,183,203 Operating expenses: Research and development 254,942 187,210 917,855 741,708 Sales and marketing 257,690 211,288 857,072 759,131 General and administrative 45,068 41,196 177,859 159,459 Amortization of purchased intangible assets 972 1,157 4,230 10,416 Litigation settlement charges -- 181,331 -- 182,331 Restructuring charges 2,255 3,212 10,805 19,463 Acquisition-related charges 4,276 -- 6,342 -- ----------- ----------- ----------- ----------- Total operating expenses 565,203 625,394 1,974,163 1,872,508 ----------- ----------- ----------- ----------- Operating income 226,798 5,852 767,584 310,695 Interest and other (expense) income, net (580) 347 1,917 6,928 Gain (loss) on equity investments 5,421 (2,251) 8,653 (5,562) ----------- ----------- ----------- ----------- Income before income taxes and noncontrolling interest 231,639 3,948 778,154 312,061 Income tax provision (benefit) 41,556 (17,185) 158,781 196,833 ----------- ----------- ----------- ----------- Consolidated net income 190,083 21,133 619,373 115,228 Adjust for net loss (income) attributable to noncontrolling interest 150 1,771 (971) 1,771 ----------- ----------- ----------- ----------- Net income attributable to Juniper Networks $ 190,233 $ 22,904 $ 618,402 $ 116,999 =========== =========== =========== =========== Net income per share attributable to Juniper Networks common stockholders: Basic $ 0.36 $ 0.04 $ 1.18 $ 0.22 =========== =========== =========== =========== Diluted $ 0.35 $ 0.04 $ 1.15 $ 0.22 =========== =========== =========== =========== Shares used in computing net income per share: Basic 523,556 523,200 522,444 523,603 =========== =========== =========== =========== Diluted 541,464 538,887 538,790 534,015 =========== =========== =========== =========== Juniper Networks, Inc. Share-Based Compensation by Category (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Cost of revenues - Product $ 1,260 $ 1,074 $ 4,353 $ 3,906 Cost of revenues - Service 3,632 2,922 13,523 10,487 Research and development 23,481 15,294 78,461 59,282 Sales and marketing 15,929 11,340 54,949 43,148 General and administrative 8,100 7,584 30,671 22,836 --------- --------- --------- --------- Total $ 52,402 $ 38,214 $ 181,957 $ 139,659 ========= ========= ========= ========= Juniper Networks, Inc. Share-Based Compensation Related Payroll Tax by Category (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- 2010 2009 2010 2009 --------- -------- --------- --------- Cost of revenues - Product $ 66 $ (23) $ 197 $ 25 Cost of revenues - Service 319 (70) 689 75 Research and development 793 (407) 2,206 133 Sales and marketing 1,177 (155) 2,912 514 General and administrative 182 4 429 85 --------- -------- --------- --------- Total $ 2,537 $ (651) $ 6,433 $ 832 ========= ======== ========= ========= Juniper Networks, Inc. Net Revenues by Reportable Segment (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ----------------------- ----------------------- 2010 2009 2010 2009 ----------- ----------- ----------- ----------- Infrastructure - Product $ 757,652 $ 562,978 $ 2,511,584 $ 1,959,198 Infrastructure - Service 149,502 132,363 538,690 482,437 ----------- ----------- ----------- ----------- Total Infrastructure $ 907,154 $ 695,341 $ 3,050,274 $ 2,441,635 ----------- ----------- ----------- ----------- Service Layer Technologies - Product $ 204,557 $ 176,118 $ 747,067 $ 608,794 Service Layer Technologies - Service 78,230 69,995 295,925 265,483 ----------- ----------- ----------- ----------- Total Service Layer Technologies $ 282,787 $ 246,113 $ 1,042,992 $ 874,277 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total $ 1,189,941 $ 941,454 $ 4,093,266 $ 3,315,912 =========== =========== =========== =========== Juniper Networks, Inc. Net Revenues by Geographic Region (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ----------------------- ----------------------- 2010 2009 2010 2009 ----------- ----------- ----------- ----------- Americas $ 580,120 $ 514,482 $ 2,095,556 $ 1,687,857 Europe, Middle East, and Africa 359,761 254,899 1,189,266 953,218 Asia Pacific 250,060 172,073 808,444 674,837 ----------- ----------- ----------- ----------- Total $ 1,189,941 $ 941,454 $ 4,093,266 $ 3,315,912 =========== =========== =========== =========== Juniper Networks, Inc. Net Revenues by Market (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ----------------------- ----------------------- 2010 2009 2010 2009 ----------- ----------- ----------- ----------- Service Provider $ 783,841 $ 639,269 $ 2,631,486 $ 2,197,069 Enterprise 406,100 302,185 1,461,780 1,118,843 ----------- ----------- ----------- ----------- Total $ 1,189,941 $ 941,454 $ 4,093,266 $ 3,315,912 =========== =========== =========== =========== 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, ------------------------ ------------------------ 2010 2009 2010 2009 ----------- ----------- ----------- ----------- GAAP Cost of revenues - Product $ 299,699 $ 234,756 $ 1,000,865 $ 841,722 Share-based compensation expense C (1,260) (1,074) (4,353) (3,906) Share-based compensation related payroll tax C (66) 23 (197) (25) Amortization of purchased intangible assets A (2,554) (904) (4,301) (5,011) ----------- ----------- ----------- ----------- Non-GAAP Cost of revenues - Product 295,819 232,801 992,014 832,780 =========== =========== =========== =========== GAAP Cost of revenues - Service 98,241 75,452 350,654 290,987 Share-based compensation expense C (3,632) (2,922) (13,523) (10,487) Share-based compensation related payroll tax C (319) 70 (689) (75) ----------- ----------- ----------- ----------- Non-GAAP Cost of revenues - Service 94,290 72,600 336,442 280,425 =========== =========== =========== =========== GAAP Gross margin - Product 662,510 504,340 2,257,786 1,726,270 Share-based compensation expense C 1,260 1,074 4,353 3,906 Share-based compensation related payroll tax C 66 (23) 197 25 Amortization of purchased intangible assets A 2,554 904 4,301 5,011 ----------- ----------- ----------- ----------- Non-GAAP Gross margin - Product 666,390 506,295 2,266,637 1,735,212 =========== =========== =========== =========== GAAP Product gross margin as a % of product revenue 68.9% 68.2% 69.3% 67.2% Share-based compensation expense as a % of product revenue C 0.1% 0.2% 0.2% 0.2% Share-based compensation related payroll tax as a % of product revenue C --% --% --% --% Amortization of purchased intangible assets as a % of product revenue A 0.3% 0.1% 0.1% 0.2% ----------- ----------- ----------- ----------- Non-GAAP Product gross margin as a % of product revenue 69.3% 68.5% 69.6% 67.6% =========== =========== =========== =========== GAAP Gross margin - Service 129,491 126,906 483,961 456,933 Share-based compensation expense C 3,632 2,922 13,523 10,487 Share-based compensation related payroll tax C 319 (70) 689 75 ----------- ----------- ----------- ----------- Non-GAAP Gross margin - Service $ 133,442 $ 129,758 $ 498,173 $ 467,495 =========== =========== =========== =========== GAAP Service gross margin as a % of service revenue 56.9% 62.7% 58.0% 61.1% Share-based compensation expense as a % of service revenue C 1.6% 1.4% 1.6% 1.4% Share-based compensation related payroll tax as a % of service revenue C 0.1% --% 0.1% --% ----------- ----------- ----------- ----------- Non-GAAP Service gross margin as a % of service revenue 58.6% 64.1% 59.7% 62.5% =========== =========== =========== =========== 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, ------------------------ ------------------------ 2010 2009 2010 2009 ----------- ----------- ----------- ----------- GAAP Gross margin $ 792,001 $ 631,246 $ 2,741,747 $ 2,183,203 Share-based compensation expense C 4,892 3,996 17,876 14,393 Share-based compensation related payroll tax C 385 (93) 886 100 Amortization of purchased intangible assets A 2,554 904 4,301 5,011 ----------- ----------- ----------- ----------- Non-GAAP Gross margin 799,832 636,053 2,764,810 2,202,707 =========== =========== =========== =========== GAAP Gross margin as a % of revenue 66.6% 67.1% 67.0% 65.8% Share-based compensation expense as a % of revenue C 0.4% 0.4% 0.4% 0.4% Share-based compensation related payroll tax as a % of revenue C --% --% --% --% Amortization of purchased intangible assets as a % of revenue A 0.2% 0.1% 0.1% 0.2% ----------- ----------- ----------- ----------- Non-GAAP Gross margin as a % of revenue 67.2% 67.6% 67.5% 66.4% =========== =========== =========== =========== GAAP Research and development expense 254,942 187,210 917,855 741,708 Share-based compensation expense C (23,481) (15,294) (78,461) (59,282) Share-based compensation related payroll tax C (793) 407 (2,206) (133) ----------- ----------- ----------- ----------- Non-GAAP Research and development expense 230,668 172,323 837,188 682,293 =========== =========== =========== =========== GAAP Sales and marketing expense 257,690 211,288 857,072 759,131 Share-based compensation expense C (15,929) (11,340) (54,949) (43,148) Share-based compensation related payroll tax C (1,177) 155 (2,912) (514) ----------- ----------- ----------- ----------- Non-GAAP Sales and marketing expense 240,584 200,103 799,211 715,469 =========== =========== =========== =========== GAAP General and administrative expense 45,068 41,196 177,859 159,459 Share-based compensation expense C (8,100) (7,584) (30,671) (22,836) Share-based compensation related payroll tax C (182) (4) (429) (85) ----------- ----------- ----------- ----------- Non-GAAP General and administrative expense 36,786 33,608 146,759 136,538 =========== =========== =========== =========== GAAP Operating expense 565,203 625,394 1,974,163 1,872,508 Share-based compensation expense C (47,510) (34,218) (164,081) (125,266) Share-based compensation related payroll tax C (2,152) 558 (5,547) (732) Amortization of purchased intangible assets A (972) (1,157) (4,230) (10,416) Litigation settlement charges B -- (181,331) -- (182,331) Restructuring charges B (2,255) (3,212) (10,805) (19,463) Acquisition-related charges A (4,276) -- (6,342) -- ----------- ----------- ----------- ----------- Non-GAAP Operating expense $ 508,038 $ 406,034 $ 1,783,158 $ 1,534,300 =========== =========== =========== =========== 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, --------------------- ---------------------- 2010 2009 2010 2009 ---------- --------- ---------- ---------- GAAP Operating income $ 226,798 $ 5,852 $ 767,584 $ 310,695 Share-based compensation expense C 52,402 38,214 181,957 139,659 Share-based compensation related payroll tax C 2,537 (651) 6,433 832 Amortization of purchased intangible assets A 3,526 2,061 8,531 15,427 Litigation settlement charges B -- 181,331 -- 182,331 Restructuring charges B 2,255 3,212 10,805 19,463 Acquisition-related charges A 4,276 -- 6,342 -- ---------- --------- ---------- ---------- Non-GAAP Operating income 291,794 230,019 981,652 668,407 ========== ========= ========== ========== GAAP Operating margin 19.1% 0.6 % 18.8% 9.4% Share-based compensation expense as a % of revenue C 4.3% 4.1 % 4.3% 4.2% Share-based compensation related payroll tax as a % of revenue C 0.2% (0.1)% 0.2% 0.1% Amortization of purchased intangible assets as a % of revenue A 0.3% 0.2 % 0.2% 0.5% Litigation settlement charges as a % of revenue B --% 19.3 % --% 5.5% Restructuring charges as a % of revenue B 0.2% 0.3 % 0.3% 0.5% Acquisition-related charges as a % of revenue A 0.4% -- % 0.2% --% ---------- --------- ---------- ---------- Non-GAAP Operating margin 24.5% 24.4 % 24.0% 20.2% ========== ========= ========== ========== GAAP Other income (expense), net 4,841 (1,904) 10,570 1,366 (Gain) loss on equity investments B (5,421) 2,251 (8,653) 5,562 ---------- --------- ---------- ---------- Non-GAAP Other (expense) income, net (580) 347 1,917 6,928 ========== ========= ========== ========== GAAP Income tax provision (benefit) 41,556 (17,185) 158,781 196,833 Non-recurring income tax adjustment B -- -- 54,069 (56,683) Valuation allowance on deferred tax assets B -- -- -- (61,755) Income tax effect of non-GAAP exclusions B 21,219 75,672 59,258 107,170 ---------- --------- ---------- ---------- Non-GAAP Provision for income tax 62,775 58,487 272,108 185,565 ========== ========= ========== ========== Non-GAAP Income tax rate 21.6% 25.4 % 27.7% 27.5% ========== ========= ========== ========== Non-GAAP Income before income taxes and noncontrolling interest* $ 291,214 $ 230,366 $ 983,569 $ 675,335 ========== ========= ========== ========== *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, --------------------- --------------------- 2010 2009 2010 2009 --------- --------- --------- --------- GAAP Net income attributable to Juniper Networks $ 190,233 $ 22,904 $ 618,402 $ 116,999 Share-based compensation expense C 52,402 38,214 181,957 139,659 Share-based compensation related payroll tax C 2,537 (651) 6,433 832 Amortization of purchased intangible assets A 3,526 2,061 8,531 15,427 Litigation settlement charges B -- 181,331 -- 182,331 Restructuring charges B 2,255 3,212 10,805 19,463 Acquisition-related charges A 4,276 -- 6,342 -- (Gain) loss on equity investments B (5,421) 2,251 (8,653) 5,562 Non-recurring income tax adjustments B -- -- (54,069) 56,683 Valuation allowance on deferred tax assets B -- -- -- 61,755 Income tax effect of non-GAAP exclusions B (21,219) (75,666) (59,258) (107,164) --------- --------- --------- --------- Non-GAAP Net income $ 228,589 $ 173,656 $ 710,490 $ 491,547 ========= ========= ========= ========= Non-GAAP Net income per share: Basic D $ 0.44 $ 0.33 $ 1.36 $ 0.94 ========= ========= ========= ========= Diluted D $ 0.42 $ 0.32 $ 1.32 $ 0.92 ========= ========= ========= ========= Shares used in computing non-GAAP net income per share: Basic D 523,556 523,200 522,444 523,603 ========= ========= ========= ========= Diluted D 541,464 538,887 538,790 534,015 ========= ========= ========= ========= GAAP Net income attributable to Juniper Networks as a % of revenue 16.0 % 2.4 % 15.1 % 3.5 % Share-based compensation expense as a % of revenue C 4.4 % 4.1 % 4.4 % 4.2 % Share-based compensation related payroll tax as a % of revenue C 0.2 % (0.1)% 0.2 % -- % Amortization of purchased intangible assets as a % of revenue A 0.3 % 0.2 % 0.2 % 0.5 % Litigation settlement charges as a % of revenue B -- % 19.3 % -- % 5.5 % Restructuring charges as a % of revenue B 0.2 % 0.3 % 0.3 % 0.5 % Acquisition-related charges as a % of revenue A 0.4 % -- % 0.2 % -- % (Gain) loss on equity investments B (0.5)% 0.2 % (0.2)% 0.2 % Non-recurring income tax adjustments as a % of revenue B -- % -- % (1.3)% 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 (1.8)% (8.0)% (1.5)% (3.2)% --------- --------- --------- --------- Non-GAAP Net income as a % of revenue 19.2 % 18.4 % 17.4 % 14.8 % ========= ========= ========= =========
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 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. Additionally, with respect to future financial guidance provided on a non-GAAP basis, we have excluded estimates for amortization of intangible assets, stock-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. 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: 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, 2010 2009 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 1,811,887 $ 1,604,723 Short-term investments 474,514 570,522 Accounts receivable, net of allowances 596,622 458,652 Deferred tax assets, net 161,535 196,318 Prepaid expenses and other current assets 169,812 48,744 ------------- ------------- Total current assets 3,214,370 2,878,959 Property and equipment, net 493,881 455,651 Long-term investments 535,178 483,505 Restricted cash 119,346 53,732 Purchased intangible assets, net 121,803 13,834 Goodwill 3,927,807 3,658,602 Long-term deferred tax assets, net -- 10,555 Other long-term assets 55,466 35,425 ------------- ------------- Total assets $ 8,467,851 $ 7,590,263 ============= ============= LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 292,270 $ 242,591 Accrued compensation 256,746 176,551 Accrued warranty 35,931 38,199 Deferred revenue 660,264 571,652 Income taxes payable 25,000 34,936 Accrued litigation settlements -- 169,330 Other accrued liabilities 201,765 142,526 ------------- ------------- Total current liabilities 1,471,976 1,375,785 Long-term deferred revenue 224,165 181,937 Long-term income tax payable 103,823 170,245 Other long-term liabilities 59,087 37,531 ------------- ------------- Total liabilities 1,859,051 1,765,498 Total equity 6,608,800 5,824,765 ------------- ------------- Total liabilities and equity $ 8,467,851 $ 7,590,263 ============= ============= Juniper Networks, Inc. Preliminary Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Twelve Months Ended December 31, ------------------------ 2010 2009 ----------- ----------- Cash flows from operating activities: Consolidated net income $ 619,373 $ 115,228 Adjustments to reconcile consolidated net income to net cash from operating activities: Depreciation and amortization 155,288 148,373 Share-based compensation 181,957 139,659 (Gain) loss on equity investments (8,653) 5,562 Excess tax benefits from share-based compensation (48,500) (3,510) Deferred income taxes 64,035 9,436 Changes in operating assets and liabilities: Accounts receivable, net (129,199) (28,682) Prepaid expenses and other assets (129,292) (8,520) Accounts payable 48,217 (2,422) Accrued compensation 78,071 16,079 Accrued warranty (2,268) (1,891) Accrued litigation settlements (169,330) -- Income tax payable 25,193 43,672 Other accrued liabilities (451) 199,787 Deferred revenue 127,894 163,326 ----------- ----------- Net cash provided by operating activities 812,335 796,097 Cash flows from investing activities: Purchases of property and equipment, net (185,291) (153,101) Purchases of trading investments (2,754) -- Purchases of available-for-sale investments (1,577,758) (1,461,532) Proceeds from sales of available-for-sale investments 537,916 285,379 Proceeds from maturities of available-for-sale investments 1,086,514 398,435 Payment for business acquisitions, net of cash and cash equivalents acquired (374,765) -- Changes in restricted cash (12,424) (11,276) Purchases of privately-held equity investments, net (4,188) (6,205) ----------- ----------- Net cash used in investing activities (532,750) (948,300) Cash flows from financing activities: Proceeds from issuance of common stock 451,039 164,207 Purchases and retirement of common stock (565,473) (453,888) Change in customer financing arrangements (3,487) 19,613 Excess tax benefits from share-based compensation 48,500 3,510 (Return of capital to) proceeds from noncontrolling interest (3,000) 4,400 ----------- ----------- Net cash used in financing activities (72,421) (262,158) ----------- ----------- Net increase (decrease) in cash and cash equivalents 207,164 (414,361) Cash and cash equivalents at beginning of period 1,604,723 2,019,084 ----------- ----------- Cash and cash equivalents at end of period $ 1,811,887 $ 1,604,723 =========== =========== Juniper Networks, Inc. Cash, Cash Equivalents, and Investments (in thousands) (unaudited) December 31, December 31, 2010 2009 -------------- -------------- Cash and cash equivalents $ 1,811,887 $ 1,604,723 Short-term investments 474,514 570,522 Long-term investments 535,178 483,505 -------------- -------------- Total $ 2,821,579 $ 2,658,750 ============== ==============
Contact Information: Investor Relations: Kathleen Nemeth Juniper Networks (408) 936-5397 kbela@juniper.net Media Relations: David Shane Juniper Networks (408) 936-4872 dshane@juniper.net Cindy Ta Juniper Networks (408)936-6131 cta@juniper.net