SUNNYVALE, CA--(Marketwire - January 25, 2011) - Juniper Networks (NYSE: JNPR)
Q4 Financial Highlights
- 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)
2010 Financial Highlights
- 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 Networks (NYSE: JNPR) today reported preliminary financial results
for the three and twelve months ended December 31, 2010, and provided its
outlook for the three months ending March 31, 2011. Juniper's fourth
quarter and full year 2010 results reflect record performance by the
company as measured by non-GAAP net income and revenues.
Net revenues for the fourth quarter of 2010 increased 26% on a
year-over-year basis and increased 18% sequentially, to $1.190 billion. For
the year ended December 31, 2010, Juniper's revenue increased 23% on a
year-over-year basis to $4.093 billion.
The Company posted GAAP net income of $190.2 million, or $0.35 per diluted
share, and non-GAAP net income of $228.6 million, or $0.42 per diluted
share, for the fourth quarter of 2010. Included in both the GAAP and
non-GAAP net income per share is approximately $0.03 per share favorable
impact due to the extension of R&D tax credit.
Non-GAAP net income per diluted share for the fourth quarter of 2010
increased 31% on a year-over-year and quarter-over-quarter basis. For the
year ended December 31, 2010, GAAP net income was $618.4 million, or $1.15
per diluted share, and non-GAAP net income was $710.5 million, or $1.32 per
diluted share.
Non-GAAP net income per diluted share, for the year ended December 31,
2010, increased 43% on a year-over-year basis. 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 produced outstanding results in 2010, the first year of a
multi-year growth strategy centered on mobile Internet and cloud computing
trends," said Kevin Johnson, Juniper's chief executive officer. "2011 is
an important next step as we prepare to introduce innovative new products
that continue to deliver on the promise of the new network."
Juniper's operating margin for the fourth quarter of 2010 increased to
19.1% on a GAAP basis, up from 0.6% in the same quarter a year ago.
Non-GAAP operating margin for the fourth quarter of 2010 increased slightly
to 24.5% from 24.4% in the same quarter a year ago. For the fiscal year
2010, Juniper's operating margin increased to 18.8% on a GAAP basis from
9.4% for the prior fiscal year.
Non-GAAP operating margin for the fiscal year 2010 increased to 24.0% from
20.2% in the fiscal year 2009.
Juniper generated net cash from operations for the fourth quarter of 2010
of $371.0 million, compared to net cash provided by operations of $259.6
million for the same quarter of 2009. For the year ended December 31, 2010,
Juniper generated net cash from operations of $812.3 million, compared to
$796.1 million in 2009.
Capital expenditures as well as depreciation and amortization expense
during the fourth quarter of 2010 were $47.8 million and $42.9 million,
respectively. Capital expenditures as well as depreciation and amortization
expense during the 2010 fiscal year were $185.3 million and $155.3 million,
respectively.
"Juniper capped 2010 with a strong revenue and profit performance in the
fourth quarter. The company executed well on the operating principles it
set forth for the year, and we are showing strong returns on the
investments we began making in 2009 in our innovation roadmap and the
expansion of our routes to market," said Robyn Denholm, Juniper's chief
financial officer. "We are focused on further enhancing our performance in
2011 by driving sustained, strong growth, improving margins, and leveraging
our strong balance sheet."
Outlook
- 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.
All forward-looking non-GAAP measures exclude 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. 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, 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