Juniper Networks Reports Preliminary Fourth Quarter and Fiscal

Juniper Networks Reports Preliminary Fourth Quarter and Fiscal Year
2012 Financial Results 
SUNNYVALE, CA -- (Marketwire) -- 01/24/13 --  Juniper Networks (NYSE:
JNPR) 
Q4 2012:  


 
--  Revenue: $1,141 million, up 2% from Q3'12 and up 2% from Q4'11
--  Operating Margin: 11.5% GAAP; 18.2% non-GAAP, up 1.3 pts Q/Q
--  GAAP Net Income Per Share: $0.19 diluted, includes $0.02 pre-tax
    impact from restructuring charges
--  Non-GAAP Net Income Per Share: $0.28 diluted, up from $0.22 diluted in
    Q3'12 and flat compared to Q4'11

  
Full Year 2012:  


 
--  Revenue: $4,365 million, down 2% from 2011
--  Operating Margin: 7.1% GAAP; 15.6% non-GAAP
--  GAAP Net Income Per Share: $0.35 diluted, includes $0.17 pre-tax
    impact from restructuring charges
--  Non-GAAP Net Income Per Share: $0.85 diluted, down from $1.19 diluted
    in 2011

  
Juniper Networks (NYSE: JNPR), the industry leader in network
innovation, today reported preliminary financial results for the
three and twelve months ended December 31, 2012, and provided its
outlook for the three months ending March 31, 2013.  
Net revenues for the fourth quarter of 2012 increased 2% sequentially
and on a year-over-year basis to $1,141 million.  
Juniper's operating margin for the fourth quarter of 2012 increased
to 11.5% on a GAAP basis from 3.8% in the third quarter of 2012, and
decreased from 11.9% in the fourth quarter of 2011. Non-GAAP
operating margin for the fourth quarter of 2012 increased to 18.2%,
from 16.9% in the third quarter of 2012 and decreased from 18.6% in
the fourth quarter of 2011. 
The Company posted GAAP net income of $96 million, or $0.19 per
diluted share for the fourth quarter of 2012. The GAAP diluted income
per share includes a $0.02 pre-tax impact from restructuring charges.
Non-GAAP net income was $145 million, or $0.28 per diluted share, for
the fourth quarter of 2012. Non-GAAP net income per diluted share
increased 27% compared to the third quarter of 2012 and was flat
compared to the fourth quarter of 2011.  
The fourth quarter of 2012 results include $11 million, or $0.02 per
diluted share, in pre-tax restructuring-related charges. The Company
has largely completed its announced headcount actions and has made
significant progre
ss on additional actions to reduce its cost
structure.  
During the fourth quarter, the Company completed the acquisition of
Contrail Systems, for a total of $176 million in cash and equity. The
total net cash outlay for the acquisition was $49 million. The
remainder of the consideration was in the form of equity awards.  
For the year ended December 31, 2012, Juniper's revenue decreased 2%
on a year-over-year basis to $4,365 million. 
For the fiscal year 2012, Juniper's GAAP operating margin was 7.1%
compared to 13.9% for the prior fiscal year. Non-GAAP operating
margin for the fiscal year 2012 was 15.6% compared to 20.6% in the
fiscal year 2011. 
For the year ended December 31, 2012, GAAP net income was $187
million, or $0.35 per diluted share. The GAAP diluted income per
share includes a $0.17 pre-tax impact from restructuring charges.
Non-GAAP net income was $450 million, or $0.85 per diluted share, for
the fiscal year 2012. Non-GAAP net income per diluted share for the
year ended December 31, 2012 decreased 29% on a year-over-year basis.
The reconciliation between GAAP and non-GAAP results of operations is
provided in a table immediately following the Preliminary Net Revenue
by Market table below. 
"Juniper finished 2012 on a good note, setting the stage for growth
in 2013," said Kevin Johnson, chief executive officer of Juniper
Networks. "During the past year we strengthened our product
portfolio, took key steps to drive operational execution, and
allocated capital in a balanced way. We believe Juniper is entering
2013 in a strong position, with good opportunities in routing and
switching and a greatly improved Enterprise security portfolio as we
continue to deliver on the promise of the high performance network."  
"I am pleased with the team's effort and commitment in executing our
strategy to drive revenue growth and improve operational execution,"
said Robyn Denholm, chief financial officer of Juniper Networks. "For
the fourth quarter we delivered sequential and year-over-year revenue
growth and expanded operating margins. We have largely completed our
announced workforce actions and are well underway with our facility
and supply chain efforts to reduce our cost structure. These efforts
are designed to sharpen our focus, drive efficiencies throughout the
company and enable agility in execution. The benefits of these
efforts are starting to show in our results." 
Other Financial Highlights
 Total cash, cash equivalents and
investments as of December 31, 2012 were $3,837 million, compared to
$4,048 million as of the third quarter of 2012 and $4,292 million as
of the fourth quarter of 2011. 
Juniper generated net cash from operations for the fourth quarter of
2012 of $155 million, compared to net cash provided by operations of
$173 million in the third quarter of 2012, and $244 million in the
fourth quarter of 2011. For the year ended December 31, 2012, Juniper
generated net cash from operations of $642 million, compared to $987
million in 2011. 
Days sales outstanding in accounts receivable ("DSO") was 35 days in
the fourth quarter of 2012, compared to 32 days in the prior quarter
and 46 days in the fourth quarter of 2011. 
For the fourth quarter, Juniper repurchased 14.5 million shares at an
average share price of $17.24 per share for a total of $250 million.
For the year ended December 31, 2012, Juniper repurchased 35.8
million shares, at an average share price of $18.05 per share, for a
total of $646 million.  
Capital expenditures, as well as depreciation and amortization of
intangible assets expense during the fourth quarter of 2012 were $92
million and $49 million, respectively. Capital expenditures, as well
as depreciation and amortization of intangible assets expense during
the fiscal year 2012, were $349 million and $187 million,
respectively. The 31% increase in capital expenditures for the full
year was primarily due to the build out of the Company's Sunnyvale,
Calif. campus. 
Outlook 
 Our outlook for the March quarter reflects our expectation
of a typical seasonal decline, especially in the Enterprise sector.
This decline is consistent with the cautious approach our customers
are taking to capital deployment. 


 
--  Juniper estimates revenue for the first quarter ending March 31, 2013
    to be in the range of $1,050 million to $1,070 million.
    
    
--  Juniper estimates that its non-GAAP gross margin will be in the range
    of 64% plus or minus 0.5%.
    
    
--  Juniper estimates that its non-GAAP operating expenses will be $515
    million plus or minus $5 million.
    
    
--  Juniper expects its non-GAAP operating margin for the first quarter
    will be in the range of 14% to 16%.
    
    
--  Juniper estimates that its non-GAAP net income per share will range
    between $0.18 and $0.22 on a diluted basis. This does not include an
    approximate $0.03 one time favorable benefit from the 2012 R&D tax
    credit. This assumes a flat share count and non-GAAP tax rate of 29%,
    which reflects the Q1 2013 application of the R&D tax credit.

  
All forward-looking non-GAAP measures exclude estimates for
amortization of intangible assets, share-based compensation expenses,
acquisition-related charges, restructuring charges,
 litigation
settlement charges, gain or loss on equity investments, non-recurring
income tax adjustments, valuation allowance on deferred tax assets,
and income tax effect of non-GAAP exclusions. A reconciliation of
non-GAAP guidance measures to corresponding GAAP measures is not
available on a forward-looking basis. 
Conference Call Webcast
  Juniper Networks will host a conference
call webcast today, January 24, 2013, at 2:00 p.m. (Pacific Standard
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 10 minutes prior to the scheduled conference call time.
The webcast replay of the conference call will be archived on the
Juniper Networks website. 
About Juniper Networks
 Juniper Networks is in the business of
network innovation. From devices to data centers, from consumers to
cloud providers, Juniper Networks delivers the software, silicon and
systems that transform the experience and economics of networking.
Additional information can be found at Juniper Networks
(www.juniper.net) or connect with Juniper on Twitter and Facebook. 
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 and political conditions globally or regionally;
business and economic conditions in the networking industry; changes
in overall technology spending and spending by communication service
providers and major customers; 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. The following tables and
reconciliations can also be found on the Investor Relations website
at www.juniper.net. 


 
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
        Preliminary Condensed Consolidated Statements of Operations         
                  (in millions, except per share amounts)                   
                                (unaudited)                                 
                                                                            
                                  Three Months Ended   Twelve Months Ended  
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------- ---------  ---------  --------- 
Net revenues:                                                               
  Product                        $    847.3 $   847.5  $ 3,262.1  $ 3,478.3 
  Service                             293.5     273.3    1,103.3      970.4 
                                 ---------- ---------  ---------  --------- 
    Total net revenues              1,140.8   1,120.8    4,365.4    4,448.7 
Cost of revenues:                                                           
  Product                             296.1     310.6    1,204.0    1,155.3 
  Service                             111.7     111.3      452.6      424.8 
                                 ---------- ---------  ---------  --------- 
    Total cost of revenues            407.8     421.9    1,656.6    1,580.1 
                                 ---------- ---------  ---------  --------- 
Gross margin                          733.0     698.9    2,708.8    2,868.6 
Operating expenses:                                                         
  Research and development            275.1     250.5    1,101.6    1,026.8 
  Sales and marketing                 263.8     253.2    1,042.0    1,001.1 
  General and administrative           50.7      45.5      203.6      179.1 
  Amortization of purchased                                                 
   intangible assets                    1.2       1.2        4.7        5.4 
  Restructuring and other                                                   
   charges                             10.6      15.0       46.8       30.6 
  Acquisition-related charges           0.7       0.3        2.0        7.1 
                                 ---------- ---------  ---------  --------- 
    Total operating expenses          602.1     565.7    2,400.7    2,250.1 
                                 ---------- ---------  ---------  --------- 
Operating income                      130.9     133.2      308.1      618.5 
Other income (expense), net             9.0     (10.7)     (16.6)     (
46.8)
                                 ---------- ---------  ---------  --------- 
Income before income taxes and                                              
 noncontrolling interest              139.9     122.5      291.5      571.7 
Income tax provision                   44.2      26.3      105.0      146.7 
                                 ---------- ---------  ---------  --------- 
Consolidated net income                95.7      96.2      186.5      425.0 
Adjust for net loss attributable                                            
 to noncontrolling interest              --        --         --        0.1 
                                 ---------- ---------  ---------  --------- 
Net income attributable to                                                  
 Juniper Networks                $     95.7 $    96.2  $   186.5  $   425.1 
                                 ========== =========  =========  ========= 
                                                                            
Net income per share                                                        
 attributable to Juniper                                                    
 Networks common stockholders:                                              
  Basic                          $     0.19 $    0.18  $    0.36  $    0.80 
                                 ========== =========  =========  ========= 
  Diluted                        $     0.19 $    0.18  $    0.35  $    0.79 
                                 ========== =========  =========  ========= 
Shares used in computing net                                                
 income per share:                                                          
  Basic                               507.6     526.1      520.9      529.8 
                                 ========== =========  =========  ========= 
  Diluted                             513.1     533.3      526.2      541.4 
                                 ========== =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
               Preliminary Net Revenues by Reportable Segment               
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Platform Systems Division:                                                  
  PSD Products:                                                             
    Routing                      $    513.7 $    478.5 $  1,946.8 $  2,166.0
    Switching                         145.8      155.9      554.8      495.8
    Security/Other                     46.6       54.6      182.5      213.2
                                 ---------- ---------- ---------- ----------
      Total PSD Products         $    706.1 $    689.0 $  2,684.1 $  2,875.0
  PSD Services                        223.7      204.1      834.3      713.3
                                 ---------- ---------- ---------- ----------
    Total Platform Systems                                                  
     Division Revenue            $    929.8 $    893.1 $  3,518.4 $  3,588.3
                                 ========== ========== ========== ==========
                                                                            
Software Solutions Division:                                                
  SSD Products:                                                             
    Routing                      $     17.5 $     27.8 $     84.7 $    112.7
    Security/Other                    123.7      130.7      493.3      490.6
                                 ---------- ---------- ---------- ----------
      Total SSD Products         $    141.2 $    158.5 $    578.0 $    603.3
  SSD Services                         69.8       69.2      269.0      257.1
                                 ---------- ---------- ---------- ----------
    Total Software Solutions                                                
     Division Revenue            $    211.0 $    227.7 $    847.0 $    860.4
                                 ---------- ---------- ---------- ----------
Total                            $  1,140.8 $  1,120.8 $  4,365.4 $  4,448.7
                                 ========== ========== ========== ==========
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
                Preliminary Net Revenues by Geographic Region               
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Americas                         $    607.0 $    521.2 $  2,285.9 $  2,238.0
Europe, Middle East, and Africa       338.6      399.6    1,266.3    1,339.8
Asia Pacific                          195.2      200.0      813.2      870.9
                                 ---------- ---------- ---------- ----------
Total                            $  1,140.8 $  1,120.8 $  4,365.4 $  4,448.7
                                 ========== ========== ========== ==========
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
                     Preliminary Net Revenues by Market                     
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Service Provider                 $    739.4 $    676.5 $  2,811.2 $  2,833.0
Enterprise                            401.4      444.3    1,554.2    1,615.7
                                 ---------- ---------- ---------- ----------
Total                            $  1,140.8 $  1,120.8 $  4,365.4 $  4,448.7
                                 ========== ========== ========== ==========
                                                                            
                                                                            
                                                                         
   
                           Juniper Networks, Inc.                           
        Reconciliation between GAAP and non-GAAP Financial Measures         
                     (in millions, except percentages)                      
                                (unaudited)                                 
                                                                            
                             Three Months Ended         Twelve Months Ended 
                      -------------------------------  -------------------- 
                      December   September   December   December   December 
                       31, 2012   30, 2012   31, 2011   31, 2012   31, 2011 
                      ---------  ---------  ---------  ---------  --------- 
GAAP Operating                                                              
 income               $   130.9  $    42.8  $   133.2  $   308.1  $   618.5 
GAAP Operating                                                              
 margin                    11.5%       3.8%      11.9%       7.1%      13.9%
  Share-based                                                               
   compensation                                                             
   expense          C      57.5       59.1       52.5      243.4      222.2 
  Share-based                                                               
   compensation                                                             
   related                                                                  
   payroll tax      C       0.1        0.1        0.2        1.1        9.3 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets           A       7.2        9.0        6.9       32.3       27.1 
  Restructuring                                                             
   and other                                                                
   charges          B      11.1       83.4       15.0       99.7       30.6 
  Other             B        --       (5.3)        --       (5.3)        -- 
  Acquisition-                                                              
   related                                                                  
   charges        A,B       0.7        0.3        0.3        2.0        9.6 
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP                                                                    
 Operating income         207.5      189.4      208.1      681.3      917.3 
Non-GAAP                                                                    
 Operating margin          18.2%      16.9%      18.6%      15.6%      20.6%
                      =========  =========  =========  =========  ========= 
                                                                            
GAAP Net income                                                             
 attributable to                                                            
 Juniper Networks          95.7       16.8       96.2      186.5      425.1 
  Share-based                                                               
   compensation                                                             
   expense          C      57.5       59.1       52.5      243.4      222.2 
  Share-based                                                               
   compensation                                                             
   related                                                                  
   payroll tax      C       0.1        0.1        0.2        1.1        9.3 
  Amortization of                                                           
   purchased                                                                
   intangible                                                               
   assets           A       7.2        9.0        6.9       32.3       27.1 
  Restructuring                                                             
   and other                                                                
   charges          B      11.1       83.4       15.0       99.7       30.6 
  Other             B        --       (5.3)        --       (5.3)        -- 
  Acquisition-                                                              
   related                                                                  
   charges        A,B       0.7        0.3        0.3        2.0        9.6 
  Gain on equity                                                            
   investments      B     (18.9)      (5.8)      (0.7)     (25.5)       0.3 
  Income tax                                                                
   effect of non-                                                           
   GAAP                                                                     
   exclusions       B      (8.8)     (39.7)     (20.3)     (84.6)     (79.6)
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP Net                                                                
 income               $   144.6  $   117.9  $   150.1  $   449.6  $   644.6 
                      ---------  ---------  ---------  ---------  --------- 
GAAP Diluted net                                                            
 income per share   D $    0.19  $    0.03  $    0.18  $    0.35  $    0.79 
                      ---------  ---------  ---------  ---------  --------- 
Non-GAAP Diluted                                                            
 net income per                                                             
 share              D $    0.28  $    0.22  $    0.28  $    0.85  $    1.19 
                      ---------  ---------  ---------  ---------  --------- 
Shares used in                                                              
 computing                                                                  
 diluted net                                                                
 income per share   D     513.1      524.5      533.3      526.2      541.4 
                      =========  =========  =========  =========  ========= 

 
Discussion of Non-GAAP Financial Measures 
The tables above and below include the following non-GAAP financial
measures derived from our Preliminary Condensed Consolidated
Statements of Operations: 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; provision for
income taxes; income tax rate; net income; and net income per share.
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 und
er compensation programs.
We consider the use of the non-GAAP measures presented above to be
helpful in assessing the performance of the continuing operation of
our business. By continuing operations we mean the ongoing revenue
and expenses of the business excluding certain items that render
comparisons with prior periods or analysis of on-going operating
trends more difficult, such as expenses not directly related to the
actual cash costs of development, sale, delivery or support of our
products and services, or expenses that are reflected in periods
unrelated to when the actual amounts were incurred or paid.
Consistent with this approach, we believe that disclosing non-GAAP
financial measures to the readers of our financial statements
provides such readers with useful supplemental data that, while not a
substitute for financial measures prepared in accordance with GAAP,
allows for greater transparency in the review of our financial and
operational performance. In addition, we have historically reported
non-GAAP results to the investment community and believe that
continuing to provide non-GAAP measures provides investors with a
tool for comparing results over time. In assessing the overall health
of our business for the periods covered by the table above and, in
particular, in evaluating the financial line items presented in the
table above, we have excluded items in the following three general
categories, each of which are described below: Acquisition-Related
Charges, Other Items, and Share-Based Compensation Related Items. We
also provide additional detail below regarding the shares used to
calculate our non-GAAP net income per share. Notes identified for
line items in the table above correspond to the appropriate note
description below. Additionally, with respect to future financial
guidance provided on a non-GAAP basis, we have excluded estimates for
amortization of intangible assets, share based compensation expenses,
acquisition related charges, restructuring charges, litigation
settlement charges, gain or loss on equity investments, non-recurring
income tax adjustments, valuation allowance on deferred tax assets,
and income tax effect of non-GAAP exclusions. 
Note A: Acquisition-Related Charges. We exclude certain expense items
resulting from acquisitions including the following, when applicable:
(i) amortization of purchased intangible assets associated with our
acquisitions; (ii) compensation related to acquisitions; and (iii)
acquisition-related charges. The amortization of purchased intangible
assets associated with our acquisitions results in our recording
expenses in our GAAP financial statements that were already expensed
by the acquired company before the acquisition and for which we have
not expended cash. Moreover, had we internally developed the products
acquired, the amortization of intangible assets, and the expenses of
uncompleted research and development would have been expensed in
prior periods. Accordingly, we analyze the performance of our
operations in each period without regard to such expenses. In
addition, acquisitions result in non-continuing operating expenses,
which would not otherwise have been incurred by us in the normal
course of our business operations. For example, we have incurred
deferred compensation charges related to assumed options and
transition and integration costs such as retention bonuses and
acquisition-related milestone payments to acquired employees. We
believe that providing non-GAAP information for acquisition-related
expense items in addition to the corresponding GAAP information
allows the users of our financial statements to better review and
understand the historic and current results of our continuing
operations, and also facilitates comparisons to less acquisitive peer
companies. 
Note B: Other Items. We exclude certain other items that are the
result of either unique or unplanned events including the following,
when applicable: (i) restructuring and related costs; (ii) impairment
charges; (iii) gain or loss on legal settlement, net of related
transaction costs; (iv) retroactive impacts of certain tax
settlements; (v) significant effects of tax legislation and judicial
or administrative interpretation of tax regulations; (vi) gain or
loss on equity investments; and (vii) the income tax effect on our
financial statements of excluding items related to our non-GAAP
financial measures. It is difficult to estimate the amount or timing
of these items in advance. Restructuring and impairment charges
result from events, which arise from unforeseen circumstances, which
often occur outside of the ordinary course of continuing operations.
Although these events are reflected in our GAAP financials, these
unique transactions may limit the comparability of our on-going
operations with prior and future periods. In the case of legal
settlements, these gains or losses are recorded in the period in
which the matter is concluded or resolved even though the subject
matter of the underlying dispute may relate to multiple or different
periods. As such, we believe that these expenses do not accurately
reflect the underlying performance of our continuing operations for
the period in which they are incurred. Similarly, the retroactive
impacts of certain tax settlements and significant effects of
retroactive tax legislation are unique events that occur in periods
that are generally unrelated to the level of business activity to
which such settlement or legislation applies. We believe this limits
comparability with prior periods and that these expenses do not
accurately reflect the underlying performance of our continuing
business operations for the period in which they are incurred.
Whether we realize gains or losses on equity investments is based
primarily on the performance and market value of those independent
companies. Accordingly, we believe that these gains and losses do not
reflect the underlying performance of our continuing operations. We
also believe providing financial information with and without the
income tax effect of excluding items related to our non-GAAP
financial measures provide our management and users of the financial
statements with better clarity regarding the on-going performance and
future liquidity of our business. Because of these factors, we assess
our operating performance both with these amounts included and
excluded, and by providing this information, we believe the users of
our financial statements are better able to understand the financial
results of what we consider our continuing operations. 
Note C: Share-Based Compensation Related Items. We provide non-GAAP
information relative to our expense for share-based compensation and
related payroll tax. We began to include share-based compensation
expense in our GAAP financial measures in accordance with Financial
Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") Topic 718, Compensation - Stock Compensation ("FASB ASC Topic
718"), in January 2006. Because of varying available valuation
methodologies, subjective assumptions and the variety of award types,
which affect the calculations of share-based compensation, we believe
that the exclusion of share-based compensation allows for more
accurate comparisons of our operating results to our peer companies.
Further, we believe that excluding share-based compensation expense
allows for a more accurate comparison of our financial results to
previous periods during which our equity-based awards were not
required to be reflected in our income statement. Share-based
compensation is very different from other forms of compensation. A
cash salary or bonus has a fixed and unvarying cash cost. For
example, the expense associated with a $10,000 bonus is equal to
exactly $10,000 in cash regardless of when it is awarded and who it
is awarded by. In contrast, the expense associated with an award of
an option for 1,000 shares of share is unrelated to the amount of
compensation ultimately received by the employee; and the cost to the
company is based on a share-based compensation valuation methodology
and underlying assumptions that may vary over time and that does not
reflect any cash expenditure by the company because no cash is
expended. Furthermore, the expense associated with granting an
employee an option is spread over multiple years unlike other
compensation expenses which are more proximate to the time of award
or payment. For example, we may be recognizing expense in a year
where the stock option is significantly underwater and is not going
to be exercised or generate any compensation for the employee. The
expense associated with an award of an option for 1,000 shares of
stock by us in one quarter may have a very different expense than an
award of an identical number of shares in a different quarter.
Finally, the expense recognized by us for such an option may be very
different than the expense to other companies for awarding a
comparable option, which makes it difficult to assess our operating
performance relative to our competitors. Similar to share-based
compensation, payroll tax on stock option exercises is dependent on
our stock price and the timing and exercise by employees of our
share-based compensation, over which our management has little
control, and as such does not correlate to the operation of our
business. Because of these unique characteristics of share-based
compensation and the related payroll tax, management excludes these
expenses when analyzing the 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 millions)                               
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------- --------------
                                                 (unaudited)                
                    ASSETS                                                  
Current assets:                                                             
  Cash and cash equivalents                    $      2,407.8 $      2,910.4
  Short-term investments                                441.5          641.3
  Accounts receivable, net of allowances                438.4          577.4
  Deferred tax assets, net                              172.6          154.3
  Prepaid expenses and other current assets             140.4          156.3
                                               -------------- --------------
    Total current assets                              3,600.7        4,439.7
Property and equipment, net                             811.9          598.6
Long-term investments                                   988.1          740.7
Restricted cash and investments                         106.4           78.3
Purchased intangible assets, net                        128.9          123.1
Goodwill                                              4,057.8        3,928.1
Other long-term assets                                  138.3           75.3
                                               -------------- --------------
    Total assets                               $      9,832.1 $      9,983.8
                                               ============== ==============
                                                                            
     LIABILITIES AND STOCKHOLDERS' EQUITY                                   
Current liabilities:                                                        
  Accounts payable                             $        209.3 $        324.9
  Accrued compensation                                  279.3          223.0
  Accrued warranty                                       29.7           28.3
  Deferred revenue                                      693.5          712.6
  Income taxes payable                                    7.8           12.5
  Other accrued liabilities                             202.4          165.4
                                               -------------- --------------
    Total current liabilities                         1,422.0        1,466.7
Long-term debt                                          999.2          999.0
Long-term deferred revenue                              229.9          254.4
Long-term income tax payable                            112.4          108.5
Other long-term liabilities                              69.1           65.5
                                               -------------- --------------
Total liabilities                                     2,832.6        2,894.1
Total stockholders' equity                            6,999.5        7,089.7
                                               -------------- --------------
    Total liabilities and stockholders' equity $      9,832.1 $      9,983.8
                                               ============== ==============
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
        Preliminary Condensed Consolidated Statements of Cash Flows         
                               (in millions)                                
                                (unaudited)                                 
                                                                            
                                                   Twelve Months Ended      
                                                       December 31,         
                                               ---------------------------- 
                                                    2012           2011     
                                               -------------  ------------- 
Cash flows from operating activities:                                       
  Consolidated net income                      $       186.5  $       425.0 
  Adjustments to reconcile consolidated net                                 
   income to net cash provided by operating                                 
   activities:                                                              
    Non-cash portion of share-based                                         
     compensation                                      242.7          217.8 
    Depreciation and amortization                      187.0          169.3 
    Restructuring and other charges                     99.7           30.6 
    Deferred income taxes                              (18.2)           7.2 
    (Gain) loss on investments, net                    (26.7)           0.3 
    Excess tax benefits from share-based                                    
     compensation                                       (7.2)         (45.0)
    Other non-cash charges                               1.5            0.7 
  Changes in operating asset
s and liabilities,                              
   net of effects from acquisitions:                                        
    Accounts receivable, net                           139.1           18.6 
    Prepaid expenses and other assets                  (29.2)          28.5 
    Accounts payable                                  (121.2)          33.9 
    Accrued compensation                                54.8          (32.2)
    Income tax payable                                  (7.5)          53.2 
    Other accrued liabilities                           (5.3)          (3.4)
    Deferred revenue                                   (53.6)          82.2 
                                               -------------  ------------- 
      Net cash provided by operating                                        
       activities                                      642.4          986.7 
                                               -------------  ------------- 
Cash flows from investing activities:                                       
  Purchases of property and equipment                 (348.7)        (266.3)
  Purchases of trading investments                      (4.1)          (5.2)
  Purchases of available-for-sale investments       (1,496.5)      (2,297.3)
  Proceeds from sales of available-for-sale                                 
   investments                                         894.2        1,281.2 
  Proceeds from maturities of available-for-                                
   sale investments                                    559.7          645.4 
  Payment for business acquisition, net of                                  
   cash and cash equivalents acquired                 (139.4)         (30.7)
  Proceeds from sales of privately-held                                     
   investments                                          36.5            2.6 
  Purchases of privately-held investments              (12.2)         (35.7)
  Purchase of licensed software                        (65.3)            -- 
  Changes in restricted cash                           (20.9)          (1.2)
                                               -------------  ------------- 
      Net cash used in investing activities           (596.7)        (707.2)
                                               -------------  ------------- 
Cash flows from financing activities:                                       
  Proceeds from issuance of common stock                99.1          346.9 
  Purchases and retirement of common stock            (650.6)        (548.6)
  Payment for capital lease obligation                  (1.4)            -- 
  Issuance of long-term debt, net                         --          991.6 
  Change in customer financing arrangements             (2.6)         (15.9)
  Excess tax benefits from share-based                                      
   compensation                                          7.2           45.0 
                                               -------------  ------------- 
        Net cash (used in) provided by                                      
         financing activities                         (548.3)         819.0 
                                               -------------  ------------- 
      Net (decrease) increase in cash and cash                              
       equivalents                                    (502.6)       1,098.5 
Cash and cash equivalents at beginning of                                   
 period                                              2,910.4        1,811.9 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $     2,407.8  $     2,910.4 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
                   Cash, Cash Equivalents, and Investments                  
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------- --------------
Cash and cash equivalents                      $      2,407.8 $      2,910.4
Short-term investments                                  441.5          641.3
Long-term investments                                   988.1          740.7
                                               -------------- --------------
  Total                                        $      3,837.4 $      4,292.4
                                               ============== ==============

 
APPENDIX 
Beginning March 31, 2013, the following tables will be provided in the
Investor Relations section of Juniper Networks website at
www.juniper.net and will no longer be included in the press release.  


 
                                                                            
                           Juniper Networks, Inc.                           
                         Segment Operating Results                          
                     (in millions, except percentages)                      
                                (unaudited)                                 
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                December 31,   September 30,   December 31, 
                                     2012           2012           2011     
                                -------------  -------------  ------------- 
Platform Systems Division:                                                  
  Product revenue               $       706.1  $       681.5  $       689.0 
  Service revenue                       223.7          211.4          204.1 
                                -------------  -------------  ------------- 
    Total PSD revenue                   929.8          892.9          893.1 
                                -------------  -------------  ------------- 
    Non-GAAP PSD contribution                                               
     margin $                           397.5          356.1          371.9 
Non-GAAP PSD contribution                                                   
 margin %                                42.8%          39.9%          41.6%
Software Solutions Division:                                                
  Product revenue                       141.2          156.7          158.5 
  Service revenue                        69.8           68.7           69.2 
                                -------------  -------------  ------------- 
    Total SSD revenue                   211.0          225.4          227.7 
                                -------------  -------------  ------------- 
    Non-GAAP SSD contribution                                               
     margin $                            84.4           99.8           94.7 
    Non-GAAP SSD contribution                                               
     margin %                            40.0%          44.3%          41.6%
                                -------------  -------------  ------------- 
Total revenue                         1,140.8        1,118.3        1,120.8 
                                ----
---------  -------------  ------------- 
Non-GAAP Segment contribution                                               
 margin $                               481.9          455.9          466.6 
Non-GAAP Segment contribution                                               
 margin %                                42.2%          40.8%          41.6%
Corporate unallocated expenses          274.4          266.5          258.5 
                                -------------  -------------  ------------- 
Non-GAAP Total segment                                                      
 operating margin $                     207.5          189.4          208.1 
                                -------------  -------------  ------------- 
Non-GAAP Total segment                                                      
 operating margin %                      18.2%          16.9%          18.6%
    Share-based compensation                                                
     expense                            (57.5)         (59.1)         (52.5)
    Share-based compensation                                                
     related payroll tax                 (0.1)          (0.1)          (0.2)
    Amortization of purchased                                               
     intangible assets                   (7.2)          (9.0)          (6.9)
    Restructuring and other                                                 
     charges                            (11.1)         (83.4)         (15.0)
    Other                                  --            5.3             -- 
    Acquisition-related charges          (0.7)          (0.3)          (0.3)
                                -------------  -------------  ------------- 
GAAP Operating income           $       130.9  $        42.8  $       133.2 
                                -------------  -------------  ------------- 
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
                    Share-Based Compensation by Category                    
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Cost of revenues - Product       $      1.1 $      1.2 $      4.6 $      4.6
Cost of revenues - Service              3.8        3.6       17.0       15.7
Research and development               28.9       22.3      109.1       97.7
Sales and marketing                    17.3       17.8       81.6       70.9
General and administrative              6.4        7.6       31.1       33.3
                                 ---------- ---------- ---------- ----------
Total                            $     57.5 $     52.5 $    243.4 $    222.2
                                 ---------- ---------- ---------- ----------
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
          Share-Based Compensation Related Payroll Tax by Category          
                                (in millions)                               
                                 (unaudited)                                
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Cost of revenues - Product       $       -- $      0.1 $       -- $      0.3
Cost of revenues - Service               --         --        0.1        1.0
Research and development                0.1         --        0.4        3.4
Sales and marketing                      --        0.1        0.5        4.1
General and administrative               --         --        0.1        0.5
                                 ---------- ---------- ---------- ----------
Total                            $      0.1 $      0.2 $      1.1 $      9.3
                                 ---------- ---------- ---------- ----------
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
        Reconciliation between GAAP and non-GAAP Financial Measures         
                     (in millions, except percentages)                      
                                (unaudited)                                 
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                December 31,   September 30,  December 31,  
                                     2012           2012           2011     
                                -------------  -------------  ------------- 
GAAP Gross margin - Product     $       551.2  $       503.5  $       536.9 
GAAP Product gross margin %                                                 
 of product revenue                      65.1%          60.1%          63.4%
  Share-based compensation                                                  
   expense                    C           1.1            1.2            1.2 
  Share-based compensation                                                  
   related payroll tax        C            --             --            0.1 
  Amortization of purchased                                                 
   intangible assets          A           6.0            7.9            5.7 
  Restructuring and other                                                   
   charges                    B           0.5           52.4             -- 
  Other                       B            --           (5.3)            -- 
                                -------------  -------------  ------------- 
Non-GAAP Gross margin -                                                     
 Product                                558.8          559.7          543.9 
                                -------------  -------------  ------------- 
Non-GAAP Product gross                                                      
 margin % of product                                                        
 revenue                                 66.0%          66.8%          64.2%
                                                                            
GAAP Gross margin - Service             181.8          170.3          162.0 
GAAP Service gross margin %                                                 
 of service revenue                      62.0%          60.8%          59.3%
  Share-based compensation                                                  
   expense                    C           3.8            3.8            3.6 
  Share-based compensation            
                                      
   related payroll tax        C            --            0.1             -- 
                                -------------  -------------  ------------- 
Non-GAAP Gross margin -                                                     
 Service                                185.6          174.2          165.6 
                                -------------  -------------  ------------- 
Non-GAAP Service gross                                                      
 margin % of service                                                        
 revenue                                 63.2%          62.2%          60.6%
                                                                            
GAAP Gross margin                       733.0          673.8          698.9 
GAAP Gross margin % of                                                      
 revenue                                 64.3%          60.3%          62.4%
  Share-based compensation                                                  
   expense                    C           4.9            5.0            4.8 
  Share-based compensation                                                  
   related payroll tax        C            --            0.1            0.1 
  Amortization of purchased                                                 
   intangible assets          A           6.0            7.9            5.7 
  Restructuring and other                                                   
   charges                    B           0.5           52.4             -- 
  Other                       B            --           (5.3)            -- 
                                -------------  -------------  ------------- 
Non-GAAP Gross margin                   744.4          733.9          709.5 
                                -------------  -------------  ------------- 
Non-GAAP Gross margin % of                                                  
 revenue                                 65.3%          65.6%          63.3%
                                                                            
GAAP Research and                                                           
 development expense                    275.1          288.2          250.5 
  Share-based compensation                                                  
   expense                    C         (28.9)         (26.0)         (22.3)
  Share-based compensation                                                  
   related payroll tax        C          (0.1)          (0.1)            -- 
                                -------------  -------------  ------------- 
Non-GAAP Research and                                                       
 development expense                    246.1          262.1          228.2 
                                -------------  -------------  ------------- 
                                                                            
GAAP Sales and marketing                                                    
 expense                                263.8          261.0          253.2 
  Share-based compensation                                                  
   expense                    C         (17.3)         (21.4)         (17.8)
  Share-based compensation                                                  
   related payroll tax        C            --             --           (0.1)
                                -------------  -------------  ------------- 
Non-GAAP Sales and                                                          
 marketing expense                      246.5          239.6          235.3 
                                -------------  -------------  ------------- 
                                                                            
GAAP General and                                                            
 administrative expense                  50.7           49.4           45.5 
  Share-based compensation                                                  
   expense                    C          (6.4)          (6.7)          (7.6)
  Share-based compensation                                                  
   related payroll tax        C            --            0.1             -- 
                                -------------  -------------  ------------- 
Non-GAAP General and                                                        
 administrative expense         $        44.3  $        42.8  $        37.9 
                                -------------  -------------  ------------- 
                                                                            
                                                                            
                                                                            
                           Juniper Networks, Inc.                           
        Reconciliation between GAAP and non-GAAP Financial Measures         
                     (in millions, except percentages)                      
                                (unaudited)                                 
                                                                            
                                             Three Months Ended             
                                ------------------------------------------- 
                                December 31,   September 30,   December 31, 
                                     2012           2012           2011     
                                -------------  -------------  ------------- 
GAAP Operating expense          $       602.1  $       631.0  $       565.7 
  Share-based compensation                                                  
   expense                    C         (52.6)         (54.1)         (47.7)
  Share-based compensation                                                  
   related payroll tax        C          (0.1)            --           (0.1)
  Amortization of purchased                                                 
   intangible assets          A          (1.2)          (1.1)          (1.2)
  Restructuring and other                                                   
   charges                    B         (10.6)         (31.0)         (15.0)
  Acquisition-related                                                       
   charges                  A,B          (0.7)          (0.3)          (0.3)
                                -------------  -------------  ------------- 
Non-GAAP Operating expense              536.9          544.5          501.4 
                                -------------  -------------  ------------- 
                                                                            
GAAP Operating income                   130.9           42.8          133.2 
GAAP Operating margin                    11.5%           3.8%          11.9%
  Share-based compensation                                                  
   expense                    C          57.5           59.1           52.5 
  Share-based compensation                                                  
   related payroll tax        C           0.1            0.1            0.2 
  Amortization of purchased                                                 
   intangible assets          A           7.2            9.0            6.9 
  Restructuring and other                                                   
   charges                    B          11.1           83.4           15.0 
  Other                       B            --           (5.3)            -- 
  Acquisition-related                                                       
   charges                  A,B           0.7            0.3            0.3 
                                -------------  -------------  ------------- 
Non-GAAP Operating income               207.5          189.4          208.1 
                                -------------  -------------  ------------- 
Non-GAAP Operating margin                18.2%          16.9%          18.6%
                                        
                                    
GAAP Income Tax Provision                44.2           22.0           26.3 
GAAP Income Tax Rate                     31.6%          56.7%          21.5%
  Income tax effect of non-                                                 
   GAAP exclusions            B           8.8           39.7           20.3 
                                -------------  -------------  ------------- 
Non-GAAP Provision for                                                      
 income tax                              53.0           61.7           46.6 
                                -------------  -------------  ------------- 
Non-GAAP Income tax rate                 26.8%          34.4%          23.7%
                                                                            
GAAP Net income                                                             
 attributable to Juniper                                                    
 Networks                                95.7           16.8           96.2 
  Share-based compensation                                                  
   expense                    C          57.5           59.1           52.5 
  Share-based compensation                                                  
   related payroll tax        C           0.1            0.1            0.2 
  Amortization of purchased                                                 
   intangible assets          A           7.2            9.0            6.9 
  Restructuring and other                                                   
   charges                    B          11.1           83.4           15.0 
  Other                       B            --           (5.3)            -- 
  Acquisition-related                                                       
   charges                  A,B           0.7            0.3            0.3 
  Gain on equity                                                            
   investments                B         (18.9)          (5.8)          (0.7)
  Income tax effect of non-                                                 
   GAAP exclusions            B          (8.8)         (39.7)         (20.3)
                                -------------  -------------  ------------- 
Non-GAAP Net income             $       144.6  $       117.9  $       150.1 
                                =============  =============  ============= 
                                                                            
GAAP Diluted net income per                                                 
 share                        D $        0.19  $        0.03  $        0.18 
                                =============  =============  ============= 
Non-GAAP Diluted net income                                                 
 per share                    D $        0.28  $        0.22  $        0.28 
                                =============  =============  ============= 
                                                                            
Shares used in computing                                                    
 diluted non-GAAP net                                                       
 income per share             D         513.1          524.5          533.3 
                                =============  =============  ============= 

  
Investor Relations:
Kathleen Nemeth
Juniper Networks
(408) 936-5397
kbela@juniper.net 
Media Relations:
Cindy Ta
Juniper Networks
(408) 936-6131
cta@juniper.net