Company delivers good revenue growth and strong year-over-year
earnings expansion
SUNNYVALE, Calif.--(BUSINESS WIRE)--
Juniper Networks (NYSE:JNPR), the industry leader in network innovation,
today reported preliminary financial results for the three months ended
Sept. 30, 2015 and provided its outlook for the three months ending Dec.
31, 2015.
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Net revenues for the third quarter of 2015 were $1,248.6 million, an
increase of 11% year-over-year and 2% sequentially.
Juniper’s operating margin for the third quarter of 2015 increased to
20.7% on a GAAP basis, a year-over-year increase of 5.4 points and an
increase of 0.8 points sequentially. Non-GAAP operating margin for the
third quarter of 2015 increased to 25.5%, an increase of 4.0 points
year-over-year and 0.3 points sequentially.
In the third quarter of 2015, Juniper posted GAAP net income of $197.7
million, an increase of 91% year-over-year and 25% sequentially. GAAP
net income per diluted share was $0.51, inclusive of a $0.06 benefit
from a lower tax rate primarily due to changes in the year-to-date
geographic mix of earnings and a nonrecurring tax benefit relating to a
change in the tax treatment of stock-based compensation and R&D cost
sharing arrangements due to a July 2015 Federal Tax Court decision in
the case known as Altera Corp. et al. v. Commissioner.
Non-GAAP net income was $221.7 million, an increase of 34%
year-over-year and 6% sequentially. Non-GAAP net income for the third
quarter of 2015 was $0.57 per diluted share, an increase of $0.21
year-over-year primarily due to the positive impact from higher revenue,
reduced share count, and lower operating expenses. The sequential
increase of $0.04 was primarily due to higher revenue and an approximate
$0.02 impact from the lower tax rate.
The reconciliation between GAAP and non-GAAP results of operations is
provided in a table immediately following the Preliminary Net Revenues
by Market table below.
“We delivered another solid quarter of growth, demonstrating our
continued momentum across the business and ability to execute our clear
and deliberate strategy,” said Rami Rahim, chief executive officer of
Juniper Networks. “We continue to challenge the status quo and bring new
product innovations to market that bolster our position as a leader in
network innovation. I'm proud of the results our team has yielded and
have confidence in our prospects for the future.”
“We once again delivered good revenue and earnings for the quarter, a
testament to our focus on our financial performance across key business
metrics,” said Robyn Denholm, chief financial and operations officer of
Juniper Networks. “We delivered significant year-over-year earnings
expansion, maintained our focus on cost control, meaningfully improved
our operating margin and continued to return capital to shareholders.
I'm pleased with the significant progress our team has made and continue
to see growing, evolving and diversifying demand for the solutions we
provide.”
Other Financial Highlights
Total cash, cash equivalents, and investments as of Sept. 30, 2015 were
$3,247 million, compared to $3,076 million as of June 30, 2015, and
$3,321 million as of Sept. 30, 2014.
Juniper’s net cash flow provided by operations for the third quarter of
2015 was $293 million, compared to net cash provided by operations of
$263 million in the second quarter of 2015, and $(70) million in the
third quarter of 2014.
Days sales outstanding in accounts receivable, or “DSO,” was 42 in the
third quarter of 2015, compared to 39 days in the prior quarter, and 49
days in the third quarter of 2014.
Capital expenditures were $71 million and depreciation and amortization
of intangible assets expense was $41 million during the third quarter of
2015. Capital expenditures for the quarter increased as we focus on
investments to drive long-term productivity and support continued
innovation and development of new products.
Juniper’s Board of Directors has declared a quarterly cash dividend of
$0.10 per share to be paid on Dec. 22, 2015 to shareholders of record as
of the close of business on Dec. 1, 2015.
During the third quarter of 2015, the Company repurchased $50 million of
common stock and paid $39 million in dividends. Since the first quarter
of 2014, the Company has returned approximately $3.5 billion of capital
to shareholders against its commitment to return a total of $4.1 billion
by the end of 2016.
Outlook
The Company expects the demand environment across multiple verticals to
remain healthy and anticipates the diversification of its revenue to
continue.
Juniper Networks estimates that for the quarter ending Dec. 31, 2015:
-
Revenues will be approximately $1,290 million, plus or minus $20
million.
-
Non-GAAP gross margin will be approximately 64%, plus or minus 0.5%.
-
Non-GAAP operating expenses will be $500 million, plus or minus $5
million. The increase in expenses is primarily due to variable costs
given higher revenue and for certain strategic go-to-market
investments.
-
Non-GAAP operating margin will be roughly 25% at the midpoint of
revenue guidance.
-
Non-GAAP net income per share will range between $0.57 and $0.60 on a
diluted basis. This assumes a flat share count from the third quarter
and a non-GAAP tax rate of approximately 25.5% for the fourth quarter,
and assumes no renewal of the R&D tax credit for 2015.
All forward-looking non-GAAP measures exclude estimates for amortization
of intangible assets, share-based compensation expenses,
acquisition-related charges, restructuring and other (benefits) charges,
impairment charges, professional services related to non-routine
stockholder matters, litigation settlement and resolution charges,
professional fees and other income and expenses associated with the sale
of Junos Pulse, gain or loss on equity investments, retroactive impact
of certain tax settlements, 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.
Third Quarter Financial Commentary Available Online
A commentary by Robyn Denholm, chief financial and operations officer,
reviewing the Company’s third quarter 2015 financial results and fourth
quarter 2015 financial outlook will be furnished to the SEC on Form 8-K
and published on the Company’s website at http://investor.juniper.net.
Analysts and investors are encouraged to review this commentary prior to
participating in the conference call webcast.
Conference Call Webcast
Juniper Networks will host a conference call webcast today, Oct. 22,
2015, at 2:00 pm PT, to be broadcast live over the Internet at http://investor.juniper.net.
To participate via telephone in the US, the toll free dial-in number is
1-877-407-8033. Outside the US, dial +1-201-689-8033. Please call 10
minutes prior to the scheduled conference call time. The webcast replay
will be archived on the Juniper Networks website.
About Juniper Networks
Juniper Networks (NYSE: JNPR) delivers innovation across routing,
switching and security. Juniper Networks’ innovations in software,
silicon and systems 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.
Investors and others should note that the Company announces material
financial and operational information to its investors using its
Investor Relations website, press releases, SEC filings and public
conference calls and webcasts. The Company also intends to use the
Twitter accounts @JuniperNetworks and @Juniper_IR and the Company’s
blogs as a means of disclosing information about the Company and for
complying with its disclosure obligations under Regulation FD. The
social media channels that the Company intends to use as a means of
disclosing information described above may be updated from time to time
as listed on the Company’s Investor Relations website.
Juniper Networks and Junos, are registered trademarks of Juniper
Networks, Inc. in the United States and other countries. The Juniper
Networks logo and the Junos logo are trademarks of Juniper Networks,
Inc. All other trademarks, service marks, registered trademarks, or
registered service marks are the property of their respective owners.
Safe Harbor
Statements in this release concerning Juniper Networks’ business
outlook, economic and market outlook, future financial and operating
results, ability to deliver revenue and earnings growth, ability to
execute its strategy, innovation pipeline, capital return program, 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 several 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; availability of
key product components; 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 settlements and resolutions; the potential impact of
activities related to the execution of capital return and product
rationalization; 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 our Investor Relations website at http://investor.juniper.net.
Juniper Networks, Inc.
|
Preliminary Condensed Consolidated Statements of Operations
|
(in millions, except per share amounts)
|
(unaudited)
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net revenues:
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
925.4
|
|
|
$
|
809.5
|
|
|
$
|
2,589.2
|
|
|
$
|
2,614.7
|
Service
|
|
323.2
|
|
|
316.4
|
|
|
949.0
|
|
|
910.8
|
Total net revenues
|
|
1,248.6
|
|
|
1,125.9
|
|
|
3,538.2
|
|
|
3,525.5
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
Product
|
|
322.6
|
|
|
290.0
|
|
|
923.1
|
|
|
975.9
|
Service
|
|
128.6
|
|
|
121.1
|
|
|
378.9
|
|
|
366.5
|
Total cost of revenues
|
|
451.2
|
|
|
411.1
|
|
|
1,302.0
|
|
|
1,342.4
|
Gross margin
|
|
797.4
|
|
|
714.8
|
|
|
2,236.2
|
|
|
2,183.1
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
247.0
|
|
|
253.2
|
|
|
747.3
|
|
|
772.7
|
Sales and marketing
|
|
235.3
|
|
|
249.2
|
|
|
687.9
|
|
|
780.6
|
General and administrative
|
|
57.1
|
|
|
55.0
|
|
|
168.6
|
|
|
190.5
|
Restructuring and other (benefits) charges
|
|
—
|
|
|
(15.0
|
)
|
|
(0.5
|
)
|
|
157.2
|
Total operating expenses
|
|
539.4
|
|
|
542.4
|
|
|
1,603.3
|
|
|
1,901.0
|
Operating income
|
|
258.0
|
|
|
172.4
|
|
|
632.9
|
|
|
282.1
|
Other (expense) income, net
|
|
(8.4
|
)
|
|
(6.8
|
)
|
|
(41.3
|
)
|
|
326.0
|
Income before income taxes
|
|
249.6
|
|
|
165.6
|
|
|
591.6
|
|
|
608.1
|
Income tax provision
|
|
51.9
|
|
|
62.0
|
|
|
155.7
|
|
|
172.8
|
Net income
|
|
$
|
197.7
|
|
|
$
|
103.6
|
|
|
$
|
435.9
|
|
|
$
|
435.3
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.52
|
|
|
$
|
0.23
|
|
|
$
|
1.11
|
|
|
$
|
0.93
|
Diluted
|
|
$
|
0.51
|
|
|
$
|
0.23
|
|
|
$
|
1.09
|
|
|
$
|
0.91
|
Shares used in computing net income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
382.8
|
|
|
448.4
|
|
|
393.2
|
|
|
468.1
|
Diluted
|
|
389.2
|
|
|
454.8
|
|
|
401.2
|
|
|
477.0
|
Cash dividends declared per common stock
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
|
$
|
0.30
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc.
|
Preliminary Net Revenues by Product and Service
|
(in millions)
|
(unaudited)
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Routing
|
|
$
|
604.4
|
|
|
$
|
533.2
|
|
|
$
|
1,711.6
|
|
|
$
|
1,700.8
|
Switching
|
|
201.4
|
|
|
155.0
|
|
|
558.1
|
|
|
546.8
|
Security
|
|
119.6
|
|
|
121.3
|
|
|
319.5
|
|
|
367.1
|
Total product
|
|
925.4
|
|
|
809.5
|
|
|
2,589.2
|
|
|
2,614.7
|
|
|
|
|
|
|
|
|
|
Total service
|
|
323.2
|
|
|
316.4
|
|
|
949.0
|
|
|
910.8
|
Total
|
|
$
|
1,248.6
|
|
|
$
|
1,125.9
|
|
|
$
|
3,538.2
|
|
|
$
|
3,525.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc.
|
Preliminary Net Revenues by Geographic Region
|
(in millions)
|
(unaudited)
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Americas
|
|
$
|
712.8
|
|
|
$
|
678.3
|
|
|
$
|
2,037.6
|
|
|
$
|
2,070.8
|
Europe, Middle East, and Africa
|
|
355.0
|
|
|
290.5
|
|
|
975.1
|
|
|
911.0
|
Asia Pacific
|
|
180.8
|
|
|
157.1
|
|
|
525.5
|
|
|
543.7
|
Total
|
|
$
|
1,248.6
|
|
|
$
|
1,125.9
|
|
|
$
|
3,538.2
|
|
|
$
|
3,525.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc.
|
Preliminary Net Revenues by Market
|
(in millions)
|
(unaudited)
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Service Provider
|
|
$
|
804.3
|
|
|
$
|
741.5
|
|
|
$
|
2,356.6
|
|
|
$
|
2,356.0
|
Enterprise
|
|
444.3
|
|
|
384.4
|
|
|
1,181.6
|
|
|
1,169.5
|
Total
|
|
$
|
1,248.6
|
|
|
$
|
1,125.9
|
|
|
$
|
3,538.2
|
|
|
$
|
3,525.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc.
|
Reconciliation between GAAP and non-GAAP Financial Measures
|
(in millions, except percentages and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
|
|
|
2015
|
|
2015
|
|
2014
|
GAAP operating income
|
|
|
|
$
|
258.0
|
|
|
$
|
243.1
|
|
|
$
|
172.4
|
|
GAAP operating margin
|
|
|
|
20.7
|
%
|
|
19.9
|
%
|
|
15.3
|
%
|
Share-based compensation expense
|
|
C
|
|
56.5
|
|
|
58.9
|
|
|
65.3
|
|
Share-based payroll tax expense
|
|
C
|
|
0.7
|
|
|
2.0
|
|
|
2.3
|
|
Amortization of purchased intangible assets
|
|
A
|
|
5.6
|
|
|
5.6
|
|
|
8.5
|
|
Restructuring and other benefits
|
|
B
|
|
(3.5
|
)
|
|
(1.9
|
)
|
|
(15.0
|
)
|
Memory-related, supplier component remediation charge
|
|
B
|
|
—
|
|
|
—
|
|
|
7.0
|
|
Divestiture-related charges
|
|
B
|
|
—
|
|
|
—
|
|
|
1.0
|
|
Other
|
|
B
|
|
0.5
|
|
|
0.5
|
|
|
—
|
|
Non-GAAP operating income
|
|
|
|
$
|
317.8
|
|
|
$
|
308.2
|
|
|
$
|
241.5
|
|
Non-GAAP operating margin
|
|
|
|
25.5
|
%
|
|
25.2
|
%
|
|
21.5
|
%
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
|
|
$
|
197.7
|
|
|
$
|
158.0
|
|
|
$
|
103.6
|
|
Share-based compensation expense
|
|
C
|
|
56.5
|
|
|
58.9
|
|
|
65.3
|
|
Share-based payroll tax expense
|
|
C
|
|
0.7
|
|
|
2.0
|
|
|
2.3
|
|
Amortization of purchased intangible assets
|
|
A
|
|
5.6
|
|
|
5.6
|
|
|
8.5
|
|
Restructuring and other benefits
|
|
B
|
|
(3.5
|
)
|
|
(1.9
|
)
|
|
(15.0
|
)
|
Memory-related, supplier component remediation charge
|
|
B
|
|
—
|
|
|
—
|
|
|
7.0
|
|
Divestiture-related charges
|
|
B
|
|
—
|
|
|
—
|
|
|
1.0
|
|
(Gain) loss on equity investments
|
|
B
|
|
(7.3
|
)
|
|
—
|
|
|
1.6
|
|
Gain on legal/contract settlement, net
|
|
B
|
|
(4.0
|
)
|
|
—
|
|
|
(10.8
|
)
|
Income tax effect of non-GAAP exclusions
|
|
B
|
|
(22.4
|
)
|
|
(10.8
|
)
|
|
0.8
|
|
Other
|
|
B
|
|
(1.6
|
)
|
|
(3.0
|
)
|
|
1.1
|
|
Non-GAAP net income
|
|
|
|
$
|
221.7
|
|
|
$
|
208.8
|
|
|
$
|
165.4
|
|
GAAP diluted net income per share
|
|
|
|
$
|
0.51
|
|
|
$
|
0.40
|
|
|
$
|
0.23
|
|
Non-GAAP diluted net income per share
|
|
D
|
|
$
|
0.57
|
|
|
$
|
0.53
|
|
|
$
|
0.36
|
|
Shares used in computing diluted net income per share
|
|
|
|
389.2
|
|
|
397.2
|
|
|
454.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discussion of Non-GAAP Financial Measures
This press release, including the tables above, includes the following
non-GAAP financial measures derived from our Preliminary Condensed
Consolidated Statements of Operations: operating income; operating
margin; net income; and diluted 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 under compensation programs. We
consider the use of the non-GAAP measures presented above to be helpful
in assessing the performance of the continuing operation of our
business. By continuing operations we mean the ongoing revenue and
expenses of the business, excluding certain items that render
comparisons with prior periods or analysis of on-going operating trends
more difficult, such as expenses not directly related to the actual cash
costs of development, sale, delivery or support of our products and
services, or expenses that are reflected in periods unrelated to when
the actual amounts were incurred or paid. Consistent with this approach,
we believe that disclosing non-GAAP financial measures to the readers of
our financial statements provides such readers with useful supplemental
data that, while not a substitute for financial measures prepared in
accordance with GAAP, allows for greater transparency in the review of
our financial and operational performance. In addition, we have
historically reported non-GAAP results to the investment community and
believe that continuing to provide non-GAAP measures provides investors
with a tool for comparing results over time. In assessing the overall
health of our business for the periods covered by the table above and,
in particular, in evaluating the financial line items presented in the
table above, we have excluded items in the following three general
categories, each of which are described below: Acquisition-Related
Charges, Other Items, and Share-Based Compensation Related Items. We
also provide additional detail below regarding the shares used to
calculate our non-GAAP net income per share. Notes identified for line
items in the table above correspond to the appropriate note description
below. 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 and other (benefits) charges,
impairment charges, professional services related to non-routine
stockholder matters, litigation settlement and resolution charges,
professional fees and other income and expenses associated with the sale
of Junos Pulse, gain or loss on equity investments, retroactive impact
of certain tax settlements, non-recurring income tax adjustments,
valuation allowance on deferred tax assets, and the income tax effect of
non-GAAP exclusions.
Note A: Acquisition-Related Charges. We
exclude certain expense items resulting from acquisitions
including amortization of purchased intangible assets associated with
our acquisitions. 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. 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 other
(benefits) charges; (ii) impairment charges; (iii) professional fees and
other income and expenses associated with the sale of Junos Pulse; (iv)
gain or loss on equity investments; (v) gain or loss on legal
settlement, net of related transaction costs; (vi) gain or loss on
contract settlement; (vii) memory-related, supplier component
remediation charge; (viii) valuation allowance on deferred tax assets;
(ix) significant effects of tax legislation and judicial or
administrative interpretation of tax regulations; and (x) 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 and contract 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 gains or losses do not accurately reflect the underlying
performance of our continuing business operations for the period in
which they are incurred. Similarly, the significant effects of tax
legislation are unique events that occur in periods that are generally
unrelated to the level of business activity to which such legislation
applies. 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 with these amounts both 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 stock is unrelated to the
amount of compensation ultimately received by the employee; and the cost
to the company is based on a share-based compensation valuation
methodology and underlying assumptions that may vary over time and that
does not reflect any cash expenditure by the company because no cash is
expended. Furthermore, the expense associated with granting an employee
an option is spread over multiple years unlike other compensation
expenses which are more proximate to the time of award or payment. For
example, we may be recognizing expense in a year where the stock option
is significantly underwater and is not going to be exercised or generate
any compensation for the employee. The expense associated with an award
of an option for 1,000 shares of stock by us in one quarter may have a
very different expense than an award of an identical number of shares in
a different quarter. Finally, the expense recognized by us for such an
option may be very different than the expense to other companies for
awarding a comparable option, which makes it difficult to assess our
operating performance relative to our competitors. Similar to
share-based compensation, payroll tax on stock option exercises is
dependent on our stock price and the timing and exercise by employees of
our share-based compensation, over which our management has little
control, and as such does not correlate to the operation of our
business. Because of these unique characteristics of share-based
compensation and the related payroll tax, management excludes these
expenses when analyzing the 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 diluted non-GAAP net income per share. The diluted non-GAAP
income per share includes 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)
|
(unaudited)
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2015
|
|
2014(*)
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,453.5
|
|
|
$
|
1,639.6
|
Short-term investments
|
|
529.9
|
|
|
332.2
|
Accounts receivable, net of allowances
|
|
577.5
|
|
|
598.9
|
Deferred tax assets, net
|
|
198.4
|
|
|
147.0
|
Prepaid expenses and other current assets
|
|
138.8
|
|
|
239.9
|
Total current assets
|
|
2,898.1
|
|
|
2,957.6
|
Property and equipment, net
|
|
959.9
|
|
|
904.3
|
Long-term investments
|
|
1,263.6
|
|
|
1,133.1
|
Restricted cash and investments
|
|
33.9
|
|
|
46.0
|
Purchased intangible assets, net
|
|
39.2
|
|
|
62.4
|
Goodwill
|
|
2,981.3
|
|
|
2,981.5
|
Other long-term assets
|
|
329.9
|
|
|
303.9
|
Total assets
|
|
$
|
8,505.9
|
|
|
$
|
8,388.8
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Short-term debt
|
|
$
|
299.9
|
|
|
$
|
—
|
Accounts payable
|
|
209.1
|
|
|
234.6
|
Accrued compensation
|
|
193.7
|
|
|
225.0
|
Deferred revenue
|
|
814.4
|
|
|
780.8
|
Other accrued liabilities
|
|
217.8
|
|
|
273.0
|
Total current liabilities
|
|
1,734.9
|
|
|
1,513.4
|
Long-term debt
|
|
1,648.7
|
|
|
1,349.0
|
Long-term deferred revenue
|
|
310.5
|
|
|
294.9
|
Long-term income taxes payable
|
|
185.0
|
|
|
177.5
|
Other long-term liabilities
|
|
198.7
|
|
|
134.9
|
Total liabilities
|
|
4,077.8
|
|
|
3,469.7
|
Total stockholders' equity
|
|
4,428.1
|
|
|
4,919.1
|
Total liabilities and stockholders' equity
|
|
$
|
8,505.9
|
|
|
$
|
8,388.8
|
* Certain amounts in the prior year Condensed Consolidated Financial
Statements contained in this press release have been reclassified to
conform to the current year presentation.
Juniper Networks, Inc.
|
Preliminary Condensed Consolidated Statements of Cash Flows
|
(in millions)
|
(unaudited)
|
|
|
|
Nine Months Ended September 30,
|
|
|
2015
|
|
2014(*)
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
435.9
|
|
|
$
|
435.3
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Share-based compensation expense
|
|
161.3
|
|
|
185.4
|
|
Depreciation, amortization, and accretion
|
|
131.5
|
|
|
141.9
|
|
Restructuring and other (benefits) charges
|
|
(4.0
|
)
|
|
179.4
|
|
Deferred income taxes
|
|
10.0
|
|
|
(85.4
|
)
|
Gain on investments, net
|
|
(6.8
|
)
|
|
(165.1
|
)
|
Gain on legal settlement, net
|
|
—
|
|
|
(121.1
|
)
|
Excess tax benefits from share-based compensation
|
|
(7.4
|
)
|
|
(8.8
|
)
|
Loss on disposal of fixed assets
|
|
0.4
|
|
|
1.9
|
|
Changes in operating assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts receivable, net
|
|
(15.7
|
)
|
|
(33.2
|
)
|
Prepaid expenses and other assets
|
|
8.8
|
|
|
(19.9
|
)
|
Accounts payable
|
|
(21.8
|
)
|
|
49.9
|
|
Accrued compensation
|
|
(29.0
|
)
|
|
(78.3
|
)
|
Income taxes payable
|
|
108.2
|
|
|
86.1
|
|
Other accrued liabilities
|
|
(45.0
|
)
|
|
(130.5
|
)
|
Deferred revenue
|
|
49.1
|
|
|
40.9
|
|
Net cash provided by operating activities
|
|
775.5
|
|
|
478.5
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
(154.9
|
)
|
|
(141.0
|
)
|
Purchases of available-for-sale investments
|
|
(1,147.6
|
)
|
|
(1,970.5
|
)
|
Proceeds from sales of available-for-sale investments
|
|
625.9
|
|
|
1,918.7
|
|
Proceeds from maturities of available-for-sale investments
|
|
197.4
|
|
|
339.0
|
|
Purchases of trading investments
|
|
(3.8
|
)
|
|
(3.5
|
)
|
Proceeds from sales of privately-held investments
|
|
10.3
|
|
|
2.5
|
|
Purchases of privately-held investments
|
|
(5.4
|
)
|
|
(12.3
|
)
|
Payments for business acquisitions, net of cash and cash equivalents
acquired
|
|
(3.5
|
)
|
|
(27.1
|
)
|
Changes in restricted cash
|
|
11.6
|
|
|
45.0
|
|
Net cash (used in) provided by investing activities
|
|
(470.0
|
)
|
|
150.8
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of common stock
|
|
97.0
|
|
|
157.6
|
|
Purchases and retirement of common stock
|
|
(1,057.6
|
)
|
|
(1,761.0
|
)
|
Issuance of long-term debt, net
|
|
594.6
|
|
|
346.5
|
|
Payment for capital lease obligation
|
|
0.4
|
|
|
(0.4
|
)
|
Customer financing arrangements
|
|
—
|
|
|
0.8
|
|
Excess tax benefits from share-based compensation
|
|
7.4
|
|
|
8.8
|
|
Payment of cash dividends
|
|
(118.0
|
)
|
|
(43.8
|
)
|
Net cash used in financing activities
|
|
(476.2
|
)
|
|
(1,291.5
|
)
|
Effect of foreign currency exchange rates on cash and cash
equivalents
|
|
(15.4
|
)
|
|
(5.9
|
)
|
Net decrease in cash and cash equivalents
|
|
(186.1
|
)
|
|
(668.1
|
)
|
Cash and cash equivalents at beginning of period
|
|
1,639.6
|
|
|
2,284.0
|
|
Cash and cash equivalents at end of period
|
|
$
|
1,453.5
|
|
|
$
|
1,615.9
|
|
* Certain amounts in the prior year Condensed Consolidated Financial
Statements contained in this press release have been reclassified to
conform to the current year presentation.
Juniper Networks, Inc.
|
Cash, Cash Equivalents, and Investments
|
(in millions)
|
(unaudited)
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2015
|
|
2014
|
Cash and cash equivalents
|
|
$
|
1,453.5
|
|
|
$
|
1,639.6
|
Short-term investments
|
|
529.9
|
|
|
332.2
|
Long-term investments
|
|
1,263.6
|
|
|
1,133.1
|
Total
|
|
$
|
3,247.0
|
|
|
$
|
3,104.9
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151022006378/en/
Source: Juniper Networks