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Juniper Networks, Inc. Reports Q3'02 Financial Results

Net Revenue $152.0M; Pro forma EPS ($0.02)

Sunnyvale, CA - October 10, 2002 —Juniper Networks, Inc. (NASDAQ: JNPR), a leading provider of trusted IP infrastructures for the New Public Network, today reported its third quarter results for the period ending September 30, 2002.

Net revenues for the third quarter were $152.0 million, compared with $201.7 million for the same period last year, a decrease of 25%. Pro forma net loss was $8.4 million or $0.02 per share, compared with pro forma net income of $32.5 million or $0.10 per share for the third quarter of 2001.

Actual net loss for the third quarter, which includes amortization of purchased intangibles and deferred stock compensation, in-process research and development, restructuring and other operating costs, integration costs, gain on debt extinguishment and losses on equity investment write-downs, was $88.3 million or $0.24 per share, compared with a net loss of $29.7 million or $0.09 per share in the third quarter of 2001.

Net revenues for the first nine months of 2002 were $391.3 million, compared with $736.0 million for the same nine-month period in 2001. Pro forma net loss for the first nine months of 2002 was $7.5 million or $0.02 per share, compared with pro forma net income of $154.0 million or $0.45 per share during the same nine-month period in 2001. Actual net loss for the first nine months of 2002 was $128.1 million or $0.37 per share, compared with actual net loss of $8.3 million or $0.03 per share during the same nine-month period in 2001.

As announced on July 2, 2002, Juniper Networks completed the acquisition of Unisphere Networks, which included $375M in cash and 36.5 million shares of Juniper Networks common stock. All results for the three-month period ending September 30, 2002, reflect the completion of the Unisphere Networks acquisition.

"Given the tough market conditions and the integration of our recent acquisition, we are pleased to have met the goals we set for the company for the third quarter," said Scott Kriens, Chairman and CEO of Juniper Networks. "We continue to expand our market success with the largest and most important customers in the industry."

About Juniper Networks, Inc.

Juniper Networks leads the industry in turning network innovation into the reliable delivery of core, edge, mobile and cable Internet services at scale for the New Public Network. Headquartered in Sunnyvale, California, Juniper Networks offers additional information on its product and service offerings at www.juniper.net.

Juniper Networks is registered in the U.S. Patent and Trademark Office and in other countries as a trademark of Juniper Networks, Inc. Broadband Cable Processor, ERX, ESP, G1, G10, G-series, Internet Processor, JUNOS, JUNOScript, M5, M10, M20, M40, M40e, M160, M-series, NMC-RX, SDX, ServiceGuard, T320, T640, T-series, UMC, and Unison are trademarks of Juniper Networks, Inc. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

Actual results could differ materially from those anticipated in forward-looking statements in this release as a result of certain factors, including those set forth in the risk factors described in the Company's SEC filings, including its recent Form 10K.

 

JUNIPER NETWORKS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		September 30, 2002		December 31, 2001
Assets		(unaudited)		(1)
Current assets:
Cash and cash equivalents		$ 248,770		$ 606,845
Short-term investments		387,794		382,797
Accounts receivable, net		74,046		103,524
Prepaid expenses and other current assets		27,636		32,882
Total current assets		738,246		1,126,048
Property and equipment, net		271,493		251,811
Long-term investments		520,169		708,232
Other long-term assets		1,090,682		303,497
Total Assets		$ 2,620,590		$ 2,389,588
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 58,066	$ 76,417
Other accrued liabilities	161,827	128,960
Deferred revenue	44,979	36,842
Total current liabilities	264,872	242,219
Convertible subordinated notes and other long-term liabilities	942,114	1,150,000
Common stock and additional paid-in capital	1,467,505	959,684
Deferred stock compensation	(22,737)	(63,065)
Accumulated other comprehensive income	14,606	18,418
Retained earnings/(accumulated deficit)	(45,770)	82,332
Total Liabilities and Stockholders' Equity	$ 2,620,590	$ 2,389,588
(1) Derived from audited financial statements

JUNIPER NETWORKS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (i) (In thousands, except per share amounts)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2002		2001		2002		2001
		(unaudited)				(unaudited)
Revenues:
Product Revenues	$ 130,264		186,126	$ 333,822		697,842
Service Revenues	21,762		15,577	57,459		38,147
Net revenues	152,026		201,703	391,281		735,989
Cost of revenues	68,865	79,899	167,016	274,120
Gross profit	83,161	121,804	224,265	461,869
Operating expenses:
Research and development	48,771	37,897	117,610	122,965
Sales and marketing	37,749	33,591	91,221	110,876
General and administrative	9,108	9,185	27,761	29,092
Total operating expenses	95,628	80,673	236,592	262,933
Operating income/(loss)	(12,467)	41,131	(12,327)	198,936
Interest income, net	356	8,188	2,593	30,096
Equity in joint venture	(180)	(1,476)	(1,316)	(2,561)
Income/(loss) before income taxes	(12,291)	47,843	(11,050)	226,471
Provision/(benefit) for income taxes	(3,933)	15,310	(3,536)	72,471
Net income/(loss)	$ (8,358)	$ 32,533	$ (7,514)	$ 154,000
Basic net income/(loss) per share	$ (0.02)	$ 0.10	$ (0.02)	$ 0.48
Shares used in computing basic net income/(loss) per share	369,944	320,178	343,423	317,981
Diluted net income/(loss) per share	$ (0.02)	$ 0.10	$ (0.02)	$ 0.45
Shares used in computing diluted net income/(loss) per share	369,944	337,106	343,423	341,411
(i) The pro forma statements exclude the impact of the contract manufacturer charge, amortization of purchased intangibles, deferred stock compensation, restructuring and other operating costs, in-process research and development, integration costs, gains from debt extinguishment and minority investment write-downs charges in all applicable periods.

JUNIPER NETWORKS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2002		2001		2002		2001
		(unaudited)				(unaudited)
Revenues:
Product Revenues	$ 130,264		186,126	$ 333,822		697,842
Service Revenues	21,762		15,577	57,459		38,147
Net revenues	152,026		201,703	391,281		735,989
Cost of revenues	68,865	119,767	167,016	274,120
Gross profit	83,161	81,936	224,265	422,001
Operating expenses:
Research and development	48,771	37,897	117,610	122,965
Sales and marketing	37,749	33,591	91,221	110,876
General and administrative	9,108	9,185	27,761	29,092
Amortization of goodwill, intangibles and deferred stock compensation	8,727	27,966	17,640	95,666
Restructuring and other operating costs	22,830	-	22,830	12,340
In-process research and development	83,479	-	83,479	-
Integration costs	2,507	-	2,507	-
Total operating expenses	213,171	108,639	363,048	370,939
Operating income/(loss)	(130,010)	(26,703)	(138,783)	51,062
Interest income, net	356	8,188	2,593	30,096
Gain from Debt extinguishment	62,855	-	62,855	-
Losses on equity investments	(19,851)	(11,000)	(50,451)	(53,620)
Equity in joint venture	(180)	(1,476)	(1,316)	(2,561)
Income/(loss) before income taxes	(86,830)	(30,991)	(125,102)	24,977
Provision/(benefit) for income taxes	1,500	(1,265)	3,000	33,268
Net loss	$ (88,330)	$ (29,726)	$ (128,102)	$ (8,291)
Basic and diluted net loss per share	$ (0.24)	$ (0.09)	$ (0.37)	$ (0.03)
Shares used in computing basic and diluted net loss per share	369,944	320,178	343,423	317,981

JUNIPER NETWORKS, INC. RECONCILIATION OF PRO FORMA TO GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2002		2001		2002		2001
		(unaudited)				(unaudited)
Pro forma net income (loss)	$ (8,358)		$ 32,533	$ (7,514)		$ 154,000
Adjustments to reconcile to GAAP net loss:
Contract manufacturing charge	-		(39,868)	-		(39,868)
Amortization of goodwill, intangibles and deferred stock compensation	(8,272)		(27,966)	(17,640)		(95,666)
Restructuring and other operating costs	(22,830)		-	(22,830)		(12,340)
In-process research and development	(83,479)		-	(83,479)		-
Integration costs	(2,507)		-	(2,507)		-
Gain from debt extinguishment	62,855		-	62,855		-
Loss on equity investments	(19,851)		(11,000)	(50,451)		(53,620)
Income tax effect	(5,433)		16,575	(6,536)		39,203
GAAP net loss	(88,330)		(29,726)	(128,102)		(8,291)