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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)