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Juniper Networks, Inc. Reports Q2'03 Financial Results

Net Revenue $165.1M; GAAP EPS $0.03; Non-GAAP EPS $0.03

Sunnyvale, CA - July 10, 2003 - Juniper Networks, Inc. (NASDAQ: JNPR) today reported its second quarter results for the period ending June 30, 2003.

Net revenues for the second quarter were $165.1 million, compared with $117.0 million for the same period last year, an increase of 41 percent.

GAAP net income for the second quarter was $13.6 million or $0.03 per share, compared with a GAAP net income of $6.2 million or $0.02 per share in the second quarter of 2002. Non-GAAP net income, which excludes an adjustment to the purchase price of an acquisition, the amortization of purchased intangibles and deferred compensation, the gain on the sale of investments and the gain on the partial retirement of the convertible subordinated notes was $10.3 million or $0.03 per share, compared with non-GAAP net income of $0.4 million or $0.00 per share in the second quarter of 2002.

Net revenues for the six months ended June 30, 2003 were $322.3 million, compared with $239.3 million for the same period last year, an increase of 35 percent.

GAAP net income for the six months ended June 30, 2003 was $17.3 million or $0.04 per share, compared with a GAAP net loss of $39.8 million or $0.12 per share for the same period last year. Non-GAAP net income, which excludes an adjustment to the purchase price of an acquisition, the amortization of purchased intangibles and deferred compensation, the gain on the sale of investments, the write-down of investments and the gain on the partial retirement of the convertible subordinated notes was $16.6 million or $0.04 per share, compared with non-GAAP net income of $0.8 million or $0.00 per share for the same period last year.

Cash provided by operations was $60.3 million for the second quarter, which brings cash provided by operations for the six months ended June 30, 2003 to $72.7 million, compared to cash provided by operations of $39.9 million for the six months ended June 30, 2002.

"The second quarter was strong," said Scott Kriens, chairman and CEO of Juniper Networks. "We continue to be encouraged by both the broadband momentum around the world as well as the sound financial footing of Juniper Networks in the marketplace."

Juniper Networks will host a conference call web cast today, July 10, 2003 at 1:45 p.m. PT/4:45 p.m. ET at:https://www.juniper.net/company/investor/conferencecall.html. In addition, there will be an audio replay available through August 10, 2003 at https://www.juniper.net/company/investor/conferencecall.html or you can call the replay at 800-633-8284 (or 402-977-9140) and enter the reservation number, 21154140, through July 17, 2003. The replays will be available 24 hours/day, including weekends.

About Juniper Networks, Inc.

Juniper Networks transforms the business of networking by converting a commodity - bandwidth - into a dependable, secure, and highly valuable corporate asset. Founded in 1996 to meet the stringent demands of service providers, Juniper Networks is now relied upon by the world's leading network operators, government agencies, research and education institutions, and information-intensive enterprises as the foundation for uncompromising networks. Juniper Networks is headquartered in Sunnyvale, California. Additional information can be found 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 most recent Form 10K.

JUNIPER NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)
    June 30, 2003   December 31, 2002
     
ASSETS (unaudited) (A)
Current assets:    
  Cash and cash equivalents
$ 516,493
$ 194,435
  Short-term investments 315,870 384,036
  Accounts receivable, net 73,767 78,501
  Prepaid expenses and other current assets 25,681 23,957
     
    Total current assets 931,811 680,929
Property and equipment, net 252,666 266,962
Long-term investments 698,618 583,664
Goodwill 983,397 987,661
Purchased intangible assets, net and other long-term assets 113,808 95,453
     
   Total Assets
$ 2,980,300
$ 2,614,669
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
  Accounts payable
$ 58,109
$ 51,747
  Accrued warranty 31,727 32,358
  Other accrued liabilities 113,386 111,773
  Deferred revenue 55,319 46,146
     
    Total current liabilities 258,541 242,024
Convertible subordinated notes 839,994 942,114
Convertible senior notes 400,000
 
Commitments and contingencies
 
Stockholders’ equity:
  Common stock and additional paid-in capital 1,495,981 1,461,910
  Deferred stock compensation (5,357) (11,113)
  Accumulated other comprehensive income 11,198 17,052
  Accumulated deficit (20,057) (37,318)
     
    Total stockholders’ equity 1,481,765 1,430,531
     
    Total Liabilities and Stockholders' Equity
$ 2,980,300
$ 2,614,669
     
 
(A) The balance sheet at December 31, 2002 has been derived from the audited consolidated financial statements at that date.


Juniper Networks, Inc.
Condensed Consolidated Statement of Operations

(in thousands, except per share amounts)
(unaudited)

    Three Months Ended
June 30,
  Six Months Ended
June 30,
     
  2003   2002 2003   2002
     
Net revenues:  
   Product
$ 141,067
 
$ 99,012
$ 276,241
 
$ 203,558
   Service 24,036 18,024 46,069 35,697
     
Total net revenues 165,103 117,036 322,310 239,255
 
Cost of revenues:        
   Product 48,803 36,153 97,174 75,864
   Service 13,627 12,002 26,607 22,287
     
      Total cost of revenues 62,430 48,155 123,781 98,151
     
Gross profit 102,673 68,881 198,529 141,104
 
Operating expenses:  
   Research and development 43,007 33,770 86,477 68,839
   Sales and marketing 33,710 25,894 66,694 53,472
   General and administrative 7,296 9,104 14,768 18,653
   Amortization of purchased intangible assets and deferred stock compensation (1) 7,803 (6,362) 15,325 8,913
     
     Total operating expenses 91,816 62,406 183,264 149,877
     
Operating income (loss) 10,857 6,475 15,265 (8,773)
Interest and other income 10,017 15,380 19,269 32,132
Interest and other expense (12,354) (14,763) (24,303) (29,895)
Gain on sale of investments 4,387 8,739
Write-down of investments (30,600)
Gain on retirement of convertible subordinated notes 4,888 4,888
Equity in net loss of joint venture (111) (1,136)
     
Income (loss) before income taxes 17,795 6,981 23,858 (38,272)
Provision for income taxes 4,217 750 6,597 1,500
     
 
Net income (loss)
$ 13,578
$ 6,231
$ 17,261
$ (39,772)
     
Net income (loss) per share:
Basic
$ 0.04
$ 0.02
$ 0.05
$ (0.12)
     
Diluted
$ 0.03
$ 0.02
$ 0.04
$ (0.12)
     
Shares used in computing net income (loss) per share:
Basic
  379,032
  330,957
  377,291
  330,162
     
Diluted 399,542 342,172 395,245 330,162
     
 
(1) Amortization of deferred stock compensation relates to the following cost and expense categories by period:


 
   Cost of revenues
$ 130
 
$ 291
$ 239
 
$ 633
   Research and development 1,850 (8,031) 3,512 3,159
   Sales and marketing 373 (610) 700 1,096
   General and administrative 147 342 269 733
     
      Total
$ 2,500
$ (8,008)
$ 4,720
$ 5,621
     
 


Juniper Networks, Inc.
Non-GAAP Condensed Consolidated Statement of Operations (1)

(in thousands, except per share amounts)
(unaudited)

    Three Months Ended
June 30,
  Six Months Ended
June 30,
     
  2003   2002 2003   2002
     
Net revenues:  
   Product
$ 141,067
 
$ 99,012
$ 276,241
 
$ 203,558
   Service 24,036 18,024 46,069 35,697
     
Total net revenues 165,103 117,036 322,310 239,255
 
Cost of revenues:        
   Product 48,803 36,153 97,174 75,864
   Service 13,627 12,002 26,607 22,287
     
      Total cost of revenues 62,430 48,155 123,781 98,151
     
Gross profit 102,673 68,881 198,529 141,104
 
Operating expenses:  
   Research and development 43,007 33,770 86,477 68,839
   Sales and marketing 33,710 25,894 66,694 53,472
   General and administrative 7,296 9,104 14,768 18,653
     
     Total operating expenses 84,013 68,768 167,939 140,964
     
Operating income 18,660 113 30,590 140
Interest income 8,827 15,380 18,079 32,132
Interest and other expense (12,354) (14,763) (24,303) (29,895)
Equity in net loss of joint venture (111) (1,136)
     
Income before income taxes 15,133 619 24,366 1,241
Provision for income taxes 4,843 198 7,797 397
     
 
Net income
$ 10,290
$ 421
$ 16,569
$ 844
     
Net income per share:
Basic
$ 0.03
$ 0.00
$ 0.04
$ 0.00
     
Diluted
$ 0.03
$ 0.00
$ 0.04
$ 0.00
     
Shares used in computing net income per share:
Basic
  379,032
  330,957
  377,291
  330,162
     
Diluted
  399,542
  342,172
  395,245
  342,502
     
 
(1) The non-GAAP statements exclude an adjustment to the purchase price of an acquisition, the impact of the amortization of purchased intangibles and deferred stock compensation, the gain from the sale of investments, the impairment write-down of investments and the gain on the retirement of convertible subordinated notes. See reconciliation to GAAP information below.


Juniper Networks, Inc.
Reconciliation of Non-GAAP to GAAP Condensed Consolidated Statements of Operations

(in thousands)

    Three Months Ended
June 30,
  Six Months Ended
June 30,
     
  2003   2002 2003   2002
     
   
Non-GAAP net income
$ 10,290
 
$ 421
$ 16,569
 
$ 844
Acquisition related adjustment 1,190 1,190
Amortization of purchased intangible assets and deferred stock compensation (7,803) 6,362 (15,325) (8,913)
Gain on sale of investments 4,387 8,739
Write-down of investments (30,600)
Gain on retirement of convertible subordinated notes 4,888 4,888
Income tax effect 626 (552) 1,200 (1,103)
     
GAAP net income (loss)
$ 13,578
$ 6,231
$ 17,261
$ (39,772)
     
 


Juniper Networks, Inc.
Condensed Consolidated Statements of Cash Flows

(in thousands)
(unaudited)
    Six months ended June 30,
  2003   2002
     
OPERATING ACTIVITIES:  
Net income (loss)
$ 17,261
$ (39,772)
Adjustments to reconcile net income (loss) to net cash from operating activities:    
  Depreciation 24,661 18,461
Amortization of purchased intangibles and deferred stock compensation 15,325 8,917
Amortization of debt issuance costs 1,677 1,906
  Gain on sale of investments (8,739)
  Write-down of investments 30,600
Gain on retirement of convertible subordinated notes (4,888)
Changes in operating assets and liabilities:    
    Accounts receivable, net 4,734 41,260
    Prepaid expenses, other current assets and other long-term assets 775 6,103
    Accounts payable 9,835 14,779
    Accrued warranty (631) (1,840)
    Other accrued liabilities 3,489 (36,197)
    Deferred revenue 9,173 (4,366)
     
      Net cash provided by operating activities 72,672 39,851
     
INVESTING ACTIVITIES:    
Purchases of property and equipment, net (9,505) (20,592)
Purchases of available-for-sale investments (477,689) (602,348)
Maturities and sales of available-for-sale investments 431,676 558,506
Increase in restricted cash (25,000)
Minority equity investments (900) (1,000)
     
      Net cash used in investing activities (81,418) (65,434)
     
FINANCING ACTIVITIES:    
Proceeds from issuance of common stock 35,107 8,564
Proceeds from issuance of convertible senior notes 392,750
Retirement of convertible subordinated notes (97,053)
     
      Net cash provided by financing activities 330,804 8,564
     
      Net increase (decrease) in cash and cash equivalents 322,058 (17,019)
      Cash and cash equivalents at beginning of period 194,435 606,845
     
      Cash and cash equivalents at end of period
$ 516,493
$ 589,826
     
     
Supplemental Disclosures of Cash Flow Information:    
Cash paid for interest
$ 23,460
$ 27,313