Document and Company Informatio
Document and Company Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Aug. 03, 2009
| Jun. 30, 2008
| |
Document and Company Information [Abstract] | |||
Entity Registrant Name | JUNIPER NETWORKS, INC. | ||
Entity Central Index Key | 0001043604 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-06-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $8,883,000,000 | ||
Entity Common Stock, Shares Outstanding | 524,215,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Net revenues: | ||||
Product | $606,959 | $723,917 | $1,194,822 | $1,398,131 |
Service | 179,404 | 155,117 | 355,724 | 303,790 |
Total net revenues | 786,363 | 879,034 | 1,550,546 | 1,701,921 |
Cost of revenues: | ||||
Product | 207,576 | 215,134 | 400,637 | 406,925 |
Service | 78,385 | 74,147 | 153,836 | 147,192 |
Total cost of revenues | 285,961 | 289,281 | 554,473 | 554,117 |
Gross margin | 500,402 | 589,753 | 996,073 | 1,147,804 |
Operating expenses: | ||||
Research and development | 183,894 | 186,357 | 369,294 | 357,003 |
Sales and marketing | 170,575 | 190,338 | 351,818 | 376,286 |
General and administrative | 39,175 | 35,609 | 78,386 | 69,243 |
Amortization of purchased intangible assets | 3,539 | 7,999 | 7,929 | 33,128 |
Restructuring charges | 7,529 | 0 | 11,758 | 0 |
Other charges | 0 | 9,000 | 0 | 9,000 |
Total operating expenses | 404,712 | 429,303 | 819,185 | 844,660 |
Operating income | 95,690 | 160,450 | 176,888 | 303,144 |
Interest and other income, net | 2,898 | 13,187 | 4,848 | 30,777 |
Loss on minority equity investments | (1,625) | (1,499) | (3,311) | (1,499) |
Income before income taxes | 96,963 | 172,138 | 178,425 | 332,422 |
Provision for income taxes | 82,194 | 51,728 | 168,116 | 101,657 |
Net income | $14,769 | $120,410 | $10,309 | $230,765 |
Net income per share: | ||||
Basic | 0.03 | 0.23 | 0.02 | 0.44 |
Diluted | 0.03 | 0.22 | 0.02 | 0.41 |
Shares used in computing net income per share: | ||||
Basic | 523,105 | 528,963 | 523,754 | 526,435 |
Diluted | 532,850 | 559,328 | 531,624 | 561,566 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | $1,554,151 | $2,019,084 |
Short-term investments | 423,955 | 172,896 |
Accounts receivable, net of allowances | 429,130 | 429,970 |
Deferred tax assets, net | 138,326 | 145,230 |
Prepaid expenses and other current assets | 49,587 | 49,026 |
Total current assets | 2,595,149 | 2,816,206 |
Property and equipment, net | 448,296 | 436,433 |
Long-term investments | 420,498 | 101,415 |
Restricted cash | 44,704 | 43,442 |
Purchased intangible assets, net | 18,594 | 28,861 |
Goodwill | 3,658,602 | 3,658,602 |
Long-term deferred tax assets, net | 8,695 | 71,079 |
Other long-term assets | 31,224 | 31,303 |
Total assets | 7,225,762 | 7,187,341 |
Current liabilities: | ||
Accounts payable | 236,529 | 249,854 |
Accrued compensation | 149,697 | 160,471 |
Accrued warranty | 35,771 | 40,090 |
Deferred revenue | 495,966 | 459,749 |
Income taxes payable | 35,672 | 33,047 |
Other accrued liabilities | 108,210 | 113,399 |
Total current liabilities | 1,061,845 | 1,056,610 |
Long-term deferred revenue | 152,622 | 130,514 |
Long-term income tax payable | 161,050 | 78,164 |
Other long-term liabilities | 33,416 | 20,648 |
Stockholders' equity: | ||
Convertible preferred stock, $0.00001 par value; 10,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.00001 par value; 1,000,000 shares authorized; 522,682 shares and 526,752 shares issued and outstanding at June 30, 2009, and December 31, 2008, respectively | 5 | 5 |
Additional paid-in capital | 8,881,808 | 8,811,497 |
Accumulated other comprehensive loss | (521) | (4,245) |
Accumulated deficit | (3,064,463) | (2,905,852) |
Total stockholders' equity | 5,816,829 | 5,901,405 |
Total liabilities and stockholders' equity | $7,225,762 | $7,187,341 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Share data in Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Convertible preferred stock, par value | 0.00001 | 0.00001 |
Convertible preferred stock, shares authorized | 10,000 | 10,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | 0.00001 | 0.00001 |
Common stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, shares issued | 522,682 | 526,752 |
Common stock, shares outstanding | 522,682 | 526,752 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash flows from operating activities: | ||
Net income | $10,309 | $230,765 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 75,355 | 95,764 |
Stock-based compensation | 67,091 | 50,073 |
Loss on minority equity investments | 3,311 | 1,499 |
Change in excess tax benefit from employee stock option plans | 7,197 | (6,224) |
Deferred income taxes | 69,288 | (9,411) |
Other non-cash charges | 0 | 772 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 840 | (44,032) |
Prepaid expenses and other assets | (6,116) | 2,181 |
Accounts payable | (10,488) | 9,445 |
Accrued compensation | (10,774) | (2,659) |
Income tax payable | 37,412 | 39,222 |
Other accrued liabilities | 10,796 | 8,506 |
Deferred revenue | 58,325 | 79,543 |
Net cash provided by operating activities | 312,546 | 455,444 |
Cash flows from investing activities: | ||
Purchases of property and equipment, net | (79,424) | (80,847) |
Purchases of available-for-sale investments | (811,449) | (214,625) |
Proceeds from sales of available-for-sale investments | 109,820 | 47,107 |
Proceeds from maturities of available-for-sale investments | 137,050 | 157,324 |
Changes in restricted cash | (1,275) | (2,565) |
Minority equity investments | (1,191) | (2,000) |
Net cash used in investing activities | (646,469) | (95,606) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 50,678 | 77,095 |
Purchases and retirement of common stock | (169,370) | (121,275) |
Net (payments) proceeds from customer financing arrangements | (5,121) | 2,689 |
Redemption of convertible debt | 0 | (276) |
Changes in excess tax benefit from employee stock option plans | (7,197) | 6,224 |
Net cash used in financing activities | (131,010) | (35,543) |
Net (decrease) increase in cash and cash equivalents | (464,933) | 324,295 |
Cash and cash equivalents at beginning of period | 2,019,084 | 1,716,110 |
Cash and cash equivalents at end of period | 1,554,151 | 2,040,405 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Common stock issued in connection with conversion of the Senior Notes | $0 | $399,153 |
Basis of Presentation
Basis of Presentation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation The unaudited Condensed Consolidated Financial Statements of Juniper Networks, Inc. (Juniper Networks or the Company) have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information as well as the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. The results of operations for the three and six months ended June30, 2009, are not necessarily indicative of the results that may be expected for the year ending December31, 2009, or any future period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations, Risk Factors, Quantitative and Qualitative Disclosures About Market Risk and the Consolidated Financial Statements and footnotes thereto included in the Companys Annual Report on Form 10-K for the year ended December31, 2008. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Summary Of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Recent Accounting Pronouncements In May2009, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards (SFAS) No.165, Subsequent Events (SFAS 165). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, SFAS 165 sets forth: (a)the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (b)the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and (c)the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS 165 is effective for interim or annual reporting periods ending after June15, 2009. The Companys adoption of SFAS 165 during the second quarter of 2009 did not affect the Companys consolidated results of operations or financial condition. In June2009, the FASB issued SFAS No.166, Accounting for Transfers of Financial Assets An Amendment of FASB Statement No.140 (SFAS 166), which amends SFAS No.140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140) to eliminate the concept of the qualifying special-purpose entity (QSPE) from SFAS 140, removes the exception from applying FASB Interpretation No.46 (revised December2003), Consolidation of Variable Interest Entities (FIN 46R) to QSPE, changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for each entitys first annual reporting period that begins after November15, 2009, for interim periods within the first annual reporting period, and for interim and annual reporting periods thereafter. SFAS 166 must be applied to transfers of financial assets occurring on or after the effective date. Earlier application of SFAS 166 is prohibited. Accordingly, the Companys transfers of financial assets will be recorded and disclosed following existing GAAP until January1, 2010. The impact of SFAS 166 on the Companys consolidated results of operations or financial condition will depend upon the level of activity of financial asset transfers that the Company may consummate after the effective date. In June2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R) (SFAS 167), which amends FIN 46R. FIN 46R was amended by SFAS 167 because of the elimination of the QSPE concept in SFAS 166. SFAS 167 amends the provisions on determining whether an entity is a variable interest entity and would require consolidation, as well as requires additional disclosures. SFAS 167 is effective for each entitys first annual reporting period that begins after November15, 2009, for interim periods within the first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application of SFAS 167 is pr |
Net Income per Share
Net Income per Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Net Loss Income per Share [Abstract] | |
Net Income per Share | Note 3. Net Income per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for that period. Diluted net income per share is computed giving effect to all dilutive potential common shares that were outstanding during the period on a weighted average basis. Dilutive potential common shares consist of shares issuable upon conversion of senior notes, if any, common shares issuable upon exercise of stock options, vesting of restricted stock units (RSUs), and vesting of performance shares. The following table presents the calculation of basic and diluted net income per share (in millions, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Numerator: Net income $ 14.8 $ 120.4 $ 10.3 $ 230.8 Denominator: Weighted-average shares used to compute basic net income per share 523.1 529.0 523.8 526.4 Effect of dilutive securities: Shares issuable upon conversion of the Senior Notes 15.6 17.8 Employee stock awards 9.8 14.7 7.8 17.4 Weighted average shares used to compute diluted net income per share 532.9 559.3 531.6 561.6 Net income per share: Basic $ 0.03 $ 0.23 $ 0.02 $ 0.44 Diluted $ 0.03 $ 0.22 $ 0.02 $ 0.41 Employee stock awards for approximately 43.5million shares and 60.5million shares of the Companys common stock in the three and six months ended June30, 2009, respectively, were outstanding, but were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. For the three and six months ended June30, 2008, approximately 22.9million shares and 18.7million shares of the Companys common stock equivalents, respectively, were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. |
Cash, Cash Equivalents, and Inv
Cash, Cash Equivalents, and Investments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Cash Cash Equivalents And Investments [Abstract] | |
Cash, Cash Equivalents, and Investments | Note 4. Cash, Cash Equivalents, and Investments The following table summarizes the Companys cash, cash equivalents, and investments (in millions): As of June 30, December 31, 2009 2008 Cash and cash equivalents: Cash $ 287.6 $ 285.9 Time deposits 124.5 125.1 Total cash 412.1 411.0 Cash equivalents: U.S. government securities 70.2 141.8 Government-sponsored enterprise obligations 23.6 94.8 Foreign government debt securities 16.0 Commercial paper 132.2 90.4 Money market funds 900.1 1,281.1 Total cash equivalents 1,142.1 1,608.1 Total cash and cash equivalents 1,554.2 2,019.1 Investments: Fixed income securities: U.S. government securities 193.4 86.7 Government sponsored-enterprise obligations 276.9 71.9 Foreign government debt securities 47.5 Commercial paper 33.0 Corporate debt securities 284.7 110.3 Total fixed income securities 835.5 268.9 Publicly-traded equity securities 8.9 5.4 Total investments $ 844.4 $ 274.3 Reported as: Short-term investments $ 423.9 $ 172.9 Long-term investments 420.5 101.4 Total $ 844.4 $ 274.3 Fair Value As of June 30, 2009 Due within one year $ 415.0 Due between one and five years 420.5 Total fixed income securities 835.5 Publicly-traded equity securities 8.9 Total investments $ 844.4 Summary of Investments The following table summarizes unrealized gains and losses related to our investments designated as trading or available-for-sale, as of June30, 2009, (in millions): Gross Gross Amortized Unrealized Unrealized Estimated Fair Cost Gains Losses Value Fixed income securities: U.S. government securities $ 193.4 $ $ $ 193.4 Government-sponsored enterprise obligations 275.6 1.3 276.9 Foreign government debt securities 47.4 0.1 47.5 Corporate debt securities 316.7 1.2 (0.2 ) 317.7 Total fixed income securities 833.1 2.6 (0.2 ) 835.5 Publicly-traded equity securities 8.6 0.3 8.9 Total $ 841.7 $ 2.9 $ (0.2 ) $ 844.4 Reported as: Short-term investments $ 423.0 $ 0.9 $ $ 423.9 Long-term investments 418.7 2.0 (0.2 ) 420.5 Total $ 841.7 $ 2.9 $ (0.2 ) $ 844.4 Gross Gross Am |
Fair Value Measurements
Fair Value Measurements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 5. Fair Value Measurements SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS 157 assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. Fair Value Hierarchy The Company determines the fair values of its financial instruments based on the fair value hierarchy established in SFAS 157, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 Inputs are unobservable inputs based on the Companys assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables provide the assets and liabilities, if any, measured at fair value on a recurring basis (in millions): Fair Value Measurements at June 30, 2009, Using Quoted Prices in Significant Other Significant Other Active Markets Observable Unobservable For Identical Remaining Remaining Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets measured at fair value: U.S. government securities $ 37.7 $ 227.5 $ $ 265.2 Government sponsored enterprise obligations 271.6 28.9 300.5 Foreign government debt securities 63.5 63.5 Corporate debt securities 284.7 284.7 Commercial paper 165.2 165.2 Money market funds 940.2 940.2 Publicly-traded securities 8.9 8.9 Derivative asset 2.0 2.0 Total $ 1,258.4 $ 771.8 $ $ 2,030.2 Fair Value Measurements at December 31, 2008, Using Quoted Prices in Significant Other Significant Other Active Markets Observable Unobservable For Identical Remaining Remaining Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) Assets measured at fair valu |
Goodwill and Purchased Intangib
Goodwill and Purchased Intangible Assets | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Goodwill and Purchased Intangible Assets [Abstract] | |
Goodwill and Purchased Intangible Assets | Note 6. Goodwill and Purchased Intangible Assets Goodwill The following table presents goodwill by segment as of June30, 2009, (in millions): Segments June 30, 2009 Infrastructure $ 1,500.5 Service Layer Technologies 2,158.1 Total $ 3,658.6 There were no changes to goodwill during the three and six months ended June30, 2009. Purchased Intangible Assets The following table presents the Companys purchased intangible assets with definite lives (in millions): Accumulated Gross Amortization Net As of June30, 2009: Technologies and patents $ 380.0 $ (373.0 ) $ 7.0 Other 68.9 (57.3 ) 11.6 Total $ 448.9 $ (430.3 ) $ 18.6 As of December31, 2008: Technologies and patents $ 379.6 $ (365.4 ) $ 14.2 Other 68.9 (54.3 ) 14.6 Total $ 448.5 $ (419.7 ) $ 28.8 Amortization of purchased intangible assets of $4.9million and $9.4million were included in operating expenses and cost of product revenues for the three months ended June30, 2009, and 2008, respectively, and $10.6million and $30.9million were included in operating expenses and cost of product revenues for the six months ended June30, 2009, and 2008, respectively. In addition, during the six months ended June30, 2008, the Company recorded an impairment charge of $5.0 million, included in its amortization of purchased intangible assets, due to the phase out of its DX products. There was no impairment charge with respect to the purchased intangible assets in the three and six months ended June30, 2009. The estimated future amortization expense of purchased intangible assets with definite lives for future periods is as follows (in millions): Years Ending December 31, Amount 2009 (remaining six months) $ 4.8 2010 4.0 2011 2.1 2012 1.2 2013 1.1 Thereafter 5.4 Total $ 18.6 |
Other Financial Information
Other Financial Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Other Financial Information [Abstract] | |
Other Financial Information | Note 7. Other Financial Information Restricted Cash As of June30, 2009, and December31, 2008, restricted cash was $44.7million and $43.4million, respectively, which consisted of escrow accounts required by certain acquisitions completed in 2005, the India Gratuity Trust, which covers statutory severance obligations in the event of termination of the Companys India employees who have provided five or more years of continuous service, and the Directors Officers (DO) indemnification trust. Warranties The Company provides for the estimated cost of product warranties at the time revenue is recognized. This provision is reported as accrued warranty within current liabilities on the Companys condensed consolidated balance sheets. Changes in the Companys warranty reserve were as follows (in millions): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Beginning balance $ 37.5 $ 41.3 $ 40.1 $ 37.5 Provisions made during the period, net 8.8 7.0 18.6 12.2 Change in estimate (1.2 ) (3.3 ) Actual costs incurred during the period (9.3 ) (6.5 ) (19.6 ) (7.9 ) Ending balance $ 35.8 $ 41.8 $ 35.8 $ 41.8 Deferred Revenue Details of the Companys deferred revenue were as follows (in millions): As of June 30, December 31, 2009 2008 Deferred product revenue: Deferred gross product revenue $ 305.9 $ 268.0 Deferred cost of product revenue (128.3 ) (110.0 ) Deferred product revenue, net 177.6 158.0 Deferred service revenue 471.0 432.3 Total $ 648.6 $ 590.3 Reported as: Current $ 496.0 $ 459.8 Long-term 152.6 130.5 Total $ 648.6 $ 590.3 Restructuring Liabilities During the first half of 2009, the Company implemented a restructuring plan (the 2009 Restructuring Plan) in an effort to better align its business operations with the current market and macroeconomic conditions. The restructuring plan included a restructuring of certain business functions that resulted in a reduction of workforce and facilities. The Company recorded $7.5 million and $11.8million in restructuring charges during the three and six months ended June30, 2009, associated with the 2009 Restructuring Plan. The Company paid $0.7million and $3.2million for severance related charges associated with the 2009 Restructuring Plan during the three and six months ended June30, 2009. During the three and six months ended June30, 2008, the Company incurred no restructuring charges and paid an immaterial amount associated with past restructuring plans. As of June30, 2009, the restructuring liability was $6.8million. Restructuring charges were based on the Companys restructuring plans that were committed to by management. Any changes in the estimates of executing the approved plans will be reflected in the Companys res |
Financing Arrangements
Financing Arrangements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Financing Arrangements [Abstract] | |
Financing Arrangements | Note 8. Financing Arrangements The Company has customer financing arrangements to sell its accounts receivable to a major third-party financing provider. The program does not, and is not intended to, affect the timing of revenue recognition because the Company only recognizes revenue upon sell-through. Under the financing arrangements, proceeds from the financing provider are due to the Company 30days from the sale of the receivable. In these transactions with the financing provider, the Company has surrendered control over the transferred assets. The accounts receivable have been isolated from the Company and put beyond the reach of creditors, even in the event of bankruptcy. The Company does not maintain effective control over the transferred assets through obligations or rights to redeem, transfer, or repurchase the receivables after they have been transferred. Pursuant to the receivable financing arrangements for the sale of receivables, the Company sold net receivables of $81.1million and $108.2million during the three months ended June30, 2009, and 2008, respectively, and $172.3million and $167.0million during the six months ended June30, 2009, and 2008, respectively. During the three months ended June30, 2009, and 2008, the Company received cash proceeds of $80.2million and $77.8million, respectively, and $175.7million and $132.1million during the six months ended June30, 2009, and 2008, respectively, from the financing provider. The amount owed by the financing provider recorded as accounts receivable on the Companys condensed consolidated balance sheets as of June30, 2009, and December31, 2008, was $66.7million and $73.9million, respectively. The portion of the receivable financed that has not been recognized as revenue is accounted for as a financing pursuant to FASB Emerging Issues Task Force Issue 88-18, Sales of Future Revenues. As of June30, 2009, and December31, 2008, the estimated amounts of cash received from the financing provider that has not been recognized as revenue were $27.9million and $33.0million, respectively. |
Derivative Instruments
Derivative Instruments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note 9. Derivative Instruments The Company accounts for derivative instruments under SFAS No.133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133). The Company uses derivatives partially to offset its market exposure to fluctuations in certain foreign currencies. The Company does not enter into derivatives for speculative or trading purposes. Cash Flow Hedges The Company uses foreign currency forward or option contracts to hedge certain forecasted foreign currency transactions relating to cost of services and operating expenses. The derivatives are intended to protect the U.S. Dollar equivalent of the Companys planned cost of services and operating expenses denominated in foreign currencies. These derivatives are designated as cash flow hedges under SFAS 133. Execution of these cash flow hedge derivatives typically occurs every month with maturities of less than one year. The effective portion of the derivatives gain or loss is initially reported as a component of accumulated other comprehensive income (loss), and upon occurrence of the forecasted transaction, is subsequently reclassified into the cost of services or operating expense line item to which the hedged transaction relates. The Company records any ineffectiveness of the hedging instruments, which was immaterial during the three and six months ended June30, 2009, and the comparable periods in 2008 in interest and other income, net on its condensed consolidated statements of operations. Cash flows from such hedges are classified as operating activities. All amounts within other comprehensive income (loss)are expected to be reclassified into income within the next 12months. Non-Designated Hedges The Company also uses foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement of certain monetary assets and liabilities denominated in foreign currencies. These hedges do not qualify for special hedge accounting treatment under SFAS 133. These derivatives are carried at fair value with changes recorded in interest and other income, net. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. The derivatives have maturities of approximately two months. The following table summarizes the total fair value of the Companys derivative instruments as of June30, 2009, (in millions): Asset Derivatives Liability Derivatives Balance Sheet Fair Balance Sheet Fair Location Value Location Value Derivatives designated as hedging instruments under SFAS 133: Foreign exchange forward contracts Other current assets $ 2.2 Other current liabilities $ 0.3 Total derivatives designated as hedging instruments under SFAS 133 $ 2.2 $ 0.3 The Company has no non-designated derivatives under SFAS 133 as of June30, 2009. The following represents the Companys top three outstanding |
Stockholders Equity
Stockholders Equity | |
1/1/2009 - 6/30/2009
USD / shares | |
Stockholders Equity [Abstract] | |
Stockholders' Equity | Note 10. Stockholders Equity Stock Repurchase Activities In March2008, the Companys Board of Directors (the Board) approved a stock repurchase program (the 2008 Stock Repurchase Program), which authorized the Company to purchase up to $1.0billion of its common stock. Under this program, the Company repurchased approximately 2.2million shares of its common stock, at an average price of $22.73 per share for a total purchase price of $49.5 million in the three months ended June30, 2009, and approximately 9.7million shares of its common stock at an average price of $17.52 per share for a total purchase price of $169.2million in the six months ended June30, 2009. As of June30, 2009, the Company has repurchased and retired approximately 19.4million shares of common stock under the 2008 Stock Repurchase Program and the program had remaining authorized funds of $602.9million. All shares of common stock purchased under the 2008 Stock Repurchase Program have been retired. Future share repurchases under the Companys 2008 Stock Repurchase Program will be subject to a review of the circumstances in place at that time and will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements. This program may be discontinued at any time. Comprehensive Income Comprehensive income consists of the following (in millions): Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Net income $ 14.8 $ 120.4 $ 10.3 $ 230.8 Change in net unrealized gains (losses)on investments, net of tax of nil 6.2 (3.9 ) 2.6 (3.4 ) Change in foreign currency translation adjustment, net of tax of nil 11.6 (1.6 ) 1.1 0.9 Total comprehensive income $ 32.6 $ 114.9 $ 14.0 $ 228.3 Accumulated Deficit The following table summarizes the activity in the Companys accumulated deficit account (in millions): Six Months Ended June 30, 2009 Balance, December31, 2008 $ (2,905.8 ) Retirement of common stock (168.9 ) Net income 10.3 Balance, June30, 2009 $ (3,064.4 ) |
Employee Benefit Plans
Employee Benefit Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Note 11. Employee Benefit Plans Stock Option Plans 2006 Equity Incentive Plan On May18, 2006, the Companys stockholders adopted the Companys 2006 Equity Incentive Plan (the 2006 Plan) to enable the granting of incentive stock options, nonstatutory stock options, RSUs, restricted stock, stock appreciation rights, performance shares, performance units, deferred stock units, and dividend equivalents to the employees and consultants of the Company. The 2006 Plan also provides for automatic, non-discretionary awards of nonstatutory stock options and RSUs to the Companys non-employee members of the Board. The maximum aggregate number of shares authorized under the 2006 Plan is 64,500,000 shares of common stock, plus the addition of any shares subject to outstanding options under the Companys Amended and Restated 1996 Stock Plan (the 1996 Plan) and the Companys 2000 Nonstatutory Stock Option Plan (the 2000 Plan) that expire unexercised after May18, 2006, up to a maximum of 75,000,000 additional shares of common stock. Options granted under the 2006 Plan have a maximum term of seven years from the grant date, and generally vest and become exercisable over a four-year period. Subject to the terms of change of control severance agreements, and except for a limited number of shares allowed under the 2006 Plan, restricted stock, performance shares, RSUs, or deferred stock units that vest solely based on continuing employment or provision of services will vest in full no earlier than the three-year anniversary of the grant date, or in the event vesting is based on factors other than continued future provision of services, such awards will vest in full no earlier than the one-year anniversary of the grant date. The 2006 Plan provides each non-employee director an automatic grant of an option to purchase 50,000 shares of common stock on the date such individual first becomes a director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy (the First Option). In addition, at each of the Companys annual stockholder meetings: (i)each non-employee director who was a non-employee director on the date of the prior years annual stockholder meeting shall be automatically granted RSUs for a number of shares equal to the Annual Value (as defined below), and (ii)each non-employee director who was not a non-employee director on the date of the prior years annual stockholder meeting shall receive a RSU award for a number of shares determined by multiplying the Annual Value by a fraction, the numerator of which is the number of days since the non-employee director received their First Option, and the denominator of which is 365, rounded down to the nearest whole share. Each RSU award specified in (i)and (ii)are referred to herein as an Annual Award. The Annual Value means the number of RSUs equal to $125,000 divided by the average daily closing price of the Companys common stock over the six month period ending on the last day of the fiscal year preceding the date of grant (for example, the period from July1, 2008 December31, 2008 for Annual Awards granted in May2009). The First Option vests |
Segments
Segments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Segments [Abstract] | |
Segments | Note 12. Segments The Companys chief operating decision maker (CODM) allocates resources and assesses performance based on financial information by the Companys business groups. The Companys operations are organized into two reportable segments: Infrastructure and Service Layer Technologies (SLT). The Infrastructure segment includes products from the E-, M-, MX-, and T-series router product families, EX-series switching products, as well as the circuit-to-packet products. The SLT segment consists primarily of Firewall virtual private network (Firewall) systems and appliances, dynamic services gateways, secure sockets layer virtual private network (SSL) appliances, intrusion detection and prevention appliances (IDP), the J-series router product family and wide area network (WAN) optimization platforms. The primary financial measure used by the CODM in assessing performance of the segments is segment operating income, which includes certain cost of revenues, research and development expenses, sales and marketing expenses, and general and administrative expenses. In the three and six months ended June30, 2009, and 2008, the CODM did not allocate certain miscellaneous expenses to its segments even though such expenses were included in the Companys management operating income. For arrangements with both Infrastructure and SLT products and services, revenue is attributed to the segment based on the underlying purchase order, contract, or sell-through report. Direct costs and operating expenses, such as standard costs, research and development and product marketing expenses, are generally applied to each segment. Indirect costs, such as manufacturing overhead and other cost of revenues, are allocated based on standard costs. Indirect operating expenses, such as sales, marketing, business development, and general and administrative expenses are generally allocated to each segment based on factors including headcount, usage, and revenue. The CODM does not allocate stock-based compensation, amortization of purchased intangible assets, restructuring and impairment charges, gains or losses on equity investments, other net income and expense, income taxes, as well as certain other charges to the segments. The following table summarizes financial information for each segment used by the CODM (in millions): Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Net revenues: Infrastructure: Product $ 469.9 $ 575.9 $ 924.2 $ 1,104.6 Service 114.1 96.5 226.9 189.7 Total Infrastructure revenues 584.0 672.4 1,151.1 1,294.3 Service Layer Technologies: Product 137.1 148.0 270.6 293.5 Service 65.3 58.6 128.8 114.1 Total Service Layer Technologies revenues 202.4 206.6 399.4 407.6 Total net revenues 786.4 879.0 1,550.5 1,701.9 Operating income: |
Income Taxes
Income Taxes | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Income Taxes [Abstract] | |
Income Taxes | Note 13. Income Taxes The Company recorded tax provisions of $82.2million and $51.7million for the three months ended June30, 2009, and 2008, or effective tax rates of 85% and 30%, respectively. The Company recorded tax provisions of $168.1million and $101.7million for the six months ended June30, 2009, and 2008, or effective tax rates of 94% and 31%, respectively. The effective tax rate for the three months ended June30, 2009, differs from the federal statutory rate of 35% and the rate for the same period in 2008 primarily due to a $52.1million income tax charge resulting from a change in the Companys estimate of unrecognized tax benefits related to share-based compensation. This change in estimate was a result of the decision by the U.S. Court of Appeals for the Ninth Circuit (the Court) in Xilinx Inc. v. Commissioner discussed below. The effective tax rate for the six months ended June30, 2009, differs from the federal statutory rate of 35% and the rate for the same period in 2008, primarily due to two income tax charges: the $52.1million related to the Courts decision; and $61.8million recorded in the three months ended March31, 2009, which resulted from changes in California income tax laws that were enacted during the Companys first quarter of 2009. The effective rate impact from these charges was partially offset by the federal Research and Development (RD) credit and the benefit of earnings in foreign jurisdictions, which are subject to lower tax rates during the three and six months ended June30, 2009. The effective tax rate for the three and six months ended June30, 2008, differed from the federal statutory rate of 35% primarily due to the benefit of earnings in foreign jurisdictions, which are subject to lower tax rates. On May27, 2009, the Courts decision in Xilinx v. Commissioner overturned a 2005 U.S. Tax Court ruling. While Juniper Networks, Inc. was not a named party to the case, the Courts decision impacts a tax position of the Company for certain years prior to fiscal 2004. The Courts decision changes the tax treatment for determining the allocable transfer price of share-based compensation expenses related to a companys intangible development costs as the Court held that related parties must share stock option costs. In light of the Courts decision, the Company changed its estimate of the tax benefit recognized under its prior tax position and has determined that it is not more likely than not that such benefit will be sustained. The case is subject to further appeal and any changes in the Courts findings could impact the Companys gross unrecognized tax benefits. The gross unrecognized tax benefits increased by approximately $74.1million for the six months ended June30, 2009, of which $24.5million, if recognized, would affect the effective tax rate. Interest and penalties accrued for the six months ended June30, 2009, were approximately $8.4million. Approximately $75.9million of the increase, including interest and penalties, occurred during the three months ended June30, 2009, and is related to the Courts decision referenced above. The Company is currently under examination by the Internal Revenue Servi |
Commitments and Contingencies
Commitments and Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 14. Commitments and Contingencies Commitments The following table summarizes the Companys principal contractual obligations as of June30, 2009, (in millions): Total 2009 2010 2011 2012 2013 Thereafter Other Operating leases $ 195.0 $ 26.7 $ 51.4 $ 43.7 $ 37.1 $ 20.6 $ 15.5 $ Sublease rental income (0.9 ) (0.3 ) (0.6 ) Purchase commitments 89.2 89.2 Tax liabilities 161.1 161.1 Other contractual obligations 51.1 12.8 17.3 13.5 5.6 1.9 Total $ 495.5 $ 128.4 $ 68.1 $ 57.2 $ 42.7 $ 22.5 $ 15.5 $ 161.1 Operating Leases Juniper Networks leases its facilities under operating leases that expire at various times, the longest of which expires in January2017. Future minimum payments under the non-cancelable operating leases, net of committed sublease income, totaled $194.1million as of June30, 2009. Rent expense for the three months ended June30, 2009, and 2008 was $14.3million and $14.7 million, respectively, and $28.3million and $28.9million for the six months ended June30, 2009, and 2008, respectively. Purchase Commitments In order to reduce manufacturing lead times and ensure adequate component supply, contract manufacturers utilized by the Company place non-cancelable, non-returnable (NCNR) orders for components based on the Companys build forecasts. As of June30, 2009, there were NCNR component orders placed by the contract manufacturers with a value of $89.2million. The contract manufacturers use the components to build products based on the Companys forecasts and on purchase orders the Company has received from customers. Generally, the Company does not own the components and title to the products transfers from the contract manufacturers to the Company and immediately to the Companys customers upon delivery at a designated shipment location. If the components remain unused or the products remain unsold for specified period, the Company may incur carrying charges or obsolete materials charges for components that the contract manufacturers purchased to build products to meet the Companys forecast or customer orders. As of June30, 2009, the Company had accrued $32.0million based on its estimate of such charges. Tax Liabilities As of June30, 2009, the Company had $161.1million included in long-term liabilities in the condensed consolidated balance sheet for unrecognized tax positions. At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments related to the additional $161.1million in liability due to uncertainties in the timing of tax audit outcomes. Other Contractual Obligations As of June30, 2009, other contractual obligations consisted primarily of an indemnity-related escrow amount of $2.3million, a five-year $36.4million data cen |
Subsequent Event
Subsequent Event | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Subsequent Event [Abstract] | |
Subsequent Event | Note 15. Subsequent Event Stock Repurchases Subsequent to June30, 2009, through the filing of this report, the Company repurchased and retired approximately 1.7million shares of its common stock for approximately $40.9million under its 2008 Stock Repurchase program at an average purchase price of $24.43 per share. The Companys 2008 Stock Repurchase Program had remaining authorized funds of $562.0million as of the report filing date. Purchases under the Companys 2008 Stock Repurchase Program are subject to a review of the circumstances in place at the time and will be made from time to time as permitted by securities laws and other legal requirements. This program may be discontinued at any time. |