Juniper Networks (JNPR) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Investor Relations:

Kathleen Nemeth

Juniper Networks

(408) 936-5397

kbela@juniper.net

Media Relations:

David Shane

Juniper Networks

(408) 936-4872

dshane@juniper.net

Cindy Ta

Juniper Networks

(408) 936-6131

cta@juniper.net

JUNIPER NETWORKS REPORTS

PRELIMINARY FOURTH QUARTER AND FISCAL YEAR 2011 FINANCIAL RESULTS

Q4 Financial Highlights:

• Revenue: $1,120.8 million, down 6% from Q4’10 and up 1% from Q3’11

• Operating Margin: 11.9% GAAP; 18.6% non-GAAP

• GAAP Net Income Per Share: $0.18 diluted

• Non-GAAP Net Income Per Share: $0.28 diluted, down 33% from Q4’10 and flat from Q3’11

2011 Financial Highlights:

• Revenue: $4,448.7 million, up 9% from 2010

• Operating Margin: 13.9% GAAP; 20.6% non-GAAP

• GAAP Net Income Per Share: $0.79 diluted

• Non-GAAP Net Income Per Share: $1.19 diluted, down 10% from 2010

SUNNYVALE, Calif., Jan. 26, 2012 - Juniper Networks (NYSE: JNPR), the industry leader in network innovation, today reported preliminary financial results for the three and twelve months ended December 31, 2011, and provided its outlook for the three months ending March 31, 2012.

Net revenues for the fourth quarter of 2011 decreased 6% on a year-over-year basis, and increased 1% sequentially, to $1,120.8 million.

For the year ended December 31, 2011, Juniper’s revenue increased 9% on a year-over-year basis to $4,448.7 million.

The Company posted GAAP net income of $96.2 million, or $0.18 per diluted share, and non-GAAP net income of $150.1 million, or $0.28 per diluted share, for the fourth quarter of 2011. Included in the GAAP diluted earnings per share was a $0.02 cents impact for restructuring and other charges. Non-GAAP net income per diluted share decreased 33% compared to the fourth quarter of 2010 and was flat compared to the third quarter of 2011.

For the year ended December 31, 2011, GAAP net income was $425.1 million, or $0.79 per diluted share, and non-GAAP net income was $644.6 million, or $1.19 per diluted share. Non-GAAP net income per diluted share for the year ended December 31, 2011 decreased 10% on a year-over-year basis. The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Share-Based Compensation Related Payroll Tax by Category table below.

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“While the fourth quarter was softer than we had anticipated primarily due to weak demand from service providers, Juniper delivered record revenues in a year where macro economic uncertainty increased as the year unfolded,” said Kevin Johnson, president and CEO. “During the year, we introduced innovative new products across our portfolio that we believe will enable Juniper to continue to grow faster than the markets we serve. We are confident in our strategy and our innovation pipeline, and we remain committed to delivering differentiated solutions that are highly relevant to our customers.”

Juniper’s GAAP operating margin for the fourth quarter of 2011 was 11.9% compared to 12.4% in the third quarter of 2011, and 19.1% in the prior year fourth quarter. Non-GAAP operating margin for the fourth quarter of 2011 was 18.6% compared to 20.0% in the third quarter of 2011, and 24.5% in the prior year fourth quarter. For the fiscal year 2011, Juniper’s GAAP operating margin was 13.9% compared to 18.8% for the prior fiscal year. Non-GAAP operating margin for the fiscal year 2011 was 20.6% compared to 24.0% in the fiscal year 2010.

“The December quarter was an atypical and unexpectedly weak finish to the year, with reduced spending by some of our largest customers.” said Robyn Denholm, Juniper’s chief financial officer. “While long-term industry fundamentals remain strong, we expect the near-term environment to remain challenging. We will invest in support of our strategy while continuing our focus on execution and prudent cost management.”

Other Financial Highlights

Total cash, cash equivalents and investments as of the fourth quarter of 2011 was $4,292.4 million, compared to $4,130.3 million as of the third quarter of 2011 and $2,821.6 million as of the fourth quarter of 2010.

Juniper generated net cash from operations in the fourth quarter of 2011 of $243.6 million, compared to net cash provided by operations of $185.2 million in the third quarter of 2011, and $371.0 million in the fourth quarter of 2010. For the year ended December 31, 2011, Juniper generated net cash from operations of $986.7 million, compared to $812.3 million in 2010.

Days sales outstanding in accounts receivable (“DSO”) was 46 days in the fourth quarter of 2011, compared to 36 days in the prior quarter and 45 days in the fourth quarter of 2010.

For the year ended December 31, 2011, Juniper repurchased 17.5 million shares, at an average share price of $30.93 per share, for a total of $541.2 million, which largely offset stock issued through our employee equity programs.

Capital expenditures, as well as depreciation and amortization of intangible assets expense during the fourth quarter of 2011, were $78.4 million and $43.3 million, respectively. Capital expenditures, as well as depreciation and amortization of intangible assets expense during the fiscal year 2011, were $266.3 million and $169.3 million, respectively.

Outlook

We believe the long-term demand fundamentals remain intact and we are confident about the growth potential of our new product portfolio. However, our outlook for the March quarter reflects near-term uncertainty in the macro-environment and the effect it may have on the level, timing, and prioritization of customer demand.

• Juniper estimates revenue for the first quarter ending March 31, 2012, to be in the range of $960 million to $990 million.

• Juniper estimates that its non-GAAP gross margin will be in the range of 63% and 64% in the first quarter.

• Juniper estimates that its non-GAAP operating expenses will increase in the first quarter compared to the fourth quarter 2011, primarily due to typical fringe-related employee expenses and variable compensation.

• Juniper expects its non-GAAP operating margin for the first quarter to be in the range of 11% and 13%.

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• Juniper estimates that its non-GAAP net income per share will range between $0.11 and $0.14 on a diluted basis, assuming a flat share count and estimated non-GAAP tax rate of 29%. This tax rate includes an estimated $0.01 cent quarterly impact on non-GAAP earnings per share assuming no renewal of the R&D tax credit.

All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition related charges, restructuring charges, impairment charges, litigation settlement charges, gain or loss on equity investments, 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.

Conference Call Web Cast

Juniper Networks will host a conference call web cast today, January 26, 2012, at 2:00 p.m. (Pacific Time), to be broadcast live over the Internet at:http://www.juniper.net/company/investor/conferencecall.html.

To participate via telephone, in the U.S. the toll free dial-in number is 877-407-8033; outside of the U.S. dial +1-201-689-8033. Please call ten minutes prior to the scheduled conference call time. The webcast replay of the conference call will be archived on the Juniper Networks website.

About Juniper Networks

Juniper Networks is in the business of network innovation. From devices to data centers, from consumers to cloud providers, Juniper Networks delivers the software, silicon and systems that transform the experience and economics of networking. Additional information can be found at Juniper Networks (www.juniper.net).

Juniper Networks and Junos are registered trademarks of Juniper Networks, Inc. in the United States and other countries. The Juniper Networks and Junos logos are trademarks of Juniper Networks, Inc. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

Statements in this release concerning Juniper Networks’ business outlook, economic and market outlook, future financial and operating results, 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 certain factors, including: general economic conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending and spending by communication service providers; 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; 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; 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.

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2011			2010		2011			2010
Net revenues:
Product	$	847,461		$	962,209	$	3,478,264		$	3,258,651
Service		273,296			227,732		970,445			834,615
Total net revenues		1,120,757			1,189,941		4,448,709			4,093,266
Cost of revenues:
Product		310,537			299,699		1,155,283			1,000,865
Service		111,285			98,241		424,836			350,654
Total cost of revenues		421,822			397,940		1,580,119			1,351,519
Gross margin		698,935			792,001		2,868,590			2,741,747
Operating expenses:
Research and development		250,465			254,942		1,026,790			917,855
Sales and marketing		253,201			257,690		1,001,060			857,072
General and administrative		45,493			45,068		179,132			177,859
Amortization of purchased intangible assets		1,227			972		5,366			4,230
Restructuring and other charges		15,014			2,255		30,564			10,805
Acquisition-related and other charges		350			4,276		7,154			6,342
Total operating expenses		565,750			565,203		2,250,066			1,974,163
Operating income		133,185			226,798		618,524			767,584
Other (expense) income, net		(10,701	)		4,841		(46,808	)		10,570
Income before income taxes and noncontrolling interest		122,484			231,639		571,716			778,154
Income tax provision		26,321			41,556		146,704			158,781
Consolidated net income		96,163			190,083		425,012			619,373
Adjust for net loss (income) attributable to noncontrolling interest		—			150		124			(971	)
Net income attributable to Juniper Networks	$	96,163		$	190,233	$	425,136		$	618,402
Net income per share attributable to Juniper Networks common stockholders:
Basic	$	0.18		$	0.36	$	0.80		$	1.18
Diluted	$	0.18		$	0.35	$	0.79		$	1.15
Shares used in computing net income per share:
Basic		526,124			523,556		529,768			522,444
Diluted		533,335			541,464		541,417			538,790

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Juniper Networks, Inc.

Preliminary Net Revenues by Reportable Segment

(in thousands)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2011		2010		2011		2010
Infrastructure:
Routers – Product	$	506,573	$	639,289	$	2,287,432	$	2,134,488
Routers – Service		174,297		144,377		606,934		521,248
Infrastructure Revenue – Routers		680,870		783,666		2,894,366		2,655,736
Switches – Product		157,053		118,363		493,149		377,096
Switches – Service		11,349		5,125		35,091		17,442
Infrastructure Revenue – Switches		168,402		123,488		528,240		394,538
Total Infrastructure Revenue	$	849,272	$	907,154	$	3,422,606	$	3,050,274
Service Layer Technologies:
Service Layer Technologies – Product	$	183,835	$	204,557	$	697,683	$	747,067
Service Layer Technologies – Service		87,650		78,230		328,420		295,925
Total Service Layer Technologies Revenue	$	271,485	$	282,787	$	1,026,103	$	1,042,992
Total Revenue	$	1,120,757	$	1,189,941	$	4,448,709	$	4,093,266

Juniper Networks, Inc.

Preliminary Net Revenues by Geographic Region

(in thousands)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2011		2010		2011		2010
Americas	$	521,157	$	580,120	$	2,238,049	$	2,095,556
Europe, Middle East, and Africa		399,612		359,761		1,339,779		1,189,266
Asia Pacific		199,988		250,060		870,881		808,444
Total	$	1,120,757	$	1,189,941	$	4,448,709	$	4,093,266

Juniper Networks, Inc.

Preliminary Net Revenues by Market

(in thousands)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2011		2010		2011		2010
Service Provider	$	676,505	$	783,841	$	2,833,035	$	2,631,486
Enterprise		444,252		406,100		1,615,674		1,461,780
Total	$	1,120,757	$	1,189,941	$	4,448,709	$	4,093,266

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Juniper Networks, Inc.

Preliminary Share-Based Compensation by Category

(in thousands)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2011		2010		2011		2010
Cost of revenues – Product	$	1,219	$	1,260	$	4,619	$	4,353
Cost of revenues – Service		3,626		3,632		15,736		13,523
Research and development		22,224		23,481		97,677		78,461
Sales and marketing		17,899		15,929		70,868		54,949
General and administrative		7,557		8,100		33,258		30,671
Total	$	52,525	$	52,402	$	222,158	$	181,957

Juniper Networks, Inc.

Preliminary Share-Based Compensation Related Payroll Tax by Category

(in thousands)

(unaudited)

	Three Months Ended December 31,				Twelve Months Ended December  31,
	2011		2010		2011		2010
Cost of revenues – Product	$	2	$	66	$	301	$	197
Cost of revenues – Service		4		319		942		689
Research and development		17		793		3,402		2,206
Sales and marketing		52		1,177		4,100		2,912
General and administrative		8		182		501		429
Total	$	83	$	2,537	$	9,246	$	6,433

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Juniper Networks, Inc.

Reconciliation between GAAP and non-GAAP Financial Measures

(in thousands, except percentages)

(unaudited)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
GAAP Cost of revenues - Product		$	310,537		$	299,699		$	1,155,283		$	1,000,865
Share-based compensation expense	C		(1,219	)		(1,260	)		(4,619	)		(4,353	)
Share-based compensation related payroll tax	C		(2	)		(66	)		(301	)		(197	)
Amortization of purchased intangible assets	A		(5,693	)		(2,554	)		(21,767	)		(4,301	)
Acquisition-related and other charges	A,B		—			—			(2,487	)		—
Non-GAAP Cost of revenues - Product			303,623			295,819			1,126,109			992,014
GAAP Cost of revenues - Service			111,285			98,241			424,836			350,654
Share-based compensation expense	C		(3,626	)		(3,632	)		(15,736	)		(13,523	)
Share-based compensation related payroll tax	C		(4	)		(319	)		(942	)		(689	)
Non-GAAP Cost of revenues - Service			107,655			94,290			408,158			336,442
GAAP Gross margin - Product			536,924			662,510			2,322,981			2,257,786
Share-based compensation expense	C		1,219			1,260			4,619			4,353
Share-based compensation related payroll tax	C		2			66			301			197
Amortization of purchased intangible assets	A		5,693			2,554			21,767			4,301
Acquisition-related and other charges	A,B		—			—			2,487			—
Non-GAAP Gross margin - Product			543,838			666,390			2,352,155			2,266,637
GAAP Product gross margin as a % of product revenue			63.4	%		68.9	%		66.8	%		69.3	%
Share-based compensation expense as a % of product revenue	C		0.1	%		0.1	%		0.1	%		0.2	%
Share-based compensation related payroll tax as a % of product revenue	C		—	%		—	%		—	%		—	%
Amortization of purchased intangible assets as a % of product revenue	A		0.7	%		0.3	%		0.6	%		0.1	%
Acquisition-related and other charges as a % of product revenue	A,B		—	%		—	%		0.1	%		—	%
Non-GAAP Product gross margin as a % of product revenue			64.2	%		69.3	%		67.6	%		69.6	%
GAAP Gross margin - Service			162,011			129,491			545,609			483,961
Share-based compensation expense	C		3,626			3,632			15,736			13,523
Share-based compensation related payroll tax	C		4			319			942			689
Non-GAAP Gross margin - Service		$	165,641		$	133,442		$	562,287		$	498,173
GAAP Service gross margin as a % of service revenue			59.3	%		56.9	%		56.2	%		58.0	%
Share-based compensation expense as a % of service revenue	C		1.3	%		1.6	%		1.6	%		1.6	%
Share-based compensation related payroll tax as a % of service revenue	C		—	%		0.1	%		0.1	%		0.1	%
Non-GAAP Service gross margin as a % of service revenue			60.6	%		58.6	%		57.9	%		59.7	%

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Juniper Networks, Inc.

Reconciliation between GAAP and non-GAAP Financial Measures

(in thousands, except percentages)

(unaudited)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
GAAP Gross margin		$	698,935		$	792,001		$	2,868,590		$	2,741,747
Share-based compensation expense	C		4,845			4,892			20,355			17,876
Share-based compensation related payroll tax	C		6			385			1,243			886
Amortization of purchased intangible assets	A		5,693			2,554			21,767			4,301
Acquisition-related and other charges	A,B		—			—			2,487			—
Non-GAAP Gross margin			709,479			799,832			2,914,442			2,764,810
GAAP Gross margin as a % of revenue			62.4	%		66.6	%		64.5	%		67.0	%
Share-based compensation expense as a % of revenue	C		0.4	%		0.4	%		0.5	%		0.4	%
Share-based compensation related payroll tax as a % of revenue	C		—	%		—	%		—	%		—	%
Amortization of purchased intangible assets as a % of revenue	A		0.5	%		0.2	%		0.4	%		0.1	%
Acquisition-related and other charges as a % of revenue	A,B		—	%		—	%		0.1	%		—	%
Non-GAAP Gross margin as a % of revenue			63.3	%		67.2	%		65.5	%		67.5	%
GAAP Research and development expense			250,465			254,942			1,026,790			917,855
Share-based compensation expense	C		(22,224	)		(23,481	)		(97,677	)		(78,461	)
Share-based compensation related payroll tax	C		(17	)		(793	)		(3,402	)		(2,206	)
Non-GAAP Research and development expense			228,224			230,668			925,711			837,188
GAAP Sales and marketing expense			253,201			257,690			1,001,060			857,072
Share-based compensation expense	C		(17,899	)		(15,929	)		(70,868	)		(54,949	)
Share-based compensation related payroll tax	C		(52	)		(1,177	)		(4,100	)		(2,912	)
Non-GAAP Sales and marketing expense			235,250			240,584			926,092			799,211
GAAP General and administrative expense			45,493			45,068			179,132			177,859
Share-based compensation expense	C		(7,557	)		(8,100	)		(33,258	)		(30,671	)
Share-based compensation related payroll tax	C		(8	)		(182	)		(501	)		(429	)
Non-GAAP General and administrative expense			37,928			36,786			145,373			146,759
GAAP Operating expense			565,750			565,203			2,250,066			1,974,163
Share-based compensation expense	C		(47,680	)		(47,510	)		(201,803	)		(164,081	)
Share-based compensation related payroll tax	C		(77	)		(2,152	)		(8,003	)		(5,547	)
Amortization of purchased intangible assets	A		(1,227	)		(972	)		(5,366	)		(4,230	)
Restructuring and other charges	B		(15,014	)		(2,255	)		(30,564	)		(10,805	)
Acquisition-related and other charges	A,B		(350	)		(4,276	)		(7,154	)		(6,342	)
Non-GAAP Operating expense		$	501,402		$	508,038		$	1,997,176		$	1,783,158

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Juniper Networks, Inc.

Reconciliation between GAAP and non-GAAP Financial Measures

(in thousands, except percentages)

(unaudited)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
GAAP Operating income		$	133,185		$	226,798		$	618,524		$	767,584
Share-based compensation expense	C		52,525			52,402			222,158			181,957
Share-based compensation related payroll tax	C		83			2,537			9,246			6,433
Amortization of purchased intangible assets	A		6,920			3,526			27,133			8,531
Restructuring and other charges	B		15,014			2,255			30,564			10,805
Acquisition-related and other charges	A,B		350			4,276			9,641			6,342
Non-GAAP Operating income			208,077			291,794			917,266			981,652
GAAP Operating margin			11.9	%		19.1	%		13.9	%		18.8	%
Share-based compensation expense as a % of revenue	C		4.7	%		4.3	%		5.0	%		4.3	%
Share-based compensation related payroll tax as a % of revenue	C		—	%		0.2	%		0.2	%		0.2	%
Amortization of purchased intangible assets as a % of revenue	A		0.7	%		0.3	%		0.6	%		0.2	%
Restructuring and other charges as a % of revenue	B		1.3	%		0.2	%		0.7	%		0.3	%
Acquisition-related and other charges as a % of revenue	A,B		—	%		0.4	%		0.2	%		0.2	%
Non-GAAP Operating margin			18.6	%		24.5	%		20.6	%		24.0	%
GAAP Other (expense) income, net	E		(10,701	)		4,841			(46,808	)		10,570
(Gain)/loss on equity investments	B		(656	)		(5,421	)		326			(8,653	)
Non-GAAP Other (expense) income, net	E		(11,357	)		(580	)		(46,482	)		1,917
GAAP Income tax provision			26,321			41,556			146,704			158,781
Non-recurring income tax adjustment	B		—			—			—			54,069
Income tax effect of non-GAAP exclusions	B		20,282			21,219			79,579			59,258
Non-GAAP Provision for income tax			46,603			62,775			226,283			272,108
Non-GAAP Income tax rate			23.7	%		21.6	%		26.0	%		27.7	%
Non-GAAP Income before income taxes and noncontrolling interest*		$	196,720		$	291,214		$	870,784		$	983,569

* Consists of non-GAAP operating income plus non-GAAP net other income and expense.

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Juniper Networks, Inc.

Reconciliation between GAAP and non-GAAP Financial Measures

(in thousands, except per share amounts and percentages)

(unaudited)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2011			2010			2011			2010
GAAP Net income attributable to Juniper Networks		$	96,163		$	190,233		$	425,136		$	618,402
Share-based compensation expense	C		52,525			52,402			222,158			181,957
Share-based compensation related payroll tax	C		83			2,537			9,246			6,433
Amortization of purchased intangible assets	A		6,920			3,526			27,133			8,531
Restructuring and other charges	B		15,014			2,255			30,564			10,805
Acquisition-related and other charges	A,B		350			4,276			9,641			6,342
(Gain)/loss on equity investments	B		(656	)		(5,421	)		326			(8,653	)
Non-recurring income tax adjustments	B		—			—			—			(54,069	)
Income tax effect of non-GAAP exclusions	B		(20,282	)		(21,219	)		(79,579	)		(59,258	)
Non-GAAP Net income		$	150,117		$	228,589		$	644,625		$	710,490
Non-GAAP Net income per share:
Basic	D	$	0.29		$	0.44		$	1.22		$	1.36
Diluted	D	$	0.28		$	0.42		$	1.19		$	1.32
Shares used in computing non-GAAP net income per share:
Basic	D		526,124			523,556			529,768			522,444
Diluted	D		533,335			541,464			541,417			538,790
GAAP Net income attributable to Juniper Networks as a % of revenue			8.6	%		16.0	%		9.6	%		15.1	%
Share-based compensation expense as a % of revenue	C		4.7	%		4.4	%		5.0	%		4.4	%
Share-based compensation related payroll tax as a % of revenue	C		—	%		0.2	%		0.2	%		0.2	%
Amortization of purchased intangible assets as a % of revenue	A		0.7	%		0.3	%		0.6	%		0.2	%
Restructuring and other charges as a % of revenue	B		1.3	%		0.2	%		0.7	%		0.3	%
Acquisition-related and other charges as a % of revenue	A,B		—	%		0.4	%		0.2	%		0.2	%
(Gain)/loss on equity investments	B		(0.1	)%		(0.5	)%		—	%		(0.2	)%
Non-recurring income tax adjustments as a % of revenue	B		—	%		—	%		—	%		(1.3	)%
Income tax effect of non-GAAP exclusions as a % of revenue	B		(1.8	)%		(1.8	)%		(1.8	)%		(1.5	)%
Non-GAAP Net income as a % of revenue			13.4	%		19.2	%		14.5	%		17.4	%

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Discussion of Non-GAAP Financial Measures

The table above includes the following non-GAAP financial measures derived from our Preliminary Condensed Consolidated Statements of Operations: cost of product revenue; cost of service revenue; product gross margin; product gross margin as a percentage of product revenue; service gross margin; service gross margin as a percentage of service revenue; gross margin; gross margin as a percentage of revenue; research and development expense; sales and marketing expense; general and administrative expense; operating expense; operating income; operating margin; other income and expense, net; income before income taxes and noncontrolling interest; provision for income taxes; income tax rate; net income; net income per share and net income as a percentage of revenue. 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 charges, litigation settlement charges, gain or loss on equity investments, non-recurring income tax adjustments, valuation allowance on deferred tax assets, and income tax effect of non-GAAP exclusions.

Note A: Acquisition-Related Charges. We exclude certain expense items resulting from acquisitions including the following, when applicable: (i) amortization of purchased intangible assets associated with our acquisitions; (ii) compensation related to acquisitions; and (iii) acquisition-related charges. 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. For example, we have incurred deferred compensation charges related to assumed options and transition and integration costs such as retention bonuses and acquisition-related milestone payments to acquired employees. 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 related costs; (ii) impairment charges; (iii) gain or loss on legal settlement, net of related transaction costs; (iv) retroactive impacts of certain tax settlements; (v) significant effects of tax legislation and judicial or administrative interpretation of tax regulations; (vi) gain or loss on equity investments; and (vii) 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 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 expenses do not accurately reflect the underlying performance of our continuing operations for the period in which they are incurred. Similarly, the retroactive impacts of certain tax settlements and significant effects of retroactive tax legislation are unique events that occur in periods that are generally unrelated to the level of business activity to which such settlement or legislation applies. We believe this limits comparability with prior periods and that 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 both with these amounts 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.

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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. 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 common 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 basic non-GAAP net income per share and diluted non-GAAP net income per share. The basic non-GAAP net income per share amount was calculated based on our non-GAAP net income and the weighted-average number of shares outstanding during the reporting period. The diluted non-GAAP income per share included additional dilution from potential issuance of common stock, except when such issuances would be anti-dilutive.

Note E: Other Income and Expense. GAAP and non-GAAP other (expense) income, net, consist primarily of interest income, interest expense and other non-operational income and expense items. As noted in Note B above, we exclude gains or losses from equity investments in our computation of non-GAAP other (expense) income.

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	December 31, 2011		December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	2,910,420	$	1,811,887
Short-term investments		641,323		474,514
Accounts receivable, net of allowances		577,386		596,622
Deferred tax assets, net		154,310		161,535
Prepaid expenses and other current assets		156,222		169,812
Total current assets		4,439,661		3,214,370
Property and equipment, net		598,581		493,881
Long-term investments		740,659		535,178
Restricted cash		78,307		119,346
Purchased intangible assets, net		123,114		121,803
Goodwill		3,928,144		3,927,807
Other long-term assets		75,354		55,466
Total assets	$	9,983,820	$	8,467,851
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	324,843	$	292,270
Accrued compensation		223,018		256,746
Deferred revenue		712,663		660,264
Other accrued liabilities		206,179		262,696
Total current liabilities		1,466,703		1,471,976
Long-term debt		999,034		—
Long-term deferred revenue		254,364		224,165
Long-term income tax payable		108,471		103,823
Other long-term liabilities		65,590		59,087
Total liabilities		2,894,162		1,859,051
Total equity		7,089,658		6,608,800
Total liabilities and equity	$	9,983,820	$	8,467,851

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Juniper Networks, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Years Ended December 31,
	2011			2010
Cash flows from operating activities:
Consolidated net income	$	425,012		$	619,373
Adjustments to reconcile consolidated net income to net cash from operating activities:
Depreciation and amortization		170,038			155,288
Non-cash portion of share-based compensation		217,761			177,825
Loss/(gain) on equity investments		326			(8,653	)
Deferred income taxes		7,225			64,035
Excess tax benefits from share-based compensation		(44,961	)		(48,500	)
Other charges		13,462			—
Changes in operating assets and liabilities:
Accounts receivable, net		18,633			(129,199	)
Prepaid expenses and other assets		28,488			(129,292	)
Accounts payable		33,871			48,217
Accrued compensation		(32,228	)		78,071
Accrued litigation settlements		—			(169,330	)
Other accrued liabilities		66,852			26,606
Deferred revenue		82,247			127,894
Net cash provided by operating activities		986,726			812,335
Cash flows from investing activities:
Purchases of property and equipment, net		(266,314	)		(185,291	)
Purchases of trading investments		(5,214	)		(2,754	)
Purchases of available-for-sale investments		(2,297,363	)		(1,577,758	)
Proceeds from sales of available-for-sale investments		1,281,236			537,916
Proceeds from maturities of available-for-sale investments		645,362			1,086,514
Payment for business acquisition, net of cash and cash equivalents acquired		(30,720	)		(374,765	)
Changes in restricted cash		(1,174	)		(12,424	)
Purchases of privately-held and other equity investments, net		(33,051	)		(4,188	)
Net cash used in investing activities		(707,238	)		(532,750	)
Cash flows from financing activities:
Proceeds from issuance of common stock		346,951			451,039
Purchases and retirement of common stock		(548,590	)		(565,473	)
Issuance of long-term debt, net		991,556			—
Change in customer financing arrangements		(15,833	)		(3,487	)
Excess tax benefits from share-based compensation		44,961			48,500
Return of capital to noncontrolling interest		—			(3,000	)
Net cash provided by (used in) financing activities		819,045			(72,421	)
Net increase in cash and cash equivalents		1,098,533			207,164
Cash and cash equivalents at beginning of period		1,811,887			1,604,723
Cash and cash equivalents at end of period	$	2,910,420		$	1,811,887

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Juniper Networks, Inc.

Cash, Cash Equivalents, and Investments

(in thousands)

(unaudited)

	December 31, 2011		December 31, 2010
Cash and cash equivalents	$	2,910,420	$	1,811,887
Short-term investments		641,323		474,514
Long-term investments		740,659		535,178
Total	$	4,292,402	$	2,821,579

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