Juniper Networks, Inc. Reports Q4’04 and Year End 2004 Financial Results 2004 Net Revenue of $1.3B, up 90%, 2004 GAAP EPS of $0.25, up 178%, and 2004 Non-GAAP EPS of $0.44, up 214%, from 2003
Sunnyvale, CA – January 18, 2005 — Juniper Networks, Inc. (NASDAQ: JNPR) today reported its results for the quarter and annual periods ended December 31, 2004.
Net revenues for the fourth quarter were $430.1 million, compared to $207.0 million for the same period last year, an increase of 108 percent.
GAAP net income for the fourth quarter was $66.0 million or $0.11 per share, compared to $14.7 million or $0.03 per share in the fourth quarter of 2003. Non-GAAP net income was $85.9 million or $0.15 per share, compared to $27.7 million or $0.06 per share in the fourth quarter of 2003. See the table at the bottom of the Non-GAAP Condensed Consolidated Statements of Operations for a reconciliation of the non-GAAP net income to the GAAP net income.
Net revenues for the full year 2004 were $1,336.0 million, compared to $701.4 million during calendar year 2003, an increase of 90 percent.
GAAP net income for calendar year 2004 was $135.7 million or $0.25 per share, compared to $39.2 million or $0.09 per share during calendar year 2003. Non-GAAP net income for calendar year 2004 was $238.6 million or $0.44 per share, compared to $59.0 million or $0.14 per share during calendar year 2003. See the table at the bottom of the Non-GAAP Condensed Consolidated Statements of Operations for a reconciliation of the non-GAAP net income to the GAAP net income.
Cash provided by operations was $142.5 million for the fourth quarter, compared to cash provided by operations of $62.9 million for the same period last year. Cash provided by operations for 2004 was $439.4M, up from $178.6M in 2003. Capital expenditures and depreciation during the fourth quarter were $18.5 million and $11.5 million, respectively.
“The fourth quarter was strong in every dimension, which completed a year of record performance,” said Scott Kriens, CEO of Juniper Networks. “We are in the sweet spot of the new networking industry, with both opportunities and capabilities to extend our growth and leadership strengths in an expanding marketplace.”
Juniper Networks will host a conference call web cast today, January 18, 2005 at 1:45 p.m. PT/4:45 p.m. ET at: http://www.juniper.net/company/investor/conferencecall.html. The conference call will be archived on the Juniper Networks website until February 28, 2005. A replay will be accessible by telephone after 3:00 p.m. Pacific Time through January 25, 2005 by dialing 800-633-8284 (or 402-977-9140), reservation number, 21227354. The replays will be available 24 hours/day, including weekends.
About Juniper Networks, Inc. Juniper Networks is the leader in delivering secure and assured communications over a single IP network. The company’s purpose-built, high performance IP platforms enable customers to support many different services and applications at scale. Service providers, enterprises, governments and research and education institutions worldwide rely on Juniper Networks to deliver products for building networks that are tailored to the specific needs of their users, services and applications. Juniper Networks’ portfolio of proven networking and security solutions supports the complex scale, security and performance requirements of the world’s most demanding networks. Additional information can be found atwww.juniper.net.
Juniper Networks, the Juniper Networks logo, NetScreen, NetScreen Technologies, the NetScreen logo, NetScreen-Global Pro, ScreenOS, and GigaScreen are registered trademarks of Juniper Networks, Inc. in the United States and other countries.
Statements in this release concerning Juniper Networks’ business outlook, future financial and operating results, and overall future prospects are forward looking statements that involve a number of uncertainties and risks. Actual results 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; the network capacity requirements of communication service providers; increases in competition; the timing of orders and their fulfillment; availability and cost of key parts and supplies; ability to establish and maintain relationships with distributors and resellers; variations in the expected mix of products sold; changes in customer mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of our products and services; rapid technological and market change; adoption of regulations or standards affecting our products, services or 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; currency fluctuations; litigation; and other factors listed in our 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.
1
Juniper Networks, Inc. Condensed Consolidated Balance Sheets (in thousands)
December 31, 2004
December 31, 2003*
ASSETS
Current assets:
Cash and cash equivalents
$
713,182
$
365,606
Short-term investments
404,659
215,906
Accounts receivable, net
187,306
77,964
Prepaid expenses and other current assets
108,586
31,333
Total current assets
1,413,733
690,809
Property and equipment, net
275,612
244,491
Long-term investments
595,234
394,297
Restricted cash
31,226
30,837
Goodwill
4,427,930
983,397
Purchased intangible assets, net and other long-term assets
255,979
67,266
Total assets
$
6,999,714
$
2,411,097
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
113,890
$
61,237
Accrued compensation
82,946
42,650
Accrued warranty
38,921
35,324
Other accrued liabilities
107,330
66,743
Deferred revenue
159,750
59,434
Total current liabilities
502,837
265,388
Deferred revenue, net of current portion
22,700
15,878
Other long-term liabilities, net of current portion
81,440
25,312
Long-term debt
400,000
542,076
Commitments and contingencies
Stockholders’ equity:
Common stock and additional paid-in capital
5,888,220
1,557,376
Deferred stock compensation
(32,394
)
(1,228
)
Accumulated other comprehensive income (loss)
(716
)
4,414
Retained earnings
137,627
1,881
Total stockholders’ equity
5,992,737
1,562,443
Total liabilities and stockholders’ equity
$
6,999,714
$
2,411,097
*Certain amounts that were previously reported have been reclassified to conform to the current period presentation. Specifically, deferred revenue and restructuring liabilities have been reclassified between short-term and long-term accounts.
2
Juniper Networks, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2004
2003
2004
2003
Net revenues:
Product (1)
$
379,834
$
179,104
$
1,162,928
$
602,455
Service
50,219
27,851
173,091
98,938
Total net revenues
430,053
206,955
1,336,019
701,393
Cost of revenues:
Product
99,434
54,753
317,616
200,621
Service
27,317
15,876
92,958
56,728
Total cost of revenues
126,751
70,629
410,574
257,349
Gross margin
303,302
136,326
925,445
444,044
Operating expenses:
Research and development
68,759
44,695
238,363
176,104
Sales and marketing
101,195
44,380
302,345
145,784
General and administrative
14,599
7,170
53,261
28,462
Amortization of purchased intangibles and deferred stock compensation (2)
28,523
5,375
100,737
22,698
Restructuring costs
–
–
(5,058
)
13,985
In-process research and development
–
–
27,500
–
Integration costs
–
–
5,087
–
Total operating expenses
213,076
101,620
722,235
387,033
Operating income
90,226
34,706
203,210
57,011
Interest and other income
11,526
6,128
28,233
33,428
Interest and other expense
(412
)
(5,410
)
(5,379
)
(39,099
)
Write-down of investments
–
–
(2,939
)
–
Loss on redemption of convertible subordinated notes
–
(15,193
)
(4,107
)
(1,085
)
Gain on sale of investments
–
–
–
8,739
Income before income taxes
101,340
20,231
219,018
58,994
Provision for income taxes
35,339
5,498
83,272
19,795
Net income
$
66,001
$
14,733
$
135,746
$
39,199
Net income per share:
Basic
$
0.12
$
0.04
$
0.28
$
0.10
Diluted*
$
0.11
$
0.03
$
0.25
$
0.09
Shares used in computing net income per share:
Basic
538,158
389,343
493,073
382,180
Diluted*
588,583
433,577
542,625
413,821
(1) Product net revenues are generated from groups of similar products as follows:
Infrastructure
$
299,863
$
179,104
$
975,729
$
602,455
Security
79,971
–
187,199
–
Total
$
379,834
$
179,104
$
1,162,928
$
602,455
(2) Amortization of deferred stock compensation relates to the following cost and expense categories by period:
Cost of revenues
$
676
$
15
$
2,850
$
(33
)
Research and development
5,217
511
21,493
1,925
Sales and marketing
3,800
78
17,685
205
General and administrative
383
17
1,927
(60
)
Total
$
10,076
$
621
$
43,955
$
2,037
*2003 amounts have been restated to include shares issuable upon conversion of the Zero Coupon Convertible Senior Notes due June 15, 2008
3
Juniper Networks, Inc. Non-GAAP Condensed Consolidated Statements of Operations (1) (in thousands, except per share amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2004
2003
2004
2003
Net revenues:
Product
$
379,834
$
179,104
$
1,162,928
$
602,455
Service
50,219
27,851
173,091
98,938
Total net revenues
430,053
206,955
1,336,019
701,393
Cost of revenues:
Product
99,434
54,753
317,616
200,621
Service
27,317
15,876
92,958
56,728
Total cost of revenues
126,751
70,629
410,574
257,349
Gross margin
303,302
136,326
925,445
444,044
Operating expenses:
Research and development
68,759
44,695
238,363
176,104
Sales and marketing
101,195
44,380
302,345
145,784
General and administrative
14,599
7,170
53,261
28,462
Total operating expenses
184,553
96,245
593,969
350,350
Operating income
118,749
40,081
331,476
93,694
Interest and other income
8,024
6,128
24,731
32,238
Interest and other expense
(412
)
(5,410
)
(5,379
)
(39,099
)
Income before income taxes
126,361
40,799
350,828
86,833
Provision for income taxes
40,436
13,056
112,265
27,787
Net income
$
85,925
$
27,743
$
238,563
$
59,046
Net income per share:
Basic
$
0.16
$
0.07
$
0.48
$
0.15
Diluted*
$
0.15
$
0.06
$
0.44
$
0.14
Shares used in computing net income per share:
Basic
538,158
389,343
493,073
382,180
Diluted*
588,583
433,577
542,625
413,821
*2003 amounts have been restated to include shares issuable upon conversion of the Zero Coupon Convertible Senior Notes due June 15, 2008
(1) The non-GAAP statements exclude restructuring costs, amortization of purchased intangibles and deferred stock compensation, in-process research and development, integration costs, write-down of investments, loss on redemption of convertible subordinated notes, gain on sale of investments and a prior period acquisition related adjustment. See reconciliation to GAAP information below:
Three Months Ended
Year Ended
December 31,
December 31,
2004
2003
2004
2003
Non-GAAP net income
$
85,925
$
27,743
$
238,563
$
59,046
Amortization of purchased intangibles and deferred stock compensation
(28,523
)
(5,375
)
(100,737
)
(22,698
)
Restructuring costs
–
–
5,058
(13,985
)
In-process research and development
–
–
(27,500
)
–
Integration costs
–
–
(5,087
)
–
Gain from non-recurring engineering contract
3,502
–
3,502
–
Acquisition related adjustment
–
–
–
1,190
Write-down of investments
–
–
(2,939
)
–
Loss on redemption of convertible subordinated notes
–
(15,193
)
(4,107
)
(1,085
)
Gain on sale of investments
–
–
–
8,739
Income tax effect
5,097
7,558
28,993
7,992
Net income
$
66,001
$
14,733
$
135,746
$
39,199
4
Juniper Networks, Inc. Condensed Consolidated Statements of Cash Flows (in thousands)
Year Ended December 31,
2004
2003
OPERATING ACTIVITIES:
Net income
$
135,746
$
39,199
Adjustments to reconcile net income to net cash from operating activities:
Depreciation
40,843
43,998
Amortization of purchased intangibles, deferred stock compensation and debt costs
104,831
26,042
Restructuring and other
321
3,621
In-process research and development
27,500
–
Write-down of investments
2,939
–
Loss on redemption of convertible subordinated notes
4,107
1,085
Gain on sale of investments
–
(8,739
)
Tax benefit of employee stock option plans
65,988
10,813
Changes in operating assets and liabilities:
Accounts receivable, net
(81,398
)
537
Prepaid expenses, other current assets and other long-term assets
(56,253
)
(3,092
)
Accounts payable
29,390
12,963
Accrued compensation
40,296
17,528
Accrued warranty
3,597
2,966
Other accrued liabilities
27,893
2,467
Deferred revenue
93,648
29,166
Net cash provided by operating activities
439,448
178,554
INVESTING ACTIVITIES:
Purchases of property and equipment, net
(63,185
)
(19,388
)
Purchases of available-for-sale investments
(739,437
)
(734,679
)
Maturities and sales of available-for-sale investments
704,740
1,085,929
Increase in restricted cash
(249
)
(30,837
)
Minority equity investments
(1,225
)
(900
)
Cash and cash equivalents acquired in connection with the NetScreen acquisition, net of cash paid
40,889
–
Net cash (used in) provided by investing activities
(58,467
)
300,125
FINANCING ACTIVITIES:
Proceeds from issuance of common stock
175,172
91,755
Redemption of convertible subordinated notes
(144,967
)
(792,013
)
Retirement of common stock
(63,610
)
–
Proceeds from issuance of convertible senior notes
–
392,750
Net cash used in financing activities
(33,405
)
(307,508
)
Net increase in cash and cash equivalents
347,576
171,171
Cash and cash equivalents at beginning of period
365,606
194,435
Cash and cash equivalents at end of period
$
713,182
$
365,606
5
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