SUNNYVALE, CA — (Marketwire) — 07/26/11 — Juniper Networks (NYSE: JNPR)
Juniper Networks (NYSE: JNPR) today reported preliminary financial results
for the three and six months ended June 30, 2011, and provided its outlook
for the three months ending September 30, 2011.
Net revenues for the second quarter of 2011 increased 15% on a
year-over-year basis, and increased 2% sequentially, to $1,120.5 million.
The Company posted GAAP net income of $115.6 million, or $0.21 per diluted
share, and non-GAAP net income of $167.2 million, or $0.31 per diluted
share, for the second quarter of 2011.
Non-GAAP net income per diluted share increased 3% compared to the second
quarter of 2010 and decreased 3% compared to last quarter. 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.
“Juniper-s results reflect momentum in our routing business and a return to
solid performance in switching. A number of factors, however, including
mixed signals in the macro economy, impacted our performance this quarter,”
said Kevin Johnson, chief executive officer at Juniper Networks. “We are
confident that our investment in innovation is generating a wave of great
products that positions us well to deliver on our multi-year growth
agenda.”
Juniper-s operating margin for the second quarter of 2011 decreased to
15.3% on a GAAP basis from 16.1% in the first quarter of 2011, and from
18.9% in the prior year second quarter. Non-GAAP operating margin for the
second quarter of 2011 decreased to 21.6% from 22.3% in the first quarter
of 2011 and from 23.9% in the prior year second quarter.
“We delivered solid year-over-year growth in the June quarter. However, we
saw some moderation in certain areas of the business, which resulted in
revenues coming in below our expectations. I-m pleased with our diligent
expense control, which enabled us to generate earnings within our guidance
range,” said Robyn Denholm, chief financial officer at Juniper Networks.
“We have taken decisive steps to ensure our cost structure takes into
account the near-term revenue environment while preserving investments that
support our multi-year growth agenda.”
Total cash, cash equivalents and investments as of the second quarter
of 2011 was $4,220.5 million, compared to $4,083.5 million as of the first
quarter of 2011 and $2,736.2 million as of the same quarter of the prior
year.
Juniper generated net cash from operations for the second quarter of 2011
of $318.3 million, compared to net cash provided by operations of $239.7
million, in the first quarter of 2011, and $221.3 million in the same
quarter of the prior year.
Days sales outstanding in accounts receivable (“DSO”) was 39 days in the
second quarter of 2011, compared to 38 days in the prior quarter and 36
days in the same quarter of the prior year.
Juniper repurchased approximately 3.9 million shares in the second quarter
of 2011, at an average price of $38.94 per share, or approximately $150
million dollars.
Capital expenditures, as well as depreciation and amortization of
intangible assets expense during the second quarter of 2011, were $62.0
million and $41.9 million, respectively.
While the long-term fundamentals driving demand for networking
solutions are healthy, our outlook for the September quarter reflects some
near-term market weakness due primarily to the timing of certain Service
Provider deployments. Our overall pipeline is strong and we anticipate many
of our recent design wins will begin translating to revenue late in 2011.
Juniper estimates revenue for the third quarter ending September 30,
2011, to be in the range of $1.070 billion to $1.120 billion.
Juniper estimates that its non-GAAP gross margin will be in the range
of between 65% and 67% in the third quarter.
Juniper expects its non-GAAP operating margin for the third quarter
will be in the range of 19% to 21%.
Juniper estimates that its non-GAAP net income per share will range
between $0.26 and $0.30 on a diluted basis, assuming a flat share count and
estimated non-GAAP tax rate of 27%. The non-GAAP EPS estimate includes a
dilutive impact of approximately $0.02 per share due to net interest
expense from our debt.
All forward-looking non-GAAP measures exclude 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. A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis.
Juniper Networks will host a conference call web cast today, July 26, 2011
at 2:00 p.m. (Pacific Time), to be broadcast live over the Internet at: .
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 until
September 13, 2011.
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 ().
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.
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; net other income and expense;
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 Stock-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, stock 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.
. 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.
. 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.
We provide non-GAAP
information relative to our expense for stock-based compensation and
related payroll tax. We began to include stock-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 stock-based compensation, we believe that the exclusion of stock-based
compensation allows for more accurate comparisons of our operating results
to our peer companies. Further, we believe that excluding stock-based
compensation expense allows for a more accurate comparison of our financial
results to previous periods during which our equity-based awards were not
required to be reflected in our income statement. Stock-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 stock is unrelated to the
amount of compensation ultimately received by the employee; and the cost to
the company is based on a stock-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 stock-based
compensation, payroll tax on stock option exercises is dependent on our
stock price and the timing and exercise by employees of our stock-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 stock-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.
. 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.
. 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.
Kathleen Nemeth
Juniper Networks
(408) 936-5397
David Shane
Juniper Networks
(408) 936-4872
Cindy Ta
Juniper Networks
(408) 936-6131
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