UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):	 	July 20, 2010	

Juniper Networks, Inc. 
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	001-34501	770422528	
_____________________
(State or other jurisdiction	_____________
(Commission	______________
(I.R.S. Employer	
of incorporation)	File Number)	Identification No.)	
  	 	 	
1194 North Mathilda Avenue, Sunnyvale, California	 	94089	
_________________________________
(Address of principal executive offices)	 	___________
(Zip Code)	
 	 	 	
Registrant’s telephone number, including area code:	 	(408) 745-2000	
Not Applicable
______________________________________________
Former name or former address, if changed since last report
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Top of the Form
Item 2.02 Results of Operations and Financial Condition.
On July 20, 2010, Juniper Networks, Inc. ("we", "us" or "the Company") issued a press release in which we announced preliminary financial results for the quarter ended June 30, 2010. A copy of the press release is furnished as Exhibit 99.1 to this report. Exhibit 99.1 shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.

Discussion of Non-GAAP Financial Measures

The tables contained in the press release furnished as Exhibit 99.1 to this report include tables presenting the following non-GAAP financial measures 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 described herein, and identified in the table in our press release, 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 in our press release 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 non-cash 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 tables in our press release and, in particular, in evaluating the non-GAAP financial line items presented in the tables in our press release, 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 tables in our press release correspond to the appropriate note description below.

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.

Note C: Stock-Based Compensation Related Items. 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.

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.

 
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

Exhibit No. Description
99.1 Press release issued by Juniper Networks, Inc. on July 20, 2010

Top of the Form
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	Juniper Networks, Inc.	
  	 	 	 	 	
July 20, 2010	 	By:	 	Mitchell L. Gaynor	
 	 	 	 		
 	 	 	 	Name: Mitchell L. Gaynor	
 	 	 	 	Title: Senior Vice President and General Counsel	

Top of the Form
Exhibit Index 

Exhibit No.	 	Description	
	 		
99.1	 	Press release issued by Juniper Networks, Inc. on July 20, 2010	

EXHIBIT 99.1

Investor Relations:	 	Media Relations:	
Kathleen Bela	 	Keith Falter	
Juniper Networks, Inc.	 	Juniper Networks, Inc.	
(408) 936-7804	 	(408) 936-4558	
kbela@juniper.net	 	kfalter@juniper.net	
JUNIPER NETWORKS REPORTS PRELIMINARY SECOND QUARTER
2010 FINANCIAL RESULTS

 	•	 	Revenue: $978.3 million, up 24% year-over-year	

 	•	 	Operating Margin: 18.9% GAAP; 23.9% non-GAAP	

 	•	 	GAAP Net Income Per Share:  $0.24 diluted	

 	•	 	Non-GAAP Net Income Per Share: $0.30 diluted, up 58% year-over-year	
SUNNYVALE, Calif., July 20, 2010 – Juniper Networks, Inc. (NYSE: JNPR) today reported preliminary financial results for the three months ended June 30, 2010.
Net revenues for the second quarter of 2010 increased 24% on a year-over-year basis to $978.3 million. The Company posted GAAP net income of $130.5 million, or $0.24 per diluted share, and non-GAAP net income of $164.0 million, or $0.30 per diluted share, for the second quarter of 2010. Non-GAAP net income per share increased 58% compared to the second quarter of 2009. The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Net Revenues by Market table below.
“Juniper continues to execute well on our growth agenda consistent with our 2010 operating principles,” said Kevin Johnson, Juniper’s Chief Executive Officer.  “With an expanding product portfolio and strong momentum in critical growth areas of high performance networking, we feel confident in our view of growth for the second half of 2010.” 
Juniper’s operating margin for the second quarter of 2010 increased to 18.9% on a GAAP basis from 17.6% in the first quarter of 2010, and increased from 12.2% in the prior year second quarter. Non-GAAP operating margin for the second quarter of 2010 increased to 23.9% from 23.2% in the first quarter of 2010 and increased from 18.1% in the prior year second quarter.
Juniper generated net cash from operations for the second quarter of 2010 of $221.3 million, compared to net cash provided by operations of $88.5 million, after litigation settlement payments of $169.3 million, in the first quarter of 2010.
Capital expenditures, as well as depreciation and amortization expense during the second quarter of 2010, were $45.4 million and $37.5 million, respectively.
“In the quarter we made good progress on our long-term model both in terms of growth rates and higher operating margin. We continued to make investments in R&D and Sales and Marketing to ensure we capture the market opportunity ahead of us,” said Robyn Denholm, Juniper’s Chief Financial Officer.  “As the business outlook continues to improve, driving operational excellence throughout the organization will remain a key area of focus.  We are confident of delivering profitable growth in 2010.”
Juniper Networks will host a conference call web cast today, July 20, 2010 at 1:45 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 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 15, 2010.
About Juniper Networks
From devices to data centers, from consumers to the cloud, Juniper Networks delivers innovative software, silicon and systems that transform the experience and economics of networking. The company serves more than 30,000 customers and partners worldwide, and generated more than $3 billion in revenue over the last year. Additional information can be found at 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; 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.
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

 	 	Three Months Ended	 	Six Months Ended,	
 	 	June 30,	 	June 30,	
 	 	2010	 	2009	 	2010	 	2009	
Net revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Product	 	$	774,058	 	 	$	606,959	 	 	$	1,495,259	 	 	$	1,194,822	 	
Service	 	 	204,242	 	 	 	179,404	 	 	 	395,659	 	 	 	355,724	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total net revenues	 	 	978,300	 	 	 	786,363	 	 	 	1,890,918	 	 	 	1,550,546	 	
Cost of revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Product	 	 	231,752	 	 	 	207,576	 	 	 	454,133	 	 	 	400,637	 	
Service	 	 	86,610	 	 	 	72,405	 	 	 	164,826	 	 	 	141,235	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cost of revenues	 	 	318,362	 	 	 	279,981	 	 	 	618,959	 	 	 	541,872	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	 	659,938	 	 	 	506,382	 	 	 	1,271,959	 	 	 	1,008,674	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Research and development	 	 	224,768	 	 	 	183,894	 	 	 	431,762	 	 	 	369,294	 	
Sales and marketing	 	 	202,303	 	 	 	176,555	 	 	 	394,678	 	 	 	364,419	 	
General and administrative	 	 	45,880	 	 	 	39,175	 	 	 	89,018	 	 	 	78,386	 	
Amortization of purchased intangible assets	 	 	1,204	 	 	 	3,539	 	 	 	2,341	 	 	 	7,929	 	
Restructuring charges	 	 	264	 	 	 	7,529	 	 	 	8,369	 	 	 	11,758	 	
Acquisition-related charges	 	 	541	 	 	 	—	 	 	 	541	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	 	 	474,960	 	 	 	410,692	 	 	 	926,709	 	 	 	831,786	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	184,978	 	 	 	95,690	 	 	 	345,250	 	 	 	176,888	 	
Interest and other income, net	 	 	833	 	 	 	2,898	 	 	 	2,292	 	 	 	4,848	 	
Gain (loss) on equity investments	 	 	3,232	 	 	 	(1,625	)	 	 	3,232	 	 	 	(3,311	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes and noncontrolling interest	 	 	189,043	 	 	 	96,963	 	 	 	350,774	 	 	 	178,425	 	
Income tax provision	 	 	58,700	 	 	 	82,194	 	 	 	55,821	 	 	 	168,116	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated net income	 	$	130,343	 	 	$	14,769	 	 	$	294,953	 	 	$	10,309	 	
Adjust for net loss (income) attributable to noncontrolling interest	 	 	168	 	 	 	—	 	 	 	(1,327	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Juniper Networks	 	$	130,511	 	 	$	14,769	 	 	$	293,626	 	 	$	10,309	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per share attributable to Juniper Networks common stockholders:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.25	 	 	$	0.03	 	 	$	0.56	 	 	$	0.02	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	0.24	 	 	$	0.03	 	 	$	0.55	 	 	$	0.02	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares used in computing net income per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	524,463	 	 	 	523,105	 	 	 	522,812	 	 	 	523,754	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	538,947	 	 	 	532,850	 	 	 	537,989	 	 	 	531,624	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Stock-Based Compensation by Category
(in thousands)
(unaudited)

 	 	Three Months Ended	 	Six Months Ended	
 	 	June 30,	 	June 30,	
 	 	2010	 	2009	 	2010	 	2009	
Cost of revenues – Product	 	$	997	 	 	$	863	 	 	$	2,102	 	 	$	1,922	 	
Cost of revenues – Service	 	 	3,242	 	 	 	2,490	 	 	 	6,736	 	 	 	4,950	 	
Research and development	 	 	18,679	 	 	 	14,981	 	 	 	35,665	 	 	 	29,661	 	
Sales and marketing	 	 	13,853	 	 	 	10,645	 	 	 	25,581	 	 	 	20,844	 	
General and administrative	 	 	7,832	 	 	 	4,550	 	 	 	15,080	 	 	 	9,714	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	44,603	 	 	$	33,529	 	 	$	85,164	 	 	$	67,091	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Stock-Based Compensation Related Payroll Tax by Category
(in thousands)
(unaudited)

 	 	Three Months Ended	 	Six Months Ended	
 	 	June,	 	June 30,	
 	 	2010	 	2009	 	2010	 	2009	
Cost of revenues – Product	 	$	40	 	 	$	14	 	 	$	111	 	 	$	16	 	
Cost of revenues – Service	 	 	152	 	 	 	44	 	 	 	317	 	 	 	56	 	
Research and development	 	 	430	 	 	 	156	 	 	 	1,185	 	 	 	187	 	
Sales and marketing	 	 	1,150	 	 	 	191	 	 	 	1,582	 	 	 	393	 	
General and administrative	 	 	111	 	 	 	31	 	 	 	208	 	 	 	43	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	1,883	 	 	$	436	 	 	$	3,403	 	 	$	695	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Net Revenues by Reportable Segment
(in thousands)
(unaudited)

 	 	Three Months Ended	 	Six Months Ended	
 	 	June 30,	 	June 30,	
 	 	2010	 	2009	 	2010	 	2009	
Infrastructure – Product	 	$	590,212	 	 	$	469,888	 	 	$	1,146,339	 	 	$	924,244	 	
Infrastructure – Service	 	 	130,144	 	 	 	114,057	 	 	 	252,713	 	 	 	226,845	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Infrastructure	 	$	720,356	 	 	$	583,945	 	 	$	1,399,052	 	 	$	1,151,089	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Service Layer Technologies — Product	 	$	183,846	 	 	$	137,071	 	 	$	348,920	 	 	$	270,578	 	
Service Layer Technologies — Service	 	 	74,098	 	 	 	65,347	 	 	 	142,946	 	 	 	128,879	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Service Layer Technologies	 	$	257,944	 	 	$	202,418	 	 	$	491,866	 	 	$	399,457	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	978,300	 	 	$	786,363	 	 	$	1,890,918	 	 	$	1,550,546	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Net Revenues by Geographic Region
(in thousands)
(unaudited) 

                                                    Three Months Ended                   Six Months Ended

                                                         June 30,                            June 30,

                                                      2010             2009           2010               2009

Americas                                       $494,221              $390,843           $982,689           $750,533

Europe, Middle East, and Africa                 289,521               231,989            553,578            455,170

Asia Pacific                                    194,558               163,531            354,651            344,843
                                  ---------------------   -------------------   ----------------   ----------------

Total                                          $978,300              $786,363         $1,890,918         $1,550,546
                                  ---------------------   -------------------   ----------------   ----------------
Juniper Networks, Inc.
Net Revenues by Market
(in thousands)
(unaudited)

 	 	Three Months Ended	 	Six Months Ended	
 	 	June 30,	 	June 30,	
 	 	2010	 	2009	 	2010	 	2009	
Service Provider	 	$	620,398	 	 	$	513,270	 	 	$	1,213,647	 	 	$	1,033,801	 	
Enterprise	 	 	357,902	 	 	 	273,093	 	 	 	677,271	 	 	 	516,745	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	978,300	 	 	$	786,363	 	 	$	1,890,918	 	 	$	1,550,546	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited) 

 	 	 	 	 	 	Three Months Ended	 	Six Months Ended	
 	 	 	 	 	 	June 30,	 	June 30,	
 	 	 	 	 	 	2010	 	2009	 	2010	 	2009	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	 	 	
GAAP Cost of revenues – Product	 	 	 	 	 	$	231,752		 	$	207,576		 	$	454,133		 		400,637		
Stock-based compensation expense	 		C		 		(997	)	 		(863	)	 		(2,102	)	 		(1,922	)	
Stock-based compensation related payroll tax	 		C		 		(40	)	 		(14	)	 		(111	)	 		(16	)	
Amortization of purchased intangible assets	 		A		 		(308	)	 		(1,369	)	 		(333	)	 		(2,738	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Cost of revenues – Product	 	 	 	 	 		230,407		 		205,330		 		451,587		 		395,961		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Cost of revenues – Service	 	 	 	 	 		86,610		 		72,405		 		164,826		 		141,235		
Stock-based compensation expense	 		C		 		(3,242	)	 		(2,490	)	 		(6,736	)	 		(4,950	)	
Stock-based compensation related payroll tax	 		C		 		(152	)	 		(44	)	 		(317	)	 		(56	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Cost of revenues – Service	 	 	 	 	 		83,216		 		69,871		 		157,773		 		136,229		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Gross margin – Product	 	 	 	 	 		542,306		 		399,383		 		1,041,126		 		794,185		
Stock-based compensation expense	 		C		 		997		 		863		 		2,102		 		1,922		
Stock-based compensation related payroll tax	 		C		 		40		 		14		 		111		 		16		
Amortization of purchased intangible assets	 		A		 		308		 		1,369		 		333		 		2,738		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Gross margin — Product	 	 	 	 	 		543,651		 		401,629		 		1,043,672		 		798,861		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Product gross margin as a % of product revenue	 	 	 	 	 		70.1	%	 		65.8	%	 		69.6	%	 		66.5	%	
Stock-based compensation expense as a % of product revenue	 		C		 		0.1	%	 		0.2	%	 		0.2	%	 		0.2	%	
Stock-based compensation related payroll tax as a % of product revenue	 		C		 		—		 		—		 		—		 		—		
Amortization of purchased intangible assets as a % of product revenue	 		A		 		—		 		0.2	%	 		—		 		0.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Product gross margin as a % of product revenue	 	 	 	 	 		70.2	%	 		66.2	%	 		69.8	%	 		66.9	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Gross margin – Service	 	 	 	 	 		117,632		 		106,999		 		230,833		 		214,489		
Stock-based compensation expense	 		C		 		3,242		 		2,490		 		6,736		 		4,950		
Stock-based compensation related payroll tax	 		C		 		152		 		44		 		317		 		56		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Gross margin — Service	 	 	 	 	 		121,026		 		109,533		 		237,886		 		219,495		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited) 

 	 	 	 	 	 	Three Months Ended	 	Six Months Ended	
 	 	 	 	 	 	June 30,	 	June 30,	
 	 	 	 	 	 	2010	 	2009	 	2010	 	2009	
GAAP Service gross margin as a % of service revenue	 	 	 	 	 		57.6	%	 	 	59.6	%	 	 	58.3	%	 	 	60.3	%	
Stock-based compensation expense as a % of service revenue	 		C		 		1.6	%	 	 	1.5	%	 	 	1.7	%	 	 	1.4	%	
Stock-based compensation related payroll tax as a % of service revenue	 		C		 		0.1	%	 	 	—	 	 	 	0.1	%	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Service gross margin as a % of service revenue	 	 	 	 	 		59.3	%	 	 	61.1	%	 	 	60.1	%	 	 	61.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	 	 	 	$	 	 	
GAAP Gross margin	 	 	 	 	 	$	659,938		 	$	506,382	 	 	 	1,271,959	 	 	 	1,008,674	 	
Stock-based compensation expense	 		C		 		4,239		 	 	3,353	 	 	 	8,838	 	 	 	6,872	 	
Stock-based compensation related payroll tax	 		C		 		192		 	 	58	 	 	 	428	 	 	 	72	 	
Amortization of purchased intangible assets	 		A		 		308		 	 	1,369	 	 	 	333	 	 	 	2,738	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Gross margin	 	 	 	 	 		664,677		 	 	511,162	 	 	 	1,281,558	 	 	 	1,018,356	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Gross margin as a % of revenue	 	 	 	 	 		67.5	%	 	 	64.4	%	 	 	67.3	%	 	 	65.1	%	
Stock-based compensation expense as a % of revenue	 		C		 		0.4	%	 	 	0.4	%	 	 	0.5	%	 	 	0.4	%	
Stock-based compensation related payroll tax as a % of revenue	 		C		 		—		 	 	—	 	 	 	—	 	 	 	—	 	
Amortization of purchased intangible assets as a % of revenue	 		A		 		—		 	 	0.2	%	 	 	—	 	 	 	0.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Gross margin as a % of revenue	 	 	 	 	 		67.9	%	 	 	65.0	%	 	 	67.8	%	 	 	65.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Research and development expense	 	 	 	 	 		224,768		 	 	183,894	 	 	 	431,762	 	 	 	369,294	 	
Stock-based compensation expense	 		C		 		(18,679	)	 	 	(14,981	)	 	 	(35,665	)	 	 	(29,661	)	
Stock-based compensation related payroll tax	 		C		 		(430	)	 	 	(156	)	 	 	(1,185	)	 	 	(187	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Research and development expense	 	 	 	 	 		205,659		 	 	168,757	 	 	 	394,912	 	 	 	339,446	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Sales and marketing expense	 	 	 	 	 		202,303		 	 	176,555	 	 	 	394,678	 	 	 	364,419	 	
Stock-based compensation expense	 		C		 		(13,853	)	 	 	(10,645	)	 	 	(25,581	)	 	 	(20,844	)	
Stock-based compensation related payroll tax	 		C		 		(1,150	)	 	 	(191	)	 	 	(1,582	)	 	 	(393	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Sales and marketing expense	 	 	 	 	 		187,300		 	 	165,719	 	 	 	367,515	 	 	 	343,182	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP General and administrative expense	 	 	 	 	 		45,880		 	 	39,175	 	 	 	89,018	 	 	 	78,386	 	
Stock-based compensation expense	 		C		 		(7,832	)	 	 	(4,550	)	 	 	(15,080	)	 	 	(9,714	)	
Stock-based compensation related payroll tax	 		C		 		(111	)	 	 	(31	)	 	 	(208	)	 	 	(43	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP General and administrative expense	 	 	 	 	 		37,937		 	 	34,594	 	 	 	73,730	 	 	 	68,629	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Operating expense	 	 	 	 	 		474,960		 	 	410,692	 	 	 	926,709	 	 	 	831,786	 	
Stock-based compensation expense	 		C		 		(40,364	)	 	 	(30,176	)	 	 	(76,326	)	 	 	(60,219	)	
Stock-based compensation related payroll tax	 		C		 		(1,691	)	 	 	(378	)	 	 	(2,975	)	 	 	(623	)	
Amortization of purchased intangible assets	 		A		 		(1,204	)	 	 	(3,539	)	 	 	(2,341	)	 	 	(7,929	)	
Restructuring charges	 		B		 		(264	)	 	 	(7,529	)	 	 	(8,369	)	 	 	(11,758	)	
Acquisition-related charges	 		A		 		(541	)	 	 	—	 	 	 	(541	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Operating expense	 	 	 	 	 	$	430,896		 	$	369,070	 	 	$	836,157	 	 	$	751,257	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited) 

 	 	 	 	 	 	Three Months Ended	 	Six Months Ended	
 	 	 	 	 	 	June 30,	 	June 30,	
 	 	 	 	 	 	2010	 	2009	 	2010	 	2009	
GAAP Operating income	 	 	 	 	 	$	184,978		 	$	95,690	 	 	$	345,250	 	 	$	176,888	 	
Stock-based compensation expense	 		C		 		44,603		 	 	33,529	 	 	 	85,164	 	 	 	67,091	 	
Stock-based compensation related payroll tax	 		C		 		1,883		 	 	436	 	 	 	3,403	 	 	 	695	 	
Amortization of purchased intangible assets	 		A		 		1,512		 	 	4,908	 	 	 	2,674	 	 	 	10,667	 	
Restructuring charges	 		B		 		264		 	 	7,529	 	 	 	8,369	 	 	 	11,758	 	
Acquisition-related charges	 		A		 		541		 	 	—	 	 	 	541	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Operating income	 	 	 	 	 		233,781		 	 	142,092	 	 	 	445,401	 	 	 	267,099	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Operating margin	 	 	 	 	 		18.9	%	 	 	12.2	%	 	 	18.3	%	 	 	11.4	%	
Stock-based compensation expense as a % of revenue	 		C		 		4.6	%	 	 	4.3	%	 	 	4.5	%	 	 	4.3	%	
Stock-based compensation related payroll tax as a % of revenue	 		C		 		0.2	%	 	 	—	 	 	 	0.2	%	 	 	—	 	
Amortization of purchased intangible assets as a % of revenue	 		A		 		0.2	%	 	 	0.6	%	 	 	0.2	%	 	 	0.7	%	
Restructuring charges as a % of revenue	 		B		 		—		 	 	1.0	%	 	 	0.4	%	 	 	0.8	%	
Acquisition-related charges as a % of revenue	 		A		 		—		 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Operating margin	 	 	 	 	 		23.9	%	 	 	18.1	%	 	 	23.6	%	 	 	17.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Other income and expense, net	 	 	 	 	 		4,065		 	 	1,273	 	 	 	5,524	 	 	 	1,537	 	
(Gain) loss on equity investments	 		B		 		(3,232	)	 	 	1,625	 	 	 	(3,232	)	 	 	3,311	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Other income and expense, net	 	 	 	 	 		833		 	 	2,898	 	 	 	2,292	 	 	 	4,848	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP income tax provision	 	 	 	 	 		58,700		 	 	82,194	 	 	 	55,821	 	 	 	168,116	 	
Non-recurring income tax adjustment	 		B		 		—		 	 	(52,124	)	 	 	54,069	 	 	 	(52,124	)	
Valuation allowance on deferred tax assets	 		B		 		—		 	 	—	 	 	 	—	 	 	 	(61,755	)	
Income tax effect of non-GAAP exclusions	 		B		 		12,130		 	 	11,120	 	 	 	26,107	 	 	 	22,336	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Provision for income tax	 	 	 	 	 		70,830		 	 	41,190	 	 	 	135,997	 	 	 	76,573	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Income tax rate	 	 	 	 	 		30.2	%	 	 	28.4	%	 	 	30.4	%	 	 	28.2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Income before income taxes and noncontrolling interest*	 	 	 	 	 	$	234,614		 	$	144,990	 	 	$	447,693	 	 	$	271,947	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
• Consists of non-GAAP operating income plus non-GAAP net other income and expense.
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited) 

 	 	 	 	 	 	Three Months Ended	 	Six Months Ended	
 	 	 	 	 	 	June 30,	 	June 30,	
 	 	 	 	 	 	2010	 	2009	 	2010	 	2009	
GAAP Net income attributable to Juniper Networks	 	 	 	 	 	$	130,511		 	$	14,769	 	 	$	293,626	 	 	$	10,309	 	
Stock-based compensation expense	 		C		 		44,603		 	 	33,529	 	 	 	85,164	 	 	 	67,091	 	
Stock-based compensation related payroll tax	 		C		 		1,883		 	 	436	 	 	 	3,403	 	 	 	695	 	
Amortization of purchased intangible assets	 		A		 		1,512		 	 	4,908	 	 	 	2,674	 	 	 	10,667	 	
Restructuring charges	 		B		 		264		 	 	7,529	 	 	 	8,369	 	 	 	11,758	 	
Acquisition-related charges	 		A		 		541		 	 	—	 	 	 	541	 	 	 	—	 	
(Gain) loss on equity investments	 		B		 		(3,232	)	 	 	1,625	 	 	 	(3,232	)	 	 	3,311	 	
Non-recurring income tax adjustment	 		B		 		—		 	 	52,124	 	 	 	(54,069	)	 	 	52,124	 	
Valuation allowance on deferred tax assets	 		B		 		—		 	 	—	 	 	 	—	 	 	 	61,755	 	
Income tax effect of non-GAAP exclusions	 		B		 		(12,130	)	 	 	(11,120	)	 	 	(26,107	)	 	 	(22,336	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Net income	 	 	 	 	 	$	163,952		 	$	103,800	 	 	$	310,369	 	 	$	195,374	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Net income per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 		D		 	$	0.31		 	$	0.20	 	 	$	0.59	 	 	$	0.37	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 		D		 	$	0.30		 	$	0.19	 	 	$	0.58	 	 	$	0.37	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares used in computing non-GAAP net income per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 		D		 		524,463		 	 	523,105	 	 	 	522,812	 	 	 	523,754	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 		D		 		538,947		 	 	532,850	 	 	 	537,989	 	 	 	531,624	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Net income attributable to Juniper Networks as a % of revenue	 	 	 	 	 		13.3	%	 	 	1.9	%	 	 	15.5	%	 	 	0.7	%	
Stock-based compensation expense as a % of revenue	 		C		 		4.6	%	 	 	4.3	%	 	 	4.5	%	 	 	4.3	%	
Stock-based compensation related payroll tax as a % of revenue	 		C		 		0.2	%	 	 	—	 	 	 	0.2	%	 	 	—	 	
Amortization of purchased intangible assets as a % of revenue	 		A		 		0.2	%	 	 	0.6	%	 	 	0.2	%	 	 	0.7	%	
Restructuring charges as a % of revenue	 		B		 		—		 	 	1.0	%	 	 	0.4	%	 	 	0.8	%	
Acquisition-related charges as a % of revenue	 		A		 		0.1	%	 	 	—	 	 	 	—	 	 	 	—	 	
(Gain) loss on equity investments	 		B		 		(0.3	)%	 	 	0.2	%	 	 	(0.2	)%	 	 	0.2	%	
Non-recurring income tax adjustment as a % of revenue	 		B		 		—		 	 	6.6	%	 	 	(2.9	)%	 	 	3.3	%	
Valuation allowance on deferred tax assets as a % of revenue	 		B		 		—		 	 	—	 	 	 	—	 	 	 	4.0	%	
Income tax effect of non-GAAP exclusions as a % of revenue	 		B		 		(1.3	)%	 	 	(1.4	)%	 	 	(1.3	)%	 	 	(1.4	)%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Non-GAAP Net income as a % of revenue	 	 	 	 	 		16.8	%	 	 	13.2	%	 	 	16.4	%	 	 	12.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Discussion of Non-GAAP Financial Measures
The table above includes the following non-GAAP financial measures 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 tables 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.
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.
Note C: Stock-Based Compensation Related Items . 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.
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.
Juniper Networks, Inc.
Preliminary Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

 	 	June 30,	 	December 31, 2009	
 	 	2010	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	1,660,086	 	 	$	1,604,723	 	
Short-term investments	 	 	563,315	 	 	 	570,522	 	
Accounts receivable, net of allowances	 	 	391,545	 	 	 	458,652	 	
Deferred tax assets, net	 	 	224,792	 	 	 	196,318	 	
Prepaid expenses and other current assets	 	 	59,568	 	 	 	48,744	 	
 	 	 	 	 	 	 	 	 	
Total current assets	 	 	2,899,306	 	 	 	2,878,959	 	
Property and equipment, net	 	 	466,172	 	 	 	455,651	 	
Long-term investments	 	 	512,817	 	 	 	483,505	 	
Restricted cash	 	 	73,439	 	 	 	53,732	 	
Purchased intangible assets, net	 	 	23,360	 	 	 	13,834	 	
Goodwill	 	 	3,711,726	 	 	 	3,658,602	 	
Long-term deferred tax assets, net	 	 	8,205	 	 	 	10,555	 	
Other long-term assets	 	 	49,302	 	 	 	35,425	 	
 	 	 	 	 	 	 	 	 	
Total assets	 	$	7,744,327	 	 	$	7,590,263	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	243,228	 	 	$	242,591	 	
Accrued compensation	 	 	206,528	 	 	 	176,551	 	
Accrued warranty	 	 	38,280	 	 	 	38,199	 	
Deferred revenue	 	 	544,578	 	 	 	571,652	 	
Income taxes payable	 	 	53,577	 	 	 	34,936	 	
Accrued litigation settlements	 	 	—	 	 	 	169,330	 	
Other accrued liabilities	 	 	134,828	 	 	 	142,526	 	
 	 	 	 	 	 	 	 	 	
Total current liabilities	 	 	1,221,019	 	 	 	1,375,785	 	
Long-term deferred revenue	 	 	223,217	 	 	 	181,937	 	
Long-term income tax payable	 	 	94,950	 	 	 	170,245	 	
Other long-term liabilities	 	 	33,336	 	 	 	37,531	 	
Commitments and contingencies	 	 	 	 	 	 	 	 	
Juniper Networks stockholders’ equity:	 	 	 	 	 	 	 	 	
Common stock, $0.00001 par value	 	 	5	 	 	 	5	 	
Additional paid-in capital	 	 	9,363,244	 	 	 	9,060,089	 	
Accumulated other comprehensive loss	 	 	(10,667	)	 	 	(1,433	)	
Accumulated deficit	 	 	(3,181,733	)	 	 	(3,236,525	)	
 	 	 	 	 	 	 	 	 	
Total Juniper Networks stockholders’ equity	 	 	6,170,849	 	 	 	5,822,136	 	
Noncontrolling interest	 	 	956	 	 	 	2,629	 	
 	 	 	 	 	 	 	 	 	
Total equity	 	 	6,171,805	 	 	 	5,824,765	 	
 	 	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	 	$	7,744,327	 	 	$	7,590,263	 	
 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 	 	Six Months Ended	
 	 	June 30,	
 	 	2010	 	2009	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Consolidated net income	 	$	294,953	 	 	$	10,309	 	
Adjustments to reconcile net income to net cash from operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	72,748	 	 	 	75,355	 	
Stock-based compensation	 	 	85,164	 	 	 	67,091	 	
(Gain) loss on equity investments	 	 	(3,232	)	 	 	3,311	 	
Change in excess tax benefits from share-based compensation	 	 	(28,287	)	 	 	7,197	 	
Deferred income taxes	 	 	(25,594	)	 	 	69,288	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	 	67,168	 	 	 	840	 	
Prepaid expenses and other assets	 	 	(15,712	)	 	 	(6,116	)	
Accounts payable	 	 	(6,331	)	 	 	(10,488	)	
Accrued compensation	 	 	29,977	 	 	 	(10,774	)	
Accrued litigation settlements	 	 	(169,330	)	 	 	—	 	
Income tax payable	 	 	(683	)	 	 	37,412	 	
Other accrued liabilities	 	 	(4,987	)	 	 	10,796	 	
Deferred revenue	 	 	14,035	 	 	 	58,325	 	
 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	309,889	 	 	 	312,546	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	
Purchases of property and equipment, net	 	 	(83,157	)	 	 	(79,424	)	
Purchases of trading investments	 	 	(1,690	)	 	 	—	 	
Purchases of available-for-sale investments	 	 	(932,004	)	 	 	(811,449	)	
Proceeds from sales of available-for-sale investments	 	 	354,890	 	 	 	109,820	 	
Proceeds from maturities of available-for-sale investments	 	 	557,363	 	 	 	137,050	 	
Changes in restricted cash	 	 	(12,296	)	 	 	(1,275	)	
Purchases of privately-held equity investments, net	 	 	(727	)	 	 	(1,191	)	
Payment for business acquired, net of cash acquired	 	 	(64,215	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(181,836	)	 	 	(646,469	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	
Proceeds from issuance of common stock	 	 	176,662	 	 	 	50,678	 	
Purchases and retirement of common stock	 	 	(253,672	)	 	 	(169,370	)	
Change in customer financing arrangements	 	 	(20,967	)	 	 	(5,121	)	
Change in excess tax benefits from share-based compensation	 	 	28,287	 	 	 	(7,197	)	
Return of capital to noncontrolling interest	 	 	(3,000	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	
Net cash used in financing activities	 	 	(72,690	)	 	 	(131,010	)	
 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	 	 	55,363	 	 	 	(464,933	)	
Cash and cash equivalents at beginning of period	 	 	1,604,723	 	 	 	2,019,084	 	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	 	$	1,660,086	 	 	$	1,554,151	 	
 	 	 	 	 	 	 	 	 	
Juniper Networks, Inc.
Cash, Cash Equivalents, Trading, and Available-For-Sale Investments
(in thousands)
(unaudited)

 	 	June 30,	 	December 31, 2009	
 	 	2010	 	 	 	 	
Cash and cash equivalents	 	$	1,660,086	 	 	$	1,604,723	 	
Short-term investments	 	 	563,315	 	 	 	570,522	 	
Long-term investments	 	 	512,817	 	 	 	483,505	 	
 	 	 	 	 	 	 	 	 	
Total	 	$	2,736,218	 	 	$	2,658,750