Juniper Networks (NYSE:JNPR), an industry leader in automated,
scalable and secure networks, today reported preliminary financial
results for the three months and twelve months ended
December 31, 2017 and provided its outlook for the three
months ending March 31, 2018.
Fourth Quarter 2017 Financial
Performance
Net revenues were $1,239.5 million, a decrease
of 11% year-over-year and 1% sequentially.
GAAP operating margin was 16.4%, a decrease from
20.7% in the fourth quarter of 2016, and a decrease from 18.4% in
the third quarter of 2017.
Non-GAAP operating margin was 22.7%, a decrease
from 26.5% in the fourth quarter of 2016, and a decrease from 23.5%
in the third quarter of 2017.
GAAP net loss was $148.1 million, a decrease of
178% year-over-year and 189% sequentially, resulting in diluted
loss per share of $0.40. GAAP net loss was primarily due to the Tax
Cuts and Jobs Act, which resulted in an estimated $289.5
million of tax expense.
Non-GAAP net income was $199.4 million, a
decrease of 22% year-over-year and 6% sequentially, resulting in
diluted earnings per share of $0.53.
Full Year 2017 Financial
Performance
Net revenues were $5,027.2 million, an increase
of 1% year-over-year.
GAAP operating margin was 16.9%, a decrease from
17.8% in fiscal year 2016.
Non-GAAP operating margin was 22.8%, a decrease
from 23.4% in fiscal year 2016.
GAAP net income was $306.2 million, a decrease
of 48% year-over-year, resulting in diluted earnings per share of
$0.80, a decrease of 48% year-over-year. The change in GAAP net
income was primarily due to the Tax Cuts and Jobs Act, which
resulted in an estimated $289.5 million of tax expense.
Non-GAAP net income was $809.0 million, flat
year-over-year, resulting in diluted earnings per share of $2.11,
an increase of 1% year-over-year.
The reconciliation between GAAP and non-GAAP
results of operations is provided in a table immediately following
the Preliminary Net Revenues by Geographic Region table below.
“We continue to lead the way in helping our
customers build more automated, cost efficient, scalable networks,"
said Rami Rahim, chief executive officer, Juniper Networks. "We
believe strongly that we have the right product portfolio in place
to win in this dynamic market.”
Balance Sheet and Other Financial
Results
Total cash, cash equivalents, and investments as
of December 31, 2017 were $4,021.0 million, compared to
$3,657.3 million as of December 31, 2016, and
$4,199.3 million as of September 30, 2017.
Net cash flows provided by operations for the
fourth quarter of 2017 was $214.2 million, compared to $335.9
million in the fourth quarter of 2016, and $201.9 million in the
third quarter of 2017.
Days sales outstanding in accounts receivable,
or “DSO,” was 62 days in the fourth quarter of 2017, compared to 68
days in the fourth quarter of 2016, and 52 days in the third
quarter of 2017.
Capital expenditures were $53.6 million and
depreciation and amortization expense was $55.0 million during
the fourth quarter of 2017.
The Company today announced an expansion of its
capital return plan. Juniper's Board of Directors has approved a
new $2 billion buyback authorization, and declared a quarterly cash
dividend of $0.18 per share to be paid on March 22, 2018 to
shareholders of record as of the close of business on March 1,
2018. Additional details can be found in the press release issued
today at
http://investor.juniper.net/investor-relations/default.aspx.
Outlook
These metrics are provided on a non-GAAP basis,
except for revenue and share count. Earnings per share is on a
fully diluted basis. The outlook assumes that the exchange rate of
the U.S. dollar to other currencies will remain relatively stable
at current levels.
The first quarter revenue outlook reflects
ongoing deployment delays as Juniper expects its large cloud
customers to continue their architectural transition, which is
expected to result in below normal seasonality. The Company remains
confident in its competitive position and strong relationship with
these strategic customers.
Beyond the first quarter, Juniper expects
revenue to grow on a sequential basis and return to year-on-year
growth by the end of the year.
The Company expects gross margins for the
quarter to remain under pressure, due to lower volume and product
mix, resulting from the architectural shifts discussed above. The
Company expects full year margins to improve directionally from
Q1'18 levels.
Juniper expects to manage operating expenses
prudently and to increase operational efficiencies, both in the
first quarter and throughout the year.
As a result of the Tax Cuts and Jobs Act, the
Company plans to repatriate approximately $3 billion. Juniper
expects the new territorial tax system to provide lower cost access
to nearly all global free cash flow on an ongoing basis. The
Company intends to use the repatriated cash to invest in its
business, support value-enhancing M&A, and fund its return of
capital to shareholders.
Juniper's guidance for the quarter ending
March 31, 2018 is as follows:
- Revenues will be approximately $1,050 million, plus or minus
$30 million.
- Non-GAAP gross margin will be approximately 58.0%, plus or
minus 1.0%.
- Non-GAAP operating expenses will be approximately $485 million,
plus or minus $5 million.
- Non-GAAP operating margin will be approximately 12.0% at the
midpoint of revenue guidance.
- Non-GAAP tax rate will be approximately 21.0%.
- Non-GAAP net income per share will be approximately $0.25, plus
or minus $0.03. This assumes a share count of approximately 360
million.
The guidance above is provided under ASC 605. Juniper will adopt
ASC 606 for Q1'18 and intends to provide a ASC 606 to 605
reconciliation when it reports Q1 results.
All forward-looking non-GAAP measures exclude
estimates for amortization of intangible assets, share-based
compensation expenses, acquisition-related charges, restructuring
charges, impairment charges, litigation settlement and resolution
charges, supplier component remediation charges and recoveries,
gain or loss on equity investments, retroactive impact of certain
tax settlements, significant effects of tax legislation and
judicial or administrative interpretation of tax regulations,
including the impact of income tax reform, non-recurring income tax
adjustments, valuation allowance on deferred tax assets, and the
income tax effect of non-GAAP exclusions, and do not include the
impact of any future acquisitions, divestitures, or joint ventures
that may occur in the period. Juniper is unable to provide a
reconciliation of non-GAAP guidance measures to corresponding U.S.
generally accepted accounting principles or GAAP measures on a
forward-looking basis without unreasonable effort due to the
overall high variability and low visibility of most of the
foregoing items that have been excluded. For example, share-based
compensation expense is impacted by the Company’s future hiring
needs, the type and volume of equity awards necessary for such
future hiring, and the price at which the Company’s stock will
trade in those future periods. Amortization of intangible assets is
significantly impacted by the timing and size of any future
acquisitions. The items that are being excluded are difficult to
predict and a reconciliation could result in disclosure that would
be imprecise or potentially misleading. Material changes to any one
of these items could have a significant effect on our guidance and
future GAAP results. Certain exclusions, such as amortization of
intangible assets and share-based compensation expenses, are
generally incurred each quarter, but the amounts have historically
and may continue to vary significantly from quarter to quarter.
Fourth Quarter and Fiscal Year 2017
Financial Commentary Available Online
A CFO Commentary reviewing the Company’s fourth
quarter and fiscal year 2017 financial results, as well as first
quarter 2018 financial outlook will be furnished to
the SEC on Form 8-K and published on the Company’s
website at http://investor.juniper.net. Analysts and investors are
encouraged to review this commentary prior to participating in the
conference call webcast.
Conference Call Webcast
Juniper Networks will host a conference call
webcast today, January 30, 2018, at 2:00 pm PT, to be
broadcast live over the Internet at http://investor.juniper.net. To
participate via telephone in the US, the toll free dial-in number
is 1-877-407-8033. Outside the US, dial +1-201-689-8033. Please
call 10 minutes prior to the scheduled conference call time. The
webcast replay will be archived on the Juniper Networks
website.
About Juniper Networks
Juniper Networks (NYSE:JNPR) challenges the
status quo with products, solutions and services that transform the
economics of networking. Our team co-innovates with our customers
and partners to deliver automated, scalable and secure networks
with agility, performance and value. Additional information can be
found at Juniper Networks (www.juniper.net) or connect with Juniper
on Twitter and Facebook.
Investors and others should note that the
Company announces material financial and operational information to
its investors using its Investor Relations website, press releases,
SEC filings and public conference calls and webcasts. The Company
also intends to use the Twitter account @JuniperNetworks and the
Company’s blogs as a means of disclosing information about the
Company and for complying with its disclosure obligations under
Regulation FD. The social media channels that the Company intends
to use as a means of disclosing information described above may be
updated from time to time as listed on the Company’s Investor
Relations website.
Juniper Networks, the Juniper Networks logo,
Juniper, and Junos are registered trademarks of Juniper Networks,
Inc. and/or its affiliates in the United States and other
countries. Other names may be trademarks of their respective
owners.
Safe Harbor
Statements in this release concerning Juniper
Networks’ business outlook, economic and market outlook, including
pricing pressure and product mix; our future financial and
operating results; expectations with respect to our market trends;
the impact of architectural transitions of cloud providers on our
business; our plans to repatriate offshore cash and potential
future uses of such cash; our expectations around lower cost access
to our global free cash; the impact of the Tax Cuts and Jobs Act on
our business; execution of our capital return program; our future
strategy; the strength of our product portfolio; our ability to
expand business opportunities; our expectations around obtaining
revenue and margin growth; our cost management and operating
expense discipline; and our overall future prospects are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act 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 several factors, including: general
economic and political conditions globally or regionally; business
and economic conditions in the networking industry; changes in
overall technology spending by our customers and spending by
communication service providers and major customers, including
Cloud providers; the network capacity requirements of our customers
and, in particular, cloud and 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,
changes or disruptions; availability of key product components;
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, including the Tax Cuts and Jobs Act; currency
fluctuations; litigation settlements and resolutions; the potential
impact of activities related to the execution of capital return,
restructurings and product rationalization; and other factors
listed in Juniper Networks’ most recent report on Form 10-Q or 10-K
filed with the Securities and Exchange Commission. Note that our
estimates as to tax rate and the impact of the Tax Cuts and Jobs
Act on our business are based on current tax law, including current
interpretations of the Tax Cuts and Jobs Act, and could be affected
by changing interpretations of the Act, as well as additional
legislation and guidance around the Act. 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 made in this release in the
event facts or circumstances subsequently change after the date of
this press release.
Use of Non-GAAP Financial
Information
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 of Non-GAAP Financial Measures" section of this press
release. The following tables and reconciliations can also be found
on our Investor Relations website at
http://investor.juniper.net.
A PDF accompanying this announcement is available
at http://resource.globenewswire.com/Resource/Download/44018fb1-a391-45b2-9188-984574f0ba71
|
Juniper Networks, Inc. |
Preliminary Condensed Consolidated Statements
of Operations |
(in millions, except per share amounts) |
(unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net revenues: |
|
|
|
|
|
|
|
Product |
$ |
830.4 |
|
|
$ |
985.6 |
|
|
$ |
3,446.2 |
|
|
$ |
3,528.9 |
|
Service |
409.1 |
|
|
400.0 |
|
|
1,581.0 |
|
|
1,461.2 |
|
Total net
revenues |
1,239.5 |
|
|
1,385.6 |
|
|
5,027.2 |
|
|
4,990.1 |
|
Cost of revenues: |
|
|
|
|
|
|
|
Product |
334.5 |
|
|
370.4 |
|
|
1,360.9 |
|
|
1,326.2 |
|
Service |
153.8 |
|
|
157.5 |
|
|
594.2 |
|
|
559.4 |
|
Total
cost of revenues |
488.3 |
|
|
527.9 |
|
|
1,955.1 |
|
|
1,885.6 |
|
Gross margin |
751.2 |
|
|
857.7 |
|
|
3,072.1 |
|
|
3,104.5 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
227.9 |
|
|
263.0 |
|
|
980.7 |
|
|
1,013.7 |
|
Sales and
marketing |
233.6 |
|
|
254.5 |
|
|
950.2 |
|
|
972.9 |
|
General
and administrative |
50.8 |
|
|
52.9 |
|
|
227.5 |
|
|
224.9 |
|
Restructuring charges |
36.2 |
|
|
0.1 |
|
|
65.6 |
|
|
3.3 |
|
Total
operating expenses |
548.5 |
|
|
570.5 |
|
|
2,224.0 |
|
|
2,214.8 |
|
Operating income |
202.7 |
|
|
287.2 |
|
|
848.1 |
|
|
889.7 |
|
Other expense, net |
(2.5 |
) |
|
(15.1 |
) |
|
(36.3 |
) |
|
(62.3 |
) |
Income before income
taxes |
200.2 |
|
|
272.1 |
|
|
811.8 |
|
|
827.4 |
|
Income tax
provision |
348.3 |
|
|
83.2 |
|
|
505.6 |
|
|
234.7 |
|
Net (loss) income |
$ |
(148.1 |
) |
|
$ |
188.9 |
|
|
$ |
306.2 |
|
|
$ |
592.7 |
|
|
|
|
|
|
|
|
|
Net (loss) income per
share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.40 |
) |
|
$ |
0.50 |
|
|
$ |
0.81 |
|
|
$ |
1.55 |
|
Diluted |
$ |
(0.40 |
) |
|
$ |
0.49 |
|
|
$ |
0.80 |
|
|
$ |
1.53 |
|
Shares used in
computing net (loss) income per share: |
|
|
|
|
|
|
|
Basic |
371.5 |
|
|
379.9 |
|
|
377.7 |
|
|
381.7 |
|
Diluted |
371.5 |
|
|
385.6 |
|
|
384.2 |
|
|
387.8 |
|
Cash dividends declared
per common stock |
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.40 |
|
|
$ |
0.40 |
|
|
|
Juniper Networks, Inc. |
Preliminary Net Revenues by Product and
Service |
(in millions) |
(unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Routing |
$ |
509.6 |
|
|
$ |
653.9 |
|
|
$ |
2,189.5 |
|
|
$ |
2,352.9 |
|
Switching |
233.2 |
|
|
250.8 |
|
|
963.4 |
|
|
858.0 |
|
Security |
87.6 |
|
|
80.9 |
|
|
293.3 |
|
|
318.0 |
|
Total
product |
830.4 |
|
|
985.6 |
|
|
3,446.2 |
|
|
3,528.9 |
|
Total
service |
409.1 |
|
|
400.0 |
|
|
1,581.0 |
|
|
1,461.2 |
|
Total |
$ |
1,239.5 |
|
|
$ |
1,385.6 |
|
|
$ |
5,027.2 |
|
|
$ |
4,990.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc. |
Preliminary Net Revenues by
Vertical |
(in millions) |
(unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Cloud |
$ |
258.8 |
|
|
$ |
410.8 |
|
|
$ |
1,314.9 |
|
|
$ |
1,322.3 |
|
Telecom/Cable |
607.9 |
|
|
636.2 |
|
|
2,315.7 |
|
|
2,324.7 |
|
Strategic
Enterprise |
372.8 |
|
|
338.6 |
|
|
1,396.6 |
|
|
1,343.1 |
|
Total |
$ |
1,239.5 |
|
|
$ |
1,385.6 |
|
|
$ |
5,027.2 |
|
|
$ |
4,990.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc. |
Preliminary Net Revenues by Geographic
Region |
(in millions) |
(unaudited) |
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Americas |
$ |
705.6 |
|
|
$ |
875.6 |
|
|
$ |
2,947.2 |
|
|
$ |
2,968.8 |
|
Europe, Middle East,
and Africa |
324.5 |
|
|
314.6 |
|
|
1,195.8 |
|
|
1,238.1 |
|
Asia Pacific |
209.4 |
|
|
195.4 |
|
|
884.2 |
|
|
783.2 |
|
Total |
$ |
1,239.5 |
|
|
$ |
1,385.6 |
|
|
$ |
5,027.2 |
|
|
$ |
4,990.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juniper Networks, Inc. |
Preliminary Reconciliations between GAAP and
non-GAAP Financial Measures |
(in millions, except percentages and per share
amounts) |
(unaudited) |
|
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31,2017 |
|
September 30,2017 |
|
December 31,2016 |
|
December 31,2017 |
|
December 31,2016 |
GAAP operating
income |
|
$ |
202.7 |
|
|
$ |
230.9 |
|
|
$ |
287.2 |
|
|
$ |
848.1 |
|
|
$ |
889.7 |
|
GAAP operating
margin |
|
16.4 |
% |
|
18.4 |
% |
|
20.7 |
% |
|
16.9 |
% |
|
17.8 |
% |
Share-based compensation expense |
C |
36.4 |
|
|
45.0 |
|
|
63.8 |
|
|
187.5 |
|
|
226.8 |
|
Share-based payroll tax expense |
C |
0.2 |
|
|
0.3 |
|
|
0.3 |
|
|
6.6 |
|
|
5.8 |
|
Amortization of purchased intangible assets |
A |
4.9 |
|
|
4.1 |
|
|
3.3 |
|
|
17.5 |
|
|
16.2 |
|
Restructuring charges |
B |
36.2 |
|
|
2.0 |
|
|
0.1 |
|
|
65.6 |
|
|
3.3 |
|
Acquisition-related and other charges |
A |
0.4 |
|
|
1.4 |
|
|
1.1 |
|
|
2.1 |
|
|
14.5 |
|
Litigation settlement charges |
B |
— |
|
|
13.2 |
|
|
— |
|
|
13.2 |
|
|
— |
|
Supplier
component remediation (recovery) charges |
B |
— |
|
|
(1.0 |
) |
|
10.8 |
|
|
6.1 |
|
|
10.8 |
|
Non-GAAP operating
income |
|
$ |
280.8 |
|
|
$ |
295.9 |
|
|
$ |
366.6 |
|
|
$ |
1,146.7 |
|
|
$ |
1,167.1 |
|
Non-GAAP operating
margin |
|
22.7 |
% |
|
23.5 |
% |
|
26.5 |
% |
|
22.8 |
% |
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income |
|
$ |
(148.1 |
) |
|
$ |
165.7 |
|
|
$ |
188.9 |
|
|
$ |
306.2 |
|
|
$ |
592.7 |
|
Share-based compensation expense |
C |
36.4 |
|
|
45.0 |
|
|
63.8 |
|
|
187.5 |
|
|
226.8 |
|
Share-based payroll tax expense |
C |
0.2 |
|
|
0.3 |
|
|
0.3 |
|
|
6.6 |
|
|
5.8 |
|
Amortization of purchased intangible assets |
A |
4.9 |
|
|
4.1 |
|
|
3.3 |
|
|
17.5 |
|
|
16.2 |
|
Restructuring charges |
B |
36.2 |
|
|
2.0 |
|
|
0.1 |
|
|
65.6 |
|
|
3.3 |
|
Acquisition-related and other charges |
A |
0.4 |
|
|
1.4 |
|
|
1.1 |
|
|
2.1 |
|
|
11.8 |
|
Litigation settlement charges |
B |
— |
|
|
13.2 |
|
|
— |
|
|
13.2 |
|
|
— |
|
Supplier
component remediation (recovery) charges |
B |
— |
|
|
(1.0 |
) |
|
10.8 |
|
|
6.1 |
|
|
10.8 |
|
(Gain)
loss on equity investments |
B |
(7.8 |
) |
|
(3.6 |
) |
|
1.6 |
|
|
(11.4 |
) |
|
3.7 |
|
Estimated
tax expense from income tax reform |
B |
289.5 |
|
|
— |
|
|
— |
|
|
289.5 |
|
|
— |
|
Income
tax effect of non-GAAP exclusions |
B |
(12.3 |
) |
|
(16.0 |
) |
|
(15.6 |
) |
|
(73.9 |
) |
|
(61.0 |
) |
Non-GAAP net
income |
|
$ |
199.4 |
|
|
$ |
211.1 |
|
|
$ |
254.3 |
|
|
$ |
809.0 |
|
|
$ |
810.1 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net (loss)
income per share |
|
$ |
(0.40 |
) |
|
$ |
0.43 |
|
|
$ |
0.49 |
|
|
$ |
0.80 |
|
|
$ |
1.53 |
|
Non-GAAP diluted net
income per share |
D |
$ |
0.53 |
|
|
$ |
0.55 |
|
|
$ |
0.66 |
|
|
$ |
2.11 |
|
|
$ |
2.09 |
|
Shares used in
computing GAAP diluted net (loss) income per share |
|
371.5 |
|
|
382.7 |
|
|
385.6 |
|
|
384.2 |
|
|
387.8 |
|
Shares used in
computing Non-GAAP diluted net income per share |
|
376.6 |
|
|
382.7 |
|
|
385.6 |
|
|
384.2 |
|
|
387.8 |
|
Discussion of Non-GAAP Financial
Measures
This press release, including the tables above,
includes the following non-GAAP financial measures derived from our
Preliminary Condensed Consolidated Statements of Operations:
operating income; operating margin; net income; and diluted net
income per share. These measures are not presented in accordance
with, nor are they a substitute for 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, certain 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 operation, we mean the ongoing revenue and expenses of
the business, excluding certain items that render comparisons with
prior periods or analysis of on-going operating trends more
difficult, such as expenses not directly related to the actual cash
costs of development, sale, delivery or support of our products and
services, or expenses that are reflected in periods unrelated to
when the actual amounts were incurred or paid. Consistent with this
approach, we believe that disclosing non-GAAP financial measures to
the readers of our financial statements provides such readers with
useful supplemental data that, while not a substitute for financial
measures prepared in accordance with GAAP, allows for greater
transparency in the review of our financial and operational
performance. In addition, we have historically reported non-GAAP
results to the investment community and believe that continuing to
provide non-GAAP measures provides investors with a tool for
comparing results over time. In assessing the overall health of our
business for the periods covered by the table above and, in
particular, in evaluating the financial line items presented in the
table above, we have excluded items in the following three general
categories, each of which are described below: Acquisition-Related
Charges, Other Items, and Share-Based Compensation Related Items.
We also provide additional detail below regarding the shares used
to calculate our non-GAAP net income per share. Notes identified
for line items in the table above correspond to the appropriate
note description below. With respect to the items excluded from our
forward-looking non-GAAP measures and reconciliation of such
measures, please see the “Outlook” section above.
Note A: Acquisition-Related Charges. We exclude
certain expense items resulting from acquisitions
including amortization of purchased intangible assets
associated with our acquisitions. 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. 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
charges; (ii) litigation settlement charges; (iii) supplier
component remediation recovery or charges; (iv) gain or loss on
equity investments; (v) significant effects of tax legislation
and judicial or administrative interpretation of tax regulations,
including the impact of income tax reform; (vi) 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. Although these events
are reflected in our GAAP financial statements, these unique
transactions may limit the comparability of our on-going operations
with prior and future periods. Restructuring charges result from
events that arise from unforeseen circumstances, which often occur
outside of the ordinary course of continuing operations. These
expenses do not accurately reflect the underlying performance of
our continuing business operations for the period in which they are
incurred. 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. Additionally, supplier component remediation
recovery and charges are directly related to an event that is
distinct and does not reflect normal business operations. 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.
Additionally, the impact of certain income tax reform, including
the revaluation of our deferred tax assets and liabilities and the
deemed repatriation of accumulated foreign earnings, are unique
events that occur in periods that are generally unrelated to the
level of business activity to which such tax reform 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. 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 with these amounts both 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: Share-Based Compensation Related Items.
We provide non-GAAP information relative to our expense for
share-based compensation and related payroll tax. Due to the
varying available valuation methodologies, subjective assumptions
and the variety of award types, which affect the calculations of
share-based compensation, we believe that the exclusion of
share-based compensation and related payroll tax allows for more
accurate comparisons of our operating results to our peer companies
and is useful to investors to understand the impact of share-based
compensation to our results of operations. Further, expense
associated with granting share-based awards does not reflect any
cash expenditures by the company as no cash is expended.
Note D: Non-GAAP Net Income Per Share Items. We
provide diluted non-GAAP net income per share. The diluted non-GAAP
net income per share includes 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 millions) |
(unaudited) |
|
|
December 31, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
2,006.5 |
|
|
$ |
1,833.2 |
|
Short-term investments |
1,026.1 |
|
|
752.3 |
|
Accounts
receivable, net of allowances |
852.0 |
|
|
1,054.1 |
|
Prepaid
expenses and other current assets |
299.9 |
|
|
332.3 |
|
Total
current assets |
4,184.5 |
|
|
3,971.9 |
|
Property and equipment,
net |
1,021.1 |
|
|
1,063.8 |
|
Long-term
investments |
988.4 |
|
|
1,071.8 |
|
Restricted cash and
investments |
36.1 |
|
|
99.9 |
|
Purchased intangible
assets, net |
128.1 |
|
|
130.2 |
|
Goodwill |
3,096.2 |
|
|
3,081.7 |
|
Other long-term
assets |
379.4 |
|
|
237.2 |
|
Total
assets |
$ |
9,833.8 |
|
|
$ |
9,656.5 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
217.6 |
|
|
$ |
221.0 |
|
Accrued
compensation |
186.0 |
|
|
233.6 |
|
Deferred
revenue |
1,030.3 |
|
|
1,032.0 |
|
Other
accrued liabilities |
304.3 |
|
|
249.3 |
|
Total
current liabilities |
1,738.2 |
|
|
1,735.9 |
|
Long-term debt |
2,136.3 |
|
|
2,133.7 |
|
Long-term deferred
revenue |
509.0 |
|
|
449.1 |
|
Long-term income taxes
payable |
650.6 |
|
|
209.2 |
|
Other long-term
liabilities |
118.8 |
|
|
166.1 |
|
Total
liabilities |
5,152.9 |
|
|
4,694.0 |
|
Total
stockholders' equity |
4,680.9 |
|
|
4,962.5 |
|
Total
liabilities and stockholders' equity |
$ |
9,833.8 |
|
|
$ |
9,656.5 |
|
|
|
Juniper Networks, Inc. |
Preliminary Condensed Consolidated Statements
of Cash Flows |
(in millions) |
(unaudited) |
|
|
Twelve Months Ended December 31, |
|
2017 |
|
2016(*) |
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
306.2 |
|
|
$ |
592.7 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Share-based compensation expense |
187.5 |
|
|
224.6 |
|
Depreciation, amortization, and accretion |
225.6 |
|
|
206.7 |
|
Deferred
income taxes |
(139.6 |
) |
|
55.9 |
|
(Gain) loss on
investments and other, net |
(14.5 |
) |
|
3.5 |
|
Changes in operating
assets and liabilities, net of effects from acquisitions: |
|
|
|
Accounts
receivable, net |
203.8 |
|
|
(263.5 |
) |
Prepaid
expenses and other assets |
43.0 |
|
|
(43.6 |
) |
Accounts
payable |
(10.1 |
) |
|
66.6 |
|
Accrued
compensation |
(42.8 |
) |
|
(21.1 |
) |
Income
taxes payable |
447.3 |
|
|
3.1 |
|
Other
accrued liabilities |
(1.3 |
) |
|
(19.4 |
) |
Deferred
revenue |
55.0 |
|
|
301.7 |
|
Net cash
provided by operating activities |
1,260.1 |
|
|
1,107.2 |
|
Cash flows from
investing activities: |
|
|
|
Purchases of property
and equipment |
(151.2 |
) |
|
(214.7 |
) |
Purchases of
available-for-sale investments |
(1,882.9 |
) |
|
(1,598.0 |
) |
Proceeds from sales of
available-for-sale investments |
944.0 |
|
|
1,182.1 |
|
Proceeds from
maturities and redemptions of available-for-sale investments |
741.6 |
|
|
342.3 |
|
Purchases of trading
investments |
(4.6 |
) |
|
(4.9 |
) |
Proceeds from sales of
trading investments |
2.3 |
|
|
3.0 |
|
Proceeds from Pulse
note receivable |
75.0 |
|
|
— |
|
Purchases of
privately-held investments |
(10.3 |
) |
|
(20.3 |
) |
Proceeds from sales of
privately-held investments |
10.1 |
|
|
9.5 |
|
Payments for business
acquisitions, net of cash and cash equivalents acquired |
(33.0 |
) |
|
(144.6 |
) |
Changes in restricted
cash |
— |
|
|
1.0 |
|
Net cash
used in investing activities |
(309.0 |
) |
|
(444.6 |
) |
Cash flows from
financing activities: |
|
|
|
Purchases and
retirement of common stock |
(725.8 |
) |
|
(324.6 |
) |
Proceeds from issuance
of common stock |
64.5 |
|
|
62.3 |
|
Payment of cash
dividends |
(150.4 |
) |
|
(152.5 |
) |
Customer financing
arrangement |
16.9 |
|
|
— |
|
Payment of debt |
— |
|
|
(300.0 |
) |
Issuance of debt,
net |
— |
|
|
494.0 |
|
Payment of financing
obligations |
— |
|
|
(15.5 |
) |
Net cash
used in financing activities |
(794.8 |
) |
|
(236.3 |
) |
Effect of foreign
currency exchange rates on cash and cash equivalents |
17.0 |
|
|
(14.0 |
) |
Net
increase in cash and cash equivalents |
173.3 |
|
|
412.3 |
|
Cash and cash
equivalents at beginning of period |
1,833.2 |
|
|
1,420.9 |
|
Cash and cash
equivalents at end of period |
$ |
2,006.5 |
|
|
$ |
1,833.2 |
|
________________________________
(*) During the first quarter of fiscal 2017, the
Company adopted the new accounting pronouncement on Improvements to
Employee Share-Based Payment Accounting, requiring excess tax
benefits to be presented as an operating activity in the
consolidated statements of cash flows. The Company applied this
provision on a retrospective basis. For the year ended
December 31, 2016, the Company reclassified $6.7 million of excess
tax benefits from share-based compensation to operating activities
from financing activities. In addition, certain other amounts for
the year ended December 31, 2016 have been reclassified to
conform to the current-period presentation.
Investor Relations:Jess LubertJuniper
Networks(408) 936-3734jlubert@juniper.net
Media Relations:Leslie MooreJuniper
Networks(408) 936-5767llmoore@juniper.net
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