Juniper Networks Reports Third Quarter 2008 Financial Results

-- Revenue: $947.0 million, up 29% from Q3'07;

-- Operating Margin: 21.3% (GAAP); 25.1% (non-GAAP);

-- Net Income: $148.5 million (GAAP); $175.6 million (non-GAAP)

-- EPS: $0.27 (diluted, GAAP); $0.32 (diluted, non-GAAP), up 45%
from Q3'07 resulting from strategic and operational execution
SUNNYVALE, Calif.--(Business Wire)--
Juniper Networks, Inc. (NASDAQ:JNPR) today reported financial
results for the three months ended September 30, 2008, that included
solid revenues, expanding margins, and improved profitability.

Net revenues for the third quarter of 2008 rose 29% on a
year-over-year basis to $947.0 million. The Company posted GAAP net
income of $148.5 million, or $0.27 per diluted share, and non-GAAP net
income of $175.6 million, or $0.32 per diluted share. The non-GAAP EPS
figure represents an increase of 45 percent from the $0.22 per diluted
share reported for the third quarter of 2007. The reconciliation
between GAAP and non-GAAP results of operations is provided in a table
immediately following the Net Revenues by Reportable Segment table
below.

"Juniper delivered a solid quarter during a period of global
economic uncertainty," stated Kevin Johnson, chief executive officer
of Juniper Networks. "We continue to enhance our product portfolio,
expand our reach to customers, and improve operational execution.
These factors have enabled us to drive revenue growth and improve
operating margins. The long-term growth potential of the
high-performance networking market is strong and, even in this
uncertain economic climate, we are cautiously optimistic about our
near-term opportunities."

Juniper's operating margin for the third quarter of 2008 rose to
21.3% on a GAAP basis from 15.3% in the same quarter a year ago.
Non-GAAP operating margin for the third quarter of 2008 rose to 25.1%
from 21.1% in the third quarter of 2007. The improvement was achieved
through continued cost discipline and improved operating efficiency.

The improved operating margins helped Juniper generate net cash
from operations for the third quarter of 2008 of $204.6 million,
compared to cash provided by operations of $191.4 million for the same
quarter of 2007.

Capital expenditures as well as depreciation and amortization
expense during the third quarter of 2008 were $40.9 million and $38.9
million, respectively.

"Juniper's results this quarter reflect good revenue growth paired
with an operating model focused on efficiencies, smart investments and
more productive sales and marketing programs," stated Robyn Denholm,
chief financial officer of Juniper Networks. "We delivered strong
margins, solid earnings per share, and healthy levels of cash from
operations. We will continue to focus on our operational excellence
initiatives," concluded Denholm.

Recent Highlights

High-Performance Network Infrastructure

Juniper continues to deliver innovative solutions to the market
that advance the fundamentals and economics of high-performance
networking. Juniper introduced the industry's first Dynamic Services
Architecture and a new category of extensible "no compromise"
networking and security products with its SRX series. This new
architecture and product family are designed to deliver scalable
performance and operational simplicity to help high-performance
businesses tightly align rapidly changing business requirements with
network technology investments to accelerate new service deployments.

In addition, Juniper introduced enhancements to existing solutions
to help customers maximize their network infrastructure investments
and lower their overall total cost of ownership. Juniper announced the
Intelligent Service Edge -- an integrated portfolio of new features
for its M- and MX-series routers that will extend JUNOS(R) to a broad
range of new applications. The enhancements will facilitate
intelligent convergence at the edge, which drives network monetization
by speeding deployment of new services and reducing operational costs
and complexity. Juniper customers, such as Deutsche Telekom and
Telecom Italia, endorsed the approach. Saverio Orlando, executive
director of Network Department, Telecom Italia said, "the Intelligent
Services Edge further demonstrates that the vision and strategy of
Telecom Italia and Juniper are aligned. This is another step that will
allow us to reduce the costs of building and scaling our network
infrastructure, while concurrently enhancing service delivery and
network flexibility."

Juniper also expanded its Network and Security Manager (NSM) to
deliver the industry's first centralized management solution for
routing, security and switching, enabling customers to consolidate and
simplify the management of their network infrastructure to increase
security, reduce cost and realize operational gains. Juniper also
announced enhancements to its Access Control Solution, to deliver
best-in-class scalability and performance, with centralized access
policy management via NSM, helping customers cost-effectively achieve
comprehensive network visibility with broad enforcement capabilities.
In addition, Juniper announced the next generation of its
best-in-class WXC application acceleration platforms to deliver a more
scalable, modular and cost-effective approach to delivering fast and
consistent application response across the WAN.

Juniper's Partner Solution Development Platform -- or PSDP --
which enables customers and partners to develop specialized
applications on JUNOS, continues to gain momentum, driving innovation
in the networking industry. For example, Juniper announced that
Triveni Digital has joined the Open IP Solution Development Program.
By integrating Triveni Digital's video experience and video signal
management solutions with JUNOS, service provider customers will be
able to deliver the highest quality level of video services -- more
reliably and with scale.

Fueling High-Performance Businesses

Customers continue to turn to Juniper as a strategic partner,
leveraging Juniper's high-performance networking portfolio to
accelerate revenue generation, achieve differentiation and lower total
cost of ownership. In the service provider market, XO Communications,
a leading nationwide provider of advanced communications services and
solutions for businesses, enterprises, government, carriers and
service providers, deployed MX960 Ethernet Services Routers to
accelerate the speed with which it can introduce new services in
response to increasing demand from enterprises and wholesale
customers, while reducing operational costs.

Telecom New Zealand International (TNZI), a global service
provider of Internet transit, data, voice and mobile services, has
upgraded the capacity and security of its international network with
Juniper Networks M-series routers and Integrated Security Gateways
(ISG) to enhance the responsiveness and efficiency of service delivery
to new consumers.

In the enterprise market, Technicolor, the leader in video
solutions for the communication, media and entertainment industries,
values the ongoing efficiencies it can achieve with their Juniper
solutions. The simplicity and ease of management made possible by the
common operating system, JUNOS, ensures their MPLS network is able to
meet the demanding requirements of all their constituents.

Ajisen (China) Holdings Limited, a leading Chinese fast food
company, deployed Juniper's routing, security and switching solutions
to help them reduce the cost, complexity and risk of delivering
business-critical IT services to the company's mobile workforce and
more than 243 retail locations across China.

Ferrum College, in Virginia, replaced its 10-year legacy
infrastructure with Juniper's EX-series Switches, Secure Services
Gateway and Unified Access Control, to improve network performance,
improve reliability and decrease maintenance costs in line with their
continued expansion.

As part of their data center improvement project, AdvancedMD
Software Inc., a leading provider of Web-based practice management
solutions for physician offices, management services organizations and
medical billing services, was looking to improve the scalability of
their switching infrastructure and maintain high service quality
during a time of rapid growth. The Juniper Networks EX switches were
the best fit, enabling them to get more for less -- they were able to
reduce the footprint of their data center and realize energy and
operational savings, along with the peace of mind they have the
flexibility to grow their platform as the medical industry continues
to rapidly adopt the SaaS (soft-as-a-service) model.

AmazingMail.com, Inc., a leader in advanced direct mail marketing
solutions, found that "deploying Juniper's EX-series switches and SSG
firewalls has helped us to achieve and surpass our operational and
financial objectives," said Larry Prine, lead systems administrator
for AmazingMail.com, Inc. "We have increased network performance,
simplified operations, and lowered our operational expenses so
significantly that we had enough budget left over to purchase two of
everything ensuring full redundancy of our network infrastructure.
We're realizing an annualized savings of $90,000 (USD) in IT costs,
we've reduced our data center footprint and we've achieved additional
power consumption savings. Now we spend less on building, managing and
maintaining the network, and more on strategic revenue-generating
activities."

Corporate News

Juniper sponsored the launch of the Carbon Disclosure Project's
sixth report, reaffirming its continued commitment to understanding
and documenting its environmental impact. For the third year in a row,
Juniper voluntarily collected and submitted its green house gas
emissions for worldwide reporting. Juniper was recognized as an
industry leader for its carbon disclosure, ranking fourth in the
technology, media and telecommunications category of the Carbon
Disclosure Project Report 2008 - S&P 500.

Juniper Networks will host a conference call web cast today,
October 23, 2008 at 1:45 p.m. (Pacific Time), to be broadcasted live
over the Internet at:
http://www.juniper.net/company/investor/conferencecall.html.

To participate via telephone, the dial-in number is 877-407-0778.
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 December 12, 2008.

About Juniper Networks, Inc.

Juniper Networks, Inc. is the leader in high-performance
networking. Juniper offers a high-performance network infrastructure
that creates a responsive and trusted environment for accelerating the
deployment of services and applications over a single network. This
fuels high-performance businesses. Additional information can be found
at www.juniper.net.

Juniper Networks, JUNOS and the Juniper Networks logo are
registered trademarks of Juniper Networks, Inc. in the United States
and other countries. 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, future financial and operating results and overall future
prospects are forward-looking statements that involve a number of
uncertainties and risks. Actual results could differ materially from
those anticipated in those forward-looking statements as a result of
certain factors, including: general economic conditions globally or
regionally; business and economic conditions in the networking
industry; changes in overall technology spending; the network capacity
requirements of communication service providers; 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 and resellers; variations in
the expected mix of products sold; changes in customer mix; customer
and industry analyst perceptions of Juniper Networks and its
technology, products and future prospects; delays in scheduled product
availability; market acceptance of 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; 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.

-0-
*T
Juniper Networks, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ----------------------
2008 2007 2008 2007
-------- --------- ----------- ----------
Net revenues:
Product $766,969 $606,769 $2,165,100 $1,658,237
Service 179,993 128,279 483,783 368,669
-------- --------- ----------- ----------
Total net revenues 946,962 735,048 2,648,883 2,026,906
Cost of revenues:
Product 230,060 168,123 636,985 482,956
Service 77,519 64,163 224,711 182,213
-------- --------- ----------- ----------
Total cost of revenues 307,579 232,286 861,696 665,169
-------- --------- ----------- ----------
Gross margin 639,383 502,762 1,787,187 1,361,737
Operating expenses:
Research and development 194,014 167,887 551,017 457,682
Sales and marketing 200,600 177,762 576,886 485,263
General and administrative 37,623 29,182 106,866 84,436
Amortization of purchased
intangible assets 5,190 20,230 38,318 65,710
Other charges, net -- (5,062) 9,000 9,164
-------- --------- ----------- ----------
Total operating expenses 437,427 389,999 1,282,087 1,102,255
-------- --------- ----------- ----------
Operating income 201,956 112,763 505,100 259,482
Interest and other income,
net 9,740 17,945 40,517 76,365
(Loss) gain on minority
equity investments -- -- (1,499) 6,745
-------- --------- ----------- ----------
Income before income taxes 211,696 130,708 544,118 342,592
Provision for income taxes 63,188 45,609 164,845 104,666
-------- --------- ----------- ----------
Net income $148,508 $ 85,099 $ 379,273 $ 237,926
======== ========= =========== ==========
Net income per share:
Basic $ 0.27 $ 0.17 $ 0.71 $ 0.44
======== ========= =========== ==========
Diluted $ 0.27 $ 0.15 $ 0.67 $ 0.41
======== ========= =========== ==========
Shares used in computing net
income per share:
Basic 540,983 515,658 534,894 543,094
======== ========= =========== ==========
Diluted 554,350 561,401 561,932 582,780
======== ========= =========== ==========
*T

-0-
*T
Juniper Networks, Inc.
Stock-Based Compensation by Category
(in thousands)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- -------- --------
Cost of revenues - Product $ 754 $ 534 $ 2,225 $ 1,490
Cost of revenues - Service 2,413 1,819 7,009 7,044
Research and development 12,780 9,244 34,921 28,553
Sales and marketing 10,946 6,592 26,753 21,894
General and administrative 1,910 3,038 7,971 9,687
--------- -------- -------- --------
Total $ 28,803 $ 21,227 $ 78,879 $ 68,668
========= ======== ======== ========
*T

-0-
*T
Juniper Networks, Inc.
Stock-Based Compensation Related Payroll Tax by Category
(in thousands)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008 2007
--------- -------- -------- --------
Cost of revenues - Product $ 6 $ 87 $ 64 $ 157
Cost of revenues - Service 18 387 200 621
Research and development 61 1,168 663 2,046
Sales and marketing 169 2,564 1,565 3,382
General and administrative 7 174 111 271
--------- -------- -------- --------
Total $ 261 $ 4,380 $ 2,603 $ 6,477
========= ======== ======== ========
*T

-0-
*T
Juniper Networks, Inc.
Net Revenues by Reportable Segment
(in thousands)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ---------------------
2008 2007 2008 2007
--------- -------- ---------- ----------
Infrastructure - Product $610,289 $464,695 $1,714,899 $1,252,816
Infrastructure - Service 118,976 79,505 308,663 233,086
--------- -------- ---------- ----------
Total Infrastructure $729,265 $544,200 $2,023,562 $1,485,902
========= ======== ========== ==========

Service Layer Technologies -
Product $156,680 $142,074 $ 450,201 $ 405,421
Service Layer Technologies -
Service 61,017 48,774 175,120 135,583
--------- -------- ---------- ----------
Total Service Layer
Technologies $217,697 $190,848 $ 625,321 $ 541,004
========= ======== ========== ==========

Total Infrastructure and
Service Layer Technologies $946,962 $735,048 $2,648,883 $2,026,906
========= ======== ========== ==========
*T

-0-
*T
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
GAAP Cost of revenues -
Product $230,060 $168,123 $ 636,985 $ 482,956
Stock-based compensation
expense C (754) (534) (2,225) (1,490)
Stock-based compensation
related payroll tax C (6) (87) (64) (157)
Amortization of
purchased intangible
assets A (1,369) (1,369) (4,107) (4,107)
--------- --------- ----------- -----------
Non-GAAP Cost of
revenues - Product 227,931 166,133 630,589 477,202
========= ========= =========== ===========

GAAP Cost of revenues -
Service 77,519 64,163 224,711 182,213
Stock-based compensation
expense C (2,413) (1,819) (7,009) (7,044)
Stock-based compensation
related payroll tax C (18) (387) (200) (621)
--------- --------- ----------- -----------
Non-GAAP Cost of
revenues - Service 75,088 61,957 217,502 174,548
========= ========= =========== ===========

GAAP Gross margin -
Product 536,909 438,646 1,528,115 1,175,281
Stock-based compensation
expense C 754 534 2,225 1,490
Stock-based compensation
related payroll tax C 6 87 64 157
Amortization of
purchased intangible
assets A 1,369 1,369 4,107 4,107
--------- --------- ----------- -----------
Non-GAAP Gross margin -
Product 539,038 440,636 1,534,511 1,181,035
========= ========= =========== ===========

GAAP Product gross
margin as a % of
product revenue 70.0% 72.3% 70.6% 70.9%
Stock-based compensation
expense as a % of C
product revenue 0.1% 0.1% 0.1% 0.1%
Stock-based compensation
related payroll tax as C
a % of product revenue -- -- -- --
Amortization of
purchased intangible A
assets as a % of
product revenue 0.2% 0.2% 0.2% 0.2%
--------- --------- ----------- -----------
Non-GAAP Product gross
margin as a % of
product revenue 70.3% 72.6% 70.9% 71.2%
========= ========= =========== ===========

GAAP Gross margin -
Service 102,474 64,116 259,072 186,456
Stock-based compensation
expense C 2,413 1,819 7,009 7,044
Stock-based compensation
related payroll tax C 18 387 200 621
--------- --------- ----------- -----------
Non-GAAP Gross margin -
Service 104,905 66,322 266,281 194,121
========= ========= =========== ===========

GAAP Service gross
margin as a % of
service revenue 56.9% 50.0% 53.6% 50.6%
Stock-based compensation
expense as a % of C
service revenue 1.4% 1.4% 1.5% 1.9%
Stock-based compensation
related payroll tax as C
a % of service revenue -- 0.3% -- 0.2%
--------- --------- ----------- -----------
Non-GAAP Service gross
margin as a % of
service revenue 58.3% 51.7% 55.1% 52.7%
========= ========= =========== ===========
*T

-0-
*T
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
2008 2007 2008 2007
--------- --------- ----------- -----------
GAAP Gross margin $639,383 $502,762 $1,787,187 $1,361,737
Stock-based
compensation expense C 3,167 2,353 9,234 8,534
Stock-based
compensation related
payroll tax C 24 474 264 778
Amortization of
purchased intangible
assets A 1,369 1,369 4,107 4,107
--------- --------- ----------- -----------
Non-GAAP Gross margin 643,943 506,958 1,800,792 1,375,156
========= ========= =========== ===========

GAAP Gross margin as a
% of revenue 67.5% 68.4% 67.5% 67.2%
Stock-based
compensation expense C
as a % of revenue 0.3% 0.3% 0.3% 0.4%
Stock-based
compensation related C
payroll tax as a % of
revenue -- 0.1% -- --
Amortization of
purchased intangible A
assets as a % of
revenue 0.2% 0.2% 0.2% 0.2%
--------- --------- ----------- -----------
Non-GAAP Gross margin
as a % of revenue 68.0% 69.0% 68.0% 67.8%
========= ========= =========== ===========

GAAP Research and
development expense 194,014 167,887 551,017 457,682
Stock-based C
compensation expense (12,780) (9,244) (34,921) (28,553)
Stock-based
compensation related C
payroll tax (61) (1,168) (663) (2,046)
--------- --------- ----------- -----------
Non-GAAP Research and
development expense 181,173 157,475 515,433 427,083
========= ========= =========== ===========

GAAP Sales and
marketing expense 200,600 177,762 576,886 485,263
Stock-based C
compensation expense (10,946) (6,592) (26,753) (21,894)
Stock-based
compensation related C
payroll tax (169) (2,564) (1,565) (3,382)
--------- --------- ----------- -----------
Non-GAAP Sales and
marketing expense 189,485 168,606 548,568 459,987
========= ========= =========== ===========

GAAP General and
administrative
expense 37,623 29,182 106,866 84,436
Stock-based C
compensation expense (1,910) (3,038) (7,971) (9,687)
Stock-based
compensation related C
payroll tax (7) (174) (111) (271)
--------- --------- ----------- -----------
Non-GAAP General and
administrative
expense 35,706 25,970 98,784 74,478
========= ========= =========== ===========

GAAP Operating expense 437,427 389,999 1,282,087 1,102,255
Stock-based C
compensation expense (25,636) (18,874) (69,645) (60,134)
Stock-based
compensation related C
payroll tax (237) (3,906) (2,339) (5,699)
Amortization of
purchased intangible A
assets (5,190) (20,230) (38,318) (65,710)
Other charges -
compensation expense A
related to
acquisitions -- (313) -- (939)
Other charges -
restructuring and A/B
acquisition
adjustments -- 97 -- 438
Other charges - stock
option investigation B
costs -- -- -- (5,975)
Other charges - B
litigation settlement -- 5,278 (9,000) 5,278
Other charges - tax B
related charges -- -- -- (7,966)
--------- --------- ----------- -----------
Non-GAAP Operating
expense $406,364 $352,051 $1,162,785 $ 961,548
========= ========= =========== ===========
*T

-0-
*T
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except percentages)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- ---------- --------- ----------
GAAP Operating income $201,956 $112,763 $505,100 $259,482
Stock-based compensation C
expense 28,803 21,227 78,879 68,668
Stock-based compensation C
related payroll tax 261 4,380 2,603 6,477
Amortization of
purchased intangible A
assets 6,559 21,599 42,425 69,817
Other charges -
compensation expense A
related to acquisitions -- 313 -- 939
Other charges -
restructuring and A/B
acquisition adjustments -- (97) -- (438)
Other charges - stock
option investigation B
costs -- -- -- 5,975
Other charges - B
litigation settlement -- (5,278) 9,000 (5,278)
Other charges - tax B
related charges -- -- -- 7,966
--------- ---------- --------- ----------
Non-GAAP Operating
income 237,579 154,907 638,007 413,608
========= ========== ========= ==========

GAAP Operating margin 21.3% 15.3% 19.1% 12.8%
Stock-based compensation
expense as a % of C
revenue 3.0% 2.9% 3.0% 3.4%
Stock-based compensation
related payroll tax as C
a % of revenue 0.1% 0.6% 0.1% 0.3%
Amortization of
purchased intangible A
assets as a % of
revenue 0.7% 2.9% 1.6% 3.5%
Other charges -
compensation expense A
related to acquisitions
as a % of revenue -- 0.1% -- --
Other charges -
restructuring and A/B
acquisition adjustments
as a % of revenue -- -- -- --
Other charges - stock
option investigation B
costs as a % of revenue -- -- -- 0.3%
Other charges -
litigation settlement B
as a % of revenue -- (0.7)% 0.3% (0.3)%
Other charges - tax
related charges as a % B
of revenue -- -- -- 0.4%
--------- ---------- --------- ----------
Non-GAAP Operating
margin 25.1% 21.1% 24.1% 20.4%
========= ========== ========= ==========

GAAP Other income and
expense, net 9,740 17,945 39,018 83,110
Loss (gain) on minority B
equity investments -- -- 1,499 (6,745)
--------- ---------- --------- ----------
Non-GAAP Other income
and expense, net 9,740 17,945 40,517 76,365
========= ========== ========= ==========

GAAP Provision for
income tax 63,188 45,609 164,845 104,666
Income tax effect of B
non-GAAP exclusions 8,535 2,790 31,927 32,526
--------- ---------- --------- ----------
Non-GAAP Provision for
income tax 71,723 48,399 196,772 137,192
========= ========== ========= ==========
Non-GAAP Income tax rate 29.0% 28.0% 29.0% 28.0%
========= ========== ========= ==========
Non-GAAP Income before
income taxes(++) $247,319 $172,852 $678,524 $489,973
========= ========== ========= ==========

(++) Consists of non-GAAP operating income plus non-GAAP net interest
and other income.
*T

-0-
*T
Juniper Networks, Inc.
Reconciliation between GAAP and non-GAAP Financial Measures
(in thousands, except per share amounts and percentages)
(unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
GAAP Net income $148,508 $ 85,099 $379,273 $237,926
Stock-based C
compensation expense 28,803 21,227 78,879 68,668
Stock-based
compensation related C
payroll tax 261 4,380 2,603 6,477
Amortization of
purchased intangible A
assets 6,559 21,599 42,425 69,817
Other charges -
compensation expense A
related to
acquisitions -- 313 -- 939
Other charges -
restructuring and A/B
acquisition
adjustments -- (97) -- (438)
Other charges - stock
option investigation B
costs -- -- -- 5,975
Other charges - B
litigation settlement -- (5,278) 9,000 (5,278)
Other charges - tax B
related charges -- -- -- 7,966
Loss (gain) on
minority equity B
investments -- -- 1,499 (6,745)
Income tax effect of B
non-GAAP exclusions (8,535) (2,790) (31,927) (32,526)
---------- ---------- ---------- ----------
Non-GAAP Net income $175,596 $124,453 $481,752 $352,781
========== ========== ========== ==========

Non-GAAP Net income
per share:
Basic D $ 0.32 $ 0.24 $ 0.90 $ 0.65
========== ========== ========== ==========
Diluted D $ 0.32 $ 0.22 $ 0.86 $ 0.61
========== ========== ========== ==========
Shares used in
computing non-GAAP
net income per share:
Basic D 540,983 515,658 534,894 543,094
========== ========== ========== ==========
Diluted D 554,350 561,401 561,932 582,780
========== ========== ========== ==========

GAAP Net income as a %
of revenue 15.7% 11.6% 14.3% 11.7%
Stock-based
compensation expense C
as a % of revenue 3.0% 2.9% 3.0% 3.4%
Stock-based
compensation related C
payroll tax as a % of
revenue -- 0.6% 0.1% 0.3%
Amortization of
purchased intangible A
assets as a % of
revenue 0.7% 2.9% 1.6% 3.5%
Other charges -
compensation expense
related to A
acquisitions as a %
of revenue -- -- -- --
Other charges -
restructuring and
acquisition A/B
adjustments as a % of
revenue -- -- -- --
Other charges - stock
option investigation B
costs as a % of
revenue -- -- -- 0.3%
Other charges -
litigation settlement B
as a % of revenue -- (0.7)% 0.3% (0.3)%
Other charges - tax
related charges as a B
% of revenue -- -- -- 0.4%
Loss (gain) on
minority equity B
investments -- -- 0.1% (0.3)%
Income tax effect of
non-GAAP exclusions B
as a % of revenue (0.9)% (0.4)% (1.2)% (1.6)%
---------- ---------- ---------- ----------
Non-GAAP Net income as
a % of revenue 18.5% 16.9% 18.2% 17.4%
========== ========== ========== ==========
*T

Discussion of Non-GAAP Financial Measures

The table above includes the following non-GAAP financial measures
from our 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;
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 Expenses, 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 Expenses. We exclude certain expense
items resulting from acquisitions including the following: (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:
(i) restructuring and related costs; (ii) impairment charges; (iii)
stock option investigation costs and related tax costs; (iv) gain or
loss on legal settlement, net of related transaction costs; (v) gain
or loss on minority equity investments; and (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. 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. The unique nature of our
stock option investigation costs and associated tax related charges
may also limit the comparability of our on-going operations with prior
and future periods. Moreover, 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. Whether we realize gains or losses on minority 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 provides 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 to be 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
Statement of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment, ("SFAS 123R") in January 2006. Because of varying
available valuation methodologies, subjective assumptions and the
variety of award types which effect 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 SFAS 123R.

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.

-0-
*T
Juniper Networks, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

September 30, December 31,
2008 2007
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,778,497 $ 1,716,110
Short-term investments 242,440 240,355
Accounts receivable, net of allowances 368,604 379,759
Deferred tax assets, net 172,009 171,598
Prepaid expenses and other current assets 40,741 47,293
------------- ------------
Total current assets 2,602,291 2,555,115
Property and equipment, net 427,211 401,818
Long-term investments 110,744 59,329
Restricted cash 43,466 35,515
Purchased intangible assets, net 35,420 77,844
Goodwill 3,658,602 3,658,602
Other long-term assets 113,894 97,183
------------- ------------
Total assets $ 6,991,628 $ 6,885,406
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 231,129 $ 219,101
Accrued compensation 129,142 158,710
Accrued warranty 43,131 37,450
Deferred revenue 433,335 425,579
Income taxes payable 53,239 52,324
Convertible debt -- 399,496
Other accrued liabilities 92,769 87,183
------------- ------------
Total current liabilities 982,745 1,379,843
Long-term deferred revenue 129,199 87,690
Other long-term liabilities 102,897 64,013
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value 5 5
Additional paid-in capital 8,777,987 8,154,932
Accumulated other comprehensive income
(loss) (5,347) 12,251
Accumulated deficit (2,995,858) (2,813,328)
------------- ------------
Total stockholders' equity 5,776,787 5,353,860
------------- ------------
Total liabilities and stockholders'
equity $ 6,991,628 $ 6,885,406
============= ============
*T

-0-
*T
Juniper Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine Months Ended
September 30,
------------------------
2008 2007(+)
----------- ------------
OPERATING ACTIVITIES:
Net income $ 379,273 $ 237,926
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 134,623 143,250
Stock-based compensation 78,877 68,668
Loss (gain) on minority equity investments 1,499 (6,745)
Excess tax benefit from employee stock
option plans (38,756) (15,667)
Other non-cash charges 698 1,317
Changes in operating assets and
liabilities:
Accounts receivable, net 11,155 (20,674)
Prepaid expenses and other assets (5,346) 6,720
Accounts payable 2,738 19,599
Accrued compensation (29,569) 9,800
Other accrued liabilities 75,610 30,244
Deferred revenue 49,266 67,727
----------- ------------
Net cash provided by operating
activities 660,068 542,165

INVESTING ACTIVITIES:
Purchases of property and equipment, net (121,728) (110,952)
Purchases of available-for-sale investments (384,835) (298,615)
Maturities and sales of available-for-sale
investments 327,696 927,029
Changes in restricted cash (8,103) (7,407)
Payments related to acquisitions -- (375)
Minority equity investments (4,500) (75)
----------- ------------
Net cash (used in) provided by
investing activities (191,470) 509,605

FINANCING ACTIVITIES:
Proceeds from issuance of common stock 115,424 308,697
Retirement of common stock (562,187) (1,623,190)
Net proceeds from distributor financing
arrangement 2,083 --
Redemption of convertible subordinated notes (287) --
Excess tax benefit from employee stock option
plans 38,756 15,667
----------- ------------
Net cash used in financing activities (406,211) (1,298,826)
----------- ------------
Net increase (decrease) in cash and
cash equivalents 62,387 (247,056)
Cash and cash equivalents at beginning
of period 1,716,110 1,596,333
----------- ------------
Cash and cash equivalents at end of
period $1,778,497 $ 1,349,277
=========== ============

Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
Common stock issued in connection with
conversion of the Senior Notes $ 399,153 $ --
=========== ============
Common stock issued in connection with
acquisitions $ -- $ 14,840
=========== ============

(+) Prior period amounts have been revised to reflect the cash flow
amounts reported in the Company's Annual Report on Form 10-K for the
year ended December 31, 2007.
*T

-0-
*T
Juniper Networks, Inc.
Cash, Cash Equivalents and Available-For-Sale Investments
(in thousands)
(unaudited)

September 30, December 31,
2008 2007
------------- ------------
Cash and cash equivalents $1,778,497 $1,716,110
Short-term investments 242,440 240,355
Long-term investments 110,744 59,329
------------- ------------
Total $2,131,681 $2,015,794
============= ============
*T

Juniper Networks, Inc.
Kathleen Bela, 408-936-7804 (Investor Relations)
kbela@juniper.net
Sarah Sorensen, 408-936-4037 (Media Relations)
ssorensen@juniper.net

Copyright Business Wire 2008