Edgar Filing: JUNIPER NETWORKS INC

Juniper 10Q 093011

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2011



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 001-34501

JUNIPER NETWORKS, INC.

(Exact name of registrant as specified in its charter)



Delaware		77-0422528
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

1194 North Mathilda Avenue
Sunnyvale, California 94089		(408) 745-2000
(Address of principal executive offices,		(Registrant's telephone number,
including zip code)		including area code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer [X]	Accelerated Filer [ ]	Non-Accelerated Filer [ ]	Smaller Reporting Company [ ]
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

There were approximately 526,008,000 shares of the Company's Common Stock, par value $0.00001, outstanding as of October 31, 2011.



Table of Contents

PART I - FINANCIAL INFORMATION	3

Item 1. Financial Statements	3

Condensed Consolidated Statements of Operations	3

Condensed Consolidated Balance Sheets	4

Condensed Consolidated Statements of Cash Flows	5

Notes to Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3. Quantitative and Qualitative Disclosures About Market Risk	48

Item 4. Controls and Procedures	48

PART II - OTHER INFORMATION	49

Item 1. Legal Proceedings	49

Item 1A. Risk Factors	49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 6. Exhibits	61

SIGNATURES	62

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

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,
	2011			2010		2011			2010
Net revenues:
Product	$	861,935		$	801,183	$	2,630,803		$	2,296,442
Service	243,861			211,224		697,149			606,883
Total net revenues	1,105,796			1,012,407		3,327,952			2,903,325
Cost of revenues:
Product	286,609			247,033		844,746			701,166
Service	107,583			87,587		313,551			252,413
Total cost of revenues	394,192			334,620		1,158,297			953,579
Gross margin	711,604			677,787		2,169,655			1,949,746
Operating expenses:
Research and development	257,096			231,151		776,325			662,913
Sales and marketing	254,933			204,704		747,859			599,382
General and administrative	44,455			43,773		133,639			132,791
Amortization of purchased intangible assets	1,263			917		4,139			3,258
Restructuring	16,813			181		15,550			8,550
Acquisition-related and other charges	18			1,525		6,804			2,066
Total operating expenses	574,578			482,251		1,684,316			1,408,960
Operating income	137,026			195,536		485,339			540,786
Other (expense) income, net	(15,957		)	205		(36,107		)	5,729
Income before income taxes and noncontrolling interest	121,069			195,741		449,232			546,515
Income tax provision	37,398			61,404		120,383			117,225
Consolidated net income	83,671			134,337		328,849			429,290
Adjust for net (income) loss attributable to noncontrolling interest	(8		)	206		124			(1,121		)
Net income attributable to Juniper Networks	$	83,663		$	134,543	$	328,973		$	428,169

Net income per share attributable to Juniper Networks common stockholders:
Basic	$	0.16		$	0.26	$	0.62		$	0.82
Diluted	$	0.16		$	0.25	$	0.60		$	0.80
Shares used in computing net income per share:
Basic	529,286			520,581		530,994			522,069
Diluted	536,583			534,880		544,086			537,158

See accompanying Notes to Condensed Consolidated Financial Statements

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Juniper Networks, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par values)



	September 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,722,449		$	1,811,887
Short-term investments	632,396			474,514
Accounts receivable, net of allowances	444,000			596,622
Deferred tax assets, net	167,549			161,535
Prepaid expenses and other current assets	165,196			169,812
Total current assets	4,131,590			3,214,370
Property and equipment, net	576,415			493,881
Long-term investments	775,457			535,178
Restricted cash and investments	90,546			119,346
Purchased intangible assets, net	130,034			121,803
Goodwill	3,928,525			3,927,807
Other long-term assets	74,525			55,466
Total assets	9,707,092			8,467,851
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	262,594			292,270
Accrued compensation	192,621			256,746
Accrued warranty	38,946			35,931
Deferred revenue	668,824			660,264
Income taxes payable	36,742			25,000
Other accrued liabilities	166,953			201,765
Total current liabilities	1,366,680			1,471,976
Long-term debt	998,997			—
Long-term deferred revenue	216,968			224,165
Long-term income taxes payable	111,642			103,823
Other long-term liabilities	74,621			59,087
Commitments and Contingencies
Juniper Networks stockholders' equity:
Convertible preferred stock, $0.00001 par value; 10,000 shares authorized; none issued and outstanding	—			—
Common stock, $0.00001 par value; 1,000,000 shares authorized; 525,726 shares and 525,378 shares issued and outstanding at September 30, 2011, and December 31, 2010, respectively	5			5
Additional paid-in capital	10,011,736			9,717,783
Accumulated other comprehensive loss	(5,468		)	(1,251		)
Accumulated deficit	(3,068,565		)	(3,108,337		)
Total Juniper Networks stockholders' equity	6,937,708			6,608,200
Noncontrolling interest	476			600
Total equity	6,938,184			6,608,800
Total liabilities and equity	$	9,707,092		$	8,467,851

See accompanying Notes to Condensed Consolidated Financial Statements

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Juniper Networks, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Nine Months Ended September 30,
	2011			2010
Cash flows from operating activities:
Consolidated net income	$	328,849		$	429,290
Adjustments to reconcile consolidated net income to net cash from operating activities:
Depreciation and amortization	125,986			112,366
Non-cash portion of share-based compensation	165,236			129,555
Deferred income taxes	(6,014		)	26,425
Loss/(gain) on equity investments	982			(3,232		)
Excess tax benefits from share-based compensation	(44,524		)	(32,932		)
Amortization of debt issuance costs	509			—
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net	152,019			(15,093		)
Prepaid expenses and other assets	14,103			(67,813		)
Accounts payable	(25,962		)	8,464
Accrued compensation	(62,625		)	8,390
Accrued litigation settlements	—			(169,330		)
Income tax payable	70,241			(16,900		)
Other accrued liabilities	23,309			836
Deferred revenue	1,012			31,274
Net cash provided by operating activities	743,121			441,300

Cash flows from investing activities:
Purchases of property and equipment	(187,886		)	(137,481		)
Purchases of trading investments	(4,575		)	(2,338		)
Purchases of available-for-sale investments	(1,893,474		)	(1,361,510		)
Proceeds from sales of available-for-sale investments	1,050,936			440,788
Proceeds from maturities of available-for-sale investments	446,150			744,464
Payment for business acquisition, net of cash and cash equivalents acquired	(31,101		)	(133,333		)
Changes in restricted cash	(1,144		)	(12,432		)
Purchases of privately-held and other equity investments, net	(32,402		)	(5,288		)
Net cash used in investing activities	(653,496		)	(467,130		)

Cash flows from financing activities:
Proceeds from issuance of common stock	341,063			257,693
Purchases and retirement of common stock	(548,590		)	(388,698		)
Issuance of long-term debt, net	991,556			—
Change in customer financing arrangements	(7,616		)	(16,906		)
Excess tax benefit from share-based compensation	44,524			32,932
Return of capital to noncontrolling interest	—			(3,000		)
Net cash provided by (used in) financing activities	820,937			(117,979		)
Net increase (decrease) in cash and cash equivalents	910,562			(143,809		)
Cash and cash equivalents at beginning of period	1,811,887			1,604,723
Cash and cash equivalents at end of period	$	2,722,449		$	1,460,914

See accompanying Notes to Condensed Consolidated Financial Statements

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Basis of Presentation

The unaudited Condensed Consolidated Financial Statements of Juniper Networks, Inc. (“Juniper Networks” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information as well as the instructions to Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Condensed Consolidated Balance Sheet as of December 31, 2010, is derived from the audited consolidated financial statements for the year ended December 31, 2010. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011, or any future period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors,” “Quantitative and Qualitative Disclosures About Market Risk,” and the Consolidated Financial Statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and accompanying notes. Actual results could differ materially from those estimates.

As of September 30, 2011, the Company owned a 60 percent interest in a joint venture with Nokia Siemens Networks B.V. (“NSN”). Given the Company's majority ownership interest in the joint venture, the accounts of the joint venture have been consolidated with the accounts of the Company, and a noncontrolling interest has been recorded for the noncontrolling investor's interests in the net assets and operations of the joint venture. In July 2011, NSN and the Company entered into an agreement to cease operation of and terminate the joint venture. NSN has assumed the activities of the joint venture. The Company is in the process of winding down this joint venture and the termination of this joint venture is not expected to have a material effect on the Company's financial position or results of operations.

Note 2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-08, Topic 350 - Intangibles - Goodwill and Other ("ASU 2011-08"), which amends Topic 350 to allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based the qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This guidance is effective for annual and interim goodwill test performed for years beginning after December 15, 2011. Early adoption is permitted. The Company's adoption of ASU 2011-08 is not expected to have an impact on its consolidated results of operations or financial condition.

In June 2011, the FASB issued ASU No. 2011-05, Topic 220 - Presentation of Comprehensive Income (“ASU 2011-05”), which requires an entity to present total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements and eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. This guidance is effective for fiscal years and interim periods, beginning after December 15, 2011. The Company's adoption of ASU 2011-05 will not have an impact on its consolidated results of operations or financial condition.

In May 2011, the FASB issued ASU No. 2011-04, Topic 820 - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”), which amends current fair value measurement and disclosure guidance to converge with International Financial Reporting Standards ("IFRS") and provides increased transparency around valuation inputs and investment categorization. This guidance is effective for fiscal years and interim periods, beginning after December 15, 2011. Early application by public companies is not permitted. The Company's adoption of ASU 2011-04 is not expected to have an impact on its consolidated results of operations or financial condition.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Note 3. Business Combinations

The Company's consolidated financial statements include the operating results of acquired businesses from the date of each acquisition. Pro forma results of operations for these acquisitions have not been presented as the financial impact to the Company's consolidated results of operations, both individually and in aggregate, is not material. Additional information existing as of the acquisition dates but unknown to the Company may become known during the remainder of the measurement period, not to exceed 12 months from the acquisition date, which may result in changes to the amounts and allocations recorded.

In the first quarter of 2011, the Company completed two business combinations for cash of approximately $30.5 million. There were no acquisitions during the second and third quarters of 2011. Total purchase consideration for these acquisitions at the acquisition dates was allocated as follows (in millions):



	2011 Acquisitions
Net tangible assets acquired	$	1.7
Intangible assets acquired	28.4
Goodwill	0.4
Total	$	30.5

The goodwill recognized is attributable primarily to expected synergies. None of the goodwill is deductible for U.S. federal income tax purposes.

The following table presents details of the intangible assets acquired through the business combinations completed in the first nine months of 2011 (in millions, except years):



	2011 Acquisitions
	Estimated Useful Life (In Years)	Amount
Existing or Core technology	10	$	21.9
Support agreements and related relationships	4	5.1
Patents	5	1.4
Total		$	28.4

The Company recognized an immaterial amount of acquisition-related costs in the three months ended September 30, 2011, and $9.3 million of acquisition-related costs in the nine months ended September 30, 2011. In the three and nine months ended September 30, 2010, the Company recognized $1.5 million and $2.1 million, respectively, of acquisition-related costs. These acquisition related charges were expensed in the period incurred and reported in the Company's consolidated statement of operations within cost of revenues and operating expense.

Note 4. Net Income per Share

Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed giving effect to all dilutive potential shares that were outstanding during the period. Dilutive potential common shares consist of common shares issuable upon exercise of stock options, employee stock purchase plan, vesting of restricted stock units (“RSUs”), and vesting of performance share awards (“PSAs”).

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the calculation of basic and diluted net income per share attributable to Juniper Networks common stockholders (in millions, except per share amounts):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Numerator:
Net income attributable to Juniper Networks	$	83.7	$	134.5	$	329.0	$	428.2
Denominator:
Weighted-average shares used to compute basic net income per share	529.3		520.6		531.0		522.1
Effect of dilutive securities:
Employee stock awards	7.3		14.3		13.1		15.1
Weighted-average shares used to compute diluted net income per share	536.6		534.9		544.1		537.2
Net income per share attributable to Juniper Networks common stockholders:
Basic	$	0.16	$	0.26	$	0.62	$	0.82
Diluted	$	0.16	$	0.25	$	0.60	$	0.80

Employee stock options, RSUs, and PSAs covering approximately 29.8 million and 12.8 million shares of the Company's common stock in the three and nine months ended September 30, 2011, respectively, and 16.8 million and 16.4 million shares for the three and nine months ended September 30, 2010, respectively, were outstanding, but were not included in the computation of diluted earnings per share. The Company excludes outstanding stock options with exercise prices that are greater than the average market price and RSUs with grant date fair values that are greater than the average market price from the calculation of diluted net income per share because their effect would be anti-dilutive. The Company includes the common shares underlying PSAs in the calculation of diluted net income per share when they become contingently issuable and excludes such shares when they are not contingently issuable.

Note 5. Cash, Cash Equivalents, and Investments

Cash and Cash Equivalents

The following table summarizes the Company's cash and cash equivalents (in millions):



	As of
	September 30, 2011		December 31, 2010
Cash:
Demand deposits	$	571.8	$	413.0
Time deposits	976.2		273.3
Total cash	1,548.0		686.3
Cash equivalents:
U.S. government securities	—		76.7
Government-sponsored enterprise obligations	—		5.0
Commercial paper	—		4.0
Money market funds	1,174.4		1,039.9
Total cash equivalents	1,174.4		1,125.6
Total cash and cash equivalents	$	2,722.4	$	1,811.9

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Investments in Available-for-Sale and Trading Securities

The following table summarizes the Company's unrealized gains and losses, and fair value of investments designated as available-for-sale and trading securities, as of September 30, 2011, and December 31, 2010 (in millions):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of September 30, 2011:
Fixed income securities:
U.S. government securities	$	361.6	$	—	$	(0.1	)	$	361.5
Government-sponsored enterprise obligations	368.2		0.3		(0.1		)	368.4
Foreign government debt securities	2.4		—		—			2.4
Certificates of deposit	38.0		—		—			38.0
Asset-backed securities	111.7		0.3		(0.1		)	111.9
Corporate debt securities	516.1		0.7		(1.2		)	515.6
Total fixed income securities	1,398.0		1.3		(1.5		)	1,397.8
Total available-for-sale securities	1,398.0		1.3		(1.5		)	1,397.8
Trading securities (1)	10.1		—		—			10.1
Total	$	1,408.1	$	1.3	$	(1.5	)	$	1,407.9

Reported as:
Short-term investments	$	632.3	$	0.2	$	(0.1	)	$	632.4
Long-term investments	775.8		1.1		(1.4		)	775.5
Total	$	1,408.1	$	1.3	$	(1.5	)	$	1,407.9

________________________________


(1)	Balance includes the Company's non-qualified deferred compensation plan assets. For additional information, see Note 12, Employee Benefits, under the section Deferred Compensation Plan.



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of December 31, 2010:
Fixed income securities:
U.S. government securities	$	158.2	$	0.2	$	—		$	158.4
Government-sponsored enterprise obligations	213.8		0.4		(0.2		)	214.0
Foreign government debt securities	46.8		0.2		—			47.0
Certificates of deposit	20.9		0.1		—			21.0
Commercial paper	9.5		—		—			9.5
Asset-backed securities	90.1		—		(0.1		)	90.0
Corporate debt securities	459.7		2.2		(0.2		)	461.7
Total fixed income securities	999.0		3.1		(0.5		)	1,001.6
Total available-for-sale securities	999.0		3.1		(0.5		)	1,001.6
Trading securities (1)	8.1		—		—			8.1
Total	$	1,007.1	$	3.1	$	(0.5	)	$	1,009.7

Reported as:
Short-term investments	$	473.6	$	0.9	$	—		$	474.5
Long-term investments	533.5		2.2		(0.5		)	535.2
Total	$	1,007.1	$	3.1	$	(0.5	)	$	1,009.7

________________________________


(1)	Balance includes the Company's non-qualified deferred compensation plan assets. For additional information, see Note 12, Employee Benefits, under the section Deferred Compensation Plan.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table presents the maturities of the Company's available-for-sale and trading securities, as of September 30, 2011 (in millions):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Due within one year	$	622.2	$	0.2	$	(0.1	)	$	622.3
Due between one and five years	775.8		1.1		(1.4		)	775.5
No contractual maturity	10.1		—		—			10.1
Total	$	1,408.1	$	1.3	$	(1.5	)	$	1,407.9

The following tables present the Company's trading and available-for-sale investments that are in an unrealized loss position as of September 30, 2011, and December 31, 2010 (in millions):



	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
As of September 30, 2011
Corporate debt securities	$	284.0	$	(1.3	)	$	—	$	—	$	284.0	$	(1.3	)
U.S. government securities	136.0		(0.1		)	—		—		136.0		(0.1		)
Government-sponsored enterprise obligations	213.6		(0.1		)	—		—		213.6		(0.1		)
Asset-backed securities (1)	64.3		—			0.8		—		65.1		—
Total	$	697.9	$	(1.5	)	$	0.8	$	—	$	698.7	$	(1.5	)

________________________________


(1)	Balance includes investments that were in an immaterial unrealized loss position as of September 30, 2011.



	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
As of December 31, 2010
Corporate debt securities (1)	$	104.3	$	(0.2	)	$	28.8	$	—	$	133.1	$	(0.2	)
Government-sponsored enterprise obligations	57.8		(0.2		)	—		—		57.8		(0.2		)
Foreign government debt securities (1)	—		—			6.2		—		6.2		—
Commercial paper (1)	5.0		—			—		—		5.0		—
Asset-backed securities	54.7		(0.1		)	—		—		54.7		(0.1		)
Total	$	221.8	$	(0.5	)	$	35.0	$	—	$	256.8	$	(0.5	)

________________________________


(1)	Balance includes investments that were in an immaterial unrealized loss position as of December 31, 2010.

The Company had 157 and 73 investments in unrealized loss positions as of September 30, 2011, and December 31, 2010, respectively. The gross unrealized losses related to these investments were primarily due to changes in market interest rates. For the fixed income securities that have unrealized losses, the Company determined that (i) it does not have the intent to sell any of these investments and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. The Company did not consider these investments to be other-than-temporarily impaired as of September 30, 2011, and December 31, 2010. The Company reviews its investments to identify and evaluate investments that have an indication of possible impairment. The Company aggregates its investments by category and length of time the securities have been in a continuous unrealized loss position to facilitate its evaluation.

Restricted Cash and Investments

The Company classifies cash and investments as restricted cash and investments on its condensed consolidated balance sheet for: (i) amounts held in escrow accounts, as required by certain acquisitions completed in 2005 and 2010; (ii) the India Gratuity Trust and Israel Retirement Trust, which cover statutory severance obligations in the event of termination of the Company's India and Israel employees, respectively; and (iii) the Directors and Officers ("D&O") indemnification trust. During the three

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

and nine months ended September 30, 2011, the Company distributed approximately $2.3 million and $30.0 million of restricted cash, mainly related to the 2010 acquisitions.

In connection with the 2010 acquisition of Ankeena Networks, Inc. ("Ankeena"), the Company agreed to pay from escrow a total amount of $10.7 million, representing the cash value of unvested restricted shares of Ankeena common stock as of April 8, 2010, held by certain former Ankeena employees. Through September 30, 2011, the Company has released $8.4 million from escrow and expects to release the remaining $2.3 million from escrow over the next twelve months as the restricted shares vest.

The following table summarizes the Company's cash and investments that are classified as restricted cash and investments in the condensed consolidated balance sheets (in millions):



	As of
	September 30, 2011		December 31, 2010
Restricted cash:
Demand deposits	$	0.5	$	1.7
Total restricted cash	0.5		1.7
Restricted investments:
U.S. government securities	—		0.6
Corporate debt securities	1.8		2.7
Mutual funds	1.2		—
Money market funds	87.0		114.3
Total restricted investments	90.0		117.6
Total restricted cash and investments	$	90.5	$	119.3

As of September 30, 2011, and December 31, 2010, the unrealized gains and losses related to restricted investments were immaterial.

Other Investments

The Company's minority equity investments in privately-held companies are carried at cost, as the Company does not have a controlling interest or the ability to exercise significant influence over these companies. The Company adjusts its privately-held equity investments for any impairment if the fair value is less than the carrying value of the respective assets on an other-than-temporary basis.

As of September 30, 2011, and December 31, 2010, the carrying values of the Company’s privately-held and other equity investments of $51.0 million and $22.1 million, respectively, were included in other long-term assets in the condensed consolidated balance sheets. During the three and nine months ended September 30, 2011, the Company invested $23.8 million and $32.5 million, respectively, in privately-held and other equity investments. During the three and nine months ended September 30, 2010, the Company invested $4.6 million and $9.8 million in privately-held and other equity investments.

In the three and nine months ended September 30, 2011, the Company recognized a loss of $1.8 million from the impairment of a privately-held investment that the Company judged to be other than temporary, partially offset by gains on other privately-held investments. In the nine months ended September 30, 2010, the Company recognized a gain of $3.2 million from its minority equity investments in Ankeena upon the acquisition of Ankeena.

Note 6. Fair Value Measurements

The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. These inputs are valued using market based approaches.

Level 3 – Inputs are unobservable inputs based on the Company’s assumptions. These inputs, if any, are valued using internal financial models.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables provide a summary of assets measured at fair value on a recurring basis and as reported in the condensed consolidated balance sheets (in millions):



	Fair Value Measurements at September 30, 2011 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale debt securities:
U.S. government securities	$	144.8	$	216.7	$	—	$	361.5
Government-sponsored enterprise obligations	274.2		94.2		—		368.4
Foreign government debt securities	—		2.4		—		2.4
Corporate debt securities (1)	—		517.4		—		517.4
Certificate of deposit	—		38.0		—		38.0
Asset-backed securities	—		111.9		—		111.9
Money market funds (2)	1,261.4		—		—		1,261.4
Total available-for-sale debt securities	1,680.4		980.6		—		2,661.0
Total available-for-sale securities	1,680.4		980.6		—		2,661.0
Trading securities:
Mutual funds (3)	11.3		—		—		11.3
Total trading securities	11.3		—		—		11.3
Derivative assets:
Foreign exchange contracts	—		0.7		—		0.7
Total derivative assets	—		0.7		—		0.7
Total assets measured at fair value	$	1,691.7	$	981.3	$	—	$	2,673.0

________________________________


(1)	Balance includes $1.8 million of restricted investments measured at fair market value, related to the Company's India Gratuity Trust.


(2)	Balance includes $87.0 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisition related escrows.


(3)	Balance includes $1.2 million of restricted investments measured at fair market value, related to the Company's India Gratuity Trust.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)



	Fair Value Measurements at September 30, 2011 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Reported as:
Cash equivalents	$	1,174.4	$	—	$	—	$	1,174.4
Short-term investments	140.9		491.5		—		632.4
Long-term investments	288.2		487.3		—		775.5
Restricted cash and investments	88.2		1.8		—		90.0
Prepaid expenses and other current assets	—		0.7		—		0.7
Total assets measured at fair value	$	1,691.7	$	981.3	$	—	$	2,673.0



	Fair Value Measurements at December 31, 2010 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale debt securities:
U.S. government securities (1)	$	54.9	$	180.8	$	—	$	235.7
Government-sponsored enterprise obligations	208.9		10.1		—		219.0
Foreign government debt securities	21.0		26.0		—		47.0
Commercial paper	—		13.5		—		13.5
Corporate debt securities (2)	2.7		461.7		—		464.4
Certificate of deposit	—		21.0		—		21.0
Asset-backed securities	—		90.0		—		90.0
Money market funds (3)	1,154.2		—		—		1,154.2
Total available-for-sale debt securities	1,441.7		803.1		—		2,244.8
Total available-for-sale securities	1,441.7		803.1		—		2,244.8
Trading securities:
Mutual funds	8.1		—		—		8.1
Total trading securities	8.1		—		—		8.1
Derivative assets:
Foreign exchange contracts	—		0.4		—		0.4
Total derivative assets	—		0.4		—		0.4
Total assets measured at fair value	$	1,449.8	$	803.5	$	—	$	2,253.3

________________________________

(1)

Balance includes $0.6 million of restricted investments measured at fair market value, related to an acquisition completed in 2005. For additional information regarding the Company's restricted investments, see Note 5, Cash, Cash Equivalents, and Investments, under the heading “Restricted Cash.” Restricted investments are included in the restricted cash balance in the condensed consolidated balance sheet.


(2)	Balance includes $2.7 million of restricted investments measured at fair market value, related to the Company's India Gratuity Trust.


(3)	Balance includes $114.3 million of restricted investments measured at fair market value, related to the Company's D&O trust and acquisition related escrows.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)



	Fair Value Measurements at December 31, 2010 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Reported as:
Cash equivalents	$	1,039.9	$	85.7	$	—	$	1,125.6
Short-term investments	150.7		323.8		—		474.5
Long-term investments	142.2		393.0		—		535.2
Restricted cash	117.0		0.6		—		117.6
Prepaid expenses and other current assets	—		0.4		—		0.4
Total assets measured at fair value	$	1,449.8	$	803.5	$	—	$	2,253.3

As of September 30, 2011, and December 31, 2010, the Company had $4.2 million and $2.6 million, respectively, of derivative liabilities measured at fair value on a recurring basis. The Company recorded the derivative liabilities, which related to its foreign exchange contracts, within other accrued liabilities in its condensed consolidated balance sheets. These liabilities were measured using significant other observable remaining inputs (Level 2) pursuant to the fair value hierarchy.

The Company's policy is to recognize asset or liability transfers among Level 1, Level 2, and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the three and nine months ended September 30, 2011, and 2010, the Company had no transfers between levels of the fair value hierarchy of its assets or liabilities measured at fair value.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of the Company's assets, including intangible assets, goodwill, and cost-method investments, are measured at fair value on a nonrecurring basis if impairment is indicated. As of September 30, 2011, and December 31, 2010, the carrying value of privately-held equity investments measured at fair value on a nonrecurring basis was 0.4 million and $0.8 million, respectively. These privately-held equity investments, which are normally carried at cost, were measured at fair value due to events and circumstances that the Company identified as significantly impacting the fair value of the investments. The Company measured the fair value of its privately held equity investments using an analysis of the financial condition and near-term prospects of the investee, including recent financing activities and their capital structure. As a result, the Company recognized an impairment loss of $1.8 million in the three and nine months ended September 30, 2011, and classified the investment as Level 3 assets due to the absence of quoted market prices and inherent lack of liquidity. The Company had no impairment charges against its privately-held equity investments in the three and nine months ended September 30, 2010. The Company had no liabilities measured at fair value on a nonrecurring basis as of September 30, 2011 and December 31, 2010.

Assets and Liabilities Not Measured at Fair Value

The carrying amounts of the Company's accounts receivable, financing receivables, accounts payable, and other accrued liabilities approximate fair value due to their short maturities. The fair value of the Company’s long-term debt is disclosed in Note 9, Financing, and was determined using quoted market prices (Level 1).

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Note 7. Goodwill and Purchased Intangible Assets

Goodwill

The following table summarizes the Company's goodwill activities by segment in the nine months ended September 30, 2011 (in millions):



	Infrastructure		SLT			Total
Balance as of January 1, 2011
Goodwill	$	1,643.4	$	3,564.4		$	5,207.8
Accumulated impairment losses	—		(1,280.0		)	(1,280.0		)
Carrying value at January 1, 2011	1,643.4		2,284.4			3,927.8
Adjustments to goodwill	2.1		(1.8		)	0.3
Goodwill acquired during the nine months ended September 30, 2011	0.4		—			0.4
Balance as of September 30, 2011
Goodwill	1,645.9		3,562.6			5,208.5
Accumulated impairment losses	—		(1,280.0		)	(1,280.0		)
Carrying value at September 30, 2011	$	1,645.9	$	2,282.6		$	3,928.5

The adjustments to goodwill during the nine months ended September 30, 2011, were related to adjustments in net tangible assets assumed from certain businesses acquired in 2010 and 2011. There were no impairments to goodwill during the three and nine months ended September 30, 2011, and 2010.

Purchased Intangible Assets

Changes to the Company’s purchased intangible assets were as follows (in millions):



	Gross		Accumulated Amortization			Net
As of September 30, 2011:
Intangible assets with finite lives:
Technologies and patents	$	494.4	$	(398.3	)	$	96.1
Other	91.5		(65.5		)	26.0
Total intangible assets with finite lives	585.9		(463.8		)	122.1
IPR&D with indefinite lives	7.9		—			7.9
Total purchased intangible assets	$	593.8	$	(463.8	)	$	130.0

As of December 31, 2010:
Intangible assets with finite lives:
Technologies and patents	$	471.1	$	(381.4	)	$	89.7
Other	86.4		(62.2		)	24.2
Total intangible assets with finite lives	557.5		(443.6		)	113.9
IPR&D with indefinite lives	7.9		—			7.9
Total purchased intangible assets	$	565.4	$	(443.6	)	$	121.8

Amortization of purchased intangible assets included in operating expenses and cost of product revenues totaled $6.7 million and $2.4 million for the three months ended September 30, 2011, and 2010, respectively, and $20.2 million and approximately $5.0 million for the nine months ended September 30, 2011, and 2010, respectively. There were no impairment charges with respect to the purchased intangible assets in the three and nine months ended September 30, 2011, and 2010.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

There were no purchased intangible assets added during the three months ended September 30, 2011. During the nine months ended September 30, 2011, the Company added $28.4 million of purchased intangible assets as a result of acquisitions completed during the first nine months of 2011. During the three and nine months ended September 30, 2010, the Company added $26.6 million and $38.8 million, respectively, of purchased intangible assets as a result of acquisitions completed during the first nine months of 2010.

Acquired in-process research and development (“IPR&D”) consists of existing research and development projects at the time of the acquisition. Projects that qualify as IPR&D assets represent those that have not yet reached technological feasibility and have no alternative future use. After initial recognition, acquired IPR&D assets are accounted for as indefinite-lived intangible assets. Development costs incurred after acquisition on acquired development projects are expensed as incurred. Upon completion of development, acquired IPR&D assets are considered amortizable finite-lived assets. If the IPR&D project is abandoned, the Company writes off the related purchased intangible asset in the period it is abandoned.

The estimated future amortization expense of purchased intangible assets with finite lives is as follows (in millions):



Years Ending December 31,	Amount
2011 (remaining three months)	$	6.6
2012	26.4
2013	26.1
2014	24.3
2015	19.3
Thereafter	19.4
Total	$	122.1

Note 8. Other Financial Information

Warranties

The Company accrues for warranty costs as part of its cost of sales based on associated material costs, labor costs for customer support, and overhead at the time revenue is recognized. This provision is reported as accrued warranty within current liabilities on the condensed consolidated balance sheets. Changes in the Company’s warranty reserve were as follows (in millions):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Beginning balance	$	38.1		$	38.3		$	35.9		$	38.2
Provisions made during the period, net	13.0			13.7			40.7			37.9
Change in estimate	(0.2		)	(1.9		)	(3.1		)	(2.4		)
Actual costs incurred during the period	(12.0		)	(13.7		)	(34.6		)	(37.3		)
Ending balance	$	38.9		$	36.4		$	38.9		$	36.4

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Deferred Revenue

Details of the Company's deferred revenue were as follows (in millions):



	As of
	September 30, 2011			December 31, 2010
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	277.8		$	294.1
Distributor inventory and other sell-through items	130.1			143.4
Deferred gross product revenue	407.9			437.5
Deferred cost of product revenue	(130.6		)	(148.8		)
Deferred product revenue, net	277.3			288.7
Deferred service revenue	608.5			595.7
Total	$	885.8		$	884.4
Reported as:
Current	$	668.8		$	660.2
Long-term	217.0			224.2
Total	$	885.8		$	884.4

Deferred product revenue primarily represents unrecognized revenue related to shipments to distributors that have not sold through to end-users, undelivered product commitments, and other shipments that have not met all revenue recognition criteria. Deferred product revenue is recorded net of the related costs of product revenue. Deferred service revenue represents customer payments made in advance for services, which include technical support, hardware and software maintenance, professional services, and training.

Restructuring Liabilities

In the third quarter of 2011, the Company implemented a restructuring plan (the "2011 Restructuring Plan") in an effort to better align its business operations with the current market and macroeconomic conditions. The 2011 Restructuring Plan primarily consisted of certain workforce reductions, and to a lesser extent, contract terminations.

During 2009, the Company implemented a restructuring plan (the "2009 Restructuring Plan") in an effort to better align its business operations with the market and macroeconomic conditions. The 2009 Restructuring Plan included restructuring of certain business functions that resulted in reductions of workforce and facilities. The Company recorded the majority of the restructuring charges associated with this plan during the years ended 2010 and 2009.

The Company recorded net restructuring charges of $16.8 million and $15.6 million, in the three and nine months ended September 30, 2011, respectively, primarily due to the implementation of its 2011 Restructuring Plan, and recorded $0.2 million and $8.6 million within restructuring in the condensed consolidated statements of operations during the three and nine months ended September 30, 2010, respectively, in connection with the restructuring plan implemented in 2009. As of September 30, 2011, remaining restructuring liability under the 2011 Restructuring Plan was related to severance costs to be paid out in the fourth quarter of 2011, as well as facilities related charges under the 2009 Restructuring Plan, which is expected to be completed through February 2015.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Restructuring charges were based on the Company's restructuring plans that were committed by management. Any changes in the estimates of executing the approved plans will be reflected in the Company's results of operations. The following table provides a summary of changes in the Company’s restructuring liability (in millions):



	Remaining Liability as of December 31, 2010		Charges		Cash payments			Non-cash Settlements and Other Adjustments			Remaining Liability as of September 30, 2011
Facilities	$	7.7	$	0.1	$	(5.2	)	$	(1.5	)	$	1.1
Severance, contractual commitments, and other charges	0.2		16.7		(2.8		)	(1.9		)	12.2
Total	$	7.9	$	16.8	$	(8.0	)	$	(3.4	)	$	13.3

Other Expense and Income, Net

Other expense and income, net consists of the following (in millions):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Interest income	$	2.2		$	2.8		$	7.2		$	8.0
Interest expense	(14.0		)	(2.6		)	(35.6		)	(6.2		)
Other	(4.2		)	—			(7.7		)	3.9
Other (expense) income, net	$	(16.0	)	$	0.2		$	(36.1	)	$	5.7

Interest income primarily includes interest earned on the Company’s cash, cash equivalents, and investments. Interest expense primarily includes interest expense from long-term debt and customer financing arrangements. Other income and expense typically consists of investment and foreign exchange gains and losses and other non-operational income and expense items. In the three and nine months ended September 30, 2011, other included legal expenses unrelated to current or recent operations of $1.4 million and $6.8 million, respectively, and net loss on equity investments of $1.1 million and $1.0 million, respectively. In the nine months ended September 30, 2010, we recognized a gain of $3.2 million on privately-held equity investments.

Note 9. Financing

Long-Term Debt

The following table summarizes the Company's long-term debt (in millions, except percentages):



	As of
	September 30, 2011
	Amount			Effective Interest Rate
Senior notes:
3.10% fixed-rate notes, due 2016	$	300.0		3.12	%
4.60% fixed-rate notes, due 2021	300.0			4.63	%
5.95% fixed-rate notes, due 2041	400.0			6.01	%
Total senior notes	1,000.0
Unaccreted discount	(1.0		)
Total	$	999.0

In March 2011, the Company issued $300.0 million aggregate principal amount of 3.10% senior notes due 2016 (the "2016 notes"), $300.0 million aggregate principal amount of 4.60% senior notes due 2021 (the "2021 notes"), and $400.0 million aggregate principal amount of 5.95% senior notes due 2041 (the "2041 notes" and, together with the 2016 notes and the 2021

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

notes the "notes"). Interest on the notes is payable in cash semiannually. The Company may redeem the notes, at any time in whole or from time to time in part, subject to a make-whole premium, and, in the event of a change in control, the holders of the notes may require the Company to repurchase for cash all or part of the notes at a purchase price equal to 101% of the aggregate principle amount, plus accrued and unpaid interest, if any. The indenture that governs the notes also contains various covenants, including limitations on the Company's ability to incur liens or enter into sale-leaseback transactions over certain dollar thresholds.

The effective rates for the notes include the interest on the notes, accretion of the discount, and amortization of issuance costs. At September 30, 2011, the estimated fair value of the notes included in long-term debt was approximately $1,051.1 million based on quoted market prices (Level 1). The Company had no debt at December 31, 2010.

Customer Financing Arrangements

The Company has customer financing arrangements to sell its accounts receivable to a major third-party financing provider. The program does not and is not intended to affect the timing of revenue recognition because the Company only recognizes revenue upon sell-through. Under the financing arrangements, proceeds from the financing provider are due to the Company 30 days from the sale of the receivable. In these transactions with the financing provider, the Company surrendered control over the transferred assets. The accounts receivable were isolated from the Company and put beyond the reach of creditors, even in the event of bankruptcy. The Company does not maintain effective control over the transferred assets through obligations or rights to redeem, transfer, or repurchase the receivables after they have been transferred.

Pursuant to the financing arrangements for the sale of receivables, the Company sold net receivables of $153.4 million and $153.1 million during the three months ended September 30, 2011, and 2010, respectively, and $552.4 million and $435.5 million during the nine months ended September 30, 2011, and 2010, respectively.

The Company received cash proceeds from the financing provider of $142.8 million and $147.0 million during the three months ended September 30, 2011, and 2010, respectively, and $544.7 million and $423.5 million during the nine months ended September 30, 2011, and 2010, respectively. The amounts owed by the financing provider recorded as accounts receivable on the Company’s condensed consolidated balance sheets as of September 30, 2011, and December 31, 2010, was $122.9 million and $127.4 million, respectively.

The portion of the receivable financed that has not been recognized as revenue is accounted for as a financing arrangement and is included in other accrued liabilities and other long-term liabilities in the condensed consolidated balance sheet. As of September 30, 2011, and December 31, 2010, the estimated cash received from the financing provider not recognized as revenue from distributors was $41.5 million and $49.1 million, respectively.

Note 10. Derivative Instruments

The Company uses derivatives to partially offset its market exposure to fluctuations in certain foreign currencies and does not enter into derivatives for speculative or trading purposes.

The notional amount of Company's foreign currency derivatives are summarized as follows (in millions):



	As of
	September 30, 2011		December 31, 2010
Cash flow hedges	$	195.9	$	110.4
Non-designated hedges	138.3		74.4
Total	$	334.2	$	184.8

Cash Flow Hedges

The Company uses foreign currency forward or option contracts to hedge certain forecasted foreign currency transactions relating to cost of services and operating expenses. The derivatives are intended to protect the U.S. Dollar equivalent of the Company's planned cost of services and operating expenses denominated in foreign currencies. These derivatives are designated as cash flow hedges. Execution of these cash flow hedge derivatives typically occurs every month with maturities of less than one year. The effective portion of the derivative's gain or loss is initially reported as a component of accumulated

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

other comprehensive income (loss), and upon occurrence of the forecasted transaction, is subsequently reclassified into the cost of services or operating expense line item to which the hedged transaction relates. The Company records any ineffectiveness of the hedging instruments in interest and other income, net in its consolidated statements of operations. Cash flows from such hedges are classified as operating activities. All amounts within other comprehensive income (loss) are expected to be reclassified into earnings within the next 12 months.

The total fair value of the Company’s derivative assets located in other current assets on the condensed consolidated balance sheet as of September 30, 2011, and December 31, 2010, was $0.7 million and $0.4 million, respectively. The total fair value of the Company’s derivative liabilities located in other accrued liabilities on the condensed consolidated balance sheet as of September 30, 2011, and December 31, 2010, was $4.2 million and $2.6 million, respectively.

During the three and nine months ended September 30, 2011, the Company recognized a loss of $5.6 million and a gain of $1.5 million, respectively, in accumulated other comprehensive income for the effective portion of its derivative instruments and reclassified a gain of $1.2 million and $3.4 million, respectively, from other comprehensive income to operating expense in the condensed consolidated statements of operations. The Company recognized a gain of $2.9 million in accumulated other comprehensive income for the effective portion of its derivative instruments and reclassified a loss of $1.5 million from other comprehensive income to operating expense in the condensed consolidated statements of operations during the three months ended September 30, 2010. During the nine months ended September 30, 2010, the Company recognized a loss of $1.6 million in accumulated other comprehensive loss for the effective portion of its derivative instruments and reclassified a loss of $4.8 million from other comprehensive loss to operating expense in the condensed consolidated statements of operations.

The ineffective portion of the Company's derivative instruments recognized in its condensed consolidated statements of operations was immaterial during the three and nine months ended September 30, 2011, and 2010.

Non-Designated Hedges

The Company also uses foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement of certain monetary assets and liabilities denominated in foreign currencies. These hedges do not qualify for special hedge accounting treatment. These derivatives are carried at fair value with changes recorded in other income and expense, net. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. The derivatives have maturities of approximately two months.

During the three and nine months ended September 30, 2011, the Company recognized a net gain of $0.8 million and $1.0 million, respectively, within other expense and income, net on its condensed consolidated statements of operations from non-designated derivative instruments. The Company recognized a gain of $0.5 million and a loss of $0.9 million on non-designated derivative instruments within other expense and income, net on its condensed consolidated statements of operations during the three and nine months ended September 30, 2010, respectively.

Note 11. Equity

Stock Repurchase Activities

In February 2010, the Company’s Board of Directors (the “Board”) approved a stock repurchase program (the “2010 Stock Repurchase Program”) which authorized the Company to repurchase up to $1.0 billion of its common stock. This authorization was in addition to the stock repurchase program approved by the Board in March 2008 (the “2008 Stock Repurchase Program”), which also enabled the Company to repurchase up to $1.0 billion of the Company’s common stock.

The Company repurchased and retired approximately 8.9 million shares of its common stock at an average price of $21.47 per share for an aggregate purchase price of $191.0 million during the three months ended September 30, 2011, and approximately 17.5 million shares of its common stock at an average price of $30.93 per share for an aggregate purchase price of $541.2 million during the nine months ended September 30, 2011, under its 2010 Stock Repurchase Program. The Company repurchased and retired approximately 5.0 million shares of its common stock at an average price of $26.81 per share for an aggregate purchase price of $134.9 million during the three months ended September 30, 2010, and approximately 14.3 million shares of its common stock at an average price of $27.09 for an aggregate purchase price of $386.7 million during the nine months ended September 30, 2010, under the two stock repurchase programs. There were no remaining authorized funds under the 2008 Stock Repurchase Program and $213.8 million remaining authorized funds under the 2010 Stock Repurchase Program

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

as of September 30, 2011.

Comprehensive Income Attributable to Juniper Networks

Comprehensive income attributable to Juniper Networks consists of the following (in millions):



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011			2010		2011			2010
Consolidated net income	$	83.7		$	134.3	$	328.8		$	429.3
Other comprehensive income (loss), net of tax:
Change in unrealized (loss) gain on investments, net of tax of nil	(8.7		)	8.7		(5.8		)	7.0
Change in foreign currency translation adjustment, net of tax of nil	(7.5		)	6.3		1.7			(1.2		)
Total other comprehensive income (loss), net of tax	(16.2		)	15.0		(4.1		)	5.8
Consolidated comprehensive income	67.5			149.3		324.7			435.1
Adjust for comprehensive loss (income) attributable to noncontrolling interest, net of tax	—			0.2		0.1			(1.1		)
Comprehensive income attributable to Juniper Networks	$	67.5		$	149.5	$	324.8		$	434.0

Table of Contents

Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes equity activity for the three and nine months ended September 30, 2011 (in millions):



	Common Stock & Additional Paid-in-Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Non- controlling Interest			Total Equity
Balance at December 31, 2010	$	9,717.8		$	(1.3	)	$	(3,108.3	)	$	0.6		$	6,608.8
Consolidated net income	—			—			129.8			(0.1		)	129.7
Change in unrealized gain on investments, net of tax of nil	—			4.4			—			—			4.4
Change in foreign currency translation adjustment, net of tax of nil	—			6.6			—			—			6.6
Issuance of shares in connection with Employee Stock Purchase Plan	23.7			—			—			—			23.7
Exercise of stock options by employees	241.7			—			—			—			241.7
Repurchase and retirement of common stock	(70.3		)	—			(129.9		)	—			(200.2		)
Repurchases related to net issuances	(1.8		)	—			(3.1		)	—			(4.9		)
Share-based compensation expense	47.6			—			—			—			47.6
Adjustment related to tax benefit from employee stock option plans	39.4			—			—			—			39.4
Balance at March 31, 2011	9,998.1			9.7			(3,111.5		)	0.5			6,896.8
Consolidated net income	—			—			115.6			(0.1		)	115.5
Change in unrealized loss on investments, net of tax of nil	—			(1.5		)	—			—			(1.5		)
Change in foreign currency translation adjustment, net of tax of nil	—			2.6			—			—			2.6
Exercise of stock options by employees	37.9			—			—			—			37.9
Repurchase and retirement of common stock	(55.2		)	—			(94.8		)	—			(150.0		)
Share-based compensation expense	58.6			—			—			—			58.6
Adjustment related to tax benefit from employee stock option plans	2.0			—			—			—			2.0
Balance at June 30, 2011	10,041.4			10.8			(3,090.7		)	0.4			6,961.9
Consolidated net income	—			—			83.7			—			83.7
Change in unrealized loss on investments, net of tax of nil	—			(8.7		)	—			—<