Juniper 10Q Master 3/31/2015
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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| |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended March 31, 2015 |
or
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| |
o | 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 incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
1133 Innovation Way | | |
Sunnyvale, California | | 94089 |
(Address of principal executive offices) | | (Zip code) |
(408) 745-2000 |
(Registrant's telephone number, 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 filing requirements for the past 90 days. Yes x No o
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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| | | |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
| | (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 o No x
There were 394,836,767 shares of the Company's Common Stock, par value $0.00001, outstanding as of May 1, 2015.
Juniper Networks, Inc.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Juniper Networks, Inc.
Condensed Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Net revenues: | | | |
Product | $ | 764.1 |
| | $ | 876.0 |
|
Service | 303.3 |
| | 294.1 |
|
Total net revenues | 1,067.4 |
| | 1,170.1 |
|
Cost of revenues: | | | |
Product | 288.8 |
| | 326.6 |
|
Service | 121.3 |
| | 123.4 |
|
Total cost of revenues | 410.1 |
| | 450.0 |
|
Gross margin | 657.3 |
| | 720.1 |
|
Operating expenses: | | | |
Research and development | 248.7 |
| | 264.0 |
|
Sales and marketing | 220.2 |
| | 273.4 |
|
General and administrative | 55.2 |
| | 74.9 |
|
Restructuring and other charges | 1.4 |
| | 114.0 |
|
Total operating expenses | 525.5 |
| | 726.3 |
|
Operating income (loss) | 131.8 |
| | (6.2 | ) |
Other (expense) income, net | (15.8 | ) | | 154.2 |
|
Income before income taxes | 116.0 |
| | 148.0 |
|
Income tax provision | 35.8 |
| | 37.4 |
|
Net income | $ | 80.2 |
| | $ | 110.6 |
|
| | | |
Net income per share: | | | |
Basic | $ | 0.20 |
| | $ | 0.23 |
|
Diluted | $ | 0.19 |
| | $ | 0.22 |
|
Shares used in computing net income per share: | | | |
Basic | 407.1 |
| | 486.2 |
|
Diluted | 414.2 |
| | 496.5 |
|
Cash dividends declared per common stock | $ | 0.10 |
| | $ | — |
|
See accompanying Notes to Condensed Consolidated Financial Statements
Juniper Networks, Inc.
Condensed Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Net income | $ | 80.2 |
| | $ | 110.6 |
|
Other comprehensive loss, net of tax: | | | |
Available-for-sale securities: | | | |
Unrealized (loss) gain on available-for-sale securities, net of tax provisions of ($3.8) and ($22.1), respectively | (0.8 | ) | | 38.1 |
|
Reclassification adjustment for realized net gains on available-for-sale securities included in net income, net of tax provision of zero and $60.3, respectively | (0.2 | ) | | (103.5 | ) |
Net change on available-for-sale securities, net of taxes | (1.0 | ) | | (65.4 | ) |
Cash flow hedges: | | | |
Unrealized (losses) gains on cash flow hedges, net of tax provisions of ($0.3) and ($0.6), respectively | (6.4 | ) | | 2.1 |
|
Reclassification adjustment for realized net losses (gains) on cash flow hedges included in net income, net of tax provision (benefit) of $0.1 and ($0.1), respectively | 3.1 |
| | (1.1 | ) |
Net change on cash flow hedges, net of taxes | (3.3 | ) | | 1.0 |
|
Change in foreign currency translation adjustments | (11.1 | ) | | 1.7 |
|
Other comprehensive loss, net of tax | (15.4 | ) | | (62.7 | ) |
Comprehensive income | $ | 64.8 |
| | $ | 47.9 |
|
See accompanying Notes to Condensed Consolidated Financial Statements
Juniper Networks, Inc.
Condensed Consolidated Balance Sheets
(In millions, except par values)
|
| | | | | | | |
| March 31,
2015 | | December 31,
2014 |
| (Unaudited) | | |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 1,810.8 |
| | $ | 1,639.6 |
|
Short-term investments | 398.2 |
| | 332.2 |
|
Accounts receivable, net of allowances | 507.6 |
| | 598.9 |
|
Deferred tax assets, net | 148.2 |
| | 147.0 |
|
Prepaid expenses and other current assets | 236.9 |
| | 254.2 |
|
Total current assets | 3,101.7 |
| | 2,971.9 |
|
Property and equipment, net | 912.2 |
| | 904.3 |
|
Long-term investments | 1,241.6 |
| | 1,133.1 |
|
Restricted cash and investments | 46.0 |
| | 46.0 |
|
Purchased intangible assets, net | 50.5 |
| | 62.4 |
|
Goodwill | 2,981.3 |
| | 2,981.5 |
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Other long-term assets | 333.3 |
| | 303.9 |
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Total assets | $ | 8,666.6 |
| | $ | 8,403.1 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities: | | | |
Short-term debt | $ | 299.9 |
| | $ | — |
|
Accounts payable | 223.6 |
| | 234.6 |
|
Accrued compensation | 169.9 |
| | 225.0 |
|
Deferred revenue | 855.5 |
| | 780.8 |
|
Other accrued liabilities | 221.5 |
| | 287.3 |
|
Total current liabilities | 1,770.4 |
| | 1,527.7 |
|
Long-term debt | 1,648.7 |
| | 1,349.0 |
|
Long-term deferred revenue | 319.2 |
| | 294.9 |
|
Long-term income taxes payable | 178.9 |
| | 177.5 |
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Other long-term liabilities | 132.3 |
| | 134.9 |
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Total liabilities | 4,049.5 |
| | 3,484.0 |
|
Commitments and contingencies (Note 15) |
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| |
|
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Stockholders' equity: | | | |
Convertible preferred stock, $0.00001 par value; 10.0 shares authorized; none issued and outstanding | — |
| | — |
|
Common stock, $0.00001 par value; 1,000.0 shares authorized; 403.8 shares and 416.2 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively | — |
| | — |
|
Additional paid-in capital | 8,584.7 |
| | 8,794.0 |
|
Accumulated other comprehensive loss | (29.2 | ) | | (13.8 | ) |
Accumulated deficit | (3,938.4 | ) | | (3,861.1 | ) |
Total stockholders' equity | 4,617.1 |
| | 4,919.1 |
|
Total liabilities and stockholders' equity | $ | 8,666.6 |
| | $ | 8,403.1 |
|
See accompanying Notes to Condensed Consolidated Financial Statements
Juniper Networks, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited) |
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Cash flows from operating activities: | | | |
Net income | $ | 80.2 |
| | $ | 110.6 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Share-based compensation expense | 46.0 |
| | 60.8 |
|
Depreciation, amortization, and accretion | 47.5 |
| | 48.1 |
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Restructuring and other charges | 1.4 |
| | 122.4 |
|
Deferred income taxes | 11.3 |
| | (44.5 | ) |
Gain on investments, net | (0.6 | ) | | (166.2 | ) |
Excess tax benefits from share-based compensation | (1.7 | ) | | (6.7 | ) |
Loss on disposal of fixed assets | — |
| | 0.8 |
|
Changes in operating assets and liabilities, net of effects from acquisitions: | | | |
Accounts receivable, net | 54.2 |
| | (15.7 | ) |
Prepaid expenses and other assets | (21.8 | ) | | (15.7 | ) |
Accounts payable | (7.8 | ) | | 19.0 |
|
Accrued compensation | (54.1 | ) | | (92.0 | ) |
Income taxes payable | 14.1 |
| | 73.1 |
|
Other accrued liabilities | (48.4 | ) | | (52.2 | ) |
Deferred revenue | 99.0 |
| | 82.8 |
|
Net cash provided by operating activities | 219.3 |
| | 124.6 |
|
Cash flows from investing activities: | | | |
Purchases of property and equipment | (44.2 | ) | | (57.4 | ) |
Purchases of available-for-sale investments | (398.8 | ) | | (327.1 | ) |
Proceeds from sales of available-for-sale investments | 169.5 |
| | 1,221.4 |
|
Proceeds from maturities of available-for-sale investments | 57.3 |
| | 79.3 |
|
Purchases of trading investments | (1.9 | ) | | (1.8 | ) |
Proceeds from sales of privately-held investments | — |
| | 2.5 |
|
Purchases of privately-held investments | (3.2 | ) | | (1.7 | ) |
Payments for business acquisitions, net of cash and cash equivalents acquired | — |
| | (27.1 | ) |
Changes in restricted cash | — |
| | 24.9 |
|
Net cash (used in) provided by investing activities | (221.3 | ) | | 913.0 |
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Cash flows from financing activities: | | | |
Proceeds from issuance of common stock | 31.8 |
| | 101.2 |
|
Purchases and retirement of common stock | (402.4 | ) | | (905.8 | ) |
Purchase of equity forward contract | — |
| | (300.0 | ) |
Issuance of long-term debt, net | 594.6 |
| | 346.5 |
|
Payment for capital lease obligation | 0.4 |
| | (0.4 | ) |
Customer financing arrangements | — |
| | 8.0 |
|
Excess tax benefits from share-based compensation | 1.7 |
| | 6.7 |
|
Payment of cash dividends | (40.8 | ) | | — |
|
Net cash provided by (used in) financing activities | 185.3 |
| | (743.8 | ) |
Effect of foreign currency exchange rates on cash and cash equivalents | (12.1 | ) | | 1.6 |
|
Net increase in cash and cash equivalents | 171.2 |
| | 295.4 |
|
Cash and cash equivalents at beginning of period | 1,639.6 |
| | 2,284.0 |
|
Cash and cash equivalents at end of period | $ | 1,810.8 |
| | $ | 2,579.4 |
|
See accompanying Notes to Condensed Consolidated Financial Statements
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Basis of Presentation
Basis of Presentation
The unaudited Condensed Consolidated Financial Statements of Juniper Networks, Inc. (the "Company" or "Juniper") have been prepared in accordance with United States ("U.S.") generally accepted accounting principles (“U.S. GAAP”) for interim financial information. 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 March 31, 2015, is derived from the audited Consolidated Financial Statements for the year ended December 31, 2014. 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 months ended March 31, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or any future period. The information included in this Quarterly Report on Form 10-Q ("Report") 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, 2014. Certain amounts in the prior year Condensed Consolidated Financial Statements contained in this Report have been reclassified to conform to the current year presentation.
The preparation of the financial statements and related disclosures in accordance with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying notes. Actual results could differ materially from those estimates under different assumptions or conditions.
In 2014, the Company realigned its organization into a One-Juniper structure which included consolidating each of the Company's research and development ("R&D) and go-to-market functions. As a result of these changes, the Company's consolidated business is considered to be one reportable segment.
Note 2. Summary of Significant Accounting Policies
There have been no material changes to the Company's significant accounting policies compared to the accounting policies described in Note 2, Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2014.
Recent Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-05 (Subtopic 350-40) - Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of the adoption on its Condensed Consolidated Financial Statements, if any.
In April 2015, the FASB issued ASU No. 2015-03 (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard would reduce the debt issuance cost asset on the Company's Condensed Consolidated Balance Sheet by approximately $11.0 million and correspondingly reduce its debt liabilities by approximately $11.0 million. The Company plans to adopt this standard in the first quarter of 2016. There would be no impact to the Condensed Consolidated Statement of Operations.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
In January 2015, the FASB issued ASU No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items, which eliminates the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard will not have an impact on the Company's Condensed Consolidated Financial Statements.
In November 2014, the FASB issued ASU No. 2014-16 (Topic 815) - Derivatives and Hedging, which provides clarification on how current guidance should be interpreted in evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Specifically, the amendments clarify that an entity should consider all relevant terms and features in evaluating the host contract and that no single term or feature would necessarily determine the economic characteristics and risks of the host contract. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendment should be applied on a modified retrospective basis to existing hybrid financial instruments issued in the form of a share as of the beginning of the year for which the amendments are effective. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's Condensed Consolidated Financial Statements.
In August 2014, the FASB issued ASU No. 2014-15 (Subtopic 205-40) - Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ("ASU 2014-15") which provides guidance about management's responsibility to evaluate whether or not there is substantial doubt about the Company's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early application is permitted. The adoption of this standard is not expected to have an impact on the Company's Condensed Consolidated Financial Statements.
In June 2014, the FASB issued ASU No. 2014-12 (Topic 718) - Compensation - Stock Compensation ("ASU 2014-12") which provides guidance that a performance target that affects vesting of a share-based payment and that could be achieved after the requisite service period is a performance condition. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost for such an award would be recognized over the required service period, if it is probable that the performance condition will be achieved. ASU 2014-12 is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods. ASU 2014-12 should be applied on a prospective basis to awards that are granted or modified on or after the effective date. The adoption of this standard is not expected to have an impact on the Company's Condensed Consolidated Financial Statements.
In May 2014, the FASB issued ASU No. 2014-09 (Topic 606)—Revenue from Contracts with Customers ("ASU 2014-09") which provides guidance for revenue recognition. This ASU affects all contracts that the Company enters into with customers to transfer goods and services or for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The standard's core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In doing so, the Company will need to use additional judgment and estimates than under the existing guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. In April 2015, the FASB proposed to defer the effective date of the new revenue standard by one year. As a result, the Company would apply the new revenue standard for annual and interim periods beginning after December 15, 2017, with early adoption permitted before annual periods beginning after December 15, 2016. Accordingly, the ASU will be effective for the Company beginning fiscal year 2017. The Company is currently evaluating the impact of the adoption on its Condensed Consolidated Financial Statements.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 3. Cash Equivalents and Investments
Investments in Available-for-Sale and Trading Securities
The following tables summarize the Company's unrealized gains and losses and fair value of investments designated as available-for-sale and trading securities as of March 31, 2015 and December 31, 2014 (in millions):
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| | | | | | | | | | | | | | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
As of March 31, 2015 | | | | | | | |
Fixed income securities: | | | | | | | |
Asset-backed securities | $ | 308.9 |
| | $ | 0.1 |
| | $ | (0.2 | ) | | $ | 308.8 |
|
Certificates of deposit | 8.2 |
| | — |
| | — |
| | 8.2 |
|
Commercial paper | 15.6 |
| | — |
| | — |
| | 15.6 |
|
Corporate debt securities | 843.2 |
| | 1.1 |
| | (0.5 | ) | | 843.8 |
|
Foreign government debt securities | 34.7 |
| | — |
| | — |
| | 34.7 |
|
Government-sponsored enterprise obligations | 190.3 |
| | 0.1 |
| | — |
| | 190.4 |
|
U.S. government securities | 233.7 |
| | 0.2 |
| | — |
| | 233.9 |
|
Total fixed income securities | 1,634.6 |
| | 1.5 |
| | (0.7 | ) | | 1,635.4 |
|
Money market funds | 776.2 |
| | — |
| | — |
| | 776.2 |
|
Mutual funds | 4.0 |
| | 0.1 |
| | — |
| | 4.1 |
|
Publicly-traded equity securities | 2.0 |
| | 0.6 |
| | — |
| | 2.6 |
|
Total available-for-sale securities | 2,416.8 |
| | 2.2 |
| | (0.7 | ) | | 2,418.3 |
|
Trading securities in mutual funds(1) | 17.7 |
| | — |
| | — |
| | 17.7 |
|
Total | $ | 2,434.5 |
| | $ | 2.2 |
| | $ | (0.7 | ) | | $ | 2,436.0 |
|
| | | | | | | |
Reported as: | | | | | | | |
Cash equivalents | $ | 750.8 |
| | $ | — |
| | $ | — |
| | $ | 750.8 |
|
Restricted investments | 45.3 |
| | 0.1 |
| | — |
| | 45.4 |
|
Short-term investments | 397.5 |
| | 0.8 |
| | (0.1 | ) | | 398.2 |
|
Long-term investments | 1,240.9 |
| | 1.3 |
| | (0.6 | ) | | 1,241.6 |
|
Total | $ | 2,434.5 |
| | $ | 2.2 |
| | $ | (0.7 | ) | | $ | 2,436.0 |
|
________________________________
| |
(1) | Balance consists of the Company's non-qualified deferred compensation plan assets. |
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
As of December 31, 2014 | | | | | | | |
Fixed income securities: | | | | | | | |
Asset-backed securities | $ | 269.3 |
| | $ | — |
| | $ | (0.3 | ) | | $ | 269.0 |
|
Certificates of deposit | 10.6 |
| | — |
| | — |
| | 10.6 |
|
Commercial paper | 20.3 |
| | — |
| | — |
| | 20.3 |
|
Corporate debt securities | 738.6 |
| | 0.5 |
| | (1.1 | ) | | 738.0 |
|
Foreign government debt securities | 24.6 |
| | — |
| | — |
| | 24.6 |
|
Government-sponsored enterprise obligations | 162.2 |
| | — |
| | (0.1 | ) | | 162.1 |
|
U.S. government securities | 246.1 |
| | — |
| | (0.1 | ) | | 246.0 |
|
Total fixed income securities | 1,471.7 |
| | 0.5 |
| | (1.6 | ) | | 1,470.6 |
|
Money market funds | 594.2 |
| | — |
| | — |
| | 594.2 |
|
Mutual funds | 3.9 |
| | 0.1 |
| | — |
| | 4.0 |
|
Publicly-traded equity securities | 2.1 |
| | — |
| | (0.1 | ) | | 2.0 |
|
Total available-for-sale securities | 2,071.9 |
| | 0.6 |
| | (1.7 | ) | | 2,070.8 |
|
Trading securities in mutual funds(1) | 16.3 |
| | — |
| | — |
| | 16.3 |
|
Total | $ | 2,088.2 |
| | $ | 0.6 |
| | $ | (1.7 | ) | | $ | 2,087.1 |
|
| | | | | | | |
Reported as: | | | | | | | |
Cash equivalents | $ | 576.6 |
| | $ | — |
| | $ | — |
| | $ | 576.6 |
|
Restricted investments | 45.2 |
| | — |
| | — |
| | 45.2 |
|
Short-term investments | 332.2 |
| | 0.2 |
| | (0.2 | ) | | 332.2 |
|
Long-term investments | 1,134.2 |
| | 0.4 |
| | (1.5 | ) | | 1,133.1 |
|
Total | $ | 2,088.2 |
| | $ | 0.6 |
| | $ | (1.7 | ) | | $ | 2,087.1 |
|
________________________________
| |
(1) | Balance consists of the Company's non-qualified deferred compensation plan assets. |
The following table presents the contractual maturities of the Company's total fixed income securities as of March 31, 2015 (in millions):
|
| | | | | | | | | | | | | | | |
| Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Estimated Fair Value |
Due in less than one year | $ | 393.7 |
| | $ | 0.2 |
| | $ | (0.1 | ) | | $ | 393.8 |
|
Due between one and five years | 1,240.9 |
| | 1.3 |
| | (0.6 | ) | | 1,241.6 |
|
Total | $ | 1,634.6 |
| | $ | 1.5 |
| | $ | (0.7 | ) | | $ | 1,635.4 |
|
The Company had 354 and 437 investments in an unrealized loss positions as of March 31, 2015 and December 31, 2014, respectively. The gross unrealized losses related to these investments were primarily due to changes in market interest rates and stock prices. The Company periodically 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.
For available-for-sale debt securities that have unrealized losses, the Company evaluates whether (i) it has the intention to sell any of these investments and (ii) whether it is 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 anticipates that it will recover the entire amortized cost basis of such available-for-sale debt securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three months ended March 31, 2015 and March 31, 2014.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
For available-for-sale equity securities that have unrealized losses, the Company evaluates whether there is an indication of other-than-temporary impairments. This determination is based on several factors, including the financial condition and near-term prospects of the issuer and the Company's intent and ability to hold the publicly-traded equity securities for a period of time sufficient to allow for any anticipated recovery in market value. During the three months ended March 31, 2014, the Company determined that certain available-for-sale equity securities were other-than-temporarily impaired, resulting in an impairment charge of $1.6 million, which was recorded within other (expense) income, net, in the Condensed Consolidated Statements of Operations. During the three months ended March 31, 2015 the Company did not recognize other-than-temporary impairments associated with these investments.
During the three months ended March 31, 2015, there were no material gross realized gains or losses from available-for-sale securities and there were no material gross realized gains or losses from trading securities. During the three months ended March 31, 2014, gross realized gains from available-for-sale securities were $165.5 million and gross realized losses were not material, excluding the impairment charge noted above. During the three months ended March 31, 2014, there were no material gross realized gains or losses from trading securities.
The following tables present the Company's available-for-sale securities that were in an unrealized loss position as of March 31, 2015 and December 31, 2014 (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 March 31, 2015 | | | | | | | | | | | |
Fixed income securities: | | | | | | | | | | | |
Asset-backed securities(1) | $ | 222.4 |
| | $ | (0.2 | ) | | $ | 1.7 |
| | $ | — |
| | $ | 224.1 |
| | $ | (0.2 | ) |
Corporate debt securities | 391.5 |
| | (0.5 | ) | | — |
| | — |
| | 391.5 |
| | (0.5 | ) |
Foreign government debt securities(2) | 29.1 |
| | — |
| | — |
| | — |
| | 29.1 |
| | — |
|
Government-sponsored enterprise obligations(2) | 60.4 |
| | — |
| | — |
| | — |
| | 60.4 |
| | — |
|
U.S. government securities(2) | 47.5 |
| | — |
| | — |
| | — |
| | 47.5 |
| | — |
|
Total fixed income securities | 750.9 |
| | (0.7 | ) | | 1.7 |
| | — |
| | 752.6 |
| | (0.7 | ) |
Total available-for-sale securities | $ | 750.9 |
| | $ | (0.7 | ) | | $ | 1.7 |
| | $ | — |
| | $ | 752.6 |
| | $ | (0.7 | ) |
________________________________
(1) Balances greater than 12 months include investments that were in an immaterial unrealized loss position as of March 31, 2015.
(2) Balances less than 12 months include investments that were in an immaterial unrealized loss position as of March 31, 2015.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 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, 2014 | | | | | | | | | | | |
Fixed income securities: | | | | | | | | | | | |
Asset-backed securities | $ | 221.9 |
| | $ | (0.3 | ) | | $ | — |
| | $ | — |
| | $ | 221.9 |
| | $ | (0.3 | ) |
Corporate debt securities | 515.9 |
| | (1.1 | ) | | — |
| | — |
| | 515.9 |
| | (1.1 | ) |
Foreign government debt securities(1) | 24.6 |
| | — |
| | — |
| | — |
| | 24.6 |
| | — |
|
Government-sponsored enterprise obligations | 113.8 |
| | (0.1 | ) | | — |
| | — |
| | 113.8 |
| | (0.1 | ) |
U.S. government securities | 189.0 |
| | (0.1 | ) | | — |
| | — |
| | 189.0 |
| | (0.1 | ) |
Total fixed income securities | 1,065.2 |
| | (1.6 | ) | | — |
| | — |
| | 1,065.2 |
| | (1.6 | ) |
Publicly-traded equity securities | 2.0 |
| | (0.1 | ) | | — |
| | — |
| | 2.0 |
| | (0.1 | ) |
Total available-for-sale securities | $ | 1,067.2 |
| | $ | (1.7 | ) | | $ | — |
| | $ | — |
| | $ | 1,067.2 |
| | $ | (1.7 | ) |
________________________________
| |
(1) | Balances less than 12 months include investments that were in an immaterial unrealized loss position as of December 31, 2014. |
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Restricted Cash and Investments
The Company classifies certain cash and investments as restricted cash and investments on its Condensed Consolidated Balance Sheets for: (i) amounts held in escrow accounts, as required in connection with certain acquisitions completed between 2005 and 2014; (ii) the India Gratuity Trust and Israel Retirement Trust, which cover statutory severance obligations in the event of termination of any of the Company's India and Israel employees, respectively; and (iii) the Directors and Officers indemnification trust ("D&O Trust"). The restricted investments are designated as available-for-sale securities.
Privately-Held Investments
The Company has privately-held investments, which include debt and redeemable preferred stock securities that are carried at fair value, and non-redeemable preferred stock securities that are carried at cost.
As of March 31, 2015 and December 31, 2014, the carrying values of the Company's privately-held investments of $93.1 million and $89.9 million, respectively, were included in other long-term assets in the Condensed Consolidated Balance Sheets. As of March 31, 2015 and December 31, 2014, the carrying value of the privately-held investments includes debt and redeemable preferred stock securities of $50.3 million and $47.5 million, respectively. For the three months ended March 31, 2015 and March 31, 2014, there were no unrealized gains or losses associated with the privately-held debt and redeemable preferred stock securities.
The Company reviews its investments to identify and evaluate investments that have an indication of possible impairment. During the three months ended March 31, 2015 and March 31, 2014, the Company determined that no privately-held investments were other-than-temporarily impaired.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 4. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables provide a summary of assets and liabilities measured at fair value on a recurring basis and as reported in the Condensed Consolidated Balance Sheets (in millions):
|
| | | | | | | | | | | | | | | |
| Fair Value Measurements at March 31, 2015 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 |
Assets measured at fair value: | | | | | | | |
Available-for-sale securities: | | | | | | | |
Asset-backed securities | $ | — |
| | $ | 308.8 |
| | $ | — |
| | $ | 308.8 |
|
Certificates of deposit | — |
| | 8.2 |
| | — |
| | 8.2 |
|
Commercial paper | — |
| | 15.6 |
| | — |
| | 15.6 |
|
Corporate debt securities | — |
| | 843.8 |
| | — |
| | 843.8 |
|
Foreign government debt securities | — |
| | 34.7 |
| | — |
| | 34.7 |
|
Government-sponsored enterprise obligations | — |
| | 190.4 |
| | — |
| | 190.4 |
|
Money market funds(1) | 776.2 |
| | — |
| | — |
| | 776.2 |
|
Mutual funds(2) | 4.1 |
| | — |
| | — |
| | 4.1 |
|
Publicly-traded equity securities | 2.6 |
| | — |
| | — |
| | 2.6 |
|
U.S. government securities | 221.6 |
| | 12.3 |
| | — |
| | 233.9 |
|
Total available-for-sale securities | 1,004.5 |
| | 1,413.8 |
| | — |
| | 2,418.3 |
|
Trading securities in mutual funds(3) | 17.7 |
| | — |
| | — |
| | 17.7 |
|
Privately-held debt and redeemable preferred stock securities | — |
| | — |
| | 50.3 |
| | 50.3 |
|
Derivative assets: | | | | | | | |
Foreign exchange contracts | — |
| | 0.5 |
| | — |
| | 0.5 |
|
Total assets measured at fair value | $ | 1,022.2 |
| | $ | 1,414.3 |
| | $ | 50.3 |
| | $ | 2,486.8 |
|
Liabilities measured at fair value: | | | | | | | |
Derivative liabilities: | | | | | | | |
Foreign exchange contracts | $ | — |
| | $ | (6.7 | ) | | $ | — |
| | $ | (6.7 | ) |
Total liabilities measured at fair value | $ | — |
| | $ | (6.7 | ) | | $ | — |
| | $ | (6.7 | ) |
| | | | | | | |
Total assets measured at fair value, reported as: | | | | | | | |
Cash equivalents | $ | 735.0 |
| | $ | 15.8 |
| | $ | — |
| | $ | 750.8 |
|
Restricted investments | 45.4 |
| | — |
| | — |
| | 45.4 |
|
Short-term investments | 65.2 |
| | 333.0 |
| | — |
| | 398.2 |
|
Long-term investments | 176.6 |
| | 1,065.0 |
| | — |
| | 1,241.6 |
|
Prepaid expenses and other current assets | — |
| | 0.5 |
| | — |
| | 0.5 |
|
Other long-term assets | — |
| | — |
| | 50.3 |
| | 50.3 |
|
Total assets measured at fair value | $ | 1,022.2 |
| | $ | 1,414.3 |
| | $ | 50.3 |
| | $ | 2,486.8 |
|
| | | | | | | |
Total liabilities measured at fair value, reported as: | | | | | | | |
Other accrued liabilities | $ | — |
| | $ | (6.7 | ) | | $ | — |
| | $ | (6.7 | ) |
Total liabilities measured at fair value | $ | — |
| | $ | (6.7 | ) | | $ | — |
| | $ | (6.7 | ) |
________________________________
| |
(1) | Balance includes $41.2 million of restricted investments measured at fair market value related to the Company's D&O Trust and acquisition-related escrows. |
| |
(2) | Balance relates to restricted investments measured at fair market value related to the Company's India Gratuity Trust. |
| |
(3) | Balance relates to investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Fair Value Measurements at December 31, 2014 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 |
Assets measured at fair value: | | | | | | | |
Available-for-sale securities: | | | | | | | |
Asset-backed securities | $ | — |
| | $ | 269.0 |
| | $ | — |
| | $ | 269.0 |
|
Certificates of deposit | — |
| | 10.6 |
| | — |
| | 10.6 |
|
Commercial paper | — |
| | 20.3 |
| | — |
| | 20.3 |
|
Corporate debt securities | — |
| | 738.0 |
| | — |
| | 738.0 |
|
Foreign government debt securities | — |
| | 24.6 |
| | — |
| | 24.6 |
|
Government-sponsored enterprise obligations | — |
| | 162.1 |
| | — |
| | 162.1 |
|
Money market funds(1) | 594.2 |
| | — |
| | — |
| | 594.2 |
|
Mutual funds(2) | 4.0 |
| | — |
| | — |
| | 4.0 |
|
Publicly-traded equity securities | 2.0 |
| | — |
| | — |
| | 2.0 |
|
U.S. government securities | 246.0 |
| | — |
| | — |
| | 246.0 |
|
Total available-for-sale securities | 846.2 |
| | 1,224.6 |
| | — |
| | 2,070.8 |
|
Trading securities in mutual funds(3) | 16.3 |
| | — |
| | — |
| | 16.3 |
|
Privately-held debt and redeemable preferred stock securities | — |
| | — |
| | 47.5 |
| | 47.5 |
|
Derivative assets: | | | | | | | |
Foreign exchange contracts | — |
| | 0.1 |
| | — |
| | 0.1 |
|
Total assets measured at fair value | $ | 862.5 |
| | $ | 1,224.7 |
| | $ | 47.5 |
| | $ | 2,134.7 |
|
Liabilities measured at fair value: | | | | | | | |
Derivative liabilities: | | | | | | | |
Foreign exchange contracts | $ | — |
| | $ | (3.9 | ) | | $ | — |
| | $ | (3.9 | ) |
Total liabilities measured at fair value | $ | — |
| | $ | (3.9 | ) | | $ | — |
| | $ | (3.9 | ) |
| | | | | | | |
Total assets measured at fair value, reported as: | | | | | | | |
Cash equivalents | $ | 552.9 |
| | $ | 23.7 |
| | $ | — |
| | $ | 576.6 |
|
Restricted investments | 45.2 |
| | — |
| | — |
| | 45.2 |
|
Short-term investments | 87.0 |
| | 245.2 |
| | — |
| | 332.2 |
|
Long-term investments | 177.4 |
| | 955.7 |
| | — |
| | 1,133.1 |
|
Prepaid expenses and other current assets | — |
| | 0.1 |
| | — |
| | 0.1 |
|
Other long-term assets | — |
| | — |
| | 47.5 |
| | 47.5 |
|
Total assets measured at fair value | $ | 862.5 |
| | $ | 1,224.7 |
| | $ | 47.5 |
| | $ | 2,134.7 |
|
| | | | | | | |
Total liabilities measured at fair value, reported as: | | | | | | | |
Other accrued liabilities | $ | — |
| | $ | (3.9 | ) | | $ | — |
| | $ | (3.9 | ) |
Total liabilities measured at fair value | $ | — |
| | $ | (3.9 | ) | | $ | — |
| | $ | (3.9 | ) |
________________________________
| |
(1) | Balance includes $41.3 million of restricted investments measured at fair market value related to the Company's D&O Trust and acquisition-related escrows. |
| |
(2) | Balance relates to restricted investments measured at fair market value related to the Company's India Gratuity Trust. |
| |
(3) | Balance relates to investments measured at fair value related to the Company's non-qualified deferred compensation plan assets. |
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The Company's Level 2 available-for-sale fixed income securities are priced using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, or alternative pricing sources with reasonable levels of price transparency which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets. The Company's derivative instruments are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company's policy is to recognize asset or liability transfers among Level 1, Level 2, and Level 3 at the beginning of the quarter in which a change in circumstances resulted in a transfer. During the three months ended March 31, 2015, the Company had no transfers between levels of the fair value hierarchy of its assets or liabilities measured at fair value.
All of the Company's privately-held debt and redeemable preferred stock securities, are classified as Level 3 assets due to the absence of quoted market prices and an inherent lack of liquidity. The Company estimates the fair value of its privately-held debt investments on a recurring basis using an analysis of the financial condition and near-term prospects of the investee, including recent financing activities and the investee's capital structure. During the three months ended March 31, 2015, there were purchases of $2.8 million related to privately-held debt securities.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain of the Company's assets, including intangible assets, goodwill, and privately-held equity investments, are measured at fair value on a nonrecurring basis, only if impairment is indicated. Privately-held equity investments, which are normally carried at cost, are measured at fair value on a nonrecurring basis due to events and circumstances that the Company identifies as significantly impacting the fair value of investments. The Company estimates 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 the investee's capital structure. Purchased intangible assets are measured at fair value primarily using discounted cash flow projections.
As of March 31, 2015, the Company had no assets measured at fair value on a nonrecurring basis. As of December 31, 2014, the Company recorded a goodwill impairment charge of $850.0 million for its Security reporting unit measured at fair value on a nonrecurring basis. The remeasurement of goodwill is classified as Level 3 value assessment due to the significance of unobservable inputs developed using company-specific information. As of December 31, 2014, the Company had no significant privately-held equity investments measured at fair value on a nonrecurring basis.
As of March 31, 2015 and December 31, 2014, the Company had no liabilities measured at fair value on a nonrecurring basis.
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. As of March 31, 2015 and December 31, 2014, the estimated fair value of the Company's short-term and long-term debt in the Condensed Consolidated Balance Sheets was approximately $2,026.0 million and $1,395.2 million, respectively, based on observable market inputs (Level 2). As of March 31, 2015 and December 31, 2014, the estimated fair value of the Company's promissory note in connection with the sale of Junos Pulse recorded in other long term assets in the Condensed Consolidated Balance Sheet was $125.0 million classified as Level 3 assets due to the absence of quoted market prices and inherent lack of liquidity.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 5. 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 the Company's foreign currency derivatives are summarized as follows (in millions):
|
| | | | | | | |
| As of |
| March 31,
2015 | | December 31,
2014 |
Cash flow hedges | $ | 118.5 |
| | $ | 160.7 |
|
Non-designated derivatives | 78.4 |
| | 78.0 |
|
Total | $ | 196.9 |
| | $ | 238.7 |
|
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 hedge the U.S. Dollar equivalent of the Company's planned cost of services and operating expenses denominated in certain foreign currencies. These derivatives are designated as cash flow hedges. Execution of these cash flow hedge derivatives typically occurs every month with maturities of one year or less. The effective portion of the derivative's gain or loss is initially reported as a component of accumulated other comprehensive income, 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 other (expense) income, net, on its Condensed Consolidated Statements of Operations. Cash flows from such hedges are classified as operating activities. All amounts within other comprehensive income are expected to be reclassified into earnings within the next twelve months.
See Note 4, Fair Value Measurements, for the fair values of the Company's derivative instruments in the Condensed Consolidated Balance Sheets.
As of March 31, 2015, the Company recognized a loss of $6.1 million in accumulated other comprehensive loss for the effective portion of its derivative instruments and reclassified a loss of $3.0 million during the three months ended March 31, 2015 from other comprehensive income to operating expense in the Condensed Consolidated Statements of Operations. As of March 31, 2014, the Company recognized a gain of $2.7 million in accumulated other comprehensive income for the effective portion of its derivative instruments and reclassified a gain of $1.0 million during the three months ended March 31, 2014 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 not material during the three months ended March 31, 2015 and March 31, 2014.
Non-Designated Derivatives
The Company also uses foreign currency forward contracts to mitigate variability in gains and losses generated from the remeasurement of certain monetary assets and liabilities denominated in foreign currencies. These derivatives are carried at fair value with changes recorded in other (expense) income, net, in the Condensed Consolidated Statements of Operations. Changes in the fair value of these derivatives are largely offset by remeasurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. These foreign exchange forward contracts have maturities within two months.
During the three months ended March 31, 2015 and March 31, 2014, the Company recognized a net gain of $2.1 million and a net loss of $0.6 million, respectively, on non-designated derivative instruments within other (expense) income, net, in its Condensed Consolidated Statements of Operations.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Offsetting of Derivatives
The Company presents its derivative assets and derivative liabilities on a gross basis in the Condensed Consolidated Balance Sheets. However, under agreements containing provisions on netting with certain counterparties of foreign exchange contracts, subject to applicable requirements, the Company is allowed to net-settle transactions on the same date in the same currency, with a single net amount payable by one party to the other. As of March 31, 2015 and December 31, 2014, the potential effect of rights of setoff associated with derivative instruments was not material. The Company is neither required to pledge nor entitled to receive cash collateral related to these derivative transactions.
Note 6. Goodwill and Purchased Intangible Assets
Goodwill
The following table presents goodwill activity during the three months ended March 31, 2015 (in millions):
|
| | | |
Balance as of December 31, 2014 | $ | 2,981.5 |
|
Other | (0.2 | ) |
Balance as of March 31, 2015 | $ | 2,981.3 |
|
There were no impairments to goodwill during the three months ended March 31, 2015 and March 31, 2014.
Purchased Intangible Assets
The Company’s purchased intangible assets were as follows (in millions):
|
| | | | | | | | | | | | | | | |
| Gross | | Accumulated Amortization | | Impairments and Other Charges | | Net |
As of March 31, 2015 | | | | | | | |
Intangible assets with finite lives: | | | | | | | |
Technologies and patents | $ | 567.7 |
| | $ | (477.2 | ) | | $ | (49.9 | ) | | $ | 40.6 |
|
Customer contracts, support agreements, and related relationships | 78.1 |
| | (66.0 | ) | | (2.8 | ) | | 9.3 |
|
Other | 1.1 |
| | (0.5 | ) | | — |
| | 0.6 |
|
Total purchased intangible assets | $ | 646.9 |
| | $ | (543.7 | ) | | $ | (52.7 | ) | | $ | 50.5 |
|
| | | | | | | |
As of December 31, 2014 | | | | | | | |
Intangible assets with finite lives: | | | | | | | |
Technologies and patents | $ | 567.7 |
| | $ | (466.1 | ) | | $ | (49.9 | ) | | $ | 51.7 |
|
Customer contracts, support agreements, and related relationships | 78.1 |
| | (65.2 | ) | | (2.8 | ) | | 10.1 |
|
Other | 1.1 |
| | (0.5 | ) | | — |
| | 0.6 |
|
Total purchased intangible assets | $ | 646.9 |
| | $ | (531.8 | ) | | $ | (52.7 | ) | | $ | 62.4 |
|
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The following table presents the amortization of intangible assets included in the Condensed Consolidated Statements of Operations (in millions):
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Cost of revenues | $ | 10.8 |
| | $ | 8.2 |
|
Operating expenses: | | | |
Sales and marketing | 0.8 |
| | 1.0 |
|
General and administrative | 0.3 |
| | 0.3 |
|
Total operating expenses | 1.1 |
| | 1.3 |
|
Total | $ | 11.9 |
| | $ | 9.5 |
|
During the three months ended March 31, 2015, the Company recorded $5.6 million to cost of revenues in the Condensed Consolidated Statements of Operations, related to the acceleration of the end-of-life of certain intangible assets.
There were no impairment charges related to purchased intangible assets during the three months ended March 31, 2015 and March 31, 2014.
As of March 31, 2015, the estimated future amortization expense of purchased intangible assets with finite lives is as follows (in millions):
|
| | | |
Years Ending December 31, | Amount |
Remainder of 2015 | $ | 16.6 |
|
2016 | 11.6 |
|
2017 | 7.0 |
|
2018 | 5.1 |
|
2019 | 4.9 |
|
Thereafter | 5.3 |
|
Total | $ | 50.5 |
|
Note 7. Other Financial Information
Inventories
The Company purchases and holds inventory to help ensure adequate component supplies over the life of the underlying products. The majority of the Company's inventory is production components to be used in the manufacturing process and finished goods inventory in transit. Inventories are reported both within prepaid expenses and other current assets and other long-term assets in the Condensed Consolidated Balance Sheets. Total inventories consisted of the following (in millions):
|
| | | | | | | |
| As of |
| March 31,
2015 | | December 31,
2014 |
Production materials | $ | 49.3 |
| | $ | 38.3 |
|
Finished goods | 19.5 |
| | 24.2 |
|
Inventories | $ | 68.8 |
| | $ | 62.5 |
|
In connection with the 2014 Restructuring Plan discussed in Note 8, Restructuring and Other Charges, the Company commenced a product rationalization initiative and accelerated the end-of-service life of certain products resulting in inventory charges of $8.4 million recorded within cost of revenues in the Condensed Consolidated Statement of Operations during the three months ended March 31, 2014.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Other Long-Term Assets
Other long-term assets consisted of the following (in millions):
|
| | | | | | | |
| As of |
| March 31,
2015 | | December 31,
2014 |
Privately-held investments | $ | 93.1 |
| | $ | 89.9 |
|
Licensed software | 8.3 |
| | 8.6 |
|
Federal income tax receivable | 28.9 |
| | 20.0 |
|
Customer financing receivable | 4.5 |
| | 16.9 |
|
Inventory | 9.8 |
| | 8.0 |
|
Prepaid costs, deposits, and other | 63.7 |
| | 35.5 |
|
Promissory note in connection with the sale of Junos Pulse(1) | 125.0 |
| | 125.0 |
|
Other long-term assets | $ | 333.3 |
| | $ | 303.9 |
|
_______________________________
| |
(1) | On October 1, 2014, the Company completed the sale of its Junos Pulse product portfolio. The Company received total consideration of $230.7 million, of which $105.7 million was in cash, net of a $19.3 million working capital adjustment, and $125.0 million was in the form of an 18-month non-contingent interest bearing promissory note issued to the Company. |
Warranties
The Company accrues for warranty costs based on associated material, labor for customer support, and overhead at the time revenue is recognized. This accrual is reported within other accrued liabilities in the Condensed Consolidated Balance Sheets. Changes in the Company’s warranty reserve during the three months ended March 31, 2015 were as follows (in millions):
|
| | | |
Balance as of December 31, 2014 | $ | 28.7 |
|
Provisions made during the period | 7.3 |
|
Actual costs incurred during the period | (7.1 | ) |
Balance as of March 31, 2015 | $ | 28.9 |
|
Deferred Revenue
Details of the Company's deferred revenue, as reported in the Condensed Consolidated Balance Sheets, were as follows (in millions):
|
| | | | | | | |
| As of |
| March 31,
2015 | | December 31,
2014 |
Deferred product revenue: | | | |
Undelivered product commitments and other product deferrals | $ | 229.5 |
| | $ | 180.3 |
|
Distributor inventory and other sell-through items | 90.0 |
| | 103.7 |
|
Deferred gross product revenue | 319.5 |
| | 284.0 |
|
Deferred cost of product revenue | (66.1 | ) | | (58.4 | ) |
Deferred product revenue, net | 253.4 |
| | 225.6 |
|
Deferred service revenue | 921.3 |
| | 850.1 |
|
Total | $ | 1,174.7 |
| | $ | 1,075.7 |
|
Reported as: | | | |
Current | $ | 855.5 |
| | $ | 780.8 |
|
Long-term | 319.2 |
| | 294.9 |
|
Total | $ | 1,174.7 |
| | $ | 1,075.7 |
|
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Deferred product revenue 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. In circumstances when costs are deferred, deferred product revenue is recorded net of the related costs of product revenue. Deferred service revenue represents billable amounts for service contracts, which include technical support, hardware and software maintenance, professional services, and training, for which services have not been rendered.
Other (Expense) Income, Net
Other (expense) income, net, consisted of the following (in millions):
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Interest income | $ | 3.8 |
| | $ | 2.1 |
|
Interest expense | (18.5 | ) | | (15.5 | ) |
Gain on investments | 0.6 |
| | 166.2 |
|
Other | (1.7 | ) | | 1.4 |
|
Other (expense) income, net | $ | (15.8 | ) | | $ | 154.2 |
|
Interest income primarily includes interest earned on the Company’s cash, cash equivalents, investments, and on the promissory note issued to the Company in connection with the sale of Junos Pulse. Interest expense primarily includes interest, net of capitalized interest expense, from short-term debt, long-term debt, and customer financing arrangements. Other typically consists of investment and foreign exchange gains and losses and other non-operational income and expense items.
During the three months ended March 31, 2014, the Company recorded a gain of $163.0 million primarily related to the sale of investments which were converted from privately-held investments to publicly-traded equity upon initial public offering and subsequently sold.
Note 8. Restructuring and Other Charges
2014 Restructuring Plan and Other Restructuring Plans
In the first quarter of 2014, the Company initiated a restructuring plan (the “2014 Restructuring Plan”) designed to refocus the Company's strategy, optimize its structure, and improve operational efficiencies. The 2014 Restructuring Plan consisted of workforce reductions, facility consolidations and closures, asset write-downs, contract terminations and other charges. The Company had also initiated restructuring plans in each of the fiscal years from 2011 through 2013 (the "Other Restructuring Plans") which focused on improving the Company's cost structure through product portfolio rationalizations, workforce reductions, contract terminations, project cancellations, and facility closures and consolidations. As of March 31, 2015, the Company's restructuring plans have been substantially completed and the Company does not expect to record significant future charges under any of these restructuring plans.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
The following table presents restructuring and other charges included in cost of revenues and restructuring and other charges in the Condensed Consolidated Statements of Operations under the Company's restructuring plans (in millions):
|
| | | | | | | |
| Three Months Ended March 31, |
| 2015 | | 2014 |
Severance | $ | 1.5 |
| | $ | 28.3 |
|
Facilities | (0.1 | ) | | 0.2 |
|
Contract terminations | — |
| | 0.8 |
|
Asset impairment and write-downs | — |
| | 93.1 |
|
Total | $ | 1.4 |
| | $ | 122.4 |
|
| | | |
Reported as: | | | |
Cost of revenues | $ | — |
| | $ | 8.4 |
|
Restructuring and other charges | 1.4 |
| | 114.0 |
|
Total | $ | 1.4 |
| | $ | 122.4 |
|
During the three months ended March 31, 2015, the Company recorded charges of $1.5 million for severance and a benefit of $0.1 million for facility consolidation and closures that were recorded to restructuring and other charges in the Condensed Consolidated Statements of Operations, related to the 2014 Restructuring Plan.
During the three months ended March 31, 2014, the Company recorded $28.0 million of severance costs, $84.7 million of impairment charges related to licensed software, and $0.8 million of charges related to contract terminations, which were recorded in restructuring and other charges in the Condensed Consolidated Statements of Operations, in connection with the 2014 Restructuring Plan. The Company also recorded inventory write-downs related to the acceleration of the end-of-service life of certain products totaling $8.4 million which were recorded in cost of revenues in the Condensed Consolidated Statements of Operations during the three months ended March 31, 2014, in connection with the 2014 Restructuring Plan. The Company recorded minor adjustments during the three months ended March 31, 2014 in connection with the Other Restructuring Plans.
Restructuring and other charges noted above are based on the 2014 Restructuring Plan and Other Restructuring Plans that were committed to by management. Any changes in the estimates of executing the approved restructuring plans are reflected in the Company's results of operations.
Restructuring Liability
Restructuring liabilities are reported within other accrued liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets. The following table provides a summary of changes in the restructuring liability related to the Company's plans during the three months ended March 31, 2015 (in millions):
|
| | | | | | | | | | | | | | | | | | | |
| December 31,
2014 | | Charges | | Cash Payments | | Non-cash Settlements and Other | | March 31,
2015 |
Severance | $ | 9.4 |
| | $ | 1.5 |
| | $ | (5.9 | ) | | $ | (0.4 | ) | | $ | 4.6 |
|
Facilities | 7.4 |
| | (0.1 | ) | | (2.3 | ) | | (0.4 | ) | | 4.6 |
|
Contract terminations and other | 0.2 |
| | — |
| | — |
| | — |
| | 0.2 |
|
Total | $ | 17.0 |
| | $ | 1.4 |
| | $ | (8.2 | ) | | $ | (0.8 | ) | | $ | 9.4 |
|
As of March 31, 2015, the Company's restructuring liability was $9.4 million, of which $4.8 million is related to severance and other charges expected to be settled by September 2015. The remaining $4.6 million, which is primarily related to facility closures, is expected to be paid through March 2018.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Note 9. Debt and Financing
Debt
The following table summarizes the Company's short-term and long-term debt (in millions, except percentages):
|
| | | | | | |
| As of March 31, 2015 |
| Amount | | Effective Interest Rates |
Senior Notes: | | | |
3.10% fixed-rate notes, due March 2016 | $ | 300.0 |
| | 3.25 | % |
3.30% fixed-rate notes, due June 2020 | 300.0 |
| | 3.47 | % |
4.60% fixed-rate notes, due March 2021 | 300.0 |
| | 4.69 | % |
4.50% fixed-rate notes, due March 2024 | 350.0 |
| | 4.63 | % |
4.35% fixed-rate notes, due June 2025 | 300.0 |
| | 4.47 | % |
5.95% fixed-rate notes, due March 2041 | 400.0 |
| | 6.03 | % |
Total senior notes | 1,950.0 |
| | |
Unaccreted discount | (1.4 | ) | | |
Total | $ | 1,948.6 |
| | |
| | | |
Reported as: | | | |
Short-term debt | $ | 299.9 |
| |
|
Long-term debt | 1,648.7 |
| | |
Total | $ | 1,948.6 |
| | |
In March 2015, the Company issued $300.0 million aggregate principal amount of 3.30% senior notes due 2020 ("2020 Notes") and $300.0 million aggregate principal amount of 4.35% senior notes due 2025 ("2025 Notes"). In March 2014, the Company issued $350.0 million aggregate principal amount of 4.50% senior notes due 2024 ("2024 Notes"). In March 2011, the Company issued $300.0 million aggregate principal amount of 3.10% senior notes due 2016 ("2016 Notes"), $300.0 million aggregate principal amount of 4.60% senior notes due 2021 ("2021 Notes"), and $400.0 million aggregate principal amount of 5.95% senior notes due 2041 ("2041 Notes").
The "2016 Notes," "2020 Notes," "2021 Notes," "2024 Notes," "2025 Notes" and "2041 Notes" collectively the "Notes" are the Company’s senior unsecured and unsubordinated obligations, ranking equally in right of payment to all of the Company’s existing and future senior unsecured and unsubordinated indebtedness and senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the Notes.
The Company may redeem the 2020 Notes and 2025 Notes, either in whole or in part, at any time one month prior to the maturity date of the 2020 Notes, and three months prior to the maturity date of the 2025 Notes, at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 2020 Notes and 2025 Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments discounted at the Treasury rate plus 30 basis points for the 2020 Notes, or the Treasury rate plus 37.5 basis points for the 2025 Notes, plus, in the case of each of the clauses (i) and (ii) above, accrued and unpaid interest, if any. At any time on or after May 15, 2020, in the case of the 2020 Notes, and at any time on or after March 15, 2025, in the case of the 2025 Notes, the Company may redeem Notes of such series, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2020 Notes and the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any. The Company may redeem the other Notes, either in whole or in part, at any time at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments discounted to the redemption date, plus, in either case, accrued and unpaid interest, if any.
In the event of a change of control repurchase event, 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 principal amount, plus accrued and unpaid interest, if any.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Interest on the Notes is payable in cash semiannually. The effective interest rates for the Notes include the interest on the Notes, accretion of the discount, and amortization of issuance costs. The indentures that govern the Notes also contain various covenants, including limitations on the Company's ability to incur liens or enter into sale-leaseback transactions over certain dollar thresholds.
As of March 31, 2015, the Company was in compliance with all covenants in the indentures governing the Notes.
Revolving Credit Facility
On June 27, 2014, the Company entered into a Credit Agreement ("Credit Agreement") with certain institutional lenders and Citibank, N.A., as administrative agent, that provides for a $500.0 million unsecured revolving credit facility, with an option of the Company to increase the amount of the credit facility by up to an additional $200.0 million, subject to certain conditions. Proceeds of loans made under the Credit Agreement may be used by the Company for working capital and general corporate purposes. Revolving loans may be borrowed, repaid and reborrowed until June 27, 2019, at which time all amounts borrowed must be repaid. Borrowings may be denominated, at the Company's option in U.S. dollars, Pounds Sterling or Euro.
Borrowings under the Credit Agreement will bear interest, at either i) a floating rate per annum equal to the base rate plus a margin of between 0.00% and 0.50%, depending on the Company's public debt rating or ii) a per annum rate equal to the reserve adjusted Eurocurrency rate, plus a margin of between 0.90% and 1.50%, depending on the Company's public debt rating. Base rate is defined as the greatest of (A) Citibank's base rate, (B) the Federal funds rate plus 0.50% or (C) the ICE Benchmark Administration Settlement Rate applicable to dollars for a period of one month plus 1.00%. The Eurocurrency rate is determined for U.S. dollars and Pounds Sterling as the rate at which deposits in such currency are offered in the London interbank market for the applicable interest period and for Euro as the rate specified for deposits in Euro with a maturity comparable to the applicable interest period.
As of March 31, 2015, the Company was in compliance with all covenants in the Credit Agreement, and no amounts were outstanding.
Customer Financing Arrangements
The Company provides certain distribution partners access to extended financing arrangements for certain end-user customers that require longer payment terms than those typically provided by the Company through factoring accounts receivable to third-party financing providers ("financing providers"). The program does not and is not intended to affect the timing of the Company's revenue recognition. Under the financing arrangements, proceeds from the financing provider are due to the Company within 30 to 90 days from the sale of the receivable. In these transactions with the financing provider, the Company surrenders control over the transferred assets. The factored accounts receivable are isolated from the Company and put beyond the reach of the Company's 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. In 2014, the Company transitioned certain distribution partners from the third party financing program to the Company's commercial payment terms. As a result the Company's customer financing activities significantly declined from fiscal year 2014 to the first quarter of 2015.
Pursuant to the financing arrangements for the sale of receivables, the Company sold net receivables of $47.1 million and $133.0 million during the three months ended March 31, 2015 and March 31, 2014, respectively.
The Company received cash proceeds from the financing provider of $60.0 million and $192.3 million during the three months ended March 31, 2015 and March 31, 2014, respectively. As of March 31, 2015 and December 31, 2014, the amounts owed to the Company by the financing provider were $15.1 million and $28.0 million, respectively, and were recorded in accounts receivable on the Condensed Consolidated Balance Sheets.
The Company has provided guarantees to third-party financing companies for certain third-party financing arrangements extended to certain end-user customers, which have terms of up to four years. The Company is liable for the aggregate unpaid payments to the third-party financing company in the event of customer default. As of March 31, 2015, the Company has not been required to make any payments under these arrangements. Pursuant to these arrangements, the Company has guarantees for third-party financing arrangements of $11.1 million as of March 31, 2015.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
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 Sheets. As of March 31, 2015 and December 31, 2014, the estimated cash received from the financing provider not recognized as revenue was $13.3 million and $67.5 million, respectively.
Note 10. Equity
Cash Dividends on Shares of Common Stock
On January 27, 2015, the Company declared a quarterly cash dividend of $0.10 per share of common stock, or $40.8 million in the aggregate, to stockholders of record on March 3, 2015 which was paid on March 24, 2015. Any future dividends, and the establishment of record and payment dates, are subject to approval by the Board of Directors (the "Board") of Juniper Networks or authorized committee thereof. See Note 16, Subsequent Events, for discussion of the Company's dividend declaration subsequent to March 31, 2015.
Stock Repurchase Activities
In February 2014, the Company's Board approved a stock repurchase program that authorized the Company to repurchase up to $2.1 billion of its common stock, including $1.2 billion pursuant to an accelerated share repurchase program ("2014 Stock Repurchase Program"). In October 2014, the Board authorized a $1.3 billion increase to the 2014 Stock Repurchase Program for a total of $3.4 billion.
During the three months ended March 31, 2015, the Company repurchased and retired approximately 17.4 million shares of its common stock under the 2014 Stock Repurchase Program at an average price of $23.05 per share for an aggregate purchase price of $400.0 million during the three months ended March 31, 2015.
During the three months ended March 31, 2014, the Company entered into two separate accelerated share repurchase agreements (collectively, the "ASR") with two financial institutions to repurchase an aggregate of $1.2 billion of the Company's common stock. During the first quarter of 2014, the Company made an up-front payment of $1.2 billion pursuant to the ASR and received and retired an initial 33.3 million shares ("Initial Shares") of the Company's common stock for an aggregate price of $900.0 million based on the market value of the Company's common stock on the date of the transaction. On July 23, 2014, the ASR was completed and an additional 16.0 million shares for the remaining $300.0 million was received from the financial institutions for a total of 49.3 million shares of the Company's common stock, which resulted in a volume weighted average repurchase price, less an agreed upon discount, of $24.35. The shares received with respect to the ASR have been retired. Retired shares return to authorized but unissued shares of common stock.
As of March 31, 2015, there was $775.0 million of authorized funds remaining under the 2014 Stock Repurchase Program. The Company intends to repurchase $600.0 million of its common stock during the second quarter of 2015, as part of its three year capital return program.
In addition to repurchases under the Company’s stock repurchase program, the Company also repurchases common stock from certain employees in connection with the net issuance of shares to satisfy minimum tax withholding obligations upon the vesting of certain stock awards issued to such employees. Repurchases associated with tax withholdings were not significant during the three months ended March 31, 2015 and March 31, 2014.
Future stock repurchases under the Company’s stock repurchase program will be subject to a review of the circumstances at that time and will be made from time to time in private transactions or open market purchases as permitted by securities laws and other legal requirements.
See Note 16, Subsequent Events, for discussion of the Company's stock repurchase activity subsequent to March 31, 2015.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Accumulated Other Comprehensive Income, Net of Tax
The components of accumulated other comprehensive income, net of related taxes, during the three months ended March 31, 2015 were as follows (in millions):
|
| | | | | | | | | | | |
| Unrealized Gains (Losses) on Available-for- Sale Securities(1) | | Unrealized Gains (Losses) on Cash Flow Hedges(2) | | Foreign Currency Translation Adjustments | | Total |
Balance as of December 31, 2014 | 8.4 |
| | (4.2 | ) | | (18.0 | ) | | (13.8 | ) |
Other comprehensive loss before reclassifications | (0.8 | ) | | (6.4 | ) | | (11.1 | ) | | (18.3 | ) |
Amount reclassified from accumulated other comprehensive income | (0.2 | ) | | 3.1 |
| | — |
| | 2.9 |
|
Other comprehensive loss, net | (1.0 | ) | | (3.3 | ) | | (11.1 | ) | | (15.4 | ) |
Balance as of March 31, 2015 | 7.4 |
| | (7.5 | ) | | (29.1 | ) | | (29.2 | ) |
________________________________
| |
(1) | The reclassifications out of accumulated other comprehensive income during the three months ended March 31, 2015 for realized gains on available-for-sale securities of $0.2 million are included in other (expense) income, net, in the Condensed Consolidated Statements of Operations. |
| |
(2) | The reclassifications out of accumulated other comprehensive income during the three months ended March 31, 2015 for realized losses on cash flow hedges are included within cost of revenues of $0.9 million, sales and marketing of $2.1 million, and general and administrative of $0.2 million and for realized gains of $0.1 million within research and development for which the hedged transactions relate in the Condensed Consolidated Statements of Operations. |
Note 11. Employee Benefit Plans
Equity Incentive Plans
The Company’s equity incentive plans include the 2006 Equity Incentive Plan (the “2006 Plan”), the 2000 Nonstatutory Stock Option Plan (the “2000 Plan”), the Amended and Restated 1996 Stock Plan (the “1996 Plan”), various equity incentive plans assumed through acquisitions, and the 2008 Employee Stock Purchase Plan (the "ESPP"). Under these plans, the Company has granted (or, in the case of acquired plans, assumed) stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), and performance share awards ("PSAs").
The 2006 Plan was adopted and approved by the Company’s stockholders in May 2006. To date, the Company's stockholders have approved a share reserve of 149.5 million shares of common stock plus the addition of any shares subject to options under the 2000 Plan and the 1996 Plan that were outstanding as of May 18, 2006, and that subsequently expire unexercised, up to a maximum of an additional 75.0 million shares. As of March 31, 2015, an aggregate of 27.8 million shares were subject to currently outstanding equity awards under the 2006 Plan and the 1996 Plan, and no shares were subject to currently outstanding equity awards under the 2000 Plan. As of March 31, 2015, 36.2 million shares were available for future issuance under the 2006 Plan and no shares were available for future issuance under either the 2000 Plan or the 1996 Plan.
The ESPP was adopted and approved by the Company's stockholders in May 2008. To date, the Company's stockholders have approved a share reserve of 19.0 million shares of the Company's common stock for issuance under this plan. The ESPP permits eligible employees to acquire shares of the Company’s common stock at a 15% discount to the offering price (as determined in the ESPP) through periodic payroll deductions of up to 10% of base compensation, subject to individual purchase limits of 6,000 shares in any twelve-month period or $25,000 worth of stock, determined at the fair market value of the shares at the time the stock purchase option is granted, in one calendar year. As of March 31, 2015, approximately 17.1 million shares have been issued and 1.9 million shares remain available for future issuance under the ESPP.
In connection with certain past acquisitions, the Company assumed stock options, RSUs, RSAs and PSAs under the assumed stock plans of the acquired companies and exchanged the assumed awards for the Company's stock options, RSUs, RSAs and PSAs, respectively. No new stock options, RSUs, RSAs and PSAs can be granted under these plans. As of March 31, 2015, stock options, RSUs, RSAs and PSAs representing approximately 3.3 million shares of common stock were outstanding under all awards assumed through the Company's acquisitions.
Juniper Networks, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
Stock Option Activities
The following table summarizes the Company’s stock option activity and related information as of and for the three months ended March 31, 2015 (in millions, except for per share amounts and years):
|
| | | | | | | | | | | | |
| Outstanding Options |
| Number of Shares | | Weighted Average Exercise Price per Share | | Weighted Average Remaining Contractual Term (In Years) | | Aggregate Intrinsic Value |
Balance as of December 31, 2014 | 9.9 |
| | $ | 24.87 |
| | | | |
Canceled | (0.1 | ) | | 23.52 |
| | | | |
Exercised | (0.3 | ) | | 14.20 |
| | | | |
Expired | (1.7 | ) | | 26.32 |
| | | | |
Balance as of March 31, 2015 | 7.8 |
| | $ | 25.05 |
| | 2.1 | | $ | 22.3 |
|
| | | | | | | |
As of March 31, 2015: | | | | | | | |
Vested and expected-to-vest options | 7.8 |
| | $ | 25.17 |
| | 2.1 | | $ | 21.5 |
|
Exercisable options | 7.3 |
| | $ | 26.23 |
| | 1.8 | | $ | 14.7 |
|
The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $22.58 per share as of March 31, 2015, and the exercise price of the applicable options multiplied by the number of related options. The pre-tax intrinsic value of options exercised, representing the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option, was $3.3 million for the three months ended March 31, 2015.
Restricted Stock Unit, Restricted Stock Award, and Performance Share Award Activities
The following table summarizes the Company’s RSU, RSA, and PSA activity and related information as of and for the three months ended March 31, 2015 (in millions, except per share amounts and years):
|
| | | | | | | | | | | | |
| Outstanding RSUs, RSAs, and PSAs |
| Number of Shares | | Weighted Average Grant-Date Fair Value per Share | | Weighted Average Remaining Contractual Term (In Years) | | Aggregate Intrinsic Value |
Balance as of December 31, 2014 | 21.3 |
| | $ | 22.05 |
| | | | |
RSUs granted (1)(3) | 6.9 |
| | 22.42 |
| | | | |
PSAs granted (2)(3) | 0.8 |
| | 22.44 |
| | | | |