Edgar Filing: JUNIPER NETWORKS INC

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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 March 31, 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 533,069,000 shares of the Company's Common Stock, par value $0.00001, outstanding as of April 29, 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	31

Item 3. Quantitative and Qualitative Disclosures About Market Risk	43

Item 4. Controls and Procedures	43

PART II - OTHER INFORMATION	44

Item 1. Legal Proceedings	44

Item 1A. Risk Factors	44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 6. Exhibits	56

SIGNATURES	57

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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 March 31,
	2011			2010
Net revenues:
Product	$	877,440		$	721,201
Service	224,172			191,417
Total net revenues	1,101,612			912,618
Cost of revenues:
Product	265,746			222,381
Service	99,981			78,216
Total cost of revenues	365,727			300,597
Gross margin	735,885			612,021
Operating expenses:
Research and development	261,979			206,994
Sales and marketing	246,291			192,375
General and administrative	44,924			43,138
Amortization of purchased intangible assets	1,544			1,137
Restructuring	(347		)	8,105
Acquisition-related	4,101			—
Total operating expenses	558,492			451,749
Operating income	177,393			160,272
Other (expense) income, net	(6,462		)	1,459
Income before income taxes and noncontrolling interest	170,931			161,731
Income tax provision (benefit)	41,271			(2,879		)
Consolidated net income	129,660			164,610
Adjust for net loss (income) attributable to noncontrolling interest	90			(1,495		)
Net income attributable to Juniper Networks	$	129,750		$	163,115

Net income per share attributable to Juniper Networks common stockholders:
Basic	$	0.24		$	0.31
Diluted	$	0.24		$	0.30
Shares used in computing net income per share:
Basic	530,789			521,141
Diluted	548,825			536,718

See accompanying Notes to Condensed Consolidated Financial Statements

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Juniper Networks, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except par values)



	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,944,383		$	1,811,887
Short-term investments	493,557			474,514
Accounts receivable, net of allowances	471,012			596,622
Deferred tax assets, net	160,032			161,535
Prepaid expenses and other current assets	235,443			169,812
Total current assets	4,304,427			3,214,370
Property and equipment, net	516,445			493,881
Long-term investments	645,609			535,178
Restricted cash	102,125			119,346
Purchased intangible assets, net	143,506			121,803
Goodwill	3,927,280			3,927,807
Other long-term assets	54,308			55,466
Total assets	$	9,693,700		$	8,467,851
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	228,275		$	292,270
Accrued compensation	188,736			256,746
Accrued warranty	38,320			35,931
Deferred revenue	733,249			660,264
Income taxes payable	25,651			25,000
Other accrued liabilities	189,513			201,765
Total current liabilities	1,403,744			1,471,976
Long-term debt	998,923			—
Long-term deferred revenue	217,024			224,165
Long-term income tax payable	101,630			103,823
Other long-term liabilities	75,530			59,087
Commitments and Contingencies – See Note 15
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; 534,376 shares and 525,378 shares issued and outstanding at March 31, 2011, and December 31, 2010, respectively	5			5
Additional paid-in capital	9,998,125			9,717,783
Accumulated other comprehensive income (loss)	9,746			(1,251		)
Accumulated deficit	(3,111,537		)	(3,108,337		)
Total Juniper Networks stockholders' equity	6,896,339			6,608,200
Noncontrolling interest	510			600
Total equity	6,896,849			6,608,800
Total liabilities and equity	$	9,693,700		$	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)



	Three Months Ended March 31,
	2011			2010
Cash flows from operating activities:
Consolidated net income	$	129,660		$	164,610
Adjustments to reconcile consolidated net income to net cash from operating activities:
Depreciation and amortization	40,758			35,269
Share-based compensation	47,586			40,561
Deferred income taxes	1,503			(12,471		)
Excess tax benefits from share-based compensation	(39,041		)	(20,520		)
Changes in operating assets and liabilities:
Accounts receivable, net	125,610			55,718
Prepaid expenses and other assets	(59,372		)	(11,150		)
Accounts payable	(58,468		)	(14,125		)
Accrued compensation	(66,510		)	(19,847		)
Accrued litigation settlements	—			(169,330		)
Income tax payable	38,099			(1,088		)
Other accrued liabilities	13,981			4,620
Deferred revenue	65,844			36,299
Net cash provided by operating activities	239,650			88,546

Cash flows from investing activities:
Purchases of property and equipment, net	(53,972		)	(37,807		)
Purchases of trading investments	(2,495		)	(1,245		)
Purchases of available-for-sale investments	(437,773		)	(447,716		)
Proceeds from sales of available-for-sale investments	193,301			224,514
Proceeds from maturities of available-for-sale investments	126,260			235,960
Payment for business acquisition, net of cash and cash equivalents acquired	(28,573		)	—
Changes in restricted cash	—			(1,550		)
Purchases of privately-held and other equity investments, net	(5,972		)	(4,773		)
Net cash used in investing activities	(209,224		)	(32,617		)

Cash flows from financing activities:
Proceeds from issuance of common stock	264,113			118,920
Purchases and retirement of common stock	(205,171		)	(76,225		)
Issuance of long-term debt, net	991,556			—
Change in customer financing arrangements	12,531			2,082
Excess tax benefit from share-based compensation	39,041			20,520
Return of capital to noncontrolling interest	—			(2,000		)
Net cash provided by financing activities	1,102,070			63,297
Net increase in cash and cash equivalents	1,132,496			119,226
Cash and cash equivalents at beginning of period	1,811,887			1,604,723
Cash and cash equivalents at end of period	$	2,944,383		$	1,723,949

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 Consolidated Condensed Balance Sheet as of December 31, 2010, is derived from the December 31, 2010, audited consolidated financial statements. 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, 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 March 31, 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.

Note 2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

In December 2010, the FASB issued ASU No. 2010-28, Topic 350 - Intangibles - Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (“ASU 2010-28”), which modifies Step 1 of the goodwill impairment test for reporting units with zero or negative amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exist. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company's adoption of ASU 2010-28 did not have an impact on its consolidated results of operations or financial condition.

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.

During the three months ended March 31, 2011, the Company completed two business combinations for cash of approximately $30.5 million. Total purchase consideration for these acquisitions 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

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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 during the three months ended March 31, 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 $5.1 million of acquisition-related costs in the three months ended March 31, 2011. These costs were expensed in the period incurred and reported in the Company's consolidated statement of operations within cost of revenues and within operating expense as acquisition-related charges. There were no comparable charges incurred in the three months ended March 31, 2010.

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”).

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 March 31,
	2011		2010
Numerator:
Net income attributable to Juniper Networks	$	129.8	$	163.1
Denominator:
Weighted-average shares used to compute basic net income per share	530.8		521.1
Effect of dilutive securities:
Employee stock awards	18.0		15.6
Weighted-average shares used to compute diluted net income per share	548.8		536.7
Net income per share attributable to Juniper Networks common stockholders:
Basic	$	0.24	$	0.31
Diluted	$	0.24	$	0.30

The Company excludes outstanding stock options with exercise prices 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. Employee stock options and PSAs covering approximately 5.8 million and 19.6 million shares of the Company's common stock in the three months ended March 31, 2011, and 2010, respectively, were outstanding, but were not included in the computation of diluted earnings per share.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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
	March 31, 2011		December 31, 2010
Cash:
Demand deposits	$	475.9	$	413.0
Time deposits	400.9		273.3
Total cash	876.8		686.3
Cash equivalents:
U.S. government securities	146.5		76.7
Government-sponsored enterprise obligations	37.8		5.0
Certificates of deposit	5.6		—
Commercial paper	21.0		4.0
Money market funds	1,856.7		1,039.9
Total cash equivalents	2,067.6		1,125.6
Total cash and cash equivalents	$	2,944.4	$	1,811.9

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 March 31, 2011, and December 31, 2010 (in millions):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
As of March 31, 2011:
Fixed income securities:
U.S. government securities	$	172.5	$	0.1	$	—		$	172.6
Government-sponsored enterprise obligations	266.5		0.3		(0.3		)	266.5
Foreign government debt securities	23.7		0.1		—			23.8
Certificates of deposit	35.8		0.1		—			35.9
Commercial paper	31.0		—		—			31.0
Asset-backed securities	112.3		0.1		(0.1		)	112.3
Corporate debt securities	484.7		1.9		(0.3		)	486.3
Total fixed income securities	1,126.5		2.6		(0.7		)	1,128.4
Total available-for-sale securities	1,126.5		2.6		(0.7		)	1,128.4
Trading securities	10.8		—		—			10.8
Total	$	1,137.3	$	2.6	$	(0.7	)	$	1,139.2

Reported as:
Short-term investments	$	492.4	$	1.2	$	—		$	493.6
Long-term investments	644.9		1.4		(0.7		)	645.6
Total	$	1,137.3	$	2.6	$	(0.7	)	$	1,139.2

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)



	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	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

The following table presents the maturities of the Company's available-for-sale and trading securities, as of March 31, 2011 (in millions):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Due within one year	$	481.6	$	1.2	$	—		$	482.8
Due between one and five years	644.9		1.4		(0.7		)	645.6
No contractual maturity	10.8		—		—			10.8
Total	$	1,137.3	$	2.6	$	(0.7	)	$	1,139.2

The following tables present the Company's trading and available-for sale investments that are in an unrealized loss position as of March 31, 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 March 31, 2011
Corporate debt securities (1)	$	152.5	$	(0.3	)	$	13.8	$	—	$	166.3	$	(0.3	)
U.S. government securities	81.2		—			—		—		81.2		—
Government-sponsored enterprise obligations	185.5		(0.3		)	—		—		185.5		(0.3		)
Asset-backed securities	59.8		(0.1		)	—		—		59.8		(0.1		)
Total	$	479.0	$	(0.7	)	$	13.8	$	—	$	492.8	$	(0.7	)

________________________________


(1)	Balance includes investments that were in an immaterial unrealized loss position 12 months or greater as of March 31, 2011.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)



	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	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 12 months or greater as of December 31, 2010.

The Company had 109 and 73 investments in unrealized loss positions as of March 31, 2011, and December 31, 2010, respectively. The gross unrealized losses related to these investments were primarily due to changes in interest rates. The contractual terms of fixed income securities do not permit the issuer to settle the securities at a price less than the amortized cost of the investments. 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 March 31, 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

Restricted cash consists of: (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 months ended March 31, 2011, the Company distributed approximately $17.2 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. As of March 31, 2011, the Company expects to release $4.7 million from escrow as these restricted shares vest over the next eighteen months.

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



	As of
	March 31, 2011		December 31, 2010
Restricted cash:
Demand deposits	$	1.7	$	1.7
Total restricted cash	1.7		1.7
Restricted investments:
U.S. government securities	0.6		0.6
Corporate debt securities	1.6		2.7
Mutual funds	1.1		—
Money market funds	97.1		114.3
Total restricted investments	100.4		117.6
Total restricted cash and investments	$	102.1	$	119.3

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

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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 goes below the carrying value of the respective assets.

As of March 31, 2011, and December 31, 2010, the carrying values of the Company’s privately-held and other equity investments of $28.3 million and $22.1 million, respectively, were included in other long-term assets in the condensed consolidated balance sheets. During the three months ended March 31, 2011 and 2010, the Company invested $6.0 million and $4.8 million, respectively, in privately-held and other equity investments. There were no losses from the Company's privately-held and other equity investments during the three months ended March 31, 2011, and 2010.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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:

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.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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 (in millions):



	Fair Value Measurements at March 31, 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 (1)	$	99.2	$	220.5	$	—	$	319.7
Government-sponsored enterprise obligations	236.9		67.4		—		304.3
Foreign government debt securities	—		23.8		—		23.8
Commercial paper	—		52.0		—		52.0
Corporate debt securities (2)	—		487.9		—		487.9
Certificate of deposit	—		41.5		—		41.5
Asset-backed securities	—		112.3		—		112.3
Money market funds (3)	1,953.8		—		—		1,953.8
Total available-for-sale debt securities	2,289.9		1,005.4		—		3,295.3
Total available-for-sale securities	2,289.9		1,005.4		—		3,295.3
Trading securities:
Mutual funds (4)	11.9		—		—		11.9
Total trading securities	11.9		—		—		11.9
Derivative assets:
Foreign exchange contracts	—		2.0		—		2.0
Total derivative assets	—		2.0		—		2.0
Total assets measured at fair value	$	2,301.8	$	1,007.4	$	—	$	3,309.2

________________________________

(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 $1.6 million of restricted investments measured at fair market value, related to the Company's India Gratuity Trust.


(3)	Balance includes $97.1 million of restricted investments measured at fair market value, related to the Company's D&O trust.


(4)	Balance includes $1.1 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 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)


(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.

The following tables summarizes the Company's assets measured at fair value on a recurring basis as reported in the consolidated balance sheet (in millions):



	Fair Value Measurements at March 31, 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	$	1,856.7	$	210.9	$	—	$	2,067.6
Short-term investments	122.4		371.2		—		493.6
Long-term investments	224.5		421.1		—		645.6
Restricted cash	98.2		2.2		—		100.4
Prepaid expenses and other current assets	—		2.0		—		2.0
Total assets measured at fair value	$	2,301.8	$	1,007.4	$	—	$	3,309.2

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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 March 31, 2011, and December 31, 2010, the Company had $0.1 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 months ended March 31, 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

As of March 31, 2011, and December 31, 2010, the Company had no material assets or 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. The fair value of the Company’s long-term debt is disclosed in Note 9, Financing, and was determined using quoted market prices.

Note 7. Goodwill and Purchased Intangible Assets

Goodwill

The following table summarizes the Company's goodwill activities by segment in the three months ended March 31, 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	(0.9		)	—			(0.9		)
Goodwill acquired during the three months ended March 31, 2011	0.4			—			0.4
Balance as of March 31, 2011
Goodwill	1,642.9			3,564.4			5,207.3
Accumulated impairment losses	—			(1,280.0		)	(1,280.0		)
Carrying value at March 31, 2011	$	1,642.9		$	2,284.4		$	3,927.3

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

During the three months ended March 31, 2011, the Company recorded an immaterial reduction to goodwill related to the adjustments in net tangible assets assumed from certain businesses acquired in 2010. There were no impairments to goodwill during the three months ended March 31, 2011, and 2010.

Purchased Intangible Assets

The following table presents the Company’s purchased intangible assets (in millions):



	Gross		Accumulated Amortization			Additions		Net
As of March 31, 2011:
Intangible assets with finite lives:
Technologies and patents	$	471.1	$	(386.9	)	$	23.3	$	107.5
Other	86.4		(63.4		)	5.1		28.1
Total intangible assets with finite lives	557.5		(450.3		)	28.4		135.6
IPR&D with indefinite lives	7.9		—			—		7.9
Total purchased intangible assets	$	565.4	$	(450.3	)	$	28.4	$	143.5

As of December 31, 2010:
Intangible assets with finite lives:
Technologies and patents	$	380.0	$	(381.4	)	$	91.1	$	89.7
Other	68.9		(62.2		)	17.5		24.2
Total intangible assets with finite lives	448.9		(443.6		)	108.6		113.9
IPR&D with indefinite lives	—		—			7.9		7.9
Total purchased intangible assets	$	448.9	$	(443.6	)	$	116.5	$	121.8

Amortization of purchased intangible assets included in operating expenses and cost of product revenues totaled $6.7 million and $1.1 million for the three months ended March 31, 2011, and 2010, respectively. There were no impairment charges with respect to the purchased intangible assets in the three months ended March 31, 2011, and 2010. The Company recorded $28.4 million of purchased intangible assets as a result of its acquisitions completed in the three months ended March 31, 2011. For further discussion, see Note 3, Business Combinations.

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 records a charge to earnings in the period it is abandoned.

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



Years Ending December 31,	Amount
2011 (remaining nine months)	$	20.1
2012	26.4
2013	26.1
2014	24.3
2015	19.3
Thereafter	19.4
Total	$	135.6

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Note 8. Other Financial Information

Warranties

The Company provides for the estimated cost of product warranties 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 March 31,
	2011			2010
Beginning balance	$	35.9		$	38.2
Provisions made during the period, net	15.3			12.1
Change in estimate	(0.8		)	(0.5		)
Actual costs incurred during the period	(12.1		)	(12.0		)
Ending balance	$	38.3		$	37.8

Deferred Revenue

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



	As of
	March 31, 2011			December 31, 2010
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	303.1		$	294.1
Distributor inventory and other sell-through items	141.8			143.4
Deferred gross product revenue	444.9			437.5
Deferred cost of product revenue	(143.0		)	(148.8		)
Deferred product revenue, net	301.9			288.7
Deferred service revenue	648.4			595.7
Total	$	950.3		$	884.4
Reported as:
Current	$	733.3		$	660.2
Long-term	217.0			224.2
Total	$	950.3		$	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 product costs of 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 2009, the Company implemented a restructuring plan (the “2009 Restructuring Plan”) in an effort to better align its business operations with the current market and macroeconomic conditions. The plan included restructuring of certain business functions that resulted in reductions of workforce and facilities. The Company recorded $8.1 million in the three months ended March 31, 2010, associated with the 2009 Restructuring Plan. The Company had no such charges during the three months ended March 31, 2011.

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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			Adjustments			Remaining Liability as of March 31, 2011
Facilities	$	7.7	$	—	$	(0.7	)	$	—		$	7.0
Severance, contractual commitments, and other charges	0.2		—		0.3			(0.3		)	0.2
Total	$	7.9	$	—	$	(0.4	)	$	(0.3	)	$	7.2

Other Expense and Income, Net

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



	Three Months Ended March 31,
	2011			2010
Interest income	$	2.4		$	2.5
Interest expense	(6.5		)	(1.6		)
Other income and expense, net	(2.4		)	0.6
Total	$	(6.5	)	$	1.5

Interest income primarily includes interest income from 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, net, primarily includes foreign exchange gains and losses and other miscellaneous expenses.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Note 9. Financing

Long-Term Debt

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



	March 31, 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	(1.1		)
Total	$	998.9

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 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 us 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

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

thresholds.

The effective rates for the notes include the interest on the notes, accretion of the discount, and amortization of issuance costs. At March 31, 2011, the estimated fair value of the notes included in long-term debt was approximately $995.3 million based on quoted market prices. The Company had no such 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 $174.8 million and $135.6 million during the three months ended March 31, 2011, and 2010, respectively.

During the three months ended March 31, 2011, and 2010, the Company received cash proceeds of $194.3 million and $138.9 million respectively, from the financing provider. The amounts owed by the financing provider recorded as accounts receivable on the Company’s condensed consolidated balance sheets as of March 31, 2011, and December 31, 2010, was $103.6 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 March 31, 2011, and December 31, 2010, the estimated cash received from the financing provider not recognized as revenue from distributors was $61.6 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
	March 31, 2011		December 31, 2010
Cash flow hedges	$	125.6	$	110.4
Non-designated hedges	148.6		74.4
Total	$	274.2	$	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 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.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The total fair value of the Company’s derivative assets located in other current assets on the condensed consolidated balance sheet as of March 31, 2011, and December 31, 2010, was $2.0 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 March 31, 2011, and December 31, 2010, was nil and $2.6 million , respectively.

During the three months ended March 31, 2011, the Company recognized a gain of $5.2 million in accumulated other comprehensive income for the effective portion of its derivative instruments and reclassified a gain of $0.5 million from other comprehensive income to operating expense in the condensed consolidated statements of operations. The Company recognized a loss of $1.5 million in accumulated other comprehensive loss for the effective portion of its derivative instruments and reclassified a loss of $0.7 million from other comprehensive loss to the condensed consolidated statements of operations during the three months ended March 31, 2010.

The ineffective portion of the Company's derivative instruments recognized in its condensed consolidated statements of operations was $0.3 million and nil during the three months ended March 31, 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 months ended March 31, 2011 and 2010, the Company recognized a loss on non-designated derivative instruments within interest and other income, net, on its condensed consolidated statements of operations of $0.2 million and $0.3 million, respectively.

Note 11. Equity

Stock Repurchase Activities

In February 2010, the Company’s Board of Directors (the “Board”) approved a new 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 4.8 million shares of its common stock at an average price of $42.14 per share for an aggregate purchase price of $200.2 million during the three months ended March 31, 2011, under its 2010 Stock Repurchase Program. The Company repurchased and retired approximately 2.8 million shares of its common stock at an average price of $27.04 per share for an aggregate purchase price of $74.4 million during the three months ended March 31, 2010 under its 2008 Stock Repurchase Program. As of March 31, 2011, there were no remaining authorized funds under the 2008 Stock Repurchase Program and $554.8 million remaining authorized funds under the 2010 Stock Repurchase Program.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Comprehensive Income Attributable to Juniper Networks

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



	Three Months Ended March 31,
	2011		2010
Consolidated net income	$	129.7	$	164.6
Other comprehensive income, net of tax:
Change in unrealized gain (loss) on investments, net tax of nil	4.4		(0.4		)
Change in foreign currency translation adjustment, net tax of nil	6.6		(2.7		)
Total other comprehensive income (loss), net of tax	11.0		(3.1		)
Consolidated comprehensive income	140.7		161.5
Adjust for comprehensive income attributable to noncontrolling interest	0.1		(1.5		)
Comprehensive income attributable to Juniper Networks	$	140.8	$	160.0

The following table summarizes equity activity for the three months ended March 31, 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 loss on investments, net tax of nil	—			4.4			—			—			4.4
Change in foreign currency translation adjustment, net 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

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes equity activity for the three months ended March 31, 2010 (in millions):



	Common Stock & Additional Paid-in-Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Non- controlling Interest			Total Equity
Balance at December 31, 2009	$	9,060.1		$	(1.4	)	$	(3,236.5	)	$	2.6		$	5,824.8
Consolidated net income	—			—			163.1			1.5			164.6
Change in unrealized loss on investments, net tax of nil	—			(0.4		)	—			—			(0.4		)
Change in foreign currency translation adjustment, net tax of nil	—			(2.7		)	—			—			(2.7		)
Issuance of shares in connection with Employee Stock Purchase Plan	20.8			—			—			—			20.8
Exercise of stock options by employees	101.2			—			—			—			101.2
Return of capital to noncontrolling interest	—			—			—			(2.0		)	(2.0		)
Repurchase and retirement of common stock	(5.7		)	—			(68.7		)	—			(74.4		)
Repurchases related to net issuances	—			—			(1.8		)	—			(1.8		)
Share-based compensation expense	40.6			—			—			—			40.6
Adjustment related to tax benefit from employee stock option plans	50.6			—			—			—			50.6
Balance at March 31, 2010	$	9,267.6		$	(4.5	)	$	(3,143.9	)	$	2.1		$	6,121.3

Note 12. Employee Benefit Plans

Share-Based Compensation Plans

The Company’s share-based compensation plans include the 2006 Equity Incentive Plan (the “2006 Plan”), 2000 Nonstatutory Stock Option Plan (the “2000 Plan”), Amended and Restated 1996 Stock Plan (the “1996 Plan”), as well as various equity incentive plans assumed through acquisitions. Under these plans, the Company has granted (or in the case of acquired plans, assumed) stock options, RSUs, and PSAs. In addition, the Company’s 2008 Employee Stock Purchase Plan (the “2008 Purchase Plan”) permits eligible employees to acquire shares of the Company’s common stock at a 15% discount to the offering price (as determined in the 2008 Purchase Plan) 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, 2011, the 2006 Plan had 61.1 million shares subject to currently outstanding equity awards and 12.8 million shares available for future issuance.

In connection with past acquisitions, the Company assumed stock option and RSU awards under the stock plans of the acquired companies. The Company exchanged those awards for Juniper Networks' stock options and RSUs. As of March 31, 2011, stock options and RSUs covering approximately 1.8 million shares of common stock were outstanding under awards assumed through the Company's past acquisitions.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Stock Option Activities

Since 2006, the Company has granted stock option awards that have a maximum contractual life of seven years from the date of grant. Prior to 2006, stock option awards generally had a ten-year contractual life from the date of grant. The following table summarizes the Company’s stock option activity and related information as of and for the three months ended March 31, 2011 (in millions, except for per share amounts and years):



	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance at January 1, 2011	49.4		$	21.90
Options granted	4.2		41.46
Options canceled	(0.5	)	23.17
Options exercised	(11.2	)	21.58
Options expired	(0.1	)	67.10
Balance at March 31, 2011	41.8		$	23.88	4.4	$	764.8

As of March 31, 2011:
Vested or expected-to-vest options	39.0		$	23.41	4.3	$	730.2
Exercisable options	23.9		$	20.98	3.4	$	504.8

Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $42.08 per share as of March 31, 2011, and the exercise price 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 the exercise and the exercise price of each option, was $211.4 million for the three months ended March 31, 2011. Total fair value of options vested for the three months ended March 31, 2011, was $27.6 million.

Restricted Stock Units and Performance Share Awards Activities

RSUs generally vest over a period of three to four years from the date of grant, and PSAs generally vest after three years provided that certain annual performance targets and other vesting criteria are met. Until vested, RSUs and PSAs do not have the voting and dividend participation rights of common stock and the shares underlying the awards are not considered issued and outstanding.

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Juniper Networks, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The following table summarizes information about the Company’s RSUs and PSAs as of and for the three months ended March 31, 2011 (in millions, except per share amounts and years):



	Outstanding RSUs and PSAs
	Number of Shares		Weighted Average Grant-Date Fair Value per Share		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance at January 1, 2011	14.2		$	25.94
RSUs granted	3.7		40.06
PSAs granted (1)	3.6		41.53
RSUs vested	(1.2	)	21.90
PSAs vested	(0.5	)	25.80
RSUs canceled	(0.1	)	25.62
PSAs canceled	(0.4	)	23.82
Balance at March 31, 2011:	19.3		$	31.80	2.1	$	819.7

As of March 31, 2011:
Vested and expected-to-vest RSUs and PSAs	16.0		$	31.34	2.0	$	673.2

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(1)

The number of shares subject to PSAs granted represents the aggregate maximum number of shares that may be issued pursuant to the award over its full term. The aggregate number of shares subject to these PSAs that would be issued if performance goals determined by the Compensation Committee are achieved at target is 1.7 million shares. Depending on achievement of such performance goals, the range of shares that could be issued under these awards is 0 to 3.6 million shares.

Employee Stock Purchase Plan

The Company's 2008 Purchase Plan is implemented in a series of offering periods, each six months in duration, or a shorter period as determined by the Board. Under the 2008 Purchase Plan, employees purchased approximately 1.0 million shares at an average per share price of $23.89 for the three months ended March 31, 2011. Employees purchased approximately 1.0 million shares of common stock through the 2008 Purchase Plan at an average price of $21.11 per share in the three months ended March 31, 2010.

As of March 31, 2011, approximately 4.6 million shares had been issued and 7.4 million shares remained available for future issuance under the 2008 Purchase Plan.

Shares Available for Grant

The following table presents the stock grant activity and the total number of shares available for grant under the 2006 Plan as of March 31, 2011 (in millions):



	Number of Shares
Balance at January 1, 2011	30.7
RSUs and PSAs granted (1)	(15.4	)
Options granted	(4.2	)
RSUs and PSAs canceled (1)	1.1
Options canceled (2)	0.5
Options expired (2)	0.1
Balance at March 31, 2011	12.8

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(1)	RSUs and PSAs with a per share or unit purchase price lower than 100% of the fair market value of the Company's common stock on the day of the grant under the 2006 Plan are counted against shares authorized under the plan as two and one-tenth shares of common stock for each share subje