<PAGE> 1
EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information gives effect to the acquisition of Micro Magic, Incorporated ("MMI")
by Juniper Networks, Inc. ("Juniper Networks"). The acquisition will be
accounted for under the purchase method of accounting in accordance with APB
Opinion No. 16. Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their
estimated fair values. Estimates of the fair values of the assets and
liabilities of MMI have been combined with the recorded values of the assets and
liabilities of Juniper Networks in the unaudited pro forma condensed
consolidated financial information. The purchase price allocation for MMI is
preliminary and is unaudited. These allocations are subject to change pending
the completion of the final analysis of the fair value of the assets acquired
and liabilities assumed. The impact of such changes could be material.
The unaudited pro forma condensed consolidated balance sheet as of
September 30, 2000 gives effect to the MMI acquisition as if it occurred on
September 30, 2000. The Juniper Networks balance sheet information was derived
from its unaudited September 30, 2000 condensed consolidated balance sheet. The
MMI balance sheet information was derived from its unaudited September 30, 2000
balance sheet. The unaudited pro forma condensed consolidated statements of
operations give pro forma effect to the acquisition as if the transaction was
consummated as of January 1, 1999. The information for the Juniper Networks and
MMI December 31, 1999 statements of operations was derived from their audited
statements of operations for the year ended December 31, 1999. The information
for the Juniper Networks and MMI September 30, 2000 statements of operations
were derived from their unaudited statements of operations for the nine-month
period ended September 30, 2000.
The unaudited pro forma condensed consolidated financial information has
been prepared by Company management for illustrative purposes only and is not
necessarily indicative of the condensed consolidated financial position or
results of operations in future periods or the results that actually would have
been realized had Juniper Networks and MMI been a combined company during the
specified periods. The pro forma adjustments are based on the information
available at the time of this Registration Statement on Form 8-K. The unaudited
pro forma condensed consolidated financial information, including the notes
thereto, is qualified in its entirety by reference to, and should be read in
conjunction with, the historical consolidated financial statements of Juniper
Networks included in its Form 10-K and Form 10-Q filed March 29, 2000 and
November 9, 2000, respectively, with the Securities and Exchange Commission, and
the historical financial statements of MMI included as exhibit 99.2 in this Form
8-K.
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JUNIPER NETWORKS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical
----------------------------
Juniper Micro Magic, Pro Forma Pro Forma
Networks, Inc. Incorporated Adjustments Combined
-------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 571,201 $ 1,848 $ (39,974)(1) $ 533,075
Short-term investments 567,731 -- -- 567,731
Accounts receivable, net 116,319 1,330 -- 117,649
Prepaid expenses and other current assets 20,775 27 -- 20,802
----------- ------- --------- -----------
Total current assets 1,276,026 3,205 (39,974) 1,239,257
Property and equipment, net 33,039 95 -- 33,134
Long-term investments 508,630 -- -- 508,630
Other long-term assets 127,730 16 123,838(2) 251,584
----------- ------- --------- -----------
Total assets $ 1,945,425 $ 3,316 $ 83,864 $ 2,032,605
=========== ======= ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 48,431 $ 30 $ -- $ 48,461
Other accrued liabilities 108,105 107 150(1) 108,362
Deferred revenue 34,770 -- -- 34,770
----------- ------- --------- -----------
Total current liabilities 191,306 137 150 191,593
Convertible subordinated notes and
other long-term liabilities 1,161,080 -- -- 1,161,080
Common stock and additional paid-in capital 540,315 568 218,636(1)(3) 759,519
Deferred stock compensation (1,595) (127) (121,584)(2)(3) (123,306)
Accumulated other comprehensive income
(loss) 20,727 -- -- 20,727
Retained earnings 33,592 2,738 (13,338)(2)(3) 22,992
----------- ------- --------- -----------
Total stockholders' equity 593,039 3,179 83,714 679,932
----------- ------- --------- -----------
Total liabilities and stockholders' equity $ 1,945,425 $ 3,316 $ 83,864 $ 2,032,605
=========== ======= ========= ===========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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JUNIPER NETWORKS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical
----------------------------
Juniper Micro Magic, Pro Forma Pro Forma
Networks, Inc. Incorporated Adjustments Combined
-------------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $ 102,606 $ 3,443 $ -- $ 106,049
Cost of revenues 45,272 1,182 -- 46,454
--------- -------- --------- ---------
Gross profit 57,334 2,261 -- 59,595
Operating expenses:
Research and development 41,502 269 -- 41,771
Sales and marketing 20,931 891 -- 21,822
General and administrative 5,235 271 -- 5,506
Amortization of goodwill, purchased
intangibles and deferred stock
compensation 4,286 15,923 103,972(2)(3) 124,181
--------- -------- --------- ---------
Total operating expenses 71,954 17,354 103,972 193,280
--------- -------- --------- ---------
Operating loss, (14,620) (15,093) (103,972) (133,685)
Interest income, net 8,011 39 (2,400)(5) 5,650
--------- -------- --------- ---------
Loss before income taxes (6,609) (15,054) (106,372) (128,035)
Provision for income taxes/(tax benefit) 2,425 (617) -- 1,808
--------- -------- --------- ---------
Net loss $ (9,034) $(14,437) $(106,372) $(129,843)
========= ======== ========= =========
Net loss per share:
Basic $ (0.03) $ (0.49)
========= ======== ========= =========
Diluted $ (0.03) $ (0.49)
========= ======== ========= =========
Shares used in computing net loss per share:
Basic 262,960 521 263,481
========= ======== ========= =========
Diluted 262,960 521 263,481
========= ======== ========= =========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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JUNIPER NETWORKS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical
-----------------------------
Juniper Micro Magic, Pro Forma Pro Forma
Networks, Inc. Incorporated Adjustments Combined
-------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Net revenues $378,115 $ 3,590 $ -- $ 381,705
Cost of revenues 136,144 1,177 -- 137,321
-------- ------- -------- ---------
Gross profit 241,971 2,413 -- 244,384
Operating expenses:
Research and development 57,590 157 -- 57,747
Sales and marketing 52,137 678 -- 52,815
General and administrative 12,631 208 -- 12,839
Amortization of goodwill, purchased
intangibles and deferred stock
compensation 6,977 5,328 49,946(2)(3) 62,251
Charitable contribution 10,000 -- -- 10,000
-------- ------- -------- ---------
Total operating expenses 139,335 6,371 49,946 195,652
-------- ------- -------- ---------
Operating income/(loss) 102,636 (3,958) (49,946) 48,732
Interest income, net 28,156 39 (1,800)(5) 26,395
-------- ------- -------- ---------
Income/(loss) before income taxes 130,792 (3,919) (51,746) 75,127
Provision for income taxes 45,033 2 -- 45,035
-------- ------- -------- ---------
Net income/(loss) $ 85,759 $(3,921) $(51,746) $ 30,092
======== ======= ======== =========
Net income per share:
Basic $ 0.28 $ 0.10
======== ======= ======== =========
Diluted $ 0.25 $ 0.09
======== ======= ======== =========
Shares used in computing net
income per share:
Basic 301,701 521 302,222
======== ======= ======== =========
Diluted 347,309 1,454 348,763
======== ======= ======== =========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial information.
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NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
BASIS OF PRESENTATION
Juniper Networks acquired MMI on December 8, 2000 for a total purchase
price of $259.3 million in a transaction accounted for as a purchase. Juniper
Networks exchanged approximately $40.0 million of cash and 828,000 shares of
Juniper Networks common stock with a fair value of $125.7 million for all of the
outstanding stock of MMI. The common stock was valued using Juniper Networks'
average closing stock price on the 3 days before the announcement, which was
$151.76 per share. Juniper Networks also assumed all of the outstanding stock
options of MMI with a fair value of approximately $93.5 million. The options
were valued using a Black-Scholes option pricing model with the inputs of .80
for volatility, 3 years for expected life, 6.00% for the risk-free interest rate
and a market value of $151.76 per share as described above. There is also
$150,000 of estimated transaction costs related to the merger.
The acquisition will be accounted for under the purchase method of
accounting in accordance with APB Opinion No. 16. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values. Preliminary estimates
based on management's best estimates of the fair values of the assets and
liabilities of MMI have been combined with the recorded values of the assets and
liabilities of Juniper Networks in the unaudited pro forma condensed
consolidated financial information. These allocations are subject to change
pending a final analysis of the value of the assets acquired and liabilities
assumed.
PRO FORMA ADJUSTMENTS
(1) To reflect the issuance of approximately $40.0 million in cash and
828,000 shares of Juniper Networks Common Stock (521,000 vested and
307,000 restricted) and the assumption of all outstanding options in
conjunction with the MMI acquisition, for an aggregate purchase price of
approximately $259.3 million, including approximately $150,000 of
estimated transaction costs.
(2) To reflect the excess of the purchase price over the fair value of
assets and liabilities acquired in connection with the MMI acquisition.
The purchase price allocation is based on management's estimates of the
fair values of the tangible and intangible assets, as well as acquired
technology which has not reached technological feasibility and has no
alternative future use. The book value of tangible assets and
liabilities acquired are presently believed to approximate fair value.
The assembled workforce, purchased technology and goodwill will be
amortized on a straight-line basis over three years. Deferred
compensation on unvested stock and stock options will be amortized over
the vesting period using the graded vesting method. The compensation
expense relates to unvested stock and stock options granted to
individuals primarily in the research and development expense category.
The total purchase price paid for the acquisition is summarized as
follows (in thousands):
<TABLE>
<S> <C>
Net assets acquired $ 3,179
In-process research and development 10,600
Assembled workforce 900
Purchased technology 7,300
Goodwill 115,638
Deferred compensation on unvested
stock and stock options 121,711
--------
Total $259,328
========
</TABLE>
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(3) To reflect the elimination of the stockholders' equity accounts and
amortization of deferred compensation of MMI.
(4) Juniper Networks will record an immediate write-off of in-process
technology at the consummation of the acquisition. The unaudited pro
forma condensed consolidated statements of operations do not include the
charge for in-process technology of approximately $10.6 million since it
is considered a non-recurring charge. The charge will be taken by
Juniper Networks in the three months ended December 31, 2000.
(5) To reflect the effect on interest income for approximately $40 million
of cash paid by Juniper Networks.
PRO FORMA NET INCOME (LOSS) PER SHARE
The unaudited pro forma combined basic net income (loss) per share is
based upon the weighted average number of outstanding shares of common stock of
Juniper Networks during the period presented, plus the number of vested shares
issued to consummate the acquisition of MMI as if the acquisition occurred at
the beginning of the period presented. The unaudited pro forma combined diluted
net income (loss) per share also includes the MMI common stock equivalents, if
antidilutive.
CONFORMING AND RECLASSIFICATION ADJUSTMENTS
There were no material adjustments required to conform the accounting
policies of Juniper Networks and MMI. Certain amounts have been reclassified to
conform to Juniper Networks's financial statement presentation.
