JUNIPER NETWORKS INC
S-1, 2000-02-04
COMPUTER COMMUNICATIONS EQUIPMENT
Previous: METROMEDIA FIBER NETWORK INC, DEF 14C, 2000-02-04
Next: CYPRESS COMMUNICATIONS INC, S-1/A, 2000-02-04



<PAGE>   1

        AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 2000

                                                 REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                      ------------------------------------

                                    FORM S-1
                             REGISTRATION STATEMENT

                                     Under
                           The Securities Act of 1933
                      ------------------------------------
                             JUNIPER NETWORKS, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                    <C>                                    <C>
               DELAWARE                                 3661                                77-042258
   (State or other jurisdiction of          (Primary Standard Industrial                 (I.R.S. Employer
    incorporation or organization)          Classification Code Number)                Identification No.)
</TABLE>

                              385 RAVENDALE DRIVE
                            MOUNTAIN VIEW, CA 94043
   (Address, including zip code, of Registrant's principal executive offices)
                      ------------------------------------

                                 LISA C. BERRY
                         GENERAL COUNSEL AND SECRETARY
                             JUNIPER NETWORKS, INC.
                  385 RAVENDALE DRIVE, MOUNTAIN VIEW, CA 94043
                                 (650) 526-8000
(Name, address, and telephone number, including area code, of agent for service)
                      ------------------------------------

                                   Copies to:

<TABLE>
<S>                                                      <C>
                  JUDITH MAYER O'BRIEN                                        NORA L. GIBSON
                      JOHN A. FORE                                          LINDSAY C. FREEMAN
                   BRUCE M. MCNAMARA                                           LORA D. BLUM
            WILSON SONSINI GOODRICH & ROSATI                          BROBECK PHLEGER & HARRISON LLP
                PROFESSIONAL CORPORATION                                        ONE MARKET
                   650 PAGE MILL ROAD                                       SPEAR STREET TOWER
                  PALO ALTO, CA 94304                                    SAN FRANCISCO, CA 94105
                     (650) 493-9300                                           (415) 442-0900
</TABLE>

                      ------------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
                      ------------------------------------

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box.  [ ]

If this Form is file to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering.  [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                      ------------------------------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
<S>                                                          <C>                      <C>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
                                                                 PROPOSED MAXIMUM
                    TITLE OF EACH CLASS                             AGGREGATE                AMOUNT OF
               OF SECURITIES TO BE REGISTERED                   OFFERING PRICE(1)         REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
  % Convertible Subordinated Notes due February 15, 2007         $575,000,000(2)              $151,800
Common Stock, par value $0.00001 per share, issuable upon
  conversion of     % Convertible Subordinated Notes due
  February 15, 2007                                                    (3)                      (3)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of computing the registration pursuant to
    Rule 457(o) of the Securities Act of 1933.

(2) Exclusive of accrued interest, if any. Includes $75,000,000 in principal
    amount of convertible notes which the underwriters have an option to
    purchase.

(3) No additional consideration will be received for any shares of common stock
    issued upon conversion or exchange of the     % Convertible Subordinated
    Notes due February 15, 2007. Pursuant to Rule 416 under the Securities Act
    of 1933 this registration statement also includes an indeterminate number of
    shares that may be issued upon conversion of the     % Convertible
    Subordinated Notes due February 15, 2007 as a result of anti-dilution and
    other provisions of the convertible notes.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2

     THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
     CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
     FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
     PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO
     BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
     PERMITTED.

                 SUBJECT TO COMPLETION. DATED           , 2000.

                                  $500,000,000

                                      LOGO

              % Convertible Subordinated Notes due February 15, 2007
                            ------------------------

    Juniper Networks, Inc. is offering $500,000,000 of    % Convertible
Subordinated Notes due February 15, 2007. You may convert your convertible notes
into shares of Juniper Networks common stock at any time prior to maturity or
their prior redemption or repurchase by Juniper Networks. The convertible notes
will mature on February 15, 2007. The conversion rate is          shares per
each $1,000 principal amount of convertible notes, subject to adjustment in
certain circumstances. This is equivalent to a conversion price of approximately
$         per share. Juniper Networks' common stock is quoted on the Nasdaq
National Market under the symbol "JNPR". On February 3, 2000, the last reported
bid price for the common stock was $154.94 per share.

    Juniper Networks will pay interest on the convertible notes on February 15
and August 15 of each year. The first interest payment will be made on August
15, 2000. The convertible notes are subordinated in right of payment to all of
Juniper Networks' senior debt. The convertible notes will be issued only in
denominations of $1,000 and integral multiples of $1,000.

    On or after the third business day after February 15, 2003, Juniper Networks
has the option to redeem all or a portion of the convertible notes that have not
been previously converted at the redemption prices set forth in this prospectus.
You have the option, subject to certain conditions, to require Juniper Networks
to repurchase any convertible notes held by you in the event of a "change in
control," as described in this prospectus, at a price equal to 100% of the
principal amount of the convertible notes plus accrued interest to the date of
repurchase.

    The convertible notes will be evidenced only by one or more global notes in
fully registered form and without coupons, deposited with a trustee for the
convertible notes, as custodian for The Depository Trust Company. Except as
described in this prospectus, beneficial interests in the global notes will be
shown on, and transfers thereof will be effected only through, records
maintained by The Depository Trust Company and its direct and indirect
participants.

    See "Risk Factors" beginning on page 6 of this prospectus to read about
important factors you should consider before buying the convertible notes.
                            ------------------------

    NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
                            ------------------------

<TABLE>
<CAPTION>
                                                                Per Note       Total
                                                                --------    ------------
<S>                                                             <C>         <C>
Initial public offering price...............................         %      $
Underwriting discount.......................................         %      $
Proceeds, before expenses, to Juniper Networks..............         %      $
</TABLE>

    The initial public offering price set forth above does not include accrued
interest, if any. Interest on the convertible notes will accrue from February
   , 2000 and must be paid by the purchaser if the convertible notes are
delivered after February    , 2000.

    To the extent that the underwriters sell more than $500,000,000 principal
amount of convertible notes, the underwriters have the option to purchase up to
an additional $75,000,000 principal amount of convertible notes from Juniper
Networks at the initial public offering price less the underwriting discount.
                            ------------------------

    The underwriters expect to deliver the convertible notes in book-entry form
only through the facilities of The Depository Trust Company against payment in
New York, New York on February    , 2000.

GOLDMAN, SACHS & CO.
          CREDIT SUISSE FIRST BOSTON
                     ROBERTSON STEPHENS
                                 DAIN RAUSCHER WESSELS
                                          SG COWEN
                                                 WARBURG DILLON READ LLC

                            ------------------------

                      Prospectus dated February   , 2000.
<PAGE>   3

                               PROSPECTUS SUMMARY

     This summary may not contain all of the information that may be important
to you. You should read the entire prospectus as well as the information
regarding us, including our consolidated financial statements and the
accompanying notes, appearing elsewhere in this prospectus. All information in
this prospectus assumes the underwriters' overallotment option with respect to
the convertible notes offering is not exercised unless otherwise stated.

ABOUT JUNIPER NETWORKS

     We are a leading provider of Internet infrastructure solutions that enable
Internet service providers and other telecommunications service providers to
meet the demands resulting from the rapid growth of the Internet. We deliver
next generation Internet backbone routers that are specifically designed, or
purpose-built, for service provider networks and offer our customers increased
reliability, performance, scalability, interoperability and flexibility, and
reduced complexity and cost compared to current alternatives. Our flagship
product is the M40 Internet backbone router and we recently introduced the M20,
an Internet backbone router purpose-built for emerging service providers. Our
Internet backbone routers combine the features of our JUNOS Internet Software,
high performance ASIC-based (application specific integrated circuit) packet
forwarding technology and Internet optimized architecture into a purpose-built
solution for service providers. Unlike conventional routers, which were
originally developed for enterprise applications and are increasingly inadequate
for service provider use in public networks, our Internet backbone routers are
specifically designed to accommodate the size and scope of the Internet.

     We sell our Internet backbone routers primarily through a direct sales
force in the United States and through value added resellers internationally.
Our M40 Internet backbone router is currently used by several of the world's
leading service providers, such as UUNet, an MCI WorldCom Company, Cable &
Wireless USA, AT&T/IBM Global Services, Frontier GlobalCenter Inc. and Verio
Inc.

     We believe that the Internet will continue to grow at significant rates and
will evolve into the next generation public network, superseding and expanding
upon many of the functions provided by the traditional telephone network. This
trend will drive the need for new Internet infrastructure equipment that can
deliver the high levels of reliability and scalability needed in a public
network. We believe we have developed the first commercially available Internet
backbone routing platform specifically designed and built to meet these
requirements. Ryan Hankin Kent, an industry research firm, estimated in 1999
that the market for Internet backbone routers was $169 million in 1998 and is
expected to increase to approximately $5.5 billion in 2003.

     Our objective is to become the primary supplier of high performance
Internet backbone infrastructure equipment. The following are key elements of
our strategy:

     -  leverage our early lead as supplier of purpose-built Internet
       infrastructure equipment;

     -  work closely with our key customers;

     -  increase our penetration in major service providers;

     -  leverage our early successes to rapidly penetrate new customers;

     -  expand our sales and distribution network;

     -  maintain and extend our technology leadership; and

     -  enable new IP-based services.

     Our principal executive offices are located at 385 Ravendale Drive,
Mountain View, California 94043, and our telephone number is (650) 526-8000.
Juniper Networks is a registered trademark and the Juniper Networks logo, M40,
M20 and JUNOS are trademarks of Juniper Networks. Each trademark, trade name or
service mark of any other company appearing in this prospectus belongs to its
holder. Information contained on our website, www.juniper.net, does not
constitute part of this prospectus. We were incorporated in the State of
California in February 1996, and we reincorporated in the State of Delaware in
March 1998.
                                        1
<PAGE>   4

                                  THE OFFERING

Securities offered.........  $500,000,000 aggregate principal amount of      %
                             Convertible Subordinated Notes due February 15,
                             2007. We also have granted the underwriters an
                             over-allotment option to purchase up to an
                             additional $75,000,000 aggregate principal amount
                             of convertible notes.

Offering price.............  100% of the principal amount of the convertible
                             notes, plus accrued interest, if any, from February
                                  , 2000.

Interest...................  We will pay interest on the convertible notes
                             semi-annually on February 15 and August 15 of each
                             year, commencing August 15, 2000.

Conversion.................  You may convert your convertible notes at your
                             option into shares of our common stock at a
                             conversion rate of           shares of common stock
                             per $1,000 principal amount of convertible notes,
                             which is equivalent to a conversion price of
                             approximately $     per share. The conversion rate
                             is subject to adjustment in certain events. The
                             convertible notes will be convertible at any time
                             before the close of business on the maturity date,
                             unless we have previously redeemed or repurchased
                             the convertible notes. You may convert your
                             convertible notes called for redemption or
                             submitted for repurchase up to and including the
                             business day immediately preceding the date fixed
                             for redemption or repurchase, as the case may be.

Subordination..............  The convertible notes are subordinated to our
                             present and future senior debt, as that term is
                             defined in "Description of the Convertible
                             Notes -- Subordination". The convertible notes are
                             also effectively subordinated in right of payment
                             to all indebtedness and other liabilities of our
                             subsidiaries. As of December 31, 1999, we did not
                             have any outstanding senior debt. The indenture
                             under which the convertible notes will be issued
                             will not restrict the incurrence of senior debt or
                             other indebtedness by us.

Global note; book-entry
system.....................  We will issue the convertible notes only in fully
                             registered form without interest coupons and in
                             minimum denominations of $1,000. The convertible
                             notes will be evidenced only by one or more global
                             notes in fully registered form and without coupons
                             deposited with the trustee for the convertible
                             notes, as custodian for DTC. Your interest in the
                             global notes will be shown on, and transfers of
                             your interest can only be made through, records
                             maintained by DTC and its participants and indirect
                             participants.

Optional redemption by
Juniper....................  On or after the third business day after February
                             15, 2003, we have the right at any time to redeem
                             some or all of your convertible notes at the
                             redemption prices set forth in this prospectus plus
                             accrued and unpaid interest.

                                        2
<PAGE>   5

Repurchase at the option of
holders upon a change in
control....................  If we experience a change in control, as that term
                             is defined in "Description of Convertible
                             Notes -- Repurchase at Option of Holders Upon a
                             Change in Control", you will have the right,
                             subject to certain conditions and restrictions, to
                             require us to repurchase some or all of your
                             convertible notes at a price equal to 100% of the
                             principal amount, plus accrued and unpaid interest
                             to the repurchase date. The repurchase price is
                             payable in cash or, at our choice but subject to
                             certain conditions, in shares of common stock,
                             valued at 95% of the average closing sales prices
                             of the common stock for the five trading days
                             preceding and including the third trading day prior
                             to the repurchase date.

Use of proceeds............  We anticipate using the net proceeds from this
                             offering for working capital and other general
                             corporate purposes. Should the opportunity arise,
                             we may also use a portion of the net proceeds to
                             fund acquisitions of or investments in
                             complementary businesses, partnerships, minority
                             investments, products or technologies.

Events of default..........  The following will be events of default under the
                             indenture for the convertible notes:

                             -  we fail to pay principal of or any premium on
                                any convertible note when due, whether or not
                                the payment is prohibited by the subordination
                                provisions of the indenture;

                             -  we fail to pay any interest on any convertible
                                note when due and that default continues for 30
                                days, whether or not the payment is prohibited
                                by the subordination provisions of the
                                indenture;

                             -  we fail to provide the notice that we are
                                required to give in the event of a change in
                                control, whether or not the notice is prohibited
                                by the subordination provisions of the
                                indenture;

                             -  we fail to perform any other covenant in the
                                indenture and that failure continues for 60 days
                                after written notice to us by the trustee or the
                                holders of at least 25% in aggregate principal
                                amount of outstanding convertible notes;

                             -  we or any of our significant subsidiaries fail
                                to pay when due at final maturity thereof,
                                either at its maturity or upon acceleration, any
                                indebtedness under any bonds, debentures,
                                convertible notes or other evidences of
                                indebtedness for money borrowed, or any
                                guarantee thereof, in excess of $25,000,000 if
                                the indebtedness is not discharged, or the
                                acceleration is not annulled, within 30 days
                                after written notice to us by the trustee or the
                                holders of at least 25% in aggregate principal
                                amount of the outstanding convertible notes; and

                             -  events of bankruptcy, insolvency or
                                reorganization with respect to us or any of our
                                significant subsidiaries specified in the
                                indenture.

                                        3
<PAGE>   6

Listing of convertible
notes......................  The convertible notes will not be listed on any
                             securities exchange or quoted on the Nasdaq
                             National Market. The underwriters have advised us
                             that they currently intend to make a market in the
                             convertible notes. However, the underwriters are
                             not obligated to do so, and any such market making
                             may be discontinued at any time at the sole
                             discretion of the underwriters without notice. Our
                             common stock is traded on the Nasdaq National
                             Market under the symbol "JNPR".

Governing law..............  The indenture and the convertible notes will be
                             governed by the laws of the State of New York,
                             without regard to conflicts of laws principles.

Risk factors...............  You should read the "Risk Factors" section,
                             beginning on page 6, as well as the other
                             cautionary statements, risks and uncertainties
                             described in this prospectus, so that you
                             understand the risks associated with an investment
                             in the convertible notes.

                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                          --------------------------------
                                                            1999        1998        1997
                                                          --------    --------    --------
<S>                                                       <C>         <C>         <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues..........................................    $102,606    $  3,807    $     --
Cost of revenues......................................      45,272       4,416          --
                                                          --------    --------    --------
Gross profit (loss)...................................      57,334        (609)         --
Operating expenses:
  Research and development............................      41,502      23,987       9,406
  Sales and marketing.................................      20,931       4,216       1,149
  General and administrative..........................       5,235       2,223       1,043
  Amortization of goodwill and purchased intangibles
     and deferred stock compensation..................       4,286       1,235          --
                                                          --------    --------    --------
     Total operating expenses.........................      71,954      31,661      11,598
                                                          --------    --------    --------
Operating loss........................................     (14,620)    (32,270)    (11,598)
Interest income, net..................................       8,011       1,301       1,235
                                                          --------    --------    --------
Loss before income taxes..............................      (6,609)    (30,969)    (10,363)
Provision for income taxes............................       2,425           2          --
                                                          --------    --------    --------
Net loss..............................................    $ (9,034)   $(30,971)   $(10,363)
                                                          ========    ========    ========
Basic and diluted net loss per share(1)...............    $  (0.10)   $  (0.80)   $  (0.40)
                                                          ========    ========    ========
Shares used in computing basic and diluted net loss
  per share(1)........................................      94,661      38,871      25,773
                                                          ========    ========    ========
Pro forma basic and diluted net loss per share
  (unaudited)(1)......................................    $  (0.07)   $  (0.28)
                                                          ========    ========
Shares used in computing pro forma basic and diluted
  net loss per share (unaudited)(1)...................     131,480     111,210
                                                          ========    ========
OTHER DATA:
Ratio of earnings to fixed charges(2).................          --          --          --
</TABLE>

                                        4
<PAGE>   7

<TABLE>
<CAPTION>
                                                                      DECEMBER 31, 1999
                                                                ------------------------------
                                                                   ACTUAL       AS ADJUSTED(3)
                                                                ------------    --------------
<S>                                                             <C>             <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments...........      $345,958           832,658
Working capital.............................................       322,170           808,870
Long-term investments.......................................        97,201            97,201
Total assets................................................       513,378         1,013,378
Total debt..................................................            --           500,000
Stockholders' equity........................................       457,715           457,715
</TABLE>

- ---------------

(1) See note 1 of the notes to consolidated financial statements for an
    explanation of the determination of the shares used to compute net less per
    share. All share and per share amounts have been adjusted to reflect the
    three-for-one split of our common stock paid to stockholders of record on
    December 31, 1999.

(2) The pre-tax loss from continuing operations for the years ended December 31,
    1999, 1998 and 1997 are not sufficient to cover fixed charges by a total of
    approximately $6.6 million in 1999, $31.0 million in 1998 and $10.4 million
    in 1997. As a result, the ratio of earnings to fixed charges has not been
    computed for any of these years.

(3) Reflects net proceeds of approximately $486,700 from the sale of the
    convertible notes, assuming an offering price of 100% of the principal
    amount, and after deducting underwriters' discounts and commissions and
    estimated offering expenses.

                                        5
<PAGE>   8

                                  RISK FACTORS

     This offering involves a high degree of risk. You should carefully consider
the risks described below before making an investment decision.

RISKS RELATED TO OUR BUSINESS

OUR FAILURE TO INCREASE OUR REVENUES WOULD PREVENT US FROM MAINTAINING
PROFITABILITY.

     We have incurred significant losses since inception. As of December 31,
1999, we had an accumulated deficit of $52.2 million. Although our net revenues
have grown from zero in the quarter ended September 30, 1998 to $45.4 million in
the quarter ended December 31, 1999, we cannot be certain that our revenues will
continue to grow. We have large fixed expenses and we expect to continue to
incur significant and increasing sales and marketing, product development and
administrative expenses. As a result, we will need to generate significantly
higher revenues to maintain profitability. See "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Consolidated Financial Statements and the Notes to the
Consolidated Financial Statements for more information on our results of
operations.

OUR LIMITED OPERATING HISTORY MAKES FORECASTING DIFFICULT.

     As a result of our limited operating history, it is difficult to forecast
accurately our revenues, and we have limited meaningful historical financial
data upon which to base planned operating expenses. Specifically, we began
operations in February 1996, introduced our M40 Internet backbone router product
in September 1998, began shipping the M40 in volume in October 1998 and
introduced the M20 in December 1999. In addition, our operating expenses are
largely based on anticipated revenue trends and a high percentage of our
expenses are and will continue to be fixed in the short-term. The revenue and
income potential of our products and business are unproven and the market that
we are addressing is rapidly evolving. If we do not achieve our expected
revenues, our operating results will be below our expectations and the
expectations of investors and market analysts, which could cause the price of
our convertible notes and common stock to decline.

OUR SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP PRODUCTS AND PRODUCT ENHANCEMENTS
THAT WILL ACHIEVE MARKET ACCEPTANCE.

     We cannot assure you that we will be able to develop new products or
product enhancements in a timely manner, or at all. Any failure to develop new
products or product enhancements will substantially decrease market acceptance
and sales of our present and future products which will significantly harm our
business and financial results. Even if we are able to develop and commercially
introduce new products and enhancements, we cannot assure you that the new
products or enhancements will achieve widespread market acceptance. Any failure
of our future products to achieve market acceptance could harm our business and
financial results.

THE LONG SALES AND IMPLEMENTATION CYCLES FOR OUR PRODUCTS, AS WELL AS OUR
EXPECTATION THAT CUSTOMERS WILL SPORADICALLY PLACE LARGE ORDERS WITH SHORT LEAD
TIMES MAY CAUSE REVENUES AND OPERATING RESULTS TO VARY SIGNIFICANTLY FROM
QUARTER TO QUARTER.

     A customer's decision to purchase our products involves a significant
commitment of its resources and a lengthy evaluation and product qualification
process. As a result, our sales cycle may be lengthy. Throughout the sales
cycle, we often spend considerable time educating and providing information to
prospective customers regarding the use and benefits of the products. Even after
making the decision to purchase, our customers tend to deploy the products
slowly and deliberately. Timing of deployment can vary widely and depends on the
skill set of the

                                        6
<PAGE>   9

customer, the size of the network deployment, the complexity of the customer's
network environment and the degree of hardware and software configuration
necessary to deploy the products. Customers with large networks usually expand
their networks in large increments on a periodic basis. Accordingly, we expect
to receive purchase orders for significant dollar amounts on an irregular basis.
Because of our limited operating history, we cannot predict these sales and
development cycles. These long cycles, as well as our expectation that customers
will tend to sporadically place large orders with short lead times, may cause
our revenues and operating results to vary significantly and unexpectedly from
quarter to quarter.

WE HAVE A LIMITED NUMBER OF CUSTOMERS UPON WHOM WE RELY, AND ANY DECREASE IN
REVENUE FROM THESE CUSTOMERS COULD HAVE AN ADVERSE EFFECT ON US.

     We began recognizing revenues from sales of the M40 in the quarter ended
December 31, 1998. A significant portion of our revenues to date have been
recognized from a limited number of customers, with two customers representing
58% of our revenues for the year ended December 31, 1999. We expect that the
majority of our revenues will continue to depend on sales of our products to a
small number of customers. Any downturn in the business of these customers or
potential new customers could significantly decrease the sales of our products
to these customers which could seriously harm our revenues and results of
operations.

IF THE INTERNET DOES NOT CONTINUE TO EXPAND AS A WIDESPREAD COMMUNICATIONS
MEDIUM, DEMAND FOR OUR PRODUCTS MAY DECLINE SIGNIFICANTLY.

     Our future success depends on the continued growth of the Internet as a
widely used medium for commerce and communication. If the Internet does not
continue to expand as a widespread communications medium and commercial
marketplace, the growth of the market for Internet infrastructure equipment may
not continue and the demand for our products could decline significantly.

WE FACE INTENSE COMPETITION THAT COULD REDUCE OUR MARKET SHARE.

     Competition in the Internet infrastructure market is intense. This market
has historically been dominated by Cisco Systems with other companies such as
Nortel Networks and Lucent Technologies providing products to a smaller segment
of the market. In addition, a number of private companies have announced plans
for new products to address the same problems which our products address.

     In order to compete effectively in the Internet router market we must
deliver products which:

     -  provide extremely high network reliability;

     -  provide high performance interfaces and packet processing capabilities;

     -  scale easily and efficiently with minimum disruption to the network;

     -  interoperate with existing network designs and equipment vendors;

     -  reduce the complexity of the network by decreasing the need for
       overlapping equipment; and

     -  provide a cost-effective solution for service providers.

     If we are unable to compete successfully against our current and future
competitors, we could experience price reductions, reduced gross margins and
loss of market share, any one of which could materially and adversely affect our
business, operating results and financial condition. See "Business --
Competition" for detailed information about our competition.

                                        7
<PAGE>   10

WE MUST EXPAND SUBSTANTIALLY OUR DIRECT AND INDIRECT SALES OPERATIONS IN ORDER
TO INCREASE MARKET AWARENESS AND SALES OF OUR PRODUCTS.

     Our products and services require a sophisticated sales effort targeted at
several key people within each of our prospective customers' organizations. This
sales effort requires the efforts of select personnel as well as specialized
system and consulting engineers. We have recently expanded our direct sales
force and plan to hire additional qualified sales personnel and system and
consulting engineers. Competition for these individuals is intense, and we might
not be able to hire the kind and number of sales personnel and system and
consulting engineers we need. In addition, we believe that our future success is
dependent upon establishing successful relationships with a variety of
distribution partners. We have entered into agreements with several value-added
resellers, some of whom also sell products that compete with our products. We
cannot be certain that we will be able to reach agreement with additional
resellers on a timely basis or at all, or that they will devote adequate
resources to selling our products.

     If we are unable to expand our direct and indirect sales operations, we may
not be able to increase market awareness or sales of our products, which may
prevent us from maintaining profitability.

IF WE DO NOT EXPAND OUR CUSTOMER SERVICE AND SUPPORT ORGANIZATION SUBSTANTIALLY,
SALES OF OUR PRODUCTS MAY BE SIGNIFICANTLY REDUCED.

     The complexity of our products and the difficulty of installing them
require highly trained customer service and support personnel. We currently have
a small customer service and support organization and will need to increase our
staff to support new customers and the expanding needs of existing customers.
Hiring customer service and support personnel is very competitive in our
industry due to the limited number of people available with the necessary
technical skills and understanding of the Internet. If we are unable to expand
our customer service and support organization, we may not be able to increase
sales of our products, which would seriously harm our business.

WE ARE DEPENDENT ON SOLE SOURCE AND LIMITED SOURCE SUPPLIERS FOR SEVERAL KEY
COMPONENTS, AND IF WE ARE UNABLE TO BUY THESE COMPONENTS ON A TIMELY BASIS, WE
WILL NOT BE ABLE TO DELIVER OUR PRODUCTS TO OUR CUSTOMERS.

     We currently purchase several key components, including ASICs and power
supplies, from single or limited sources. We worked with IBM for over three
years to develop several of our key proprietary application specific integrated
circuits, or ASICs, which are custom designed integrated circuits built to
perform a specific function more rapidly than a general purpose microprocessor.
IBM is currently our sole source supplier of these ASICs. These ASICs are very
complex, and we may not be able to develop an alternate source to IBM in a
timely manner, which could hurt our ability to deliver our products to our
customers. We also purchase power supplies from a single source and purchase
other custom components from other sole or limited sources. If we are unable to
buy these components on a timely basis, we will not be able to deliver the
products to our customers, which would negatively impact present and future
sales and revenue which would, in turn, seriously harm our business.

WE CURRENTLY DEPEND PRIMARILY ON ONE CONTRACT MANUFACTURER, AND IF WE HAVE TO
QUALIFY A NEW CONTRACT MANUFACTURER WE MAY LOSE REVENUE AND DAMAGE OUR CUSTOMER
RELATIONSHIPS.

     Solectron, a third party manufacturer for numerous companies, manufactures
the M40 and M20 at its Milpitas, California facility on a purchase order basis
and is our primary manufacturer. We currently do not have a long-term supply
contract with Solectron. If we should fail to effectively manage our
relationship with Solectron, or if Solectron experiences delays, disruptions or
quality control problems in its manufacturing operations, our ability to ship
products to our

                                        8
<PAGE>   11

customers could be delayed. We have begun the process to qualify a new third
party contract manufacturer. Qualifying a new contract manufacturer and
commencing volume production is expensive and time consuming. If we are required
or choose to change contract manufacturers, we may lose revenue and damage our
customer relationships.

IF WE FAIL TO ACCURATELY PREDICT OUR MANUFACTURING REQUIREMENTS, WE COULD INCUR
ADDITIONAL COSTS OR EXPERIENCE MANUFACTURING DELAYS.

     Because we currently do not have a long-term supply contract with
Solectron, it is not obligated to supply products to us for any specific period,
in any specific quantity or at any certain price, except as may be provided in a
particular purchase order. We provide forecasts of our demand to Solectron up to
six months prior to scheduled delivery of products to our customers. If we
overestimate our requirements, Solectron may have excess inventory, which would
increase our costs. If we underestimate our requirements, Solectron may have an
inadequate inventory, which could interrupt manufacturing of our products and
result in delays in shipments and revenues. In addition, lead times for
materials and components we order vary significantly and depend on factors such
as the specific supplier, contract terms and demand for each component at a
given time. We also may experience shortages of certain components from time to
time, which also could delay the manufacturing of our products.

THE UNPREDICTABILITY AND SEASONALITY OF OUR QUARTERLY RESULTS MAY ADVERSELY
AFFECT THE TRADING PRICE OF OUR COMMON STOCK AND THE CONVERTIBLE NOTES.

     Our revenues and operating results will vary significantly from quarter to
quarter due to a number of factors, many of which are outside of our control and
any of which may cause our stock price to fluctuate. The primary factors that
may affect us include the following:

     -  demand for our products;

     -  the timing of sales of our products;

     -  the timing of recognizing revenue and deferred revenue;

     -  new product introductions by our competitors;

     -  changes in our pricing policies or the pricing policies of our
        competitors;

     -  our ability to develop, introduce and ship new products and product
        enhancements that meet customer requirements in a timely manner;

     -  our ability to obtain sufficient supplies of the sole or limited source
        components, including ASICs and power supplies for our products;

     -  increases in the prices of the components we purchase;

     -  our ability to attain and maintain production volumes and quality levels
        for our products;

     -  Internet growth and demand for Internet infrastructure;

     -  prototype expenses;

     -  costs related to acquisitions of technology or businesses; and

     -  general economic conditions as well as those specific to the Internet
        and related industries.

     In addition, we are dependent on decisions by customers to build their
Internet infrastructure, which decisions are in turn dependent upon the success
and expected demand for the services offered by those customers. Furthermore,
the long sales and implementation cycles for our products, as well as the degree
to which customers will sporadically place large orders with short

                                        9
<PAGE>   12

lead times, may cause revenues and operating results to vary significantly from
quarter to quarter.

     We plan to increase significantly our operating expenses to fund greater
levels of research and development, expand our sales and marketing operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and administrative functions to address the
increased reporting and other administrative demands, that have resulted from
being a publicly traded company and the increasing size of our business. Our
operating expenses are largely based on anticipated revenue trends and a high
percentage of our expenses are, and will continue to be, fixed in the short
term. As a result, a delay in generating or recognizing revenue for the reasons
set forth above, or for any other reason, could cause significant variations in
our operating results from quarter to quarter and could result in substantial
operating losses.

     Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that in some future quarters, our operating results
may be below the expectations of public market analysts and investors. In this
event, the price of our common stock and the convertible notes may fall.

IF OUR PRODUCTS DO NOT INTEROPERATE WITH OUR CUSTOMERS' NETWORKS, INSTALLATIONS
WILL BE DELAYED OR CANCELLED AND COULD RESULT IN SUBSTANTIAL PRODUCT RETURNS
WHICH COULD HARM OUR BUSINESS.

     Our products are designed to interface with our customers' existing
networks, each of which has different specifications and utilizes multiple
protocol standards. Many of our customers' networks contain multiple generations
of products that have been added over time as these networks have grown and
evolved. Our products must interoperate with all of the products within these
networks as well as future products in order to meet our customers'
requirements. If we find errors in the existing software used in our customers'
networks, we must modify our JUNOS Internet Software to fix or overcome these
errors so that our products will interoperate and scale with the existing
software and hardware. If our products do not interoperate with those of our
customers' networks, installations could be delayed, orders for our products
could be cancelled or our products could be returned. This would also seriously
harm our reputation, which could seriously harm our business and prospects.

BECAUSE OUR PRODUCTS ARE COMPLEX AND ARE DEPLOYED IN COMPLEX ENVIRONMENTS, THEY
MAY HAVE ERRORS OR DEFECTS THAT WE FIND ONLY AFTER FULL DEPLOYMENT, WHICH COULD
SERIOUSLY HARM OUR BUSINESS.

     Our products are highly complex and designed to be deployed in very large
and complex networks. Although we have thoroughly tested our products, because
of the nature of the product, it can only be fully tested when deployed in very
large networks with high amounts of traffic. To date, our products have been
deployed only on a limited basis. Consequently, our customers may discover
errors or defects in the hardware or the software after it has been fully
deployed. If we are unable to fix errors or other problems that may be
identified in full deployment, we could experience:

     -  loss of or delay in revenues and loss of market share;

     -  loss of customers;

     -  failure to achieve market acceptance;

     -  diversion of development resources;

     -  increased service and warranty costs;

     -  legal actions by our customers; and

     -  increased insurance costs.

                                       10
<PAGE>   13

CUSTOMER PRODUCT LIABILITY CLAIMS BASED ON ERRORS IN OUR SOFTWARE OR MISTAKES IN
PERFORMING OUR SERVICES COULD RESULT IN COSTLY LITIGATION AGAINST US.

     We may be subject to claims based on errors in our software or mistakes in
performing our services, including claims relating to damages to our customers'
internal systems. Our contracts with our customers generally contain provisions
designed to limit our exposure to potential product liability claims, such as
disclaimers of warranties and limitations on liability for special,
consequential and incidental damages. We believe our product liability insurance
is adequate to cover potential product liability claims. However, a product
liability claim, whether successful or not, could seriously impact our capital
reserves, harm our reputation, and direct the attention of key personnel away
from our business, any of which could harm our business.

PROBLEMS ARISING FROM USE OF OUR PRODUCTS IN CONJUNCTION WITH OTHER VENDORS'
PRODUCTS COULD DISRUPT OUR BUSINESS AND HARM OUR FINANCIAL CONDITION.

     Service providers typically use our products in conjunction with products
from other vendors. As a result, when problems occur, it may be difficult to
identify the source of the problem. These problems may cause us to incur
significant warranty and repair costs, divert the attention of our engineering
personnel from our product development efforts and cause significant customer
relations problems.

OUR PRODUCTS ARE NEW AND FACE RAPID TECHNOLOGICAL CHANGES AND EVOLVING STANDARDS
AND IF WE DO NOT RESPOND IN A TIMELY MANNER, OUR BUSINESS COULD BE HARMED.

     The Internet infrastructure market is characterized by rapid technological
change, frequent new product introductions, changes in customer requirements and
evolving industry standards. In developing our products, we have made, and will
continue to make, assumptions with respect to which standards will be adopted by
our customers and competitors. If the standards adopted are different from those
which we have chosen to support, market acceptance of our products may be
significantly reduced or delayed and our business will be seriously harmed. In
addition, the introduction of products embodying new technologies and the
emergence of new industry standards could render our existing products obsolete.

     In addition, in order to introduce products embodying new technologies and
new industry standards, we must be able to gain access to the latest
technologies of our suppliers such as IBM. Any failure to gain access to the
latest technologies could harm our business and operating results.

OUR FAILURE TO ESTABLISH AND MAINTAIN KEY CUSTOMER RELATIONSHIPS MAY RESULT IN
DELAYS IN INTRODUCING NEW PRODUCTS OR CAUSE CUSTOMERS TO FOREGO PURCHASING OUR
PRODUCTS.

     Our future success will also depend upon our ability to develop and manage
key customer relationships in order to introduce a variety of new products and
product enhancements that address the increasingly sophisticated needs of our
customers. Our failure to establish and maintain these customer relationships
may adversely affect our ability to develop new products and product
enhancements. In addition, we may experience delays in releasing new products
and product enhancements in the future. Material delays in introducing new
products and enhancements or our inability to introduce competitive new products
may cause customers to forego purchases of our products and purchase those of
our competitors, which could seriously harm our business.

IF WE FAIL TO MANAGE EXPANSION EFFECTIVELY, OUR BUSINESS, FINANCIAL CONDITION
AND PROSPECTS COULD BE SERIOUSLY HARMED.

     Our ability to successfully offer our products and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We continue to
                                       11
<PAGE>   14

increase the scope of our operations domestically and internationally and have
grown our headcount substantially. At December 31, 1998, we had a total of 156
employees and at December 31, 1999, we had a total of 335 employees. In
addition, we plan to continue to hire a significant number of employees this
year. This growth has placed, and our anticipated growth in future operations
will continue to place, a significant strain on our management systems and
resources. We expect that we will need to continue to improve our financial and
managerial controls, reporting systems and procedures, and will need to continue
to expand, train and manage our work force worldwide. Furthermore, we expect
that we will be required to manage multiple relationships with various customers
and other third parties.

WE DEPEND ON OUR KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET AND IF WE ARE UNABLE TO HIRE ADDITIONAL PERSONNEL, OUR ABILITY
TO SELL OUR PRODUCTS COULD BE HARMED.

     Our future success depends upon the continued services of our executive
officers and other key engineering, sales, marketing and support personnel. None
of our officers or key employees is bound by an employment agreement for any
specific term and we do not have "key person" life insurance policies covering
any of our employees.

     We also intend to hire a significant number of engineering, sales,
marketing and support personnel in the future, and we believe our success
depends, in large part, upon our ability to attract and retain these key
employees. Competition for this personnel is intense, especially in the San
Francisco Bay area. In particular, we have experienced difficulty in hiring
qualified ASIC, software, system and test and customer support engineers and
there can be no assurance that we will be successful in attracting and retaining
these individuals. The loss of the services of any of our key employees, the
inability to attract or retain qualified personnel in the future, or delays in
hiring required personnel, particularly engineers and sales personnel, could
delay the development and introduction of and negatively impact our ability to
sell our products.

IF WE BECOME SUBJECT TO UNFAIR HIRING CLAIMS WE COULD INCUR SUBSTANTIAL COSTS IN
DEFENDING OURSELVES.

     Companies in our industry whose employees accept positions with competitors
frequently claim that their competitors have engaged in unfair hiring practices.
We have received claims of this kind in the past and we cannot assure you that
we will not receive claims of this kind in the future as we seek to hire
qualified personnel or that those claims will not result in material litigation.
We could incur substantial costs in defending ourselves against these claims,
regardless of their merits.

OUR BUSINESS WILL BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS FROM THIRD-PARTY CHALLENGES.

     We rely on a combination of patent, copyright, trademark and trade secret
laws and restrictions on disclosure to protect our intellectual property rights.
We also enter into confidentiality or license agreements with our employees,
consultants and corporate partners, and control access to and distribution of
our software, documentation and other proprietary information. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy or otherwise obtain and use our products or technology. Monitoring
unauthorized use of our products is difficult and we cannot be certain that the
steps we have taken will prevent unauthorized use of our technology,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States.

NECESSARY LICENSES OF THIRD-PARTY TECHNOLOGY MAY NOT BE AVAILABLE TO US OR MAY
BE VERY EXPENSIVE.

                                       12
<PAGE>   15

     From time to time we may be required to license technology from third
parties to develop new products or product enhancements. We cannot assure you
that third party licenses will be available to us on commercially reasonable
terms, if at all. The inability to obtain any third-party license required to
develop new products and product enhancements could require us to obtain
substitute technology of lower quality or performance standards or at greater
cost either of which could seriously harm our business, financial condition and
results of operations.

WE COULD BECOME SUBJECT TO LITIGATION REGARDING INTELLECTUAL PROPERTY RIGHTS
WHICH COULD SERIOUSLY HARM OUR BUSINESS.

     In recent years, there has been significant litigation in the United States
involving patents and other intellectual property rights. Although we have never
been involved in any intellectual property litigation, we may be a party to
litigation in the future to protect our intellectual property or as a result of
an alleged infringement of others' intellectual property. Claims for alleged
infringement and any resulting lawsuit, if successful, could subject us to
significant liability for damages and invalidation of our proprietary rights.
These lawsuits, regardless of their success, would likely be time-consuming and
expensive to resolve and would divert management time and attention. Any
potential intellectual property litigation could also force us to do one or more
of the following:

     -  stop selling, incorporating or using our products that use the
        challenged intellectual property;

     -  obtain from the owner of the infringed intellectual property right a
        license to sell or use the relevant technology, which license may not be
        available on reasonable terms, or at all; or

     -  redesign those products that use such technology.

     If we are forced to take any of the foregoing actions, our business may be
seriously harmed. Although we carry general liability insurance, our insurance
may not cover potential claims of this type or may not be adequate to indemnify
us for all liability that may be imposed. For more information concerning our
intellectual property rights, see "Business -- Intellectual Property."

WE FACE RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS THAT COULD HARM OUR
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

     We market, sell and service our products in the United States and
internationally. We have established offices in England, The Netherlands, France
and Germany to market, sell and service our products in Europe and in Japan,
Hong Kong and Australia to market, sell and service our products in the Asia
Pacific region.

     We intend to expand substantially our international operations and enter
new international markets. This expansion will require significant management
attention and financial resources to develop successfully direct and indirect
international sales and support channels. We may not be able to maintain or
increase international market demand for our products.

     We currently have limited experience in marketing and distributing our
products internationally and in developing versions of our products that comply
with local standards. In addition, international operations are subject to other
inherent risks, including:

                                       13
<PAGE>   16

     -  greater difficulty in accounts receivable collection and longer
        collection periods;

     -  difficulties and costs of staffing and managing foreign operations;

     -  the impact of recessions in economies outside the United States;

     -  unexpected changes in regulatory requirements;

     -  certification requirements;

     -  reduced protection for intellectual property rights in some countries;

     -  potentially adverse tax consequences; and

     -  political and economic instability.

     Our export revenues were $22.5 million for the year ended December 31, 1999
and are generally denominated in U.S. dollars. Consequently, we do not currently
engage in currency hedging activities. However, a portion of our international
revenues may be denominated in foreign currencies in the future.

ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR FINANCIAL
CONDITION.

     We intend to make investments in complementary companies, products or
technologies. In the event of any such investments or acquisitions, we could:

     -  issue stock that would dilute our current stockholders' percentage
        ownership;

     -  incur debt;

     -  assume liabilities;

     -  incur amortization expenses related to goodwill and other intangible
        assets; or

     -  incur large and immediate write-offs.

     These acquisitions also involve numerous risks, including:

     -  problems combining the purchased operations, technologies or products;

     -  unanticipated costs;

     -  diversion of management's attention from our core business;

     -  adverse effects on existing business relationships with suppliers and
        customers;

     -  risks associated with entering markets in which we have no or limited
        prior experience; and

     -  potential loss of key employees, particularly those of the acquired
        organizations.

     We cannot assure you that we will be able to successfully integrate any
businesses, products, technologies or personnel that we might acquire in the
future.

RISKS RELATED TO THE CONVERTIBLE NOTES

SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
FLOW.

     We will have substantial amounts of outstanding indebtedness, primarily the
convertible notes, upon the completion of this offering. As a result of this
indebtedness, our principal and interest payment obligations will increase
substantially. There is the possibility that we may be unable to generate cash
sufficient to pay the principal of, interest on and other amounts due in respect
of our indebtedness when due. We may also add additional equipment loans and
lease lines to finance capital expenditures and may obtain additional long term
debt, working capital lines of credit and lease lines.
                                       14
<PAGE>   17

     Our substantial leverage could have significant negative consequences,
including:

     -  increasing our vulnerability to general adverse economic and industry
        conditions;

     -  limiting our ability to obtain additional financing;

     -  requiring the dedication of a substantial portion of our expected cash
        flow from operations to service our indebtedness, thereby reducing the
        amount of our expected cash flow available for other purposes, including
        capital expenditures;

     -  limiting our flexibility in planning for, or reacting to, changes in our
        business and the industry in which we compete; and

     -  placing us at a possible competitive disadvantage relative to less
        leveraged competitors and competitors that have better access to capital
        resources.

THE CONVERTIBLE NOTES WILL RANK BELOW FUTURE SENIOR DEBT WE MAY INCUR, AND WE
MAY BE UNABLE TO REPAY OUR OBLIGATIONS UNDER THE CONVERTIBLE NOTES.

     The convertible notes will be unsecured and subordinated in right of
payment to all future senior debt we may incur. Because the convertible notes
will be subordinate to our senior debt, if we experience a bankruptcy,
liquidation or reorganization; an acceleration of the convertible notes due to
an event of default under the indenture; or other specified events, we will be
permitted to make payments on the convertible notes only after we have satisfied
all of our senior debt obligations. Therefore, we may not have sufficient assets
remaining to pay amounts due on any or all of the convertible notes. In
addition, the convertible notes effectively will be subordinate to all
liabilities, including trade payables, of our subsidiaries and any subsidiaries
that we may in the future acquire or establish. Consequently, our right to
receive assets of any subsidiaries upon their liquidation or reorganization, and
the rights of the holders of the convertible notes to share in those assets,
would be subordinate to the claims of the subsidiaries' creditors.

     The convertible notes will be our obligations exclusively. The indenture
for the convertible notes does not limit our ability, or that of any of our
presently existing or future subsidiaries, to incur senior debt, other
indebtedness and other liabilities. We may have difficulty paying what we owe
under the convertible notes if we, or any of our subsidiaries, incur additional
indebtedness or other liabilities. From time to time we and our subsidiaries may
incur additional indebtedness, including senior debt, which could adversely
affect our ability to pay our obligations under the convertible notes.

WE MAY BE UNABLE TO REPAY OR REPURCHASE THE CONVERTIBLE NOTES.

     At maturity, the entire outstanding principal amount of the convertible
notes will become due and payable. In addition, if we experience a change in
control, as defined in "Description of the Convertible Notes-Repurchase at
Option of Holders Upon a Change in Control", each holder of the convertible
notes may require us to repurchase all or a portion of that holder's convertible
notes. At maturity or if a change in control occurs, we may not have sufficient
funds or may be unable to arrange for additional financing to pay the principal
amount or repurchase price due. Under the terms of the indenture for the
convertible notes, we may elect, if we meet certain conditions, to pay the
repurchase price upon a change in control with shares of our common stock. Any
future borrowing arrangements or agreements relating to senior debt to which we
become a party may contain restrictions on, or prohibitions against, our
repayments or repurchases of the convertible notes. If the maturity date or
change in control occurs at a time when our other arrangements prohibit us from
repaying or repurchasing the convertible notes, we could try to obtain the
consent of the lenders under those arrangements, or we could attempt to
refinance the borrowings that contain the restrictions. If we do not obtain the
necessary consents or refinance these borrowings, we will be unable to repay or
repurchase the convertible
                                       15
<PAGE>   18

notes. In that case, our failure to repurchase any tendered convertible notes or
repay the convertible notes due upon maturity would constitute an event of
default under the indenture. Any such default, in turn, may cause a default
under the terms of our senior debt. As a result, in those circumstances, the
subordination provisions of the indenture would, absent a waiver, prohibit any
repayment or repurchase of the convertible notes until we pay the senior debt in
full.

THE PRICE OF OUR COMMON STOCK AND THEREFORE THE PRICE OF OUR CONVERTIBLE NOTES
MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY RESULT IN LOSSES FOR INVESTORS.

     The market price for our common stock may be volatile. We expect our stock
price to be subject to fluctuations as a result of a variety of factors,
including factors beyond our control. These include:

     -  quarterly variations in operating results;

     -  changes in financial estimates by securities analysts;

     -  changes in market valuations of Internet related companies;

     -  announcements by us or our competitors of new products or of significant
        acquisitions, strategic partnerships or joint ventures;

     -  any loss of a major customer;

     -  additions or departures of key personnel;

     -  any deviations in net revenues or in losses from levels expected by
        securities analysts;

     -  future sales of common stock; and

     -  volume fluctuations, which are particularly common among highly volatile
        securities of Internet related companies.

     We may fail to meet the expectations of our stockholders or of securities
analysts at some time in the future, and our stock price, and therefore the
price of our convertible notes, could decline as a result.

THERE MAY BE NO PUBLIC MARKET FOR THE CONVERTIBLE NOTES.

     Prior to this offering, there has been no trading market for the
convertible notes. Although the underwriters have advised us that they currently
intend to make a market in the convertible notes, they are not obligated to do
so and may discontinue their market-making activities at any time without
notice. Consequently, we cannot ensure that any market for the convertible notes
will develop, or if one does develop, that it will continue for any period of
time. If an active market for the convertible notes fails to develop or
continue, this failure could harm the trading price of the convertible notes. We
do not intend to apply for listing of the notes on any securities exchange or
any automated quotation system.

MANAGEMENT MAY APPLY THE PROCEEDS OF THIS OFFERING TO USES THAT DO NOT INCREASE
OUR PROFITS OR MARKET VALUE.

     The net proceeds from the sale of the convertible notes have not been
allocated for a particular purpose. We intend to use the net proceeds for
general corporate purposes and working capital. In addition, we may use the net
proceeds to make investments in and acquisitions of complementary businesses,
partnerships, minority investments, products or technologies, although no
agreement or understanding with respect to any future acquisition or investment
has been reached. Our management will have significant discretion as to the use
of the net proceeds of the offering and you will not have the opportunity, as
part of your investment decision, to assess whether the proceeds are being used
appropriately. The net proceeds from

                                       16
<PAGE>   19

this offering may be applied to uses that ultimately may not increase our
operating results or our market value. See "How We Intend to Use the Proceeds
From This Offering."

OUR EXECUTIVE OFFICERS AND DIRECTORS WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL
OVER JUNIPER NETWORKS AFTER THIS OFFERING, WHICH COULD ENABLE THEM TO CONTROL
OUR BUSINESS AND AFFAIRS.

     Our executive officers, directors and entities affiliated with them,
beneficially own approximately 40% of our outstanding common stock as of
December 31, 1999. These stockholders, if acting together, would be able to
influence significantly all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions. See "Principal Stockholders."

PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT COULD
PREVENT A CHANGE IN OUR CONTROL.

     Provisions of our amended and restated certificate of incorporation,
bylaws, and Delaware law could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders. See
"Description of Capital Stock."

                   NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify
forward-looking statements. This prospectus also contains forward-looking
statements attributed to third parties relating to their estimates regarding the
growth of Internet use. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us and
described in the preceding pages and elsewhere in this prospectus.

              HOW WE INTEND TO USE THE PROCEEDS FROM THIS OFFERING

     We are offering $500,000,000 of convertible notes. After deducting the
underwriters' discounts and estimated offering expenses, we anticipate retaining
approximately $486,700 of the proceeds from the sale of the convertible notes,
assuming a sale of the convertible notes at 100% of the principal amount. We
anticipate retaining approximately $559,825 if the underwriters exercise their
over-allotment option in full.

     We intend to use our net proceeds from this offering for general corporate
purposes and working capital requirements. We may also use a portion of the net
proceeds to fund possible investments in and acquisitions of complementary
businesses, partnerships, minority investments, products or technologies.
Currently there are no commitments or agreements regarding any such acquisitions
or investments. Pending their ultimate use, we intend to invest the net proceeds
from this offering in short-term and long-term securities.

                                       17
<PAGE>   20

                          PRICE RANGE OF COMMON STOCK

     Our common stock has been quoted on the Nasdaq National Market under the
symbol "JNPR" since June 25, 1999. Prior to that time, there was no public
market for the common stock. The following table sets forth, for the periods
indicated, the high and low closing prices per share of the common stock as
reported on the Nasdaq National Market. All per share amounts have been adjusted
to reflect the three-for-one split of our common stock paid to stockholders of
record on December 31, 1999.

<TABLE>
<CAPTION>
                                                                 HIGH        LOW
                                                                -------    -------
<S>                                                             <C>        <C>
1999
Second Quarter (since June 25, 1999)........................    $ 49.66    $ 32.96
Third Quarter...............................................    $ 75.67    $ 41.67
Fourth Quarter..............................................    $118.17    $ 60.71
2000
First Quarter (through February 3, 2000)....................    $154.94    $102.58
</TABLE>

     On February 3, 2000 the reported last sale price of the common stock on the
Nasdaq National Market was $154.94. As of December 31, 1999 there were
approximately 300 stockholders of record.

                                DIVIDEND POLICY

     We have never declared or paid any dividends on our capital stock. We
currently expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any dividends in the
foreseeable future.

                                       18
<PAGE>   21

                                 CAPITALIZATION

     The following table sets forth our actual capitalization as of December 31,
1999, and our capitalization as adjusted to give effect to the issuance of
$500,000,000 in convertible notes being offered hereby at an assumed initial
public offering price of 100% principal amount. You should read this table in
conjunction with our consolidated financial statements and the related notes
included elsewhere herein.

<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 1999
                                                              -----------------------
                                                               ACTUAL     AS ADJUSTED
                                                              --------    -----------
                                                               (IN THOUSANDS, EXCEPT
                                                                SHARE AND PER SHARE
                                                                     AMOUNTS)
<S>                                                           <C>         <C>
Debt:
     % Convertible Subordinated Notes due February 15,
  2007......................................................  $     --     $500,000
Other long-term debt........................................        --           --
Stockholders' equity:
  Convertible preferred stock, $0.00001 par value,
     10,000,000 shares authorized, none issued or
     outstanding (actual and as adjusted)...................        --           --
  Common stock, $0.00001 par value, 200,000,000 shares
     authorized, 155,938,599 shares issued and outstanding
     (actual and as adjusted)(1)............................         2            2
  Additional paid-in capital................................   513,696      513,696
  Deferred stock compensation...............................    (3,001)      (3,001)
  Accumulated other comprehensive loss......................      (815)        (815)
  Accumulated deficit.......................................   (52,167)     (52,167)
                                                              --------     --------
     Total stockholders' equity.............................   457,715      457,715
                                                              --------     --------
       Total capitalization.................................  $457,715     $957,715
                                                              ========     ========
</TABLE>

- ---------------

(1) Based on shares outstanding as of December 31, 1999. It excludes: (a)
    24,365,521 shares of common stock reserved for issuance under our Amended
    1996 Stock Option Plan, of which 22,469,165 shares were subject to
    outstanding options at a weighted average exercise price of $25.11 per share
    and 1,896,356 shares available for future grants, and (b) 1,500,000 shares
    available for issuance under our 1999 Employee Stock Purchase Plan. Shares
    issued and outstanding and shares reserved for issuance have been adjusted
    to reflect the three-for-one split of our common stock to be paid to
    stockholders of record on December 31, 1999. See "Description of Capital
    Stock" and Note 5 to the Consolidated Financial Statements.

                                       19
<PAGE>   22

                      SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
related notes thereto included elsewhere herein. The consolidated statement of
operations data set forth below for the fiscal years ended December 31, 1999,
1998 and 1997, and the consolidated balance sheet data as of December 31, 1999
and 1998 have been derived from our audited consolidated financial statements
included elsewhere herein, which have been audited by Ernst & Young LLP,
independent auditors. The consolidated statement of operations data set forth
below for the period from February 2, 1996 (inception) to December 31, 1996, and
the consolidated balance sheet data as of December 31, 1997 have been derived
from our audited consolidated financial statements not included or incorporated
by reference elsewhere herein, which have been audited by Ernst & Young LLP,
independent auditors. The consolidated balance sheet data at December 31, 1996
are derived from unaudited consolidated financial statements that are not
included or incorporated by reference herein. The historical results are not
necessarily indicative of results to be expected for any future period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
                                                                                                    PERIOD FROM
                                                                                                     INCEPTION
                                                                                                   (FEBRUARY 2,
                                                                 YEAR ENDED DECEMBER 31,             1996) TO
                                                              ------------------------------       DECEMBER 31,
                                                                1999       1998       1997             1996
                                                              --------   --------   --------   ---------------------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                           <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues...............................................   $102,606   $  3,807   $     --         $     --
Cost of revenues...........................................     45,272      4,416         --               --
                                                              --------   --------   --------         --------
Gross profit (loss)........................................     57,334       (609)        --               --
Operating expenses:
  Research and development.................................     41,502     23,987      9,406            1,850
  Sales and marketing......................................     20,931      4,216      1,149               --
  General and administrative...............................      5,235      2,223      1,043               89
  Amortization of goodwill and purchased intangibles and
    deferred stock compensation............................      4,286      1,235         --               --
                                                              --------   --------   --------         --------
    Total operating expenses...............................     71,954     31,661     11,598            1,939
                                                              --------   --------   --------         --------
Operating loss.............................................    (14,620)   (32,270)   (11,598)          (1,939)
Interest income, net.......................................      8,011      1,301      1,235              140
                                                              --------   --------   --------         --------
Loss before income taxes...................................     (6,609)   (30,969)   (10,363)          (1,799)
Provision for income taxes.................................      2,425          2         --               --
                                                              --------   --------   --------         --------
Net loss...................................................   $ (9,034)  $(30,971)  $(10,363)        $ (1,799)
                                                              ========   ========   ========         ========
Basic and diluted net loss per share(1)....................   $  (0.10)  $  (0.80)  $  (0.40)        $  (0.15)
                                                              ========   ========   ========         ========
Shares used in computing basic and diluted net loss per
  share(1).................................................     94,661     38,871     25,773           11,874
                                                              ========   ========   ========         ========
Pro forma basic and diluted net loss per share
  (unaudited)(1)...........................................   $  (0.07)  $  (0.28)
                                                              ========   ========
Shares used in computing pro forma basic and diluted net
  loss per share (unaudited)(1)............................    131,480    111,210
                                                              ========   ========
OTHER DATA:
Ratio of earnings to fixed charges.........................         --(2)       --(2)       --(2)             --(3)
</TABLE>

- ---------------
(1) See Note 1 of notes to consolidated financial statements for an explanation
    of the determination of the shares used to compute net loss per share. All
    share and per share amounts have been adjusted to reflect the three-for-one
    split of our common stock to be paid to stockholders of record on December
    31, 1999.

(2) The pre-tax loss from continuing operations for the years ended December 31,
    1999, 1998 and 1997 are not sufficient to cover fixed charges by a total of
    approximately $6.6 million in 1999, $31.0 million in 1998 and $10.4 million
    in 1997. As a result, the ratio of earnings to fixed charges has not been
    computed for any of these years.

(3) The ratio of earnings to fixed charges calculation is not applicable as
    there were no fixed charges during this period.

                                       20
<PAGE>   23

<TABLE>
<CAPTION>
                                                      AS OF DECEMBER 31,
                                  -----------------------------------------------------------
                                           1999              1998       1997         1996
                                  ----------------------   --------   --------   ------------
                                   ACTUAL    AS ADJUSTED
                                  --------   -----------
<S>                               <C>        <C>           <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA
  (IN THOUSANDS):
Cash, cash equivalents, and
  short-term investments.......   $345,958   $  832,658    $ 20,098   $ 46,227     $  9,468
Working capital................    322,170      808,870      14,432     44,691        9,315
Long-term investments..........     97,201       97,201          --         --           --
Total assets...................    513,378    1,013,378      36,671     50,210       10,388
Total debt.....................         --      500,000       5,204      2,083          408
Stockholders' equity...........    457,715      457,715      17,065     46,048        9,728
</TABLE>

                                       21
<PAGE>   24

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and our consolidated financial statements
and the related notes thereto included elsewhere herein. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in the
forward-looking statements as a result of certain factors including the risks
discussed in "Risk Factors" and elsewhere herein.

OVERVIEW

     We are a leading provider of Internet infrastructure solutions that enable
Internet service providers and other telecommunications service providers,
collectively described in this discussion as service providers, to meet the
demands resulting from the rapid growth of the Internet. Our Internet backbone
routers are specifically designed and purpose-built for service provider
networks and offer our customers increased reliability, performance,
scalability, interoperability and flexibility, and reduced complexity and cost
compared to current alternatives.

     In September 1998 we began shipping our first product, the M40 Internet
backbone router, with volume shipments beginning in October 1998. We began
shipping the M20, a derivative of the M40, in December 1999. We currently sell
our products to major service providers in North America through our direct
sales force and sell to international customers primarily through value added
resellers.

     From our inception in February 1996 through September 1998, our operating
activities were primarily devoted to expanding our research and development
capabilities, designing our ASICs, developing our software, developing and
testing the M40 and developing other products. We also expanded our
administrative, marketing and sales organizations and implemented strategic
relationships. Since our inception, we have incurred significant losses, and as
of December 31, 1999, we had an accumulated deficit of $52.2 million. We
achieved our first quarter of profitability for the quarter ended December 31,
1999. In order to maintain profitability, we will need to generate significantly
higher revenues because we expect to continue to incur significant research and
development, sales and marketing and general and administrative expenses as the
business and operations continue to grow.

RESULTS OF OPERATIONS

NET REVENUES

     We began generating net revenues in the fourth quarter of 1998. Our total
net revenue increased to $102.6 million for the year ended December 31, 1999
from $3.8 million for the year ended December 31, 1998. The increase in net
revenues was primarily due to the following three factors: 1999 being the first
full year of product sales; an increase in market acceptance of our products;
and overall growth in the marketplace due to the growth of the Internet and an
increase in emerging customers and networks.

     Our revenues for the year ended December 31, 1999 were derived from sales
of one product, the M40. While we have introduced new products, such as the M20,
and plan to continue to introduce new products, there can be no assurance that
we will be successful in these efforts or that such products will be
well-received by our existing and potential customer base. A limited number of
customers have historically accounted for a substantial portion of our revenues.
Two customers accounted for 58% of our total net revenues for the year ended
December 31, 1999 and two customers accounted for 100% of our revenues for the
year ended December 31, 1998. We expect that a significant portion of our future
revenues will continue to come from sales of our products to a relatively small
number of customers because our direct

                                       22
<PAGE>   25

sales and marketing efforts are focused primarily on the world's leading service
providers. For the year ended December 31, 1999, export sales accounted for 22%
of our total net revenue. We are seeking to diversify our customer base, but we
cannot be certain that our efforts in this regard will be successful.

     Because the market for Internet backbone routers is new and evolving, the
volume and timing of orders are difficult to predict. A customer's decision to
purchase our products typically involves a significant commitment of their
resources and a lengthy evaluation and product qualification process which
involves technical evaluation, integration, testing, network planning and
implementation and typically takes several months. Even after making the
decision to purchase our products, our customers tend to deploy the products
slowly and deliberately. Timing of deployment can vary widely. Customers with
large networks usually expand their networks in large increments on a periodic
basis. Accordingly, we expect to receive purchase orders for significant dollar
amounts on an irregular basis. Because of our limited operating history, we
cannot predict these sales and development cycles. Long sales and implementation
cycles for our products, as well as the expectation that customers will tend to
sporadically place large orders with short lead times, may cause revenues and
operating results to vary significantly and unexpectedly from quarter to
quarter. Historically, selling prices in the Internet infrastructure equipment
market have been relatively stable. However, as competitors launch new products,
this pricing trend may change.

     We generally recognize product revenue at the time of shipment, assuming
that collectibility is probable, unless we have future obligations for network
interoperability or have to obtain customer acceptance, in which case revenue is
deferred until these obligations are met. Revenue from service obligations is
deferred and recognized on a straight-line basis over the contractual period.
Amounts billed in excess of revenue recognized are included as deferred revenue
and accounts receivable in the accompanying consolidated balance sheets.

     At December 31, 1999, a total of $19.3 million of revenue was deferred,
which we currently expect to recognize in 2000. Our products generally carry a
one year warranty that includes factory repair services as needed for
replacement parts. Estimated expenses for warranty obligations are accrued as
revenue is recognized.

COST OF REVENUES

     Cost of revenues for the year ended December 31, 1999, were $45.3 million
resulting in a gross margin of 55.9% for the year. Cost of revenues for the year
ended December 31, 1998 were $4.4 million. The increase in cost of revenues is
primarily related to the increase in net revenues, as well as increases in our
customer service and support organizations. We expect cost of revenues to
continue to increase as net revenues increase. Our gross margins are highly
variable and dependent on many factors, some of which are outside of our
control. Some of the primary factors affecting gross margins include:

     -  demand for our products and services;

     -  changes in our pricing policies and those of our competitors;

     -  new product introductions both by us and by our competitors;

     -  the mix of interfaces sold;

     -  the volume manufacturing pricing we are able to attain from our partner
        for outsourced manufacturing; and

     -  the mix of products and services sold.

     Cost of revenues includes the cost of our manufacturing overhead and
customer service and support organizations. We have outsourced our
manufacturing, our repair operations and the

                                       23
<PAGE>   26

majority of our supply chain management operations. Accordingly, a significant
portion of our cost of revenues consists of payments to Solectron, our primary
contract manufacturer. Solectron manufactures our products using quality
assurance programs and standards which we established. Manufacturing engineering
and documentation control are conducted at our facility in Mountain View,
California.

RESEARCH AND DEVELOPMENT EXPENSES

     Research and development expenses increased to $41.5 million in 1999 from
$24.0 million in 1998 and $9.4 million in 1997. Research and development
expenses consist primarily of salaries and related personnel costs,
non-recurring engineering charges and prototype costs related to the design,
development, testing and enhancement of our ASICs. The increase associated with
headcount increases accounted for 40% of the increase from 1998 to 1999 and 30%
of the increase from 1997 to 1998. Non-recurring engineering and prototype costs
accounted for approximately 20% of the increase from 1998 to 1999 and 50% of the
increase from 1997 to 1998.

     We expense our research and development costs as they are incurred. Several
components of our research and development effort require significant
expenditures, the timing of which can cause significant quarterly variability in
our expenses. For example, a large number of prototypes are required to build
and test our products and the building and testing process occurs over a short
period of time. Our ASIC development requires a payment for non-recurring
engineering charges at the beginning of the process to design and develop the
ASIC, regardless of whether the integrated circuit works. In addition, a per
unit cost is payable as we purchase ASICs. With several large ASICs in our
architecture, we will incur large non-recurring engineering and prototype
expenses with every enhancement of the existing products and for any new product
development. We expect to continue to devote substantial resources to the
development of new products and the enhancement of existing products. We believe
that research and development is critical to our strategic product development
objectives and that to leverage our leading technology and meet the changing
requirements of our customers, we will need to fund investments in several
development projects in parallel. As a result, we expect our research and
development expenses to increase in absolute dollars in the future.

SALES AND MARKETING EXPENSES

     Sales and marketing expenses increased to $20.9 million in 1999 from $4.2
million in 1998, and $1.1 million in 1997. The increases from period to period
in sales and marketing expenses were primarily attributable to salaries,
commissions (resulting from increased sales) and related expenses for personnel
engaged in sales, marketing and customer engineering support functions,
including international expansion, as well as costs associated with promotional
and other marketing expenses.

     We intend to expand our direct and indirect sales operations substantially,
both domestically and internationally, in order to increase market awareness of
our products and to better support our existing customers worldwide. We believe
that continued investment in sales and marketing is critical to our success and
expect these expenses to increase in absolute dollars in the future as we hire
additional sales and marketing personnel, initiate additional marketing programs
to support our products and establish sales offices in new domestic and
international locations.

GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses increased to $5.2 million in 1999 from
$2.2 million in 1998 and $1.0 million in 1997. General and administrative
expenses consist primarily of salaries and related expenses for executive,
finance, accounting, facilities, and human resources personnel, as well as
recruiting expenses, professional fees and other corporate expenses. The
increases from period to period in general and administrative expenses were
primarily

                                       24
<PAGE>   27

attributable to the costs associated with additional headcount to support
increased levels of business activity. In addition, the increase from 1998 to
1999 was also due to costs associated with being a publicly traded company. We
expect general and administrative expenses to increase in absolute dollars as we
add personnel and incur additional costs related to the growth of our business
and our operation as a public company.

AMORTIZATION OF GOODWILL AND PURCHASED INTANGIBLES AND DEFERRED STOCK
COMPENSATION

     In connection with the grant of certain stock options to employees during
1998 and the three months ended March 31, 1999, we recorded deferred
compensation of $6.4 million in 1998 and $1.1 million in 1999 representing the
difference between the deemed value of the common stock for accounting purposes
and the exercise price of these options at the date of grant. Deferred
compensation is presented as a reduction of stockholders' equity and is
amortized over the vesting period of the applicable options using the graded
vesting method. This compensation expense relates to stock options granted to
individuals in all operating expense categories. In November 1999, we acquired
certain intellectual property and intangible assets resulting in our recording
of $18.4 million of goodwill and other intangibles. The goodwill and other
intangibles will be amortized over a three-year period. We expensed $4.3 million
of goodwill and purchased intangibles and deferred compensation during 1999, and
$1.2 million of deferred compensation during 1998.

INTEREST INCOME, NET

     Net interest income includes income earned on cash and investments
partially offset by expenses related to financing obligations. Net interest
income was $8.0 million in 1999, $1.3 million in 1998 and $1.2 million in 1997.
The increase from 1998 to 1999 is directly due to interest earned on large cash
and investment balances as a result of our initial public offering in June 1999
and our secondary offering in October 1999.

PROVISION FOR INCOME TAXES

     We recorded a tax provision of $2.4 million for the year ended December 31,
1999. The provision for income taxes consists primarily of federal alternative
minimum taxes, state taxes and foreign taxes. As of December 31, 1999 we had
approximately $37.0 million of federal net operating loss carryforwards and
$32.0 million of state net operating loss carryforwards for tax reporting
purposes available to offset future taxable income. Such net operating loss
carryforwards expire at various dates beginning in 2004 to the extent that they
are not utilized. We have not recognized any benefit from the future use of loss
carryforwards for these periods, or for any other periods, since inception.
Management's evaluation of all the underlying assumptions of future profitable
operations contain risks that do not provide sufficient assurance to recognize
the tax benefits currently.

                                       25
<PAGE>   28

                        QUARTERLY RESULTS OF OPERATIONS

     The following table presents our operating results for each quarter during
the years ended December 31, 1999 and 1998. The information for each of these
quarters is unaudited and has been prepared on the same basis as the audited
financial statements appearing elsewhere herein. In the opinion of management,
all necessary adjustments consisting only of normal recurring adjustments, have
been included to present fairly the unaudited quarterly results when read in
conjunction with our audited consolidated financial statements and the related
notes appearing elsewhere herein. These operating results are not necessarily
indicative of the results of any future period.

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                              ---------------------------------------------------
                                              DECEMBER 31,   SEPTEMBER 30,   JUNE 30,   MARCH 31,
                                                  1999           1999          1999       1999
                                              ------------   -------------   --------   ---------
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>            <C>             <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues...............................     $45,442         $29,564      $17,556     $10,044
Cost of revenues...........................      18,389          12,490        8,046       6,347
                                                -------         -------      -------     -------
  Gross profit.............................      27,053          17,074        9,510       3,697
Operating expenses:
  Research and development.................      15,820          11,510        7,991       6,181
  Sales and marketing......................       8,869           5,610        3,849       2,603
  General and administrative...............       1,781           1,701          977         776
  Amortization of goodwill and purchased
     intangibles and deferred stock
     compensation..........................       1,689             802          891         904
                                                -------         -------      -------     -------
     Total operating expenses..............      28,159          19,623       13,708      10,464
                                                -------         -------      -------     -------
Operating loss.............................      (1,106)         (2,549)      (4,198)     (6,767)
Interest income and provision for income
  taxes, net...............................       4,186             962          346          92
                                                -------         -------      -------     -------
Net income (loss)..........................     $ 3,080         $(1,587)     $(3,852)    $(6,675)
                                                =======         =======      =======     =======
Basic net income (loss) per share..........     $  0.02         $ (0.01)     $ (0.07)    $ (0.15)
                                                =======         =======      =======     =======
Diluted net income (loss) per share........     $  0.02         $ (0.01)     $ (0.07)    $ (0.15)
                                                =======         =======      =======     =======
</TABLE>

                                       26
<PAGE>   29

<TABLE>
<CAPTION>
                                                                 QUARTER ENDED
                                              ---------------------------------------------------
                                              DECEMBER 31,   SEPTEMBER 30,   JUNE 30,   MARCH 31,
                                                  1998           1998          1998       1998
                                              ------------   -------------   --------   ---------
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>            <C>             <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues...............................     $ 3,807        $     --      $    --     $    --
Cost of revenues...........................       3,815             382          180          39
                                                -------        --------      -------     -------
  Gross loss...............................          (8)           (382)        (180)        (39)
Operating expenses:
  Research and development.................       6,145           8,284        6,061       3,497
  Sales and marketing......................       1,718           1,215          764         519
  General and administrative...............         882             562          444         335
  Amortization of deferred stock
     compensation..........................         648             374          192          21
                                                -------        --------      -------     -------
     Total operating expenses..............       9,393          10,435        7,461       4,372
                                                -------        --------      -------     -------
Operating loss.............................      (9,401)        (10,817)      (7,641)     (4,411)
Interest income and provision for income
  taxes, net...............................         117             238          438         506
                                                -------        --------      -------     -------
Net loss...................................     $(9,284)       $(10,579)     $(7,203)    $(3,905)
                                                =======        ========      =======     =======
Basic and diluted loss per share...........     $ (0.22)       $  (0.27)     $ (0.20)    $ (0.12)
                                                =======        ========      =======     =======
</TABLE>

     Our revenues and operating results will vary significantly from quarter to
quarter due to a number of factors, many of which are outside of our control and
any of which may cause the price of our common stock and the convertible notes
to fluctuate. The primary factors that may affect us include the following:

     -  demand for our products;

     -  the timing of sales of our products;

     -  the timing of recognizing revenue and deferred revenue;

     -  new product introductions by our competitors;

     -  changes in our pricing policies or the pricing policies of our
        competitors;

     -  our ability to develop, introduce and ship new products and product
        enhancements that meet customer requirements in a timely manner;

     -  our ability to obtain sufficient supplies of sole or limited source
       components;

     -  increases in the prices of the components we purchase;

     -  our ability to attain and maintain production volumes and quality levels
       for the M40;

     -  decisions by end-users to reallocate their information resources to
       other purposes;

     -  Internet growth and demand for Internet infrastructure;

     -  prototype expenses;

     -  costs related to acquisitions of technology or businesses; and

     -  general economic conditions as well as those specific to the Internet
       and related industries.

     In addition, we are dependent on decisions by customers to build their
Internet infrastructure, which decisions are in turn dependent upon the success
and expected demand for the services

                                       27
<PAGE>   30

offered by those customers. Furthermore, the long sales and implementation
cycles for the M40, as well as the degree to which customers will sporadically
place large orders with short lead times, may cause revenues and operating
results to vary significantly from quarter to quarter.

     We plan to increase significantly our operating expenses to fund greater
levels of research and development, expand our sales and marketing operations,
broaden our customer support capabilities and develop new distribution channels.
We also plan to expand our general and administrative functions to address the
increased reporting and other administrative demands, which have resulted from
being a publicly traded company and the increasing size of our business. Our
operating expenses are largely based on anticipated revenue trends, and a high
percentage of our expenses are and will continue to be fixed in the short term.
As a result, a delay in generating or recognizing revenue for the reasons set
forth above or for any other reason could cause significant variations in our
operating results from quarter to quarter and could result in substantial
operating losses.

     Due to the foregoing factors, we believe that quarter-to-quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that in some future quarters, our operating results
may be below the expectations of public market analysts and investors. In this
event, the price of our common stock and the convertible notes may fall.

LIQUIDITY AND CAPITAL RESOURCES

     Prior to our initial public offering, we financed operations primarily
through the private placement of convertible preferred stock and capital leases.
In June 1999, we completed the initial public offering of our common stock and
realized net proceeds from the offering of approximately $65.2 million. In
October 1999, we completed a secondary public offering of our common stock and
realized net proceeds from the offering of $324.3 million. At December 31, 1999,
we had cash and cash equivalents of $158.0 million, short-term investments of
$187.9 million and long-term investments of $97.2 million. We regularly invest
our excess funds in short-term money market funds, commercial paper and
government and non-government debt securities.

     Net cash provided by operating activities was $20.5 million for the year
ended December 31, 1999. Net cash used in operating activities was $24.8 million
for the year ended December 31, 1998 and $8.6 million for the year ended
December 31, 1997. Net cash flows used in operating activities primarily consist
of the net loss for all periods, as well as increases in accounts receivable for
the years ending December 31, 1999 and 1998. Net cash provided by operating
activities in each period are primarily attributed to non-cash charges such as
depreciation and amortization, as well as increases in accounts payable and
other liabilities and deferred revenue for the years ended December 31, 1999 and
1998.

     Net cash used in investing activities was $305.4 million for the year ended
December 31, 1999 and $13.0 million for the year ended December 31, 1997. Net
cash provided by investing activities was $9.3 million for the year ended
December 31, 1998. Net cash used in investing activities for all periods
primarily consisted of purchases of available for sale investments, as well as
purchases of property and equipment. Net cash provided by investing activities
for all periods consisted entirely of maturities of available-for-sale
investments.

     Net cash provided by financing activities was $422.9 million for the year
ended December 31, 1999, primarily from the net proceeds of our initial and
secondary public offerings, as well as our convertible preferred stock offering,
partially offset by payments on lease obligations. Net cash provided by
financing activities was $5.2 million for the year ended December 31, 1998,
primarily from proceeds from sale-leaseback liabilities, partially offset by
payments on lease obligations. Net cash provided by financing activities was
$48.5 million for the year ended December 31, 1997, primarily from the net
proceeds from private sales of convertible preferred stock, as well as proceeds
from sale-leaseback liabilities.
                                       28
<PAGE>   31

     Our capital requirements depend on numerous factors, including:

     - market acceptance of our products;

     - the resources we devote to developing, marketing, selling and supporting
       our products; and

     - the timing and extent of establishing international operations.

     We expect to devote substantial capital resources to continue our research
and development efforts, to hire and expand our sales, support, marketing and
product development organizations, to expand marketing programs, to establish
additional facilities worldwide and for other general corporate activities.
Although we believe that our current cash balances will be sufficient to fund
our operations for at least the next 12 months, there can be no assurance that
we will not require additional financing within this time frame or that such
additional funding, if needed, will be available on terms acceptable to us or at
all.

YEAR 2000

     We have not experienced any problems with our computer systems relating to
such systems being unable to recognize appropriate dates related to the year
2000. We are also not aware of any material problems with our clients or
vendors. Accordingly, we do not anticipate incurring material expenses or
experiencing any material operational disruptions as a result of any Year 2000
issues.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. FAS No. 133, as
amended, establishes methods for derivative financial instruments and hedging
activities related to those instruments, as well as other hedging activities. We
are required to adopt FAS No. 133 effective January 1, 2001. Because we do not
currently hold any derivative instruments and do not engage in hedging
activities, we do not currently believe that the adoption of FAS No. 133, as
amended, will have a significant impact on our financial position, results of
operations or cash flows.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, or SAB 101. This summarizes certain areas of the
Staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. We believe that our current revenue
recognition principles comply with SAB 101.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET INTEREST RATE SENSITIVITY

     The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we have
invested in may be subject to market risk. This means that a change in
prevailing interest rates may cause the principal amount of the investment to
fluctuate. For example, if we hold a security that was issued with a fixed
interest rate at the then-prevailing rate and the prevailing interest rate later
rises, the principal amount of our investment will probably decline. To minimize
this risk, we maintain our portfolio of cash equivalents and short-and long-term
investments in a variety of securities, including commercial paper, money market
funds and government and non-government debt securities. In general, money
market funds are not subject to market risk because the interest paid on such
funds fluctuates with the prevailing interest rate. See Note 2 to the
Consolidated Financial Statements.

                                       29
<PAGE>   32

     The following table presents the amounts of cash equivalents and
investments that are subject to market risk and the weighted average interest
rates, by year of expected maturity for our investment portfolios as of December
31, 1999 and December 31, 1998. This table does not include money market funds
because those funds are not subject to market risk.

<TABLE>
<CAPTION>
                                                              MATURING      MATURING      MATURING
                                                             DURING 2000   DURING 2001   DURING 2002
                                                             -----------   -----------   -----------
<S>                                                          <C>           <C>           <C>
DECEMBER 31, 1999:
Cash equivalents...........................................   $ 89,151      $     --      $     --
  Weighted average interest rate...........................       5.68%           --            --
Investments................................................    187,915        93,963         3,238
  Weighted average interest rate...........................       5.96%         6.23%         7.01%
                                                              --------      --------      --------
Total......................................................   $277,066      $ 93,963      $  3,238
                                                              ========      ========      ========
  Weighted average interest rate...........................       5.87%         6.23%         7.01%
</TABLE>

<TABLE>
<CAPTION>
                                                              MATURING      MATURING      MATURING
                                                             DURING 1999   DURING 2000   DURING 2001
                                                             -----------   -----------   -----------
<S>                                                          <C>           <C>           <C>
DECEMBER 31, 1998:
Cash equivalents...........................................   $ 16,520      $     --      $     --
  Weighted average interest rate...........................       5.33%           --            --
</TABLE>

EXCHANGE RATE SENSITIVITY

     We operate primarily in the United States, and all sales to date have been
made in US dollars. Accordingly, we have had no material exposure to foreign
currency rate fluctuations.

                                       30
<PAGE>   33

                                    BUSINESS

OVERVIEW

     We are a leading provider of Internet infrastructure solutions that enable
Internet service providers and other telecommunications service providers, to
meet the demands resulting from the rapid growth of the Internet. We deliver
next generation Internet backbone routers that are specifically designed, or
purpose-built, for service provider networks and offer our customers increased
reliability, performance, scalability, interoperability and flexibility, and
reduced complexity and cost compared to current alternatives. Our flagship
product is the M40 Internet backbone router, and we recently introduced the M20,
an Internet backbone router purpose-built for emerging service providers. Our
Internet backbone routers combine the features of our JUNOS Internet Software,
high performance ASIC-based packet forwarding technology and Internet-optimized
architecture into a purpose-built solution for service providers. Unlike
conventional routers, which were originally developed for enterprise
applications and are increasingly inadequate for service provider use in public
networks, our Internet backbone routers are specifically designed to accommodate
the size and scope of the Internet.

     We believe that the Internet will continue to grow at significant rates and
will evolve into the next generation public network, superseding and expanding
upon many of the functions provided by the traditional telephone network. This
trend will drive the need for new Internet infrastructure equipment that can
deliver the high levels of reliability and scalability needed in a public
network. We believe we have developed the first commercially available Internet
backbone routing platform specifically designed and built to meet these
requirements. Ryan Hankin Kent, an industry research firm, estimated in 1999
that the market for Internet backbone routers was $169 million in 1998 and
expects that market to increase to approximately $5.5 billion in 2003.

     We sell our Internet backbone routers primarily through a direct sales
force in the United States and through value added resellers internationally.
Our M40 Internet backbone router is currently used by several of the world's
leading service providers, such as UUNet, an MCI WorldCom Company, Cable &
Wireless USA, AT&T/IBM Global Services, Frontier GlobalCenter Inc. and Verio
Inc.

INDUSTRY BACKGROUND

     The Internet has evolved from an academic research project into a network
of hundreds of separately administered, public and private networks
interconnected using Internet Protocol (IP). IP traffic is growing
exponentially, driven by increasing numbers of new users, connected devices and
Internet transactions. The result of the widespread use of IP is a ubiquitous
network that today carries a large and growing amount of data traffic enabling
millions of users to share information and conduct electronic commerce.
International Data Corporation, an industry research firm, forecasts continued
dramatic growth worldwide in the Internet and Internet traffic:

     -  World Wide Web users will grow from approximately 142 million in 1998 to
        approximately 399 million in 2002;

     -  the number of computers and other devices accessing the World Wide Web
        will grow from approximately 89 million in 1997 to approximately 537
        million by 2002; and

     -  commerce revenues on the Internet will grow from approximately $50
        billion at the end of 1998 to approximately $734 billion by the end of
        2002.

     The importance of IP continues to increase as the number of users,
connected devices and transactions over the Internet grows. This growth
highlights the potential for the Internet to replace the traditional telephone
network and the pervasive public network.

     The rapid adoption of the Internet and the tremendous growth of IP traffic
have prompted service providers to construct large scale data networks. These
networks are being optimized to
                                       31
<PAGE>   34

transport data traffic as compared to traditional telephone networks, which were
optimized to transport voice traffic. The architecture of these next generation
networks is being driven by two key technologies: packet/cell switching and
optical networking.

     Advantages of Packet/Cell Switching.  Packet/cell switching technology,
which divides data traffic into distinct units called packets or cells and
routes each packet or cell independently, provides superior use of available
network capacity compared to traditional circuit switching technology. In a
circuit switched network, each data stream, such as a voice telephone call
between two points, is provided with a dedicated channel, or circuit, for the
duration of the telephone call. This approach leads to inefficient use of
network resources because a channel is fully dedicated to each transaction,
whether or not data is actually flowing at any given moment. As a result, a
circuit switched architecture is highly inefficient for Internet applications
which tend to create large bursts of data traffic followed by long periods of
silence. Packet/cell switching architectures enable greater utilization out of a
fixed capacity circuit by combining traffic that has different capacity demands
of the circuit at different times. Packet/cell switches more efficiently fill
the available network bandwidth with packets of data from many users, thereby
reducing the wasted bandwidth due to silence from any one particular user. The
use of packet/cell switching is driving the architecture of the Internet to be
fundamentally different from traditional circuit switched voice based networks.
In packet/cell switched networks, IP has emerged as the de facto standard for
providing services to end users. Primary packet/cell switching products include
frame relay switches, ATM switches and routers.

     Rapid Advances in Optical Networking.  Optical networking technology uses
pulses of light, rather than pulses of electricity, to transmit data in a
network, and uses fiber optic connections instead of wires. Optical networking
can be used to transmit much more information over a given connection than
electrical signals can convey. Optical networking advances, such as dense
wavelength division multiplexing, or DWDM, which allows transmission of several
frequencies of light over one strand of optical fiber, have enabled still higher
data transmission rates and improved efficiency of bandwidth utilization.
Currently available DWDM technology enables the transmission of up to 128
frequencies which allows a service provider to multiply the transmission
capacity of a fiber optic network by a factor of up to 128.

     Packet/Cell Technologies Have Not Kept Up With Optical Technologies.  Many
service providers are installing DWDM equipment and are increasingly focusing on
combining IP and optical networking technologies. However, traditional packet
switching equipment is not capable of forwarding packets at rates sufficient to
keep pace with optical transmission speeds. As affordable fiber optic
transmission capacity becomes widely available, the performance and complexity
of current packet/cell switching architectures is increasingly constraining the
growth of the Internet.

     The intersection of traditional packet/cell switching and fiber optic
technology is demonstrated by the following diagram:

                                   [DIAGRAM]

THE NEW REQUIREMENTS OF THE INTERNET

     The reliability and performance of current Internet infrastructure
equipment have become critical issues for service providers as they continue to
support dramatic growth in IP traffic and increasingly seek to offer new revenue
generating, mission-critical services, such as Virtual Private Networks, or
VPNs, and voice-over IP. New requirements for next generation networks are
driving a set of new requirements for Internet infrastructure equipment,
including:

     -  high reliability;

     -  high performance;
                                       32
<PAGE>   35

     -  high performance under stressful conditions;

     -  scalability;

     -  interoperability;

     -  reduced complexity; and

     -  cost effectiveness.

     High Reliability.  As businesses and consumers increasingly rely on the
Internet for mission-critical applications, high network reliability becomes
essential. Service providers are increasingly expected to provide a similar
degree of reliability on the Internet that users have become accustomed to on
the traditional telephone network. The "five nines" (99.999%) reliability
standard of the traditional telephone network is becoming the target to which
suppliers of next-generation Internet platforms are being compared. As service
providers begin to bundle voice and data on their networks, this high degree of
reliability is becoming even more critical.

     High Performance.  To handle the rapid growth in IP traffic, today's
networks increasingly require routers that can operate at interface speeds as
high as 2.5 billion bits of information per second (Gbps), and in the near
future, 10 Gbps. The processing of data packets at these high speeds requires
sophisticated forwarding technology to inspect each packet and assign it to a
destination based on priority, data type and other considerations. Since a large
number of IP packets, many of which perform critical administrative functions,
are small in size, high performance Internet routers need to achieve their
specified transmission speeds even for small packet sizes. Since smaller packets
increase packet processing demands, routing large numbers of smaller packets
tends to be more resource intensive than routing of larger packets. Routers
based on general-purpose microprocessors traditionally are unable to forward
small packets at maximum rates, and, as a consequence, fail to operate at wire
speed, which results in data loss, packet retransmission and network
instability. A wire speed router, which achieves its specified transmission rate
for any type of traffic passing through it, can accomplish this task. Unlike the
enterprise environment, where network capacity is relatively inexpensive and
service quality requirements are not as demanding, the additional capacity and
related costs of network bandwidth and low service levels resulting from
retransmission of dropped packets are increasingly unacceptable to service
providers. Thus, provisioning of mission-critical services increasingly requires
the high performance enabled by wire speed processing.

     High Performance Under Stressful Conditions.  In a large and complex
network, individual components inevitably fail. However, the failure of an
individual device or link must not compromise the network as a whole. In a
typical network, when a failure occurs, the network loses some degree of
capacity and, in turn, a greater load falls on the remaining network routers,
which must provide alternate routes. Routers must quickly adjust to the new
state of the network to maintain packet forwarding rates and avoid dropping
significant numbers of packets when active routes are lost or when large numbers
of routes change. Routing protocols are used to accomplish this convergence, a
process that places even greater stress on the router. Given the complexity of
Internet infrastructure, particularly compared to enterprise networks, the
convergence process is far more complex and places a far greater load on the
routing software, thereby requiring a much more sophisticated device.

     Scalability.  Due to the rapid growth in Internet users and IP traffic,
service providers must continuously expand their networks, both in terms of
increased numbers of access points of presence (PoPs), and also greater capacity
per PoP. To facilitate this expansion process, Internet infrastructure equipment
must be highly scalable. Next generation routers therefore need to be
upgradeable and configurable to function within constantly changing networks
while incurring minimal downtime.

                                       33
<PAGE>   36

     Interoperability.  Service providers do not have the time or inclination to
change their existing networks to favor introduction of new products; rather,
new products must be compatible with the existing environment. Given the open
and inter-connected nature of the Internet, the complexity of running an
Internet backbone network requires a service provider to control and police
relations with other service providers. For example, service providers must
carefully control what traffic is accepted under what conditions from other
providers. Major service providers connect their respective networks via peering
arrangements, in which service providers agree to exchange traffic with one
another. These arrangements are prone to abuse, such as the illicit use by one
service provider of another service provider's backbone to carry excess traffic.
Service provider relationships are controlled by a set of rules called policies,
implemented through a data protocol called Border Gateway Protocol 4, or BGP4.
The software in each router must offer 100% compatibility with all aspects of
BGP4, as well as 100% compatibility with the interior protocols and standards
used within each service provider's backbone network. The compatibility level
must be maintained despite changes to software equipment configuration and
network architecture and upgrades to the various protocol standards. Thus,
routing software must be flexible and quickly upgradeable to support any
necessary revisions. This level of compatibility, in turn, cannot impact the
performance, scalability or reliability of the equipment. Attaining this
sophisticated level of interoperability is highly challenging and requires
significant testing to ensure compatibility.

     Reduced Complexity.  Today's Internet architectures are highly complex.
Since traditional routers have not fully met service providers' needs, many
service providers have tried to improve Internet backbone performance by adding
additional network devices such as ATM switches in the core of the network. As a
result, service providers have built networks with ATM switches surrounded by an
overlay network of lower capacity routers. These different layers of equipment
lead to higher capital costs and the need to manage distinct network elements.
ATM switches are also poorly suited to carrying IP traffic, which results in
inefficient use of network bandwidth. Moreover, this network design can cause
unpredictable router behavior during periods of stress because the routers are
not aware of the ATM backbone infrastructure and thus cannot quickly converge if
there is a partial network outage.

     This type of layered backbone network with a complex patchwork of products
based on different technologies is represented below:

                                   [DIAGRAM]

     Cost Effectiveness.  Exponential growth in IP traffic and intense price
competition in the telecommunications market is increasingly requiring service
providers to seek solutions that significantly reduce the capital expenditures
required to build and operate their networks. In addition to the basic cost of
equipment such as routers, service providers incur substantial ancillary costs
in terms of space required to deploy the equipment, power consumption and
on-going operations and maintenance. Service providers therefore want to deploy
dense and varied equipment configurations in limited amounts of rack and floor
space. Currently, service

                                       34
<PAGE>   37

providers are moving from OC-3 (155 million bits per second, or Mbps) and OC-12
(622 Mbps) speed networks at the core to higher capacity OC-12 and OC-48 (2.5
gigabits per second, or Gbps) speed networks. In turn, the connections from each
PoP to the core are evolving from 100 Mbps and OC-3 speeds to gigabit and OC-12
transmission rates. Therefore, in order to continue to scale their networks
toward higher data speeds in a cost effective manner, service providers need the
ability to mix and match easily many different speed connections at appropriate
densities, without significantly increasing the consumption of space or power.

     There is a clear need for next generation routers that can support high
speeds and offer new IP-based services. Network operators are eagerly seeking
new solutions that increase the level of scalability and reliability within
their networks and reduce the cost and complexity of their architectures.

THE JUNIPER NETWORKS SOLUTION

     We develop, market and sell what we believe is the first commercially
available purpose-built Internet backbone router optimized for the specific high
performance needs of service providers. Our flagship product, the M40 Internet
backbone router, combines the features of our JUNOS Internet Software,
high-performance ASIC-based packet forwarding technology and Internet-optimized
architecture. As the need for core bandwidth has continued to increase, it
created the need for service rich platforms at the edge of the network. In
December 1999 we introduced the M20 backbone router, purpose-built to alleviate
capacity demand on access points in the PoP. The M40 router operates at the
Internet's core while the M20 router extends purpose-built performance
capability to service provider entry points. The M20 router is also a
cost-efficient solution for new and emerging IP carriers (smaller service
providers) capable of enabling a high-bandwidth core and high-speed services for
the service provider edge in one device.

     The M40 and M20 platforms share common software and services, and common
ASIC technology for full compatibility and scalability. Critical service
provider applications including high-speed access, peering, and hosting are
served by both platforms. Physical interfaces are interchangeable between
platforms, increasing user flexibility and allowing common sparing.

     JUNOS Internet Software.  Our Internet software, called JUNOS, is one of
our key competitive differentiators. JUNOS is designed to meet the IP network
routing, operations and control requirements of the world's largest service
providers and is an integral component of our product family system
architecture. The ability of JUNOS to manage the complex network sharing
relationships among service providers allows our products to be placed at
critical points in the core of a service provider's network. The JUNOS Internet
Software allows our products to have widespread network placement due to its
interoperability with Cisco's Internetwork Operating System, or IOS, currently
the most broadly deployed routing operating system. The ability to coexist has
enabled the M40 to achieve successful deployment where other products in the
past have failed.

     Unconstrained by legacy routing software, we developed JUNOS using a
modular design, in which distinct functions are implemented as separate modules
with well defined interfaces and interactions, simplifying troubleshooting and
maintenance. JUNOS operates in protected memory mode. These features keep
functionality distinct, and minimize the impact of any failure that may occur to
the specific software application in which the failure occurs. Also, we believe
JUNOS' software modularity will enable the continuous upgrade of new enhanced
capabilities, while protecting reliability and compatibility with existing
networks. The design and development of the JUNOS Internet Software has been
possible due to the significant Internet engineering expertise of our
development team. Our expert engineers have authored or co-authored 22 Requests
for Comments, which are documents by industry experts that define major
standards for Internet protocols.

                                       35
<PAGE>   38

     High Performance ASIC-based Packet Forwarding Technology.  The M40 Internet
backbone router contains five major application specific integrated circuits
that we designed and built using the most advanced ASIC technology. These ASICs
contain over five million gates in total, with three of the designs each having
a larger number of transistors than the Intel Pentium II microprocessor. The
result is a system that is substantially faster than today's general purpose
microprocessor based routers in its ability to process and forward IP packets,
allowing our products to deliver high performance at wire speed. The ability to
enhance and implement large scale ASICs will be a long-term differentiator for
us, particularly as the sophistication required to forward traffic across higher
speed networks increases. As with the introduction of the M20, we expect to
continue to leverage our existing ASIC technology in future products and
continue to capitalize on our advanced ASIC design capabilities.

     Internet Optimized Architecture.  As purpose-built Internet backbone
routers, our products employ an architecture designed exclusively for the
Internet. The system architecture provides a clean separation between the
routing and packet-forwarding functions. Separating these two functions enables
us to develop independently a full-featured routing protocol and traffic
engineering functionality through our JUNOS Internet Software and wire speed
packet forwarding performance through high performance ASICs. Furthermore, with
the routing and forwarding functions segregated, the products do not sacrifice
performance, even when there is a failure in the network. When a failure occurs,
JUNOS detects the failure and is able to quickly converge to the new state of
the network while the ASICs continue to forward packets at wire speed until they
receive updated routes from JUNOS.

     The key benefits of our solution are:

     -  carrier class reliability;

     -  wire speed performance;

     -  scalability;

     -  interoperability;

     -  flexibility;

     -  reduced complexity; and

     -  cost effectiveness.

     Carrier Class Reliability.  Our products' system architecture provides
reliable operation for service providers in large complex networks even under
abnormal conditions. This architecture, combined with JUNOS' modular software
design, limits the impact of a failure to the specific software application. In
addition, the hardware used in our products has been designed with a very high
level of integration to maximize the mean time between failure. Moreover, data
and instructions have appropriate error correction and parity checks in memory
to guarantee their integrity.

     Wire Speed Performance.  We believe the M40 is the first Internet backbone
router that can forward minimum-sized IP packets over OC-48 links at wire speed.
This maximizes network stability and the capacity utilization of expensive wide
area circuits. In contrast to available solutions, the M40 is able to maintain
packet forwarding rates and to avoid dropping significant numbers of packets
when active routes are lost or when large numbers of routes change.

     Scalability.  Our JUNOS Internet Software is designed to accommodate
service providers' scale requirements. In addition, the ASIC interface links
have been oversized, enabling the M40 to easily scale with growing levels of
data traffic. We believe our software and ASIC designs represent a competitive
advantage, because it is very difficult for existing vendors to graft these
capabilities to their prior generation designs.

                                       36
<PAGE>   39

     Interoperability.  The M40 has demonstrated consistent interoperability
with existing network infrastructures. Our internal test environments confirm
interoperability with Cisco routers, a variety of leading ATM and Gigabit
Ethernet switches and SONET add drop multiplexers. Deployment of the M40 at
several major carriers has demonstrated that JUNOS is interoperable with
installed Cisco routers for both routing and administration. In addition, JUNOS
enables service providers to manage their complex peering relationships with
other service providers despite frequent software, equipment configuration and
network architecture changes.

     Flexibility.  Our ASICs are programmable and provide the flexibility to add
support for new protocols or changes in existing protocols. Since JUNOS is
modular in architecture and already supports existing and emerging protocols, it
is also a platform for efficiently introducing new interfaces and new services
in the network.

     Reduced Complexity.  Our products are purpose-built for service providers
and allow a simple and more structured approach to building Internet backbones
compared to the complex topologies in place today. With the M40 and the M20,
service providers can build more efficient networks with less dependence on
devices like ATM switches, which reduce the operational burdens of running
multiple distinct network layers.

     Additionally, our products offer a thorough implementation of traffic
engineering based on MPLS, including the ability to dynamically adapt traffic
flows according to rules adopted by the network operator. Traffic engineering
refers to a set of capabilities for understanding underlying traffic trends in
the network and maximizing the utilization of the network on multiple
dimensions.

                                   [DIAGRAM]

     Cost Effectiveness.  We have integrated these customer benefits into a
system that provides critical routing and forwarding functions at lower overall
cost. Our products' wire speed performance allows service providers to reduce
network operating cost by making more efficient use of their networks. In
addition, we designed the M40 to support a broad variety and density of
interfaces in a unit that occupies half a typical telecommunications rack. As a
result, service providers can cost effectively deploy the M40, which can be
easily upgraded, to connect to a variety of speed and circuit types at the
network core.

THE JUNIPER NETWORKS STRATEGY

     Our objective is to become the primary supplier of high performance
Internet backbone infrastructure. The key elements of our strategy include:

     -  leverage early lead as supplier of purpose-built Internet
        infrastructure;

     -  work very closely with key customers;

     -  increase penetration at major service providers;

     -  leverage early success to penetrate new customers rapidly;

     -  expand sales and distribution network;

                                       37
<PAGE>   40

     -  maintain and extend technology leadership; and

     -  enable new IP-based services.

     Leverage Early Lead as Supplier of Purpose-Built Internet
Infrastructure.  From inception we have focused solely on designing and building
Internet infrastructure for service providers. We have integrated purpose-built
software and hardware into an Internet optimized architecture that specifically
meets service providers' needs and have seen significantly positive initial
responses from our existing and potential customers. We believe that many of
these customers will deploy Internet backbone infrastructure equipment from only
a few vendors. The purpose-built advantages of our products provide us with a
time-to-market lead, which is a critical advantage in gaining rapid penetration
as one of these selected vendors. Once our products are widely deployed in a
service provider's network as the primary or even secondary Internet backbone
infrastructure equipment, we believe we create a significant barrier to entry to
potential competitors who do not currently offer commercially-viable next
generation routing solutions.

       Work Very Closely with Key Customers.  In developing our products,
including our JUNOS Internet Software, we worked very closely with customers to
design and build a product specifically to meet their complex needs. Since JUNOS
has been available and used by our customers for over a year, we understand
clearly the challenges facing these carriers, enabling us to subsequently design
additional features and capabilities into both our software and hardware. We
believe our close relationships with, and constant feedback from, our customers
have been key elements in our design wins and rapid deployment to date. We plan
to continue to work very closely with our key customers to implement
enhancements to current products as well as to design future products that
specifically meet their evolving needs. We are also actively involved with these
customers in developing key standards, such as MPLS, and are an active
participant in standards organizations such as the Internet Engineering Task
Force and the Optical Internetworking Forum.

     Increase Penetration at Major Service Providers.  Our initial focus has
been to penetrate several of the largest service providers, where operators have
the technical sophistication, resources and desire to test and evaluate our
solution against potential alternatives. While we have received initial orders
from major service providers, such as UUNet (MCI Worldcom), Cable & Wireless,
AT&T/IBM Global Services, Frontier GlobalCenter and Verio, we believe that there
is a significant opportunity to further penetrate these large and complex
networks given the advantages of our products. As the growth of the Internet
requires these service providers to continue to build their networks and replace
outdated equipment, we will pursue further opportunities to capture greater
market share within these large accounts.

     Leverage Early Successes to Penetrate New Customers Rapidly.  We believe
that the Internet infrastructure equipment buying patterns of the medium and
smaller-sized service providers typically lag behind those of the larger service
providers. Since the network challenges that the large service providers face
today are likely to be the problems encountered by smaller service providers in
the near future, we believe smaller service providers are likely to deploy
equipment similar to larger service providers. Furthermore, smaller service
providers often lack the technical resources to thoroughly test different
vendors' products. Therefore, they typically piggyback on larger service
providers' evaluation efforts by purchasing the same platforms deployed by the
larger service providers. Since we have begun to sell to several of the largest
service providers, we intend to leverage this success by allocating our
marketing efforts towards a greater number of medium and smaller-sized service
providers.

     Expand Sales and Distribution Network.  In order to pursue the large number
of potential customers for our Internet infrastructure solutions, we plan to
continue to aggressively add to our sales and distribution capabilities. We are
adding to our direct sales and support capabilities for our major customers in
North America and adding value-added resellers to sell to and support

                                       38
<PAGE>   41

our other domestic and international customers. In the quarter ended December
31, 1999, we added 12 people to the sales organization for a total of 72 people.

     Maintain and Extend Technology Leadership.  Our Internet software, ASIC
technology and Internet-optimized architecture have been key elements to
establishing our technology leadership. We believe that these elements are
highly leverageable into future products we are currently developing. We intend
to maintain and extend our technological leadership in the Internet
infrastructure market through continued significant investment in JUNOS Internet
Software and ASIC designs to enhance the feature richness of our products and to
develop future differentiated offerings for service providers.

     Enable New IP-based Services.  Our platform enables service providers to
build networks cost effectively and to offer new differentiated services for
their customers more efficiently than conventional products. While we believe
that current service providers are likely to be the largest and most successful
IP network operators in the near term, many new service providers are likely to
emerge oriented around the delivery of IP-based services. These services, which
include web hosting, outsourced Internet and intranet services, VPNs, outsourced
enterprise applications and voice-over IP, are cost-effectively enabled by our
Internet infrastructure platform. Although the market for our products today is
driven primarily by the need for traditional Internet network capacity, as other
IP-based services and applications continue to grow in importance, the total
potential market for our products will continue to grow commensurately.

TECHNOLOGY

     Our core technology consists of our Internet backbone router architecture,
JUNOS Internet Software and ASIC hardware expertise. Our general-purpose
architecture is initially embodied in the M40, but also is designed to serve as
the platform for future generations of products, such as the M20.

M40 ARCHITECTURE

     The architecture of our products is exemplified by the M40. The following
diagram illustrates the architecture of the M40 Internet backbone router:

                                   [DIAGRAM]

     The M40 architecture delivers the forwarding rates and network control
necessary to scale Internet backbones rapidly and reliably. The M40 system
includes a Routing Engine, or RE, and a Packet Forwarding Engine, or PFE. The
clean separation of the routing and forwarding functions ensures that the two
functions do not compete for the same resources.

     The Routing Engine.  The RE consists of the JUNOS Internet Software
operating on an Intel-based platform. The JUNOS Internet Software features
Internet-scale protocol support, with flexible policy software that enables
maximum control over the acceptance, modification and advertisement of route
prefixes. In addition, the JUNOS Internet Software offers a range of
                                       39
<PAGE>   42

configuration management tools that simplify the configuration process and help
protect against operator error. The RE conducts the processing intensive
activity of maintaining the routing table, from which the forwarding table
residing in the PFE is derived. The RE is connected to the PFE through a
dedicated 100 Mbps link. After constructing or updating the forwarding table,
the RE downloads a copy of the table to the PFE. Updates to the forwarding table
are done atomically in small incremental steps so that packet forwarding is not
interrupted by routing changes.

     The Packet Forwarding Engine.  The M40 delivers wire speed packet
forwarding using our ASIC designs. All links between ASICs are oversized,
dedicated channels, and the PFE architecture is free from the bottlenecks faced
by traditional crossbar switches, which use intelligent agent software to
perform both routing and forwarding functions over multiple connections to
either parts of the network. Bottlenecks can occur in a crossbar switch because
the routing and forwarding functions are not separated. The heart of the PFE is
the Internet Processor ASIC. With over one million gates and a lookup rate of
over 40 million packets per second, or Mpps, the Internet Processor represents
the largest and fastest route lookup ASIC currently available, capable of
processing data at throughput rates in excess of 40 Gbps.

     All lookup rates reflect longest-match route table lookups for all packets
and all lookups are performed in hardware. There is no caching mechanism, which
is a mechanism by which critical information, such as destinations for traffic,
is stored in rapidly accessible memory to make the process of looking up traffic
destinations faster. In addition there is no risk of cache misses in the system
which can result in slower storage access and thus considerably slower traffic
delivery. In addition, the forwarding table can be updated without affecting
forwarding rates. The Internet Processor is programmable to support up to four
different forwarding tables (layer 2 and/or layer 3) simultaneously. Supported
forwarding protocols currently include unicast and multicast IPv4 and MPLS.
Finally, the Internet Processor maintains its performance regardless of length
of lookups or table size.

     The PFE also features a shared memory system with single-stage buffering,
so packets are written to and read from memory only once. Single-stage buffering
greatly reduces the complexities and throughput delays associated with
multistage buffering systems. The pooled memory is distributed across the
Flexible PIC Concentrator, or FPC, cards, allowing memory to scale as interfaces
are added. The Internet Processor also features prefix accounting mechanisms
that operate at rates in excess of 20 Mpps.

JUNOS INTERNET SOFTWARE: TRAFFIC ENGINEERING AND CONTROL

     JUNOS Internet Software offers a full suite of Internet-scale,
Internet-tested routing protocols. Protocols and software tools, which are used
to control and direct network traffic, are critical to an Internet backbone
routing solution. Software control is made more important by the fact that the
size and complexity of backbone networks are increasing at a time when service
providers are looking to differentiate themselves through value-added service
offerings.

     JUNOS Internet Software features implementations of all major Internet
protocols, including BGP4, DVMRP, PIM, IS-IS, Open Shortest Path First. IS-IS
and Open Shortest Path First are algorithms broadly used in enterprise networks
and by service providers to determine and update the running state of the
network and available destinations in the network. These implementations were
developed in-house by our design team which has extensive experience in
addressing the scaling issues of rapidly growing service providers.

     JUNOS Internet Software also provides a new level of traffic engineering
capabilities with its implementation of MPLS. Developed in conjunction with the
Internet Engineering Task Force, our MPLS capability offers enhanced visibility
into traffic patterns and the ability to control the path traffic takes through
the network. Path selection enables service providers to engineer traffic for
efficient use of network capacity and avoidance of congestion. We expect MPLS
and its traffic

                                       40
<PAGE>   43

engineering capabilities to become a crucial tool for service providers as they
scale their networks.

     JUNOS Internet Software features a modular design, with separate programs
running in protected memory space in conjunction with an independent operating
system. Unlike monolithic, unprotected operating system designs, which are prone
to system wide failure, the protected, modular approach improves reliability by
ensuring that modifications made to one module have no unwanted side-effects on
other sections of the software. In addition, having clean software interfaces
between modules facilitates software development and maintenance, enabling
faster response to customer needs and delivery of new features.

     JUNOS Internet Software has been extensively tested in multiple service
provider networks to ensure compatibility with Cisco's IOS. Since each major
service provider's network is different, this extensive testing is necessary to
ensure seamless introduction into existing service provider environments.

PRODUCTS

M40 INTERNET BACKBONE ROUTER

     The M40 Internet backbone router is specifically designed for the
specialized needs of service providers. The M40 features leading-edge
packet-forwarding performance, very high port density and flexibility, and
purpose-built Internet software. The M40 delivers higher speed performance for
service providers than current alternatives. The M40 helps solve the critical
problem of managing backbone networks by ensuring greater control over traffic
and better use of network capacity and by providing service providers with the
necessary traffic engineering tools, such as MPLS.

FEATURES OF THE M40 INTERNET BACKBONE ROUTER

     Port Density Per Rack-Inch.  Our M40 Internet backbone router offers very
high port density per rack-inch, ensuring optimal use of valuable and scarce PoP
rack space. Because the forwarding engine is oversized, all interfaces perform
at wire speed for all packet sizes.

     The M40 router features a highly flexible combination of backbone interface
speeds on the market today. In a 35-inch chassis, the M40 router provides 8
OC-48/STM-16, 32 OC-12/STM-4, 128 OC-3/STM-1 or 128 DS3 interfaces. M40
interfaces are located on Physical Interface Cards, or PICs, which plug into FPC
boards. There are eight FPC slots on the M40 and each FPC slot supports up to
four PICs and an aggregate throughput rate of more than 2.5 Gbps. In addition to
supporting wire speed OC-48 interfaces, each FPC supports various combinations
of interfaces, permitting the mixing of interface types and speeds on a single
FPC. Supported PIC interfaces include:

     -  1-port OC-48/STM-16 SONET/SDH;

     -  1-port OC-12/STM-4 SONET/SDH;

     -  1-port OC-12/STM-4 ATM;

     -  4-port OC-3/STM-1 SONET/SDH;

     -  2-port OC-3/STM-1 ATM;

     -  4-port DS3; and

     -  1-port Gigabit Ethernet.

     The PIC interface cards are sold both as part of the initial product
configuration and also, subsequently, as add-on items. Interfaces are typically
added as the customer's network expands or the capacity of individual links is
upgraded.
                                       41
<PAGE>   44

     Class-of-Service Flexibility.  The M40 router is designed for a variety of
class-of-service applications. The M40's queuing mechanism is based on a
weighted round-robin selection among multiple queues on outgoing interfaces.
Queues can be configured with drop profiles to control the rate of packet drops
based on utilization of buffer capacity.

     Low Power Consumption.  As provider PoPs have grown and become more fully
populated with systems, power consumption has become a significant concern.
Access to sufficient power can be a constraint on the ability of a facility to
support a larger network. Because of its low part count and efficient design,
our M40 Internet backbone router draws less than 1700 watts of power (35A at
48V) in a fully loaded configuration, enabling it to offer very high performance
and port density per watt.

     Engineered for Stressful Conditions.  The M40 architecture is designed to
reliably handle stressful network conditions. For example, the route lookup
capacity of our Internet Processor has been oversized with respect to interface
speeds. In addition, the separation of routing and processing enables the M40 to
converge quickly while maintaining wire speed.

     Built for Reliability.  In addition to preserving network reliability, the
M40 router is designed to ensure system reliability. The M40's cooling system is
fully redundant to protect against individual fan failure. Similarly, the M40's
dual power supplies are fully redundant, each capable of supporting the full
power load of the system. The M40 can boot off of any one of multiple redundant
storage media, ensuring that the system remains operational in the event of a
disk failure. For software reliability, JUNOS Internet Software features a
protected, modular design with separate processes running in protected memory
space on top of an independent operating system. A modular design protects
against system wide failures, ensuring that modifications made to one module
have no unwanted side-effects on other portions of the code base. Finally, a low
component count and an efficient design combine to give the M40 system superior
reliability.

     The M40 base price list ranges between $45,000 and $52,000. PIC module
prices begin at $18,000.

M20 INTERNET BACKBONE ROUTER

     The M20 is purpose-built for new emerging carriers and smaller service
providers. It can serve a variety of high speed uses, starting at the core. As
new carriers build out the core, they determine that there is a need for high
speed connectivity to end customers, other carriers and hosting environments.
The M20, with its services and configuration flexibility can provide the
solution in one chassis, which is both cost and space effective.

     The M20's small size, high performance and high port density make it an
optimum platform for high-speed access applications. Its Gigabit Ethernet port
density and 802.1q VLAN support makes it attractive for hosting applications.
The M20 also provides forwarding performance and the rich BGP4 and policy
implementations (with JUNOS Internet Software) needed for peering applications.

     Although the M20 measures only 14 inches (35.56 cm) in height, it brings
new levels of port density and performance to provider edge applications,
supporting nearly 200 DS-3s in a single chassis and 1000 DS-3s in a standard
seven-foot (2.13-m) rack. The M20 supports a wide range of interfaces including:

     -  1-port OC-48/STM-16 SONET/SDH;

     -  1-port OC-12/STM-4 SONET/SDH;

     -  1-port OC-12/STM-4 ATM;

     -  4-port OC-3/STM-1 SONET/SDH;

     -  2-port OC-3/STM-1 ATM;
                                       42
<PAGE>   45

     -  4-port DS3;

     -  1-port Gigabit Ethernet; and

     -  Channelized OC-12/STM-4 to DS-3.

The M20 base list price is $20,000. PIC module prices begin at $18,000.

CUSTOMERS

     The following is a representative list of our customers as of December 31,
1999:

<TABLE>
<S>                                            <C>
END USERS:                                     DISTRIBUTORS:
AboveNet Communications                        Alcatel
AT&T                                           Ericsson
AT&T/IBM Global Services                       3Com
Broadband Office                               K-Net Ltd.
Cable & Wireless                               Nissho Electronics
Frontier GlobalCenter                          NTT PC Communications
Globix                                         OKI Electronics
GST Network Funding                            Samsung America
MCI WorldCom-vBNS                              Softway
MIBH                                           Solunet
PSINet.
Qwest Communications International
TCG CERFnet.
University of Washington
UUNet
Verio
</TABLE>

     We recognize revenue from the shipment of products at the time of shipment
unless we have future obligations for network interoperability or if we have to
obtain customer acceptance. In those cases, we defer recognition of the revenue
until we have met our obligations.

     Two customers, UUNet and Cable & Wireless, comprised approximately 58% of
our recognized revenues for the year ended December 31, 1999.

SALES AND MARKETING

     We sell and market our products primarily through our direct sales
organization, value-added resellers and an original equipment manufacturer.

     Direct Sales.  Our North American direct sales organization is divided into
Western and Eastern regional operations. Our direct sales efforts are focused on
the largest service providers. The direct sales account managers cover the
market on an assigned account basis and work as a team with account oriented
systems engineers. They are directed by a regional operations manager who
reports to the North American Director of Sales. We also have technical
engineers that consult with and provide our customers with guidance and
assistance on the evolution of their networks as it relates to the deployment of
our products. These consulting engineers also help in defining the features that
are required for our products to be successful in specific applications. A key
feature of our sales effort is the relationship we establish at various levels
in our customers' organization. Our sales team maintains contact with key
individuals who have service planning and infrastructure buildout
responsibility.

     Value Added Resellers.  We have complemented our direct sales effort in the
United States through the addition of several highly focused value added
resellers. Our arrangements with

                                       43
<PAGE>   46

value added resellers typically have been non-exclusive and provide the value
added reseller with discounts based upon the volume of their orders.

     Original Equipment Manufacturer Partner.  We have established a strategic
distribution relationship with Ericsson. We believe that Ericsson has
significant customer relationships in place and offers products which complement
ours. Ericsson will provide the first level of support to its customers. Our
agreement with Ericsson allows it to distribute our products on a worldwide,
non-exclusive basis with discounts based upon the volume of orders it receives.

     International Resellers.  In order to further our international sales
objectives, we have established a number of country specific value added
resellers such as Alcatel. These resellers have expertise in deploying complex
Internet infrastructure equipment in their respective markets and provide the
first level of support required by our international customers.

     As of December 31, 1999, we employed 72 people in our sales support and
marketing organizations.

CUSTOMER SERVICE AND SUPPORT

     We believe that a broad range of support services is essential to the
successful installation and ongoing support of our products. We have hired
support engineers with proven Internet experience. We offer the following
services: 24 hours a day, seven days a week technical assistance (on-line,
telephone and on-site), professional services, educational services, logistics
services and web-based information.

     We offer a variety of flexible and comprehensive support programs,
including basic hardware and software warranty services, next day onsite parts
and labor, 24 hours a day, seven days a week same day parts and labor and
on-site resident engineers. We deliver these services directly to major end
users and also utilize a two-tiered support model, leveraging the capabilities
of our partners and third party organizations. We also train our partners in the
delivery of education and support services.

     Customer service and support provide front line product support and is the
problem resolution interface to our partners and direct end users. If customer
service and support are unable to resolve an issue themselves, they duplicate
the problem scenario and provide the failure information, such as logs, dumps,
traces and system configuration to appropriate subject matter experts in our
engineering department.

     Based on the severity of the problem and the impact to our customers'
network, there are strict escalation guidelines to ensure that the appropriate
technical resource and management attention is brought to bear on the problem in
a timeframe commensurate with problem priority. The overall goal is to fix the
problem, at the appropriate level, in the right timeframe in order to ensure our
customers' satisfaction.

     As of December 31, 1999, we employed 31 people in our customer service and
support organization, with the majority located in our Mountain View, California
corporate headquarters.

RESEARCH AND DEVELOPMENT

     We have assembled a team of skilled engineers with extensive experience in
the fields of high end computing, network system design, Internet routing
protocols and embedded software. These individuals have been drawn from leading
computer data networking and telecommunications companies. In addition to
building complex hardware and software systems, the engineering team has
experience in delivering very large, highly integrated ASICs and extremely
scalable Internet software.

     Our research and development department is organized into teams that work
in parallel on several projects in a way similar to the development of
successive generations of complex
                                       44
<PAGE>   47

microprocessors. As a result, we will seek to offer our customers next
generation products as they are needed.

     We believe that strong product development capabilities are essential to
our strategy of enhancing our core technology, developing additional
applications, incorporating that technology and maintaining the competitiveness
of our product and service offerings. We are leveraging our first generation
ASICs, developing additional network interfaces targeted to our customer
applications and continuing to develop next generation technology to support the
anticipated growth in network bandwidth requirements. We continue to expand the
functionality of our JUNOS Internet Software to improve performance and
scalability, and to provide an enhanced user interface.

     Our research and development process is driven by the availability of new
technology, market demand and customer feedback. We have invested significant
time and resources in creating a structured process for undertaking all product
development projects. This process involves all functional groups and all levels
within our company. Following an assessment of market demand, our research and
development team develops a full set of comprehensive functional product
specifications based on inputs from the product management and sales
organizations. This process is designed to provide a framework for defining and
addressing the steps, tasks and activities required to bring product concepts
and development projects to market.

     As of December 31, 1999, we employed 170 people in our research and
development organization.

     Our research and development expenses totaled $41.5 million for the year
ended December 31, 1999, $24.0 million for the year ended December 31, 1998,
$9.4 million for the year ended December 31, 1997 and $1.9 million for the
period from February 2, 1996, the date of our inception, to December 31, 1996.

MANUFACTURING

     Our manufacturing operation is entirely outsourced. We have developed a
strategic relationship with Solectron, under which we have subcontracted our
manufacturing activity. This subcontracting activity extends from prototypes to
full production and includes activities such as material procurement, final
assembly, test, control and shipment to our customers. We design, specify and
monitor all of the tests that are required to meet internal and external quality
standards. This arrangement provides us with the following benefits:

     -  we operate without dedicating any space to manufacturing operations;

     -  we conserve the working capital that would be required for funding
        inventory;

     -  we can adjust manufacturing volumes quickly to meet changes in demand;
        and

     -  we can quickly deliver products to customers through Solectron's turnkey
        manufacturing and drop shipment capabilities.

We have recently established a relationship with an additional third party to
manufacture certain of our products.

     Our ASICs are manufactured by IBM using its 0.25 micron process. IBM is
responsible for all aspects of the production of the ASICs using our proprietary
designs.

COMPETITION

     Competition in the Internet infrastructure market is intense. The market
historically has been dominated by Cisco Systems, Inc., with other companies
such as Nortel Networks and Lucent Technologies Inc. providing products to a
smaller segment of the market. In addition, a number
                                       45
<PAGE>   48

of private companies have announced plans for new products to address the same
problems which our products address.

     Cisco traditionally has been the dominant supplier of solutions to this
market. We believe this is the result of its early leadership position in the
enterprise router market. As the Internet has grown rapidly, Cisco has leveraged
this position and has developed a broad product line of routers which support
all major local area and wide area interfaces. We believe that our ability to
compete with Cisco depends upon our ability to demonstrate that our products are
superior in meeting the needs of service providers and are extremely compatible
with Cisco's current and future products. Although we believe that we are
currently among the top providers of Internet infrastructure solutions
worldwide, we cannot assure you that we will be able to compete successfully
with Cisco, currently the leading provider in this market.

     We expect that, over time, large companies with significant resources,
technical expertise, market experience, customer relationships and broad product
lines, such as Lucent and Nortel, will introduce new products which are designed
to compete more effectively in this market. As a result, we expect to face
increased competition in the future from larger companies with significantly
more resources than we have. Although we believe that our technology and the
purpose-built features of our products make them unique and will enable us to
compete effectively with these companies, we cannot assure you that we will be
successful.

     Many of our current and potential competitors, such as Cisco, Lucent and
Nortel, have significantly broader product lines than we do and may bundle their
products with other networking products in a manner that may discourage
customers from purchasing our products. Also, many of our current and potential
competitors have greater name recognition and more extensive customer bases that
could be leveraged. Increased competition could result in price reduction, fewer
customer orders, reduced gross margins and loss of market share, any of which
could seriously harm our operating results.

     There are also many small private companies which claim to have products
with greater capabilities than our products. Consolidation in this industry has
begun, with one or more of these smaller private companies being acquired by
large, established suppliers of Internet infrastructure products, and we believe
it is likely to continue. As a result, we expect to face increased competition
in the future from larger companies with significantly more resources than we
have.

     Several companies also provide solutions which can substitute for some uses
of routers. For example, high bandwidth asynchronous transfer mode, or ATM,
switches, are used in the core of certain major backbone service providers. ATM
switches can carry a variety of traffic types, including voice, video and data,
using fixed, 53 byte cells. Companies that use ATM switches are enhancing their
products with new software technologies such as multi-protocol label switching,
or MPLS, which can potentially simplify the task of mixing routers and switches
in the same network. These substitutes can reduce the need for large numbers of
routers.

INTELLECTUAL PROPERTY

     Our success and ability to compete are substantially dependent upon our
internally developed technology and know how. We have two patents issued
relating to high speed switching devices. These patents will expire in 2017 and
2016, respectively. In addition we have seven patent applications pending in the
United States relating to the design of our products. Our engineering teams have
significant expertise in ASIC design and we own all rights to the design of the
ASICs which form the core of the M40. Our JUNOS Internet Software was developed
internally and is protected by United States and other copyright laws.

     While we rely on patent, copyright, trade secret and trademark law to
protect our technology, we also believe that factors such as the technological
and creative skills of our personnel, new

                                       46
<PAGE>   49

product developments, frequent product enhancements and reliable product
maintenance are essential to establishing and maintaining a technology
leadership position. There can be no assurance that others will not develop
technologies that are similar or superior to our technology.

     Our success will depend upon our ability to obtain necessary intellectual
property rights and protect our intellectual property rights. We cannot be
certain that we will be able to obtain the necessary intellectual property
rights or that other parties will not contest our intellectual property rights.

LEGAL PROCEEDINGS

     We are not subject to any material legal proceedings.

EMPLOYEES

     As of December 31, 1999, we had 335 full-time employees, 170 of whom were
engaged in research and development, 72 in sales and marketing, 31 in customer
support and 62 in finance, administration and operations. None of our employees
are represented by a labor union. We have not experienced any work stoppages and
we consider our relations with our employees to be good.

     Our future performance depends in significant part upon the continued
service of our key technical, sales and senior management personnel, none of
whom is bound by an employment agreement requiring service for any defined
period of time. The loss of the services of one or more of our key employees
could have a material adverse effect on our business, financial condition and
results of operations. Our future success also depends on our continuing ability
to attract, train and retain highly qualified technical, sales and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that we can retain our key personnel in the future.

FACILITIES

     We sublease approximately 60,000 square feet in two buildings located in
Mountain View, California. Approximately 33,000 square feet are subleased
pursuant to a sublease that expires December 31, 2001, and approximately 27,000
square feet are subleased pursuant to a lease that expires June 30, 2000. Also,
we have entered into leases for approximately 144,000 and 25,000 square feet of
office space in Sunnyvale, California. The lease on the office space for 144,000
square feet will commence on the later of May 1, 2000 or the completion of our
improvements on the premises, and it will expire on the later of May 1, 2012 or
twelve years after the completion of our improvements on the premises, with
certain options for extension and expansion. The lease on the office space for
25,000 square feet has commenced on October 1, 1999, and it will expire two
months after the later of May 1, 2000 or the completion of our improvements on
the 144,000 square foot facility. The commercial real estate market in the San
Francisco Bay area is volatile and unpredictable in terms of available space,
rental fees, occupancy rates and preferred locations. We cannot be certain that
additional space will be available when we require it, or that it will be
affordable or in a preferred location.

                                       47
<PAGE>   50

                                   MANAGEMENT

                        EXECUTIVE OFFICERS AND DIRECTORS

     Our executive officers and directors and their ages, as of December 31,
1999, are as follows:

<TABLE>
<CAPTION>
NAME                                          AGE    POSITION
- ----                                          ---    --------
<S>                                           <C>    <C>
Scott Kriens..............................    42     President, Chief Executive Officer and
                                                     Chairman of the Board
Pradeep Sindhu............................    47     Chief Technical Officer and
                                                     Vice Chairman of the Board
Joe Furgerson.............................    40     Vice President of Marketing
Marcel Gani...............................    47     Chief Financial Officer
Steven Haley..............................    45     Vice President of Worldwide Sales and Service
Gary Heidenreich..........................    51     Vice President of Operations
Peter L. Wexler...........................    44     Vice President of Engineering
William R. Hearst III(1)..................    50     Director
Vinod Khosla(2)...........................    44     Director
C. Richard Kramlich(1)....................    64     Director
William Stensrud(2).......................    49     Director
</TABLE>

- ---------------

(1) Member of audit committee

(2) Member of compensation committee

     SCOTT KRIENS  has served as President, Chief Executive Officer and Chairman
of the board of directors of Juniper Networks since October 1996. From April
1986 to January 1996, Mr. Kriens served as Vice President of Sales and Vice
President of Operations at StrataCom, Inc., a telecommunications equipment
company, which he co-founded in 1986. Mr. Kriens received a B.A. in Economics
from California State University, Hayward.

     PRADEEP SINDHU  co-founded Juniper Networks in February 1996 and served as
Chief Executive Officer and Chairman of the board of directors until September
1996. Since then, Dr. Sindhu has served as Vice Chairman of the board of
directors and Chief Technical Officer of Juniper Networks. From September 1984
to February 1991, Dr. Sindhu worked as a Member of the Research Staff, and from
March 1987 to February 1996, as the Principal Scientist, and from February 1994
to February 1996, as Distinguished Engineer at the Computer Science Lab, Xerox
Corporation, Palo Alto Research Center, a technology research center. Dr. Sindhu
holds a B.S.E.E. from the Indian Institute of Technology in Kanpur, an M.S.E.E.
from the University of Hawaii and a Masters in Computer Science and Ph.D. in
Computer Science from Carnegie-Mellon University.

     JOE FURGERSON  joined Juniper Networks in January 1997.  He served as our
Director of Marketing from January 1997 to September 1998 and has served as our
Vice President of Marketing since September 1998. From April 1994 to December
1996, Mr. Furgerson served as Director of Product Marketing, Network Systems
Division at 3Com Corporation, a data networking company. He holds a B.A. in
Economics from Claremont Men's College and an M.B.A. from the Stanford Graduate
School of Business.

     MARCEL GANI  joined Juniper Networks as Chief Financial Officer in February
1997. From January 1996 to January 1997, Mr. Gani served as Vice President and
Chief Financial Officer of NVIDIA Corporation, a 3D graphic processor company.
Mr. Gani also held the positions of Vice President and Chief Financial Officer
at Grand Junction Networks, a data networking company acquired by Cisco Systems,
Inc., from March 1995 to January 1996, and at Primary Access Corporation, a data
networking company acquired by 3Com Corporation, from March 1993 to March 1995.
Mr. Gani holds an M.B.A. from the University of Michigan.
                                       48
<PAGE>   51

     STEVEN HALEY  joined Juniper Networks as Vice President of Worldwide Sales
and Service in August 1997. Prior to joining Juniper Networks, Mr. Haley served
as Vice President of Sales at Cisco Systems, Inc., a data networking company,
from July 1996 to August 1997. From February 1990 to July 1996, he worked for
StrataCom, Inc., serving in a variety of management roles from Managing
Director, Europe to Vice President of Sales, Americas. He holds a B.S. in
Marketing from the University of Massachusetts, Amherst.

     GARY HEIDENREICH  joined Juniper Networks in July 1997 as Vice President of
Operations. From August 1993 to July 1997, Mr. Heidenreich served as Vice
President of Systems Manufacturing at 3Com Corporation. Mr. Heidenreich holds a
B.S.I.E. from New Mexico State University and an M.B.A. from the University of
Dallas.

     PETER L. WEXLER  joined Juniper Networks as Vice President of Engineering
in January 1997. From April 1995 to January 1997, Mr. Wexler served as Vice
President of Engineering at Bay Networks, a data networking company. From April
1993 to April 1995, Mr. Wexler served as Director of High-End Platform
Development at Wellfleet Communications, a predecessor to Bay Networks and a
manufacturer of high-performance routers. He holds a B.S.E. from State
University of New York at Stony Brook, an M.S.E. from the University of Illinois
and an M.B.A. from Boston University.

     WILLIAM R. HEARST III  has served as a Director of Juniper Networks since
February 1996 and has served as a member of the audit committee since July 1998.
Mr. Hearst is a partner with Kleiner Perkins Caufield & Byers, a venture capital
firm located in Menlo Park, California. From May 1995 to August 1996, he was the
Chief Executive Officer of At Home Corporation, a high speed Internet access and
consumer online services company. Mr. Hearst was editor and publisher of the San
Francisco Examiner, from 1984 until 1995. Mr. Hearst also serves on the boards
of Excite@Home, RePlay Networks, Com21, Inc., Oblix, Inc., Doublebill.com, Inc.,
Geocast, Network Systems Inc., the Hearst Corporation and Hearst-Argyle
Television. He is a Fellow of the AAAS, a Trustee of Carnegie Institution in
Washington, D.C. and a Trustee of the California Academy of Sciences. Mr. Hearst
is a 1972 graduate of Harvard University, holding an A.B. degree in Mathematics.

     VINOD KHOSLA  has served a Director of Juniper Networks since February 1996
and has served as a member of the compensation committee since July 1998. Mr.
Khosla has been a General Partner with the venture capital firm of Kleiner
Perkins Caufield & Byers from February 1986 to the present. Mr. Khosla was a
co-founder of Daisy Systems Corporation, an electronic design automation
company, and the founding Chief Executive Officer of Sun Microsystems, Inc., a
computer and data networking company. Mr. Khosla also serves on the boards of
Asera, Cerent, Concentric Network Corporation, Corio Inc., Corvis Corporation,
Siara Systems and QWEST Communications International Inc., as well as several
other private companies. Mr. Khosla holds a B.S.E.E. from the Indian Institute
of Technology in New Delhi, an M.S.E. from Carnegie-Mellon University, and an
M.B.A. from the Stanford Graduate School of Business.

     C. RICHARD KRAMLICH  has served as a Director of Juniper Networks since
July 1996 and has been a member of the audit committee since July 1998. Mr.
Kramlich is the co-founder and has been a General Partner of New Enterprise
Associates, L.P., a venture capital fund, since 1978. He is a director of
Healtheon Corporation, Com 21, Inc., Lumisys, Inc., Silicon Graphics, Inc. and
Chalone Wine Group, Inc. Mr. Kramlich holds a B.A. from Northwestern University
and an M.B.A. from Harvard Business School.

     WILLIAM STENSRUD  has served as a Director of Juniper Networks since
October 1996 and has served as a member of the compensation committee since July
1998. Mr. Stensrud has been a General Partner with the venture capital firm of
Enterprise Partners from January 1997 to the present. Mr. Stensrud was an
independent investor and turn-around executive from March 1996 to January 1997.
During this period Mr. Stensrud served as President at Paradyne Corporation and
as a director of Paradyne Corporation, GlobeSpan Corporation and Paradyne
Partners LLP,
                                       49
<PAGE>   52

all data networking companies. From January 1992 to July 1995, Mr. Stensrud
served as President and Chief Executive Officer of Primary Access Corporation, a
data networking company acquired by 3Com Corporation. From the acquisition
through March 1996, Mr. Stensrud served as an executive at 3Com Corporation.
From 1986 to 1992, Mr. Stensrud served as the Marketing Vice President of
StrataCom, Inc., a telecommunications equipment company, which Mr. Stensrud
co-founded. Mr. Stensrud also serves on the boards of Rhythms Corporation,
Paradyne Corporation and Packeteer Corporation. He holds a B.S. degree in
Electrical Engineering and Computer Science from Massachusetts Institute of
Technology.

                               BOARD OF DIRECTORS

     Our board of directors currently consists of six authorized members. The
board is divided into three classes, Class I, Class II and Class III, with each
class serving staggered three-year terms. The Class I Directors, currently
Messrs. Kriens and Stensrud, will stand for re-election at the 2000 annual
meeting of stockholders. The Class II Directors, currently Messrs. Khosla and
Sindhu, will stand for re-election at the 2001 annual meeting of stockholders
and the Class III Directors, currently Messrs. Hearst and Kramlich, will stand
for re-election at the 2002 annual meeting of stockholders. This classification
of the board of directors may delay or prevent a change in control of our
company or in our management. See "Description of Capital Stock -- Delaware
Anti-Takeover Law and Certain Charter and Bylaw Provisions."

     Executive officers are appointed by the board of directors on an annual
basis and serve until their successors have been elected and qualified. There
are no family relationships among any of our directors, officers or key
employees.

BOARD COMMITTEES

     We established an audit committee and a compensation committee in July
1998. The audit committee consists of Messrs. Hearst and Kramlich. The audit
committee reviews our internal accounting procedures and consults with and
reviews the services provided by our independent auditors.

     The compensation committee consists of Messrs. Khosla and Stensrud. The
compensation committee reviews and recommends to the board of directors the
compensation of all of our officers and directors, including stock compensation
and loans and establishes and reviews general policies relating to the
compensation and benefits of our employees.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Prior to establishing the compensation committee, the board of directors as
a whole performed the functions delegated to the compensation committee. No
member of the board of directors or the compensation committee serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of directors
or compensation committee.

DIRECTOR COMPENSATION

     We do not currently compensate in cash our directors for their service as
members of the board of directors, although they are reimbursed for certain
expenses in connection with attendance at board of director and compensation
committee meetings. Under our 1996 Stock Plan, nonemployee directors are
eligible to receive stock option grants at the discretion of the board of
directors or other administrator of the plan.

                                       50
<PAGE>   53

LIMITATIONS ON DIRECTORS' LIABILITY AND INDEMNIFICATION

     Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that directors
of a corporation will not be personally liable for monetary damages for breach
of their fiduciary duties as directors, except liability for:

     -  any breach of their duty of loyalty to the corporation or its
        stockholders;

     -  acts or omissions not in good faith or which involve intentional
        misconduct or a knowing violation of law;

     -  unlawful payments of dividends or unlawful stock repurchases or
        redemptions; or

     -  any transaction from which the director derived an improper personal
        benefit.

     The limitation of liability does not apply to liabilities arising under the
federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.

     Our certificate of incorporation and bylaws provide that we will indemnify
our directors and officers and may indemnify our employees and other agents to
the fullest extent permitted by law. We believe that indemnification under our
bylaws covers at least negligence and gross negligence on the part of
indemnified parties. Our bylaws also permit us to secure insurance on behalf of
any officer, director, employee or other agent for any liability arising out of
his or her actions in their capacity as an officer, director, employee or other
agent, regardless of whether the bylaws would permit indemnification.

     We have entered into agreements to indemnify our directors, executive
officers and certain other employees, in addition to the indemnification
provided for in our bylaws. These agreements, among other things, provide for
indemnification for judgments, fines, settlement amounts and certain expenses,
including attorneys' fees incurred by in any action or proceeding, including any
action by or in the right of Juniper Networks, arising out of the person's
services as a director, executive officer or employee of us, any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified persons for those positions.

     The limited liability and indemnification provisions in our certificate of
incorporation and bylaws may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duty and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards under these
indemnification provisions.

     At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor are
we aware of any threatened litigation that may result in claims for
indemnification.

                                       51
<PAGE>   54

                             EXECUTIVE COMPENSATION

     Summary Compensation Table.  The following table sets forth the
compensation earned, awarded or paid for services rendered to us in all
capacities for the fiscal year ended December 31, 1999, by our Chief Executive
Officer and our four next most highly compensated executive officers who earned
more than $100,000 in salary and bonus during the fiscal year ended December 31,
1999, whom we refer to in this prospectus collectively as the named executive
officers:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                     LONG-TERM
                                                                    COMPENSATION
                                             ANNUAL COMPENSATION       AWARDS
                                             --------------------   ------------
                                                                     SECURITIES
                                                                     UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITIONS          YEAR    SALARY      BONUS      OPTIONS(1)    COMPENSATION
- ----------------------------          ----   ---------   --------   ------------   ------------
<S>                                   <C>    <C>         <C>        <C>            <C>
Scott Kriens.......................   1999   $170,000    $ 5,000      900,000        $     --(2)
President and                         1998    170,000         --        3,735           1,200
Chief Executive Officer               1997    170,000         --           --              --
Steven Haley.......................   1999   $175,000    $    --      465,000        $284,203(3)
Vice President of                     1998    150,000     69,039      114,390           1,133(2)
Worldwide Sales and Service           1997     62,109         --           --              --
Pradeep Sindhu.....................   1999   $145,000    $12,425      540,000        $     --(2)
Chief Technical Officer               1998    140,225     25,000        5,355           1,004
                                      1997    114,000         --           --              --
Peter Wexler.......................   1999   $150,000    $ 6,000      240,000        $     --(2)
Vice President of Engineering         1998    150,000         --        3,060           1,133
                                      1997    137,500         --           --              --
Marcel Gani........................   1999   $150,000    $12,500      240,000        $     --(2)
Chief Financial Officer               1998    150,000         --        2,745           1,133
                                      1997    131,250         --           --              --
</TABLE>

- ---------------

(1) The underlying share amounts have been adjusted for the three-for-one split
    of our common stock for stockholders of record on December 31, 1999 and paid
    on January 14, 2000.

(2) Consists of premiums paid by us for term life insurance.

(3) Consists of commissions.

     Option Grants in Last Fiscal Year.  The following table shows certain
information regarding stock options granted to the named executive officers
during the fiscal year ended December 31, 1999. All of these stock options were
granted under our 1996 Stock Plan. The material terms of these option grants are
as follows: (a) nonqualified stock options; (b)granted at fair market value at
the time of grant; (c) vest over a four term with the first cliff of the grant
vesting beginning in 2001 for Mr. Kriens and Mr. Sindhu, and in 2002 Mr. Haley,
Mr. Wexler and Mr. Gani; and (d) a term of ten years, subject to earlier
termination in the event the optionee ceases to be employed by us. See "Certain
Transactions" for a description of the exercises of stock options granted to the
named executive officers under the 1996 Stock Plan. In accordance with the rules
of the Securities and Exchange Commission, also shown below is the potential
realizable value over the term of the option, the period from the grant date to
the expiration date, based on assumed rates of stock appreciation of 5% and 10%,
compounded annually. These amounts are based on certain assumed rates of
appreciation and do not represent our estimate of our future stock price. Actual
gains, if any, on stock option exercises will be dependent on the future
performance of the common stock.

                                       52
<PAGE>   55

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                        PERCENT OF                             POTENTIAL REALIZABLE VALUE AT
                          NUMBER OF    TOTAL OPTIONS                              ASSUMED ANNUAL RATES OF
                          SECURITIES      GRANTED      EXERCISE                STOCK APPRECIATION FOR OPTION
                          UNDERLYING   TO EMPLOYEES     PRICE                             TERM(3)
                           OPTIONS        DURING         PER      EXPIRATION   ------------------------------
NAME                       GRANTED       PERIOD(1)     SHARE(2)      DATE            5%             10%
- ----                      ----------   -------------   --------   ----------   --------------  --------------
<S>                       <C>          <C>             <C>        <C>          <C>             <C>
Scott Kriens............   900,000         5.387%       $60.71     10/4/09      $34,361,211     $87,078,055
Steven Haley............    30,303         0.181          3.30     2/10/09           62,889         159,374
                           119,697         0.716          3.30     2/10/09          248,413         629,528
                           315,000         1.886         60.71     10/4/09       12,026,424      30,477,320
Pradeep Sindhu..........   540,000         3.232         60.71     10/4/09       20,616,727      52,246,834
Peter Wexler............   240,000         1.436         60.71     10/4/09        9,162,990      23,220,815
Marcel Gani.............   240,000         1.436         60.71     10/4/09        9,162,990      23,220,815
</TABLE>

- ---------------

(1) Based on an aggregate of 16,837,006 options granted by us during the fiscal
    year ended December 31, 1999, to our employees, directors and consultants,
    including the named executive officers. All of the option grant numbers and
    per share numbers have been adjusted for the three-for-one split of our
    common stock for stockholders of record on December 31, 1999.

(2) Options were granted at an exercise price equal to the fair market value of
    our common stock, as determined in good faith by our board of directors. As
    of the effective date of the initial public offering, options are granted at
    fair market value on the date of grant.

(3) The potential realizable value is calculated based on the ten year term of
    the option at its time of grant. It is calculated based on the assumption
    that the closing price for the common stock on the date of grant appreciates
    at the indicated annual rate compounded annually for the entire term of the
    option and that the option is exercised and sold on the last day of its term
    for the appreciated stock price.

                                       53
<PAGE>   56

     Aggregate Option Exercises and Option Values.  The following table sets
forth information with respect to the named executive officers concerning option
exercises for the fiscal year ended December 31, 1999, and exercisable and
unexercisable options held as of December 31, 1999:

     OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                   NUMBER OF SECURITIES
                                                  UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                        OPTIONS AT              IN-THE-MONEY OPTIONS AT
                         SHARES       VALUE          DECEMBER 31, 1999           DECEMBER 31, 1999(2)
                       ACQUIRED ON   REALIZED   ---------------------------   ---------------------------
NAME                    EXERCISE       (1)      EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
- ----                   -----------   --------   -----------   -------------   -----------   -------------
<S>                    <C>           <C>        <C>           <C>             <C>           <C>
Scott Kriens.........        --      $     --         --         900,000      $        --    $47,362,500
Steven Haley.........    30,465       204,792    112,500         465,000       12,718,744     33,546,870
Pradeep Sindhu.......     5,355        22,015         --         540,000               --     28,417,500
Marcel Gani..........        --            --         --         240,000               --     12,630,000
Peter Wexler.........        --            --      3,060         240,000          345,100     12,630,000
</TABLE>

- ---------------

(1) Based on the fair market value of our stock on the date of exercise, minus
    the exercise price, multiplied by the number of shares issued upon exercise
    of the option.

(2) The value of in-the-money options is based on the closing price on December
    31, 1999 of $113.333 per share, minus the per share exercise price,
    multiplied by the number of shares underlying the option.

EMPLOYMENT AGREEMENTS

     We entered into a change of control agreement with Mr. Kriens on October 1,
1996, which provides that he will be entitled to base compensation and benefit
payments for a period of three months, in the event that his employment is
terminated in connection with a change of control of Juniper Networks. Further,
Mr. Kriens' restricted stock would be released from any repurchase option and
his stock options would become vested and exercisable as to an additional amount
equal to that amount which would have vested and become exercisable had Mr.
Kriens remained employed for a period of 18 months following the change of
control. If his employment continues following a change of control, his stock
options will be vested and exercisable at a rate 1.5 times the rate otherwise
set forth in the stock option agreement for a period of twelve months following
the change of control. Under the employment agreement, Mr. Kriens is entitled to
receive three months' base compensation and benefits, regardless of whether
there is a change of control, in the event that his employment is involuntarily
terminated. Upon involuntary termination, and regardless of whether there has
been a change of control, Mr. Kriens' restricted stock and stock options would
become immediately vested and exercisable as to an additional amount equal to
the number of stock options which would have become vested and exercisable
during the three-month period following the involuntary termination had Mr.
Kriens remained employed with us.

     We entered into a change of control agreement with Mr. Gani in February
1997, which provides that he will be entitled to receive base compensation and
benefits for a period of three months, in the event of involuntary termination.
In the event of a change of control at Juniper Networks, the vesting of Mr.
Gani's stock options will accelerate as to that number of options equal to the
number of shares that would vest over the next 30 months in accordance with our
standard vesting schedule or the balance of his unvested stock, whichever amount
is less.

                                       54
<PAGE>   57

                              CERTAIN TRANSACTIONS

     During our last fiscal year ending December 31, 1999, there has not been,
nor is there currently proposed, any transaction or series of similar
transactions to which we were or are to be a party in which the amount involved
exceeds $60,000, and in which any director, executive officer, holder of more
than 5% of our common stock or any member of the immediate family of any of
these people had or will have a direct or indirect material interest other than
compensation agreements and other arrangements, which are described where
required in "Management," and the transactions described below.

TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS

     Common Stock.  On February 26, 1996, we issued 2,250,000 shares of common
stock at a price of $0.044 per share to Mr. Sindhu, one of our founders,
executive officers and directors.

     On June 11, 1996, we issued the following shares of common stock at a price
of $0.044 per share to the following purchasers, among others:

<TABLE>
<CAPTION>
                                                                 SHARES OF
PURCHASER                                                       COMMON STOCK
- ---------                                                       ------------
<S>                                                             <C>
Kleiner, Perkins, Caufield & Byers VII......................     5,493,749
KPCB VII Founders Fund......................................       600,001
KPCB Information Sciences Zaibatsu Fund II..................       156,249
</TABLE>

     Kleiner, Perkins, Caufield & Byers VII, KPCB VII Founders Fund and KPCB
Information Sciences Zaibatsu Fund II are affiliated entities and together are
considered a holder of more than 5% of our common stock. Messrs. Khosla and
Hearst, two of our directors, are general partners of Kleiner, Perkins, Caufield
& Byers VII, KPCB VII Founders Fund and KPCB Information Sciences Zaibatsu Fund
II. Messrs. Khosla and Hearst disclaim beneficial ownership of the securities
held by such entities, except for their proportional interests in the entities.

     Series A Preferred Stock.  On June 11, 1996, we sold 1,743,751 shares of
our Series A Preferred Stock for $1.00 per share. Each share of Series A
Preferred Stock converted into 2.25 shares of common stock at the time of the
initial public offering. The purchasers of the Series A Preferred Stock
included, among others:

<TABLE>
<CAPTION>
                                                                           AS CONVERTED
                                                           SHARES OF        SHARES OF
PURCHASER                                                SERIES A STOCK    COMMON STOCK
- ---------                                                --------------    ------------
<S>                                                      <C>               <C>
Kleiner, Perkins, Caufield & Byers VII...............      1,513,834        3,406,127
KPCB VII Founders Fund...............................        165,333          371,999
KPCB Information Sciences Zaibatsu Fund II...........         43,056           96,876
</TABLE>

                                       55
<PAGE>   58

     Series B Preferred Stock.  On August 5, 1996, November 8, 1996, and
December 30, 1996, we sold a total of 3,333,334 shares, 484,683 shares, and
3,958 shares, respectively, of our Series B Preferred Stock for $2.40 per share.
In addition, on December 16, 1996, and June 18, 1997, we granted warrants
exercisable for 83,333 shares and 10,000 shares, respectively, of our Series B
Preferred Stock at an exercise price of $2.40. Each share of Series B Preferred
Stock converted into 2.25 shares of common stock at the time of the initial
public offering. The purchasers of the Series B Preferred Stock included, among
others:

<TABLE>
<CAPTION>
                                                                           AS CONVERTED
                                                           SHARES OF        SHARES OF
PURCHASER                                                SERIES B STOCK    COMMON STOCK
- ---------                                                --------------    ------------
<S>                                                      <C>               <C>
Kleiner, Perkins, Caufield & Byers VII...............        304,688          685,548
KPCB Information Sciences Zaibatsu Fund II...........          7,812           17,577
New Enterprise Associates VI, Limited Partnership....      1,214,583        2,732,812
NEA Presidents Fund, L.P.............................         31,250           70,313
NEA Ventures 1996, L.P...............................          4,167            9,376
Kriens 1996 Trust U/T/A October 29, 1996.............        364,683          820,537
Stensrud Family Trust U/T/A September 6, 1993........        120,000          270,000
</TABLE>

     New Enterprise Associates VI, Limited Partnership and NEA Presidents Fund,
L.P. and NEA Ventures 1996, L.P. are affiliated entities and together are
considered a holder of more than 5% of our common stock. Mr. Kramlich, one of
our directors, is a partner of New Enterprise Associates VI, Limited Partnership
and NEA Presidents Fund, L.P. and NEA Ventures 1996, L.P. Mr. Kramlich disclaims
beneficial ownership of the securities held by these entities, except for his
proportional interest in the entities. Mr. Kriens, one of our directors and
executive officers and a holder of more than 5% of our common stock, is a
trustee of the Kriens 1996 Trust U/T/A October 29, 1996. Mr. Stensrud, one of
our directors, is a trustee of the Stensrud Family Trust U/T/A September 16,
1993.

     Series C Preferred Stock.  On July 1, 1997, and September 30, 1997, we sold
4,479,286 shares and 671,892 shares, respectively, of our Series C Preferred
Stock for $8.93 per share. Each share of Series C Preferred Stock converted into
2.25 shares of common stock at the time of the initial public offering. The sale
of Series C Preferred Stock included, among others, the sale of 783,875 shares
of Series C Preferred Stock (1,763,718 shares as converted to common stock) to
Ericsson Business Networks AB, which is a holder of more than 5% of our common
stock.

     Series D and D-1 Preferred Stock.  On March 16, 1999, we sold 500,000
shares of our Series D Preferred Stock and 2,580,000 shares of our Series D-1
Preferred Stock for $11.03 per share to Ericsson Business Networks AB. Each
share of Series D Preferred Stock converted into one share of common stock at
the time of the initial public offering. Each share of D-1 Preferred Stock
converted into 0.38166 shares of common stock at the time of the initial public
offering.

INDEMNIFICATION

     We have entered into indemnification agreements with each of our directors
and officers. These indemnification agreements will require us to indemnify our
directors and officers to the fullest extent permitted by Delaware law.

     All future transactions, including any loans from us to our officers,
directors, principal stockholders or affiliates, will be approved by a majority
of the board of directors, including a majority of the independent and
disinterested members of the board of directors or, if required by law, a
majority of disinterested stockholders, and will be on terms no less favorable
to us than could be obtained from unaffiliated third parties.

                                       56
<PAGE>   59

                             PRINCIPAL STOCKHOLDERS

     The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of December 31, 1999:

     -  each stockholder known by us to own beneficially more than 5% of our
        common stock, as explained below;

     -  each of the named executive officers;

     -  each of our directors; and

     -  all of our directors and executive officers as a group.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options or warrants held by that person that
are currently exercisable or will become exercisable within 60 days after
December 31, 1999, are deemed outstanding, while the shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
Unless otherwise indicated in the footnotes below, the persons and entities
named in the table have sole voting or investment power with respect to all
shares beneficially owned, subject to community property laws where applicable.

                                       57
<PAGE>   60

     The number and percentage of shares beneficially owned are based on the
aggregate of 155,938,599 shares of common stock outstanding as of December 31,
1999. All share amounts have been adjusted for the three-for-one split of our
common stock to stockholders of record on December 31, 1999.

<TABLE>
<CAPTION>
                                                                       SHARES OF
                                                                      COMMON STOCK
                                                                   BENEFICIALLY OWNED
                                                                ------------------------
                                                                  NUMBER      PERCENTAGE
                                                                ----------    ----------
<S>                                                             <C>           <C>
OFFICERS AND DIRECTORS(1):
Scott Kriens(2).............................................     9,485,455       6.1%
Steven Haley(3).............................................     1,164,393          *
Pradeep Sindhu(4)...........................................     6,770,355       4.3%
Peter Wexler(5).............................................     2,028,060       1.3%
Marcel Gani(6)..............................................     1,251,495          *
William Hearst(7)...........................................    32,709,372      21.0%
c/o Kleiner Perkins Caufield & Byers
  2750 Sand Hill Road, Menlo Park, CA 94025
Vinod Khosla(8).............................................    32,709,372      21.0%
c/o Kleiner Perkins, Caufield & Byers
  2750 Sand Hill Road, Menlo Park, CA 94025
C. Richard Kramlich(9)......................................     5,812,311       3.7%
c/o New Enterprise Associates
  2490 Sand Hill Road, Menlo Park, CA 94025
William R. Stensrud(10).....................................       945,000          *
c/o Enterprise Partners
  7979 Ivanhoe Ave., Suite 550, La Jolla, CA 92037
All directors and executive officers as a group (11
  persons)(11)..............................................    62,444,026      40.0%
5% STOCKHOLDERS:
Kleiner Perkins Caufield & Byers............................    32,709,372      21.0%
  2750 Sand Hill Road, Menlo Park, CA 94025(12)
Ericsson Business Networks AB...............................     9,745,203       6.3%
  S-131 89 Stockholm, Sweden
</TABLE>

- ---------------

*  Less than 1% of the outstanding shares of common stock.

(1)  Unless otherwise indicated, the address of each listed stockholder is c/o
     Juniper Networks, Inc., 385 Ravendale Drive, Mountain View, California
     94043.

(2)  Includes 9,460,455 shares held in the name of the Kriens 1996 Trust, of
     which Mr. Kriens and his spouse are trustees, of which 1,621,377 shares are
     subject to our right of repurchase, as of December 31, 1999, which lapses
     over time and 25,000 shares subject to options which are currently
     exercisable or will become exercisable within 60 days of December 31, 1999.

(3)  Includes 60,000 shares held in the name of the Haley Family Foundation
     Trust and an aggregate of 90,000 shares held in trust for the benefit of
     Mr. Haley's children. Includes 421,875 shares subject to our right of
     repurchase as of December 31, 1999 (which lapses over time) and 119,538
     shares, subject to options which are currently exercisable or will become
     exercisable within 60 days of December 31, 1999.

(4)  Includes 281,250 shares subject to our right of repurchase, as of December
     31, 1999 (which lapses over time) and 15,000 shares subject to options
     which are currently exercisable or will be come exercisable within 60 days
     of December 31, 1999. Includes an aggregate of 180,000 shares held in
     custody for Mr. Sindhu's children pursuant to the California Uniform
     Transfer to Minors Act.

                                       58
<PAGE>   61

(5)  Includes 590,625 shares subject to our right of repurchase, as of December
     31, 1999 (which lapses over time) and 3,060 shares subject to options which
     are currently exercisable or will become exercisable within 60 days of
     December 31, 1999.

(6)  Includes 1,251,495 shares held in the name of the Gani 1995 Trust dated
     December 8, 1995, of which Mr. Gani and his spouse are trustees and of
     which 442,969 shares are subject to our right of repurchase, as of December
     31, 1999 (which lapses over time).

(7)  Comprised of 32,709,372 shares held by entities affiliated with Kleiner
     Perkins Caufield & Byers. Mr. Hearst is a general partner of Kleiner
     Perkins Caufield & Byers and is a director of Juniper Networks. Mr. Hearst
     disclaims beneficial ownership of shares held by those entities, except to
     the extent of his proportional interest arising from his partnership
     interest in Kleiner Perkins Caufield & Byers.

(8)  Comprised of 32,709,372 shares held by entities affiliated with Kleiner
     Perkins Caufield & Byers. Mr. Khosla is a general partner of Kleiner
     Perkins Caufield & Byers and is a director of Juniper Networks. Mr. Khosla
     disclaims beneficial ownership of shares held by those entities, except to
     the extent of his proportional interest arising from his partnership
     interest in Kleiner Perkins Caufield & Byers.

(9)  Includes 5,737,500 shares held by entities affiliated with New Enterprise
     Associates. Mr. Kramlich is a general partner of New Enterprise Associates
     and is a director of Juniper Networks. Mr. Kramlich disclaims beneficial
     ownership of shares held by those entities, except to the extent of his
     proportional interest in New Enterprise Associates.

(10) Includes 810,000 shares held in the name of the Stensrud Family Trust U/T/A
     September 16, 1993, as community property.

(11) Includes all shares referenced in notes 3 through 10 above, except that the
     shares beneficially owned by Messrs. Hearst and Khosla are counted only
     once in this calculation. Also includes 2,148,750 shares beneficially owned
     by two other executive officers of which 738,048 shares are subject to our
     right of repurchase as of December 31, 1999 (which lapses over time) and
     128,475 shares subject to options which are exercisable or will become
     exercisable within 60 days of December 31, 1999.

(12) Includes (i) 31,672,266 shares held by Kleiner Perkins Caufield & Byers
     VII, (ii) 812,106 shares held by KPCB Information Sciences Zaibatsu Fund
     II, and (iii) 225,000 shares held by KPCB IX Associates, LLC.

                                       59
<PAGE>   62

                        DESCRIPTION OF CONVERTIBLE NOTES

     The convertible notes will be issued under an indenture between us and
Norwest Bank Minnesota, National Association, as trustee, substantially in the
form filed as an exhibit to the registration statement of which this prospectus
forms a part. The indenture and the convertible notes are governed by New York
law. Because this section is a summary, it does not describe every aspect of the
convertible notes and the indenture. The following summaries of certain
provisions of the indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, the detailed provision of
the convertible notes and the indenture, including the definitions therein of
certain terms.

GENERAL

     The convertible notes will be general, unsecured obligations of ours. The
convertible notes will be subordinated, which means that they will rank behind
certain of our indebtedness as described below. The convertible notes will be
limited to $500,000,000 aggregate principal amount or $575,000,000 if the
underwriters exercise in full their right to purchase additional convertible
notes. We are required to repay the principal amount of the convertible notes in
full on February 15, 2007. The convertible notes will bear interest at the rate
per annum shown on the front cover of this prospectus from February   , 2000. We
will pay interest on the convertible notes on February 15 and August 15 of each
year, commencing on August 15, 2000. Interest payable per $1,000 principal
amount of convertible notes for the period from February   , 2000 to August 15,
2000 will be $          .

     You may convert the convertible notes into shares of our common stock
initially at the conversion rate stated on the front cover of this prospectus at
any time before the close of business on February 15, 2007, unless the
convertible notes have been previously redeemed or repurchased. Holders of
convertible notes called for redemption or submitted for repurchase will be
entitled to convert the convertible notes up to and including the business day
immediately preceding the date fixed for redemption or repurchase, as the case
may be. The conversion rate may be adjusted as described below.

     We may redeem the convertible notes at our option at any time on or after
the third business day after February 15, 2003, in whole or in part, at the
redemption prices set forth below under "-- Optional Redemption by Juniper,"
plus accrued and unpaid interest to the redemption date. If there is a change in
control of Juniper, you will have the right to require us to repurchase your
convertible notes as described below under "-- Repurchase at Option of Holders
Upon a Change in Control."

FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES

     The convertible notes will be issued:

     -  only in fully registered form;

     -  without interest coupons; and

     -  in denominations of $1,000 and greater multiples.

     The convertible notes will be evidenced by one or more global convertible
notes which will be deposited with the trustee as custodian for DTC and
registered in the name of Cede & Co., as nominee of DTC. Except as set forth
below, record ownership of the global note may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.

     The global note will not be registered in the name of any person, or
exchanged for convertible notes that are registered in the name of any person,
other than DTC or its nominee unless either of the following occurs:

                                       60
<PAGE>   63

     -  DTC notifies us that it is unwilling, unable or no longer qualified to
        continue acting as the depositary for the global note; or

     -  an event of default with respect to the convertible notes represented by
        the global note has occurred and is continuing.

     In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global note will be registered.

     DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes, and as a result:

     -  you cannot get convertible notes registered in your name if they are
        represented by the global note;

     -  you cannot receive physical certificated convertible notes in exchange
        for your beneficial interest in the global convertible notes;

     -  you will not be considered to be the owner or holder of the global note
        or any note it represents for any purpose; and

     -  all payments on the global note will be made to DTC or its nominee.

     The laws of some jurisdictions require that certain kinds of purchasers can
only own securities in definitive, certificated form. These laws may limit your
ability to transfer your beneficial interests in the global note to these types
of purchasers.

     Only institutions, such as a securities broker or dealer, that have
accounts with the DTC or its nominee (called "participants") and persons that
may hold beneficial interests through participants can own a beneficial interest
in the global note. The only place where the ownership of beneficial interests
in the global note will appear and the only way the transfer of those interests
can be made will be on the records kept by DTC (for their participants'
interests) and the records kept by those participants (for interests of persons
held by participants on their behalf).

     Secondary trading in bonds and convertible notes of corporate issuers is
generally settled in clearinghouse (that is, next-day) funds. In contrast,
beneficial interests in a global note usually trade in DTC's same-day funds
settlement system, and settle in immediately available funds. We make no
representations as to the effect that settlement in immediately available funds
will have on trading activity in those beneficial interests.

     We will make cash payments of interest on and principal of and the
redemption or repurchase price of the global note to Cede, the nominee for DTC,
as the registered owner of the global note. We will make these payments by wire
transfer of immediately available funds on each payment date.

     We have been informed that DTC's practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
respective beneficial interests in the convertible notes represented by the
global note as shown on DTC's records, unless DTC has reason to believe that it
will not receive payment on that payment date. Payments by participants to
owners of beneficial interests in convertible notes represented by the global
note held through participants will be the responsibility of those participants,
as is now the case with securities held for the accounts of customers registered
in street name.

     We will send any redemption notices to Cede. We understand that if less
than all the convertible notes are being redeemed, DTC's practice is to
determine by lot the amount of the holdings of each participant to be redeemed.

     We also understand that neither DTC nor Cede will consent or vote with
respect to the convertible notes. We have been advised that under its usual
procedures, DTC will mail an
                                       61
<PAGE>   64

omnibus proxy to us as soon as possible after the record date. The omnibus proxy
assigns Cede's consenting or voting rights to those participants to whose
accounts the convertible notes are credited on the record date identified in a
listing attached to the omnibus proxy.

     Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.

     DTC has advised us that it will take any action permitted to be taken by a
holder of convertible notes, including the presentation of convertible notes for
exchange, only at the direction of one or more participants to whose account
with DTC interests in the global note are credited and only in respect of such
portion of the principal amount of the convertible notes represented by the
global note as to which such participant or participants has or have given such
direction.

     DTC has also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a clearing corporation within the meaning of the Uniform
Commercial Code, as amended, and a clearing agency registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Certain of such participants, or their
representatives, together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.

     The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the trustee are not responsible for maintaining,
supervising or reviewing any of those records.

CONVERSION RIGHTS

     You have the option to convert any portion of the principal amount of any
note that is an integral multiple of $1,000 into shares of our common stock at
any time on or prior to the close of business on the maturity date. The
conversion rate will be equal to the number of shares per $1,000 principal
amount of convertible notes shown on the cover page of this prospectus. The
conversion rate is equivalent to a conversion price of approximately
$          . Your right to convert a convertible note called for redemption or
delivered for repurchase will terminate at the close of business on the business
day immediately preceding the redemption date or repurchase date for that note,
unless we default in making the payment due upon redemption or repurchase.

     You may convert all or part of any convertible note by delivering the
convertible note at the Corporate Trust Office of the trustee in the Borough of
Manhattan, the city of New York, accompanied by a duly signed and completed
conversion notice, a copy of which may be obtained by the trustee. The
conversion date will be the date on which the convertible note and the duly
signed and completed conversion notice are so delivered.

     As promptly as practicable on or after the conversion date, we will issue
and deliver to the trustee a certificate or certificates for the number of full
shares of our common stock issuable

                                       62
<PAGE>   65

upon conversion, together with payment in lieu of any fraction of a share. The
certificate will then be sent by the trustee to the conversion agent for
delivery to the holder. The shares of our common stock issuable upon conversion
of the convertible notes will be fully paid and nonassessable and will rank
equally with the other shares of our common stock.

     If you surrender a convertible note for conversion on a date that is not an
interest payment date, you will not be entitled to receive any interest for the
period from the next preceding interest payment date to the conversion date,
except as described below in this paragraph. Any note surrendered for conversion
during the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date (except
convertible notes, or portions thereof, called for redemption on a redemption
date or to be repurchased on a repurchase date for which the right to convert
would terminate during such period) must be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the principal
amount of convertible notes being surrendered for conversion. In the case of any
note which has been converted after any regular record date but before the next
succeeding interest payment date, interest payable on such interest payment date
shall be payable on such interest payment date notwithstanding such conversion,
and such interest shall be paid to the holder of such note on such regular
record date.

     No other payment or adjustment for interest, or for any dividends in
respect of our common stock, will be made upon conversion. Holders of our common
stock issued upon conversion will not be entitled to receive any dividends
payable to holders of our common stock as of any record time or date before the
close of business on the conversion date. We will not issue fractional shares
upon conversion. Instead, we will pay cash based on the market price of our
common stock at the close of business on the conversion date.

     You will not be required to pay any taxes or duties relating to the issue
or delivery of our common stock on conversion but you will be required to pay
any tax or duty relating to any transfer involved in the issue or delivery of
our common stock in a name other than yours. Certificates representing shares of
our common stock will not be issued or delivered unless all taxes and duties, if
any, payable by you have been paid.

     The conversion rate will be subject to adjustment for, among other things:

     -  dividends and other distributions payable in our common stock on shares
        of our capital stock,

     -  the issuance to all holders of our common stock of rights, options or
        warrants entitling them to subscribe for or purchase our common stock at
        less than the then current market price of such common stock as of the
        record date for shareholders entitled to receive such rights, options or
        warrants,

     -  subdivisions, combinations and reclassifications of our common stock,

     -  distributions to all holders of our common stock of evidences of our
        indebtedness, shares of capital stock, cash or assets, including
        securities, but excluding:

       -  those dividends, rights, options, warrants and distributions referred
          to above,

       -  dividends and distributions paid exclusively in cash, and

       -  distributions upon mergers or consolidations discussed below,

     -  distributions consisting exclusively of cash, excluding any cash portion
        of distributions referred to in the bullet point immediately above, or
        cash distributed upon a merger or

                                       63
<PAGE>   66

       consolidation to which the next succeeding bullet point applies, to all
       holders of our common stock in an aggregate amount that, combined
       together with:

       -  other all-cash distributions made within the preceding 365-day period
          in respect of which no adjustment has been made, and

       -  any cash and the fair market value of other consideration payable in
          connection with any tender offer by us or any of our subsidiaries for
          our common stock concluded within the preceding 365-day period in
          respect of which no adjustment has been made,

       exceeds 10% of our market capitalization, being the product of the
       current market price per share of the common stock on the record date for
       such distribution and the number of shares of common stock then
       outstanding, and

     -  the successful completion of a tender offer made by us or any of our
        subsidiaries for our common stock which involves an aggregate
        consideration that, together with:

       -  any cash and other consideration payable in a tender offer by us or
          any of our subsidiaries for our common stock expiring within the
          365-day period preceding the expiration of that tender offer in
          respect of which no adjustment has been made, and

       -  the aggregate amount of any all cash distributions referred to in the
          immediately preceding bullet point above to all holders of our common
          stock within the 365-day period preceding the expiration of that
          tender offer in respect of which no adjustments have been made,

       exceeds 10% of our market capitalization on the expiration of such tender
       offer.

     We reserve the right to effect such increases in the conversion rate in
addition to those required by the foregoing provisions as we consider to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients. We will not be required to make any adjustment to the conversion
rate until the cumulative adjustments amount to 1.0% or more of the conversion
rate. We will compute all adjustments to the conversion rate and will give
notice by mail to holders of the registered convertible notes of any
adjustments.

     In case of any consolidation or merger of Juniper with or into another
entity or any merger of another entity into Juniper, or in case of any sale or
transfer of all or substantially all of our assets, each note then outstanding
will become convertible only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of common stock into which the convertible notes
were convertible immediately prior to the consolidation or merger or sale or
transfer. The preceding sentence will not apply to a merger which does not
result in any reclassification, conversion, exchange or cancellation of the
common stock.

     We may increase the conversion rate for any period of at least 20 days,
upon at least 15 days notice, if our board of directors determines that the
increase would be in our best interest. The board of directors' determination in
this regard will be conclusive. We will give holders of convertible notes at
least 15 days' notice of such an increase in the conversion rate. Any increase,
however, will not be taken into account for purposes of determining whether the
closing price of our common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a change in control as defined
below.

     If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, such as distributions of evidences of indebtedness or
assets of Juniper, but generally not stock dividends on common stock or rights
to subscribe for common stock, and, pursuant to the anti-dilution

                                       64
<PAGE>   67

provisions of the indenture, the number of shares into which convertible notes
are convertible is increased, that increase may be deemed for United States
federal income tax purposes to be the payment of a taxable dividend to holders
of convertible notes. See "Certain United States Federal Income and Estate Tax
Consequences -- U.S. Holders."

SUBORDINATION

     The convertible notes are subordinated and, as a result, the payment of the
principal, any premium and interest on the convertible notes, including amounts
payable on any redemption or repurchase, will be subordinated to the prior
payment in full, in cash or other payment satisfactory to holders of senior
debt, of all of our senior debt. The convertible notes are also effectively
subordinated to any debt or other liabilities of our subsidiaries.

     Senior debt is defined in the indenture to mean: the principal of, and
premium, if any, and interest, including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding, on, and
all fees and other amounts payable in connection with, the following, whether
absolute or contingent, secured or unsecured, due or to become due, outstanding
on the date of the indenture or thereafter created, incurred or assumed:

     -  our indebtedness evidenced by a credit or loan agreement, note, bond,
        debenture or other written obligation,

     -  all of our obligations for money borrowed,

     -  all of our obligations evidenced by a note or similar instrument given
        in connection with the acquisition of any businesses, properties or
        assets of any kind,

     -  our obligations:

       -  as lessee under leases required to be capitalized on the balance sheet
          of the lessee under generally accepted accounting principles, or

       -  as lessee under other leases for facilities, capital equipment or
          related assets, whether or not capitalized, entered into or leased for
          financing purposes,

     -  all of our obligations under interest rate and currency swaps, caps,
        floors, collars, hedge agreements, forward contracts or similar
        agreements or arrangements,

     -  all of our obligations with respect to letters of credit, bankers'
        acceptances and similar facilities, including reimbursement obligations
        with respect to the foregoing,

     -  all of our obligations issued or assumed as the deferred purchase price
        of property or services, but excluding trade accounts payable and
        accrued liabilities arising in the ordinary course of business,

     -  all obligations of the type referred to in the above clauses of another
        person and all dividends of another person, the payment of which, in
        either case, we have assumed or guaranteed, or for which we are
        responsible or liable, directly or indirectly, jointly or severally, as
        obligor, guarantor or otherwise, or which are secured by a lien on our
        property, and

     -  renewals, extensions, modifications, replacements, restatements and
        refundings of, or any indebtedness or obligation issued in exchange for,
        any such indebtedness or obligation described in the above clauses of
        this definition.

Senior debt will not include the convertible notes or any other indebtedness or
obligation if its terms or the terms of the instrument under which or pursuant
to which it is issued expressly provide that it is not superior in right of
payment to the convertible notes.

                                       65
<PAGE>   68

     We may not make any payment on account of principal, premium or interest on
the convertible notes, or redemption or repurchase of the convertible notes, if
either of the following occurs:

     -  we default in our obligations to pay principal, premium, interest or
        other amounts on our senior debt, including a default under any
        redemption or repurchase obligation, and the default continues beyond
        any grace period that we may have to make those payments; or

     -  any other default occurs and is continuing on any designated senior debt
        and:

       -  the default permits the holders of the designated senior debt to
          accelerate its maturity, and

       -  the trustee has received a notice (a "payment blockage notice") of the
          default from us, the holder of such debt or such other person
          permitted to give such notice under the indenture.

     If payments of the convertible notes have been blocked by a payment default
on senior debt, payments on the convertible notes may resume when the payment
default has been cured or waived or ceases to exist. If payments on the
convertible notes have been blocked by a nonpayment default, payments on the
convertible notes may resume on the earlier of:

     -  the date the nonpayment default is cured or waived or ceases to exist,
        or

     -  179 days after the payment blockage notice is received.

     No nonpayment default that existed on the day a payment blockage notice was
delivered to the trustee can be used as the basis for any subsequent payment
blockage notice. In addition, once a holder of designated senior debt has
blocked payment on the convertible notes by giving a payment blockage notice, no
new period of payment blockage can be commenced pursuant to a subsequent payment
blockage notice until both of the following are satisfied:

     -  365 days have elapsed since the effectiveness of the immediately prior
        payment blockage notice; and

     -  all scheduled payments of principal, any premium and interest with
        respect to the convertible notes that have come due have been paid in
        full in cash.

     Designated senior debt means our obligations under any particular senior
debt in which the instrument creating or evidencing the same or the assumption
or guarantee thereof, or related agreements or documents to which we are a
party, expressly provides that such indebtedness shall be designated senior debt
for purposes of the indenture. The instrument, agreement or other document
evidencing any designated senior debt may place limitations and conditions on
the right of such senior debt to exercise the rights of designated senior debt.

     In addition, upon any acceleration of the principal due on the convertible
notes as a result of an event of default or payment or distribution of our
assets to creditors upon any dissolution, winding up, liquidation or
reorganization, whether voluntary or involuntary, marshaling of assets,
assignment for the benefit of creditors, or in bankruptcy, insolvency,
receivership or other similar proceedings, all principal, premium, if any,
interest and other amounts due on all senior debt must be paid in full before
you are entitled to receive any payment. By reason of such subordination, in the
event of insolvency, our creditors who are holders of senior debt are likely to
recover more, ratably, than the you are, and you will likely to experience a
reduction or elimination of payments on the convertible notes.

     In addition, the convertible notes will be structurally subordinated to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because our right to receive any
assets of our subsidiaries upon their liquidation or reorganization, and the
right of the holders of the convertible notes to participate in those assets,

                                       66
<PAGE>   69

will be effectively subordinated to the claims of that subsidiary's creditors,
including trade creditors, except to the extent that we are recognized as a
creditor of such subsidiary, in which case our claims would still be subordinate
to any security interest in the assets of the subsidiary and any indebtedness of
the subsidiary senior to us.

     The indenture does not limit our ability to incur senior debt or our
ability or the ability of our subsidiaries to incur any other indebtedness.

OPTIONAL REDEMPTION BY JUNIPER NETWORKS

     On or after the third business day after February 15, 2003 we may redeem
the convertible notes in whole or in part, at the prices set forth below. If we
elect to redeem all or part of the convertible notes, we will give at least 30,
but no more than 60, days notice to you.

     The redemption price, expressed as a percentage of principal amount, is as
follows for the following periods:

<TABLE>
<CAPTION>
                                                                REDEMPTION
PERIOD                                                            PRICE
- ------                                                          ----------
<S>                                                             <C>
Beginning on the third business day after February 15, 2003
  and ending on February 14, 2004...........................
Beginning on February 15, 2004 and ending on February 14,
  2005......................................................
Beginning on February 15, 2005 and ending on February 14,
  2006......................................................
Beginning on February 15, 2006 and ending on February 14,
  2007......................................................
</TABLE>

and thereafter is equal to 100%. In each case, we will pay interest to, but
excluding the redemption date.

     No sinking fund is provided for the convertible notes, which means that the
indenture does not require us to redeem or retire the convertible notes
periodically.

PAYMENT AND CONVERSION

     We will make all payments of principal and interest on the convertible
notes by dollar check drawn on an account maintained at a bank in the city of
New York. If you hold registered convertible notes with a face value greater
than $2,000,000, at your request we will make payments of principal or interest
to you by wire transfer to an account maintained by you at a bank in the city of
New York. Payment of any interest on the convertible notes will be made to the
person in whose name the note, or any predecessor note, is registered at the
close of business on February 1 or August 1, whether or not a business day,
immediately preceding the relevant interest payment date (a "regular record
date"). If you hold registered convertible notes with a face value in excess of
$2,000,000 and you would like to receive payments by wire transfer, you will be
required to provide the trustee with wire transfer instructions at least 15 days
prior to the relevant payment date.

     Payments on any global note registered in the name of DTC or its nominee
will be payable by the trustee to DTC or its nominee in its capacity as the
registered holder under the indenture. Under the terms of the indenture, we and
the trustee will treat the persons in whose names the convertible notes,
including any global note, are registered as the owners for the purpose of
receiving payments and for all other purposes. Consequently, neither we, the
trustee nor any of our agents or the trustee's agents has or will have any
responsibility or liability for:

     -  any aspect of DTC's records or any participant's or indirect
        participant's records relating to or payments made on account of
        beneficial ownership interests in the global note, or for maintaining,
        supervising or reviewing any of DTC's records or any participant's or
        indirect participant's records relating to the beneficial ownership
        interests in the global note, or

                                       67
<PAGE>   70

     -  any other matter relating to the actions and practices of DTC or any of
        its participants or indirect participants.

     We will not be required to make any payment on the convertible notes due on
any day which is not a business day until the next succeeding business day. The
payment made on the next succeeding business day will be treated as though it
were paid on the original due date and no interest will accrue on the payment
for the additional period of time.

     Convertible notes may be surrendered for conversion at the Corporate Trust
Office of the trustee in the Borough of Manhattan, New York. Convertible notes
surrendered for conversion must be accompanied by appropriate notices and any
payments in respect of interest or taxes, as applicable, as described above
under "-- Conversion Rights."

     We have initially appointed the trustee as paying agent and conversion
agent. We may terminate the appointment of any paying agent or conversion agent
and appoint additional or other paying agents and conversion agents. However,
until the convertible notes have been delivered to the trustee for cancellation,
or moneys sufficient to pay the principal of, premium, if any, and interest on
the convertible notes have been made available for payment and either paid or
returned to us as provided in the indenture, the trustee will maintain an office
or agency in the Borough of Manhattan, New York for surrender of convertible
notes for conversion. Notice of any termination or appointment and of any change
in the office through which any paying agent or conversion agent will act will
be given in accordance with "-- Notices" below.

     All moneys deposited with the trustee or any paying agent, or then held by
us, in trust for the payment of principal of, premium, if any, or interest on
any convertible notes which remain unclaimed at the end of two years after the
payment has become due and payable will be repaid to us, and you will then look
only to us for payment.

REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL

     If a change in control as defined below occurs, you will have the right, at
your option, to require us to repurchase all of your convertible notes not
previously called for redemption, or any portion of the principal amount
thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we
are required to pay is 100% of the principal amount of the convertible notes to
be repurchased, together with interest accrued to, but excluding, the repurchase
date.

     At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock valued at 95% of the average of the
closing prices of the our common stock for the five trading days immediately
preceding and including the third trading day prior to the repurchase date. We
may only pay the repurchase price in our common stock if we satisfy conditions
provided in the indenture.

     Within 30 days after the occurrence of a change in control, we are
obligated to give to you notice of the change in control and of the repurchase
right arising as a result of the change of control. We must also deliver a copy
of this notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of our notice irrevocable
written notice to the trustee of your exercise of your repurchase right,
together with the convertible notes with respect to which the right is being
exercised. We are required to repurchase the convertible notes on the date that
is 45 days after the date of our notice.

     A change in control will be deemed to have occurred at the time after the
convertible notes are originally issued that any of the following occurs:

     -  any person, including any syndicate or group deemed to be a "person"
        under Section 13(d)(3) of the Exchange Act, acquires a beneficial
        ownership, directly or indirectly, through a purchase, merger or other
        acquisition transaction or series of transactions, of shares of our
        capital stock entitling the person to exercise 50% or more

                                       68
<PAGE>   71

       of the total voting power of all shares of our capital stock that is
       entitled to vote generally in elections of directors, other than an
       acquisition by us, any of our subsidiaries or any of our employee benefit
       plans; or

     -  we merge or consolidate with or into any other person, any merger of
        another person into us or we convey, sell, transfer or lease all or
        substantially all of our assets to another person, other than

        -  any such transaction:

           -  that does not result in any reclassification, conversion, exchange
              or cancellation of outstanding shares of our capital stock, and

           -  pursuant to which the holders of our common stock immediately
              prior to such transaction have the entitlement to exercise,
              directly or indirectly, 50% or more of the total voting power of
              all shares of capital stock entitled to vote generally in the
              election of directors of the continuing or surviving corporation
              immediately after such transaction, and

        -  any merger which is effected solely to change our jurisdiction of
           incorporation and results in a reclassification, conversion or
           exchange of outstanding shares of our common stock into solely shares
           of common stock.

     However, a change in control will not be deemed to have occurred if either:

     -  the closing price per share of our common stock for any five trading
        days within the period of 10 consecutive trading days ending immediately
        after the later of the change in control or the public announcement of
        the change in control, in the case of a change in control relating to an
        acquisition of capital stock, or the period of 10 consecutive trading
        days ending immediately before the change in control, in the case of
        change in control relating to a merger, consolidation or asset sale,
        equals or exceeds 105% of the conversion price of the convertible notes
        in effect on each of those trading days, or

     -  all of the consideration, excluding cash payments for fractional shares
        and cash payments made pursuant to dissenters' appraisal rights, in a
        merger or consolidation otherwise constituting a change of control under
        the first and second bullet points in the preceding paragraph above
        consists of shares of common stock traded on a national securities
        exchange or quoted on the Nasdaq National Market, or will be so traded
        or quoted immediately following such merger or consolidation, and as a
        result of such merger or consolidation the convertible notes become
        convertible solely into such common stock.

     For purposes of these provisions:

     -  the conversion price is equal to $1,000 divided by the conversion rate;

     -  whether a person is a "beneficial owner" will be determined in
        accordance with Rule 13d-3 under the Exchange Act; and

     -  "person" includes any syndicate or group that would be deemed to be a
        "person" under Section 13(d)(3) of the Exchange Act.

     The rules and regulations promulgated under the Exchange Act requires the
dissemination of prescribed information to security holders in the event of an
issuer tender offer and may apply in the event that the repurchase option
becomes available to you. We will comply with this rule to the extent it applies
at that time.

     We may, to the extent permitted by applicable law, at any time purchase
convertible notes in the open market, by tender at any price or by private
agreement. Any note that we purchase may, to the extent permitted by applicable
law and subject to restrictions contained in the
                                       69
<PAGE>   72

purchase agreement with the underwriters, be re-issued or resold or may, at our
option, be surrendered to the trustee for cancellation. Any convertible notes
surrendered for cancellation may not be re-issued or resold and will be canceled
promptly.

     The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of all or substantially all of
our assets. There is no precise, established definition of the phrase
substantially all under applicable law. Accordingly, your ability to require us
to repurchase your convertible notes as a result of conveyance, transfer, sale,
lease or other disposition of less than all of our assets may be uncertain.

     The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may adversely
affect you.

     Our ability to repurchase convertible notes upon the occurrence of a change
in control is subject to important limitations. Some of the events constituting
a change in control could result in an event of default under our senior debt.
Moreover, a change in control could cause an event of default under, or be
prohibited or limited by, the terms of our senior debt. As a result, unless we
were to obtain a waiver, a repurchase of the convertible notes in cash could be
prohibited under the subordination provisions of the indenture until the senior
debt is paid in full. Although we have the right to repurchase the convertible
notes with our common stock, subject to certain conditions, we cannot assure you
that we would have the financial resources, or would be able to arrange
financing, to pay the repurchase price in cash for all the convertible notes
that might be delivered by holders of convertible notes seeking to exercise the
repurchase right. If we were to fail to repurchase the convertible notes when
required following a change in control, an event of default under the indenture
would occur, whether or not such repurchase is permitted by the subordination
provisions of the indenture. Any such default may, in turn, cause a default
under our senior debt. See "-- Subordination".

MERGERS AND SALES OF ASSETS BY THE COMPANY

     We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us unless:

     -  the person formed by such consolidation or into or with which we are
        merged or the person to which our properties and assets are so conveyed,
        transferred, sold or leased, shall be a corporation, limited liability
        company, partnership or trust organized and existing under the laws of
        the United States, any State within the United States or the District of
        Columbia and, if we are not the surviving person, the surviving person
        assumes the payment of the principal of, premium, if any, and interest
        on the convertible notes and the performance of our other covenants
        under the indenture, and

     -  immediately after giving effect to the transaction, no event of default,
        and no event that, after notice or lapse of time or both, would become
        an event of default, will have occurred and be continuing.

EVENTS OF DEFAULT

     The following will be events of default under the indenture:

     -  we fail to pay principal of or premium, if any, on any note when due,
        whether or not prohibited by the subordination provisions of the
        indenture;

     -  we fail to pay any interest on any note when due, which failure
        continues for 30 days, whether or not prohibited by the subordination
        provisions of the indenture;

                                       70
<PAGE>   73

     -  we fail to provide notice of a change in control, whether or not such
        notice is prohibited by the subordination provisions of the indenture;

     -  we fail to perform any other covenant in the indenture, which failure
        continues for 60 days after written notice as provided in the indenture;

     -  any indebtedness under any bonds, debentures, convertible notes or other
        evidences of indebtedness for money borrowed, or any guarantee thereto,
        by us or any of our significant subsidiaries in an aggregate principal
        amount in excess of $25,000,000 is not paid when due either at its
        stated maturity or upon acceleration thereof, and such indebtedness is
        not discharged, or such acceleration is not rescinded or annulled,
        within a period of 30 days after notice as provided in the indenture;
        and

     -  certain events of bankruptcy, insolvency or reorganization involving us
        or any of our significant subsidiaries.

     Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any holder, unless the holder shall
have furnished reasonable indemnity to the trustee. Subject to providing
indemnification of the trustee, the holders of a majority in aggregate principal
amount of the outstanding convertible notes will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the trustee.

     If an event of default other than an event of default arising from events
of insolvency, bankruptcy or reorganization occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of the outstanding
convertible notes may, subject to the subordination provisions of the indenture,
accelerate the maturity of all convertible notes. However, after such
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding convertible notes
may, under certain circumstances, rescind and annul the acceleration if all
events of default, other than the non-payment of principal of the convertible
notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in the indenture. If an event of default
arising from events of insolvency, bankruptcy or reorganization occurs, then the
principal of, and accrued interest on, all the convertible notes will
automatically become immediately due and payable without any declaration or
other act on the part of the holders of the convertible notes or the trustee.
For information as to waiver of defaults, see "-- Meetings, Modification and
Waiver."

     You will not have any right to institute any proceeding with respect to the
indenture, or for any remedy under the indenture, unless you give the trustee
written notice of a continuing event of default and the holders of at least 25%
in aggregate principal amount of the outstanding convertible notes have made
written request, and furnished reasonable indemnity, to the trustee to institute
proceedings, and the trustee has not received from the holders of a majority in
aggregate principal amount of the outstanding convertible notes a direction
inconsistent with the written request and shall have failed to institute such
proceeding within 60 days. However, these limitations do not apply to a suit
instituted by you for the enforcement of payment of the principal of, premium,
if any, or interest on your convertible note on or after the respective due
dates expressed in your convertible note or your right to convert your
convertible note in accordance with the indenture.

     We will be required to furnish to the trustee annually a statement as to
our performance of certain of our obligations under the indenture and as to any
default in such performance.

                                       71
<PAGE>   74

MEETINGS, MODIFICATION AND WAIVER

     The indenture contains provision for convening meetings of the holders of
convertible notes to consider matters affecting their interests.

     Certain limited modifications of the indenture may be made without the
necessity of obtaining the consent of the holders of the convertible notes.
Other modifications and amendments of the indenture may be made, and certain
past defaults by us may be waived, either:

     -  with the written consent of the holders of not less than a majority in
        aggregate principal amount of the convertible notes at the time
        outstanding, or

     -  by the adoption of a resolution, at a meeting of holders of the
        convertible notes at which a quorum is present, by the holders of at
        least 66 2/3% in aggregate principal amount of the convertible notes
        represented at such meeting.

The quorum at any meeting called to adopt a resolution will be persons holding
or representing a majority in aggregate principal amount of the convertible
notes at the time outstanding and, at any reconvened meeting adjourned for lack
of a quorum, 25% of such aggregate principal amount.

     However, a modification or amendment requires the consent of the holder of
each outstanding note affected if it would:

     -  change the stated maturity of the principal or interest of a note;

     -  reduce the principal amount of, or any premium or interest on, any note;

     -  reduce the amount payable upon a redemption or mandatory repurchase;

     -  modify the provisions with respect to the repurchase rights of holders
        of convertible notes in a manner adverse to the holders;

     -  change the place or currency of payment on a note;

     -  impair the right to institute suit for the enforcement of any payment on
        any note;

     -  modify our obligation to maintain an office or agency in New York City;

     -  modify the subordination provisions in a manner that is adverse to the
        holders of the convertible notes;

     -  adversely affect the right to convert the convertible notes;

     -  reduce the above-stated percentage of the principal amount of the
        holders whose consent is needed to modify or amend the indenture;

     -  reduce the percentage of the principal amount of the holders whose
        consent is needed to waive compliance with certain provisions of the
        indenture or to waive certain defaults; or

     -  reduce the percentage required for the adoption of a resolution or the
        quorum required at any meeting of holders of convertible notes at which
        a resolution is adopted.

     The holders of a majority in aggregate principal amount of the outstanding
convertible notes may waive compliance by us with certain restrictive provisions
of the indenture by written consent. Holders of at least 66 2/3% in aggregate of
the principal amount of convertible notes represented at a meeting may also
waive compliance by us with certain restrictive provisions of the indenture by
the adoption of a resolution at the meeting if a quorum of holders are present
and certain other conditions are met. The holders of a majority in aggregate
principal amount of the outstanding convertible notes also may waive by written
consent any past default under the indenture, except a default in the payment of
principal, premium, if any, or interest.

                                       72
<PAGE>   75

NOTICES

     Notice to holders of the registered convertible notes will be given by mail
to the addresses as they appear in the security register. Notices will be deemed
to have been given on the date of such mailing.

     Notice of a redemption of convertible notes will be given not less than 30
nor more than 60 days prior to the redemption date and will specify the
redemption date. A notice of redemption of the convertible notes will be
irrevocable.

REPLACEMENT OF CONVERTIBLE NOTES

     We will replace any note that becomes mutilated, destroyed, stolen or lost
at the expense of the holder upon delivery to the trustee of the mutilated
convertible notes or evidence of the loss, theft or destruction satisfactory to
us and the trustee. In the case of a lost, stolen or destroyed note, indemnity
satisfactory to the trustee and us may be required at the expense of the holder
of the note before a replacement note will be issued.

PAYMENT OF STAMP AND OTHER TAXES

     We will pay all stamp and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or taxing authority thereof
or therein with respect to the issuance of the convertible notes or of shares of
stock upon conversion of the convertible notes. We will not be required to make
any payment with respect to any other tax, assessment or governmental charge
imposed by any government or any political subdivision thereof or taxing
authority thereof or therein.

GOVERNING LAW

     The indenture and the convertible notes will be governed by and construed
in accordance with the laws of the State of New York, United States of America.

THE TRUSTEE

     If an event of default occurs and is continuing, the trustee will be
required to use the degree of care of a prudent person in the conduct of his own
affairs in the exercise of its powers. Subject to such provisions, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the holders of convertible notes, unless they
shall have furnished to the trustee reasonable security or indemnity.

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     We are authorized to issue 200,000,000 shares of common stock, $0.00001 par
value, and 10,000,000 shares of undesignated preferred stock, $0.00001 par
value. The following description of our capital stock does not purport to be
complete and is subject to and qualified by our certificate of incorporation and
bylaws, which are included as exhibits to the Registration Statement of which
this prospectus forms a part, and by the provisions of applicable Delaware law.

COMMON STOCK

     As of December 31, 1999, there were 155,938,599 shares of common stock
outstanding which were held of record by approximately 300 stockholders.

                                       73
<PAGE>   76

     The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the board of directors out of funds legally available for that
purpose. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of Juniper Networks, the holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities, subject to
prior distribution rights of preferred stock, if any, then outstanding. The
common stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
nonassessable, and the shares of common stock to be issued upon the closing of
this offering will be fully paid and nonassessable.

PREFERRED STOCK

     The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, any or all
of which may be greater than the rights of the common stock. We cannot state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of the common stock until the board of directors determines the
specific rights of the holders of such preferred stock. However, the effects
might include, among other things, restricting dividends on the common stock,
diluting the voting power of the common stock, impairing the liquidation rights
of the common stock and delaying or preventing a change in control of Juniper
Networks without further action by the stockholders. There are no shares of
preferred stock outstanding as of December 31, 1999. We have no present plans to
issue any shares of preferred stock.

REGISTRATION RIGHTS

     Under the terms of certain registration rights agreements between us and
the holders of the registrable securities, twelve months after the closing of
our initial public offering and at their expense, require on three separate
occasions that we register their shares for public resale on Form S-3 or similar
short-form registration, provided that we are eligible to use Form S-3 or
similar short-form registration, and provided further that the value of the
securities to be registered is at least $5,000,000. Furthermore, in the event we
elect to register any of our shares of common stock for purposes of effecting
any public offering, the holders of registrable securities are entitled, at our
expense, to include their shares of common stock in the registration, subject to
the right of the underwriter to reduce the number of shares proposed to be
registered in view of market conditions.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

     Certain provisions of Delaware law and our certificate of incorporation and
bylaws could make it more difficult to acquire us by means of a tender offer, a
proxy contest or otherwise and the removal of incumbent officers and directors.
These provisions, summarized below, are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of us to first negotiate with us. We believe
that the benefits of increased protection of our potential ability to negotiate
with the proponent of an unfriendly or unsolicited proposal to acquire or
restructure us outweigh the disadvantages of discouraging takeover or
acquisition proposals because, among other things, negotiation of these
proposals could result in an improvement of their terms.

     We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the
                                       74
<PAGE>   77

date the person because an interested stockholder, unless (with certain
exceptions) the "business combination" or the transaction in which the person
became an interested stockholder is approved in a prescribed manner. Generally,
a "business combination" includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns (or within three years prior to the determination of
interested stockholder status, did own) 15% or more of a corporation's voting
stock. The existence of this provision would be expected to have an
anti-takeover effect with respect to transactions not approved in advance by the
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.

     Our certificate of incorporation and bylaws require that any action
required or permitted to be taken by our stockholders must be effected at a duly
called annual or special meeting of the stockholders and may not be effected by
a consent in writing. In addition, special meetings of our stockholders may be
called only by the board of directors or certain of our officers. Our
certificate of incorporation and bylaws also provide that, beginning upon the
closing of this offering, our board of directors will be divided into three
classes, with each class serving staggered three-year terms, and that certain
amendments of the certificate of incorporation and of the bylaws require the
approval of holders of at least 66 2/3% of the voting power of all outstanding
stock. These provisions may have the effect of deterring hostile takeovers or
delaying changes in control or management of Juniper Networks.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for the common stock is Norwest Bank
Minnesota, N.A.

        CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES

     The following is a general discussion of certain U.S. federal income and
estate tax consequences to beneficial owners of the convertible notes or
underlying common stock. This discussion is based upon the Internal Revenue Code
of 1986, as amended (the "code"), U.S. Treasury Regulations ("regulations"),
Internal Revenue Service ("IRS") rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change, possibly with
retroactive effect, or different interpretation.

     This discussion is for general information only and does not address all
aspects of U.S. federal income taxation that may be relevant to beneficial
owners of the convertible notes or common stock. This discussion does not
describe the tax consequences:

     -  arising under the laws of any foreign, state or local jurisdiction,

     -  that may be relevant to particular beneficial owners in light of their
        personal circumstances, such as holders subject to the U.S. federal
        alternative minimum tax, or

     -  to certain types of beneficial owners, such as certain financial
        institutions, insurance companies, tax-exempt entities, dealers in
        securities, persons who hold the convertible notes or common stock in
        connection with a straddle, hedging or conversion transaction for U.S.
        federal income tax purposes, or persons that have a "functional
        currency" other than the U.S. dollar, who may be subject to special
        rules.

This discussion assumes that each holder has acquired the convertible notes on
their original issuance at their original offering price and holds the
convertible notes and common stock received upon conversion thereof as capital
assets within the meaning of Section 1221 of the code. We have not sought any
ruling from the IRS with respect to statements made and the conclusions reached
in this discussion and there can be no assurance that the IRS will agree with
such statements and conclusions.

                                       75
<PAGE>   78

     For purposes of this discussion, the term "U.S. holder" means a beneficial
owner who or that:

     -  is a citizen or resident of the United States,

     -  is a corporation or partnership created or organized in or under the
        laws of the United States or a political subdivision thereof, unless, in
        the case of a partnership, future regulations provide to the contrary,

     -  is an estate the income of which is subject to U.S. federal income
        taxation regardless of its source,

     -  is a trust if (A) a U.S. court is able to exercise primary supervision
        over the administration of the trust and (B) one more U.S. persons,
        within the meaning of Section 7701(a)(30) of the code ("U.S. persons"),
        have authority to control all substantial decisions of the trust, or

     -  is otherwise subject to U.S. federal income taxation on a net income
        basis in respect of the convertible notes or common stock.

As used herein, a "non-U.S. holder" means a beneficial owner who or that is not
a U.S. holder. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
THEIR PARTICIPATION IN THIS OFFERING, AND THEIR OWNERSHIP AND DISPOSITION OF THE
CONVERTIBLE NOTES, INCLUDING CONVERSION OF THE CONVERTIBLE NOTES, OR COMMON
STOCK, INCLUDING THE EFFECT THAT THEIR PARTICULAR CIRCUMSTANCES MAY HAVE ON SUCH
TAX CONSEQUENCES.

U.S. HOLDERS

     Interest on Convertible Notes.  Interest paid on a note will be taxable to
a U.S. holder as ordinary interest income, at the time that such interest is
accrued or actually or constructively received, in accordance with such U.S.
holder's method of accounting for U.S. federal income tax purposes. We expect
that the convertible notes will not be issued with "original issue discount,"
within the meaning of the code.

     Conversion of Convertible Notes.  A U.S. holder of a note generally will
not recognize gain or loss on the conversion of the note into common stock. Such
U.S. holder's aggregate tax basis in the common stock received upon conversion
of the note will be equal to the U.S. holder's adjusted tax basis in the note at
the time of conversion, less any portion of that basis allocable to cash
received in lieu of a fractional share. The holding period of the common stock
received upon conversion of a note generally will include the period during
which the U.S. holder held such note prior to the conversion.

     Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for such fractional share. Gain or loss
recognized on the receipt of cash paid in lieu of such fractional share
generally will be capital gain or loss equal to the difference between the
amount of cash received and the amount of tax basis allocable to the fractional
share.

     Adjustment of Conversion Rate.  The conversion rate of the convertible
notes is subject to adjustment in certain circumstances. See "Description of the
Convertible Notes-Conversion Rights." Under Section 305(c) of the code,
adjustments that have the effect of increasing or decreasing the proportionate
interest of U.S. holders of the convertible notes in assets or earnings of
Juniper (for example, an adjustment following a distribution of property by
Juniper to its stockholders) may in some circumstances give rise to deemed
distributions to U.S. holders; similarly, a failure to adjust the conversion
rate of the convertible notes to reflect a stock dividend or other event
increasing the proportionate interest of shareholders of outstanding common
stock can in some circumstances give rise to deemed distributions to such
shareholders. Such deemed
                                       76
<PAGE>   79

distributions will be treated as a dividend, return of capital or capital gain
in accordance with the earnings and profits rules discussed under
"-- Distributions on Common Stock" below.

     Distributions on Common Stock.  Distributions on common stock will
constitute a dividend for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. Dividends paid to U.S. holders that are U.S. corporations
may qualify for the dividends-received deduction. Noncorporate taxpayers and
certain corporations are not entitled to the dividends-received deduction.

     To the extent, if any, that a U.S. holder receives a distribution on common
stock that would otherwise constitute a dividend for U.S. federal income tax
purposes but that exceeds our current and accumulated earnings and profits, such
distribution will be treated first as a non-taxable return of capital reducing
the US. holder's tax basis in the common stock. Any such distributions in excess
of the U.S. holder's tax basis in the common stockwill be treated as capital
gain.

     Sale or Exchange of Convertible Notes or Common Stock.  In general, subject
to the discussion under "Market Discount" below, a U.S. holder of a note will
recognize capital gain or loss upon the sale, redemption, retirement or other
disposition of the note measured by the difference between the amount of cash
and the fair market value of any property received, except to the extent
attributable to the payment of accrued interest, and such U.S. holder's adjusted
tax basis in the note. In general, subject to the discussion under "Market
Discount" below, a U.S. holder of common stock received upon conversion of a
note will recognize capital gain or loss upon the sale, exchange, redemption or
other disposition of the common stock under rules similar to the computation of
gain or loss on the disposition of the convertible notes. However, special rules
may apply to a redemption of common stock which may result in the proceeds of
the redemption being treated as a dividend. In general, the maximum tax rate for
noncorporate taxpayers on long-term capital gain is 20% with respect to capital
assets, including the convertible notes and common stock, but only if they have
been held for more than 12 months at the time of disposition.

     Market Discount.  The resale of convertible notes may be affected by the
impact on a purchaser of the "market discount" provisions of the code. For this
purpose, the market discount on a note generally will be equal to the amount, if
any, by which the stated redemption price at maturity of the note immediately
after its acquisition, other than at original issue, exceeds the U.S. holder's
adjusted tax basis in the note. Subject to a de minimisexception, these
provisions generally require a U.S. holder who acquires a note at a market
discount to treat as ordinary income any gain recognized on the disposition of
such note to the extent of the accrued market discount on such note at the time
of disposition, unless the U.S. holder elects to include accrued market discount
in income currently. In general, market discount will be treated as accruing on
a straight-line basis over the remaining term of the note at the time of
acquisition, or, at the election of the U.S. holder, under a constant yield
method. A U.S. holder who acquires a note at a market discount and who does not
elect to include accrued market discount in income currently may be required to
defer the deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the note until the note is disposed of in a
taxable transaction. If a U.S. holder acquires a Note with market discount and
receives common stock upon conversion of the note, the amount of accrued market
discount not previously included in income with respect to the converted note
through the date of conversion will be treated as ordinary income upon the
disposition of the common stock.

NON-U.S. HOLDERS

     Payments of Interest.  Generally, payments of interest on the convertible
notes to, or on behalf of, a non-U.S. holder will not be subject to U.S. federal
withholding tax if:

                                       77
<PAGE>   80

     -  such non-U.S. holder does not actually or constructively own 10% or more
        of the total combined voting power of all classes of our stock;

     -  such non-U.S. holder is not (a) a controlled foreign corporation for
        U.S. federal income tax purposes that is related to us through stock
        ownership or (b) a bank that received the note on an extension of credit
        made pursuant to a loan agreement entered into in the ordinary course of
        its trade or business; and

     -  the non-U.S. holder provides a statement signed under penalties of
        perjury that includes its name and address and certifies that it is not
        a U.S. person in compliance with applicable requirements of the
        regulations or an exemption is otherwise established.

If these requirements cannot be satisfied, a non-U.S. holder will be subject to
U.S. federal withholding tax at a rate of 30%, or lower treaty rate, if
applicable, on interest payments on the convertible notes.

     Conversion of Convertible Notes.  A non-U.S. holder generally will not be
subject to U.S. federal withholding tax on the conversion of a note into common
stock. To the extent a non-U.S. holder receives cash in lieu of a fractional
share on the conversion, such cash may give rise to gain that would be subject
to the rules described below with respect to the sale or exchange of a note or
Common Stock. See "-- Sale or Exchange of Convertible Notes or Common Stock"
below.

     Adjustment of Conversion Rate.  The conversion rate of the convertible
notes is subject to adjustment in certain circumstances. See "Description of
Convertible Notes-Conversion Rights." Any such adjustment could, in certain
circumstances, give rise to a deemed distribution to non-U.S. holders of the
convertible notes. See "U.S. holders-Adjustment of Conversion Rate" above. In
such case, the deemed distribution would be subject to the rules below regarding
withholding of U.S. federal tax on dividends in respect of common stock. See
"-- Distributions on Common Stock" below.

     Distributions on Common Stock.  Distributions on common stock will
constitute a dividend for U.S. federal income tax purposes to the extent of our
current or accumulated earnings and profits as determined under U.S. federal
income tax principles. Dividends paid on common stock held by a non-U.S. holder
will be subject to U.S. federal withholding tax at a rate of 30%, or lower
treaty rate, if applicable.

     Sale or Exchange of Convertible Notes or Common Stock. In general, a
non-U.S. holder will not be subject to U.S. federal withholding tax on gain
recognized upon the sale or other disposition, including a redemption, of a note
or common stock received upon conversion thereof unless the non-U.S. holder:

     -  is a nonresident alien individual who is present in the United States
        for 183 or more days in the taxable year in which the gain is realized
        and certain other conditions are satisfied, or

     -  is subject to tax pursuant to the provisions of U.S. tax law applicable
        to certain U.S. expatriates.

     U.S. Estate Tax.  Convertible notes owned or treated as owned by an
individual who is not a citizen or resident, as specially defined for U.S.
federal estate tax purposes, of the United States at the time of death
("nonresident decedent") will not be included in the nonresident decedent's
gross estate for U.S. federal estate tax purposes as a result of the nonresident
decedent's death, provided that, at the time of death, the nonresident decedent
does not own, actually or constructively, 10% or more of the total combined
voting power of all classes of our stock and payments with respect to such
convertible notes would not have been effectively connected with the conduct of
a trade or business in the United States by the nonresident decedent. Common
stock owned or treated as owned by a nonresident decedent will be included in
the nonresident
                                       78
<PAGE>   81

decedent's gross estate for U.S. federal estate tax purposes as a result of the
nonresident decedent's death. Subject to applicable treaty limitations, if any,
a nonresident decedent's estate may be subject to U.S. federal estate tax on
property included in the estate for U.S. federal estate tax purposes.

IRS REPORTING AND BACKUP WITHHOLDING

     Certain noncorporate U.S. holders may be subject to IRS reporting and
backup withholding at a rate of 31% on payments of interest on the convertible
notes, dividends on common stock and proceeds from the sale or other disposition
of the convertible notes or common stock. Backup withholding will only be
imposed where the noncorporate U.S. holder:

     -  fails to furnish its taxpayer identification number ("TIN"), which would
        ordinarily be his or her social security number,

     -  furnishes an incorrect TIN,

     -  is notified by the IRS that he or she has failed to properly report
        payments of interest or dividends, or

     -  under certain circumstances, fails to certify, under penalties of
        perjury, that he or she has furnished a correct TIN and has not been
        notified by the IRS that he or she is subject to backup withholding.

We must also institute backup withholding on payments made to a U.S. holder if
instructed to do so by the IRS. A failure to provide us with a correct TIN may
also subject a U.S. holder to penalties imposed by the IRS.

     We will report annually to the IRS and to each non-U.S. holder any interest
and dividends paid with respect to a note or common stock, respectively, that is
subject to U.S. federal withholding tax or that is exempt from such tax under an
applicable treaty or the code. We will also report to the IRS and to each
non-U.S. holder such income paid which is exempt from federal withholding tax
because it is effectively connected with such non-U.S. holder's U.S. trade or
business. However, a non-U.S. holder will not be subject to IRS reporting or
backup withholding if the payor has received appropriate certification
statements from or on behalf of the non-U.S. holder and provided that the payor
does not have actual knowledge that the non-U.S. holder is a U.S. person. The
payment of the proceeds from the disposition of the convertible notes or common
stock to or through the U.S. office of any U.S. or foreign broker will be
subject to IRS reporting and possibly backup withholding unless the owner
certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption, provided that the broker does not have actual
knowledge that the holder is a U.S. person or that the conditions of any other
exemption are not, in fact, satisfied. The payment of the proceeds from the
disposition of a note or common stock to or through a non-U.S. office of a
non-U.S. broker that is not a U.S. related person will not be subject to IRS
reporting or backup withholding. For this purpose, a "U.S. related person" is:

     -  a controlled foreign corporation for U.S. federal income tax purposes,

     -  a non-U.S. person 50% or more of whose gross income from all sources for
        the three-year period ending with the close of its taxable year
        preceding the payment, or for such part of the period that the broker
        has been in existence, is derived from the activities that are
        effectively connected with the conduct of a U.S. trade or business, or

     -  with respect to payments made after December 31, 2000, a foreign
        partnership, if at any time during its tax year, one or more of its
        partners are U.S. persons, as defined in regulations, who in the
        aggregate hold more than 50% of the income or capital interest in the
        partnership or if, at any time during its tax year, such foreign
        partnership is engaged in a United States trade or business.
                                       79
<PAGE>   82

     In the case of the payment of proceeds from the disposition of convertible
notes or common stock to or through a non-U.S. office of a broker that is a U.S.
related person, the regulations require IRS reporting on the payment unless the
broker has documentary evidence in its files that the owner is a non-U.S. holder
and the broker has no knowledge to the contrary. Backup withholding will not
apply to payments made through foreign offices of a broker that is a U.S. person
or a U.S. related person, absent actual knowledge that the payee is a U.S.
person.

     Any amounts withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against such holder's U.S. federal income tax
liability, if any, or will otherwise be refundable, provided that the requisite
procedures are followed. Holders of the convertible notes or common stock should
consult their own tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption, if
applicable.

PROSPECTIVE FINAL REGULATIONS

     On October 6, 1997, new regulations were issued which modify the
requirements imposed on a non-U.S. holder and certain intermediaries for
establishing the recipient's status as a non-U.S. holder eligible for exemption
from U.S. federal withholding tax and backup withholding described above. The
new regulations generally are effective for payments made after December 31,
2000, subject to certain transition rules. In general, the new regulations do
not significantly alter the substantive withholding and IRS reporting
requirements, but, rather, unify current certification procedures and forms and
clarify reliance standards. In addition, the new regulations impose more
stringent conditions on the ability of financial intermediaries acting for a
non-U.S. holder to provide certifications on behalf of the non-U.S. holder,
which may include entering into an agreement with the IRS to audit certain
documentation with respect to such certifications. Non-U.S. holders should
consult their own tax advisors to determine the effects of the application on
the new regulations on their particular circumstances.

                   WHERE YOU MAY FIND ADDITIONAL INFORMATION

     We filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act for the convertible notes in this
offering. This prospectus does not contain all of the information in the
registration statement and the exhibits and schedule that were filed with the
registration statement or incorporated herein by reference. For further
information with respect to Juniper Networks, we refer you to the registration
statement and the exhibits and schedule that were filed with the registration
statement or incorporated herein by reference. Statements contained in this
prospectus about the contents of any contract or any other document that is
filed as an exhibit to the registration statement or incorporated herein by
reference are not necessarily complete, and we refer you to the full text of the
contract or other document filed as an exhibit to the registration statement or
incorporated herein by reference. A copy of the registration statement and the
exhibits and schedule that were filed with the registration statement or
incorporated herein by reference may be inspected without charge at the public
reference facilities maintained by the Securities and Exchange Commission in
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or
any part of the registration statement may be obtained from the SEC upon payment
of the prescribed fee. The Securities and Exchange Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of the site is http://www.sec.gov.

     Juniper Networks is subject to the information and periodic reporting
requirements of the Securities Exchange Act of 1934, and, in accordance with the
requirements of the Securities Exchange Act of 1934, files periodic reports,
proxy statements and other information with the

                                       80
<PAGE>   83

Securities and Exchange Commission. These periodic reports, proxy statements and
other information will be available for inspection and copying at the regional
offices, public reference facilities and web site of the Securities and Exchange
Commission referred to above.

                                 LEGAL MATTERS

     The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California. Certain legal matters will be passed upon for the underwriters by
Brobeck Phleger & Harrison LLP, San Francisco, California. As of September 29,
1999, WS Investment Company 96A and WS Investment Co. 96B, each an investment
partnership composed of certain current and former members of and persons
associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation, in
addition to certain current individual members of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, beneficially own an aggregate of 159,374
shares of Juniper Networks' common stock. Since that time the shares held by
those partnerships have been distributed to the individual partners and some of
the shares have been sold in open market transactions.

                                    EXPERTS

     Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1999 and 1998, and for each of the three
years in the period ended December 31, 1999, as set forth in their report. We
have included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.

                                       81
<PAGE>   84

                                  UNDERWRITING

     Juniper Networks and the underwriters for the offering named below have
entered into an underwriting agreement with respect to the convertible notes
being offered. Subject to certain conditions, each underwriter has severally
agreed to purchase the principal amount of convertible notes indicated in the
following table.

<TABLE>
<CAPTION>
                                                                Principal Amount of
                        Underwriters                             Convertible Notes
                        ------------                            -------------------
<S>                                                             <C>
Goldman, Sachs & Co.........................................       $
Credit Suisse First Boston Corporation......................
FleetBoston Robertson Stephens Inc..........................
Dain Rauscher Incorporated..................................
SG Cowen Securities Corporation.............................
Warburg Dillon Read LLC.....................................
                                                                   ------------
     Total..................................................       $
                                                                   ============
</TABLE>

                            ------------------------

     If the underwriters sell more convertible notes than the total principal
amount set forth in the table above, the underwriters have an option to buy up
to an additional $75,000,000 principal amount of convertible notes from Juniper
Networks to cover such sales. They may exercise that option for 30 days. If any
convertible notes are purchased pursuant to this option, the underwriters will
severally purchase convertible notes in approximately the same proportion as set
forth in the table above.

     The following table shows the per convertible note and total underwriting
discounts and commissions to be paid to the underwriters by Juniper Networks.
Such amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase additional convertible notes.

<TABLE>
<CAPTION>
                                                                    Paid by the Company
                                                                ----------------------------
                                                                No Exercise    Full Exercise
                                                                -----------    -------------
<S>                                                             <C>            <C>
Per Convertible Note........................................            %               %
Total.......................................................     $               $
</TABLE>

     Convertible notes sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus. Any convertible notes sold by the underwriters to securities dealers
may be sold at a discount from the initial public offering price of up to      %
of the principal amount of the convertible notes. Any such securities dealers
may resell any convertible notes purchased from the underwriters to certain
other brokers or dealers at a discount from the initial public offering price of
up to      % of the principal amount of the convertible notes. If all the
convertible notes are not sold at the initial offering price, the underwriters
may change the offering price and the other selling terms.

     Juniper Networks, the officers and the directors have agreed with the
underwriters not to dispose of or hedge any of its shares of common stock or
securities convertible into or exchangeable for shares of common stock during
the period from the date of this prospectus continuing through the date 90 days
after the date of this prospectus, except with the prior written consent of the
underwriters, subject to certain exceptions.

     The convertible notes are a new issue of securities with no established
trading market. Juniper Networks has been advised by the underwriters that the
underwriters intend to make a market in the convertible notes but are not
obligated to do so and may discontinue market

                                       82
<PAGE>   85

making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the convertible notes.

     In connection with the offering, the underwriters may purchase and sell
convertible notes and common stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the underwriters of a
greater principal amount of convertible notes than they are required to purchase
in this offering. Stabilizing transactions consist of certain bids or purchases
made for the purpose of preventing or retarding a decline in the market price of
the convertible notes or the common stock while the offering is in progress.

     The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased convertible
notes sold by or for the account of such underwriter in stabilizing or short
covering transactions.

     These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the convertible notes and the common stock. As a
result, the price of the convertible notes or the common stock may be higher
than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriters at any
time. These transactions may be effected on the Nasdaq National Market, in the
over-the-counter market or otherwise.

     Juniper Networks estimates that its share of the total expenses of the
offering, excluding underwriting discounts and commissions, will be
approximately $800,000.

     Juniper Networks has agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.

                                       83
<PAGE>   86

                      (THIS PAGE INTENTIONALLY LEFT BLANK)

                                       84
<PAGE>   87

                             JUNIPER NETWORKS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Ernst & Young LLP, Independent Auditors...........  F-2
Consolidated Balance Sheets.................................  F-3
Consolidated Statements of Operations.......................  F-4
Consolidated Statement of Stockholders' Equity..............  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7
</TABLE>

                                       F-1
<PAGE>   88

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Juniper Networks, Inc.

     We have audited the accompanying consolidated balance sheets of Juniper
Networks, Inc. as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Juniper
Networks, Inc. at December 31, 1999 and 1998, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.

                                          /s/ Ernst & Young LLP

Palo Alto, California
January 17, 2000

                                       F-2
<PAGE>   89

                             JUNIPER NETWORKS, INC.

                          CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                                --------------------
                                                                  1999        1998
                                                                --------    --------
<S>                                                             <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $158,043    $ 20,098
  Short-term investments....................................     187,915          --
  Accounts receivable, net of allowance for doubtful
     accounts of $632 in 1999 (none in 1998)(1).............      23,950       8,056
  Prepaid expenses and other current assets.................       7,925         680
                                                                --------    --------
Total current assets........................................     377,833      28,834
Property and equipment, net.................................      12,416       7,702
Long-term investments.......................................      97,201          --
Intangibles and other long-term assets......................      25,928         135
                                                                --------    --------
Total assets................................................    $513,378    $ 36,671
                                                                ========    ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 15,368    $  4,245
  Accrued warranty..........................................       9,641         684
  Accrued compensation and related liabilities..............       5,371       1,114
  Other accrued liabilities.................................       6,013         500
  Deferred revenue..........................................      19,270       5,639
  Current obligations under capital leases..................          --       2,220
                                                                --------    --------
Total current liabilities...................................      55,663      14,402
Long-term liabilities.......................................          --       5,204
Commitments
Stockholders' equity:
  Convertible preferred stock, $0.00001 par value, issuable
     in series: 10,000 and 10,859 shares authorized at
     December 31, 1999 and 1998; none and 10,717 shares
     issued and outstanding at December 31, 1999 and 1998...          --          --
  Common stock, $0.00001 par value, 200,000 shares
     authorized; 155,939 and 61,732 shares issued and
     outstanding at December 31, 1999 and 1998..............           2           1
  Additional paid-in capital................................     513,696      65,350
  Deferred stock compensation...............................      (3,001)     (5,153)
  Accumulated other comprehensive loss......................        (815)         --
  Accumulated deficit.......................................     (52,167)    (43,133)
                                                                --------    --------
Stockholders' equity........................................     457,715      17,065
                                                                --------    --------
Total liabilities and stockholders' equity..................    $513,378    $ 36,671
                                                                ========    ========
</TABLE>

- ---------------

(1) Includes $632 due from Ericsson Business Networks AB, a related party, as of
    December 31, 1999.

                            See accompanying notes.

                                       F-3
<PAGE>   90

                             JUNIPER NETWORKS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                                    DECEMBER 31,
                                                          --------------------------------
                                                            1999        1998        1997
                                                          --------    --------    --------
<S>                                                       <C>         <C>         <C>
Net revenues(1).......................................    $102,606    $  3,807    $     --
Cost of revenues......................................      45,272       4,416          --
                                                          --------    --------    --------
Gross profit (loss)...................................      57,334        (609)         --
Operating expenses:
  Research and development............................      41,502      23,987       9,406
  Sales and marketing.................................      20,931       4,216       1,149
  General and administrative..........................       5,235       2,223       1,043
  Amortization of goodwill and purchased intangibles
     and deferred stock compensation..................       4,286       1,235          --
                                                          --------    --------    --------
     Total operating expenses.........................      71,954      31,661      11,598
                                                          --------    --------    --------
Operating loss........................................     (14,620)    (32,270)    (11,598)
Interest income, net..................................       8,011       1,301       1,235
                                                          --------    --------    --------
Loss before income taxes..............................      (6,609)    (30,969)    (10,363)
Provision for income taxes............................       2,425           2          --
                                                          --------    --------    --------
Net loss..............................................    $ (9,034)   $(30,971)   $(10,363)
                                                          ========    ========    ========
Basic and diluted net loss per share..................    $  (0.10)   $  (0.80)   $  (0.40)
                                                          ========    ========    ========
Shares used in computing basic and diluted net loss
  per share...........................................      94,661      38,871      25,773
                                                          ========    ========    ========
Pro forma basic and diluted net loss per share
  (unaudited).........................................    $  (0.07)   $  (0.28)
                                                          ========    ========
Shares used in computing pro forma basic and diluted
  net loss per share (unaudited)......................     131,480     111,210
                                                          ========    ========
</TABLE>

- ---------------

(1) Includes $5.5 million in revenue from Ericsson Business Networks AB, a
    related party, for the year ended December 31, 1999.

                            See accompanying notes.

                                       F-4
<PAGE>   91

                             JUNIPER NETWORKS, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                        CONVERTIBLE                                                      ACCUMULATED
                                      PREFERRED STOCK      COMMON STOCK     ADDITIONAL     DEFERRED         OTHER
                                      ----------------   ----------------    PAID-IN        STOCK       COMPREHENSIVE   ACCUMULATED
                                      SHARES    AMOUNT   SHARES    AMOUNT    CAPITAL     COMPENSATION       LOSS          DEFICIT
                                      -------   ------   -------   ------   ----------   ------------   -------------   -----------
<S>                                   <C>       <C>      <C>       <C>      <C>          <C>            <C>             <C>
Balance at December 31, 1996........    5,566     $--     47,683     $--     $ 11,527      $    --          $  --        $ (1,799)
 Issuance of warrants to purchase
   Series B preferred stock.........       --     --          --     --             1           --             --              --
 Issuance of Series C preferred
   stock to investors...............    5,151     --          --     --        45,953           --             --              --
 Issuance of warrants to purchase
   Series C preferred stock.........       --     --          --     --             3           --             --              --
 Issuance of common stock, net of
   repurchases......................       --     --       9,681     --           375           --             --              --
 Compensation expense related to
   stock options....................       --     --          --     --           351           --             --              --
 Net loss...........................       --     --          --     --            --           --             --         (10,363)
                                      -------     --     -------     --      --------      -------          -----        --------
Balance at December 31, 1997........   10,717     --      57,364     --        58,210           --             --         (12,162)
 Exercise of stock options by
   employees, net of repurchases....       --     --       4,368      1           752           --             --              --
 Deferred stock compensation........       --     --          --     --         6,388       (6,388)            --              --
 Amortization of deferred stock
   compensation.....................       --     --          --     --            --        1,235             --              --
 Net loss...........................       --     --          --     --            --           --             --         (30,971)
                                      -------     --     -------     --      --------      -------          -----        --------
Balance at December 31, 1998........   10,717     --      61,732      1        65,350       (5,153)            --         (43,133)
 Issuance of Series D and D-1
   preferred stock to investors.....    3,080     --          --     --        33,948           --             --              --
 Conversion of preferred stock to
   common stock.....................  (13,797)    --      76,794     --            --           --             --              --
 Issuance of common stock, net of
   issuance costs of $1,885.........       --     --      11,613      1       389,454           --             --              --
 Exercise of common stock
   warrants.........................       --     --         779     --            --           --             --              --
 Exercise of stock options by
   employees, net of repurchases....       --     --       4,888     --         6,870           --             --              --
 Issuance of common stock and
   options in connection with the
   acquisition of intellectual
   property and other intangibles...       --     --         133     --        16,960           --             --              --
 Deferred stock compensation........       --     --          --     --         1,114       (1,114)            --              --
 Amortization of deferred stock
   compensation.....................       --     --          --     --            --        3,266             --              --
   Other comprehensive loss:
   Change in unrealized loss on
     available-for-sale
     securities.....................       --     --          --     --            --           --           (815)             --
   Net loss.........................       --     --          --     --            --           --             --          (9,034)
 Comprehensive loss.................       --     --          --     --            --           --             --              --
                                      -------     --     -------     --      --------      -------          -----        --------
Balance at December 31, 1999........       --     $--    155,939     $2      $513,696      $(3,001)         $(815)       $(52,167)
                                      =======     ==     =======     ==      ========      =======          =====        ========

<CAPTION>

                                          TOTAL
                                      STOCKHOLDERS'
                                         EQUITY
                                      -------------
<S>                                   <C>
Balance at December 31, 1996........    $  9,728
 Issuance of warrants to purchase
   Series B preferred stock.........           1
 Issuance of Series C preferred
   stock to investors...............      45,953
 Issuance of warrants to purchase
   Series C preferred stock.........           3
 Issuance of common stock, net of
   repurchases......................         375
 Compensation expense related to
   stock options....................         351
 Net loss...........................     (10,363)
                                        --------
Balance at December 31, 1997........      46,048
 Exercise of stock options by
   employees, net of repurchases....         753
 Deferred stock compensation........          --
 Amortization of deferred stock
   compensation.....................       1,235
 Net loss...........................     (30,971)
                                        --------
Balance at December 31, 1998........      17,065
 Issuance of Series D and D-1
   preferred stock to investors.....      33,948
 Conversion of preferred stock to
   common stock.....................          --
 Issuance of common stock, net of
   issuance costs of $1,885.........     389,455
 Exercise of common stock
   warrants.........................          --
 Exercise of stock options by
   employees, net of repurchases....       6,870
 Issuance of common stock and
   options in connection with the
   acquisition of intellectual
   property and other intangibles...      16,960
 Deferred stock compensation........          --
 Amortization of deferred stock
   compensation.....................       3,266
   Other comprehensive loss:
   Change in unrealized loss on
     available-for-sale
     securities.....................        (815)
   Net loss.........................      (9,034)
                                        --------
 Comprehensive loss.................      (9,849)
                                        --------
Balance at December 31, 1999........    $457,715
                                        ========
</TABLE>

                            See accompanying notes.

                                       F-5
<PAGE>   92

                             JUNIPER NETWORKS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          YEAR ENDED
                                                                         DECEMBER 31,
                                                              -----------------------------------
                                                                1999         1998         1997
                                                              ---------    ---------    ---------
<S>                                                           <C>          <C>          <C>
OPERATING ACTIVITIES:
Net loss....................................................  $  (9,034)   $ (30,971)   $ (10,363)
Adjustments to reconcile net loss to net cash from operating
  activities:
  Depreciation and amortization.............................      5,306        2,171          712
  Amortization of goodwill and purchased intangibles,
    prepaid maintenance contracts and deferred stock
    compensation............................................      4,933        1,602          589
  Loss on disposal of property and equipment................         --           --           59
  Issuance of stock for consulting services.................         --           30           21
  Issuance of warrants in connection with certain leasing
    arrangements............................................         --           --           14
  Changes in operating assets and liabilities:
    Accounts receivable.....................................    (15,894)      (8,056)          --
    Prepaid expenses and other current assets...............     (7,892)        (504)        (699)
    Other long-term assets..................................       (398)         (10)        (104)
    Accounts payable and other current liabilities..........     16,593        4,084          489
    Accrued warranty........................................      8,957          684           --
    Accrued milestone payment...............................         --         (423)         423
    Accrued compensation and related liabilities............      4,257          869          245
    Deferred revenue........................................     13,631        5,639           --
    Other long-term liabilities.............................         --           43           --
                                                              ---------    ---------    ---------
Net cash provided by (used in) operating activities.........     20,459      (24,842)      (8,614)

INVESTING ACTIVITIES:
Purchases of property and equipment, net....................    (10,020)      (6,531)      (3,110)
Purchases of short-term investments.........................   (324,437)      (3,501)     (20,715)
Maturities of short-term investments........................     38,506       19,286       10,800
Minority equity investments.................................     (8,000)          --           --
Acquisition of intellectual property and other
  intangibles...............................................     (1,456)          --           --
                                                              ---------    ---------    ---------
Net cash provided by (used in) investing activities.........   (305,407)       9,254      (13,025)

FINANCING ACTIVITIES:
Proceeds from sale-leaseback liabilities....................         --        5,705        2,603
Payments on lease obligations...............................     (7,381)      (1,157)        (439)
Proceeds from issuance of preferred stock...................     33,948           --       45,953
Proceeds from issuance of common stock......................    396,326          696          366
                                                              ---------    ---------    ---------
Net cash provided by financing activities...................    422,893        5,244       48,483
                                                              ---------    ---------    ---------
Net increase (decrease) in cash and cash equivalents........    137,945      (10,344)      26,844
Cash and cash equivalents at beginning of period............     20,098       30,442        3,598
                                                              ---------    ---------    ---------
Cash and cash equivalents at end of period..................  $ 158,043    $  20,098    $  30,442
                                                              =========    =========    =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest......................................  $     477    $     592    $     210
                                                              =========    =========    =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:
Acquisition of property and equipment under capital lease...  $      --    $   5,692    $   2,243
                                                              =========    =========    =========
Deferred stock compensation.................................  $   1,114    $   6,388    $      --
                                                              =========    =========    =========
Common stock issued in connection with the acquisition of
  intellectual property and other intangibles...............  $  16,960    $      --    $      --
                                                              =========    =========    =========
</TABLE>

                            See accompanying notes.

                                       F-6
<PAGE>   93

                             JUNIPER NETWORKS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

     Juniper Networks, Inc. ("Juniper Networks") was incorporated in the state
of California on February 2, 1996. Juniper Networks was reincorporated in the
state of Delaware effective as of March 15, 1998. Juniper Networks was
established for the purpose of providing Internet infrastructure solutions to
Internet service providers and other telecommunication service providers.
Juniper Networks develops next generation Internet backbone routers.

     From inception, in February 1996, through September 1998, Juniper Networks'
operating activities were primarily devoted to increasing research and
development capabilities, designing ASICs, developing software, developing and
testing the M40 and other products, staffing the administrative, marketing and
sales organizations and establishing strategic relationships. Accordingly,
Juniper Networks was classified as a development stage company through that
date. Juniper Networks commenced product shipments in October 1998 and therefore
emerged from the development stage.

BASIS OF PRESENTATION

     The consolidated financial statements include the accounts of Juniper
Networks and its wholly-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated.

USE OF ESTIMATES

     The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those estimates.

RECLASSIFICATIONS

     Certain reclassifications, none of which affected operating or net loss,
have been made to prior year amounts to conform to the current year
presentation.

CASH, CASH EQUIVALENTS, SHORT- AND LONG-TERM INVESTMENTS

     Juniper Networks considers all highly liquid investment securities with
maturities from date of purchase of 90 days or less to be cash equivalents.
Short- and long-term investments consist of debt securities with original
maturities between three months and three years.

     Management determines the appropriate classification of debt and equity
securities at the time of purchase and evaluates such designation as of each
balance sheet date. To date, all marketable debt securities have been classified
as available-for-sale and are carried at fair value with unrealized gains and
losses, if any, included in stockholders' equity. Realized gains and losses and
declines in value of securities judged to be other than temporary are included
in interest income and have not been significant to date. Interest and dividends
on all securities are included in interest income.

CONCENTRATIONS

     Financial instruments that potentially subject Juniper Networks to
concentrations of credit risk consist principally of investments in debt
securities and trade receivables. Management
                                       F-7
<PAGE>   94

believes the financial risks associated with these financial instruments are
minimal. Juniper Networks maintains its cash, cash equivalents and investments
with high quality financial institutions. Juniper Networks performs ongoing
credit evaluations of its customers and generally does not require collateral on
accounts receivable.

     Juniper Networks' revenues to date have been derived for the sale of one
product, the M40. For the year ended December 31, 1999, two customers, A and C,
accounted for 32% and 26% of Juniper Networks' net revenues. For the year ended
December 31, 1998, two customers, A and B, accounted for 78% and 22% of Juniper
Networks' net revenues. For the year ended December 31, 1999, export sales to
Europe and Asia accounted for a total of 21.9% of net revenues.

     Juniper Networks purchases certain custom semiconductor chips from a sole
supplier. Additionally, Juniper Networks relies on one hardware manufacturer for
the production of its product. The inability of the supplier or manufacturer to
fulfill supply requirements of Juniper Networks could negatively impact future
results.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of Juniper Networks' short-term and long-term investments is
based on quoted market prices.

     The fair value of short-term and long-term capital lease obligations is
estimated based on current interest rates available to Juniper Networks for debt
instruments with similar terms, degrees of risk, and remaining maturities. The
carrying values of these obligations approximate their respective fair values as
of December 31, 1998.

PROPERTY AND EQUIPMENT

     Property and equipment, including equipment leased under capital leases,
are recorded at cost less accumulated depreciation. Depreciation is calculated
using the straight-line method over the lesser of the estimated useful life,
generally three to five years, or the lease term of the respective assets.

INTANGIBLES AND OTHER ASSETS

     Intangibles and other assets include equity investments made in privately
held companies in which Juniper Networks has less than a 20% equity ownership
interest and over which Juniper Networks has no ability to exercise significant
influence. Such investments are accounted for on the cost basis and are reviewed
for impairment indicators. Through December 31, 1999, no impairment indicators
have been identified and no write-downs of the cost basis of these investments
has been made. Also included in intangibles and other assets is goodwill and
other intangibles as a result of the November 1999 acquisition of intellectual
property and other intangible assets. The goodwill and other intangibles are
being amortized over a three-year period.

REVENUE RECOGNITION

     Juniper Networks generally recognizes product revenue at the time of
shipment, assuming that collectibility is probable, unless Juniper Networks has
future obligations for network interoperability or has to obtain customer
acceptance, in which case revenue is deferred until these obligations are met.
Revenue from service obligations is deferred and recognized on a straight-line
basis over the contractual period. Amounts billed in excess of revenue
recognized are included as deferred revenue and accounts receivable in the
accompanying consolidated balance sheets.

                                       F-8
<PAGE>   95

WARRANTY RESERVES

     Juniper Networks' product generally carries a one-year warranty that
includes factory repair services as needed for replacement of parts. Estimated
expenses for warranty obligations are accrued as revenue is recognized.

RESEARCH AND DEVELOPMENT

     Costs to develop Juniper Networks' products are expensed as incurred in
accordance with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 2, "Accounting for Research and Development
Costs," which establishes accounting and reporting standards for research and
development.

     Juniper Networks adopted SOP 98-1 "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use" during 1999, which requires
that all costs related to the development of internal use software be expensed
as incurred, other than those incurred during the application development stage.
Costs incurred during the application development stage were insignificant for
all periods presented.

STOCK-BASED COMPENSATION

     Juniper Networks accounts for its stock options and equity awards in
accordance with the provisions of the Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and has elected to follow the
"disclosure only" alternative prescribed by Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FAS 123).

STOCK SPLITS

     Juniper Networks effected a three-for-two stock split of its common stock
on June 27, 1997 and October 2, 1998 and a three-for-one stock split in the form
of a 200% common stock dividend paid on January 14, 2000. All share and per
share amounts have been adjusted to reflect the splits.

NET LOSS PER SHARE

     Basic net loss per share and diluted net loss per share are presented in
conformity with Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (FAS 128), for all periods
presented. Pursuant to the Securities and Exchange Commission Staff Accounting
Bulletin No. 98, common stock and convertible preferred stock issued or granted
for nominal consideration prior to the anticipated effective date of the initial
public offering must be included in the calculation of basic and diluted net
loss per common share as if they had been outstanding for all periods presented.
To date, Juniper Networks has not had any issuances or grants for nominal
consideration.

     In accordance with FAS 128, basic and diluted net loss per share has been
computed using the weighted-average number of shares of common stock outstanding
during the period, less the weighted-average number of shares of common stock
issued to founders, investors and employees that are subject to repurchase (see
Note 5). Basic and diluted pro forma net loss per share, as presented in the
consolidated statements of operations, has been computed as described above and
also gives effect, under Securities and Exchange Commission guidance, to the
conversion of the convertible preferred stock (using the if-converted method)
from the original date of issuance, using the initial public offering price of
$34.00 per share to calculate the conversion ratio for Series D-1 convertible
preferred stock.

                                       F-9
<PAGE>   96

     The following table presents the calculation of basic and diluted and pro
forma basic and diluted net loss per share(in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                            1999        1998        1997
                                                          --------    --------    --------
<S>                                                       <C>         <C>         <C>
Net loss..............................................    $ (9,034)   $(30,971)   $(10,363)
                                                          --------    --------    --------
BASIC AND DILUTED:
  Weighted-average shares of common stock
     outstanding......................................     109,652      59,073      55,869
  Less: weighted-average shares subject to
     repurchase.......................................     (14,991)    (20,202)    (30,096)
                                                          --------    --------    --------
  Weighted-average shares used in computing basic and
     diluted net loss per share.......................      94,661      38,871      25,773
                                                          ========    ========    ========
  Basic and diluted net loss per share................    $  (0.10)   $  (0.80)   $  (0.40)
                                                          ========    ========    ========
PRO FORMA:
  Net loss............................................    $ (9,034)   $(30,971)
                                                          ========    ========
  Shares used above...................................      94,661      38,871
  Pro forma adjustment to reflect weighted effect of
     assumed conversion of convertible preferred
     stock............................................      36,819      72,339
                                                          --------    --------
  Shares used in computing pro forma basic and diluted
     net loss per common share (unaudited)............     131,480     111,210
                                                          ========    ========
  Pro forma basic and diluted net loss per common
     share (unaudited)................................    $  (0.07)   $  (0.28)
                                                          ========    ========
</TABLE>

     Juniper Networks has excluded all convertible preferred stock, warrants for
convertible preferred stock, outstanding stock options and shares subject to
repurchase from the calculation of diluted loss per share because all such
securities are antidilutive for all periods presented. The total number of
shares excluded from the calculations of diluted net loss per share were
68,288,000, 101,769,000 and 86,811,000 for the years ended December 31, 1999,
1998 and 1997, respectively.

SEGMENT INFORMATION

     Juniper Networks has adopted the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 131, "Disclosure About Segments
of an Enterprise and Related Information" (FAS 131). Juniper Networks operates
solely in one segment, the development and marketing of Internet infrastructure
equipment, and therefore there is no impact to Juniper Networks' consolidated
financial statements due to the adoption of FAS 131.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (FAS 133). FAS
133, as amended, establishes methods for derivative financial instruments and
hedging activities related to those instruments, as well as other hedging
activities. Juniper Networks is required to adopt FAS 133 effective January 1,
2001. Because Juniper Networks currently does not hold any derivative
instruments and does not engage in hedging activities, Juniper Networks does not
currently believe that the adoption of FAS 133, as amended, will have a
significant impact on its financial position or results of operations.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 (SAB 101). SAB 101 summarizes certain areas of the
Staff's views in applying generally

                                      F-10
<PAGE>   97

accepted accounting principles to revenue recognition in financial statements.
Juniper Networks believes that its current revenue recognition principles comply
with SAB 101.

2.  CASH EQUIVALENTS, SHORT- AND LONG-TERM INVESTMENTS

     Cash equivalents, short- and long-term investments consist of the following
(in thousands):

<TABLE>
<CAPTION>
                                                                DECEMBER 31, 1999
                                                 ------------------------------------------------
                                                               GROSS        GROSS
                                                 AMORTIZED   UNREALIZED   UNREALIZED   ESTIMATED
                                                   COST        GAINS        LOSSES     FAIR VALUE
                                                 ---------   ----------   ----------   ----------
<S>                                              <C>         <C>          <C>          <C>
Money market funds............................   $ 56,034     $     --     $     --     $ 56,034
Commercial paper..............................     79,862           --           --       79,862
Certificates of deposit.......................         66           --           --           66
Government securities.........................    135,325            5         (181)     135,149
Corporate debt securities.....................    151,829           12         (651)     151,190
Asset-backed securities.......................      8,000           --           --        8,000
                                                 --------     --------     --------     --------
                                                 $431,116     $     17     $   (832)    $430,301
                                                 ========     ========     ========     ========
Included in cash and cash equivalents.........   $145,179     $      6     $     --     $145,185
Included in short-term investments............    188,170           11         (266)     187,915
Included in long-tern investments.............     97,767           --         (566)      97,201
                                                 --------     --------     --------     --------
                                                 $431,116     $     17     $   (832)    $430,301
                                                 ========     ========     ========     ========
Due within one year...........................   $333,349     $     17     $   (266)    $333,100
Due between one year and two years............     94,500           --         (537)      93,963
Due between two years and three years.........      3,267           --          (29)       3,238
                                                 --------     --------     --------     --------
                                                 $431,116     $     17     $   (832)    $430,301
                                                 ========     ========     ========     ========
</TABLE>

<TABLE>
<CAPTION>
                                                                DECEMBER 31, 1998
                                                 ------------------------------------------------
                                                               GROSS        GROSS
                                                 AMORTIZED   UNREALIZED   UNREALIZED   ESTIMATED
                                                   COST        GAINS        LOSSES     FAIR VALUE
                                                 ---------   ----------   ----------   ----------
<S>                                              <C>         <C>          <C>          <C>
Money market funds............................   $  3,037     $     --     $     --     $  3,037
Commercial paper..............................     16,520           --           --       16,520
                                                 --------     --------     --------     --------
                                                 $ 19,557     $     --     $     --     $ 19,557
                                                 ========     ========     ========     ========
Included in cash and cash equivalents.........   $ 19,557     $     --     $     --     $ 19,557
                                                 ========     ========     ========     ========
</TABLE>

3.  PROPERTY AND EQUIPMENT, NET

     Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                                -----------------
                                                                 1999       1998
                                                                -------    ------
<S>                                                             <C>        <C>
Computers and equipment.....................................    $14,953    $7,435
Purchased software..........................................      4,252     2,540
Furniture and fixtures......................................      1,383       594
                                                                -------    ------
Total.......................................................     20,588    10,569
Less accumulated depreciation and lease amortization........     (8,172)   (2,867)
                                                                -------    ------
Property and equipment , net................................    $12,416    $7,702
                                                                =======    ======
</TABLE>

                                      F-11
<PAGE>   98

4.  CAPITAL LEASE OBLIGATIONS

     Juniper Networks enters into various capital leases, including sale and
leaseback transactions, to finance purchases of property and equipment. As of
December 31, 1998, under various lease lines of credit, Juniper Networks had
$1,891,000 available for future purchases of property and equipment that expired
on June 30, 1999. Under the terms of certain lease agreements, warrants to
purchase the Company's preferred stock were granted as described in Note 5.
Capitalized costs of $8,470,000, and accumulated amortization of $905,000 are
included in property and equipment at December 31, 1998. During the year ending
December 31, 1999, Juniper Networks paid off all of the then outstanding capital
lease balances.

5.  STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

<TABLE>
<CAPTION>
                                                                        SHARES ISSUED
                                                                      AND OUTSTANDING AT
                                                       SHARES            DECEMBER 31,
                                                     INITIALLY     ------------------------
                                                     AUTHORIZED       1999          1998
                                                     ----------    ----------    ----------
<S>                                                  <C>           <C>           <C>
Series A.........................................     1,743,751            --     1,743,751
Series B.........................................     3,915,308            --     3,821,975
Series C.........................................     5,200,000            --     5,151,178
Series D.........................................       600,000            --            --
Series D-1.......................................     2,580,000            --            --
                                                     ----------    ----------    ----------
Total preferred stock............................    14,039,059            --    10,716,904
                                                     ==========    ==========    ==========
</TABLE>

     All outstanding shares of Juniper Networks' convertible preferred stock
automatically converted into 76,794,000 shares of Common Stock upon completion
of Juniper Networks' initial public offering. As of December 31, 1999,
10,000,000 shares of convertible preferred stock remain authorized and available
for issuance.

WARRANTS

     Juniper Networks periodically grants warrants in connection with certain
lease arrangements. Juniper Networks had the following warrants to purchase
shares of preferred stock outstanding at December 31, 1998:

<TABLE>
<CAPTION>
                             EXERCISE
                               PRICE                       EXPIRATION OF    NUMBER OF SHARES
PREFERRED STOCK SERIES       PER SHARE     DATE ISSUED       WARRANTS       (PREFERRED STOCK)
- ----------------------       ---------    -------------    -------------    -----------------
<S>                          <C>          <C>              <C>              <C>
Series B.................      $2.40      December 1996    December 2003          83,333
Series B.................       2.40          June 1997    December 2003          10,000
Series C.................       8.93          June 1997    December 2003          23,516
                                                                                 -------
     Total..............................................................         116,849
                                                                                 =======
</TABLE>

     During the year ended December 31, 1999, all warrants were exercised for a
total of approximately 779,000 shares of Common Stock. All of the warrants were
exercisable immediately. The fair value of the warrants was amortized as
interest expense in accordance with the lease payments.

COMMON STOCK

     Juniper Networks is authorized to issue up to 200,000,000 shares of its
common stock. At December 31, 1999 and 1998, 155,938,599 and 61,731,984 shares
were issued and outstanding.

                                      F-12
<PAGE>   99

Prior to the adoption of the 1996 Stock Option Plan, Juniper Networks issued
shares of common stock to founders, investors, and employees. The shares issued
to investors were fully vested upon purchase. Generally, shares issued to
founders and employees were sold pursuant to restricted stock purchase
agreements containing provisions established by the Board of Directors. These
provisions give Juniper Networks the right to repurchase the shares at the
original sales price. This right expires at the rate of 25% after one year and
2.0833% per month thereafter. At December 31, 1999 and 1998, 840,001 and
4,148,439 of these shares, issued outside of the 1996 Stock Option Plan,
remained subject to repurchase.

STOCK OPTION PLAN

     Juniper Networks' 1996 Stock Option Plan (the Plan) provides for the
granting of incentive stock options to employees and nonstatutory stock options
to employees, directors and consultants. Incentive stock options are granted at
an exercise price of not less than the fair value per share of the common stock
on the date of grant. Nonstatutory stock options may be granted at an exercise
price of not less than 85% of the fair value per share on the date of grant;
however, no statutory stock options have been granted for less than fair market
value on the date of grant. Vesting and exercise provisions are determined by
the Board of Directors. Options granted under the Plan generally become
exercisable over a four-year period beginning on the date of grant. Options
granted under the Plan have a maximum term of ten years. Options granted to
consultants are in consideration for the fair value of services previously
rendered, are not contingent upon future events and are expensed in the period
of grant. Juniper Networks has authorized 57,562,500 shares of common stock for
issuance under the Plan. At December 31, 1999, 1,896,356 shares were available
for future option grants or stock sales under the Plan.

     Option activity under the Plan is summarized as follows:

<TABLE>
<CAPTION>
                                                                    OUTSTANDING OPTIONS
                                                               ------------------------------
                                                                 NUMBER      WEIGHTED-AVERAGE
                                                               OF SHARES      EXERCISE PRICE
                                                               ----------    ----------------
<S>                                                            <C>           <C>
Options granted............................................     5,393,250         $ 0.07
                                                               ----------
Balance at December 31, 1997...............................     5,393,250           0.07
Options granted............................................    10,537,440           0.62
Options exercised..........................................    (4,521,948)          0.16
Options canceled...........................................      (365,028)          0.09
                                                               ----------
Balance at December 31, 1998...............................    11,043,714           0.56
Options granted............................................    16,837,006          33.76
Options exercised..........................................    (4,935,090)          1.13
Options canceled...........................................      (476,465)          7.78
                                                               ----------
Balance at December 31, 1999...............................    22,469,165          25.11
                                                               ==========
</TABLE>

     The Plan also provides for the sale of shares of common stock to employees
and consultants at the fair value per share of the common stock. Shares issued
to consultants are for the fair value of services previously rendered and are
not contingent upon future events. Shares sold to employees are made pursuant to
restricted stock purchase agreements containing provisions established by the
Board of Directors. These provisions give Juniper Networks the right to
repurchase the shares at the original sales price. This right expires at a rate
determined by the Board of Directors, generally at the rate of 25% after one
year and 2.0833% per month thereafter.

     During the year ended December 31, 1997 and the period from inception
(February 2, 1996) to December 31, 1996, Juniper Networks issued 10,717,299 and
14,522,652 shares under the
                                      F-13
<PAGE>   100

Plan. No shares were issued under the Plan in the years ended December 31, 1999
and 1998. At December 31, 1999 and 1998, 9,158,052 and 14,055,312 shares were
subject to repurchase rights under the Plan. At December 31, 1999 and 1998,
1,266,509 and 1,189,275 shares, respectively, had been repurchased under the
Plan.

     The following schedule summarizes information about stock options
outstanding as of December 31, 1999:

<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                  ----------------------------------------------------   ------------------------------
                                 WEIGHTED-AVERAGE
   RANGE OF         NUMBER           REMAINING        WEIGHTED-AVERAGE     NUMBER      WEIGHTED-AVERAGE
EXERCISE PRICES   OUTSTANDING    CONTRACTUAL LIFE      EXERCISE PRICE    EXERCISABLE    EXERCISE PRICE
- ---------------   -----------   -------------------   ----------------   -----------   ----------------
<S>               <C>           <C>                   <C>                <C>           <C>
$ 0.04-$  0.56     4,648,857           8.22                $ 0.29         1,177,599         $ 0.24
$ 0.64-$  4.67     5,294,415           9.01                $ 2.88           353,777         $ 1.77
$ 7.00-$ 69.33     4,715,349           9.39                $ 7.61             4,125         $ 7.00
$21.44-$ 60.71     6,666,345           9.76                $60.44            31,095         $21.44
$63.63-$112.57     1,144,199           9.89                $89.60                --         $   --
                  ----------                                              ---------
$ 0.04-$112.57... 22,469,165           9.19                $25.11         1,566,596         $ 1.03
                  ==========                                              =========
</TABLE>

     As of December 31, 1998, 325,608 options are exercisable at an average
exercise price of $0.05, and as of December 31, 1997, 79,980 options are
exercisable at an average price of $0.01.

     During the year ended December 31, 1998 and the three months ended March
31, 1999, in connection with the grant of certain stock options to employees,
Juniper Networks recorded deferred stock compensation of $6,388,000 and
$1,114,000 representing the difference between the exercise price and the deemed
fair value of Juniper Networks' common stock on the date such stock options were
granted. Such amount is included as a reduction of stockholders' equity and is
being amortized by charges to operations on a graded vesting method. Juniper
Networks recorded amortization of deferred stock compensation expense of
$3,266,000 and $1,235,000 for the years ended December 31, 1999 and 1998. At
December 31, 1999 and 1998, Juniper Networks had a total of $3,001,000 and
$5,153,000 remaining to be amortized over the corresponding vesting period of
each respective option, generally four years. The amortization expense relates
to options awarded to employees in all operating expense categories. This amount
has not been separately allocated to these categories.

EMPLOYEE STOCK PURCHASE PLAN

     In April 1999, the Board of Directors approved the adoption of Juniper
Networks' 1999 Employee Stock Purchase Plan (the Purchase Plan). A total of
1,500,000 shares of common stock have been reserved for issuance under the 1999
Purchase Plan, plus, commencing on January 1, 2000, annual increases equal to
the lesser of 1,500,000 shares, or 1% of the outstanding common shares on such
date or a lesser amount determined by the Board of Directors. The 1999 Purchase
Plan permits eligible employees to acquire shares of Juniper Networks' common
stock through periodic payroll deductions of up to 10% of base compensation. No
more than 3,000 shares may be purchased by each employee in any twelve month
period, and in no event, may an employee purchase more than $25,000 worth of
stock, determined at the fair market value of the shares at the time such option
is granted, in one calendar year. The Purchase Plan will be implemented in a
series of offering periods, each six months in duration; provided, however, that
the first offering period will be approximately thirteen months in duration,
ending on the last trading day on or before July 31, 2000. The price at which
the common stock may be purchased is 85% of the lesser of the fair market value
of Juniper Network's common stock on the first day of the applicable offering
period or on the last day of the respective offering period.

                                      F-14
<PAGE>   101

STOCK-BASED COMPENSATION

     The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock-based compensation plans. Because the exercise
price of Juniper Networks' employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense was recognized.

     Pro forma information regarding net loss has been determined as if Juniper
Networks had accounted for its employee stock options under the fair value
method prescribed by FAS 123. The resulting effect on pro forma net loss
disclosed is not likely to be representative of the effects on net income/(loss)
on a pro forma basis in future years, due to subsequent years including
additional grants and years of vesting.

     The fair value of each option granted through December 31, 1999 was
estimated on the date of grant using the minimum value (before the Company went
public) or the Black-Scholes method. The Black-Scholes option valuation model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. The Black-Scholes model
requires the input of highly subjective assumptions including the expected stock
price volatility. Because Juniper Networks' stock-based awards have
characteristics significantly different from those in traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
stock-based awards. The fair value of Juniper Networks' stock-based awards was
estimated using the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                          -----------------------------------
                                                            1999         1998         1997
                                                          ---------    ---------    ---------
    <S>                                                   <C>          <C>          <C>
    Dividend yield....................................       --           --           --
    Volatility factor.................................       80%          --           --
    Risk-free interest rate...........................      5.49%        5.23%        6.20%
    Expected life.....................................    3.0 years    4.5 years    4.5 years
    Weighted average fair value of options granted in
      the period......................................     $17.97        $0.37        $0.03
</TABLE>

     For purposes of pro forma disclosures, the estimated fair value of options
is amortized to pro forma expense over the options' vesting period. Pro forma
information follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                          --------------------------------
                                                            1999        1998        1997
                                                          --------    --------    --------
    <S>                                                   <C>         <C>         <C>
    Net loss:
      As reported.....................................    $ (9,034)   $(30,971)   $(10,363)
      Pro forma.......................................     (43,488)    (31,143)    (10,403)
    Basic and diluted net loss per share:
      As reported.....................................       (0.10)      (0.80)      (0.40)
      Pro forma.......................................       (0.46)      (0.80)      (0.40)
</TABLE>

COMMON STOCK RESERVED FOR FUTURE ISSUANCE

     The Company has reserved 25,865,521 shares of common stock for future
issuance under its 1996 Stock Option Plan and 1999 Employee Stock Purchase Plan.

                                      F-15
<PAGE>   102

6.  401(K) PLAN

     Juniper Networks maintains a savings and retirement plan qualified under
Section 401(k) of the Internal Revenue Code of 1986, as amended. All employees
are eligible to participate on their first day of employment with Juniper
Networks. Under the plan, employees may contribute up to 20% of their pretax
salaries per year but not more than the statutory limits. Juniper Networks does
not contribute to the plan.

7.  COMMITMENTS

     Juniper Networks leases its facilities under operating leases that expire
in 2012. Rental expense for the years ended December 31, 1999, 1998 and 1997,
were approximately $1,847,000, $937,000 and $529,000, respectively.

     Future minimum payments under the noncancellable operating leases consist
of the following (in thousands):

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                                  1999
                                                              ------------
<S>                                                           <C>
2000........................................................    $ 3,892
2001........................................................      5,401
2002........................................................      4,660
2003........................................................      4,762
2004........................................................      4,898
Thereafter..................................................     42,072
                                                                -------
     Total minimum lease payments...........................    $65,685
                                                                =======
</TABLE>

     Juniper Networks has outstanding purchase order commitments for production
materials of approximately $6,357,000 and $2,442,000 at December 31, 1999 and
1998. Juniper Networks expects the purchase orders to be fulfilled in the first
quarter of 2000.

8.  INCOME TAXES

     Due to operating losses and the inability to recognize the benefits
therefrom, there is no tax provision for the years ended December 31, 1997. For
the year ended December 31, 1999 the provision for income taxes consists of the
following (in thousands):

<TABLE>
<S>                                                           <C>
Current Provision:
  Federal...................................................     $  700
  State.....................................................        800
  Foreign...................................................        925
                                                                 ------
Total current provision.....................................     $2,425
                                                                 ======
</TABLE>

                                      F-16
<PAGE>   103

     The difference between the provision for income taxes and the amount
computed by applying the Federal statutory income tax rate (35 percent) to loss
before taxes is explained below (in thousands):

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                             ------------------------------
                                                              1999        1998       1997
                                                             -------    --------    -------
<S>                                                          <C>        <C>         <C>
Tax provision (benefit) at federal statutory rate........    $(2,313)   $(10,839)   $(3,627)
Federal alternative minimum tax..........................        700          --         --
State taxes..............................................        800           2         --
Foreign taxes............................................        925          --         --
Unbenefitted net operating losses, reserves and
  accruals...............................................      2,313      10,839      3,627
                                                             -------    --------    -------
     Total...............................................    $ 2,425    $      2    $    --
                                                             =======    ========    =======
</TABLE>

     Significant components of Juniper Networks' deferred tax assets are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                               --------------------
                                                                 1999        1998
                                                               --------    --------
<S>                                                            <C>         <C>
Deferred tax assets:
  Net operating loss carryforwards.........................    $ 14,000    $ 13,470
  Research credit carryforwards............................       2,830       1,490
  Deferred revenue.........................................       6,200       2,700
  Reserves and accruals not currently deductible...........       7,250         500
  Other temporary differences..............................         840        (110)
                                                               --------    --------
Total deferred tax assets..................................      31,120      18,050
Valuation allowance........................................     (31,120)    (18,050)
                                                               --------    --------
Net deferred tax assets....................................    $     --    $     --
                                                               ========    ========
</TABLE>

     FASB Statement No. 109 provides for the recognition of deferred tax assets
if realization of such assets is more likely than not. Based upon the weight of
available evidence, which includes the Company's historical operating
performance and the reported cumulative net losses in all prior years, Juniper
Networks has provided a full valuation allowance against its net deferred tax
assets.

     The net valuation allowance increased by $13,070,000 during the year ended
December 31, 1999 and increased by $12,850,000 during the year ended December
31, 1998, respectively. As of December 31, 1999 approximately $14,500,000 of the
valuation allowance reflected above relates to the tax benefits of stock option
deductions which will be credited to equity when realized.

     As of December 31, 1999, Juniper Networks had net operating loss
carryforwards for federal and state tax purposes of approximately $37,000,000
and $32,000,000, respectively. Juniper Networks also had federal and state
research and development tax credit carryforwards of approximately $1,700,000
and $1,700,000, respectively. The federal and state net operating loss
carryforwards will expire at various dates beginning in year 2004, if not
utilized.

     Utilization of the net operating losses and tax credits may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and tax credits
before utilization.

                                      F-17
<PAGE>   104

                      (THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>   105

                       APPENDIX -- DESCRIPTION OF GRAPHICS

PROSPECTUS COVER

Juniper Networks, Inc. Logo


PAGE 32

Diagram showing areas of bottleneck when packet/cell switching and fiber optic
technologies are deployed together. The left side of the diagram is labeled
"Electronic Packet/Cell Switching" above pictures of computers. To the right of
the diagram is the text "Electronic Packet/Cell Switching" above pictures of
servers which are labeled "Servers." Between these pictures are links labeled
"Fiber Optic Core" and the text "Bottleneck" at the edges of the Fiber Optic
Core links.


PAGE 34

Diagram showing a typical architecture for a service provider's network
backbone, including the placement of network routes, switches and access
concentration points. Diagram contains the text "Enterprise Routers," "DS3,"
"DS1," "DS0," "OC-12," "OC-3," "ATM," "OC-12 ATM or OC-12 SONET or OC-48 SONET,"
"Core Backbone," "Intra-POP," "Access," "Router," "Switch" and "Access
Concentration Point."


PAGE 37

Diagram showing traffic path between router points labeled "San Francisco" and
"New York." Below the diagram is a legend of icons in the diagram which are
labeled "Shortest path," "Traffic Engineered Path" and "Router."


PAGE 39

Diagram showing the JUNOS Routing Engine with the text "Forwarding Table"
contained in the diagram. Also includes a diagram below this diagram of the
Packet Forwarding Engine containing the text "Forwarding Table," "Internet
Processor," "Memory-based Switch Fabric" and "I/O Card."



PROSPECTUS BACK COVER

Juniper Networks, Inc. Logo
<PAGE>   106

- ---------------------------------------------------------
- ---------------------------------------------------------

  No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the convertible notes offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
                               ------------------
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                             Page
                                             ----
<S>                                       <C>
Prospectus Summary.......................       1
Risk Factors.............................       6
Note Regarding Forward-Looking
  Statements.............................      17
How We Intend to Use the Proceeds from
  this Offering..........................      17
Price Range of Common Stock..............      18
Dividend Policy..........................      18
Capitalization...........................      19
Selected Consolidated Financial Data.....      20
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations.............................      22
Business.................................      31
Management...............................      48
Certain Transactions.....................      55
Principal Stockholders...................      57
Description of Convertible Notes.........      60
Description of Capital Stock.............      73
Certain United States Federal Income and
  Estate Tax Consequences................      75
Where You May Find Additional
  Information............................      80
Legal Matters............................      81
Experts..................................      81
Underwriting.............................      82
Index to Consolidated
  Financial Statements...................     F-1
</TABLE>

- ---------------------------------------------------------
- ---------------------------------------------------------
                       ---------------------------------------------------------
                       ---------------------------------------------------------

                                  $500,000,000

                             JUNIPER NETWORKS, INC.

                % Convertible Subordinated Notes due February 15, 2007

                               ------------------

                                      LOGO
                               ------------------

                              GOLDMAN, SACHS & CO.

                           CREDIT SUISSE FIRST BOSTON

                               ROBERTSON STEPHENS

                             DAIN RAUSCHER WESSELS

                                    SG COWEN

                            WARBURG DILLON READ LLC

                       ---------------------------------------------------------
                       ---------------------------------------------------------
<PAGE>   107

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of the convertible notes being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.

<TABLE>
<S>                                                             <C>
SEC registration fee........................................    $151,800
NASD filing fee.............................................      30,500
Printing and engraving expenses.............................     150,000
Legal fees and expenses.....................................     300,000
Accounting fees and expenses................................      75,000
Blue sky fees and expenses..................................       3,000
Trustee fees................................................      20,000
Miscellaneous fees and expenses.............................      69,700
                                                                --------
     Total..................................................    $800,000
                                                                ========
</TABLE>

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by current law.

     Article Eighth of our Amended and Restated Certificate of Incorporation
provides for the indemnification of directors and officers to the fullest extent
permissible under Delaware law.

     Article VI of our Bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of Juniper Networks if such person
acted in good faith and in a manner reasonably believed to be in and not opposed
to our best interest, and, with respect to any criminal action or proceeding,
the indemnified party had no reason to believe his or her conduct was unlawful.

     We have entered into indemnification agreements with our directors and
officers, in addition to indemnification provided for in our Bylaws, and intend
to enter indemnification agreements with any new directors and officers in the
future. The indemnification agreements may require us, among other things, to
indemnify our directors and officers against certain liabilities that may arise
by reason of their status or service as directors and officers (other than
liabilities arising from willful misconduct of culpable nature), to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and to obtain directors and officers insurance, if
available on reasonable terms.

     Reference is also made to Section 8 of the Underwriting Agreement contained
in Exhibit 1.1 hereto, indemnifying officers and directors of Juniper Networks
against certain liabilities.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

     Since inception, we have issued unregistered securities to a limited number
of persons as described below:

         1. On February 6, 1996 we sold 4,050,000 shares of our common stock at
  an aggregate purchase price of $8,910.00.

                                      II-1
<PAGE>   108

          2. On April 15, 1996 we sold 225,000 shares of our common stock for an
     aggregate purchase price of $2,002.50.

          3. On June 12, 1996 we sold 450,000 shares of our common stock for an
     aggregate purchase price of $20,025.40.

          4. From inception through June 30, 1999, we granted stock options and
     restricted stock purchase rights to purchase an aggregate of 16,677,997
     shares of our common stock at prices ranging from $0.11 to $28.00 per share
     to employees, consultants and directors pursuant to our 1996 Stock Plan.

          5. From inception through June 30, 1999, we issued and sold an
     aggregate of 11,302,289 shares of our common stock to employees,
     consultants and directors for an aggregate consideration of $6,492,421
     pursuant to exercise of options granted under our 1996 Stock Plan.

          6. From inception through June 30, 1999 we issued an aggregate of
     111,283 shares of our common stock under our 1996 Stock Plan to consultants
     in consideration for past services rendered for an aggregate value of
     $74,365.00.

          7. On June 11, 1996 we sold 1,743,751 shares of Series A Preferred
     Stock for $1.00 per share to the following private investors for an
     aggregate purchase price of $1,743,751: Kleiner Perkins Caulfield & Byers
     Fund VII, KPBC Information Sciences Zaibatsu Fund II, Kleiner Perkins
     Caulfield & Byers VII and WS Investment Company 96A.

          8. On June 11, 1996 we sold 6,328,123 shares of common stock for $0.44
     per share to a the following private investors for an aggregate purchase
     price of $281,249.90: Kleiner Perkins Caulfield & Byers Fund VII, KPCB
     Information Sciences Zaibatsu Fund II, Kleiner Perkins Caulfield & Byers
     VII and WS Investments 96A.

          9. On August 5, 1996 and November 18, 1996 we sold 3,818,017 shares of
     Series B Preferred Stock for $2.40 per share to the following private
     investors for an aggregate purchase price of $9,163,240.80: Benchmark
     Capital Partners, L.P., Benchmark Founders' Fund, L.P., Crosspoint Venture
     Partners 1996, Institutional Venture Management VII, L.P., IVP Founders
     Fund I, L.P., Institutional Venture Partners VI, L.P., KPCB Informational
     Sciences Zaibatsu Fund II, Kleiner Perkins Caulfield & Byers VII, Kriens
     1996 Trust U/T/A October 29, 1996, McQuillan Consulting Self-Employed
     Profit Sharing Plan, NEA Presidents Fund L.P., NEA Ventures 1996, L.P., New
     Enterprise Associates VI, Limited Partnership, O'Brien Family Trust, U/T/A
     dated 7/1/92, Larry Sonsini, Stensrud Family Trust U/T/A September 16, 1993
     and WS Investment Company 96B.

          10. On December 16, 1996, in connection with an equipment lease, we
     issued a warrant to purchase 83,333 shares of our Series B Preferred Stock
     at an exercise price of $2.40 per share to Venture Lending & Leasing, Inc..

          11. On December 30, 1996 we issued 3,958 shares of Series B Preferred
     Stock at $2.40 per share to William Gunning and Florin Oprescu as
     consideration for past services rendered.

          12. On June 18, 1997, in connection with a lease agreement, we issued
     a warrant to purchase 10,000 shares of our Series B Preferred Stock at an
     exercise price of $2.40 per share to Excite@Home, a lessor of real
     property.

          13. On July 1, 1997 and September 30, 1997 we sold 5,151,178 shares of
     our Series C Preferred Stock at $8.93 per share to the following private
     investors for an aggregate purchase price of $46,000,020: 3Com Corporation,
     Anschutz Family Investment Company LLC, AT&T Venture Fund II., L.P.,
     Crosspoint Venture Partners 1996, Ericsson Business

                                      II-2
<PAGE>   109

     Networks AB, Lucent Technologies Inc., Newbridge Networks Corporation,
     Nortel Networks Corporation and UUNet Technologies, Inc.

          14. On September 30, 1997, in connection with an equipment lease, we
     issued a warrant to purchase 23,516 shares of our Series C Preferred Stock
     at an exercise price of $8.93 per share to Venture Lending & Leasing, Inc.

          15. On March 3, 1999 we issued 130,000 shares of common stock to an
     employee at an exercise price of $9.90 per share pursuant to a restricted
     stock purchase agreement.

          16. On March 16, 1999 we sold 500,000 shares of our Series D Preferred
     Stock and 2,580,000 shares of our Series D1 Preferred Stock both for $11.03
     per share to Ericsson Business Networks AB for an aggregate purchase price
     of $33,972,400.

     For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Transactions" in the form of prospectus included herein.

     Except as indicated above, none of the foregoing transactions involved any
underwriters, underwriting discounts or commissions or any public offering, and
we believe that each transaction was exempt from the registration requirements
of the Securities Act by virtue of Section 4(2) thereof, Regulation D
promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients in such transactions represented their intention to acquire the
securities for investment only and not with a view to or for resale in
connection with any distribution thereof, and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationships with us, to
information about us.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (A) INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER    DESCRIPTION OF DOCUMENT
 -------   -----------------------
<C>        <S>
 1.1*      Form of Underwriting Agreement
 3.1**     Amended and Restated Certificate of Incorporation of the
           Registrant
 3.3**     Amended and Restated Bylaws of the Registrant
 4.1*      Form of Registrant's Convertible Note
 4.2**     Third Amended and Restated Registration Rights Agreement
           dated March 9, 1999
 4.3*      Form of Indenture by and between the Registrant and Norwest
           Bank Minnesota, N.A.
 5.1*      Opinion of Wilson Sonsini Goodrich & Rosati Professional
           Corporation
10.1**     Form of Indemnification Agreement entered into by the
           Registrant with each of its directors, officers and certain
           employees
10.2**     Amended and Restated 1996 Stock Plan
10.3**     1999 Employee Stock Purchase Plan
10.4**     Sublease between Trident Microsystems, Inc. and the
           Registrant dated July 1, 1998
10.5**     Sublease between At Home Corporation and the Registrant
           dated June 4, 1998
10.6**     Change of Control Agreement between Scott Kriens and the
           Registrant dated October 1, 1996
10.7**     Change of Control Agreement between Marcel Gani and the
           Registrant dated February 18, 1997
</TABLE>

                                      II-3
<PAGE>   110

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER    DESCRIPTION OF DOCUMENT
 -------   -----------------------
<C>        <S>
10.8***    Agreement for ASIC Design and Purchase of Products between
           IBM Microelectronics and the Registrant dated August 26,
           1997
10.8.1***  Amendment One to Agreement for ASIC Design and Purchase of
           Products between IBM Microelectronics and the Registrant
           dated January 5, 1998
10.8.2***  Amendment Two to Agreement for ASIC Design and Purchase of
           Products between IBM Microelectronics and the Registrant
           dated March 2, 1998
10.9***    Standard Manufacturing Agreement between Solectron
           California Corporation, Fine Pitch Technology Inc. and the
           Registrant dated June 10, 1998
10.10**    Lease between Mathilda Associates LLC and the Registrant
           dated June 18, 1999
21.1*      Subsidiaries of Registrant
23.1       Consent of Ernst & Young LLP, Independent Auditors
23.2*      Consent of Counsel. Reference is made to Exhibit 5.1.
23.3*      Consent of International Data Corporation
23.4*      Consent of Ryan, Hankin, Kent, Inc.
24.1       Power of Attorney (see page II-6)
25.1*      Form T-1 Statement of Eligibility of Trustee for Indenture
           under the Trust Indenture Act of 1939.
27.1       Financial Data Schedule
</TABLE>

- ---------------

  * To be filed by amendment.

 ** Incorporated by reference herein to the Registration Statement of Form S-1
    and all amendments thereto filed with the Securities and Exchange Commission
    on April 21, 1999 and declared effective June 24, 1999.

*** Confidential treatment requested and received as to certain portions. These
    exhibits are incorporated by reference herein to the Registration Statement
    of Form S-1 and all amendments thereto filed with the Securities and
    Exchange Commission on April 21, 1999 and declared effective June 24, 1999.

(B) FINANCIAL STATEMENT SCHEDULES

     The following financial statement schedule of Juniper Networks is filed as
part of this Report and should be read in conjunction with the Financial
Statements of Juniper Networks.

<TABLE>
<CAPTION>
SCHEDULE               DESCRIPTION
- --------    ---------------------------------
<S>         <C>
   II       Valuation and Qualifying Accounts
</TABLE>

     Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

     Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and certain employees
pursuant to the provisions referenced in Item 14 of this Registration Statement
or otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore unenforceable. In the event of a claim
for indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or other covered employee of
Juniper Networks in the successful defense of any action, suit or proceeding) is
asserted by a director, officer or other covered
                                      II-4
<PAGE>   111

employee in connection with the securities being registered hereunder, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

     We hereby undertake that:

          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of Prospectus filed as part of
     this Registration Statement in reliance on Rule 430A and contained in a
     form of Prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h)
     under the Securities Act shall be deemed to be part of this Registration
     Statement as of the time it was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of Prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                      II-5
<PAGE>   112

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mountain
View, State of California, on the fourth day of February, 2000.

                                          JUNIPER NETWORKS, INC.

                                          By: /s/ SCOTT KRIENS
                                            ------------------------------------
                                              Scott Kriens
                                              President and Chief Executive
                                              Officer

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENT, that the persons whose signatures appear
below each severally constitutes and appoints Marcel Gani and Lisa C. Berry, and
each of them, as true and lawful attorneys-in-fact and agents, with full powers
of substitution and resubstitution, for them in their name, place and stead, in
any and all capacities, to sign any and all amendments (including pre-effective
and post-effective amendments) to this Registration Statement and to sign any
registration statement (and any post-effective amendments thereto) relating to
the same offering as this Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
                  SIGNATURE                                  TITLE                       DATE
                  ---------                                  -----                       ----
<S>                                            <C>                                 <C>
/s/ SCOTT KRIENS                               President, Chief Executive Officer  February 4, 2000
- ---------------------------------------------  and Chairman of the Board
Scott Kriens                                   (Principal Executive Officer)

/s/ MARCEL GANI                                Chief Financial Officer (Principal  February 4, 2000
- ---------------------------------------------  Financial and Accounting Officer)
Marcel Gani

/s/ PRADEEP SINDHU                             Chief Technical Officer and Vice    February 4, 2000
- ---------------------------------------------  Chairman of Board
Pradeep Sindhu

/s/ WILLIAM R. HEARST III                      Director                            February 4, 2000
- ---------------------------------------------
William R. Hearst III

/s/ VINOD KHOSLA                               Director                            February 4, 2000
- ---------------------------------------------
Vinod Khosla

/s/ C. RICHARD KRAMLICH                        Director                            February 4, 2000
- ---------------------------------------------
C. Richard Kramlich

/s/ WILLIAM STENSRUD                           Director                            February 4, 2000
- ---------------------------------------------
William Stensrud
</TABLE>

                                      II-6
<PAGE>   113

                             JUNIPER NETWORKS, INC.

                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    BALANCE AT   CHARGED TO
                                                    BEGINNING    COSTS AND                 BALANCE AT
                   DESCRIPTION                       OF YEAR      EXPENSES    DEDUCTIONS   END OF YEAR
                   -----------                      ----------   ----------   ----------   -----------
<S>                                                 <C>          <C>          <C>          <C>
Year ended December 31, 1999
  Allowance for doubtful accounts................      $ --         $632         $ --         $632
Year ended December 31, 1998
  Allowance for doubtful accounts................      $ --         $ --         $ --         $ --
Year ended December 31, 1997
  Allowance for doubtful accounts................      $ --         $ --         $ --         $ --
</TABLE>
<PAGE>   114

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER    DESCRIPTION OF DOCUMENT
 -------   -----------------------
<C>        <S>
 1.1*      Form of Underwriting Agreement
 3.1**     Amended and Restated Certificate of Incorporation of the
           Registrant
 3.3**     Amended and Restated Bylaws of the Registrant
 4.1*      Form of Registrant's Convertible Note
 4.2**     Third Amended and Restated Registration Rights Agreement
           dated March 9, 1999
 4.3*      Form of Indenture by and between the Registrant and Norwest
           Bank Minnesota, N.A.
 5.1*      Opinion of Wilson Sonsini Goodrich & Rosati Professional
           Corporation
10.1**     Form of Indemnification Agreement entered into by the
           Registrant with each of its directors, officers and certain
           employees
10.2**     Amended and Restated 1996 Stock Plan
10.3**     1999 Employee Stock Purchase Plan
10.4**     Sublease between Trident Microsystems, Inc. and the
           Registrant dated July 1, 1998
10.5**     Sublease between At Home Corporation and the Registrant
           dated June 4,1998
10.6**     Change of Control Agreement between Scott Kriens and the
           Registrant dated October 1, 1996
10.7**     Change of Control Agreement between Marcel Gani and the
           Registrant dated February 18, 1997
10.8***    Agreement for ASIC Design and Purchase of Products between
           IBM Microelectronics and the Registrant dated August 26,
           1997
10.8.1***  Amendment One to Agreement for ASIC Design and Purchase of
           Products between IBM Microelectronics and the Registrant
           dated January 5, 1998
10.8.2***  Amendment Two to Agreement for ASIC Design and Purchase of
           Products between IBM Microelectronics and the Registrant
           dated March 2, 1998
10.9***    Standard Manufacturing Agreement between Solectron
           California Corporation, Fine Pitch Technology Inc. and the
           Registrant dated June 10, 1998
10.10**    Lease between Mathilda Associates LLC and the Registrant
           dated June 18, 1999
21.1*      Subsidiaries of Registrant
23.1       Consent of Ernst & Young LLP, Independent Auditors
23.2*      Consent of Counsel. Reference is made to Exhibit 5.1.
23.3*      Consent of International Data Corporation
23.4*      Consent of Ryan, Hankin, Kent, Inc.
24.1       Power of Attorney (see page II-6)
25.1*      Form T-1 Statement of Eligibility of Trustee for Indenture
           Under the Trust Indenture Act of 1939.
27.1       Financial Data Schedule
</TABLE>
<PAGE>   115

- ---------------

  * To be filed by amendment.

 ** Incorporated by reference herein to the Registration Statement of Form S-1
    and all amendments thereto filed with the Securities and Exchange Commission
    on April 21, 1999 and declared effective June 24, 1999.

*** Confidential treatment requested and received as to certain portions. These
    exhibits are incorporated by reference herein to the Registration Statement
    of Form S-1 and all amendments thereto filed with the Securities and
    Exchange Commission on April 21, 1999 and declared effective June 24, 1999.

<PAGE>   1
                                                                    EXHIBIT 23.1

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our reports dated
January 17, 2000, in the Registration Statement (Form S-1) and related
Prospectus of Juniper Networks, Inc. for the registration of its common stock
issuable under the conversion of convertible notes.

Our audits also included the financial statement schedule listed in Item 16(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.


                                   /s/ Ernst & Young LLP



Palo Alto, California
February 4, 2000


<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1,000

<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                         158,043
<SECURITIES>                                   285,116
<RECEIVABLES>                                   24,582
<ALLOWANCES>                                       632
<INVENTORY>                                          0
<CURRENT-ASSETS>                               377,833
<PP&E>                                          20,588
<DEPRECIATION>                                   8,172
<TOTAL-ASSETS>                                 513,378
<CURRENT-LIABILITIES>                           55,663
<BONDS>                                              0
                                0
                                          0
<COMMON>                                             2
<OTHER-SE>                                     457,713
<TOTAL-LIABILITY-AND-EQUITY>                   513,378
<SALES>                                        102,606
<TOTAL-REVENUES>                               102,606
<CGS>                                           45,272
<TOTAL-COSTS>                                   45,272
<OTHER-EXPENSES>                                41,502
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                (6,609)
<INCOME-TAX>                                     2,425
<INCOME-CONTINUING>                            (9,034)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   (9,034)
<EPS-BASIC>                                   (0.10)
<EPS-DILUTED>                                   (0.10)


</TABLE>


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission