EX-99.2 5 f83834exv99w2.txt EXHIBIT 99.2 Exhibit 99.2 UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma condensed combined consolidated financial information gives effect to the acquisition of Unisphere Networks ("Unisphere") by Juniper Networks, Inc. ("Juniper Networks"). The acquisition will be accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standard (SFAS) No. 141, "Business Combinations" (SFAS 141). Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Estimates of the fair values of the assets and liabilities of Unisphere have been combined with the recorded values of the assets and liabilities of Juniper Networks in the unaudited pro forma condensed combined consolidated financial information. The purchase price allocation for Unisphere is preliminary and unaudited. These allocations are subject to change pending the completion of an analysis of the fair value of the assets acquired and liabilities assumed. The impact of such changes could be material. The unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2002 gives effect to the Unisphere acquisition as if it occurred on March 31, 2002. The Juniper Networks consolidated balance sheet information included therein was derived from its unaudited March 31, 2002 condensed consolidated balance sheet. The Unisphere consolidated balance sheet information included therein was derived from its unaudited March 31, 2002 consolidated balance sheet. The unaudited pro forma condensed combined consolidated statements of operations give pro forma effect to the acquisition as if the transaction was consummated on January 1, 2001. The information included in the 2001 unaudited pro forma condensed combined consolidated statement of operations includes the condensed consolidated statement of operations of Juniper Networks for the year ended December 31, 2001 and the condensed consolidated statement of operations of Unisphere for the year ended September 30, 2001, which were derived from their respective audited consolidated statements of operations for such years. The information included in the unaudited condensed combined consolidated statement of operations for the three months ended March 31, 2002 was derived from the unaudited condensed consolidated statements of operations of Juniper Networks and Unisphere for this three-month period. Unisphere's revenues and net loss for the three-month period ended December 31, 2001, which are not presented in the aforementioned unaudited condensed combined consolidated statements of operations, were $60.3 million and $14.2 million, respectively. The unaudited pro forma condensed combined consolidated financial information has been prepared by Company management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or results of operations in future periods or the results that actually would have been realized had Juniper Networks and Unisphere been a combined company during the specified periods. The pro forma adjustments are based on the information available at the time of this Current Report on Form 8-K. The unaudited pro forma condensed combined consolidated financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of Juniper Networks included in its Form 10-K and Form 10-Q filed April 1, 2001 and May 15, 2002, respectively, with the Securities and Exchange Commission, and the historical consolidated financial statements of Unisphere included as exhibit 99.1 in this Form 8-K. JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2002 (IN THOUSANDS)
Historical ---------------------------------- Juniper Unisphere Pro Forma Pro Forma Networks, Inc. Networks Adjustments Combined ------------- -------------- -------------- -------------- ASSETS Current assets: Cash and cash equivalents $ 705,184 $ 26,943 $ (375,000) (1) $ 357,127 Short-term investments 346,882 -- -- 346,882 Accounts receivable, net 65,916 12,529 -- 78,445 Inventories -- 12,289 1,462 (2) 13,751 Prepaid expenses and other current assets 29,347 5,358 -- 34,705 Current assets of discontinued operations -- 3,685 (3,685) -- ------------- -------------- -------------- -------------- Total current assets 1,147,329 60,804 (377,223) 830,910 Property and equipment, net 253,917 30,645 -- 284,562 Long-term investments 645,672 -- -- 645,672 Other long-term assets 274,073 178,100 600,936 (2)(3) 1,053,109 Non-current assets of discontinued operations -- 123,351 (123,351)(3) -- ------------- -------------- -------------- -------------- Total assets $ 2,320,991 $ 392,900 $ 100,362 $ 2,814,253 ============= ============== ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 53,127 $ 11,461 $ -- $ 64,588 Other accrued liabilities 120,677 21,694 15,163 (1) 157,534 Deferred revenue 30,628 17,220 -- 47,848 Convertible promissory note -- 113,630 (113,630)(3) -- Current liabilities of discontinued operations -- 5,910 (5,910)(3) -- ------------- -------------- -------------- -------------- Total current liabilities 204,432 169,915 (104,377) 269,970 Convertible subordinated notes 1,150,000 -- -- 1,150,000 Common stock and additional paid-in capital 974,074 1,330,060 (818,937)(1)(3) 1,485,197 Deferred stock compensation (49,435) (13,710) 13,211 (2)(3) (49,934) Notes receivable from officers -- (26,879) 26,879 (3) -- Accumulated other comprehensive income (loss) 5,591 (274) 274 (3) 5,591 Retained earnings (accumulated deficit) 36,329 (1,066,212) 983,312 (2)(3) (46,571) ------------- -------------- -------------- -------------- Total stockholders' equity 966,559 222,985 204,739 1,394,283 ------------- -------------- -------------- -------------- Total liabilities and stockholders' equity $ 2,320,991 $ 392,900 $ 100,362 $ 2,814,253 ============= ============== ============== ==============
See accompanying notes to unaudited pro forma condensed combined consolidated financial information. JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED 2001 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Historical ---------------------------------- Juniper Unisphere Pro Forma Pro Forma Networks, Inc. Networks Adjustments Combined ------------- -------------- -------------- -------------- Net revenues $ 887,022 $ 169,882 $ -- $ 1,056,904 Cost of revenues 372,771 91,131 5,062 (2) 468,964 ------------- -------------- -------------- -------------- Gross profit 514,251 78,751 (5,062) 587,940 Operating expenses: Research and development 155,530 55,700 -- 211,230 Sales and marketing 140,407 48,400 -- 188,807 General and administrative 37,554 11,596 -- 49,150 Amortization of deferred stock compensation 74,080 9,443 (9,003)(2)(3) 74,520 Amortization of goodwill and purchased intangibles 49,277 71,678 (56,973)(2)(3) 63,982 Restructuring costs 12,340 -- 12,340 In-Process research and development 4,200 -- 4,200 ------------- -------------- -------------- -------------- Total operating expenses 473,388 196,817 (65,976) 604,229 ------------- -------------- -------------- -------------- Operating income (loss) 40,863 (118,066) 60,914 (16,289) Interest income 94,747 -- (13,538)(5) 81,209 Interest and other expense (61,377) (4,893) (66,270) Loss on investments (53,620) -- (53,620) Equity in net loss of joint venture (4,076) -- (4,076) ------------- -------------- -------------- -------------- Loss from continuing operations before income taxes 16,537 (122,959) 47,376 (59,046) Provision for income taxes 29,954 -- -- 29,954 ------------- -------------- -------------- -------------- Loss from continuing operations (13,417) (122,959) 47,376 (89,000) Loss from discontinued operations -- (89,740) 89,740 (3) -- ------------- -------------- -------------- -------------- Net loss $ (13,417) $ (212,699) $ 137,116 $ (89,000) ============= ============== ============== ============== Net loss per share: Basic $ (0.04) $ (0.25) ============= ============== ============== ============== Diluted $ (0.04) $ (0.25) ============= ============== ============== ============== Shares used in computing net loss per share: Basic 319,378 36,500 355,878 ============= ============== ============== ============== Diluted 319,378 36,500 355,878 ============= ============== ============== ==============
See accompanying notes to unaudited pro forma condensed combined consolidated financial information. JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Historical ---------------------------------- Juniper Unisphere Pro Forma Pro Forma Networks, Inc. Networks Adjustments Combined ------------- -------------- -------------- -------------- Net revenues $ 122,219 $ 50,468 $ -- $ 172,687 Cost of revenues 49,996 21,443 -- 71,439 ------------- -------------- -------------- -------------- Gross profit 72,223 29,025 -- 101,248 Operating expenses: Research and development 35,069 15,282 -- 50,351 Sales and marketing 27,578 13,019 -- 40,597 General and administrative 9,549 2,632 -- 12,181 Amortization of deferred stock compensation 13,629 4,038 (4,018)(2)(3) 13,649 Amortization of purchased intangibles 1,646 -- 3,676 (2) 5,322 ------------- -------------- -------------- -------------- Total operating expenses 87,471 34,971 (342) 122,100 ------------- -------------- -------------- -------------- Operating income/(loss) (15,248) (5,946) 342 (20,852) Interest income 16,752 -- (1,819)(5) 14,933 Interest and other expense (15,132) (1,632) (16,764) Loss on investments (30,600) -- (30,600) Equity in net loss of joint venture (1,025) -- (1,025) ------------- -------------- -------------- -------------- Loss from continuing operations before income taxes (45,253) (7,578) (1,477) (54,308) Provision for income taxes 750 -- -- 750 ------------- -------------- -------------- -------------- Loss from continuing operations (46,003) (7,578) (1,477) (55,058) Loss from discontinued operations -- (12,679) 12,679 (3) -- ------------- -------------- -------------- -------------- Net loss $ (46,003) $ (20,257) $ 11,202 $ (55,058) ============= ============== ============== ============== Net loss per share: Basic $ (0.14) $ (0.15) ============= ============== ============== ============== Diluted $ (0.14) $ (0.15) ============= ============== ============== ============== Shares used in computing net loss per share: Basic 329,367 36,500 365,867 ============= ============== ============== ============== Diluted 329,367 36,500 365,867 ============= ============== ============== ==============
See accompanying notes to unaudited pro forma condensed combined consolidated financial information. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION BASIS OF PRESENTATION Juniper Networks acquired Unisphere on July 1, 2002 for a total purchase price of approximately $901.3 million in a transaction accounted for as a purchase. Juniper Networks exchanged approximately $375 million of cash and 36.5 million shares of Juniper Networks common stock with a fair value of approximately $359.9 million for all of the outstanding stock of Unisphere. The common stock was valued using Juniper Networks' average closing stock price on the 2 days before and after the transaction was announced, which was $9.86 per share. Juniper Networks also assumed all of the outstanding stock options of Unisphere with a fair value of approximately $151.2 million. The options were valued using a Black-Scholes option pricing model with the inputs of 0.8 for volatility, 2 years for expected life, 4% for the risk-free interest rate and a market value of $9.86 per share as described above. The estimated aggregate purchase price of $901.3 million includes an estimate of the direct costs associated with this transaction aggregating approximately $9.7 million and an estimated liability of approximately $5.5 million associated with the estimated costs of terminating certain employees of Unisphere and other exit activities. During the quarter ending September 30, 2002 Juniper Networks expects to incur additional costs for severance (related to its employees whose positions were eliminated) and other exit costs (related to facilities which will be closed) as a result of the acquisition of Unisphere. These amounts have not been finalized at this time. The acquisition will be accounted for under the purchase method of accounting in accordance with SFAS 141. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Preliminary estimates based on management's best estimates of the fair values of the assets and liabilities of Unisphere have been combined with the recorded values of the assets and liabilities of Juniper Networks in the unaudited pro forma condensed combined financial information. This allocation is subject to change pending completion of an analysis of the value of the assets acquired and liabilities assumed. The impact of such changes could be material. PRO FORMA ADJUSTMENTS (1) To reflect the issuance of approximately $375.0 million in cash and 36.5 million shares of Juniper Networks Common Stock and the assumption of all outstanding options in conjunction with the Unisphere acquisition, for an aggregate purchase price of approximately $901.3 million, including approximately $15.2 million of estimated transaction and exit costs. (2) To reflect the excess of the purchase price over the fair value of assets and liabilities acquired in connection with the Unisphere acquisition. The purchase price allocation is based on management's preliminary estimates of the fair values of the tangible and intangible assets, as well as acquired technology, certain of which has not reached technological feasibility and has no alternative future use. The purchased technology, service contract relationships and non-compete agreements will be amortized on a straight-line basis over two to six years. The backlog valuation, as depicted below, and inventory fair value mark-up of approximately $1.5 million, which is included in the fair value of net tangible assets acquired, will be charged to costs of goods sold over the period they are consumed, which is expected to be within the next six months. Deferred compensation on unvested stock options will be amortized over the vesting period using the graded vesting method. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", the goodwill will not be amortized. The preliminary allocation of the total purchase price paid for the acquisition is summarized as follows (in thousands): Fair value of net tangible assets acquired $ 39,897 In-process research and development 82,900 Purchased technology 61,500 Service contract relationships 6,900 Non-compete agreements 2,400 Order backlog 3,600 Goodwill 703,591 Deferred compensation on unvested stock options 499 --------- Total $ 901,287 =========
(3) To reflect the elimination of the stockholders' equity accounts (including deferred stock compensation and accumulated other comprehensive loss), discontinued operation accounts (which were not purchased by Juniper Networks), goodwill and amortization of goodwill of Unisphere. In addition, the convertible promissory notes and notes receivable from officers were eliminated because the convertible promissory notes converted to 12,657 shares of Unisphere common stock prior to the acquisition and the notes receivable from officers were forgiven by Unisphere's former parent company prior to the acquisition of Unisphere by Juniper Networks. There were no transactions between Juniper Networks and Unisphere during the periods presented in the accompanying unaudited condensed combined financial statements. (4) Juniper Networks will record an immediate write-off of in-process research and development at the consummation of the acquisition. The unaudited pro forma condensed combined statements of operations do not include the charge for in-process research and development of approximately $82.9 million since it is considered a non-recurring charge. The charge will be recorded by Juniper Networks in the three months ended September 30, 2002. (5) To reflect the effect on interest income for approximately $375 million of cash paid by Juniper Networks. PRO FORMA NET LOSS PER SHARE The unaudited pro forma combined basic net loss per share is based upon the weighted average number of outstanding shares of common stock of Juniper Networks during the periods presented, plus the number of vested shares issued to consummate the acquisition of Unisphere as if the acquisition occurred on January 1, 2001. The unaudited pro forma combined diluted net loss per share is the same as the unaudited pro forma combined basic net loss per share as all common stock equivalents are anti-dilutive due to the loss position. RECLASSIFICATIONS Certain amounts in Unisphere's historical condensed financial information have been reclassified to conform to Juniper Networks' historical financial statement presentation.