EX-99.2 5 f68090ex99-2.txt EXHIBIT 99.2 1 EXHIBIT 99.2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma condensed consolidated financial information gives effect to the acquisition of Micro Magic, Incorporated ("MMI") by Juniper Networks, Inc. ("Juniper Networks"). The acquisition will be accounted for under the purchase method of accounting in accordance with APB Opinion No. 16. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Estimates of the fair values of the assets and liabilities of MMI have been combined with the recorded values of the assets and liabilities of Juniper Networks in the unaudited pro forma condensed consolidated financial information. The purchase price allocation for MMI is preliminary and is unaudited. These allocations are subject to change pending the completion of the final analysis of the fair value of the assets acquired and liabilities assumed. The impact of such changes could be material. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2000 gives effect to the MMI acquisition as if it occurred on September 30, 2000. The Juniper Networks balance sheet information was derived from its unaudited September 30, 2000 condensed consolidated balance sheet. The MMI balance sheet information was derived from its unaudited September 30, 2000 balance sheet. The unaudited pro forma condensed consolidated statements of operations give pro forma effect to the acquisition as if the transaction was consummated as of January 1, 1999. The information for the Juniper Networks and MMI December 31, 1999 statements of operations was derived from their audited statements of operations for the year ended December 31, 1999. The information for the Juniper Networks and MMI September 30, 2000 statements of operations were derived from their unaudited statements of operations for the nine-month period ended September 30, 2000. The unaudited pro forma condensed consolidated financial information has been prepared by Company management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or results of operations in future periods or the results that actually would have been realized had Juniper Networks and MMI been a combined company during the specified periods. The pro forma adjustments are based on the information available at the time of this Registration Statement on Form 8-K. The unaudited pro forma condensed consolidated financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of Juniper Networks included in its Form 10-K and Form 10-Q filed March 29, 2000 and November 9, 2000, respectively, with the Securities and Exchange Commission, and the historical financial statements of MMI included as exhibit 99.2 in this Form 8-K. 2 JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 (IN THOUSANDS)
Historical ---------------------------- Juniper Micro Magic, Pro Forma Pro Forma Networks, Inc. Incorporated Adjustments Combined -------------- ------------ ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 571,201 $ 1,848 $ (39,974)(1) $ 533,075 Short-term investments 567,731 -- -- 567,731 Accounts receivable, net 116,319 1,330 -- 117,649 Prepaid expenses and other current assets 20,775 27 -- 20,802 ----------- ------- --------- ----------- Total current assets 1,276,026 3,205 (39,974) 1,239,257 Property and equipment, net 33,039 95 -- 33,134 Long-term investments 508,630 -- -- 508,630 Other long-term assets 127,730 16 123,838(2) 251,584 ----------- ------- --------- ----------- Total assets $ 1,945,425 $ 3,316 $ 83,864 $ 2,032,605 =========== ======= ========= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 48,431 $ 30 $ -- $ 48,461 Other accrued liabilities 108,105 107 150(1) 108,362 Deferred revenue 34,770 -- -- 34,770 ----------- ------- --------- ----------- Total current liabilities 191,306 137 150 191,593 Convertible subordinated notes and other long-term liabilities 1,161,080 -- -- 1,161,080 Common stock and additional paid-in capital 540,315 568 218,636(1)(3) 759,519 Deferred stock compensation (1,595) (127) (121,584)(2)(3) (123,306) Accumulated other comprehensive income (loss) 20,727 -- -- 20,727 Retained earnings 33,592 2,738 (13,338)(2)(3) 22,992 ----------- ------- --------- ----------- Total stockholders' equity 593,039 3,179 83,714 679,932 ----------- ------- --------- ----------- Total liabilities and stockholders' equity $ 1,945,425 $ 3,316 $ 83,864 $ 2,032,605 =========== ======= ========= ===========
See accompanying notes to unaudited pro forma condensed consolidated financial information. 3 JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Historical ---------------------------- Juniper Micro Magic, Pro Forma Pro Forma Networks, Inc. Incorporated Adjustments Combined -------------- ------------ ----------- --------- Net revenues $ 102,606 $ 3,443 $ -- $ 106,049 Cost of revenues 45,272 1,182 -- 46,454 --------- -------- --------- --------- Gross profit 57,334 2,261 -- 59,595 Operating expenses: Research and development 41,502 269 -- 41,771 Sales and marketing 20,931 891 -- 21,822 General and administrative 5,235 271 -- 5,506 Amortization of goodwill, purchased intangibles and deferred stock compensation 4,286 15,923 103,972(2)(3) 124,181 --------- -------- --------- --------- Total operating expenses 71,954 17,354 103,972 193,280 --------- -------- --------- --------- Operating loss, (14,620) (15,093) (103,972) (133,685) Interest income, net 8,011 39 (2,400)(5) 5,650 --------- -------- --------- --------- Loss before income taxes (6,609) (15,054) (106,372) (128,035) Provision for income taxes/(tax benefit) 2,425 (617) -- 1,808 --------- -------- --------- --------- Net loss $ (9,034) $(14,437) $(106,372) $(129,843) ========= ======== ========= ========= Net loss per share: Basic $ (0.03) $ (0.49) ========= ======== ========= ========= Diluted $ (0.03) $ (0.49) ========= ======== ========= ========= Shares used in computing net loss per share: Basic 262,960 521 263,481 ========= ======== ========= ========= Diluted 262,960 521 263,481 ========= ======== ========= =========
See accompanying notes to unaudited pro forma condensed consolidated financial information. 4 JUNIPER NETWORKS, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Historical ----------------------------- Juniper Micro Magic, Pro Forma Pro Forma Networks, Inc. Incorporated Adjustments Combined -------------- ------------ ----------- ---------- Net revenues $378,115 $ 3,590 $ -- $ 381,705 Cost of revenues 136,144 1,177 -- 137,321 -------- ------- -------- --------- Gross profit 241,971 2,413 -- 244,384 Operating expenses: Research and development 57,590 157 -- 57,747 Sales and marketing 52,137 678 -- 52,815 General and administrative 12,631 208 -- 12,839 Amortization of goodwill, purchased intangibles and deferred stock compensation 6,977 5,328 49,946(2)(3) 62,251 Charitable contribution 10,000 -- -- 10,000 -------- ------- -------- --------- Total operating expenses 139,335 6,371 49,946 195,652 -------- ------- -------- --------- Operating income/(loss) 102,636 (3,958) (49,946) 48,732 Interest income, net 28,156 39 (1,800)(5) 26,395 -------- ------- -------- --------- Income/(loss) before income taxes 130,792 (3,919) (51,746) 75,127 Provision for income taxes 45,033 2 -- 45,035 -------- ------- -------- --------- Net income/(loss) $ 85,759 $(3,921) $(51,746) $ 30,092 ======== ======= ======== ========= Net income per share: Basic $ 0.28 $ 0.10 ======== ======= ======== ========= Diluted $ 0.25 $ 0.09 ======== ======= ======== ========= Shares used in computing net income per share: Basic 301,701 521 302,222 ======== ======= ======== ========= Diluted 347,309 1,454 348,763 ======== ======= ======== =========
See accompanying notes to unaudited pro forma condensed consolidated financial information. 5 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION BASIS OF PRESENTATION Juniper Networks acquired MMI on December 8, 2000 for a total purchase price of $259.3 million in a transaction accounted for as a purchase. Juniper Networks exchanged approximately $40.0 million of cash and 828,000 shares of Juniper Networks common stock with a fair value of $125.7 million for all of the outstanding stock of MMI. The common stock was valued using Juniper Networks' average closing stock price on the 3 days before the announcement, which was $151.76 per share. Juniper Networks also assumed all of the outstanding stock options of MMI with a fair value of approximately $93.5 million. The options were valued using a Black-Scholes option pricing model with the inputs of .80 for volatility, 3 years for expected life, 6.00% for the risk-free interest rate and a market value of $151.76 per share as described above. There is also $150,000 of estimated transaction costs related to the merger. The acquisition will be accounted for under the purchase method of accounting in accordance with APB Opinion No. 16. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. Preliminary estimates based on management's best estimates of the fair values of the assets and liabilities of MMI have been combined with the recorded values of the assets and liabilities of Juniper Networks in the unaudited pro forma condensed consolidated financial information. These allocations are subject to change pending a final analysis of the value of the assets acquired and liabilities assumed. PRO FORMA ADJUSTMENTS (1) To reflect the issuance of approximately $40.0 million in cash and 828,000 shares of Juniper Networks Common Stock (521,000 vested and 307,000 restricted) and the assumption of all outstanding options in conjunction with the MMI acquisition, for an aggregate purchase price of approximately $259.3 million, including approximately $150,000 of estimated transaction costs. (2) To reflect the excess of the purchase price over the fair value of assets and liabilities acquired in connection with the MMI acquisition. The purchase price allocation is based on management's estimates of the fair values of the tangible and intangible assets, as well as acquired technology which has not reached technological feasibility and has no alternative future use. The book value of tangible assets and liabilities acquired are presently believed to approximate fair value. The assembled workforce, purchased technology and goodwill will be amortized on a straight-line basis over three years. Deferred compensation on unvested stock and stock options will be amortized over the vesting period using the graded vesting method. The compensation expense relates to unvested stock and stock options granted to individuals primarily in the research and development expense category. The total purchase price paid for the acquisition is summarized as follows (in thousands): Net assets acquired $ 3,179 In-process research and development 10,600 Assembled workforce 900 Purchased technology 7,300 Goodwill 115,638 Deferred compensation on unvested stock and stock options 121,711 -------- Total $259,328 ========
6 (3) To reflect the elimination of the stockholders' equity accounts and amortization of deferred compensation of MMI. (4) Juniper Networks will record an immediate write-off of in-process technology at the consummation of the acquisition. The unaudited pro forma condensed consolidated statements of operations do not include the charge for in-process technology of approximately $10.6 million since it is considered a non-recurring charge. The charge will be taken by Juniper Networks in the three months ended December 31, 2000. (5) To reflect the effect on interest income for approximately $40 million of cash paid by Juniper Networks. PRO FORMA NET INCOME (LOSS) PER SHARE The unaudited pro forma combined basic net income (loss) per share is based upon the weighted average number of outstanding shares of common stock of Juniper Networks during the period presented, plus the number of vested shares issued to consummate the acquisition of MMI as if the acquisition occurred at the beginning of the period presented. The unaudited pro forma combined diluted net income (loss) per share also includes the MMI common stock equivalents, if antidilutive. CONFORMING AND RECLASSIFICATION ADJUSTMENTS There were no material adjustments required to conform the accounting policies of Juniper Networks and MMI. Certain amounts have been reclassified to conform to Juniper Networks's financial statement presentation.