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2007 Annual Report - Juniper Networks JUNIPER NETWORKS, INC. 1194 N. Mathilda Avenue Sunnyvale, California 94089 (408) 745-2000 Letter to Stockholders and Proxy Statement Report on

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  • JUNIPER NETWORKS, INC. 1194 N. Mathilda Avenue

    Sunnyvale, California 94089

    (408) 745-2000

    Letter to Stockholders

    and Proxy Statement

    Report on Form 10-K

    2007 Annual Report

    Notice of 2008 Annual Meeting of Stockholders

  • To Our Stockholders:

    2007 was a very successful year for Juniper Networks on many fronts, both financially and

    strategically. First, the financial success: the Company posted $2.84 billion in revenue, ahead of

    our expectations and 23% above 2006. Our revenue growth rates compared to the prior year

    accelerated in each successive quarter during the year, and our fourth quarter marked the

    highest single revenue quarter in Juniper history. We delivered on the bottom line as well,

    posting $360.8 million, or $0.62 per diluted share, in GAAP net earnings, as we demonstrated

    improved leverage in our business model exiting 2007. We ended the year with over $2 billion in

    cash and cash equivalents.

    These results demonstrated that Juniper executed on its two key strategic goals for 2007:

    - build revenue momentum in the high-performance segment of the networking market; and, - begin to expand operating margins as we focus on establishing operating excellence and

    progress toward our targeted profitability model.

    In 2008 we are poised to make further gains on both of those objectives.

    We are in this position because Juniper is pursuing a strategy that is aligned closely with the

    evolution in global network infrastructure. Our business is no longer so much about the individual

    pieces – core, edge, aggregation, access – nor is it about building specific products to the needs

    of customer verticals – service providers, enterprises and public sector agencies. We serve all

    these customers with customized solutions, but each solution is built with an underlying focus on

    total network performance, supported by an infrastructure footprint that provides fast, reliable and

    secure access to applications and services at global scale. Underlying those capabilities is

    JUNOS, our single-source network operating system that runs across our network infrastructure.

    We call our approach high-performance networking – and it is the DNA of our company.

    In fact, it is also our core strength in the marketplace, and the market itself has helped validate

    that assertion. We serve each of the top 65 network service providers around the world. We

    serve 96 of the Fortune 100 enterprises. We serve the U.S. government and many NATO

    governments, as well as others around the globe.

    Many of these customers are taking advantage of our broad portfolio of high-performance

    networking infrastructure offerings, including the MX-series family of Ethernet service and multi-

    service edge routers. The MX-series established itself upon its introduction in 2007 as one of our

    fastest ramping new product families ever and is at the forefront of efficient and cost-effective

  • Ethernet networks and services, providing the performance and scalability to such applications as

    Internet Protocol TV (IPTV) and video-on-demand. Products like the MX960, the largest capacity

    and highest density Ethernet platform for carriers available today, and the recently introduced

    MX480 and MX240 play right into our high-performance focus.

    We also continue to win customer acceptance and industry accolades for products like our T1600

    multi-terabit core router, the industry’s highest throughput and most energy efficient core router,

    and recipient of Internet Telephony’s 2007 product of the year designation. Revenue from our T-

    series products grew 55% in the fourth quarter compared to Q4 of the prior year and the product

    group is now deployed in more than 200 production networks globally.

    In addition to the momentum we’ve established with these new key product lines, at the

    conclusion of 2007 we achieved quarterly profitability on a non-GAAP basis in our Service Layer

    Technology (SLT) segment. We crossed the half-billion dollar revenue mark in this business in

    2007 as our products continued to gain market share. We believe our firewall, SSL VPN and

    WAN Optimization solutions will continue to be well-received by our customers.

    So, our technology, our market position and our recognition as a leader by customers and

    industry followers are all as strong as they ever have been for Juniper. However, we also need to

    turn the opportunities these positions create into increasing value for stockholders. Juniper

    performed well in 2007, but it can perform better. And our team is hard at work on making that


    During 2007 we began implementing a series of company-wide operating initiatives---we call

    them our 4 Ps, for planning, productivity, processes and people. Collectively our efforts are

    focused on supporting the scalability of our business in a number of ways: optimally aligning our

    resources – human and financial -- with our R&D and marketing activities; finding and executing

    on productivity improvement opportunities in our sales and service organizations; leveraging the

    capabilities of our engineering organization across all product groups; and transforming core

    systems and processes to create efficiencies in areas like product design, customer support and

    enterprise resource planning.

    These initiatives underpin a business focus on strengthening our operating profit margins. The

    later part of 2007 yielded initial results that give us a good start on that path, but much remains to

    be done. We will continue to focus relentlessly on execution and operational excellence as we

    progress toward our performance goals.

  • Along the way, we will continue to build on our position as the leader in high performance

    networking. Juniper is only a 12-year old company, yet it has and continues to play a critical role

    in defining how to deliver optimal network performance in a global information environment

    demanding ever-increasing bandwidth and speed. The good news is that seeing and meeting

    these challenges happens to be our organization’s underlying strength. By focusing on the open

    architecture that we believe will drive optimal network performance, and tailoring our solutions to

    customers whether they are operators or users of those networks, we expect to continue leading

    the way.

    Our confidence in these goals is made stronger by the more than 6,000 talented people

    throughout Juniper’s global organizations who embody our high-performance DNA approach. I

    want to thank them for their great work, as well as our partners, customers, suppliers, and

    stockholders for their support of Juniper Networks.


    Scott Kriens

    Chairman and Chief Executive Officer

  • (This page intentionally left blank.)

  • JUNIPER NETWORKS, INC. 1194 North Mathilda Avenue Sunnyvale, California 94089 (408) 745-2000


    Time and Date 9:00 a.m., Pacific time, on Wednesday, May 21, 2008 Juniper Networks, Inc.

    Place 1220 North Mathilda Avenue Building 3, Pacific Conference Room Sunnyvale, CA 94089

    Items of Business (1) To elect two Class III directors;

    (2) To approve the Juniper Networks, Inc. 2008 Employee Stock Purchase Plan

    (3) To ratify the appointment of Ernst & Young LLP, an independent registered public accounting firm, as auditors for the fiscal year ending December 31, 2008; and

    (4) To consider such other business as may properly come before the meeting.

    Adjournments and Postponements Any action on the items of business described above may be consid- ered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.

    Record Date You are entitled to vote only if you were a Juniper Networks stock- holder as of the close of business on March 24, 2008.

    This notice of annual meeting and proxy statement and form of proxy are being distributed on or about April 18, 2008.

  • Meeting Admission You are entitled to attend the annual meeting only if you were a Juniper Networks stockholder as of the close of business on March 24, 2008 or hold a valid proxy for the annual meeting. You should be prepared to present valid government-issued photo identification for admittance. In addition, if you are a stockholder of record, your ownership will be verified against the list of stockholders of record on the record date prior to being admitted to the meeting. If you are not a stockholder of record but hold shares through a broker or nominee (i.e., in street name), you should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to March 24, 2008, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of owner- ship. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admit- ted to the annual meeting.

    The annual meeting will begin promptly at 9:00 a.m., Pacific time. Check-in will