avatar Juniper Networks, Inc. Manufacturing
  • Location: California 
  • Founded:
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    JUNIPER NETWORKS, INC. 1194 N. Mathilda Avenue Sunnyvale, California 94089 www.juniper.net (408) 745-2000 2004 Annual Report Letter to Stockholders Notice of 2005 Annual Meeting of Stockholders and Proxy Statement Report on Form 10-K


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    To Our Valued Stockholders, Juniper Networks expanded its leadership in secure and assured networking and achieved several significant milestones as the company continued to strengthen and grow its market-leading position. We generated revenue of over $1.3B in 2004, up 90% from 2003, by executing on the four strategic goals we set out to accomplish at the beginning of the year: Expand the franchise and the brand throughout the world, and across industries and applications. We expanded into new markets, including the customer premise equipment market and the private network markets as well as the Firewall/VPN and SSL markets through our security acquisition and portfolio. Our brand awareness increased around the world and we have grown facilities in both Bangalore and Beijing to expand our development capability and the pool of top talent that we employ. And today we do business in more than 75 countries around the world, with over 80 offices in 35 countries. Continue to invest in leading edge technology. We innovated and delivered several new infrastructure and security solutions and to further strengthen our leadership, we delivered approximately 500 new features on both the infrastructure and security portfolio. Broaden the collaboration with our partners. We made significant investments in our channel partners through our J-Partners program and collaborated with leading industry partners such as Microsoft, IBM, Netegrity, Oblix and RSA Security to help us expand our leadership position. The announcement of the Endpoint Defense Initiative enabled broader and deeper integration of our SSL VPN appliances with leading endpoint security products from our Global Alliances Program partners. In addition, we expanded our distribution arrangement with Ingram Micro, the world’s largest IT distributor, and we have enjoyed continued success with our strategic partners such as Ericsson, Lucent, NEC, and Siemens worldwide. Focus on the commitment to leadership in our industry, along with our customers. Today we enjoy relationships with all of the top 25 wireline service providers worldwide and we enjoy relationships with thousands of other customers operating both public and private networks worldwide. The Infranet Council has taken hold and we are working with many partners on making the network both secure and assured. And according to industry analysts, we increased our market share in all markets and we received recognition across the industry including 20 Product awards; 8 Analyst awards; 5 Executive awards; 5 Company awards; 2 Channel Awards; and a Marketing award. There was one additional goal we added at the completion of the NetScreen acquisition and as we grew the company: Scale the business and the processes and practices that support it. With the acquisition of NetScreen, the company built more management breadth by adding a team with experience at scale, expanding the bench strength of the company. In addition, we retooled some of the systems and procedures behind our distribution channel and this has already begun to bring returns. In summary, 2004 was a record year. The goals we put in place were strategic in nature and as they continue into the 2005 plans we believe we can capitalize on the progress we have made. Our strategy continues to focus on being the best supplier of traffic processing solutions, which enables our customers to secure and assure their networks. As we enter this year, we will focus on expanding upon the achievements we made last year: Increase our investment in sales and marketing. It is essential to expand and grow our presence in new markets, serving both private and public networks with a full portfolio of 1


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    secure and assured networking products, to build on the growing credibility we enjoy with the Juniper brand today. Increase our investment in R&D to continue our technological innovation and leadership and further advance our competitive advantage. Our competitive advantage is the cumulative effect of these investments. Juniper will continue to invest to protect and expand our lead by recruiting top talent around the world and investing in our products and our intellectual property. Continue to capitalize on the investments made in our partners. Much of our spending in sales and marketing will be earmarked for partners and their development, to help generate the demand and to offer the support of our partners to fulfill that demand. Take our current leadership position and extend it even further. This goal will be measured by our involvement with our customers as they design and implement the migration to a more secure multi service network environment. This involvement demonstrates our value, and we are in more discussions, at more strategic levels, than ever before. Scale the company for continued growth. We are concentrating on scaling our management experience, through both the hiring of outstanding and experienced people, as well as by investing significantly in the development of our existing team. We will also continue to scale our systems and improve our processes to prepare in advance for continued success. Many of these investments will enable us to continue to show that we are a company that, is easy to do business with, easy to communicate with, and reliable as a company and a partner prepared to meet the needs of our market. We are excited about our position and where the company’s capabilities meet the market’s opportunities I would like to thank and recognize all of our employees for their continued commitment and incredible efforts on achieving these results. I would also like to thank our customers, our long-term shareholders, our partners and our suppliers for their continued confidence in Juniper Networks. Scott Kriens Chairman and CEO 2


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    JUNIPER NETWORKS, INC. 1194 North Mathilda Avenue Sunnyvale, California 94089 www.juniper.net (408) 745-2000 NOTICE OF 2005 ANNUAL MEETING OF STOCKHOLDERS Time and Date 9:00 a.m., Pacific time, on Wednesday, May 18, 2005 Place Juniper Networks, Inc. 1220 North Mathilda Avenue Building 3, Pacific Conference Room Sunnyvale, CA 94089 Items of Business (1) To elect three Class III directors; (2) To ratify the appointment of Ernst & Young LLP, an independent registered public accounting firm, as auditors for the fiscal year ending December 31, 2005; and (3) To consider such other business as may properly come before the meeting. Adjournments and Any action on the items of business described above may be considered at the annual Postponements 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 stockholder as of the close of business on March 21, 2005. 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 21, 2005 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 or plan participants 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 21, 2005, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admitted to the annual meeting. The annual meeting will begin promptly at 9:00 a.m., Pacific time. Check-in will begin at 8:30 a.m., Pacific time, and you should allow ample time for the check-in procedures.


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    Voting Your vote is very important. Whether or not you plan to attend the annual meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. You may submit your proxy or voting instructions for the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided, or, in most cases, by using the telephone or the Internet. For specific instructions on how to vote your shares, please refer to the section entitled Questions and Answers beginning on page 1 of this proxy statement and the instructions on the proxy or voting instruction card. By Order of the Board of Directors, Mitchell L. Gaynor Vice President, General Counsel and Secretary This notice of annual meeting and proxy statement and form of proxy are being distributed on or about April 13, 2005.


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    2005 ANNUAL MEETING OF STOCKHOLDERS NOTICE OF ANNUAL MEETING AND PROXY STATEMENT TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Why am I receiving these materials? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 What information is contained in this proxy statement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 How may I obtain Juniper Networks’ 10-K? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 What items of business will be voted on at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 How does the Board recommend that I vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 What shares can I vote? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 What is the difference between holding shares as a shareowner of record and as a beneficial owner? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 How can I attend the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 How can I vote my shares in person at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 How can I vote my shares without attending the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Can I change my vote or otherwise revoke my proxy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Is my vote confidential? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 How many shares must be present or represented to conduct business at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Will my shares be voted if I do not return my proxy card? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 How are votes counted? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 What is the voting requirement to approve each of the proposals? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Is cumulative voting permitted for the election of directors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 What happens if additional matters are presented at the annual meeting? . . . . . . . . . . . . . . . . . . . . . . 4 What should I do if I receive more than one set of voting materials? . . . . . . . . . . . . . . . . . . . . . . . . . . 4 How may I obtain a separate set of voting materials? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Who will bear the cost of soliciting votes for the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Where can I find the voting results of the annual meeting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 What is the deadline to propose actions for consideration or to nominate individuals to serve as directors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Board Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Board Structure and Committee Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Identification and Evaluation of Nominees for Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Stockholder Communications with the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Policy on Director Attendance at Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Non-Employee Director Compensation Table For Fiscal 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 PROPOSALS TO BE VOTED ON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PROPOSAL NO. 1 Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 PROPOSAL NO. 2 Ratification of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Beneficial Ownership Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 i


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    EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Option Grants in Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values . . . . . . . . . . . . . . . . . . . . . . 20 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Board Compensation Committee Report on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Stock Performance Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 PRINCIPAL AUDITOR FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . 26 ii


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    QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING Q. Why am I receiving these materials? A: The Board of Directors (the “Board”) of Juniper Networks, Inc., a Delaware corporation (“Juniper Networks” or the “Company”), is providing these proxy materials for you in connection with Juniper Networks’ annual meeting of stockholders, which will take place on May 18, 2005. As a stockholder, you are invited to attend the annual meeting and are entitled to and requested to vote on the items of business described in this proxy statement. Q: What information is contained in this proxy statement? A: The information included in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, the compensation of directors and executive officers, and certain other required information. Q: How may I obtain Juniper Networks’ 10-K? A: A copy of our 2004 Annual Report on Form 10-K is enclosed. Stockholders may request another free copy of the 2004 Form 10-K from: Juniper Networks, Inc. Attn: Investor Relations 1194 North Mathilda Avenue Sunnyvale, CA 94089 (408) 745-2000 A copy of our 2004 Annual Report on Form 10-K is also available on the website of the Securities and Exchange Commission. You can reach this website by going to the Investor Relations Center on our Website, and clicking on the drop-down menu labeled “SEC Filings”. The address of the Investor Relations Center is: http://www.juniper.net/company/investor Juniper Networks will also furnish any exhibit to the 2004 Annual Report on Form 10-K if specifically requested in writing. Q: What items of business will be voted on at the annual meeting? A: The items of business scheduled to be voted on at the annual meeting are: • The election of three Class III directors; and • The ratification of Ernst & Young LLP, an independent registered public accounting firm as auditors for the 2005 fiscal year. We will also consider other business that properly comes before the annual meeting. Q: How does the Board recommend that I vote? A: Our Board recommends that you vote your shares “FOR” each of the nominees to the Board and “FOR” the ratification of Ernst & Young LLP, an independent registered public accounting firm, as auditors for the 2005 fiscal year. Q: What shares can I vote? A: Each share of Juniper Networks common stock issued and outstanding as of the close of business on March 21, 2005, the Record Date, is entitled to be voted on all items being voted upon at the annual meeting. You may vote all shares owned by you as of this time, including (1) shares held directly in your name as the stockholder of record and (2) shares held for you as the beneficial owner through a broker, trustee or other nominee such 1


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    as a bank. More information on how to vote these shares is contained in this proxy statement. On the Record Date we had approximately 544,176,804 shares of common stock issued and outstanding. Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner? A: Most Juniper Networks stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially. Stockholder of Record If your shares are registered directly in your name with Juniper Networks’ transfer agent, Wells Fargo Shareowner Services, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by Juniper Networks. As the stockholder of record, you have the right to grant your voting proxy directly to Juniper Networks or to vote in person at the meeting. Juniper Networks has enclosed or sent a proxy card for you to use. Beneficial Owner If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you together with a voting instruction card. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote and are also invited to attend the annual meeting. Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares. Q: How can I attend the annual meeting? A: You are entitled to attend the annual meeting only if you were a Juniper Networks stockholder as of the close of business on March 21, 2005 or you 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 name will be verified against the list of stockholders of record on the record date prior to your being admitted to the annual 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 on the record date, such as your most recent account statement prior to March 21, 2005, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not provide valid government-issued photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the annual meeting. The meeting will begin promptly at 9:00 a.m., local time. Check-in will begin at 8:30 a.m., and you should allow ample time for the check-in procedures. Q: How can I vote my shares in person at the annual meeting? A: Shares held in your name as the stockholder of record may be voted in person at the annual meeting. Shares held beneficially in street name may be voted in person only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the annual meeting, you may also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting. Q: How can I vote my shares without attending the annual meeting? A: Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the meeting. If you are a stockholder of record, you may vote 2


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    by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee. For directions on how to vote, please refer to the instructions below and those included on your proxy card or, for shares held beneficially in street name, the voting instruction card provided by your broker, trustee or nominee. By Internet—Stockholders of record of Juniper Networks common stock with Internet access may submit proxies by following the “Vote by Internet” instructions on their proxy cards. Most Juniper Networks stockholders who hold shares beneficially in street name may vote by accessing the website specified on the voting instruction cards provided by their brokers, trustee or nominees. Please check the voting instruction card for Internet voting availability. By Telephone—Stockholders of record of Juniper Networks common stock who live in the United States or Canada may submit proxies by following the “Vote by Phone” instructions on their proxy cards. Most Juniper Networks stockholders who hold shares beneficially in street name and live in the United States or Canada may vote by phone by calling the number specified on the voting instruction cards provided by their brokers, trustee or nominees. Please check the voting instruction card for telephone voting availability. By Mail—Stockholders of record of Juniper Networks common stock may submit proxies by completing, signing and dating their proxy cards and mailing them in the accompanying pre-addressed envelopes. Juniper Networks stockholders who hold shares beneficially in street name may vote by mail by completing, signing and dating the voting instruction cards provided and mailing them in the accompanying pre-addressed envelopes. Q: Can I change my vote or otherwise revoke my proxy? A: You may change your vote at any time prior to the vote at the annual meeting. If you are the stockholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to the Juniper Networks corporate Secretary prior to your shares being voted, or by attending the annual meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person. Q: Is my vote confidential? A: Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Juniper Networks or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Q: How many shares must be present or represented to conduct business at the annual meeting? A: The quorum requirement for holding the annual meeting and transacting business is that holders of a majority of shares of Juniper Networks common stock entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes are counted for the purpose of determining the presence of a quorum. Q: Will my shares be voted if I do not return my proxy card? A: If your shares are held in street name, your broker may, under certain circumstances, vote your shares. Brokerage firms have authority to vote client’s unvoted shares on some “routine” matters. If you do not give a proxy to vote your shares, your broker may either (1) vote your shares on “routine” matters or (2) leave your shares unvoted. In addition, the terms of the agreement with your broker may grant your broker discretionary authority to vote your shares. 3


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    Q: How are votes counted? A: In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. For the other items of business, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you “ABSTAIN,” the abstention has the same effect as a vote “AGAINST.” If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you sign your proxy card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (“FOR” all of Juniper Networks’ nominees to the Board and “FOR” ratification of the independent auditors). Q: What is the voting requirement to approve each of the proposals? A: In the election of directors, the three nominees receiving the highest number of “FOR” votes at the annual meeting will be elected. The proposal for ratification of the independent auditors requires the affirmative “FOR” vote of a majority of those shares present in person or represented by proxy and entitled to vote on that proposal at the annual meeting. If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained. Abstentions have the same effect as votes against the matter. Q: Is cumulative voting permitted for the election of directors? A: No. Each share of common stock outstanding as of the close of business on the Record Date is entitled to one vote. Q: What happens if additional matters are presented at the annual meeting? A: Other than the two items of business described in this proxy statement, we are not aware of any other business to be acted upon at the annual meeting. If you grant a proxy using the enclosed form, the persons named as proxyholders, Robert Dykes and Mitchell Gaynor, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any unforeseen reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board of Directors. Q: What should I do if I receive more than one set of voting materials? A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive. Q: How may I obtain a separate set of voting materials? A: If you share an address with another stockholder, you may receive only one set of proxy materials (including our letter to stockholders, 2004 Annual Report on Form 10-K and proxy statement) unless you have provided contrary instructions. If you wish to receive a separate set of proxy materials now or in the future, you may write or call us to request a separate copy of these materials from: 4


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    Juniper Networks, Inc. Attn: Investor Relations 1194 North Mathilda Avenue Sunnyvale, CA 94089 (408) 745-2000 http://www.juniper.net/company/investor Similarly, if you share an address with another stockholder and have received multiple copies of our proxy materials, you may write or call us at the above address and phone number to request delivery of a single copy of these materials. Q: Who will bear the cost of soliciting votes for the annual meeting? A: Juniper Networks is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. We also have hired Morrow & Co. to assist us in the distribution of proxy materials and the solicitation of votes described above. We will pay Morrow & Co. a fee of $8000 plus customary costs and expenses for these services. Upon request, we will also reimburse brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy and solicitation materials to stockholders. Q: Where can I find the voting results of the annual meeting? A: We intend to announce preliminary voting results at the annual meeting and publish final results in our quarterly report on Form 10-Q for the second quarter of 2005. Q: What is the deadline to propose actions for consideration or to nominate individuals to serve as directors? A: Although the deadline for submitting proposals or director nominations for consideration at the 2005 annual meeting has passed, you may submit proposals, including director nominations, for consideration at future stockholder meetings. Stockholder Proposals: For a stockholder proposal to be considered for inclusion in Juniper Networks’ proxy statement for the annual meeting next year, the written proposal must be received by the Corporate Secretary of Juniper Networks at our principal executive offices no later than December 14, 2005. If the date of next year’s annual meeting is moved more than 30 days before or after the anniversary date of this year’s annual meeting, the deadline for inclusion of proposals in Juniper Networks’ proxy statement is instead a reasonable time before Juniper Networks begins to print and mail its proxy materials. Such proposals also will need to comply with Securities and Exchange Commission regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Proposals should be addressed to: Juniper Networks, Inc. Attn: Corporate Secretary 1194 North Mathilda Avenue Sunnyvale, CA 94089 Fax: (408) 745-2100 For a stockholder proposal that is not intended to be included in Juniper Networks’ proxy statement under Rule 14a-8, the stockholder must deliver a proxy statement and form of proxy to holders of a sufficient number of shares of Juniper Networks common stock to approve that proposal, provide the information required by the bylaws of Juniper Networks and give timely notice to the Corporate Secretary of Juniper Networks in 5


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    accordance with the bylaws of Juniper Networks, which, in general, require that the notice be received by the Corporate Secretary of Juniper Networks not later than the close of business on December 14, 2005. If the date of the stockholder meeting is moved more than 30 days before or 60 days after the anniversary of the Juniper Networks annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in Juniper Networks’ proxy statement under Rule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and no later than the close of business on the later of the following two dates: • 90 days prior to the meeting; and • 10 days after public announcement of the meeting date. Recommendation and Nomination of Director Candidates: The Nominating and Corporate Governance Committee will consider both recommendations and nominations for candidates to the Board of Directors from Qualifying Stockholders. A “Qualifying Stockholder” is a stockholder that has owned for a period of one year prior to the date of the submission of the recommendation through the time of submission of the recommendation at least 1% of the total common stock of the Company outstanding as of the last day of the calendar month preceding the submission. A Qualifying Stockholder that desires to recommend a candidate for election to the Board of Directors must direct the recommendation in writing to Juniper Networks, Inc., Corporate Secretary, 1194 North Mathilda Avenue, Sunnyvale, California 94089-1206, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years, written evidence that the candidate is willing to serve as a director of the Company if nominated and elected and evidence of the nominating person’s ownership of Company stock. A stockholder that instead desires to nominate a person directly for election to the Board of Directors must meet the deadlines and other requirements set forth in Section 2.5 of the Amended and Restated Bylaws and the rules and regulations of the Securities and Exchange Commission. To be timely, such stockholder’s notice must be delivered to or mailed and received by the secretary of the Company not less than one hundred twenty (120) days prior to the date of the Company’s proxy statement released to stockholders in connection with the Company’s previous year’s annual meeting of stockholders. To be in proper form, a stockholder’s notice to the secretary shall set forth: (i) the name and address of the stockholder who intends to make the nominations, propose the business, and, as the case may be, the name and address of the person or persons to be nominated or the nature of the business to be proposed; (ii) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or introduce the business specified in the notice; (iii) if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the Board of Directors; and (v) if applicable, the consent of each nominee to serve as director of the Company if so elected. Copy of Bylaws: You may contact the Juniper Networks Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. 6


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    CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS Juniper Networks is committed to having sound corporate governance principles. Having such principles is essential to running our business efficiently and to maintaining our integrity in the marketplace. Juniper Networks’ Corporate Governance Standards and Worldwide Code of Business Conduct and Ethics applicable to all Juniper Networks employees, officers, directors, contractors and agents are available at http://www.juniper.net/company/ investor/. Our Worldwide Code of Business Conduct and Ethics complies with the rules of the SEC, the listing standards of the Nasdaq National Market and Rule 406 of the Sarbanes-Oxley Act of 2002. Juniper Networks has also adopted complaint procedures for Accounting and Auditing matters in compliance with the listing standards of the Nasdaq National Market. Concerns relating to accounting, internal controls or auditing matters may be brought to the attention of either the Company’s Concerns Committee (comprised of the Company’s Chief Financial Officer, General Counsel, Vice President of Human Resources, Corporate Controller, and the Director of Internal Audit), or to the Audit committee directly. Concerns are reviewed by the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters. Board Independence The Board has determined that, except for Scott Kriens and Pradeep Sindhu, each of whom is an executive officer of the company, each of the current directors has no material relationship with Juniper Networks (either directly or as a partner, shareholder or officer of an organization that has a material relationship with Juniper Networks) and is independent within the meaning of the NASDAQ Stock Market, Inc. (“Nasdaq”) director independence standards. Furthermore, the Board has determined that each of the members of each of the committees of the Board has no material relationship with Juniper Networks (either directly or as a partner, stockholder or officer of an organization that has a material relationship with Juniper Networks) and is “independent” within the meaning of the NASDAQ director independence standards, including in the case of the members of the Audit Committee, the heightened “independence” standard required for such committee members set forth in the applicable SEC rules. Board Structure and Committee Composition As of December 31, 2004, our Board had 9 directors divided into three classes — Class I, Class II and Class III — with each class being as nearly equal in number as possible and with a three-year term for each class. As of December 31, 2004, the classes were comprised as follows: Class I Class II Class III (Term expires in 2006) (Term expires in 2007) (Term expires this year) Scott Kriens Pradeep Sindhu William R. Hearst III Stratton Sclavos Kenneth Levy Kenneth Goldman William R. Stensrud Robert M. Calderoni Frank Marshall The Board has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The membership during the last fiscal year and the function of each of the committees are described below. Each of these committees operates under a written charter adopted by the Board. All of those committee charters are available on Juniper Networks’ website at http://www.juniper.net/company/investor/. In addition, the Board has a Stock Committee comprised of the Chief Executive Officer and Chief Financial Officer. The Stock Committee has authority to grant stock options to employees who are not executive officers. During 2004, the Stock Committee held no meetings, and took action only by written consent. The Board has also established special litigation and securities pricing committees for specific purposes, such as oversight of securities litigation matters or the issuance of securities. None of the special committees met during 2004. During 2004, each director attended at least 75% of all Board and applicable committee meetings except Mr. Hearst, who attended 74% (14 meetings) of the applicable meetings and Mr. Sclavos who attended 56%. 7


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    Nominating and Corporate Name of Director Board Audit Compensation Governance Non-Employee Directors: Robert M. Calderoni . . . . . . . . . . . . . . . . . . . . . . . . . . . X X Kenneth Goldman(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X William R. Hearst III . . . . . . . . . . . . . . . . . . . . . . . . . . X X Frank Marshall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X Kenneth Levy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X Stratton Sclavos. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X William R. Stensrud. . . . . . . . . . . . . . . . . . . . . . . . . . . . X X X Employee Directors Scott Kriens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X Pradeep Sindhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X Number of Meetings in Fiscal 2004 . . . . . . . . . . 9 10 3 3 X = Committee member (1) The Board has determined that Mr. Goldman is an “audit committee financial expert” within the meaning of the rules promulgated by the Securities and Exchange Commission. Audit Committee The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of Juniper Networks’ financial statements, Juniper Networks’ compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, the performance of Juniper Networks’ internal audit function and independent auditors, and risk assessment and risk management. The Audit Committee works closely with management as well as Juniper Networks’ independent auditors. The Audit Committee has the authority to obtain advice and assistance from, and receive appropriate funding from Juniper Networks for, outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties. The report of the Audit Committee is included herein on page 26. The charter of the Audit Committee is available at http://www.juniper.net/company/investor/. Compensation Committee The Compensation Committee discharges the Board’s responsibilities relating to compensation of Juniper Networks’ executive officers, including evaluation of the CEO; produces an annual report on executive compensation for inclusion in Juniper Networks’ proxy statement and has overall responsibility for approving and evaluating executive officer compensation plans. The report of the Compensation Committee is included herein beginning on page 21. The charter of the Compensation Committee is available at http://www.juniper.net/company/investor/. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee identifies individuals qualified to become Board members, consistent with criteria approved by the Board; oversees the organization of the Board to discharge the Board’s duties and responsibilities properly and efficiently; and identifies best practices and recommends corporate governance principles, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance. The charter of the Nominating and Governance Committee is available at http://www.juniper.net/company/investor/. Identification and Evaluation of Nominees for Directors The Nominating and Corporate Governance Committee’s criteria and process for evaluating and identifying the candidates that it selects, or recommends to the full Board for selection, as director nominees, are as follows: 8


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    • The Committee regularly reviews the current composition and size of the Board. • The Committee reviews the qualifications of any candidates who have been properly recommended or nominated by a stockholder, as well as those candidates who have been identified by management, individual members of the Board of Directors or, if the Committee determines, a search firm. Such review may, in the Committee’s discretion, include a review solely of information provided to the Committee or may also include discussions with persons familiar with the candidate, an interview with the candidate or other actions that the Committee deems proper. • The Committee evaluates the performance of the Board as a whole and evaluates the performance and qualifications of individual members of the Board eligible for re-election at the annual meeting of stockholders. • The Committee considers the suitability of each candidate, including the current members of the Board, in light of the current size and composition of the Board. In evaluating the qualifications of the candidates, the Committee considers many factors, including, issues of character, judgment, independence, age, expertise, diversity of experience, length of service, other commitments, ability to serve on committees of the Board and the like. The Committee evaluates such factors, among others, and does not assign any particular weighting or priority to any of these factors. The Committee considers each individual candidate in the context of the current perceived needs of the Board as a whole. While the Committee has not established specific minimum qualifications for Director candidates, the Committee believes that candidates and nominees must reflect a Board that is comprised of directors who (i) are predominantly independent, (ii) are of high integrity, (iii) have qualifications that will increase overall Board effectiveness and (iv) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to audit committee members. • In evaluating and identifying candidates, the Committee has the authority to retain and terminate any third party search firm that is used to identify director candidates, and has the authority to approve the fees and retention terms of any search firm. • After such review and consideration, the Committee selects, or recommends that the Board of Directors select, the slate of director nominees, either at a meeting of the Committee at which a quorum is present or by unanimous written consent of the Committee. Mr. Marshall was appointed to the Board in 2004 in connection with our acquisition of NetScreen Technologies, Inc. and was recommended to the Nominating and Corporate Governance Committee by our Chief Executive Officer. Each of the nominees for reelection at the 2005 Annual Meeting was evaluated by the Nominating and Corporate Governance Committee, recommended by the committee to the Board for nomination and nominated by the Board for reelection. Stockholder Communications with the Board Stockholders of Juniper Networks, Inc. and other parties interested in communicating with the Board may contact any of our directors by writing to them by mail or express mail c/o Juniper Networks, Inc., 1194 North Mathilda Avenue, Sunnyvale, California 94089-1206. The Nominating and Corporate Governance Committee of the Board has approved a process for handling stockholder communications received by the Company. Under that process, the General Counsel receives and logs stockholder communications directed to the Board and, unless marked “confidential”, reviews all such correspondence and regularly (not less than quarterly) forwards to the Board a summary of such correspondence and copies of such correspondence. Communications marked “confidential” will be logged as received by the General Counsel and then will be forwarded to the addressee(s). Policy on Director Attendance at Annual Meetings Although we do not have a formal policy regarding attendance by members of the Board at our annual meetings of stockholders, directors are encouraged to attend annual meetings of Juniper Networks stockholders. Eight of our nine directors attended the 2004 Annual Meeting of Stockholders. 9


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    DIRECTOR COMPENSATION The following table provides information on Juniper Networks’ compensation and reimbursement practices during fiscal 2004 for non-employee directors, as well as the range of compensation paid to non-employee directors who served during the 2004 fiscal year. Neither Mr. Kriens nor Dr. Sindhu received any separate compensation for their Board activities. The Board has not made any changes to director compensation for 2005. NON-EMPLOYEE DIRECTOR COMPENSATION TABLE FOR FISCAL 2004 Annual retainer (payable quarterly) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000 Stock options granted upon appointment or election to the Board (1)(2) . . . . . . . . . . . . . . . . 100,000 Stock options granted annually (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Payment for each Board meeting attended in person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 Payment for each Board meeting attended by phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500 Payment for each committee meeting attended in person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500 Payment for each committee meeting attended by phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250 Reimbursement for expenses attendant to Board membership . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes Range of total cash compensation earned by directors (for the year) . . . . . . . . . . . . . . . . . . . . $16,500−$31,000 (1) Directors who joined the Board prior to the adoption of this policy received grants at the time the policy was adopted. (2) Vests monthly over three years commencing on the date of grant. (3) Vests monthly over twelve months commencing on the date of grant. 10


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    PROPOSALS TO BE VOTED ON PROPOSAL NO. 1 ELECTION OF DIRECTORS There are three nominees for election to Class III of the Board this year — Kenneth Goldman, William R. Hearst III and Frank Marshall. Each of the nominees is presently a member of the Board. Information regarding the business experience of each nominee and the other members of the Board is provided below. Each of the Class III directors are elected to serve a three-year term until the Company’s annual meeting in 2008 and until their respective successors is elected. There are no family relationships among our executive officers and directors. If you sign your proxy or voting instruction card but do not give instructions with respect to the voting of directors, your shares will be voted for the three persons recommended by the Board. If you wish to give specific instructions with respect to the voting of directors, you may do so by indicating your instructions on your proxy or voting instruction card. Our Board recommends a vote FOR the election to the Board of each of the following nominees. Vote Required The three persons receiving the highest number of “for” votes represented by shares of Juniper Networks common stock present in person or represented by proxy and entitled to be voted at the annual meeting will be elected. Nominees for Election Kenneth Goldman Mr. Goldman has served as Senior Vice President, Finance and Administration and Director since 2003 Chief Financial Officer of Siebel Systems, Inc. since August 2000. From July 1996 Age 55 to July 2000, Mr. Goldman served as Senior Vice President of Finance and Chief Financial Officer of Excite@Home, Inc. From 1992 to 1996, Mr. Goldman served as Senior Vice President of Finance and Chief Financial Officer of Sybase, Inc. Mr. Goldman was a member of the Financial Accounting Standards Advisory Council from December 1999 to December 2003. Mr. Goldman is a member of the board of directors of Leadis Technology Inc. and a member of the board of trustees of Cornell University. William R. Hearst III Since January 1995, Mr. Hearst has been a partner with Kleiner Perkins Caufield Director since 1996 & Byers, a venture capital firm. Mr. Hearst was editor and publisher of the San Age 55 Francisco Examiner from 1984 until 1995. Mr. Hearst serves on the boards of directors of Hearst-Argyle Television, The Hearst Corporation, Oblix, Inc., OnFiber, Applied Minds, Akimbo and RGB Media. He is a Fellow of the American Association for the Advancement of Science and a trustee of Carnegie Institution, the Hearst Foundation, Mathematical Sciences Research Institute, the California Academy of Sciences and Grace Cathedral of San Francisco. 11


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    Frank Marshall Mr. Marshall joined the board of directors of NetScreen Technologies, Inc. in Director since 2004 December 1997, became chairman of the NetScreen board in November 2002 and Age 58 was appointed to our Board upon our acquisition of NetScreen. Mr. Marshall is a private investor in early stage high technology companies. Mr. Marshall serves as a director and advisor for several private companies and is a director for PMC- Sierra, Inc., an internetworking semiconductor solutions company. Mr. Marshall was the interim chief executive officer of Covad Communications Group, Inc. Mr. Marshall served as vice president of engineering and general manager, core business unit of Cisco Systems, Inc. from 1992 until October 1997. He holds a B.S. in electrical engineering from Carnegie Mellon University and an M.S. in electrical engineering from the University of California, Irvine. Continuing Directors Robert M. Calderoni Mr. Calderoni has served as President and Chief Executive Officer and a member Director since 2003 of the board of directors of Ariba, Inc. since October 2001. From October 2001 Age 45 to December 2001, Mr. Calderoni also served as Ariba’s Interim Chief Financial Officer. From January 2001 to October 2001, Mr. Calderoni served as Ariba’s Executive Vice President and Chief Financial Officer. Mr. Calderoni was also an employee of the Company from November 2000 to January 2001. From November 1997 to January 2001, he served as Chief Financial Officer at Avery Dennison Corporation, a manufacturer of pressure-sensitive materials and office products. From June 1996 to November 1997, Mr. Calderoni served as Senior Vice President of Finance at Apple Computer, a provider of hardware and software products and Internet-based services. Scott Kriens Mr. Kriens has served as Chief Executive Officer and Chairman of the Board of Director since 1996 Directors of Juniper Networks since October 1996. From April 1986 to January Age 47 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 also serves on the boards of directors of Equinix, Inc. and VeriSign, Inc. Kenneth Levy Mr. Levy is a founder of KLA Instruments Corporation and since July 1, 1999 has Director since 2003 been Chairman of the Board of KLA-Tencor Corporation. From July 1998 until Age 61 June 1999, he was Chief Executive Officer and a director of KLA-Tencor Corporation. From April 1997 until June 1998, he was its Chairman of the Board. From 1975 until April 1997, he was Chief Executive Officer and Chairman of the Board of KLA Instruments Corporation. He currently serves on the boards of directors of the following publicly traded companies: KLA-Tencor Corporation, Ultratech, Inc. and Extreme Networks, Inc. Mr. Levy is a Director Emeritus of SEMI, a semiconductor manufacturing industry trade association. Stratton Sclavos Mr. Sclavos has been President and Chief Executive Officer of VeriSign Inc. since July Director since 2000 1995 and Chairman of its board of directors since December 2001. From October 1993 Age 43 to June 1995, he was Vice President, Worldwide Marketing and Sales of Taligent, Inc., a software development company that was a joint venture among Apple Computer, Inc., IBM and Hewlett-Packard. Prior to that time, he served in various sales, business development and marketing capacities for GO Corporation, MIPS Computer Systems, Inc. and Megatest Corporation. Mr. Sclavos also serves on the boards of directors of Salesforce.com and Intuit, Inc. 12


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    Pradeep Sindhu Dr. Sindhu co-founded Juniper Networks in February 1996 and served as Chief Director since 1996 Executive Officer and Chairman of the Board of Directors until September 1996. Age 52 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, and a technology research center. Dr. Sindhu also serves on the board of directors of Infinera Corporation. William R. Stensrud Mr. Stensrud has been a General Partner with the venture capital firm of Enterprise Director since 1996 Partners since January 1997. Mr. Stensrud was an independent investor and turn- Age 54 around executive from March 1996 to January 1997. During this period, Mr. Stensrud served as President of Paradyne Corporation and as a director of Paradyne Corporation, GlobeSpan Corporation and Paradyne Partners LLP, 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 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 board of directors of Paradyne Corporation. 13


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    PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT AUDITORS The Audit Committee of the Board has appointed Ernst & Young LLP, an independent registered public accounting firm, to audit Juniper Networks’ consolidated financial statements for the fiscal year ending December 31, 2005. During fiscal 2004, Ernst & Young served as Juniper Networks’ independent auditors and also provided certain tax and other audit related services. See “Principal Auditor Fees and Services” on page 25. Representatives of Ernst & Young are expected to attend the annual meeting, where they are expected to be available to respond to appropriate questions and, if they desire, to make a statement. Our Board recommends a vote FOR the ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as Juniper Networks’ auditors for the 2005 fiscal year. If the appointment is not ratified, the Audit Committee will consider whether it should select other independent auditors. Vote Required Ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as auditors for fiscal 2005 requires the affirmative vote of a majority of the shares of Juniper Networks common stock present in person or represented by proxy and entitled to be voted at the meeting. 14


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    COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information, as of March 21, 2005, concerning: • Beneficial owners of more than 5% of Juniper Networks’ common stock; • beneficial ownership by current Juniper Networks directors and nominees and the named executive officers set forth in the Summary Compensation table on page 18; and • beneficial ownership by all current Juniper Networks directors and Juniper Networks executive officers as a group. The information provided in the table is based on Juniper Networks’ records, information filed with the Securities and Exchange Commission and information provided to Juniper Networks, except where otherwise noted. The number of shares beneficially owned by each entity, person, director or executive officer is determined under rules of the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares that the individual has the right to acquire as of May 21, 2005 (60 days after March 21, 2005) through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his spouse) with respect to the shares set forth in the following table. BENEFICIAL OWNERSHIP TABLE Amount and Nature of Beneficial Percent Name and Address of Beneficial Owner Ownership(1) of Class(1) Holders of Greater Than 5% AXA Financial, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,836,873 (2) 16.33% 1290 Avenue of the Americas New York, NY 10104 FMR Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,618,458 (3) 8.02% 82 Devonshire Street Boston, MA 02109 Directors, Nominees and Named Executive Officers: Robert M. Calderoni (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,777 * James A. Dolce, Jr. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,238,454 * Marcel Gani (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,245,916 * Kenneth Goldman (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,473 * William R. Hearst III (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,034,919 * Scott Kriens (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,534,083 2.84% Krishna “Kittu” Kolluri (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . 356,828 * Kenneth Levy (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000 * Frank Marshall (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 789,363 * Stratton Sclavos (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,000 * Pradeep Sindhu (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,829,574 2.17% William R. Stensrud (15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,518,752 * All Directors and Executive Officers as a Group (12 persons) (16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,929,139 6.42% * Represents holdings of less than one percent. 15


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    (1) Pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, as amended, “Vested Options” are options that may be exercised as of May 21, 2005 (60 days after March 21, 2005). The percentages are calculated using 544,176,804 outstanding shares of the Company’s common stock on March 21, 2005 as adjusted pursuant to Rule 13d-3(d)(1)(i). (2) Based on information reported on Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005. AXA Financial, Inc. is the parent holding company for several entities that hold our common stock as investment advisors, including Alliance Capital Management L.P. Collectively, these entities have shared voting power with respect to 10,748,089 shares and shared investment power with respect to 175,857 shares. (3) Based on information reported on Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005. (4) Consists of shares which are subject to options that may be exercised within 60 days of March 21, 2005. (5) Includes 2,075,693 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (6) Includes 860,353 shares held by Trust and 375,832 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (7) Includes 68,555 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (8) Includes 105,000 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (9) Includes 10,981,672 shares held by the Kriens 1996 Trust, of which Mr. Kriens and his spouse are the trustees and 3,140,624 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (10) Includes 145,378 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (11) Consists of shares which are subject to options that may be exercised within 60 days of March 21, 2005. (12) Includes 315,894 shares held by Big Basin Partners, LP, 88,206 shares held by Timark, LP, of which Mr. Marshall is a general partner; 135,400 shares held by the Frank & Judith Marshall Trust and 56,111 shares which are subject to options that may be exercised within 60 days of March 21, 2005 (13) Includes 135,000 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (14) Includes 2,768,780 shares held by the Sindhu Investments, LP, a family limited partnership; 27,846 shares held in the Pradeep Sindhu Annuity Trust; 5,860,682 shares held by the Sindhu Family Trust and 6,867 shares held by Dr. Sindhu’s spouse. Also includes 1,573,750 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (15) Includes 1,217,352 shares held in a trust as community property and 115,000 shares which are subject to options that may be exercised within 60 days of March 21, 2005. (16) Includes all shares reference in notes 4 through 15 above. 16


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    SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and holders of more than 10% of Juniper Networks common stock to file with the Securities and Exchange Commission reports regarding their ownership and changes in ownership of our securities. Juniper Networks believes that, during fiscal 2004, its directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements, except that: (i) each of Scott Kriens, Pradeep Sindhu, Marcel Gani and James A. Dolce had one option grant with respect to which the required Form 4 was filed late; and (ii) William R. Hearst III and Frank Marshall, each of whom received a distribution from a limited partnership as the result of an acquisition, with respect to which the required Form 4 was filed late. In making this statement, Juniper Networks has relied upon examination of the copies of Forms 3, 4 and 5, and amendments thereto, provided to Juniper Networks and the written representations of its directors, executive officers and 10% stockholders. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company reimburses Mr. Kriens for ordinary operating costs relating to his use of a personal aircraft for business purposes up to a maximum amount per year. In 2004 the annual limit was $300,000 and Mr. Kriens received $300,000 in reimbursements. In 2005, the Company anticipates that Mr. Kriens will increase his business travel and the annual limit has been increased to $650,000. 17


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    EXECUTIVE COMPENSATION The following table discloses compensation received by Juniper Networks’ Chief Executive Officer during fiscal 2004 and Juniper Networks’ four other most highly paid executive officers (together with the CEO, the “named executive officers”) during fiscal 2004 as well as their compensation received from Juniper Networks for each of the fiscal years ending December 31, 2003 and December 31, 2002. Summary Compensation Table Annual Compensation Long-Term Compensation Other Restricted Securities All Annual Stock Underlying Other Name and Principal Position Year Salary Bonus(1) Compensation (14) Award(s) Options Compensation (2) Scott Kriens . . . . . . . . . . . . . . . 2004 $412,500 $539,077 $2,000 NA 750,000(3) $ 540 Chairman and Chief 2003 275,000 161,350 2,000 NA 800,000(4) 510 Executive Officer 2002 275,000 0 2,000 NA 2,750,000(5) 462 Pradeep Sindhu . . . . . . . . . . . . 2004 $198,750 $253,683 $2,000 NA 200,000(3) $ 828 Vice Chairman and Chief 2003 185,000 70,554 2,000 NA 300,000(4) 377 Technical Officer 2002 185,000 10,000 2,000 NA 400,000(6) 462 Marcel Gani . . . . . . . . . . . . . . . 2004 $245,833 $315,851 $2,000 NA 300,000(3) $ 828 Executive Vice President, 2003 200,000 117,345 2,000 NA 500,000(4) 408 Chief Financial Officer 2002 200,000 0 2,000 NA 1,080,000(7) 462 James A. Dolce, Jr. . . . . . . . . 2004 $249,167 $319,611 $ 0 NA 300,000(3) $ 40,978(9) Executive Vice President, 2003 254,581 70,407 0 NA 500,000(4) 125,922(9) Field Operations 2002(8) 120,000 0 0 NA 0 26,922(9) Krishna “Kittu” Kolluri. . . . . 2004(10) $249,167 $486,288(11) $2,000 NA 0(12) $ 91,421(13) General Manager, 2003 NA NA NA NA Security Products 2002 NA NA NA NA (1) Amounts in this column reflect bonuses earned in 2004, although such amounts were paid in 2005. (2) Consists of the standard employee benefit portion paid by the Company for all employees for premiums for term life insurance and, in the case of Mr. Dolce and Mr. Kolluri, the additional amounts described in footnotes 9 and 12, respectively. (3) Mr. Kriens was granted an option for 750,000 shares, Dr. Sindhu was granted an option for 200,000 shares, Mr. Gani was granted an option for 300,000 shares and Mr. Dolce was granted an option for 300,000 shares on January 29, 2004 at an exercise price of $28.17. (4) Mr. Kriens was granted an option for 800,000 shares, Dr. Sindhu was granted an option for 300,000 shares, Mr. Gani was granted an option for 500,000 shares and Mr. Dolce was granted an option for 500,000 shares on September 26, 2003 at an exercise price of $15.00 per share. (5) Mr. Kriens was granted an exchange option on May 28, 2002 for 2,200,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 550,000 shares was granted at an exercise price of $5.69 per share. (6) Dr. Sindhu was granted an exchange option on May 28, 2002 for 100,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 300,000 shares was granted at an exercise price of $5.69 per share. (7) Mr. Gani was granted an exchange option on May 28, 2002 for 580,000 shares at an exercise price of $10.31 per share. In connection with the acquisition of Unisphere Networks and in recognition of the additional responsibility associated therewith, on July 1, 2002 an additional option for 500,000 shares was granted at an exercise price of $5.69 per share. 18


  • Page 27

    (8) Mr. Dolce was elected a named executive officer upon the closing of the acquisition of Unisphere Networks on July 1, 2002. The data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks. (9) Amounts paid in 2004 reflect $40,618 in commissions paid. Amounts in 2003 reflect $125,414 in commissions paid. Amounts in 2002 reflect $26,634 in commissions paid on or after July 1, 2002 as the data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks. (10) Mr. Kolluri was elected a named executive officer upon the closing of the acquisition of NetScreen Technologies, Inc. on April 16, 2004. The data shown in the Summary Compensation Table only reflects the amounts he received while an executive officer of Juniper Networks. (11) Includes a bonus of $200,000 paid in 2005 relating to the acquisition of Neoteris Inc. by NetScreen Technologies Inc. Also includes a $50,000 sales bonus committed to Mr. Kolluri prior to the acquisition of NetScreen Technologies, Inc. by the Company. (12) No options were granted in 2004. (13) Amounts paid in 2004 reflect $91,331 in escrowed merger consideration relating to the acquisition by NetScreen Technologies Inc. of Neoteris Inc. (14) In all cases, consists of matching contributions paid under the Company’s 401(k) plan. Option Grants In Last Fiscal Year The following tables set forth the stock options granted to the Named Executive Officers under the Company’s stock option plans and the options exercised by such Named Executive Officers during the fiscal year ended December 31, 2004. The Option/SAR Grant Table below sets forth hypothetical gains or “option spreads” for the options at the end of their respective ten-year terms, as calculated in accordance with the rules of the Securities and Exchange Commission. Percent of Potential Realizable No. of Total Options Value at Assumed Securities Granted to Annual Rates of Underlying Employees Exercise Stock Appreciation Options During Price Per Expiration for Option Terms Name Granted Period Price Date 5% 10% Scott Kriens . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 3.36 $28.17 1/29/2014 $13,286,971 $33,671,794 Pradeep Sindhu . . . . . . . . . . . . . . . . . . . . . . 200,000 0.90 $28.17 1/29/2014 3,543,192 8,979,145 Marcel Gani . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 1.35 $28.17 1/29/2014 5,314,788 13,468,718 James A. Dolce, Jr. . . . . . . . . . . . . . . . . . . 300,000 1.35 $28.17 1/29/2014 5,314,788 13,468,718 Krishna “Kittu” Kolluri . . . . . . . . . . . . . . — — — — — — 19


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    Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values The following table shows stock option exercises and the value of unexercised stock options held by the Named Executive Officers during the last fiscal year. Number of Securities Value of Unexercised Shares Underlying Unexercised In-the-Money Options at Options at December 31, 2004 December 31, 2004 (1) Aquired on Value Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable Scott Kriens . . . . . . . . . . . . . . . . 0 $ 0 2,782,291 1,517,709 47,327,757 11,385,244 Pradeep Sindhu . . . . . . . . . . . . . 0 0 1,452,656 527,344 6,688,121 5,106,879 Marcel Gani . . . . . . . . . . . . . . . . 500,000 8,433,333 288,333 774,395 4,374,872 8,445,528 James A. Dolce, Jr. . . . . . . . . . 1,000,000 19,353,938 2,103,181 774,395 43,841,581 7,004,406 Krishna “Kittu” Kolluri . . . . . 70,000 1,634,324 99,192 365,637(2) 1,305,715 6,154,221 (1) The value of in-the-money options is based on the closing price on December 31, 2004 of $27.19 per share, minus the per share exercise price, multiplied by the number of shares underlying the option. (2) Includes 50,806 shares that are subject to repurchase. Employment Agreements The Company 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 by the Company. The Company entered into an Amendment and Assumption Agreement with Krishna “Kittu” Kolluri on April 15, 2004 in connection with the Company’s acquisition of NetScreen Technologies, Inc. Pursuant to the Amendment and Assumption Agreement, Mr. Kolluri agreed that the commencement of his employment with the Company upon the closing of the NetScreen acquisition did not constitute (i) “Good Reason,” as defined in Section 5.5b of Mr. Kolluri’s Employment Agreement with NetScreen, for a voluntary termination of Employee’s employment, (ii) any other type of “constructive termination” or (iii) grounds for termination without cause under Mr. Kolluri’s employment agreement. Pursuant to Mr. Kolluri’s employment agreement, as amended, Mr. Kolluri is eligible for a bonus of up to 100% of his base salary pursuant to Juniper Networks’ Executive Officer Incentive Plan. The employment agreement, as amended, in connection with NetScreen’s acquisition of Neoteris, Inc., also provides for a grant of options to purchase 200,000 shares of NetScreen’s common stock and makes Mr. Kolluri eligible to receive a bonus of up to $200,000, partially payable upon on the completion of performance objectives. If Mr. Kolluri is terminated without cause or terminates his employment for good reason (in each case, as defined in the amended employment agreement) within 24 months of the effectiveness of NetScreen’s acquisition of Neoteris, he will be entitled to the continuation of his base salary (payable in accordance with usual payroll practice) and health insurance coverage for a period of six months. 20


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    BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Compensation Committee The Compensation Committee is comprised of three independent, non-employee members of the Board of Directors, as defined by the Nasdaq rules. None of the members have interlocking compensation committee relationships as defined by the Securities and Exchange Commission. The Compensation Committee is responsible for reviewing and approving the annual base salary, the annual incentive bonus, including the specific goals and amounts, equity compensation and other benefits or compensation arrangements of the Company’s Chief Executive Officer and its other executive officers. Compensation Philosophy The Compensation Committee recognizes that in order for the Company to successfully develop, introduce, market and sell products, the Company must be able to attract, retain and reward qualified executive officers who will be able to operate effectively in a high growth, complex environment. In that regard, the Company must offer compensation that (a) is competitive in the industry; (b) motivates executive officers to achieve the Company’s strategic business objectives; and (c) aligns the interests of executive officers with the long-term interests of stockholders. The Company provides its executive officers with a compensation package consisting of base salary, performance- based incentive pay, stock options and participation in benefit plans generally available to other employees. The Compensation Committee’s intention is to adopt compensation programs that encourage creation of long-term value for stockholders, employee retention, and equity ownership through stock option grants. The Compensation Committee’s approach is predicated upon the philosophy that a substantial portion of aggregate annual compensation for executive officers should be contingent upon the Company’s overall performance and an individual’s contribution to the Company’s success in meeting certain critical objectives. In this regard, the Compensation Committee has tended to target base salary at approximately the 50th percentile relative to peer companies. Incentive compensation and long term equity awards are intended to target overall compensation at between the 50th and 75th percentile, although changes in the market price of the Company’s common stock can result in total compensation outside the target range. As the Compensation Committee applies these compensation philosophies in determining appropriate executive compensation levels and other compensation factors, the Compensation Committee reaches its decisions with a view towards maximizing the Company’s overall performance. The Compensation Committee considers market information about its peer companies from published survey data provided to the Compensation Committee by the Company’s human resources staff. The market data consists primarily of base salary and total cash compensation rates, as well as incentive bonus and stock programs of other companies considered by the Compensation Committee to be peers in the Company’s industry. In addition, for determining 2004 compensation (including cash and equity compensation), the Compensation Committee retained an executive compensation consultant. The compensation consultant provided data from a selected peer group of 13 computer, networking and telecommunications companies as well as from broad high technology industry companies with revenues of $250 million to $1 billion. Since the Company’s 2004 Annual Meeting of Stockholders, the Compensation Committee has not structured such compensation arrangements so as to qualify them for deductibility under Section 162(m) of the Internal Revenue Code. Executive Officer Compensation Base Salary. For 2004, the Compensation Committee evaluated the base salaries of the executive officers relative to the peer companies as well as their individual performance. The Compensation Committee determined that, in several cases, the compensation to Juniper Networks executives was below the industry’s 50th percentile for base cash compensation. To bring the salary standard into this target range, Mr. Kriens’ and Mr. Gani’s base salary levels were increased $150,000 and $50,000, respectively. With respect to the other executive officers, the Compensation Committee determined that increases in base salary of between $0 and $15,000 were merited. 21


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    Management Incentive Plan. The Company has an executive incentive bonus plan applicable to the Section 16 reporting officers. Under the 2004 executive incentive plan, each participant had a target incentive equal to 100% of base salary. The incentive bonus was primarily based upon the achievement of Company revenue and earnings targets. Below a specified level, no bonus would have been earned. Achievement of revenue and earnings in excess of the targets could result in a greater than target bonus, up to a maximum amount. In addition, regardless of the amount of achievement, no bonus would be paid it the Company failed to expand its business into new growth areas. The amount determined based on achievement of the corporate goals was then subject to a further increase or decrease by up to an additional 20 percentage points depending on the performance of the Company’s stock price relative to the stock prices of certain designated publicly-traded companies and by up to 10 percentage points based on the achievement of individual objectives specified for each executive. Most, but not all, of the companies included in the stock performance peer group were also included in the 13 companies surveyed with respect to compensation information. The acquisition of NetScreen Technologies, Inc. in April 2004 satisfied the expansion into new areas requirement. Furthermore, as a result of this acquisition, the Compensation Committee in the middle of 2004 increased the revenue and earnings targets and made several changes to the stock performance peer company list. Based on the Company’s actual 2004 financial results, the 2004 corporate goal attainment component (consisting of the achievement of the revised revenue and earnings targets) of the bonus was 100.27%. In 2004, the peer company performance measure resulted in a 20 percentage point increase in the bonus payments. Achievement of the individual performance objectives in 2004 ranged from between 92% and 95%. As a result, the payments under the executive incentive plan ranged between 126% and 128% of base salary. In connection with the acquisition of Neoteris, NetScreen established a merger bonus for Mr. Kolluri pursuant to which he was eligible for a bonus of up to $200,000 based on achievement of specified business objectives. The Compensation Committee determined that these objectives were fully achieved and awarded the $200,000 bonus to Mr. Kolluri. Stock Option Grants. Grants of stock options to executive officers are based upon each executive officer’s relative position, responsibilities, historical and expected contributions to the Company, and the executive officer’s existing stock ownership and previous option grants. Stock options are granted at the fair market value on the date of grant and will provide value to the executive officers only when the price of the Company’s common stock increases over the exercise price. Chief Executive Officer Compensation In 2004, the Compensation Committee determined that Mr. Kriens’ base salary was substantially below comparative data, at the targeted 50th percentile level, and required adjustment. As a result, effective for fiscal year 2004, the Compensation Committee increased the base salary of Mr. Kriens to $425,000 with a target bonus percentage of 100% of base salary. Consistent with the Company’s philosophy to provide long-term incentive in the form of stock options, Mr. Kriens received an option in 2004 exercisable for 750,000 shares of Company common stock at an exercise price of $28.17. The options granted to Mr. Kriens vest over a four-year period in accordance with the terms of the Company’s standard vesting schedule. Mr. Kriens executive incentive bonus for 2004 was based on the same criteria as described above. Based on Company performance and achievement of 93% of his individual objectives, Mr. Kriens was awarded a bonus of $539,077, which represented a payout at 127% of target. The Company also reimburses Mr. Kriens for operating expenses associated with the use of private aircraft for business purposes up to a maximum amount per year. MEMBERS OF THE COMPENSATION COMMITTEE William Stensrud, Chairman, Frank Marshall (became a member in February 2005), and Kenneth Levy 22


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    COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of 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 the Company’s Board of Directors or Compensation Committee. EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2004 about our common stock that may be issued under the Company’s existing equity compensation plans. The table does not include information with respect to shares subject to outstanding options assumed by the Company in connection with acquisitions of the companies that originally granted those options. Footnote (6) to the table sets forth the total number of shares of the Company’s Common Stock issuable upon exercise of assumed options as of December 31, 2004, and the weighted average exercise price of those options. No additional options may be granted under those assumed plans. Number of Securities Number of Remaining Available for Securities to be Weighted- Future Issuance Under Issued Upon Average Equity Compensation Exercise of Exercise Price Plans (excluding Outstanding of Outstanding securities reflected Plan Category Options Options in the first column) Equity compensation plans approved by security holders (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,820,206(3) $20.92 42,379,182(4) Equity compensation plans not approved by security holders (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,931,711 $13.99 28,190,299(5) Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,751,917 $18.09 70,569,481 (1) Includes the Amended and Restated 1996 Stock Incentive Plan (the “1996 Plan”) and the 1999 Employee Stock Purchase Plan (the “Purchase Plan”). (2) Includes the 2000 Nonstatutory Stock Option Plan (the “2000 Plan”). No options issued under this Plan are held by any directors or executive officers. (3) Excludes purchase rights accruing under the Purchase Plan, which has a stockholder-approved reserve of 8,168,907 shares. (4) Consists of shares available for future issuance under the 1996 Plan and the Purchase Plan. As of December 31, 2004, an aggregate of 34,210,275 and 8,168,907 shares of Common Stock were available for issuance under the 1996 Plan and the Purchase Plan, respectively. Under the terms of the 1996 Plan, an annual increase is added on the first day of each fiscal year equal to the lesser of (a) 18,000,000 shares, (b) 5% of the outstanding shares on that date or (c) a lesser amount determined by the Board of Directors. Under the terms of the Purchase Plan, an annual increase is added on the first day of each fiscal year equal to the lesser of (a) 3,000,000 shares, (b) 1% of the outstanding shares on that date or (c) a lesser amount determined by the Board of Directors. (5) Consists of shares available for future issuance under the 2000 Plan. Under the terms of the 2000 Plan, an annual increase is added on the first day of each fiscal year equal to the greater of (a) 5,000,000 shares, (b) 5% of the outstanding shares on that date or (c) a lesser amount determined by the Board of Directors. (6) As of December 31, 2004, a total of 23,432,320 shares of the Company’s Common Stock were issuable upon exercise of outstanding options under plans assumed in connection with acquisitions. The weighted average exercise price of those outstanding options is $10.20 per share. No additional options may be granted under those assumed plans. For a narrative description of the material features of the 2000 Plan, please see Note 10 to the Company’s Consolidated Financial Statements included with our Annual Report on Form 10-K for the year ended December 31, 2004. 23


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    STOCK PERFORMANCE GRAPH The graph below shows the cumulative total stockholder return assuming the investment of $100 on June 25, 1999 in each of Juniper Networks common stock, the Nasdaq Composite Index and the Nasdaq Telecommunications Index. 1500.0% 1250.0% 1000.0% 750.0% 500.0% 250.0% 0.0% 25-Jun-99 30-Sep-99 31-Mar-00 30-Jun-00 29-Sep-00 30-Mar-01 29-Jun-01 28-Sep-01 29-Mar-02 28-Jun-02 30-Sep-02 31-Mar-03 30-Jun-03 30-Sep-03 31-Mar-04 30-Jun-04 30-Sep-04 15-Mar-05 31-Dec-99 29-Dec-00 31-Dec-01 31-Dec-02 31-Dec-03 31-Dec-04 JNPR NASDAQ TELECOM 24


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    PRINCIPAL AUDITOR FEES AND SERVICES The Audit Committee has appointed Ernst & Young LLP, an independent registered public accounting firm, as Juniper Networks’ auditors for the fiscal year ending December 31, 2005. Representatives of Ernst & Young are expected to be present at the annual meeting and will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. Fees Incurred by Juniper Networks for Ernst & Young LLP Fees for professional services provided by the Company’s independent registered public accounting firm in each of the last two years are: 2004 2003 Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,714,000 $ 498,000 Audit-related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505,000 221,000 Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,000 434,000 All other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,789,000 $1,153,000 Audit fees are for professional services rendered in connection with the audit of the Company’s annual financial statements and the review of its quarterly financial statements. Audit fees increased in 2004 compared to 2003 due to additional work performed by Ernst & Young LLP in its assessment of the Company’s internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Audit-related fees in 2004 were primarily related to the Company’s acquisition of NetScreen Technologies, Inc. in April 2004. Audit-related fees in 2003 were primarily related to the issuance of the Zero Coupon Convertible Senior Notes due June 15, 2008. Tax fees are for professional services rendered for tax compliance, tax advice and tax planning. The Audit Committee preapproves all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. The committee has delegated such preapproval authority to the chairman of the committee. The Audit Committee preapproved all services performed by the Company’s independent registered public accounting firm in 2004. 25


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    REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for the audit. The Audit Committee meets with the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held 10 meetings during fiscal year 2004. In this context, the Audit Committee hereby reports as follows: 1. The Audit Committee has reviewed and discussed the audited financial statements with the Company’s management. 2. The Audit Committee has discussed with the independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standard, AU 380), SAS 99 (Consideration of Fraud in a Financial Statement Audit) and Securities and Exchange Commission rules discussed in Final Releases Nos. 33-8183 and 33-8183a. 3. The Audit Committee has received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committee”) and has discussed with the independent auditors the independent auditors’ independence. 4. Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in Juniper Networks’ Annual Report on Form 10-K for the fiscal year ended December 31, 2004, for filing with the Securities and Exchange Commission. MEMBERS OF THE AUDIT COMMITTEE Robert M. Calderoni Kenneth Goldman William R. Hearst III 26


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    Directions to Juniper Networks, Inc. 1220 N. Mathilda Avenue Building 3, Pacific Conference Room Sunnyvale, CA 94089 From San Francisco Airport: • Travel south on Highway 101. • Exit Highway 237 east in Sunnyvale. • Exit Mathilda and turn left onto Mathilda Avenue. • Juniper Networks Corporate Headquarters and Knowledge Center will be on the right side across from the Lockheed/Martin light rail station. From San Jose Airport and points south: • Travel north on Highway 101 to Mathilda Avenue in Sunnyvale. • Exit Mathilda Avenue north. • Continue on Mathilda past Highway 237 and Lockheed Martin Avenue. • Juniper Networks Corporate Headquarters and Knowledge Center will be on the right side across from the Lockheed/Martin light rail station. From Oakland Airport and the East Bay: • Travel south on Interstate 880 until you get to Milpitas. • Turn right on Highway 237 west. • Continue approximately 10 miles. • Exit Mathilda Avenue and turn right at the stoplight. • Juniper Networks Corporate Headquarters and Knowledge Center will be on the right side across from the Lockheed/Martin light rail station.


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 0-26339 JUNIPER NETWORKS, INC. (Exact name of registrant as specified in its charter) Delaware 77-0422528 (State or other jurisdiction of incorporation or (IRS Employer Identification No.) organization) 1194 North Mathilda Avenue Sunnyvale, California 94089 (408) 745-2000 (Address of principal executive offices, (Registrant's telephone number, including including zip code) area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common stock, $0.00001 par value Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined by Exchange Act Rule 12b-2). Yes [X] No [ ] The aggregate market value of the Common Stock held by non-affiliates of the Registrant was approximately $9,467,666,000 as of the end of the Registrant's second fiscal quarter, (based on the closing price for the Common Stock on the NASDAQ National Market on June 30, 2004). As of February 28, 2005 there were approximately 543,714,000 shares of the Registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE As noted herein, the information called for by Part III is incorporated by reference to specified portions of the Registrant's definitive proxy statement to be issued in conjunction with the Registrant's 2005 Annual Meeting of Stockholders, which is expected to be filed not later than 120 days after the Registrant's fiscal year ended December 31, 2004.


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    Table of Contents PART I........................................................................................................................................................... 1 ITEM 1. Business.................................................................................................................................... 1 ITEM 2. Properties................................................................................................................................ 11 ITEM 3. Legal Proceedings .................................................................................................................. 12 ITEM 4. Submission of Matters to a Vote of Security Holders ............................................................. 13 PART II........................................................................................................................................................ 14 ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities............................................................................................................................... 14 ITEM 6. Selected Consolidated Financial Data.................................................................................... 14 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 15 ITEM 7A. Quantitative and Qualitative Disclosure about Market Risk ................................................. 38 ITEM 8. Financial Statements and Supplementary Data ..................................................................... 40 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures .............................................................................................................................................................. 72 ITEM 9A. Controls and Procedures...................................................................................................... 72 ITEM 9B. Other Information.................................................................................................................. 73 PART III....................................................................................................................................................... 73 ITEM 10. Directors and Executive Officers of the Registrant............................................................... 73 ITEM 11. Executive Compensation ...................................................................................................... 73 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.............................................................................................................................. 73 ITEM 13. Certain Relationships and Related Transactions ................................................................. 73 ITEM 14. Principal Accountant Fees and Services .............................................................................. 73 PART IV ...................................................................................................................................................... 74 ITEM 15. Exhibits and Financial Statement Schedules ....................................................................... 74


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    PART I ITEM 1. Business Overview We design and sell products and services that together provide our customers with Internet Protocol (“IP”) secure networking solutions. Our solutions are incorporated into the global web of interconnected public and private networks across which a variety of media, including voice, video and data, travel to and from end users around the world. Our network infrastructure solutions enable service providers and other network-intensive businesses to support and deliver services and applications on a highly efficient and low cost integrated network. Our security solutions meet a broad array of our customer’s security priorities, from protecting the network itself, to protecting data on the network. Together, our secure networking solutions enable our customers to convert networks that provide commoditized, best efforts services into more valuable assets that provide differentiation and value and increased reliability and security to end users. In April 2004, we completed our acquisition of NetScreen Technologies, Inc. (“NetScreen”). NetScreen developed, marketed and sold a broad array of integrated network security solutions for enterprises, carriers and government entities. As a result of the NetScreen acquisition, we expanded our customer base and portfolio of products, and now offer two categories of networking products: infrastructure products, which consist predominately of the original Juniper Networks products, and security products, which consist predominately of the former NetScreen products. During our fiscal year ended December 31, 2004, we generated annual revenues of $1.3 billion and conducted business in approximately 75 countries. See the information in Item 8 for more information on our financial position as of December 31, 2004 and 2003 and our results of operations and cash flows for the periods ended December 31, 2004, 2003 and 2002. We were incorporated in California in 1996 and reincorporated in Delaware in 1997. Our corporate headquarters is located in Sunnyvale, California. Our website address is www.juniper.net. The Juniper Networks Strategy Our objective and strategy is to provide best-in-class traffic processing technologies that allow our customers to provide a secure and assured network experience for any application on an IP network. Our technological leadership and problem solving abilities combined with our experience and fundamental understanding of the requirements of high performance IP secure networking solutions will help us in meeting our objectives. Key elements of our strategy are described below. Maintain and Extend Technology Leadership. Our application-specific integrated circuit (ASIC) technology, software and network-optimized product architecture have been key elements to establishing our technology leadership. We believe that these elements can be leveraged into future products we are currently developing. We intend to maintain and extend our technological leadership in the network infrastructure and security markets primarily through innovation and continued investment in our research and development departments, supplemented by external partnerships, including joint development with alliances, as well as acquisitions that would allow us to deliver a broader range of products and services to customers in target markets. Leverage Early Lead as Supplier of Purpose-Built Network Infrastructure and Security. From inception we have focused on designing and building IP network infrastructure for service providers and network intensive businesses and have integrated purpose-built technology into a network optimized architecture that specifically meets our customers’ needs. We believe that many of these customers will deploy networking equipment from only a few vendors. The purpose-built advantages of our infrastructure -1-


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    and security 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 have been widely deployed in a customer’s network, it becomes more difficult for potential competitors to sell to those customers in the future. Be Strategic to Our Customers. In developing our infrastructure and security solutions, we work very closely with customers to design and build a product specifically to meet their complex needs. Over time, we have expanded our understanding of the challenges facing these customers. That increased understanding has enabled us to subsequently design additional capabilities into our products. 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 customers to implement enhancements to current products as well as to design future products that specifically meet their evolving needs. Enable New IP-Based Services. Our platforms enable network operators to build and secure networks cost effectively and to offer new differentiated services for their customers more efficiently than conventional products. We believe that the secure delivery of IP-based services and applications, including web hosting, outsourced Internet and intranet services, outsourced enterprise applications and voice-over IP, will continue to grow and are cost-effectively enabled by our secure networking solutions. Establish and Develop Industry Partnerships. Our customers have diverse requirements. While our products meet certain requirements of our customers, our products are not intended to satisfy certain other requirements. Therefore we believe that it is important that we build relationships with other industry leaders in a diverse set of networking technologies and services. These relationships ensure that we have access to those technologies and services, whether through joint venture, resale, acquisition or other collaboration, in order to better support a broader set of our customers’ requirements. Markets and Customers We sell our products and services through distributors and value-added resellers to end-users in the following markets: Service Providers Service providers include wireline, wireless and cable operators. Supporting most major service provider networks in the world, our platforms are designed and built for the scale and dependability that service providers demand. Our secure networking solutions benefit these customers by: • Reducing capital and operational costs by running multiple services over the same network using our high density, highly reliable platforms; • Promoting generation of additional revenue by enabling new services to be offered to new market segments based on our product capabilities; • Increasing customer satisfaction, while lowering costs, by enabling consumers to self-select automatically provisioned service packages that provide the quality, speed and pricing they desire; and • Providing increased asset longevity and higher return on investment as their networks can scale to multi-terabit rates based on the capabilities of our platforms. Enterprise Our secure networking solutions are designed to meet the reliability and scalability demanded by the world’s largest and most advanced networks. For this reason, network intensive enterprises that rely on their networks for the essence of their business are able to deploy our solutions as a powerful component in delivering the advanced network capabilities needed for their leading-edge applications while: -2-


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    • Reducing costs through operational efficiencies in implementing and managing the network; • Driving down capital expenses with sophisticated network intelligence that is robust, secure and scalable; and • Providing enterprises with the control necessary to deliver a secure and assured user experience to their customers and internal clients. Public Sector The public sector includes federal, state and local governments and research and education institutions. Our solutions provide the security, dependability, and performance required by leading government agencies, including the United States Department of Defense, intelligence and civilian agencies. Research and education (R&E) networks push the envelope in networking and applications, continually demanding the most advanced products and technologies while simultaneously helping shape their development. These networks help academic researchers and educators transform their vision into reality with scientific and educational advancements using applications such as telemedicine, 3D visualization and simulation, grid computing, and collaborative videoconferencing. Juniper Networks helps the public sector secure and assure their networking infrastructure by: • Delivering best-in-class network security without impacting performance or the ability to turn on additional services; • Providing highly dependable (reliable, available, and stable) products to ensure that government networks are operational and available; • Offering flexible and comprehensive service and support packages designed for federal customers; and • Working as a business partner for the long term with the optimal combination of flexibility, responsiveness, technical know-how and financial strength. Fundamental Requirements for High Performance Secure Networks As they work to support growth in IP traffic and seek to offer new revenue generating or mission- critical services, our customers require secure network solutions that are not only feature rich but also deliver high reliability, high performance and assured user experiences. At the same time, both service providers and enterprises must focus on detecting and preventing the ever increasing number of security threats facing the network itself and the data that flows across the network. This security must be innate to networking products and must not come at the expense of overall performance or unjustifiable cost. Feature richness, high reliability, security, high performance, scalability, and cost effectiveness are each fundamental requirements in meeting the needs associated with the growth in IP traffic and the secure and assured delivery of value-added services to end users. Feature Richness. The importance of increasing revenue streams and decreasing capital and operational costs for our customers is a significant priority in the industry. Service providers want to sell more revenue generating services with better cost efficiencies. Enterprises and other network operators want to provide a secure and assured network experience to their end users on a cost effective but value- generating basis. Each of these goals is ultimately a function of the features and capabilities that can be securely provided on each of the network elements. As networks advance, more and more features are required to sell new services as well as to lower the ongoing costs of operating the network. Next generation networking solutions therefore need to have flexibility to add new capabilities frequently without compromising the performance of the system, which gets increasingly difficult as the network demands increase. -3-


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    High Reliability. As businesses and consumers increasingly rely on IP networks for mission-critical applications, high network reliability is essential. As a result, those businesses and consumers expect service providers to deliver a high degree of reliability in their networks. Security. Today’s network environment presents an ever-increasing number of challenges regarding network security ranging from simple denial of service attacks to sophisticated, pervasive and malicious intrusions. The importance of security is increasing within all of our customers and we are continually improving and evolving the security capabilities on all of our product solutions. It is extremely important to provide comprehensive network-based security services that are fully integrated, free of performance trade-offs and scaleable to any customer or market. High Performance Without Compromising Intelligence. To handle the rapid growth in IP traffic, today’s network operators increasingly require secure networking solutions that can operate at higher speeds, while still delivering real-time services such as security and quality-of-service features. 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 IP 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. A wire speed router, which achieves its specified transmission rate for any type of traffic passing through it, can accomplish this task. 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. IP infrastructure 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 IP network infrastructure, the convergence process is far more complex and places a far greater load on the router, thereby requiring a much more sophisticated device. Scalability. Due to the rapid growth in 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, secure networking solutions must be highly scalable. Next generation routers and security appliances therefore need to be flexible and configurable to function within constantly changing networks while incurring minimal downtime. High Return on Investment. Continued growth in IP traffic, price competition in the telecommunications market and increasing pressure for network operators to attain higher returns on their network infrastructure investments all contribute to our customers’ desire for solutions that significantly reduce the capital expenditures required to build and operate their networks. In addition to the basic cost of equipment, network operators incur substantial ancillary costs for the space required to deploy the equipment, power consumed and ongoing operation and maintenance of the equipment. Network operators therefore want to deploy dense and varied equipment configurations in limited amounts of rack and floor space. Therefore, in order to continue to scale their networks toward higher data speeds in a cost effective manner, network operators need the ability to mix and match easily many different speed connections at appropriate densities, without significantly increasing the consumption of space or power and driving costs higher. These requirements define a clear need for IP infrastructure and security solutions that can support high speeds and offer new IP-based services. At the same time, network operators are eagerly seeking new solutions that increase the level of scalability and reliability within their networks and reduce the cost of their architectures. -4-


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    Juniper Networks Technology and Products Early in the Company’s history, we developed, marketed and sold the first commercially available purpose-built IP backbone router optimized for the specific high performance needs of service providers. As the need for core bandwidth continued to increase, the need for service rich platforms at the edge of the network was created. Our infrastructure products are designed to address the needs at the core and the edge of the network as well as for wireless access by combining high-performance packet forwarding technology and robust operating systems into a network-optimized solution. With the acquisition of NetScreen, we have added a broad family of network security solutions that deliver high performance, cost-effective security for enterprises, service providers and government entities. We offer firewall and virtual private network (“VPN”) systems and appliances, as well as a line of intrusion detection and prevention (“IDP”) appliances. Both our infrastructure and security solutions are built upon ASIC and software expertise. Our infrastructure products offer a full suite of scalable, tested routing protocols, which are used to control, and direct network traffic, and are critical to a network routing solution. This control is made more important by the fact that the size and complexity of IP networks are increasing at a time when service providers are looking to differentiate themselves through value-added service offerings. Our firewall and VPN systems are standards-based for easy integration into customer networks, and deliver integrated firewall, VPN and denial of service protection capabilities in a single device. Our IDP appliances incorporate multiple methods of detection, such as attack pattern matching, protocol anomaly detection and backdoor detection, and stop attacks based on known patterns of attack, suspicious traffic or connection requests. Infrastructure Products We believe that an overview of the physical nature of our infrastructure products is helpful in understanding the operation of our business. Although specific designs vary among our product families, our platforms are essentially modular, with the chassis serving as the base of the platform. The chassis contains components that enable and support many of the fundamental functions of the router, such as power supplies, cooling fans, and components that run our JUNOS or JUNOSe operating system, perform high-speed packet forwarding, or keep track of the structure of the network and instruct the packet forwarding components where to send packets. Each chassis has a certain number of slots that are available to be populated with components we refer to as modules or interfaces. The modules are the components through which the router receives incoming packets of data from the network over a variety of transmission media. The physical connection between a transmission medium and a module is referred to as a port. The number of ports on a module varies widely depending on the functionality and throughput offered by the module. In some cases, modules do not contain ports or physically receive packets from the network, but rather enhance the overall functionality of the router. We refer to these components as service modules. Major Infrastructure Product Families M-Series and T-Series: Our M-series platforms are extremely versatile as they can be deployed at the edge of operator networks, in small and medium core networks, and in other applications. The M-series product family includes the M320, M160, M40e, M20, M10i and M7i platforms. Our T-series platforms, T640 and T320, are primarily designed for core IP infrastructures. The M-series and T-series products leverage our ASIC technology and the same JUNOS operating system to ensure continuous and predictable service delivery, while reducing capital and operational costs. E-Series: Our E-series products are a full featured platform with support for carrier-class routing, broadband subscriber management services and a comprehensive set of IP services. The E-series family includes the ERX-1440, -1410, -710, -705 and -310 platforms. Leveraging our JUNOSe operating -5-


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    system, the E-Series service delivery architecture enables service providers to easily deploy innovative revenue generating services to their customers and avoid the costly and limiting piecemeal outcomes that result from equipment that delivers inconsistent edge services. All E-Series platforms offer a full suite of routing protocols and provide scalable capacity for tens of thousands of users. Major Security Product Families Firewall and VPN Systems: Our NetScreen-5400, -5200, -1000 and -500 products are high performance security systems designed to provide integrated firewall, VPN and denial of service protection capabilities for enterprise environments and carrier network infrastructures. Each can be deployed in high bandwidth environments and can be used to deliver managed security services. Our firewall and VPN systems allow unique security policies to be enforced for multiple virtual local area networks, or VLANs, allowing a single system to secure multiple networks. Our security systems also allow for the creation of multiple Virtual Systems, each providing a unique security domain with its own virtual firewall and VPN and dedicated management interface. These features enable enterprises, carriers and government entities to use a single security system to secure multiple networks and enable carriers to deliver security services to multiple customers. Firewall and VPN Appliances: Our NetScreen-208, -204, -100, -50, -25, -5XT and -5XP security appliances are fixed configuration products of varying performance characteristics that offer integrated firewall, VPN and denial of service protection capabilities. Our security appliances are designed to maximize security and performance while using less physical space than competing products. Our security appliances can be deployed to provide small to medium-sized businesses and enterprise remote locations with secure Internet access and communication. Secure Access Secure Sockets Layer (“SSL”) VPN Appliances: Our Secure Access-5000, -3000 and -1000 appliances are used to secure remote access for mobile employees, secure extranets for customers and partners, and secure intranets. Our SSL VPN appliances are designed to be used in enterprise environments of all sizes. Intrusion Detection and Prevention (“IDP”) Appliances: Our IDP-1000, -500, -100 and -10 appliances utilize intrusion detection methods to increase the attack detection accuracy and provide the broadest attack detection coverage available. Our IDP appliances provide fast and efficient traffic processing and alarm collection, presentation and forwarding. Once an attack is detected, our IDP appliances prevent the intrusion by dropping the packets or connection associated with the attack, reducing or eliminating the effects of the attack. Our IDP appliances can also alert the IT staff to respond to the attack. Our IDP appliances can be clustered to provide high availability and reduce risk associated with a single point of failure. See Note 12 in Item 8 for a breakdown of net product revenues by categories of products. Sales, Marketing and Distribution Structure As of December 31, 2004, the Company employed a staff of 1,057 employees in our worldwide sales and marketing organizations. These sales employees operate within their respective regions and generally either engage customers directly or manage customer opportunities through our strategic distribution relationships and value-added resellers. Information concerning our revenues by significant customers and by geographic region can be found in Note 2 and Note 12 to the Consolidated Financial Statements included within this Annual Report on Form 10-K. Direct Sales Structure Our direct sales organization is organized into three geographic theaters and within each theater according to the particular needs in that market. Our three geographic theaters are (i) the Americas, (ii) Europe, Middle East and Africa and (iii) Asia Pacific. Our direct relationships with our customers are governed either by customer purchase orders and our acknowledgement of those orders or by purchase -6-


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    contracts. In instances where we have contracts with our customer, those contracts set forth only general terms of sale and do not require customers to purchase specified quantities of our products. Global Channel System In our sales and marketing efforts, we also employ a global network of strategic distribution relationships, as well as theater or country-specific distributors and value added resellers. Within each theater, in addition to our direct sales force, we employ sales professionals to assist with the management of our various sales channels. We have strategic reseller relationships with Ericsson A.B., Lucent Technologies and Siemens A.G. We believe that each of these companies have significant customer relationships in place and offer products that complement our product offerings. Our arrangements with each of these partners allow them to resell our products on a worldwide, non-exclusive basis, provide for discounts based upon the volume of products sold and specify other general terms of sale. The agreements do not require these partners to purchase specified quantities of our products. Siemens accounted for greater than 10% of our total revenues in 2004. In addition to these strategic reseller relationships, the Company maintains relationships with distributors and value-added resellers in various theaters. These distributors and value-added resellers tend to be focused on particular theaters or particular countries within theaters. These resellers have expertise in deploying complex networking solutions in their respective markets. Our agreements with these resellers are non-exclusive, generally limited by theater, and provide product discounts and other ordinary terms of sale. These agreements do not require our distributors or resellers to purchase specified quantities of our products. Customer Service and Support We believe that a broad range of support services is essential to the successful deployment and ongoing support of our products and we have hired support engineers with proven network experience to provide those services. In most cases, our customer service and support organization provides front line product support and is the problem resolution interface to our partners and direct end users. We offer the following services: 24x7x365 technical assistance, hardware repair and replacement, unspecified updates, professional services and educational services. We deliver these services directly to major end users and also utilize a multi-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. As of December 31, 2004, we employed 337 people in our worldwide customer service and support organization. Research and Development We have assembled a team of skilled engineers with extensive experience in the fields of high-end computing, network system design, security, 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 highly integrated ASICs and scalable technology. 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. In our infrastructure and security products, we are leveraging our ASIC technology, developing additional network interfaces targeted to our customer applications and continuing to develop next generation technology to support the anticipated growth in IP network requirements. We continue to expand the functionality of our products to improve performance reliability and scalability, and to provide an enhanced user interface. -7-


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    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 all product development projects. This process involves all functional groups and all levels within the 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, 2004, we employed 1,184 people in our worldwide research and development organization. Our research and development expenses totaled $238.4 million, $176.1 million and $161.9 million for the years ended December 31, 2004, 2003 and 2002, respectively. Manufacturing and Operations We employ 105 employees in manufacturing and operations who primarily manage relationships with our contract manufacturers, manage our supply chain, and monitor and manage product testing and quality. The majority of our manufacturing operation is outsourced. We currently have manufacturing relationships primarily with Celestica and Plexus, under which we have subcontracted the majority of our manufacturing activity. This subcontracting activity extends from prototypes to full production and includes activities such as material procurement, final assembly, test, control, shipment to our customers and repairs. We design, specify and monitor all of the tests that are required to meet internal and external quality standards. These arrangements provide us with the following benefits: • We conserve the working capital that would be required for funding inventory; • We can adjust manufacturing volumes quickly to meet changes in demand; • We can quickly deliver products to customers with turnkey manufacturing and drop shipment capabilities; • We gain economies of scale because, by purchasing large quantities of common components, our contract manufacturers obtain more favorable pricing than we could buying components alone; and • We operate without dedicating significant space to manufacturing operations. Our contract manufacturers manufacture our products based on rolling forecasts from us about our product needs. Each of the contract manufacturers procures components necessary to assemble the products in our forecast and test the products according to our specifications. Products are then shipped directly to our distributors, value-added resellers or end-user. The Company generally does not own the components and our customers generally take title to our products upon shipment from the contract manufacturers. In certain circumstances, we may be liable to our contract manufacturers for carrying and obsolete material charges for excess components purchased based on our forecasts. Although we have contracts with our contract manufacturers, those contracts merely set forth a framework within which the contract manufacturer may accept purchase orders from us. The contracts do not require them to manufacture our products on a long-term basis. Our ASICs are manufactured by IBM and Toshiba, each of whom is responsible for all aspects of the production of the ASICs using our proprietary designs. Competition -8-


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    Competition in the network infrastructure and security markets is intense. Cisco Systems, Inc. has historically dominated the market, with other companies such as Nortel Networks, Alcatel S.A., CheckPoint Systems, Inc. and Huawei Technologies providing competitive products. In addition, a number of public and private companies have announced plans for new products to address the same needs that our products address. We believe that our ability to compete with Cisco and others depends upon our ability to demonstrate that our products are superior in meeting the needs of our current and potential customers and are compatible with Cisco’s current and future products. We expect that, over time, large companies with significant resources, technical expertise, market experience, customer relationships and broad product lines, such as Nortel and Alcatel, 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, Nortel and Alcatel, 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 several other companies that 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 network 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 that can substitute for some uses of routers. For example, high bandwidth Asynchronous Transfer Mode (“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 (“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. 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 many of our products. Our 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 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 patents will be issued on the patent applications that we have filed, or that we will be able to obtain the necessary intellectual property rights or that other parties will not contest our intellectual property rights. Employees -9-


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    As of December 31, 2004, we had 2,948 full-time employees, 265 of whom were in general and administrative functions. 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. Executive Officers of the Registrant The following sets forth certain information regarding our executive officers as of December 31, 2004. NAME AGE POSITION Scott Kriens ........................... 47 Chief Executive Officer and Chairman of the Board Pradeep Sindhu..................... 52 Chief Technical Officer and Vice Chairman of the Board James A. Dolce Jr. ................ 42 Executive Vice President, Field Operations Robert R.B. Dykes................. 55 Executive Vice President, Business Operations and Chief Financial Officer* Marcel Gani ........................... 52 Executive Vice President, Chief Financial Offier Krishna “Kittu” Kolluri............. 41 Executive Vice President and General Manager of the Security Products Group Carol Mills.............................. 51 Executive Vice President and General Manager of the Infrastructure Products Group *Mr. Dykes joined the Company and assumed the role of Chief Financial Officer from Mr. Gani on January 1, 2005. Mr. Gani assumed the role of Chief of Staff on January 1, 2005. SCOTT KRIENS has served as 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. Mr. Kriens also serves on the board of directors of Equinix, Inc. and Verisign, Inc. 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. JAMES A. DOLCE, JR. joined Juniper Networks as Executive Vice President Field Operations in July 2002 as part of our acquisition of Unisphere Networks, Inc. He served as Chief Executive Officer and a director of Unisphere from July 2000 until July 2002. From January 2000 to July 2000, Mr. Dolce served as President of Unisphere. From April 1999 to January 2000, Mr. Dolce served as Vice President of the Data Products Group of Unisphere. From September 1997 to April 1999, he served as President of Redstone Communications, which he co-founded. From May 1996 to July 1997, Mr. Dolce served as Vice President and General Manager of the Remote Access Business Unit of Cascade Communications, a provider of wide area network switches. ROBERT R.B. DYKES joined Juniper Networks in January 2005 from Flextronics where he was Chief Financial Officer and President, Systems Group, from February 1997 to December 2004. Prior to that, - 10 -


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    Mr. Dykes was Executive Vice President, Worldwide Operations and Chief Financial Officer of Symantec Corporation from October 1988 to February 1997. Mr. Dykes also held Chief Financial Officer roles at industrial robots manufacturer, Adept Technology, and at disc drive controller manufacturer, Xebec. He also held senior financial management positions at Ford Motor Company. Mr. Dykes holds a Bachelor of Commerce in Administration degree from Victoria University, Wellington, New Zealand. MARCEL GANI joined Juniper Networks as Chief Financial Officer in February 1997. Mr. Gani served as Executive Vice President and Chief Financial Officer from July 2002 through December 2004. Mr. Gani currently serves as Chief of Staff. 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. Mr. Gani also serves on the board of directors of the Chalone Wine Group. KRISHNA “KITTU” KOLLURI joined Juniper Networks in April 2004. Prior to that he was general manager of Secure Access Products at NetScreen from November 2003 to April 2004, a position he assumed following Netscreen's acquisition of Neoteris where he served as president and chief executive officer from March 2001 to November 2003. Mr. Kolluri co-founded Healtheon/WebMD, where he served as senior vice president and general manager of Provider Services from February 1996 to November 2000 and was responsible for product development, operations and business development. Before co-founding Healtheon/WebMD, Mr. Kolluri worked at Silicon Graphics, Inc. managing high profile Interactive TV projects from March 1990 to January 1996. Mr. Kolluri holds a B.Tech in Mechanical Engineering from Indian Institute of Technology, Madras, India, and an M.S. in Operations Research from the State University of New York, Buffalo. CAROL MILLS joined Juniper Networks in November 2004. Prior to joining Juniper Networks, Ms. Mills was principal consultant for Barrymore and Baldwin, a strategy consulting firm. Before that Ms. Mills was chief executive officer of a private enterprise software company, Acta Technology, from September 1998 until it was acquired by Business Objects in July 2002. Ms. Mills moved to Acta Technology from Hewlett Packard Company where, during her 17 year tenure, she held a number of leadership positions including general manager, Commercial Unix Business. Ms. Mills holds an MBA from Harvard University and a BA in Economics from Smith College. She also serves on the Board of Directors of Adobe Systems Incorporated. Available Information We file our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 with the SEC electronically. The public may read or copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov. You may obtain a free copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports on the day of filing with the SEC on our website at http://www.juniper.net, by contacting the Investor Relations Department at our corporate offices by calling (888) 586-4737 or by sending an e-mail message to investor-relations@juniper.net. ITEM 2. Properties We lease approximately 1.3 million square feet world wide, with the majority being in North America. Our corporate headquarters is located in Sunnyvale, California and consists of four buildings totaling approximately 0.6 million square feet. Each building is on an individual lease or sublease, which provides - 11 -


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    various option, expansion and extension provisions. The corporate headquarters leases expire between June 2012 and May 2014. Additionally, we lease an approximately 0.3 million square foot facility in Westford, Massachusetts under two leases. The leases expire between January and March 2011. We also own approximately 80 acres of land adjacent to our leased corporate headquarters location. In addition to our offices in Sunnyvale and Westford, we also lease offices in various locations throughout the United States, Canada, South America, Europe, the Middle East and the Asia Pacific region, including in China, the Netherlands, Virginia, India, Hong Kong, Canada, France, Japan, Australia, the United Kingdom and Korea. Our current offices are in good condition and appropriately support our business needs. ITEM 3. Legal Proceedings The Company is subject to legal claims and litigation arising in the ordinary course of business, such as employment or intellectual property claims, including the matters described below. The outcome of any such matters is currently not determinable. Although the Company does not expect that such legal claims and litigation will ultimately have a material adverse effect on the Company's consolidated financial position or results of operations, an adverse result in one or more matters could negatively affect our results in the period in which they occur. IPO Allocation Case In December 2001, a class action complaint was filed in the United States District Court for the Southern District of New York against the Goldman Sachs Group, Inc., Credit Suisse First Boston Corporation, FleetBoston Robertson Stephens, Inc., Royal Bank of Canada (Dain Rauscher Wessels), SG Cowen Securities Corporation, UBS Warburg LLC (Warburg Dillon Read LLC), Chase (Hambrecht & Quist LLC), J.P. Morgan Chase & Co., Lehman Brothers, Inc., Salomon Smith Barney, Inc., Merrill Lynch, Pierce, Fenner & Smith, Incorporated (collectively, the "Underwriters"), the Company and certain of the Company's officers. This action was brought on behalf of purchasers of the Company's common stock in the Company's initial public offering in June 1999 and its secondary offering in September 1999. Specifically, among other things, this complaint alleged that the prospectus pursuant to which shares of common stock were sold in the Company's initial public offering and its subsequent secondary offering contained certain false and misleading statements or omissions regarding the practices of the Underwriters with respect to their allocation of shares of common stock in these offerings and their receipt of commissions from customers related to such allocations. Various plaintiffs have filed actions asserting similar allegations concerning the initial public offerings of approximately 300 other issuers. These various cases pending in the Southern District of New York have been coordinated for pretrial proceedings as In re Initial Public Offering Securities Litigation, 21 MC 92. In April 2002, plaintiffs filed a consolidated amended complaint in the action against the Company, alleging violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Defendants in the coordinated proceeding filed motions to dismiss. In October 2002, the Company's officers were dismissed from the case without prejudice pursuant to a stipulation. On February 19, 2003, the court granted in part and denied in part the motion to dismiss, but declined to dismiss the claims against the Company. In June 2004, a stipulation for the settlement and release of claims against the issuers, including the Company, was submitted to the Court for preliminary approval. The terms of the settlement, if approved, would dismiss and release all claims against participating defendants (including the Company). In exchange for this dismissal, Directors and Officers insurance carriers would agree to guarantee a recovery by the plaintiffs from the underwriter defendants of at least $1 billion, and the issuer defendants would agree to an assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters. The settlement is subject to a number of conditions, including certification of a class for settlement purposes and formal court approval. If the settlement does not occur, and litigation continues, the Company believes it has meritorious defenses and intends to defend the case vigorously. Federal Securities Class Action Suit - 12 -

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