JUNIPER NETWORKS, INC. 
This Quarterly Report on Form 10-Q, which we refer to as the Report, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements regarding future events and the future results ofJuniper Networks, Inc. , which we refer to as "we," "us," "Juniper," or the "Company," that are based on our current expectations, estimates, forecasts, and projections about our business, economic and market outlook, our results of operations, the industry in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "would," "will," "could," "may," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including the duration, extent, and continuing impact of the COVID-19 pandemic and the global semiconductor shortage, and our ability to successfully manage the demand, supply, and operational challenges associated with the COVID-19 pandemic and the global semiconductor shortage. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Report under the section entitled "Risk Factors" in Item 1A of Part II and elsewhere, and in other reports we file with theU.S. Securities and Exchange Commission , or theSEC . In addition, many of the foregoing risks and uncertainties are, and could be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result of the pandemic. While forward-looking statements are based on reasonable expectations of our management at the time that they are made, you should not rely on them. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, except as required by applicable law. The following discussion is based upon our unaudited Condensed Consolidated Financial Statements included in Part 1, Item I, of this Report, which were prepared in accordance withU.S. generally accepted accounting principles, orU.S. GAAP. In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the manufacturing and shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory and spare parts, among other matters. In making these decisions, we consider various factors, including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. Each of these decisions has some impact on the financial results for any given period. To aid in understanding our operating results for the periods covered by this Report, we have provided an executive overview, which includes a summary of our business and market environment along with a financial results and key performance metrics overview. These sections should be read in conjunction with the more detailed discussion and analysis of our condensed consolidated financial condition and results of operations in this Item 2, our "Risk Factors" section included in Item 1A of Part II of this Report, and our unaudited Condensed Consolidated Financial Statements and Notes included in Item 1 of Part I of this Report, as well as our audited Consolidated Financial Statements and Notes included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 , or Form 10-K.
Business and Market Environment
Juniper Networks designs, develops and sells products and services for high-performance networks to enable customers to build scalable, reliable, secure and cost-effective networks for their businesses, while achieving agility and improved operating efficiency through automation. We sell our products in more than 150 countries in three geographic regions:Americas ;Europe ,Middle East , andAfrica , which we refer to as EMEA; andAsia Pacific , which we refer to as APAC. We organize and manage our business by major functional departments on a consolidated basis as one operating segment. Our true north is experience-first networking to help our customers achieve their business outcomes. We sell high-performance networking product offerings within the following customer solution categories: AI-Driven Enterprise, Automated WAN Solutions, andCloud-Ready Data Center , and our connected security products are sold in each category.
•AI-Driven Enterprise encompasses client-to-cloud portfolio, cloud-delivered
campus wired and wireless solutions of Mist and EX switches, and SD-WAN
portfolio that includes
•Automated WAN Solutions includes MX and PTX product lines, and ACX product line
targeting the Metro market. It also includes the recently acquired Netrounds
products that are part of Paragon Automation, our WAN Automation suite.
33
--------------------------------------------------------------------------------
Table of Contents
•Cloud-Ready Data Center includes the QFX product line, Apstra and Contrail
product lines, along with the high-end security portfolio of SRX, targeting data
center security for service provider, cloud and enterprise. To accelerate our
strategy, in January 2021 , we acquired Apstra, a leader in intent-based
networking, open programmability and automated closed loop assurance for the
management of data center networks. We believe our acquisition of Apstra will
expand upon our data center networking portfolio to create a compelling solution
that will change the customer experience of operating in a modern data center.
In addition to our product offerings, we offer software-as-a-service (SaaS),
software subscription, and other customer services, including maintenance and
support, professional services, and education and training programs.
Our products and services address high-performance network requirements for our
customers within our verticals: Cloud, Service Provider, and Enterprise who view
the network as critical to their success. We believe our silicon, systems, and
software represent innovations that transform the economics and experience of
networking, helping our customers achieve superior performance, greater choice,
and flexibility, while reducing overall total cost of ownership. We are
executing against our innovation roadmap as each of our industry verticals
transitions to cloud architectures. We focus on compelling and differentiated
use cases targeting the AI-Driven Enterprise, Automated WAN Solutions, and
Cloud-Ready Data Center . We believe our understanding of high-performance
networking technology and cloud architecture positions us to effectively
capitalize on the industry transition to more automated, cost-efficient, and
scalable networks.
COVID-19 Pandemic Update
The COVID-19 pandemic and the containment measures taken by governments and
businesses are expected to continue to have a substantial negative impact on
businesses around the world and on global, regional, and national economies. As
a result, the pandemic has, and may continue to, negatively affect our
operations, including as a result of external factors beyond our control such as
restrictions on the physical movement of our employees, contract manufacturers,
partners, and customers to limit the spread of COVID-19 and the availability and
acceptance of COVID-19 vaccines as well as the effectiveness of the vaccines to
new variants of this disease. The majority of our global workforce has been
working remotely since March 2020 , and we continue to implement our four-phased
approach to office reopening. We will continue to follow the guidance of local
and national governments, including monitoring the health of our employees who
have returned or will be returning to our offices.
We continue to support healthy customer demand for our products by working with
our suppliers and distributors to address supply chain disruptions as well as
travel restrictions that have impacted our operations. We have a global supply
chain, which consists of primary manufacturing partners and component suppliers.
During the second quarter of 2021, the supply constraints we continued to
experience were due to both constrained manufacturing capacity as well as
component parts shortages as our component vendors were also facing
manufacturing challenges. These challenges resulted in extended lead-times to
our customers, increased logistics costs, and impacted the volume of products we
were able to deliver, which negatively impacted our ability to recognize
revenue.
Challenges to our supply chain due to the impact of the pandemic remain dynamic,
and we continue to experience higher logistics costs due to air travel and
transport restrictions that limited the availability of flights on which we were
able to ship products. Our supply chain team has been working to meet our
customer needs by executing on a strong risk mitigation plan, including
multi-sourcing, pre-ordering components, transforming our logistics network,
prioritizing critical customers, working with local government agencies to
understand challenges, and partnering on solutions that limit disruptions to our
operations while ensuring the safety of our employees, partners and suppliers.
The pandemic did not have a substantial net impact to our consolidated operating
results or our liquidity position in the second quarter of 2021. We continue to
generate operating cash flows to meet our short-term liquidity needs, and we
expect to continue to maintain access to the capital markets enabled by our
strong credit ratings. In the second quarter of 2021, we did not observe any
material impairments of our assets or a significant change in the fair value of
assets due to the pandemic.
We enter the third quarter of fiscal year 2021 with strong momentum and healthy
backlog across all verticals. We continue to work with government authorities
and implement safety measures to ensure that we are able to continue
manufacturing and distributing our products during the pandemic. We continue to
experience constrained supply, increased logistics costs, and accelerated
customer demand, any of which could adversely impact our business, results of
operations, and overall financial performance in future periods.
34
--------------------------------------------------------------------------------
Table of Contents
Global Semiconductor Shortage
There is a worldwide shortage of semiconductors impacting many industries,
caused in-part by the COVID-19 pandemic. Similar to others, we are experiencing
ongoing component shortages, which have resulted in extended lead times of
certain products. We also experienced and may continue to experience increased
component costs, which had a negative impact on our gross margin. During the
past quarter, we experienced record product orders across all verticals and
customer solutions; we believe some of the strength was attributable to industry
supply chain challenges that were causing certain customers to place orders
early to secure supply when needed. We continued to strengthen our supply chain
and have increased inventory levels over the course of the last year. We
continue to work closely with our suppliers to further enhance our resiliency
and mitigate recent disruptions outside of our control. We believe that even
with these actions, extended lead times will likely persist for at least the
next few quarters. While the situation is dynamic, at this point in time we
believe we will have access to sufficient semiconductor supply to meet our
full-year financial forecast. Refer to Part II, Item 1A (Risk Factors) of this
Report for further discussion of this risk.
35
--------------------------------------------------------------------------------
Table of Contents
Financial Results and Key Performance Metrics Overview
The following table provides an overview of our financial results and key
financial metrics (in millions, except per share amounts, percentages, and days
sales outstanding, or DSO):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % ChangeNet revenues$ 1,172.3 $ 1,086.3 $ 86.0 8 %$ 2,246.7 $ 2,084.3 $ 162.4 8 % Gross margin$ 681.9 $ 619.6 $ 62.3 10 %$ 1,297.5 $ 1,198.9 $ 98.6 8 % Percentage of net revenues 58.2 % 57.0 % 57.8 % 57.5 % Operating income$ 85.7 $ 90.5 $ (4.8) (5) %$ 113.5 $ 129.9 $ (16.4) (13) % Percentage of net revenues 7.3 % 8.3 % 5.1 % 6.2 % Net income$ 62.0 $ 61.2 $ 0.8 1 %$ 30.9 $ 81.6 $ (50.7) (62) % Percentage of net revenues 5.3 % 5.6 % 1.4 % 3.9 % Net income per share: Basic$ 0.19 $ 0.18 $ 0.01 6 %$ 0.09 $ 0.25 $ (0.16) (64) % Diluted$ 0.19 $ 0.18 $ 0.01 6 %$ 0.09 $ 0.24 $ (0.15) (63) % Operating cash flows$ 437.0 $ 369.8 $ 67.2 18 % Stock repurchase plan activity$ 110.0 $ -$ 110.0 N/M$ 235.0 $ 200.0 $ 35.0 18 %
Cash dividends declared
- % $ 0.40 $ 0.40 $ - - %
per common stock
DSO 59 63 (4) (6) %
As of
June 30, December 31,
2021 2020 $ Change % Change
Deferred revenue:
Deferred product revenue $ 118.1 $ 104.7 $ 13.4 13 %
Deferred service revenue $ 1,213.2 $ 1,181.1 $ 32.1 3 %
Total $ 1,331.3 $ 1,285.8 $ 45.5 4 %
Deferred revenue from
customer solutions(*) $ 355.8 $ 316.4 $ 39.4 12 %
Deferred revenue from
hardware maintenance and
professional services $ 975.5 $ 969.4 $ 6.1 1 %
Total $ 1,331.3 $ 1,285.8 $ 45.5 4 %
______________________
N/M - Not meaningful
(*) Includes deferred revenue from hardware solutions, software licenses,
software support and maintenance and SaaS offerings sold in our Automated WAN
Solutions, Cloud-Ready Data Center , and AI-Driven Enterprise customer solution
categories.
•Net Revenues: Net revenues increased across all verticals during the three and
six months ended June 30, 2021 , compared to the same periods in 2020. Service
net revenues increased primarily due to strong sales of support contracts,
timing of renewals and professional services projects and to a lesser extent,
software subscriptions.
Of our top ten customers for the second quarter of 2021, four were in Cloud,
five were in Service Provider, and one was in Enterprise. Of these customers,
two were located outside of the U.S. •Gross Margin: The gross margin as a percentage of net revenues increased primarily from higher service gross margin mainly due to lower delivery costs and higher revenue.
36
--------------------------------------------------------------------------------
Table of Contents
•Operating Margin: The operating income as a percentage of net revenues
decreased primarily due to higher personnel-related expenses driven by increases
in variable compensation expense and headcount, and higher restructuring
charges.
•Operating Cash Flows: Net cash provided by operations increased primarily due to higher collections, partially offset by higher supplier payments and headcount related restructuring costs.
•Capital Return: We continue to return capital to our stockholders. During the six months endedJune 30, 2021 , we repurchased 9.3 million shares of our common stock in the open market at an average price of$25.30 per share for an aggregate purchase price of$235.0 million . During the three and six months endedJune 30, 2021 , we paid a quarterly dividend of$0.20 per share, for an aggregate amount of$64.7 million and$129.9 million , respectively. •DSO: DSO is calculated as the ratio of ending accounts receivable, net of allowances, divided by average daily net revenues for the preceding 90 days. DSO decreased primarily due to higher revenues.
•Deferred Revenue: Total deferred revenue increased as of
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity withU.S. GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and the accompanying notes. On an ongoing basis, we evaluate our estimates and assumptions. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenues, and expenses that are not readily apparent from other sources. During the six months endedJune 30, 2021 , there were no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Form 10-K.
Recent Accounting Pronouncements
See Note 1, Basis of Presentation and Summary of Significant Accounting
Policies, in the Notes to Condensed Consolidated Financial Statements in Item 1
of Part I of this Report, for a full description of the recently adopted
accounting standards and recent accounting standards not yet adopted, including
the actual and expected dates of adoption and estimated effects on our
consolidated results of operations and financial condition, which is
incorporated herein by reference.
37
--------------------------------------------------------------------------------Table of Contents Results of Operations Revenues
The following table presents net revenues by customer solution, customer vertical, and geographic region (in millions, except percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Customer Solutions:
Automated WAN Solutions
(3) % $ 782.5 $ 722.3 $ 60.2 8 %
Percentage of net revenues 33.8 % 37.4 % 34.8 % 34.7 %
Cloud-Ready Data Center 201.9 157.6 44.3 28 % 359.3 332.0 27.3 8 %
Percentage of net revenues 17.2 % 14.5 % 16.0 % 15.9 %
AI-Driven Enterprise 195.1 152.7 42.4 28 % 356.3 296.1 60.2 20 %
Percentage of net revenues 16.6 % 14.1 % 15.9 % 14.2 %
Hardware Maintenance and
Professional Services 379.2 369.2 10.0 3 % 748.6 733.9 14.7 2 %
Percentage of net revenues 32.4 % 34.0 % 33.3 % 35.2 %
Total net revenues $ 1,172.3 $ 1,086.3 $ 86.0 8 % $ 2,246.7 $ 2,084.3 $ 162.4 8 %
Cloud $ 320.6 $ 285.5 $ 35.1 12 % $ 591.3 $ 547.4 $ 43.9 8 %
Percentage of net revenues 27.3 % 26.3 % 26.3 % 26.3 %
Service Provider 443.7 436.2 7.5 2 % 881.9 811.7 70.2 9 %
Percentage of net revenues 37.8 % 40.2 % 39.3 % 38.9 %
Enterprise 408.0 364.6 43.4 12 % 773.5 725.2 48.3 7 %
Percentage of net revenues 34.9 % 33.5 % 34.4 % 34.8 %
Total net revenues $ 1,172.3 $ 1,086.3 $ 86.0 8 % $ 2,246.7 $ 2,084.3 $ 162.4 8 %
Americas:
United States $ 597.4 $ 547.3 $ 50.1 9 % $ 1,120.5 $ 1,076.7 $ 43.8 4 %
Other 55.3 61.5 (6.2) (10) % 115.2 111.6 3.6 3 %
Total Americas 652.7 608.8 43.9 7 % 1,235.7 1,188.3 47.4 4 %
Percentage of net revenues 55.7 % 56.0 % 55.0 % 57.1 %
EMEA 323.9 294.1 29.8 10 % 635.0 549.1 85.9 16 %
Percentage of net revenues 27.6 % 27.1 % 28.3 % 26.3 %
APAC 195.7 183.4 12.3 7 % 376.0 346.9 29.1 8 %
Percentage of net revenues 16.7 % 16.9 % 16.7 % 16.6 %
Total net revenues $ 1,172.3 $ 1,086.3 $ 86.0 8 % $ 2,246.7 $ 2,084.3 $ 162.4 8 %
Three Months Ended
Total net revenues increased primarily due to increases in
The AI-Driven Enterprise revenue increase was primarily driven by Enterprise and Cloud, and to a lesser extent, Service Provider.
The Automated WAN Solutions revenue decrease was primarily driven by Cloud and to a lesser extent, Enterprise, partially offset by an increase in Service Provider.
38--------------------------------------------------------------------------------
Table of Contents
Six Months Ended
Total net revenues increased primarily due to increases across all customer solutions mainly driven by higher sales volume.
The Automated WAN Solutions revenue increase was primarily driven by Service Provider, partially offset by decline in Enterprise.
The AI-Driven Enterprise revenue increased across all verticals.
Effective in the first quarter of fiscal 2021, we also began presenting revenues from software and related services as well as total security, as these offerings represent key areas of strategic focus that are critical components to our business success. Software and related services offerings include revenue from software license, software support and maintenance and SaaS contracts. Total security offerings include revenue from our complete portfolio of hardware and software security products, including SD-WAN solutions, as well as services related to our security solutions.
The following table presents net revenues from software and security products and services (in millions, except percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Software and Related
Services $ 172.5 $ 108.4 $ 64.1 59 % $ 315.4 $ 242.0 $ 73.4 30 %
Percentage of net revenues 14.7 % 10.0 % 14.0 % 11.6 %
Total Security $ 171.7 $ 154.5 $ 17.2 11 % $ 334.7 $ 301.1 $ 33.6 11 %
Percentage of net revenues 14.6 % 14.2 % 14.9 % 14.4 %
Gross Margins
The following table presents gross margins (in millions, except percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Product gross margin $ 408.8 $ 370.6 $ 38.2 10 % $ 764.7 $ 710.4 $ 54.3 8 %
Percentage of product
revenues 53.8 % 53.5 % 53.4 % 54.6 %
Service gross margin 273.1 249.0 24.1 10 % 532.8 488.5 44.3 9 %
Percentage of service
revenues 66.1 % 63.2 % 65.4 % 62.4 %
Total gross margin $ 681.9 $ 619.6 $ 62.3 10 % $ 1,297.5 $ 1,198.9 $ 98.6 8 %
Percentage of net revenues 58.2 % 57.0 % 57.8 % 57.5 %
Our gross margins as a percentage of net revenues have been and will continue to
be affected by a variety of factors, including the mix and average selling
prices of our products and services, new product introductions and enhancements,
manufacturing, component and logistics costs, expenses for inventory
obsolescence and warranty obligations, cost of support and service personnel,
customer mix as we continue to expand our footprint with certain strategic
customers, the mix of distribution channels through which our products and
services are sold, and import tariffs. For example, we are subject to tariffs on
networking components imported from China , which are included in products that
we import into and sell within the United States . In addition, our logistics and
other supply chain-related costs have increased due to the COVID-19 pandemic.
For more information on the impact of tariffs and COVID-19 on our business, see
the "Risk Factors" section of Item 1A of Part II of this Report.
39
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended June 30, 2021 compared with the Three Months Ended June 30,
2020
Product gross margin
Product gross margin as a percentage of product revenues increased primarily due
to customer and product mix and lower logistics costs incurred related to
COVID-19 pandemic, partially offset by higher intangible amortization associated
with the acquisitions of 128 Technology , Apstra, and Netrounds and costs
incurred due to supply constraints. We continue to undertake specific efforts to
address certain factors impacting our product gross margin. These efforts
include performance and quality improvements through engineering to increase
value across our products; optimizing our supply chain and service business;
pricing management; and increasing software and solution sales.
Service gross margin
Service gross margin as a percentage of service net revenues increased primarily due to lower delivery costs and higher revenue.
Six Months Ended
Product gross margin
Product gross margin as a percentage of product revenues decreased primarily due to higher intangible amortization associated with the acquisitions of Apstra,128 Technology and Netrounds, and increased costs incurred due to supply constraints, partially offset by favorable mix. We continue to undertake specific efforts to address certain factors impacting our product gross margin. These efforts include performance and quality improvements through engineering to increase value across our products; optimizing our supply chain and service business; pricing management; and increasing software and solution sales.
Service gross margin
Service gross margin as a percentage of service net revenues increased primarily due to lower delivery costs and higher revenue.
Operating Expenses
The following table presents operating expenses (in millions, except
percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Research and development $ 245.8 $ 241.0 $ 4.8 2 % $ 500.5 $ 473.5 $ 27.0 6 %
Percentage of net revenues 21.0 % 22.2 % 22.3 % 22.7 %
Sales and marketing 257.8 224.2 33.6 15 % 510.5 463.4 47.1 10 %
Percentage of net revenues 22.0 % 20.6 % 22.7 % 22.2 %
General and administrative 71.0 59.1 11.9 20 % 132.1 118.4 13.7 12 %
Percentage of net revenues 6.1 % 5.4 % 5.9 % 5.7 %
Restructuring charges 21.6 4.8 16.8 350 % 40.9 13.7 27.2 199 %
Percentage of net revenues 1.8 % 0.4 % 1.8 % 0.7 %
Total operating expenses $ 596.2 $ 529.1 $ 67.1 13 % $ 1,184.0 $ 1,069.0 $ 115.0 11 %
Percentage of net revenues 50.9 % 48.7 % 52.7 % 51.3 %
40-------------------------------------------------------------------------------- Table of Contents Three Months EndedJune 30, 2021 compared with the Three Months EndedJune 30, 2020
Total operating expenses increased primarily due to higher variable compensation and higher restructuring costs, and to a lesser extent, increases in headcount-related costs.
Six Months Ended
Total operating expenses increased primarily due to higher variable compensation and higher restructuring costs, and to a lesser extent, increases in headcount-related costs.
Loss on Extinguishment of Debt
During the six months endedJune 30, 2021 , we incurred a loss on extinguishment of debt of$60.6 million related to the redemption of the remainder of our outstanding Senior Notes maturing in 2024 andJune 2025 . The loss primarily consists of a premium on the early redemption and acceleration of unamortized debt discount and fees on the redeemed debt.
Other Expense, Net
The following table presents other expense, net (in millions, except
percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Interest income $ 3.4 $ 9.3 $ (5.9) (63) % $ 7.5 $ 24.4 $ (16.9) (69) %
Interest expense (12.6) (19.3) 6.7 (35) % (26.3) (39.5) 13.2 (33) %
(Loss) gain on investments,
net (1.2) 6.5 (7.7) (118) % 2.6 0.7 1.9 271 %
Other (0.5) (0.9) 0.4 (44) % 0.3 (1.1) 1.4 (127) %
Total other expense, net $ (10.9) $ (4.4) $ (6.5) 148 % $ (15.9) $ (15.5) $ (0.4) 3 %
Percentage of net revenues (0.9) % (0.4) % (0.7) % (0.7) %
Three Months Ended
Total other expense, net increased primarily due to lower interest income related to our fixed income investment portfolio, as a result of lower yields from a lower average portfolio balance and losses on certain equity investments. This was partially offset by lower interest expense as a result of lower interest rate debt portfolio.
Six Months Ended
Total other expense, net increased primarily due to lower interest income related to our fixed income investment portfolio, as a result of lower yields from a lower average portfolio balance. This was partially offset by lower interest expense as a result of lower interest rate debt portfolio.
41
--------------------------------------------------------------------------------
Table of Contents
Income Tax (Benefit) Provision
The following table presents income tax (benefit) provision (in millions, except
percentages):
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Income tax (benefit)
provision $ 12.8 $ 24.9 $ (12.1) (49) % $ 6.1 $ 32.8 $ (26.7) (81) %
Effective tax rate 17.1 % 28.9 % 16.5 % 28.7 %
The effective tax rate decreased during the three and six months ended June 30,
2021 , compared to the same periods in 2020, primarily due to a change in the
effect of discrete items in the comparative periods. For further explanation of
our income tax (benefit) provision, see Note 13, Income Taxes, in Notes to
Condensed Consolidated Financial Statements in Item 1 of Part I of this Report.
Our effective tax rate may fluctuate significantly on a quarterly basis and may
be adversely affected to the extent earnings are lower than anticipated in
countries that have lower statutory rates and higher than anticipated in
countries that have higher statutory rates. Our effective tax rate may also
fluctuate due to changes in the valuation of our deferred tax assets or
liabilities, or by changes in tax laws, regulations, or accounting principles,
as well as certain discrete items. See Item 1A of Part I, "Risk Factors" of this
Report for a description of relevant risks which may adversely affect our
results.
As a result of recommendations by the Organisation for Economic Co-operation and
Development ("OECD") on Base Erosion and Profit Shifting, certain countries in
EMEA and APAC have either enacted new corporate tax legislation or are
considering enacting such legislation in the near future. We expect the effect
of these reform measures to potentially impact long-standing tax principles,
particularly in regard to transfer pricing. Consequently, we expect global tax
authorities to increasingly challenge our cost sharing and other intercompany
arrangements, and the related sourcing of taxable profits in global
jurisdictions.
42-------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources
We have funded our business primarily through our operating activities and the issuance of our long-term debt. The following table presents our capital resources (in millions, except percentages):
As of
June 30, December 31,
2021 2020 $ Change % Change
Working capital $ 955.2 $ 1,110.1 $ (154.9) (14) %
Cash and cash equivalents $ 986.7 $ 1,361.9 $ (375.2) (28) %
Short-term investments 335.5 412.1 (76.6) (19) %
Long-term investments 493.2 656.6 (163.4) (25) %
Total cash, cash equivalents, and investments 1,815.4 2,430.6 (615.2) (25) %
Short-term portion of long-term debt - 421.5 (421.5) (100) %
Long-term debt 1,694.4 1,705.8 (11.4) (1) %
Cash, cash equivalents, and investments, net of debt
303.3 $ (182.3) (60) %
© Edgar Online, source
