Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774)
today announced its full year ("FY2009") and 4th quarter ("4Q09")
consolidated financial results for fiscal year ended March 31,
2010.
1
Highlights of Full FY2009 Financial Results
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Revenues were JPY68,006 million ($728.1 million), down 2.5% YoY.
While connectivity and outsourcing service grew steadily, systems
integration revenue was heavily affected by the decrease in IT
related investments in Japan.
-
Operating income was JPY3,412 million ($36.5 million), up 16.9%
YoY, mainly due to the increase in connectivity and outsourcing
service gross margin and the decrease in administrative expenses.
Operating loss related to the ATM operation business was JPY1,000
million ($10.7 million).
-
Net income attributable to IIJ2 was JPY2,234 million
($23.9 million), up 57.4% YoY.
-
FY2009 year-end cash dividend forecast was revised from JPY1,000
to JPY1,250 per share of common stock (FY2009 total dividend of
JPY2,250, up from JPY2,000 as previously planned).
Highlights of Fourth Quarter FY2009 Financial
Results
-
Revenues were JPY19,694 million ($210.9 million), up 4.0% YoY.
Systems construction revenues increased due to seasonal factors and
outsourcing service continuously increased YoY, respectively.
-
Operating income was JPY1,404 million ($15.0 million), up 30.9%
YoY, mainly due to the increase in SI gross margin and the decrease
in administrative expenses.
-
Net income attributable to IIJ was JPY1,101 million ($11.8
million), up 3.4% YoY.
Financial Targets for FY2010
-
IIJ targets revenues of JPY71.0 billion, operating income of
JPY4.3 billion, income before income tax expense
(benefit)2 of JPY3.7 billion and net
income attributable to IIJ of JPY2.6 billion for FY2010.
-
IIJ targets cash dividend of JPY2,500 per share of common stock
for FY2010 (JPY1,250 for interim-period cash dividend and JPY1,250
for fiscal year-end cash dividend)
1 Unless otherwise stated, all financial figures
discussed in this announcement are prepared in accordance with U.S.
GAAP. All financial figures are unaudited and consolidated. The
translation of Japanese yen into U.S. dollars is solely for the
convenience of readers outside of Japan. The rate used for the
translation was JPY93.40 per US$1.00, which was the noon buying
rate on March 31, 2010.
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2 Effective April 1, 2009, we have adopted ASC810,
"Consolidations".
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Overview of Full FY2009 Financial Results and Business
Outlook
"It has been truly a tough year for us with the drop in Japanese
IT investments heavily affecting our revenue," said Koichi Suzuki,
President and CEO of IIJ. "Yet, amid the tough economic situation,
we have exceeded our full year profit target," continued
Suzuki.
"Recurring revenue steadily increased YoY followed by the
continuous demands for outsourcing services for cost reduction
purposes. The increase in contracted number of over Gbps
connectivity is also a supporting fact that demands for higher
bandwidth connectivity remains. Additionally, our continuous effort
for cost reduction has resulted in the improvement in
profitability. Accordingly, despite the weak Japanese economy, our
profit exceeded our full year target. We have also raised our
FY2009 year-end cash dividend to JPY1,250 from JPY1,000 per share
of common stock in response to our business results.
"We have also made achievements in the Group business strategy.
We've merged two of our 100% consolidated subsidiary, which mainly
provides SI, on April 1, 2010 to operate the Group more efficiently
as well as to seize opportunities to further enhance our business
in the IT service market. This merger will allow us to combine and
strengthen our network service and SI business structure.
"As for our FY2010 business environment, although how strongly
the SI revenues will return is still uncertain, we are seeing signs
of recovery in systems construction along with the slow but
recovering economy. We believe Japanese companies have been
refraining from IT investment for more than enough time and that
they will eventually need to start investing in order for them to
maintain competitiveness. Our new cloud computing service "IIJ GIO"
is also starting up well and are expected to contribute to revenue
in the coming fiscal year. And of course, demands for higher
bandwidth connectivity and outsourcing services remain. There are
positive factors for our future business outlook.
"For our ATM operation business, it is currently in its
starting-up phase. We are propelling to start-up a business,
similar to Seven Bank's ATM operation business, and we target to
reach break even at some point during the later half of
FY2010."
Full FY2009 Financial Results Summary
Operating Results Summary
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FY2008
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FY2009
|
YoY %
change
|
|
JPY millions
|
JPY millions
|
|
Total Revenues
|
69,731
|
68,006
|
(2.5%)
|
Connectivity and Outsourcing Services
|
35,076
|
36,972
|
5.4%
|
SI
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33,647
|
30,071
|
(10.6%)
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Equipment Sales
|
985
|
756
|
(23.2%)
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ATM Operation Business
|
23
|
207
|
781.2%
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Total Costs
|
56,146
|
54,050
|
(3.7%)
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Connectivity and Outsourcing Services
|
29,318
|
30,533
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4.1%
|
SI
|
25,543
|
21,904
|
(14.2%)
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Equipment Sales
|
863
|
649
|
(24.8%)
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ATM Operation Business
|
422
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964
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128.2%
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SG&A Expenses and
R&D
|
10,668
|
10,544
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(1.2%)
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Operating Income
|
2,917
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3,412
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16.9%
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Income before Income Tax Expense
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2,034
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2,859
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40.5%
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Net income attributable to IIJ
|
1,419
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2,234
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57.4%
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Segment Summary
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FY2008
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FY2009
|
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JPY millions
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JPY millions
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Net Revenues
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69,731
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68,006
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Network services and SI business
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69,961
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68,228
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ATM operation business
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23
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207
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Elimination
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253
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429
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Operating Income (Loss)
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2,917
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3,412
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Network service and SI business
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3,663
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4,435
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ATM operation business
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(705)
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(1,001)
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Elimination
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41
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22
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We have omitted segment analysis because most of our revenues
are dominated by Network services and systems integration
business.
Full FY2009 Financial Results
Revenues
Revenues were JPY68,006 million, down 2.5% YoY.
Connectivity and Outsourcing Services revenue were
JPY36,972 million, up 5.4% YoY. Connectivity service for corporate
use increased by 5.4% YoY. While over 1Gbps IP reached 125
contracts at the end of FY2009 driven by demands for higher
bandwidth, revenues for IP connectivity service slightly decreased
YoY as a result of the decrease in volume charge revenue in 4Q09.
For IIJ Mobile service, it steadily increased throughout the year
contributing to total revenue, increasing by 120.9% YoY.
For connectivity service for home use, revenue increased by 4.8%
YoY. The shift from ADSL to optical fiber and the increase in
mobile data communication service contributed to the total
growth.
For outsourcing services, each service line-ups, such as "IIJ
SecureMX Service" of email related services and "IIJ Secure Web
Gateway Service", increased steadily contributing to the 5.7% YoY
growth in outsourcing service revenues. "IIJ Secure Web Gateway
Service" prevents virus infection through a web browser and also
prevents information leakage.
Contracts for mobile data communication service reached over
40,000 contracts compared to approximately 23,000 contracts as of
March 2009.
SI revenues were JPY30,071 million, down 10.6% YoY.
Heavily affected by the weak Japanese economy, systems construction
revenues decreased by 22.5% YoY to JPY11,354 million. Systems
operation and maintenance revenues decreased by 1.4% YoY to
JPY18,717 million affected by cost down pressure from large
accounts and by the decrease in numbers of new engagements for
systems construction.
The order backlog for systems construction and equipment sales
was JPY3,164 million, up 10.5% YoY and order backlog for systems
operation and maintenance was JPY10,395 million, down 13.4% YoY as
of March 31, 2010, respectively.
Equipment sales revenues were JPY756 million, down 23.2%
YoY.
ATM Operation Business revenues were JPY207 million compared to
JPY23 million in FY2008.
Cost and expense
Cost of revenues was JPY54,050 million, down 3.7% YoY.
Cost of Connectivity and Outsourcing Services revenue was
JPY30,533 million, up 4.1% YoY as outsourcing related costs,
network operation related costs and personnel related costs
increased, respectively along with the increase in revenue.
Backbone cost was JPY3,699 million, up 0.2% YoY. Gross margin was
JPY6,439 million, up 11.8% YoY and gross margin ratio was 17.4%, up
1.0% YoY.
Cost of SI revenues was JPY21,904 million, down 14.2%
YoY. Outsourcing related costs largely decreased as a result of
reduction of full-time outsourcing personnel. Purchasing cost also
decreased along with the decrease in systems construction revenues.
Gross margin was JPY8,167 million, up 0.8% YoY and gross margin
ratio was 27.2%, up 3.1% YoY.
Cost of Equipment Sales revenues was JPY649 million, down
24.8% YoY.
Cost of ATM Operation Business revenues was JPY964
million compared to JPY422 million in FY2008.
Number of Contracts for Connectivity
Services
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as of
March 31, 2009
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as of
March 31, 2010
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YoY
Change
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Connectivity Services (Corporate Use)
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48,802
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63,998
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15,196
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IP Service (-99Mbps)
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938
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926
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(12)
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IP Service (100Mbps-999Mbps)
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225
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254
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29
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IP Service (1Gbps--)
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94
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125
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31
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IIJ Data Center Connectivity Service
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298
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315
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17
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IIJ FiberAccess/F and IIJ DSL/F
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26,023
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28,663
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2,640
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IIJ Mobile Service3
4
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19,698
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32,315
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12,617
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Others
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1,526
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1,400
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(126)
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Connectivity Services (Home Use)
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443,412
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400,667
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(42,745)
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Under IIJ Brand
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46,901
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46,900
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(1)
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hi-ho
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179,786
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168,223
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(11,563)
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OEM
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216,725
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185,544
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(31,181)
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Total Contracted Bandwidth
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530.5 Gbps
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650.4 Gbps
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119.9 Gbps
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Connectivity and Outsourcing Services Revenues
Breakdown
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FY2008
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FY2009
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YoY %
change
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JPY millions
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JPY millions
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Connectivity Service (Corporate Use)
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13,142
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13,847
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5.4%
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IP
Service5
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9,275
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9,214
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(0.7%)
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IIJ FiberAccess/F and IIJ DSL/F
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2,894
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2,948
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1.8%
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IIJ Mobile Service6
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631
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1,395
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120.9%
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Others
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342
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290
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(15.1%)
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Connectivity Service (Home Use)
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6,538
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6,854
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4.8%
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Under IIJ Brand
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1,009
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1,034
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2.5%
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hi-ho
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4,971
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5,254
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5.7%
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OEM
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558
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566
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1.4%
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Outsourcing Services
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15,396
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16,271
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5.7%
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Total Connectivity and Outsourcing Services
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35,076
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36,972
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5.4%
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3 Contracts of IIJ Mobile Service are of mobile data
communication service for corporate use.
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4 The contract number of IIJ Mobile Service as of
December 2009 (35,357 contracts, announced on February 12, 2010)
were miscalculated by including the contract number for mobile data
communication service for home use. The correct contract number of
IIJ Mobile Service as of December 2009 is 29,209 contracts.
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5 IP Service revenues include revenues from the Data
Center Connectivity Service.
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6 Revenue from mobile data communication service for
home use is included in Connectivity service (home use).
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SG&A Expenses and R&D
Sales and marketing expenses were JPY5,405 million, up
16.7% YoY. There were increase in personnel related expenses and
depreciation related to the new back-office system which began its
operation during FY2009.
General and administrative expenses were JPY4,826
million, down 14.2% YoY, largely due to the decrease of outsourcing
related expenses and general expenses as a result of tight cost
control.
Research and development expenses were JPY313 million,
down 24.6% YoY.
Operating income
Operating income was JPY3,412 million, up 16.9% YoY. While
operating loss related to the ATM operation business increased,
gross margin of connectivity and outsourcing service increased and
general and administrative expenses decreased.
Other income (expenses)
Other income (expenses) was net other expenses of JPY553 million
compared to net other expenses of JPY883 million in FY2008 as
impairment losses on equity securities and interest expense
decreased compared to FY2008.
Income before income tax expenses
Income before income tax expenses was JPY2,859 million, up 40.5%
YoY.
Net Income
Income tax expense was JPY1,132 million compared to JPY1,003
million in FY2008. Deferred tax expenses was JPY756 million
compared to JPY637 million in FY2008.
Equity in net income of equity method investees was JPY159
million compared to JPY35 million in FY2008.
Net income was JPY1,886 million, up 76.8% YoY.
Net income attributable to IIJ
Net loss attributable to noncontrolling interests was JPY348
million compared to JPY352 million in FY2008, both related to GDX
Japan Inc. and Trust Networks Inc.
Net income attributable to IIJ was JPY2,234 million, up 57.4%
YoY.
Full FY2009 Financial Condition
Balance Sheets
As of March 31, 2010, the balance of total assets was JPY51,115
million, a decrease of JPY1,186 million from the balance as of
March 31, 2009.
For current assets, as compared to each of the respective
balances as of March 31, 2009, cash and cash equivalents decreased
by JPY1,423 million and accounts receivables increased by JPY1,140
million. As for current liabilities, as compared to each of the
respective balances as of March 31, 2009, short-term borrowings
decreased by JPY2,900 million, accounts payable increased by JPY903
million and current capital lease obligations decreased by JPY543
million. Noncurrent capital lease obligations decreased by JPY1,208
million.
The balance of other investments as of March 31, 2010 was
JPY2,582 million, an increase of JPY667 million from the balance as
of March 31, 2009. The breakdown of other investments were JPY1,447
million in nonmarketable equity securities, JPY867 million in
available-for-sale securities and JPY268 million in other.
As of March 31, 2010, the balance of non-amortized intangible
assets (excluding telephone rights) such as goodwill was JPY2,831
million and the balance of amortized intangible assets was JPY2,618
million. The breakdown of non-amortized intangible assets were
JPY2,639 million in goodwill and JPY192 million in trademark. The
breakdown of amortized intangible assets were JPY2,520 million in
customer relationships and JPY98 million in licenses.
Total IIJ shareholders' equity as of March 31, 2010 was
JPY27,320 million, an increase of JPY2,150 million from the balance
as of March 31, 2009. IIJ Shareholders' equity ratio (IIJ
shareholders' equity/total assets) as of March 31, 2010 was 53.4%,
up 5.3 points compared to March 31, 2009.
Cash Flows
Cash and cash equivalents as of March 31, 2010 were JPY8,764
million compared to JPY10,188 million as of March 31, 2009.
Net cash provided by operating activities for FY2009 was
JPY9,621 million compared to net cash provided by operating
activities of JPY8,631 million for FY2008. While operating income
increased mainly due to the increase in gross margin from
connectivity and outsourcing service and the decrease in general
and administrative expenses, there were changes in operating assets
and liabilities during FY2009. The changes in operating assets and
liabilities mainly resulted from the increase in accounts
receivables of JPY1,179 million (decrease of JPY1,947 million for
FY2008), decrease in inventories and prepaid expenses of JPY486
million (decrease of JPY467 million for FY2008) and increase in
accounts payable of JPY809 million (decrease of JPY2,005 million
for FY2008).
Net cash used in investing activities for FY2009 was
JPY3,788 million compared to net cash used in investing activities
of JPY3,328 million for FY2008, mainly due to payment of JPY3,254
million for the purchase of property and equipment (payment of
JPY2,991 million for FY2008) and the purchase of other investments
of JPY875 million (purchase of JPY175 million for FY2008).
Net cash used in financing activities for FY2009 was
JPY7,238 million compared to net cash used in financing activities
of JPY6,573 million for FY2008, mainly due to principal payments
under capital leases of JPY4,083 million (payment of JPY3,954
million for FY2008), net repayment of short-term borrowings of
JPY2,900 million (net repayment of JPY1,800 million for FY2008) and
payments of JPY405 million for FY2008 year-end dividends and FY2009
interim period dividends.
Reconciliation of Non-GAAP Financial
Measures
The following table summarizes the reconciliation of adjusted
EBITDA to net income attributable to IIJ in our consolidated
statements of income that are prepared in accordance with U.S.
GAAP.
Adjusted EBITDA
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FY2008
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FY2009
|
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JPY millions
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JPY millions
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Adjusted EBITDA
|
8,348
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8,718
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Depreciation and Amortization 7
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(5,431)
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(5,306)
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Operating Income
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2,917
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3,412
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Other Income (Expense)
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(883)
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(553)
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Income Tax Expense
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1,003
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1,132
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Equity in Net Income of Equity
Method Investees
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35
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159
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Net income
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1,067
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1,886
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Net loss attributable to
noncontrolling interests
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352
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348
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Net Income attributable to IIJ
|
1,419
|
2,234
|
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CAPEX
|
|
|
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FY2008
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FY2009
|
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JPY millions
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JPY millions
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CAPEX, including capital leases
|
7,006
|
5,584
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Acquisition of Assets by Entering into
Capital Leases
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4,015
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2,330
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Purchase of Property and Equipment
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2,991
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3,254
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7 Depreciation and amortization includes impairment
loss on other intangible assets. (See IIJ's consolidated financial
statements for details).
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FY2010 Financial Targets (announced on May 14,
2010)
Our targets for the fiscal year ending March 31, 2011 are as
follows:
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(JPY in millions)
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Revenues
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Operating
Income
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Income before
Income Tax Expense (Benefit)
|
Net Income
attributable to IIJ
|
1H FY2010
|
32,300
|
1,200
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1,100
|
800
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Full FY2010
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71,000
|
4,300
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3,700
|
2,600
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We target revenue of JPY71,000 million (up 4.4% YoY), operating
income of JPY4,300 million (up 26.0% YoY), income before income tax
expense (benefit) of JPY3,700 million (up 29.4% YoY) and net income
attributable to IIJ of JPY2,600 million (up 16.4% YoY) for the full
FY2010 financial targets.
We expect our connectivity and outsourcing service revenues, a
recurring revenue, to continue to increase steadily along with its
ordinary course of growth. As for the systems integration, while
demands are expected to increase, the full recover of IT
investments are still uncertain, and because the order backlog for
systems operation and maintenance as of March 2010 decreased by
JPY1,613 million YoY as a result of a size-down in a certain
contracted account, we expect systems integration revenue to
decrease compared to FY2009. As for the ATM operation business
which is in its business start-up phase, while we target to reach
break even at some point during the later half of FY2010, we expect
operating loss of around JPY400 million related to this business
for FY2010.
Presentation
Presentation Materials will be posted on our web site
(http://www.iij.ad.jp/en/IR/) on May 14, 2010.
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access
and comprehensive network solutions providers. IIJ and its group of
companies provide total network solutions that mainly cater to
high-end corporate customers. IIJ's services include high-quality
systems integration and security services, Internet access,
hosting/housing, and content design. Moreover, IIJ has built one of
the largest Internet backbone networks in Japan, and between Japan
and the United States. IIJ was listed on the U.S. NASDAQ Stock
Market in 1999 and on the First Section of the Tokyo Stock Exchange
in 2006.
The Internet Initiative Japan Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4613
Statements made in this press release regarding IIJ's or
management's intentions, beliefs, expectations, or predictions for
the future are forward-looking statements that are based on IIJ's
and managements' current expectations, assumptions, estimates and
projections about its business and the industry. These
forward-looking statements, such as statements regarding FY2008
revenues and operating and net profitability, are subject to
various risks, uncertainties and other factors that could cause
IIJ's actual results to differ materially from those contained in
any forward-looking statement. These risks, uncertainties and other
factors include: IIJ's ability to maintain and increase revenues
from higher-margin services such as systems integration and
outsourcing services; the possibility that revenues from
connectivity services may decline substantially as a result of
competition and other factors; the ability to compete in a rapidly
evolving and competitive marketplace; the impact on IIJ's profits
of fluctuations in costs such as backbone costs and subcontractor
costs; the impact on IIJ's profits of fluctuations in the price of
available-for-sale securities; the impact of technological changes
in its industry; IIJ's ability to raise additional capital to cover
its indebtedness; the possibility that NTT, IIJ's largest
shareholder, may decide to exercise substantial influence over IIJ;
and other risks referred to from time to time in IIJ's filings on
Form 20-F of its annual report and other filings with the United
States Securities and Exchange Commission.
Internet Initiative Japan Inc.
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Consolidated Balance Sheets (Unaudited)
|
(As of March 31, 2009 and March 31, 2010)
|
|
|
|
|
|
|
|
As of March 31, 2009
|
As of March 31, 2010
|
|
Thousands of
JPY
|
%
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
%
|
ASSETS
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
Cash and cash equivalents
|
10,187,724
|
|
93,838
|
8,764,415
|
|
Accounts receivable, net of allowance for
doubtful accounts of JPY 22,072 thousand and
JPY 37,178 thousand at March 31, 2009
and March 31, 2010, respectively
|
10,256,527
|
|
122,019
|
11,396,597
|
|
Inventories
|
529,756
|
|
8,649
|
807,803
|
|
Prepaid expenses
|
1,771,955
|
|
17,056
|
1,593,000
|
|
Deferred tax assets —Current
|
762,221
|
|
16,817
|
1,570,746
|
|
Other current assets, net of allowance for
doubtful accounts of JPY 11,720 thousand and
JPY 720 thousand at March 31, 2009 and
March 31, 2010, respectively
|
848,586
|
|
8,159
|
762,081
|
|
Total current assets
|
24,356,769
|
46.6
|
266,538
|
24,894,642
|
48.7
|
INVESTMENTS IN EQUITY METHOD INVESTEES
|
947,626
|
1.8
|
12,113
|
1,131,354
|
2.2
|
OTHER INVESTMENTS
|
1,914,594
|
3.7
|
27,640
|
2,581,610
|
5.1
|
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of JPY 16,444,517
thousand and JPY 17,653,271 thousand at March
31, 2009 and March 31, 2010, respectively
|
13,172,891
|
25.2
|
138,867
|
12,970,152
|
25.4
|
GOODWILL
|
2,639,319
|
5.0
|
28,258
|
2,639,319
|
5.2
|
OTHER INTANGIBLE ASSETS —Net
|
3,201,806
|
6.1
|
30,184
|
2,819,187
|
5.5
|
GUARANTEE DEPOSITS
|
2,072,652
|
4.0
|
21,455
|
2,003,862
|
3.9
|
Deferred tax assets —Noncurrent
|
2,253,464
|
4.3
|
7,338
|
685,370
|
1.3
|
OTHER ASSETS, net of allowance for doubtful
accounts of JPY72,800 thousand and JPY91,319
thousand at March 31, 2009 and March 31, 2010,
respectively, and net of loan loss valuation
allowance of JPY 16,701thousand at March 31,
2009 and March 31 2010, respectively
|
1,742,078
|
3.3
|
14,882
|
1,389,954
|
2.7
|
TOTAL
|
52,301,199
|
100.0
|
547,275
|
51,115,450
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009
|
As of March 31, 2010
|
|
Thousands of
JPY
|
%
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
%
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Short-term borrowings
|
7,350,000
|
|
47,644
|
4,450,000
|
|
Capital lease obligations —current portion
|
3,272,257
|
|
29,226
|
2,729,673
|
|
Accounts payable
|
6,064,829
|
|
74,600
|
6,967,654
|
|
Accrued expenses
|
1,069,310
|
|
12,682
|
1,184,483
|
|
Accrued retirement and pension costs —current
|
11,959
|
|
156
|
14,539
|
|
Deferred income
|
1,255,749
|
|
15,473
|
1,445,174
|
|
Other current liabilities
|
763,544
|
|
9,875
|
922,345
|
|
Total current liabilities
|
19,787,648
|
37.8
|
189,656
|
17,713,868
|
34.7
|
CAPITAL LEASE OBLIGATIONS —Noncurrent
|
4,866,120
|
9.3
|
39,161
|
3,657,657
|
7.2
|
ACCRUED RETIREMENT AND PENSION COSTS
—Noncurrent
|
1,399,592
|
2.7
|
13,941
|
1,302,054
|
2.5
|
OTHER NONCURRENT LIABILITIES
|
1,004,920
|
1.9
|
11,544
|
1,078,168
|
2.1
|
Total Liabilities
|
27,058,280
|
51.7
|
254,302
|
23,751,747
|
46.5
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY:
|
|
|
|
|
|
Common-stock—authorized, 377,600 shares;
issued and outstanding, 206,478 shares at
March 31, 2009 and March 31, 2010
|
16,833,847
|
32.2
|
180,234
|
16,833,847
|
32.9
|
Additional paid-in capital
|
27,611,737
|
52.8
|
293,829
|
27,443,600
|
53.7
|
Accumulated deficit
|
(18,549,142)
|
(35.5)
|
(179,016)
|
(16,720,092)
|
(32.7)
|
Accumulated other comprehensive income (loss)
|
(320,711)
|
(0.6)
|
1,807
|
168,769
|
0.3
|
Treasury stock—3,934 shares held by
the company at March 31, 2009 and March 31, 2010
|
(406,547)
|
(0.8)
|
(4,353)
|
(406,547)
|
(0.8)
|
Total Internet Initiative Japan Inc. shareholders' equity
|
25,169,184
|
48.1
|
292,501
|
27,319,577
|
53.4
|
NONCONTROLLING INTERESTS
|
73,735
|
0.2
|
472
|
44,126
|
0.1
|
Total equity
|
25,242,919
|
48.3
|
292,973
|
27,363,703
|
53.5
|
TOTAL
|
52,301,199
|
100.0
|
547,275
|
51,115,450
|
100.0
|
|
|
|
|
|
|
(Note1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate in
New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note 2) The above presentation as of March 31, 2009 has been
changed to conform to the presentation as of March 31, 2010.
|
|
Internet Initiative Japan Inc.
|
Consolidated Statements of Income
(Unaudited)
|
(For the fiscal year ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31, 2009
|
Fiscal Year Ended
March 31, 2010
|
|
Thousands of
JPY
|
% of total
revenues
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
% of total
revenues
|
REVENUES:
|
|
|
|
|
|
Connectivity and outsourcing services:
|
|
|
|
|
|
Connectivity (corporate use)
|
13,142,393
|
|
148,256
|
13,847,116
|
|
Connectivity (home use)
|
6,537,370
|
|
73,386
|
6,854,258
|
|
Outsourcing services
|
15,395,833
|
|
174,210
|
16,271,256
|
|
Total
|
35,075,596
|
|
395,852
|
36,972,630
|
|
Systems integration:
|
|
|
|
|
|
Systems Construction
|
14,658,502
|
|
121,559
|
11,353,598
|
|
Systems Operation and Maintenance
|
18,988,595
|
|
200,396
|
18,716,978
|
|
Total
|
33,647,097
|
|
321,955
|
30,070,576
|
|
Equipment sales
|
984,585
|
|
8,100
|
756,517
|
|
ATM operation business
|
23,452
|
|
2,213
|
206,657
|
|
Total revenues
|
69,730,730
|
100.0
|
728,120
|
68,006,380
|
100.0
|
COST AND EXPENSES:
|
|
|
|
|
|
Cost of connectivity and outsourcing services
|
29,317,645
|
|
326,914
|
30,533,726
|
|
Cost of systems integration
|
25,542,758
|
|
234,515
|
21,903,699
|
|
Cost of equipment sales
|
863,031
|
|
6,952
|
649,315
|
|
Cost of ATM operation business
|
422,285
|
|
10,320
|
963,862
|
|
Total cost
|
56,145,719
|
80.5
|
578,701
|
54,050,602
|
79.5
|
Sales and marketing
|
4,630,579
|
6.6
|
57,870
|
5,405,075
|
7.9
|
General and administrative
|
5,621,870
|
8.1
|
51,670
|
4,826,006
|
7.1
|
Research and development
|
415,180
|
0.6
|
3,352
|
313,112
|
0.5
|
Total cost and expenses
|
66,813,348
|
95.8
|
691,593
|
64,594,795
|
95.0
|
OPERATING INCOME
|
2,917,382
|
4.2
|
36,527
|
3,411,585
|
5.0
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
Interest income
|
45,153
|
|
307
|
28,691
|
|
Interest expense
|
(408,152)
|
|
(3,279)
|
(306,208)
|
|
Foreign exchange losses
|
(28,515)
|
|
(4)
|
(395)
|
|
Net gains on sales of other investments
|
15,631
|
|
530
|
49,512
|
|
Losses on write-down of other investments
|
(524,287)
|
|
(3,670)
|
(342,796)
|
|
Other—net
|
17,276
|
|
200
|
18,673
|
|
Other expense — net
|
(882,894)
|
(1.3)
|
(5,916)
|
(552,523)
|
(0.8)
|
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN
NET INCOME
OF EQUITY METHOD INVESTEES
|
2,034,488
|
2.9
|
30,611
|
2,859,062
|
4.2
|
INCOME TAX EXPENSE
|
1,002,711
|
1.4
|
12,121
|
1,132,093
|
1.7
|
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES
|
35,099
|
0.0
|
1,707
|
159,423
|
0.3
|
NET INCOME
|
1,066,876
|
1.5
|
20,197
|
1,886,392
|
2.8
|
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
352,428
|
0.5
|
3,723
|
347,746
|
0.5
|
NET INCOME ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC.
|
1,419,304
|
2.0
|
23,920
|
2,234,138
|
3.3
|
|
|
|
|
|
|
|
Fiscal Year Ended
March 31, 2009
|
Fiscal Year Ended
March 31, 2010
|
NET INCOME PER SHARE
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares)
|
205,165
|
|
202,544
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares)
|
205,195
|
|
202,544
|
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs)
|
82,065,978
|
|
81,017,600
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs)
|
82,077,978
|
|
81,017,600
|
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY)
|
6,917.87
|
118.10
|
11,030.38
|
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY)
|
6,916.85
|
118.10
|
11,030.38
|
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY)
|
17.29
|
0.30
|
27.58
|
DILUTED NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY)
|
17.29
|
0.30
|
27.58
|
|
|
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate in
New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note2) The above presentation for the fiscal year ended March
31, 2009 has been changed to conform to the presentation
for the fiscal year ended March 31, 2010.
|
|
Internet Initiative Japan Inc.
|
Consolidated Statements of Shareholders' Equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(For the fiscal year ended March 31, 2008 and March 31,
2009)
|
|
|
|
|
|
(Thousands of JPY)
|
|
|
|
Internet Initiative Japan Inc. shareholders' equity
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Total
equity
|
Comprehensive
income
(loss)
|
Accumulated deficit
|
Accumulated other comprehensive income (loss)
|
Shares of
Common
Stock
Outstanding
|
Treasury
Stock
|
Additional
Paid-in
Capital
|
NON-CONTROLLING INTERESTS
|
BALANCE, APRIL 1, 2008
|
25,274,815
|
|
(19,555,489)
|
90,618
|
16,833,847
|
―
|
27,611,737
|
294,102
|
Subsidiary stock issuance
|
132,061
|
|
|
|
|
|
|
132,061
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net Income
|
1,066,876
|
1,066,876
|
1,419,304
|
|
|
|
|
(352,428)
|
Other Comprehensive loss, net of tax
|
(411,329)
|
(411,329)
|
|
(411,329)
|
|
|
|
|
Total comprehensive income
|
655,547
|
655,547
|
|
|
|
|
|
|
Payment of dividends
|
(412,957)
|
|
(412,957)
|
|
|
|
|
|
Acquisition of treasury stock
|
(406,547)
|
|
|
|
|
(406,547)
|
|
|
BALANCE, MARCH 31, 2009
|
25,242,919
|
|
(18,549,142)
|
(320,711)
|
16,833,847
|
(406,547)
|
27,611,737
|
73,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(For the fiscal year ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
(Thousands of JPY)
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. shareholders' equity
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Total
equity
|
Comprehensive
income
(loss)
|
Accumulated deficit
|
Accumulated other comprehensive income (loss)
|
Shares of
Common
Stock
Outstanding
|
Treasury
Stock
|
Additional
Paid-in
Capital
|
NON-CONTROLLING INTERESTS
|
BALANCE, APRIL 1, 2009
|
25,242,919
|
|
(18,549,142)
|
(320,711)
|
16,833,847
|
(406,547)
|
27,611,737
|
73,735
|
Subsidiary stock issuance
|
150,000
|
|
|
|
|
|
(168,137)
|
318,137
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net Income
|
1,886,392
|
1,886,392
|
2,234,138
|
|
|
|
|
(347,746)
|
Other Comprehensive income, net of tax
|
489,480
|
489,480
|
|
489,480
|
|
|
|
|
Total comprehensive income:
|
2,375,872
|
2,375,872
|
|
|
|
|
|
|
Payment of dividends
|
(405,088)
|
|
(405,088)
|
|
|
|
|
|
BALANCE, MARCH 31, 2010
|
27,363,703
|
|
(16,720,092)
|
168,769
|
16,833,847
|
(406,547)
|
27,443,600
|
44,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(For the fiscal year ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
(Thousands of U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. shareholders' equity
|
|
|
|
|
|
|
Common Stock
|
|
|
|
Total
equity
|
Comprehensive
income
(loss)
|
Accumulated deficit
|
Accumulated other comprehensive income (loss)
|
Shares of
Common
Stock
Outstanding
|
Treasury
Stock
|
Additional
Paid-in
Capital
|
NON-CONTROLLING INTERESTS
|
BALANCE, APRIL 1, 2009
|
270,266
|
|
(198,599)
|
(3,434)
|
180,234
|
(4,353)
|
295,629
|
789
|
Subsidiary stock issuance
|
1,606
|
|
|
|
|
|
(1,800)
|
3,406
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Net Income
|
20,197
|
20,197
|
23,920
|
|
|
|
|
(3,723)
|
Other Comprehensive income, net of tax
|
5,241
|
5,241
|
|
5,241
|
|
|
|
|
Total comprehensive income:
|
25,438
|
25,438
|
|
|
|
|
|
|
Payment of dividends
|
(4,337)
|
|
(4,337)
|
|
|
|
|
|
BALANCE, MARCH 31, 2010
|
292,973
|
|
(179,016)
|
1,807
|
180,234
|
(4,353)
|
293,829
|
472
|
|
|
|
|
|
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate in
New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note 2) The above presentation for the fiscal year ended March
31, 2009 has been changed to conform to the presentation
for the fiscal year ended March 31, 2010.
|
Internet Initiative Japan Inc.
|
Consolidated Statements of Cash Flows
(Unaudited)
|
(For the fiscal year ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
|
Fiscal Year Ended
March 31, 2009
|
Fiscal Year Ended
March 31, 2010
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
OPERATING ACTIVITIES:
|
|
|
|
Net income
|
1,066,876
|
20,197
|
1,886,392
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
Depreciation and amortization
|
5,317,141
|
56,818
|
5,306,826
|
Impairment loss on other intangible assets
|
113,360
|
--
|
--
|
Provision for retirement and pension costs,
less payments
|
127,662
|
2,419
|
225,915
|
Provision for allowance for doubtful
accounts and advances
|
26,020
|
433
|
40,467
|
Loss on disposal of property and equipment
|
443,019
|
6,843
|
639,160
|
Net gains on sales of other investments
|
(15,631)
|
(530)
|
(49,512)
|
Losses on write-down of other investments
|
524,287
|
3,670
|
342,796
|
Foreign exchange losses
|
9,605
|
162
|
15,116
|
Equity in net income of equity method investees
(net of dividend)
|
(4,719)
|
(1,707)
|
(159,423)
|
Deferred income tax expense
|
636,818
|
8,099
|
756,422
|
Others
|
1,741
|
139
|
13,000
|
Changes in operating assets and liabilities net of effects
from acquisition of business and a company:
|
|
|
|
Decrease (increase) in accounts receivable
|
1,947,490
|
(12,627)
|
(1,179,388)
|
Decrease in inventories, prepaid expenses
and other current and noncurrent assets
|
467,023
|
5,201
|
485,711
|
Increase (decrease) in accounts payable
|
(2,005,074)
|
8,660
|
808,845
|
Increase (decrease) in income taxes payable
|
(188,517)
|
1,026
|
95,819
|
Increase in accrued expenses, other
current and noncurrent liabilities
|
163,768
|
4,207
|
392,948
|
Net cash
provided by operating activities
|
8,630,869
|
103,010
|
9,621,094
|
INVESTING ACTIVITIES:
|
|
|
|
Purchase of property and equipment
|
(2,991,378)
|
(34,835)
|
(3,253,629)
|
Proceeds from sales of property and equipment
|
--
|
2,201
|
205,548
|
Purchase of available-for-sale securities
|
(187,516)
|
(784)
|
(73,236)
|
Purchase of short-term and other investments
|
(175,264)
|
(9,369)
|
(875,016)
|
Investment in equity method investee
|
--
|
(244)
|
(22,834)
|
Proceeds from sales of available-for-sale securities
|
3,417
|
1,326
|
123,880
|
Proceeds from sales and redemption of short-term and
other investments
|
111,509
|
838
|
78,250
|
Payments of guarantee deposits
|
(109,929)
|
(898)
|
(83,833)
|
Refund of guarantee deposits
|
66,124
|
1,372
|
128,192
|
Payments for refundable insurance policies
|
(52,364)
|
(589)
|
(55,020)
|
Refund from insurance policies
|
7,382
|
428
|
39,959
|
Other
|
(53)
|
--
|
--
|
Net cash used in investing
activities
|
(3,328,072)
|
(40,554)
|
(3,787,739)
|
|
|
|
|
Fiscal Year Ended
March 31, 2009
|
Fiscal Year Ended
March 31, 2010
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
FINANCING ACTIVITIES:
|
|
|
|
Proceeds from issuance of short-term borrowings
with initial maturities over three months
|
10,750,000
|
64,240
|
6,000,000
|
Repayments of short-term borrowings with initial
maturities over three months and long-term borrowings
|
(12,125,000)
|
(118,844)
|
(11,100,000)
|
Principal payments under capital leases
|
(3,953,833)
|
(43,714)
|
(4,082,908)
|
Net increase (decrease) in short-term borrowings with
initial
maturities less than three months
|
(425,000)
|
23,554
|
2,200,000
|
Proceeds from issuance of subsidiary stock to
minority shareholders
|
--
|
1,606
|
150,000
|
Dividends paid
|
(412,957)
|
(4,337)
|
(405,088)
|
Payments for acquisition of treasury stock
|
(406,547)
|
--
|
--
|
Net cash used in financing activities
|
(6,573,337)
|
(77,495)
|
(7,237,996)
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
|
(12,716)
|
(200)
|
(18,668)
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,283,256)
|
(15,239)
|
(1,423,309)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD
|
11,470,980
|
109,076
|
10,187,724
|
CASH AND CASH EQUIVALENTS, END OF
THE PERIOD
|
10,187,724
|
93,837
|
8,764,415
|
|
|
|
|
ADDITIONAL CASH FLOW INFORMATION:
|
|
|
|
Interest paid
|
408,712
|
3,287
|
307,045
|
Income tax paid
|
774,409
|
1,717
|
160,398
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
Acquisition of assets by entering into capital leases
|
4,014,537
|
24,947
|
2,330,077
|
Facilities purchase liabilities
|
182,564
|
6,733
|
628,905
|
|
|
|
|
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate
in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note 2) The above presentation for the fiscal year ended March
31, 2009 has been changed to conform to the presentation for the
fiscal year ended March 31, 2010.
|
4th Quarter FY2009 Consolidated Financial Results (3
months)
The following tables are highlight data of 4th Quarter FY2009
consolidated financial results (unaudited, from January 1, 2010 to
March 31, 2010).
Operating Results Summary
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
Total Revenues:
|
18,942
|
19,694
|
4.0%
|
Connectivity and Outsourcing Services
|
9,135
|
9,372
|
2.6%
|
SI
|
9,542
|
9,905
|
3.8%
|
Equipment Sales
|
259
|
318
|
22.8%
|
ATM Operation Business
|
6
|
99
|
1491.1%
|
Cost of Revenues:
|
14,891
|
15,358
|
3.1%
|
Connectivity and Outsourcing Services
|
7,466
|
7,655
|
2.5%
|
SI
|
7,039
|
7,152
|
1.6%
|
Equipment Sales
|
224
|
270
|
20.3%
|
ATM Operation Business
|
162
|
281
|
73.5%
|
SG&A Expenses and R&D
|
2,978
|
2,930
|
(1.6%)
|
Operating Income
|
1,073
|
1,404
|
30.9%
|
Income before Income Tax Expense
|
792
|
1,076
|
35.8%
|
Net Income attributable to IIJ
|
1,065
|
1,101
|
3.4%
|
|
Connectivity and Outsourcing Services Revenues Breakdown
and Cost
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
Connectivity and Outsourcing Services
Revenues
|
9,135
|
9,372
|
2.6%
|
Connectivity Service (Corporate Use)
|
3,437
|
3,480
|
1.3%
|
IP Service
|
2,351
|
2,257
|
(4.0%)
|
IIJ FiberAccess/F and IIJ DSL/F
|
736
|
752
|
2.2%
|
IIJ Mobile Service
|
268
|
401
|
49.4%
|
Others
|
81
|
70
|
(14.2%)
|
Connectivity Service (Home Use)
|
1,678
|
1,720
|
2.5%
|
Under IIJ Brand
|
247
|
260
|
5.2%
|
hi-ho
|
1,289
|
1,320
|
2.4%
|
OEM
|
142
|
140
|
(1.3%)
|
Outsourcing Services
|
4,020
|
4,172
|
3.8%
|
Cost of Connectivity and Outsourcing
Services
|
7,466
|
7,655
|
2.5%
|
Backbone Cost (included in the cost
of Connectivity and Outsourcing Service)
|
916
|
954
|
4.2%
|
Connectivity and Outsourcing Services Gross Margin
Ratio
|
18.3%
|
18.3%
|
―
|
|
SI Revenue Breakdown and Cost
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
SI Revenues
|
9,542
|
9,905
|
3.8%
|
Systems Construction
|
4,644
|
5,218
|
12.4%
|
Systems Operation and Maintenance
|
4,898
|
4,687
|
(4.3%)
|
Cost of SI
|
7,039
|
7,152
|
1.6%
|
SI Gross Margin Ratio
|
26.2%
|
27.8%
|
―
|
|
|
|
|
SI and Equipment Sales Order Backlog
|
14,871
|
13,559
|
(8.8%)
|
|
Equipment Sales Revenue and Cost
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
Equipment Sales Revenues
|
259
|
318
|
22.8%
|
Cost of Equipment Sales
|
224
|
270
|
20.3%
|
Equipment Sales Gross Margin Ratio
|
13.4%
|
15.2%
|
―
|
|
ATM Operation Business Revenue and Cost
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
ATM Operation Business Revenues
|
6
|
99
|
1491.1%
|
Cost of ATM Operation Business
|
162
|
281
|
73.5%
|
|
Other Financial Statistics
|
|
4Q08
|
4Q09
|
YoY Change
|
|
JPY millions
|
JPY millions
|
|
Adjusted EBITDA
|
2,550
|
2,776
|
8.9%
|
CAPEX, including capital leases
|
657
|
1,218
|
85.2%
|
Depreciation and amortization 7
|
1,477
|
1,372
|
(7.1%)
|
Reconciliation of Non-GAAP Financial
Measures
The following table summarizes the reconciliation of adjusted
EBITDA to net income in our consolidated statements of income that
are prepared in accordance with U.S. GAAP.
Adjusted EBITDA
|
|
4Q08
|
4Q09
|
|
JPY millions
|
JPY millions
|
Adjusted EBITDA
|
2,550
|
2,776
|
Depreciation and Amortization 7
|
(1,477)
|
(1,372)
|
Operating Income
|
1,073
|
1,404
|
Other Income (Expense)
|
(281)
|
(328)
|
Income Tax Expense
|
(190)
|
90
|
Equity in Net Income (Loss) of Equity
Method Investees
|
(10)
|
32
|
Net income
|
972
|
1,018
|
Net loss attributable to noncontrolling
interests
|
93
|
83
|
Net Income attributable to IIJ
|
1,065
|
1,101
|
7 Depreciation and amortization includes impairment
loss on other intangible assets. (See IIJ's consolidated financial
statements for details).
|
The following table summarizes the reconciliation of capital
expenditures to the purchase of property and equipment in our
consolidated statements of cash flows that are prepared and
presented in accordance with U.S. GAAP.
CAPEX
|
|
4Q08
|
4Q09
|
|
JPY millions
|
JPY millions
|
CAPEX, including capital leases
|
657
|
1,218
|
Acquisition of Assets by Entering into
Capital Leases
|
329
|
767
|
Purchase of Property and Equipment
|
328
|
451
|
|
Internet Initiative Japan Inc.
|
Quarterly Consolidated Statements of Income
(Unaudited)
|
(Three Months ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2009
|
Three Months Ended
March 31, 2010
|
|
Thousands of
JPY
|
% of total
revenues
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
% of total
revenues
|
REVENUES:
|
|
|
|
|
|
Connectivity and outsourcing services:
|
|
|
|
|
|
Connectivity (corporate use)
|
3,436,518
|
|
37,256
|
3,479,668
|
|
Connectivity (home use)
|
1,678,316
|
|
18,419
|
1,720,371
|
|
Outsourcing services
|
4,019,900
|
|
44,669
|
4,172,128
|
|
Total
|
9,134,734
|
|
100,344
|
9,372,167
|
|
Systems integration:
|
|
|
|
|
|
Systems Construction
|
4,644,483
|
|
55,874
|
5,218,612
|
|
Systems Operation and Maintenance
|
4,897,539
|
|
50,177
|
4,686,575
|
|
Total
|
9,542,022
|
|
106,051
|
9,905,187
|
|
Equipment sales
|
258,784
|
|
3,403
|
317,807
|
|
ATM operation business
|
6,187
|
|
1,054
|
98,440
|
|
Total revenues
|
18,941,727
|
100.0
|
210,852
|
19,693,601
|
100.0
|
COST AND EXPENSES:
|
|
|
|
|
|
Cost of connectivity and outsourcing services
|
7,466,183
|
|
81,963
|
7,655,368
|
|
Cost of systems integration
|
7,038,866
|
|
76,579
|
7,152,446
|
|
Cost of equipment sales
|
223,978
|
|
2,884
|
269,369
|
|
Cost of ATM operation business
|
161,698
|
|
3,004
|
280,609
|
|
Total cost
|
14,890,725
|
78.6
|
164,430
|
15,357,792
|
78.0
|
Sales and marketing
|
1,124,574
|
5.9
|
15,817
|
1,477,339
|
7.5
|
General and administrative
|
1,654,402
|
8.7
|
14,796
|
1,381,928
|
7.0
|
Research and development
|
198,986
|
1.1
|
773
|
72,188
|
0.4
|
Total cost and expenses
|
17,868,687
|
94.3
|
195,816
|
18,289,247
|
92.9
|
OPERATING INCOME
|
1,073,040
|
5.7
|
15,036
|
1,404,354
|
7.1
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
Interest income
|
12,611
|
|
115
|
10,701
|
|
Interest expense
|
(98,006)
|
|
(696)
|
(65,036)
|
|
Foreign exchange gains (loss)
|
(18,986)
|
|
36
|
3,409
|
|
Losses on sales of other investments
|
(2,049)
|
|
309
|
28,872
|
|
Losses on write-down of other investments
|
(195,071)
|
|
(3,141)
|
(293,355)
|
|
Other—net
|
20,789
|
|
(140)
|
(13,089)
|
|
Other expense — net
|
(280,712)
|
(1.5)
|
(3,517)
|
(328,498)
|
(1.6)
|
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME
IN EQUITY METHOD INVESTEES
|
792,328
|
4.2
|
11,519
|
1,075,856
|
5.5
|
INCOME TAX EXPENSE (BENEFIT)
|
(189,718)
|
(1.0)
|
962
|
89,902
|
0.5
|
EQUITY IN NET INCOME (LOSS) OF EQUITY
METHOD INVESTEES
|
(10,008)
|
(0.1)
|
345
|
32,259
|
0.2
|
NET INCOME
|
972,038
|
5.1
|
10,902
|
1,018,213
|
5.2
|
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
92,944
|
0.5
|
884
|
82,632
|
0.4
|
NET INCOME ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN INC.
|
1,064,982
|
5.6
|
11,786
|
1,100,845
|
5.6
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2009
|
Three Months Ended
March 31, 2010
|
NET INCOME PER SHARE
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares)
|
202,544
|
|
202,544
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares)
|
202,544
|
|
202,544
|
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs)
|
81,017,600
|
|
81,017,600
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs)
|
81,017,600
|
|
81,017,600
|
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY)
|
5,258.03
|
58.19
|
5,435.09
|
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY)
|
5,258.03
|
58.19
|
5,435.09
|
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY)
|
13.15
|
0.15
|
13.59
|
DILUTED NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY)
|
13.15
|
0.15
|
13.59
|
|
|
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate in
New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note 2) The above presentation for the three months ended March
31, 2009 has been changed to conform to the presentation
for the three months ended March 31, 2010.
|
Internet Initiative Japan Inc.
|
Quarterly Consolidated Statements of Cash Flows
(Unaudited)
|
(Three Months ended March 31, 2009 and March 31,
2010)
|
|
|
|
|
|
Three Months Ended
March 31, 2009
|
Three Months Ended
March 31, 2010
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
OPERATING ACTIVITIES:
|
|
|
|
Net income
|
972,038
|
10,902
|
1,018,213
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
Depreciation and amortization
|
1,476,858
|
14,693
|
1,372,362
|
Reversal of retirement and pension
costs, less payments
|
(67,291)
|
(134)
|
(12,506)
|
Provision for allowance for doubtful
accounts and advances
|
8,268
|
144
|
13,393
|
Loss on disposal of property and equipment
|
279,247
|
6,600
|
616,410
|
Net losses (gains) on sales of other investments
|
2,049
|
(309)
|
(28,872)
|
Losses on write-down of other investments
|
195,071
|
3,141
|
293,355
|
Foreign exchange gains
|
(11,223)
|
(12)
|
(1,097)
|
Equity in net loss (income) of equity method investees
(net of dividend)
|
10,008
|
(345)
|
(32,259)
|
Deferred income tax benefit
|
(335,379)
|
(365)
|
(34,059)
|
Others
|
(231)
|
139
|
13,000
|
Changes in operating assets and liabilities net of effects
from acquisition of business and a company:
|
|
|
|
Increase in accounts receivable
|
(708,788)
|
(30,369)
|
(2,836,491)
|
Decrease in inventories, prepaid expenses
and other current and noncurrent assets
|
1,715,877
|
12,032
|
1,123,824
|
Increase in accounts payable
|
117,161
|
15,823
|
1,477,895
|
Increase in income taxes payable
|
--
|
2,242
|
209,397
|
Increase (decrease) in accrued expenses, other
current and noncurrent liabilities
|
(373,663)
|
1,798
|
167,930
|
Net cash provided by operating activities
|
3,280,002
|
35,980
|
3,360,495
|
INVESTING ACTIVITIES:
|
|
|
|
Purchase of property and equipment
|
(328,364)
|
(4,827)
|
(450,852)
|
Proceeds from sales of property and equipment
|
--
|
292
|
27,278
|
Purchase of available-for-sale securities
|
(87,524)
|
(472)
|
(44,052)
|
Purchase of short-term and other investments
|
(50,000)
|
(6,692)
|
(625,000)
|
Proceeds from sales of available-for-sale securities
|
3,417
|
603
|
56,288
|
Proceeds from sales and redemption of short-term and
other investments
|
62,627
|
230
|
21,426
|
Payments of guarantee deposits
|
(27,025)
|
(252)
|
(23,583)
|
Refund of guarantee deposits
|
38,775
|
679
|
63,442
|
Payments for refundable insurance policies
|
(13,860)
|
(141)
|
(13,154)
|
Other
|
--
|
(16)
|
(1,498)
|
Net cash used in investing activities
|
(401,954)
|
(10,596)
|
(989,705)
|
|
|
|
|
Three Months Ended
March 31, 2009
|
Three Months Ended
March 31, 2010
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
FINANCING ACTIVITIES:
|
|
|
|
Proceeds from issuance of short-term borrowings
with initial maturities over three months
|
250,000
|
2,677
|
250,000
|
Repayments of short-term borrowings with initial
maturities over three months
|
(575,000)
|
(6,960)
|
(650,000)
|
Principal payments under capital leases
|
(1,106,108)
|
(15,255)
|
(1,424,846)
|
Net Increase in short-term borrowings with initial
maturities less than three months
|
(125,000)
|
(2,677)
|
(250,000)
|
Payments for acquisition of treasury stock
|
(105,992)
|
--
|
--
|
Net cash used in financing activities
|
(1,662,100)
|
(22,215)
|
(2,074,846)
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
|
16,329
|
25
|
2,369
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
1,232,277
|
3,194
|
298,313
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD
|
8,955,447
|
90,643
|
8,466,102
|
CASH AND CASH EQUIVALENTS, END OF
THE PERIOD
|
10,187,724
|
93,837
|
8,764,415
|
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.40 which was the noon buying rate
in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New
York prevailing as of March 31, 2010.
|
(Note 2) The above presentation for the three months ended March
31, 2009 has been changed to conform to the presentation
for the three months ended March 31, 2010.
|
Note: The following information is provided to disclose Internet
Initiative Japan Inc. ("IIJ") financial results (unaudited) for the
Fiscal Year Ended March 31, 2010 ("FY2009") in the form defined by
the Tokyo Stock Exchange.
Consolidated Financial Results for the Fiscal Year Ended
March 31, 2010
[Under accounting principles generally accepted in the
United States ("U.S. GAAP")]
May 14, 2010
Company name: Internet Initiative Japan
Inc. Exchange listed: Tokyo
Stock Exchange First Section
Stock code number:
3774
URL: http://www.iij.ad.jp/
Representative: Koichi Suzuki, President and Representative
Director
Contact: Akihisa Watai, Managing Director and
CFO TEL: (03) 5259-6500
Annual general shareholder's meeting: scheduled on June 25,
2010
Payment of dividend: Scheduled to be started on June 28,
2010
Filing of annual report (Yuka-shoken-houkokusho) to the
regulatory organization in Japan: June 28, 2010 (Scheduled)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Fiscal Year
Ended March 31, 2010
(April 1, 2009 to March 31, 2010)
(1) Consolidated Results of Operations
|
|
(% shown is YoY change)
|
|
|
|
|
Total
Revenues
|
Operating
Income
|
Income before Income
Tax Expense
|
Net Income attributable
to IIJ
|
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
Fiscal year ended March 31, 2010
|
68,006
|
(2.5)
|
3,412
|
16.9
|
2,859
|
40.5
|
2,234
|
57.4
|
Fiscal year ended March 31, 2009
|
69,731
|
4.3
|
2,917
|
(38.7)
|
2,034
|
(53.4)
|
1,419
|
(72.6)
|
|
Basic Net Income
attributable
to IIJ per
Share
|
Diluted Net Income
attributable
to IIJ per
Share
|
Shareholders' Equity
Net Income to Total
Shareholders'
Equity
|
Income before
Income Tax
Expense to
Total Assets
|
Total
Revenues
Operating Margin
Ratio
|
|
JPY
|
JPY
|
%
|
%
|
%
|
Fiscal year ended March 31, 2010
|
11,030.38
|
11,030.38
|
8.5
|
5.5
|
5.0
|
Fiscal year ended March 31, 2009
|
6,917.87
|
6,916.85
|
5.7
|
3.8
|
4.2
|
(Reference) Equity in net income of equity method
investees Fiscal year ending March 31, 2010: JPY159
million
Fiscal
year ending March 31, 2009: JPY35 million
(Note) Income before income tax expense represents income from
operations before income tax expense and equity in net income in
equity method investees, respectively, in IIJ's consolidated
financial statements. Additionally, net income attributable to IIJ
is equivalent to net income in the former presentation materials up
to FY2008.
(2) Consolidated Financial Position
|
|
|
|
|
|
Total
Assets
|
Total
Equity
|
Shareholders'
Equity
|
Shareholders' Equity as a
percentage of Total Assets
|
Shareholders' Equity per
share
|
|
JPY millions
|
JPY millions
|
JPY millions
|
%
|
JPY
|
March 31, 2010
|
51,115
|
27,364
|
27,320
|
53.4
|
134,882.18
|
March 31, 2009
|
52,301
|
25,243
|
25,169
|
48.1
|
124,265.27
|
(Note) Shareholders' equity, shareholders' equity as a
percentage of total assets and shareholders' equity per share
represents IIJ Shareholders' equity, IIJ shareholders' equity as a
percentage of total assets and IIJ shareholders' equity per share,
respectively, in IIJ's consolidated financial statements..
(3) Consolidated Cash Flow
|
|
|
|
|
Operating
Activities
|
Investing
Activities
|
Financing
Activities
|
Cash and Cash Equivalents (End of the
Period)
|
|
JPY millions
|
JPY millions
|
JPY millions
|
JPY millions
|
Fiscal year ended March 31, 2010
|
9,621
|
(3,788)
|
(7,238)
|
8,764
|
Fiscal year ended March 31, 2009
|
8,631
|
(3,328)
|
(6,573)
|
10,188
|
2. Dividends
|
Dividend per Shares
|
|
1st quarter-end
|
2nd quarter-end
|
3rd quarter-end
|
Year-end
|
Total
|
|
Yen
|
Yen
|
Yen
|
Yen
|
Yen
|
Fiscal year ended March 31, 2009
|
--
|
1,000.00
|
--
|
1,000.00
|
2,000.00
|
Fiscal year ending March 31, 2010
|
--
|
1,000.00
|
--
|
1,250.00
|
2,250.00
|
Fiscal year ending March 31, 2011 (Target)
|
--
|
1,250.00
|
--
|
1,250.00
|
2,500.00
|
|
Total cash dividends
for the year
|
Payout
Ratio (consolidated)
|
Ratio of Dividends to Shareholder's Equity
(consolidated)
|
|
JPY millions
|
%
|
%
|
Fiscal year ended March 31, 2009
|
409
|
28.9
|
1.6
|
Fiscal year ending March 31, 2010
|
456
|
20.4
|
1.7
|
Fiscal year ending March 31, 2011 (Target)
|
|
19.5
|
|
3. Target of Consolidated Financial Results for the
Fiscal Year Ending March 31, 2011
(April 1, 2010 through March 31,
2011)
|
|
|
|
(% shown is YoY change)
|
|
Total Revenues
|
Operating Income
|
Income before Income Tax Expense (Benefit)
|
Net Income Attributable to IIJ
|
Basic Net Income attributable to IIJ per Share
|
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY
|
Interim Period Ending September 30, 2009
|
32,300
|
0.1
|
1,200
|
2.9
|
1,100
|
7.3
|
800
|
11.8
|
3,949.76
|
Fiscal year ending March 31, 2009
|
71,000
|
4.4
|
4,300
|
26.0
|
3,700
|
29.4
|
2,600
|
16.4
|
12,836.72
|
4. Others
(1) Change of Condition in Consolidated Subsidiaries during the
fiscal year ended March 31, 2010
(Change of Condition in Specific Consolidated Subsidiaries with
a Change of Scope of Consolidation): None
Newly Established
(Name: )
Excluded
(Name:
)
(2) Changes in Significant Accounting and Reporting Policies for
Consolidated Financial Statements
1) Changes due to the revision of
accounting standards: Yes
2) Others: None
(3) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding
(inclusive of treasury stock):
As of March 31, 2010: 206,478 shares
As of March 31, 2009: 206,478 shares
2) The number of treasury
stock:
As of March 31, 2010: 3,934 shares
As of March 31, 2009: 3,934 shares
3) The weighted average number of
shares outstanding:
As of March 31, 2010: 202,544 shares
As of March 31, 2009: 205,165 shares
CONTACT: Internet Initiative Japan Inc.
IIJ Investor Relations Office
Yuko Kazama
+81-3-5259-6500
ir@iij.ad.jp
http://www.iij.ad.jp/en/IR
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