Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774)
today announced its consolidated financial results for the first
six months of the fiscal year ending March 31, 2014 (from April 1,
2013 to September 30, 2013, "1H FY2013," "1H13").1
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Highlights of 1H FY2013
Financial Results |
|
|
|
|
|
Revenues |
JPY54,397 million |
($553 million, up 6.4% YoY) |
Operating Income |
JPY3,009 million |
($31 million, down 7.8% YoY) |
Net Income attributable to IIJ |
JPY2,205 million |
($22 million, up 9.9% YoY) |
|
|
|
▪ 1H13 revenues increased by
6.4% YoY due to the revenue growth in network services, systems
integration and ATM operation business. |
|
|
▪ 1H13 operating income
decreased by 7.8% YoY mainly due to the increase in SG&A
expenses along with business expansion. |
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▪ 1H13 net
income attributable to IIJ increased by 9.9% YoY due to the
increase in non-operating income. |
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Overview of 1H FY2013 Financial Results and Business
Outlook
"Overall, our surrounding business environment continues to be
solid. We're seeing increasing systems integration demand among
Japanese companies this fiscal year. IT investment has been
withheld since the Lehman Shock, yet with Abenomics, they're now
more inclined to invest in IT. The demand for disaster recovery
systems, renewing existing systems, adopting cloud services and so
on is on the rise," said Koichi Suzuki, Chairman and CEO of
IIJ.
"As the concept of cloud computing has received wide
recognition, Japanese blue-chip companies are beginning to look at
their IT systems differently," followed Eijiro Katsu, President and
COO of IIJ. "The shift from owning heavy IT assets to using cloud
services is a great business opportunity for us as cloud requires
our strengths: reliable and secure network and system operation.
We're continuously expanding our enterprise cloud service lineups
to support such transition. For instance, we provide SAP, Oracle
DB, VMware and many other business familiar products on top of our
cloud. We're also devoting R&D efforts in SDN (Software Defined
Network) technology and have been continuously releasing and
developing its software platform. Some major network operators in
Japan have started to use them for evaluation purpose."
"1H13 revenue reflects strong systems integration demand. The
result didn't exceed our interim target as certain large SNS and
telecommunications clients decreased their network services usage.
Weak operating income was due to the increase in expenses as we
expand business both domestically and internationally while the
revenue suffered from the above individual factor," continued
Katsu.
"Having great market opportunity, our priority is to expand the
scale of IIJ business. We consider M&As and business alliances
as one of the possible means to do so. In the era of network
traffic explosion together with the growing demand to outsource IT
systems, our expertise in providing reliable network services and
systems operation for blue-chip companies is increasingly vital. We
continue to strategically expand our business to move toward the
next stage of growth," concluded Suzuki.
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
JPY98.29 per US$1.00, which was the noon buying rate on September
30, 2013.
1H FY2013
Financial Results Summary |
|
|
|
Operating Results
Summary |
|
|
|
|
1H12 |
1H13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Total Revenues |
51,109 |
54,397 |
6.4 |
Network
Services |
32,259 |
33,611 |
4.2 |
Systems
Integration (SI) |
17,127 |
18,673 |
9.0 |
Equipment
Sales |
641 |
755 |
17.7 |
ATM Operation
Business |
1,082 |
1,358 |
25.5 |
Total Costs |
40,961 |
43,967 |
7.3 |
Network
Services |
25,383 |
26,465 |
4.3 |
Systems
Integration (SI) |
14,089 |
15,765 |
11.9 |
Equipment
Sales |
551 |
681 |
23.6 |
ATM Operation
Business |
938 |
1,056 |
12.6 |
SG&A Expenses
and R&D |
6,885 |
7,421 |
7.8 |
Operating Income |
3,263 |
3,009 |
(7.8) |
Income before Income Tax
Expense |
3,176 |
3,348 |
5.4 |
Net Income attributable to
IIJ |
2,007 |
2,205 |
9.9 |
Segment Results
Summary |
|
|
|
1H12 |
1H13 |
|
JPY millions |
JPY millions |
Total Revenues |
51,109 |
54,397 |
Network Services
and SI Business |
50,311 |
53,296 |
ATM Operation
Business |
1,082 |
1,358 |
Elimination |
284 |
257 |
Operating Income |
3,263 |
3,009 |
Network Service
and SI Business |
3,260 |
2,829 |
ATM Operation
Business |
83 |
241 |
Elimination |
80 |
61 |
We have omitted segment analysis because most of our revenues
are dominated by Network Services and Systems Integration (SI)
Business.
1H FY2013 Results of Operation
Revenues
Total revenues were JPY54,397 million, up 6.4% YoY.
Network Services revenue was JPY33,611 million, up 4.2% YoY.
Revenues for Internet connectivity services for corporate use
were JPY8,358 million, up 6.9% YoY. The increase was mainly due to
the increasing demands for broader bandwidth and mobile
service.
Revenues for Internet connectivity services for home use were
JPY2,856 million, up 3.2% YoY. The revenue grew both YoY and QoQ as
we continue to accumulate orders for LTE mobile data communication
service.
WAN services revenues were JPY12,619 million, stayed almost flat
compared to 1H12.
Outsourcing services revenues were JPY9,778 million, up 7.5%
YoY. The revenue growth was mainly due to revenue increase in "IIJ
GIO Hosting Package Services" and datacenter-related services.
Network Services
Revenues Breakdown |
|
|
|
|
1H12 |
1H13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Internet Connectivity Service
(Corporate Use) |
7,816 |
8,358 |
6.9 |
IP
Service2 |
4,934 |
5,268 |
6.8 |
IIJ FiberAccess/F
and IIJ DSL/F |
1,606 |
1,575 |
(1.9) |
IIJ Mobile
Service3 |
1,156 |
1,401 |
21.2 |
Others |
120 |
114 |
(4.6) |
Internet Connectivity Service
(Home Use) |
2,768 |
2,856 |
3.2 |
Under IIJ
Brand |
621 |
980 |
57.9 |
hi-ho |
1,841 |
1,532 |
(16.8) |
OEM |
306 |
344 |
12.1 |
WAN Services |
12,577 |
12,619 |
0.3 |
Outsourcing
Services |
9,098 |
9,778 |
7.5 |
Total Network
Services |
32,259 |
33,611 |
4.2 |
Number of
Contracts for Connectivity Services |
|
|
|
|
as of Sep. 30, 2012 |
as of Sep.
30, 2013 |
YoY Change |
Internet Connectivity Services
(Corporate Use) |
100,282 |
123,334 |
23,052 |
IP Service
(-99Mbps) |
911 |
879 |
(32) |
IP Service
(100Mbps-999Mbps) |
369 |
428 |
59 |
IP Service
(1Gbps-) |
164 |
255 |
91 |
IIJ Data Center
Connectivity Service |
315 |
299 |
(16) |
IIJ FiberAccess/F
and IIJ DSL/F |
45,741 |
52,374 |
6,633 |
IIJ Mobile
Service4 |
51,488 |
67,789 |
16,301 |
Others |
1,294 |
1,310 |
16 |
Internet Connectivity Services
(Home Use) |
431,620 |
552,993 |
121,373 |
Under IIJ
Brand |
65,808 |
123,920 |
58,112 |
hi-ho |
152,031 |
155,045 |
3,014 |
OEM |
213,781 |
274,028 |
60,247 |
Total Contracted
Bandwidth |
1,003.3Gbps |
1,454.8Gbps |
451.5Gbps |
SI revenues were JPY18,673 million, up 9.0%
YoY.
Systems construction revenue, a one-time revenue, was JPY7,151
million, up 6.8% YoY, mainly due to the continuous accumulation of
orders. Systems operation and maintenance revenue, a recurring
revenue, was JPY11,522 million, up 10.4% YoY. The increase was
mainly due to the increase in revenue of "IIJ GIO Component
Services."
The orders received for SI and equipment sales were JPY25,203
million, up 21.2% YoY. In the breakdown, the orders received for
systems construction and equipment sales were JPY10,466 million, up
26.1% YoY, and the orders received for systems operation and
maintenance were JPY14,737 million, up 18.0% YoY.
The order backlog for SI and equipment sales as of September 30,
2013 amounted to JPY25,855 million, up 30.1% YoY. In the breakdown,
the order backlog for systems construction and equipment sales was
JPY6,263 million, up 30.4% YoY, and the order backlog for systems
operation and maintenance was JPY19,592 million, up 30.0% YoY.
Equipment sales revenues were JPY755 million, up
17.7% YoY.
ATM Operation Business revenues were JPY1,358 million, up 25.5%
YoY. The increase was mainly in accordance with the increase in the
numbers of newly placed ATMs. 698 ATMs were placed as of November
8, 2013.
2 IP Service revenues include revenues from the Data Center
Connectivity Service.
3 Revenue from mobile data communication service for home use is
included in Internet Connectivity Service (Home Use).
4 Contracts of IIJ Mobile Service are of mobile data
communication service for corporate use.
Cost and expense
Total cost of revenues was JPY43,967 million, up 7.3% YoY.
Cost of Network Services revenues was JPY26,465 million, up 4.3%
YoY. Gross margin was JPY7,146 million, up 3.9% YoY. Gross margin
ratio was 21.3%, almost the same as 1H12. The increase was mainly
due to the increase in circuit-related, personnel-related and
network operation related costs.
Cost of SI revenues was JPY15,765 million, up 11.9% YoY. The
increase was mainly due to the increase in outsourcing-related and
personnel-related costs. Gross margin was JPY2,908 million, down
4.3% YoY and gross margin ratio was 15.6%.
Cost of Equipment Sales revenues was JPY681 million, up 23.6%
YoY. Gross margin was JPY74 million and gross margin ratio was
9.8%.
Cost of ATM Operation Business revenues was JPY1,056 million, up
12.6% YoY. The increase was in accordance with the number of newly
placed ATMs. Gross margin was JPY302 million and gross margin ratio
was 22.2%.
SG&A and R&D expenses
SG&A and R&D expenses were JPY7,421 million, up 7.8%
YoY.
Sales and Marketing expenses were JPY4,162 million, up 5.9% YoY.
The increase was mainly due to the increase in personnel-related
expenses, rent expenses related to expanded office spaces, and
sales commission expenses related to Internet connectivity services
for home use.
General and Administrative expenses were JPY3,037 million, up
10.6% YoY. The increase was mainly due to the increase in
personnel-related expenses related to the increase in employees,
rent expenses related to the expanded office spaces and
depreciation and other expenses related to the office
relocation.
Research and Development expenses were JPY222 million, up 6.4%
YoY.
Operating income
Operating income was JPY3,009 million, down 7.8% YoY. The
decrease was mainly due to the increase in SG&A expenses along
with business expansion.
Other income (expenses)
Other income (expenses) was an income of JPY339 million (an
expense of JPY87 million for 1H12), mainly due to foreign currency
gains of JPY139 million (foreign currency losses of JPY50 million
for 1H12) and net gain on other investments of JPY172 million.
Income before income tax expense
Income before income tax expense was JPY3,348 million, up 5.4%
YoY (JPY3,176 million for 1H12) as a result that the increase in
non-operating income exceeded the decrease in operating income.
Net income
Income tax expense was JPY1,243 million (JPY1,251 million for
1H12).
Equity in net income of equity method investees was JPY127
million (JPY83 million for 1H12) mainly due to net income of
Internet Revolution, Inc. and Internet Multifeed Co.
As a result of the above, net income was JPY2,232 million, up
11.1% YoY (JPY2,008 million for 1H12).
Net income attributable to IIJ
Net income attributable to non-controlling interests was JPY27
million mainly related to net income of Trust Networks Inc (Net
loss attributable to non-controlling interests of JPY1 million for
1H12).
Net income attributable to IIJ was JPY2,205 million, up 9.9 %
YoY (JPY2,007 million for 1H12).
1H FY2013 Financial Condition
Balance Sheets
As of September 30, 2013, the balance of total assets was
JPY97,842 million, increased by JPY15,731 million from the balance
as of March 31, 2013 (JPY82,111 million as of March 31, 2013).
As for current assets as of September 30, 2013, as compared to
the respective balances as of March 31, 2013, cash and cash
equivalents increased by JPY13,523 million mainly due to the equity
finance in 1H13, accounts receivable decreased by JPY2,058 million,
and prepaid expenses increased by JPY944 million. As for noncurrent
assets, as compared to the respective balance as of March 31, 2013,
property and equipment increased by JPY758 million and guarantee
deposits increased by JPY658 million along with our office
expansion. As for current liabilities, as compared to the
respective balance as of March 31, 2013, accounts payable decreased
by JPY1,554 million and income taxes payable decreased by JPY793
million.
As for the balances of capital lease obligations, as compared to
the respective balances as of March 31, 2013, capital lease
obligations-current portion increased by JPY187 million to JPY3,692
million and capital lease obligations-noncurrent decreased by
JPY293 million to JPY5,077 million.
As of September 30, 2013, the balance of other investments
increased by JPY1,408 million to JPY5,180 million. The breakdown of
other investments were JPY3,205 million in nonmarketable equity
securities, JPY1,262 million in available-for-sale securities and
JPY712 million in other.
As of September 30, 2013, the balance of non-amortized
intangible assets (excluding telephone rights) such as goodwill was
JPY6,077 million, and the breakdown of non-amortized intangible
assets were JPY5,970 million in goodwill and JPY107 million in
trademark. The balance of amortized intangible assets, which was
customer relationships, was JPY4,432 million.
Total IIJ shareholders' equity as of September 30, 2013
increased by JPY19,547 million from the respective balance as of
March 31, 2013 as a result of equity finance and net income in
1H13, JPY57,153 million. IIJ shareholders' equity ratio (total IIJ
shareholders' equity/total assets) as of September 30, 2013 was
58.4%.
Cash Flows
Cash and cash equivalents as of September 30, 2013 were
JPY25,782 million compared to JPY11,670 million as of September 30,
2012.
Net cash provided by operating activities for 1H13 was JPY3,696
million compared to net cash provided by operating activities of
JPY3,970 million for 1H12. The decrease was mainly due to accounts
payable and other current liabilities decreased, while net income
and depreciation and amortization, which are non-cash expenses,
increased.
Net cash used in investing activities for 1H13 was JPY4,202
million compared to net cash used in investing activities of
JPY3,054 million for 1H12, mainly due to payments for purchase of
property and equipment of JPY2,784 million (JPY2,785 million for
1H12), payments for purchase of other investments of JPY1,083
million (JPY374 million for 1H12) and payments for guarantee
deposits of JPY662 million (JPY22 million for 1H12).
Net cash provided by financing activities for 1H13 was JPY13,883
million compared to net cash used in financing activities of
JPY2,756 million for 1H12, mainly due to proceeds from issuance of
common stock of JPY17,271 million, principal payments under capital
leases of JPY1,972 million (JPY1,813 million for 1H12), payment of
FY2012 year-end dividends of JPY405 million (JPY355 million for
1H12).
FY2013 Financial Targets (announced on May 15,
2013)
Due to seasonal factors, our revenue volume tends to be larger
in the second half than the first half while our fixed type
expenses such as personnel-related tend to increase from the
beginning of a fiscal year. 1H13 operating income decreased
compared to 1H12 mainly due to: the increase in the fixed type
expenses such as personnel- and offices- related expenses,
reflecting the increased number of new employees accordingly with
our business expansion strategy, the relatively small systems
construction revenue recognition while we accumulated a large
number of order backlog which will be realized as revenue in 2H13,
and the decrease in recurring revenues from certain large
telecommunication and SNS game clients for pricing revision at the
beginning of FY2013 and reduction in their server usage.
Our FY2013 financial targets announced on May 15, 2013 remain
unchanged as the orders for systems construction continue to be
accumulated at a good pace toward 2H13. Also, the monthly recurring
revenues of network services and systems operation and maintenance
should continue to grow.
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 |
|
|
|
1H12 |
1H13 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
6,902 |
7,247 |
Depreciation and
Amortization5 |
3,639 |
4,238 |
Operating Income |
3,263 |
3,009 |
Other Income
(Expense) |
(87) |
339 |
Income Tax
Expense |
1,251 |
1,243 |
Equity in Net Income of Equity
Method Investees |
83 |
127 |
Net Income |
2,008 |
2,232 |
Less: Net Income attributable
to Noncontrolling Interests |
(1) |
(27) |
Net Income attributable to
IIJ |
2,007 |
2,205 |
CAPEX |
|
|
|
1H12 |
1H13 |
|
JPY millions |
JPY millions |
CAPEX, including Capital
Leases |
5,903 |
4,647 |
Acquisition of
Assets by Entering into Capital Leases |
3,118 |
1,863 |
Purchase of
Property and Equipment |
2,785 |
2,784 |
5 Depreciation and amortization includes impairment loss on
other intangible assets. (See IIJ's consolidated financial
statements for details).
Presentation
Presentation materials will be posted on our web site
(http://www.iij.ad.jp/en/ir/) on November 8, 2013.
About Internet Initiative Japan Inc.
Founded in 1992, Internet Initiative Japan Inc. is one of
Japan's leading Internet-access and comprehensive network solutions
providers. IIJ and its group companies provide total network
solutions that mainly cater to high-end corporate customers. IIJ's
services include high-quality systems integration, security
services, Internet access, and cloud computing. Moreover, IIJ has
built one of the largest Internet backbone networks in Japan that
is connected to the United States and the United Kingdom. IIJ
listed on NASDAQ in 1999 and on the First Section of the Tokyo
Stock Exchange in 2006. For more information about IIJ, visit the
IIJ Web site at http://www.iij.ad.jp/en/.
Statements made in this press release regarding IIJ's or
managements' 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 revenues,
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 but not limited to: a decrease of corporate
spending or capital expenditure due to depression in the Japanese
economy and/or corporate earnings decreased, an inability to
achieve anticipated results and cause negative impact on
profitability, a possibility that less of reliability for our
services and loss of business chances due to interrupt or suspend
of our services, an excess increase in network rerated cost and
outsourcing cost, personnel cost etc, a possibility to lose
business opportunity due to our inadequate resources in personnel
and others, an increase in competition and strong pricing pressure,
the recording of an impairment loss as a results of an impairment
test on the non-amortized intangible assets such as goodwill, a
decline in value and trending value of our holding securities.
Please refer to IIJ's filings on Form 20-F of its annual report and
other filings with the United States Securities and Exchange
Commission ("SEC") for other risks.
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Balance Sheets (Unaudited) |
(As of March 31, 2013
and September 30, 2013) |
|
|
As of March 31, 2013 |
As of September 30,
2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
12,258,872 |
262,302 |
25,781,630 |
Accounts receivable, net of
allowance for doubtful accounts of JPY 93,934 thousand and
JPY 54,390 thousand at March 31, 2013 and September 30,
2013, respectively |
18,764,703 |
169,973 |
16,706,721 |
Inventories |
1,301,684 |
20,982 |
2,062,306 |
Prepaid expenses |
2,492,164 |
34,958 |
3,436,081 |
Deferred tax assets
—current |
1,046,828 |
10,598 |
1,041,654 |
Other current assets, net of
allowance for doubtful accounts of JPY 10,732 thousand and
JPY 719 thousand at March 31, 2013 and September 30,
2013, respectively |
1,576,718 |
14,752 |
1,449,953 |
Total current assets |
37,440,969 |
513,565 |
50,478,345 |
INVESTMENTS IN EQUITY METHOD INVESTEES |
1,681,723 |
18,406 |
1,809,081 |
OTHER INVESTMENTS |
3,771,262 |
52,697 |
5,179,525 |
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of JPY 29,516,394
thousand and JPY 32,636,483 thousand at March 31, 2013
and September 30, 2013, respectively |
23,025,755 |
241,978 |
23,784,050 |
GOODWILL |
5,969,951 |
60,738 |
5,969,951 |
OTHER INTANGIBLE ASSETS —Net |
4,791,431 |
46,468 |
4,567,370 |
GUARANTEE DEPOSITS |
2,051,449 |
27,570 |
2,709,872 |
DEFERRED TAX ASSETS —Noncurrent |
163,773 |
1,347 |
132,412 |
NET INVESTMENT IN SALES-TYPE
LEASES —Noncurrent |
898,040 |
8,476 |
833,065 |
Prepaid expenses —Noncurrent |
2,201,108 |
22,983 |
2,258,981 |
OTHER ASSETS, net of allowance for doubtful
accounts of JPY 71,727 thousand and JPY 71,432 thousand
at March 31, 2013 and September 30, 2013, respectively |
115,805 |
1,213 |
119,198 |
TOTAL |
82,111,266 |
995,441 |
97,841,850 |
|
|
|
As of March 31, 2013 |
As of September 30,
2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Short-term borrowings |
9,400,000 |
95,635 |
9,400,000 |
Long-term borrowings —current
portion |
1,010,000 |
9,971 |
980,000 |
Capital lease obligations
—current portion |
3,505,471 |
37,566 |
3,692,346 |
Accounts payable —trade |
10,973,120 |
96,443 |
9,479,379 |
Accounts payable —other |
949,264 |
9,041 |
888,669 |
Income taxes payable |
1,669,849 |
8,916 |
876,399 |
Accrued expenses |
2,266,427 |
20,152 |
1,980,780 |
Deferred income —current |
1,806,074 |
18,627 |
1,830,818 |
Other current liabilities |
803,902 |
9,340 |
917,982 |
Total current liabilities |
32,384,107 |
305,691 |
30,046,373 |
LONG-TERM BORROWINGS |
980,000 |
-- |
-- |
CAPITAL LEASE OBLIGATIONS —Noncurrent |
5,370,365 |
51,654 |
5,077,037 |
ACCRUED RETIREMENT AND PENSION COSTS
—Noncurrent |
2,112,085 |
22,684 |
2,229,624 |
DEFERRED TAX LIABILITIES —Noncurrent |
412,132 |
6,162 |
605,585 |
DEFERRED INCOME —Noncurrent |
2,562,208 |
22,722 |
2,233,363 |
OTHER NONCURRENT LIABILITIES |
656,191 |
4,498 |
442,127 |
Total Liabilities |
44,477,088 |
413,411 |
40,634,109 |
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
Common-stock —authorized,
75,520,000 shares; issued and outstanding, 41,295,600 shares
at March 31, 2013 |
16,833,847 |
259,406 |
25,497,022 |
—authorized, 75,520,000 shares;
issued and outstanding, 46,697,800 shares at September
30, 2013 |
|
|
|
Additional paid-in capital |
27,300,325 |
365,582 |
35,933,105 |
Accumulated deficit |
(6,399,088) |
(46,796) |
(4,599,585) |
Accumulated other comprehensive
income |
263,770 |
7,274 |
714,970 |
Treasury stock —758,800 shares
and 758,813 shares held by the company at March 31, 2013 and
September 30, 2013, respectively |
(392,079) |
(3,989) |
(392,122) |
Total Internet Initiative Japan
Inc. shareholders' equity |
37,606,775 |
581,477 |
57,153,390 |
NONCONTROLLING INTERESTS |
27,403 |
553 |
54,351 |
Total equity |
37,634,178 |
582,030 |
57,207,741 |
TOTAL |
82,111,266 |
995,441 |
97,841,850 |
|
|
|
|
|
|
|
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Income and |
Quarterly Consolidated
Statements of Other Comprehensive Income (Unaudited) |
(For the six months
ended September 30, 2012 and September 30, 2013) |
|
Quarterly
Consolidated Statements of Income |
|
Six Months Ended September 30,
2012 |
Six Months Ended
September 30, 2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
REVENUES: |
|
|
|
Network services: |
|
|
|
Internet
connectivity services (corporate use) |
7,815,625 |
85,035 |
8,358,114 |
Internet
connectivity services (home use) |
2,768,151 |
29,055 |
2,855,790 |
WAN services |
12,577,216 |
128,379 |
12,618,348 |
Outsourcing
services |
9,097,610 |
99,484 |
9,778,277 |
Total |
32,258,602 |
341,953 |
33,610,529 |
Systems integration: |
|
|
|
Systems
construction |
6,693,586 |
72,757 |
7,151,242 |
Systems operation
and maintenance |
10,433,028 |
117,222 |
11,521,775 |
Total |
17,126,614 |
189,979 |
18,673,017 |
Equipment sales |
641,780 |
7,684 |
755,309 |
ATM operation business |
1,082,005 |
13,817 |
1,358,104 |
Total revenues |
51,109,001 |
553,433 |
54,396,959 |
COST AND EXPENSES: |
|
|
|
Cost of network services |
25,382,614 |
269,247 |
26,464,339 |
Cost of systems
integration |
14,089,358 |
160,395 |
15,765,185 |
Cost of equipment sales |
551,245 |
6,930 |
681,162 |
Cost of ATM operation
business |
938,041 |
10,743 |
1,055,944 |
Total cost |
40,961,258 |
447,315 |
43,966,630 |
Sales and marketing |
3,931,676 |
42,350 |
4,162,559 |
General and administrative |
2,745,077 |
30,900 |
3,037,201 |
Research and development |
208,283 |
2,255 |
221,590 |
Total cost and expenses |
47,846,294 |
522,820 |
51,387,980 |
OPERATING INCOME |
3,262,707 |
30,613 |
3,008,979 |
OTHER INCOME (EXPENSE): |
|
|
|
Dividend income |
34,762 |
364 |
35,760 |
Interest income |
14,823 |
130 |
12,801 |
Interest expense |
(145,163) |
(1,348) |
(132,467) |
Foreign exchange gains
(losses) |
(49,997) |
1,417 |
139,285 |
Net gain on sales of other
investments |
13,565 |
843 |
82,852 |
Net gain on other
investments |
-- |
1,754 |
172,423 |
Losses on write-down of other
investments |
(19,788) |
-- |
-- |
Other —net |
65,389 |
285 |
27,965 |
Other income (expense)
—net |
(86,409) |
3,445 |
338,619 |
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
3,176,298 |
34,058 |
3,347,598 |
INCOME TAX EXPENSE |
1,251,172 |
12,648 |
1,243,173 |
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
83,088 |
1,296 |
127,358 |
NET INCOME |
2,008,214 |
22,706 |
2,231,783 |
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS |
(1,058) |
(274) |
(26,912) |
NET INCOME ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN INC. |
2,007,156 |
22,432 |
2,204,871 |
|
|
|
Six Months Ended September 30,
2012 |
Six Months Ended
September 30, 2013 |
NET INCOME PER SHARE |
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,536,800 |
|
42,683,242 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,564,800 |
|
42,734,376 |
BASIC WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,073,600 |
|
85,366,484 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,129,600 |
|
85,468,752 |
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
49.51 |
0.53 |
51.66 |
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
49.48 |
0.52 |
51.59 |
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY) |
24.76 |
0.26 |
25.83 |
DILUTED NET INCOME PER
ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
24.74 |
0.26 |
25.80 |
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
|
Quarterly
Consolidated Statements of Other Comprehensive Income |
|
Six Months Ended September 30,
2012 |
Six Months Ended
September 30, 2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
NET INCOME |
2,008,214 |
22,706 |
2,231,783 |
Comprehensive income (loss): |
|
|
|
Foreign currency translation
adjustments |
3,299 |
2,770 |
272,253 |
Unrealized holding gain (loss)
on securities |
(13,379) |
1,820 |
178,865 |
Defined benefit pension
plans |
119 |
1 |
118 |
Total comprehensive income |
1,998,253 |
27,297 |
2,683,019 |
Less: Comprehensive income attributable to
noncontrolling interests |
(1,058) |
(274) |
(26,948) |
Comprehensive income attributable to Internet
Initiative Japan Inc. |
1,997,195 |
27,023 |
2,656,071 |
|
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Cash Flows (Unaudited) |
(For the six months
ended September 30, 2012 and September 30, 2013) |
|
|
Six Months Ended September 30,
2012 |
Six Months Ended
September 30, 2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
|
Net income |
2,008,214 |
22,706 |
2,231,783 |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and
amortization |
3,639,342 |
43,122 |
4,238,476 |
Provision for retirement and
pension costs, less payments |
106,730 |
1,198 |
117,723 |
Provision for (reversal of)
allowance for doubtful accounts |
86 |
(480) |
(47,200) |
Loss on disposal of property
and equipment |
2,315 |
37 |
3,616 |
Net gain on sales of other
investments |
(13,565) |
(843) |
(82,852) |
Net gain on other
investments |
-- |
(1,754) |
(172,423) |
Impairment of other
investments |
19,788 |
-- |
-- |
Foreign exchange losses
(gains), net |
36,218 |
(896) |
(88,024) |
Equity in net income of equity
method investees |
(83,088) |
(1,296) |
(127,358) |
Deferred income tax
expense |
124,330 |
1,725 |
169,584 |
Others |
967 |
10 |
934 |
Changes in operating assets and
liabilities net of effects from acquisition of a
company: |
|
|
|
Decrease in accounts
receivable |
177,411 |
21,733 |
2,136,106 |
Decrease in net investment in
sales-type lease — noncurrent |
141,255 |
661 |
64,975 |
Increase in inventories |
(782,389) |
(7,718) |
(758,645) |
Increase in prepaid
expenses |
(949,899) |
(9,493) |
(933,077) |
Decrease in other current and
noncurrent assets |
48,180 |
1,547 |
152,072 |
Increase (decrease) in accounts
payable |
301,591 |
(15,391) |
(1,512,769) |
Decrease in income taxes
payable |
(1,320,716) |
(8,075) |
(793,648) |
Increase (decrease) in deferred
income-noncurrent |
276,090 |
(3,832) |
(376,601) |
Increase
(decrease) in accrued expenses and other current and
noncurrent liabilities |
237,403 |
(5,362) |
(527,057) |
Net cash
provided by operating activities |
3,970,263 |
37,599 |
3,695,615 |
INVESTING ACTIVITIES: |
|
|
|
Purchase of property and
equipment |
(2,785,190) |
(28,324) |
(2,783,991) |
Proceeds from sales of property
and equipment |
375,005 |
1,252 |
123,086 |
Purchase of available-for-sale
securities |
(19,606) |
(345) |
(33,902) |
Purchase of other
investments |
(373,909) |
(11,015) |
(1,082,640) |
Investment in an equity method
investee |
(100,000) |
-- |
-- |
Proceeds from sales of
available-for-sale securities |
-- |
2,232 |
219,362 |
Proceeds from sales of other
investments |
89,117 |
41 |
4,000 |
Payments of guarantee
deposits |
(22,473) |
(6,738) |
(662,283) |
Refund of guarantee
deposits |
12,397 |
72 |
7,112 |
Payments for refundable
insurance policies |
(368) |
-- |
-- |
Refund from insurance
policies |
-- |
163 |
16,026 |
Acquisition of a newly
controlled company, net of cash acquired |
(229,058) |
-- |
-- |
Other |
60 |
(94) |
(9,250) |
Net cash used
in investing activities |
(3,054,025) |
(42,756) |
(4,202,480) |
|
|
|
|
|
|
|
Six Months Ended September 30,
2012 |
Six Months Ended
September 30, 2013 |
|
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 |
21,000 |
2,035 |
200,000 |
Repayments of short-term
borrowings with initial maturities over three months and
long-term borrowings |
(1,010,000) |
(12,311) |
(1,210,000) |
Principal payments under
capital leases |
(1,812,654) |
(20,068) |
(1,972,457) |
Net increase in short-term
borrowings with initial maturities less than three
months |
400,000 |
-- |
-- |
Dividends paid |
(354,697) |
(4,124) |
(405,368) |
Proceeds from issuance of
common stock, net of issuance cost |
-- |
175,717 |
17,271,204 |
Other |
-- |
(0) |
(41) |
Net cash
provided by (used in) financing activities |
(2,756,351) |
141,249 |
13,883,338 |
|
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS |
(26,261) |
1,488 |
146,285 |
|
|
|
|
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS |
(1,866,374) |
137,580 |
13,522,758 |
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
13,536,824 |
124,722 |
12,258,872 |
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
11,670,450 |
262,302 |
25,781,630 |
|
ADDITIONAL CASH FLOW INFORMATION: |
|
|
|
Interest paid |
145,876 |
1,351 |
132,774 |
Income taxes paid |
2,288,440 |
15,604 |
1,533,720 |
|
|
|
|
NONCASH INVESTING AND FINANCING
ACTIVITIES: |
|
|
|
Acquisition of assets by
entering into capital leases |
3,118,126 |
18,955 |
1,863,053 |
Facilities purchase
liabilities |
804,789 |
9,041 |
888,669 |
Asset retirement
obligation |
-- |
560 |
55,066 |
Acquisition of a company: |
|
|
|
Assets acquired |
404,140 |
-- |
-- |
Liabilities assumed |
104,321 |
-- |
-- |
Noncontrolling interests |
119 |
-- |
-- |
Cash paid |
(299,700) |
-- |
-- |
Cash acquired |
70,642 |
-- |
-- |
Acquisition of a newly
controlled company, net of cash acquired |
(229,058) |
-- |
-- |
|
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
|
Going Concern Assumption
(Unaudited) |
Nothing to be
reported. |
|
Material Changes In
Shareholders' Equity (Unaudited) |
IIJ issued new
shares by way of public offering with payment due July 18, 2013 and
by way of third-party allotment in connection with secondary
offering of shares by way of over-allotment with payment due August
5, 2013. As a result, common stock and additional paid-in capital
increased by JPY8,662 million and JPY8,610 million, respectively,
for the second quarter of fiscal year ending March 31, 2014. The
balances of common stock and additional paid-in capital as of
September 30, 2013 were JPY25,497 million and JPY 35,933 million,
respectively. |
|
Segment Information
(Unaudited) |
Business
Segments: |
Revenues: |
|
Six Months Ended September 30,
2012 |
Six Months Ended September 30,
2013 |
|
Thousands of JPY |
Thousands of JPY |
Network service and systems integration
business |
50,310,706 |
53,295,762 |
Customers |
50,026,996 |
53,038,855 |
Intersegment |
283,710 |
256,907 |
ATM operation business |
1,082,005 |
1,358,104 |
Customers |
1,082,005 |
1,358,104 |
Intersegment |
-- |
-- |
Elimination |
283,710 |
256,907 |
Consolidated total |
51,109,001 |
54,396,959 |
|
|
|
Segment
profit or loss: |
|
|
|
Six Months Ended September 30,
2012 |
Six Months Ended September 30,
2013 |
|
Thousands of JPY |
Thousands of JPY |
Network service and systems integration
business |
3,260,156 |
2,829,032 |
ATM operation business |
82,920 |
240,882 |
Elimination |
80,369 |
60,935 |
Consolidated operating income |
3,262,707 |
3,008,979 |
|
Geographic
information is not presented due to immateriality of revenue
attributable to international operations. |
|
Subsequent Events
(Unaudited) |
Nothing to be
reported. |
2nd Quarter FY2013 Consolidated Financial Results (3
months)
The following tables are highlight data of 2nd Quarter FY2013
consolidated financial results (unaudited, from July 1, 2013 to
September 30, 2013).
Operating Results Summary |
|
|
|
|
2Q12 |
2Q13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Total Revenues: |
26,268 |
27,956 |
6.4 |
Network
Services |
16,167 |
16,825 |
4.1 |
Systems
Integration (SI) |
9,175 |
9,981 |
8.8 |
Equipment
Sales |
311 |
437 |
40.3 |
ATM Operation
Business |
615 |
713 |
16.1 |
Cost of Revenues: |
20,939 |
22,555 |
7.7 |
Network
Services |
12,619 |
13,223 |
4.8 |
Systems
Integration (SI) |
7,526 |
8,415 |
11.8 |
Equipment
Sales |
277 |
396 |
42.5 |
ATM Operation
Business |
517 |
521 |
0.8 |
SG&A Expenses and
R&D |
3,440 |
3,697 |
7.5 |
Operating Income |
1,889 |
1,704 |
(9.8) |
Income before Income Tax
Expense |
1,803 |
1,917 |
6.3 |
Net Income attributable to
IIJ |
1,110 |
1,251 |
12.7 |
Network Services Revenues Breakdown |
|
|
|
|
2Q12 |
2Q13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Internet Connectivity Service
(Corporate Use) |
3,951 |
4,167 |
5.5 |
IP
Service |
2,495 |
2,587 |
3.7 |
IIJ FiberAccess/F
and IIJ DSL/F |
804 |
792 |
(1.4) |
IIJ Mobile
Service |
592 |
731 |
23.5 |
Others |
60 |
57 |
(4.9) |
Internet Connectivity Service
(Home Use) |
1,340 |
1,459 |
8.9 |
Under IIJ
Brand |
303 |
525 |
73.4 |
hi-ho |
882 |
759 |
(13.9) |
OEM |
155 |
175 |
12.9 |
WAN Services |
6,264 |
6,308 |
0.7 |
Outsourcing
Services |
4,612 |
4,891 |
6.0 |
Network Services
Revenues |
16,167 |
16,825 |
4.1 |
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 |
|
|
|
2Q12 |
2Q13 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
3,730 |
3,871 |
Depreciation and
Amortization |
1,841 |
2,167 |
Operating Income |
1,889 |
1,704 |
Other Income
(Expense) |
(86) |
213 |
Income Tax
Expense |
736 |
706 |
Equity in Net Income of Equity
Method Investees |
50 |
62 |
Net income |
1,117 |
1,273 |
Less: Net income attributable
to noncontrolling interests |
(7) |
(22) |
Net Income attributable to
IIJ |
1,110 |
1,251 |
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 |
|
|
|
2Q12 |
2Q13 |
|
JPY millions |
JPY millions |
CAPEX, including capital
leases |
2,606 |
1,754 |
Acquisition of
Assets by Entering into Capital Leases |
1,479 |
688 |
Purchase of
Property and Equipment |
1,127 |
1,065 |
|
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Income (Unaudited) |
(For the three months
ended September 30, 2012 and September 30, 2013) |
|
|
Three Months Ended September 30,
2012 |
Three Months Ended
September 30, 2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
REVENUES: |
|
|
|
Network services: |
|
|
|
Internet connectivity services
(corporate use) |
3,950,858 |
42,396 |
4,167,105 |
Internet connectivity services
(home use) |
1,339,001 |
14,839 |
1,458,531 |
WAN services |
6,264,795 |
64,183 |
6,308,549 |
Outsourcing services |
4,612,416 |
49,761 |
4,891,009 |
Total |
16,167,070 |
171,179 |
16,825,194 |
Systems integration: |
|
|
|
Systems Construction |
3,933,690 |
42,601 |
4,187,234 |
Systems Operation and
Maintenance |
5,241,338 |
58,942 |
5,793,403 |
Total |
9,175,028 |
101,543 |
9,980,637 |
Equipment sales |
311,145 |
4,442 |
436,616 |
ATM operation business |
614,495 |
7,258 |
713,411 |
Total revenues |
26,267,738 |
284,422 |
27,955,858 |
COST AND EXPENSES: |
|
|
|
Cost of network services |
12,618,608 |
134,527 |
13,222,659 |
Cost of systems
integration |
7,525,533 |
85,619 |
8,415,537 |
Cost of equipment sales |
278,206 |
4,034 |
396,474 |
Cost of ATM operation
business |
516,954 |
5,299 |
520,842 |
Total cost |
20,939,301 |
229,479 |
22,555,512 |
Sales and marketing |
2,001,385 |
20,832 |
2,047,534 |
General and administrative |
1,334,025 |
15,636 |
1,536,859 |
Research and development |
104,343 |
1,144 |
112,446 |
Total cost and expenses |
24,379,054 |
267,091 |
26,252,351 |
OPERATING INCOME |
1,888,684 |
17,331 |
1,703,507 |
OTHER INCOME (EXPENSE): |
|
|
|
Dividend income |
12,228 |
88 |
8,649 |
Interest income |
6,630 |
71 |
6,955 |
Interest expense |
(73,726) |
(652) |
(64,116) |
Foreign exchange gains
(losses) |
(29,579) |
475 |
46,666 |
Net gain on sales of other
investments |
13,563 |
274 |
26,932 |
Net gain on other
investments |
-- |
1,754 |
172,423 |
Losses on write-down of other
investments |
(17,825) |
-- |
-- |
Other—net |
3,043 |
163 |
16,060 |
Other income (expense) —
net |
(85,666) |
2,173 |
213,569 |
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD
INVESTEES |
1,803,018 |
19,504 |
1,917,076 |
INCOME TAX EXPENSE |
736,412 |
7,180 |
705,754 |
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
50,201 |
625 |
61,404 |
NET INCOME |
1,116,807 |
12,949 |
1,272,726 |
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS |
(6,358) |
(221) |
(21,665) |
NET INCOME ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN INC. |
1,110,449 |
12,728 |
1,251,061 |
|
|
Three Months Ended September 30,
2012 |
Three Months Ended
September 30, 2013 |
NET INCOME PER SHARE |
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,536,800 |
|
44,804,204 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,569,000 |
|
44,856,748 |
BASIC WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,073,600 |
|
89,608,408 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,138,000 |
|
89,713,496 |
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
27.39 |
0.28 |
27.92 |
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
27.37 |
0.28 |
27.89 |
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY) |
13.70 |
0.14 |
13.96 |
DILUTED NET
INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
13.69 |
0.14 |
13.95 |
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
|
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Cash Flows (Unaudited) |
(For the three months
ended September 30, 2012 and September 30, 2013) |
|
|
Three Months Ended September 30,
2012 |
Three Months Ended
September 30, 2013 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
|
Net income |
1,116,807 |
12,949 |
1,272,726 |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and
amortization |
1,841,047 |
22,054 |
2,167,716 |
Provision for retirement and
pension costs, less payments |
53,919 |
614 |
60,353 |
Provision for (reversal of)
allowance for doubtful accounts |
145 |
(364) |
(35,761) |
Loss on disposal of property
and equipment |
1,271 |
30 |
2,971 |
Net gain on sales of other
investments |
(13,563) |
(274) |
(26,932) |
Net gain on other
investments |
-- |
(1,754) |
(172,423) |
Impairment of other
investments |
17,825 |
-- |
-- |
Foreign exchange losses
(gains), net |
2,373 |
(82) |
(8,072) |
Equity in net income of equity
method investees |
(50,201) |
(625) |
(61,404) |
Deferred income tax
benefit |
(27,279) |
(1,004) |
(98,657) |
Others |
22,818 |
(106) |
(10,471) |
Changes in operating assets and
liabilities net of effects from acquisition of a
company: |
|
|
|
Increase in
accounts receivable |
(1,241,974) |
(8,001) |
(786,378) |
Decrease in net
investment in sales-type lease―noncurrent |
98,205 |
687 |
67,556 |
Increase in
inventories |
(702,255) |
(5,627) |
(553,097) |
Decrease prepaid
expenses |
617,321 |
4,933 |
484,823 |
Decrease in other
current and noncurrent assets |
343,478 |
355 |
34,858 |
Increase in
accounts payable |
175,983 |
4,568 |
448,979 |
Increase in
income taxes payable |
724,293 |
7,074 |
695,246 |
Increase in
deferred income― noncurrent |
271,080 |
749 |
73,650 |
Decrease in accrued expenses, other current and noncurrent
liabilities |
(705,353) |
(14,125) |
(1,388,312) |
Net cash
provided by operating activities |
2,545,940 |
22,051 |
2,167,371 |
INVESTING ACTIVITIES: |
|
|
|
Purchase of property and
equipment |
(1,126,849) |
(10,840) |
(1,065,478) |
Proceeds from sales of property
and equipment |
210,799 |
544 |
53,482 |
Purchase of available-for-sale
securities |
(3,503) |
(224) |
(21,963) |
Purchase of other
investments |
(59,599) |
(10,778) |
(1,059,363) |
Proceeds from sales of
available-for-sale securities |
-- |
2,232 |
219,362 |
Proceeds from sales of other
investments |
68,996 |
-- |
-- |
Payments of guarantee
deposits |
(21,708) |
(13) |
(1,310) |
Refund of guarantee
deposits |
2,646 |
22 |
2,192 |
Payments for refundable
insurance policies |
(187) |
-- |
-- |
Refund from insurance
policies |
-- |
163 |
16,026 |
Other |
6,773 |
(59) |
(5,815) |
Net cash used
in investing activities |
(922,632) |
(18,953) |
(1,862,867) |
|
|
|
|
Three Months Ended September 30,
2012 |
Three Months Ended
September 30, 2013 |
|
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 |
21,000 |
-- |
-- |
Repayments of short-term
borrowings with initial maturities over three months and
long-term borrowings |
(1,010,000) |
(12,311) |
(1,210,000) |
Principal payments under
capital leases |
(935,440) |
(10,085) |
(991,296) |
Net increase in short-term
borrowings with initial maturities less than three
months |
500,000 |
2,035 |
200,000 |
Proceeds from
issuance of common stock, net of issuance cost |
-- |
175,717 |
17,271,204 |
Net cash
provided by (used in) financing activities |
(1,424,440) |
155,356 |
15,269,908 |
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS |
1,490 |
(705) |
(69,242) |
|
|
|
|
NET INCREASE IN CASH AND CASH
EQUIVALENTS |
200,358 |
157,749 |
15,505,170 |
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
11,470,092 |
104,553 |
10,276,460 |
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
11,670,450 |
262,302 |
25,781,630 |
|
(Note) The U.S. dollar amounts
have been translated from yen, for convenience only, at the rate of
JPY 98.29 per 1U.S. dollar which was the noon buying rate in
New York City for cable transfers in foreign currencies as of
September 30, 2013. |
Note: The following information is provided to
disclose Internet Initiative Japan Inc. ("IIJ") financial results
(unaudited) for the first six months ended September 30, 2013 in
the form defined by the Tokyo Stock Exchange.
Consolidated Financial
Results for the First Six Months Ended September 30,
2013 |
|
[Under accounting
principles generally accepted in the United States ("U.S.
GAAP")] |
|
|
November 8, 2013 |
Company name: Internet Initiative Japan
Inc. |
Exchange listed: First Section, Tokyo Stock
Exchange |
Stock code number: 3774 |
URL: http://www.iij.ad.jp/ |
Representative: Eijiro Katsu, President and
Representative Director |
|
Contact: Akihisa Watai, Managing Director and
CFO |
TEL: (03) 5259-6500 |
Filing of quarterly report
(Shihanki-houkokusho) to the regulatory organization in Japan:
Scheduled on November 14, 2013 |
|
Payment of dividend: December 6, 2013 |
Supplemental material on quarterly results:
Yes |
Presentation on quarterly results: Yes (for
institutional investors and analysts) |
|
|
(Amounts of less than JPY one million are
rounded) |
1. Consolidated Financial
Results for the First Six Months Ended September 30,
2013 |
|
|
|
|
(April 1, 2013 to
September 30, 2013) |
|
|
|
|
(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 |
% |
Six Months Ended September 30, 2013 |
54,397 |
6.4 |
3,009 |
(7.8) |
3,348 |
5.4 |
2,205 |
9.9 |
Six Months Ended September 30,
2012 |
51,109 |
8.3 |
3,263 |
33.3 |
3,176 |
38.7 |
2,007 |
47.4 |
(Note1) Total comprehensive income attributable to IIJ
Six Months Ended September 30, 2013: JPY2,656 million (up 33.0%
YoY)
Six Months Ended September 30, 2012: JPY1,997 million (up 44.4%
YoY)
(Note2) Income before income tax expense represents income from
operations before income tax expense and equity in net income of
equity method investees in IIJ's consolidated financial
statements.
|
|
|
|
Basic Net Income attributable to IIJ
per Share |
Diluted Net Income attributable to
IIJ per Share |
|
JPY |
JPY |
Six Months Ended September 30, 2013 |
51.66 |
51.59 |
Six Months Ended September 30,
2012 |
49.51 |
49.48 |
(Note) IIJ conducted a 1:200 stock split on common stock with an
effective date of October 1, 2012. Accordingly, basic net income
attributable to IIJ per share and diluted net income attributable
to IIJ per share have been calculated as if the stock split were
conducted on April 1, 2012, at the beginning of the fiscal year
ended March 31, 2013.
|
|
|
|
|
(2) Consolidated
Financial Position |
|
|
|
|
|
Total Assets |
Total Equity |
Total IIJ Shareholders' Equity |
Total IIJ Shareholders' Equity to
Total Assets |
|
JPY millions |
JPY millions |
JPY millions |
% |
As of September 30, 2013 |
97,842 |
57,208 |
57,153 |
58.4 |
As of March 31, 2013 |
82,111 |
37,634 |
37,607 |
45.8 |
|
|
2.
Dividends |
|
|
Dividends per Share |
|
1Q-end |
2Q-end |
3Q-end |
Year-end |
Total |
|
JPY |
JPY |
JPY |
JPY |
|
Fiscal Year Ended March 31, 2013 |
-- |
1,750.00 |
-- |
10.00 |
1,760.00 |
Fiscal Year Ending March 31,
2014 |
-- |
11.00 |
|
|
|
Fiscal Year Ending March 31, 2014
(forecast) |
|
|
-- |
11.00 |
22.00 |
(Note1) Changes in the latest
forecasts released: None |
|
|
|
|
|
(Note2) IIJ conducted a 1:200
stock split on common stock with an effective date of October 1,
2012. 2Q-end dividend (interim dividend) for the fiscal year ended
March 31, 2013 does not take the stock split into consideration.
The dividends for 2Q-end and the total dividend for the fiscal year
ended March 31, 2013 would have been JPY8.75 and JPY18.75
respectively if the stock split were conducted on April 1, 2012, at
the beginning of the fiscal year ended March 31, 2013. |
|
|
|
|
|
3. Target of
Consolidated Financial Results for the Fiscal Year Ending March 31,
2014 |
|
|
|
|
|
(April 1, 2013 through
March 31, 2014) |
|
|
|
(% 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 |
Fiscal Year Ending March 31, 2014 |
117,000 |
10.1 |
9,400 |
21.2 |
9,000 |
16.0 |
6,000 |
13.2 |
135.42 |
(Note1) Changes in the latest
forecasts released: None |
|
|
|
|
|
|
|
|
|
(Note2) IIJ issued 4,700,000
shares of common stock by way of public offering on July 18, 2013.
IIJ also issued 700,000 shares of common stock by way of
third-party allotment in connection with secondary offering of
shares by way of over-allotment on August 5, 2013. Basic Net Income
attributable to IIJ per Share in the above "3. Target of
Consolidated Financial Results for the Fiscal Year Ending March 31,
2014" was recalculated to reflect the increases in the number of
shares outstanding. |
|
|
|
|
|
|
|
|
|
* Notes
(1) Changes in significant subsidiaries for the
first six months ended September 30, 2013
(Changes in significant subsidiaries for the first
six months ended September 30, 2013 which resulted in changes in
scope of consolidation): None
(2) Application of simplified or exceptional
accounting: None
(3) Changes in significant accounting and reporting
policies for the quarterly consolidated financial statements
1) Changes due to the revision of accounting
standards: None
2) Others: None
(4) Number of shares outstanding (shares of common
stock)
1) The number of shares outstanding (inclusive of
treasury stock):
As of September 30, 2013: 46,697,800 shares
As of March 31, 2013: 41,295,600 shares
2) The number of treasury stock:
As of September 30, 2013: 758,813 shares
As of March 31, 2013: 758,800 shares
3) The weighted average number of shares
outstanding:
For the first six months ended September 30,
2013: 42,683,242 shares
For the first six months ended September 30,
2012: 40,536,800 shares
(Note) IIJ conducted a 1:200 stock split on common stock with an
effective date of October 1, 2012. The number of shares outstanding
(shares of common stock) in the above have been calculated as if
the stock split were conducted on April 1, 2012, the beginning of
the fiscal year ended March 31, 2013.
CONTACT: For inquiries, contact:
IIJ Investor Relations
Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp
URL: http://www.iij.ad.jp/en/ir
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