Internet Initiative Japan Inc. (Nasdaq:IIJI) (TSE:3774) ("IIJ")
today announced its consolidated financial results for the nine
months ended December 31, 2009.(1)
Highlights of Financial Results for the Nine Months
Ended Dec 2009
-
Revenues were JPY48,313 million ($519.0 million), down 4.9% YoY
due to the continued decline in systems integration revenue.
-
Operating income was JPY2,007 million ($21.6 million), up 8.8%
YoY with continuous increase of connectivity and outsourcing
service gross margin. Operation loss related to the new ATM
operation business was JPY730 million ($7.8 million), up 57.0%
YoY.
-
Net income attributable to IIJ(2) was JPY1,133 million ($12.2
million), up 219.8% YoY.
-
FY2009 revenue target was revised down from JPY73,000 million to
JPY68,000 million, yet profit target remain unchanged.
-
IIJ to absorb two of its wholly-owned subsidiary on April 1,
2010 (Scheduled).
(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
JPY93.08 per US$1.00, which was the noon buying rate on December
31, 2009.
|
(2) Effective April 1, 2009, we have adopted ASC810,
"Consolidations". For details, please refer to page 7 in this
presentation material.
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Nine Months Overview and Business Outlook
"We have achieved income growth for three consecutive quarters
in these tough economic environment," said Koichi Suzuki, President
and CEO of IIJ.
"During the nine months ended December 31, 2009, our business
environment were tough as companies continued to withhold their
investments and kept a tight grip on spending. Cost down pressure
has also been severe. In such economic environment, total revenue
decreased YoY dragged by the decrease in SI revenue. Both systems
construction and systems operation and maintenance were heavily
affected resulting in a weaker than expected outcome. Yet, in such
economic situation, connectivity service and outsourcing service
revenues continued to increase followed by steady demands. Over
1Gbps connectivity service, mobile data communication service, and
outsourcing services such as email and security related continued
to growth."
"Additionally, we continue to operate the company with
discipline," continued Suzuki. "We have taken actions to lower our
cost and expenses to improve profitability. As a result, gross
margin for connectivity and outsourcing increased and general and
administrative expenses decreased YoY. Accordingly, despite the
increase in losses related to the ATM operation business which is
in its start-up phase with 147 ATMs placed as of December 31, 2009,
our operating income is increasing and our operating margin ratio
is improving quarter by quarter."
"For our mid- to long-term growth, to best position ourselves in
the future IT outsourcing market, we have taken several actions. In
November 2009, we have launched our cloud computing service "IIJ
GIO". The pre-sales of this cloud computing service are doing well
and has already been adopted by several clients such as the Cabinet
Office web site."
"We have decided to absorb our two 100% owned consolidated
subsidiaries, which are engaging in systems integration business on
April 1, 2010. As seen in the cloud-computing concept, the trend to
outsource corporate information system with network element are
accelerating. To seize IT demands in this trends, we believe the
best solution would be to unite our internet related network
technology and the systems integration ability of our subsidiaries
through this merger. We will reform ourselves to best seize
mid-term IT demands which should continuously occur and become
strong when the economic situation recovers."
Nine Months Financial Results Summary
Operating Results Summary
|
|
Nine months ended
Dec 31, 2008
|
Nine months ended
Dec 31, 2009
|
YoY %
change
|
|
JPY millions
|
JPY millions
|
|
Total Revenues
|
50,789
|
48,313
|
(4.9%)
|
Connectivity and Outsourcing
Services
|
25,941
|
27,601
|
6.4%
|
SI
|
24,105
|
20,165
|
(16.3%)
|
Equipment Sales
|
726
|
439
|
(39.6%)
|
ATM Operation Business
|
17
|
108
|
526.8%
|
Total Costs
|
41,255
|
38,693
|
(6.2%)
|
Connectivity and Outsourcing
Services
|
21,851
|
22,878
|
4.7%
|
SI
|
18,504
|
14,751
|
(20.3%)
|
Equipment Sales
|
639
|
380
|
(40.5%)
|
ATM Operation Business
|
261
|
684
|
(162.2%)
|
SG&A Expenses and R&D
|
7,690
|
7,613
|
(1.0%)
|
Operating Income
|
1,844
|
2,007
|
8.8%
|
Income before Income Tax Expense
|
1,242
|
1,783
|
43.6%
|
Net income attributable to IIJ
|
354
|
1,133
|
219.8%
|
Segment Summary
|
|
Nine months ended
Dec 31, 2008
|
Nine months ended
Dec 31, 2009
|
|
JPY millions
|
JPY millions
|
Net Revenues
|
50,789
|
48,313
|
Network services and SI
business
|
50,935
|
48,525
|
ATM operation business
|
17
|
108
|
Elimination
|
163
|
320
|
Operating Income (Loss)
|
1,844
|
2,007
|
Network service and SI
business
|
2,326
|
2,754
|
ATM operation business
|
(456)
|
(731)
|
Elimination
|
26
|
16
|
We have omitted segment analysis because most of our revenues
are dominated by Network services and systems integration
business.
Nine Months Financial Results
Revenues
Revenues were JPY48,313 million (down 4.9% YoY).
Connectivity and Outsourcing Services revenue were
JPY27,601 million, up 6.4% YoY. Connectivity service for corporate
use increased by 6.8% YoY. Over 1Gbps IP connectivity services
increased, reaching 121 contracts as of December 31, 2009 (up 39
contracts YoY). IIJ Mobile service also increased with contracts
reaching over 36,000 contracts. For connectivity service for home
use, revenue increased by 5.7% YoY. The shift from ADSL to optical
fiber service which charge higher monthly fees has contributed to
the increase in revenue as well as the increase in mobile data
communication service, launched in December 2008, under hi-ho and
IIJmio brands. For outsourcing services, email related, network
outsourcing related and security related services contributed to
the YoY increase.
SI revenues were JPY20,165 million, down 16.3% YoY.
Systems construction revenues decreased by 38.7% YoY to JPY6,135
million, heavily affected by the weak Japanese economy. Systems
operation and maintenance revenues also slightly decreased by 0.4%
YoY to JPY14,030 million as the decrease in systems construction
revenue had affected the new engagements of systems operation and
maintenance contracts. There were also severe cost down pressure
from large accounts as they are tightening cost reduction. The
order backlog for systems construction and equipment sales was
JPY5,297 million (up 25.0% YoY) and order backlog for systems
operation and maintenance was JPY9,689 million (up 4.1% YoY) as of
as of December 31, 2009, respectively.
Equipment sales revenues were JPY439 million, down 39.6%
YoY.
ATM Operation Business revenues were JPY108 million compared to
JPY17 million for the nine months ended December 2008. As of
December 31, 2009, there are 147 ATMs placed in Japan.
Number of Contracts for Connectivity
Services
|
|
as of Dec 31, 2008
|
as of Dec 31, 2009
|
YoY
Change
|
Connectivity Services (Corporate Use)
|
47,277
|
66,171
|
18,894
|
IP Service (-99Mbps)
|
936
|
927
|
(9)
|
IP Service (100Mbps-999Mbps)
|
223
|
244
|
21
|
IP Service (1Gbps-)
|
82
|
121
|
39
|
IIJ Data Center Connectivity
Service
|
301
|
299
|
(2)
|
IIJ FiberAccess/F and IIJ
DSL/F
|
25,295
|
27,805
|
2,510
|
IIJ Mobile Service(3)
|
18,830
|
35,357
|
16,527
|
Others
|
1,610
|
1,418
|
(192)
|
Connectivity Services (Home Use)
|
450,708
|
404,700
|
(46,008)
|
Under IIJ Brand
|
47,327
|
47,718
|
391
|
hi-ho
|
183,416
|
171,511
|
(11,905)
|
OEM
|
219,965
|
185,471
|
(34,494)
|
Total Contracted Bandwidth
|
476.6 Gbps
|
647.2Gbps
|
170.6Gbps
|
|
|
|
|
Connectivity and Outsourcing Services Revenues
Breakdown
|
|
Nine months ended
Dec 31, 2008
|
Nine months ended
Dec 31, 2009
|
YoY %
change
|
|
JPY millions
|
JPY millions
|
|
Connectivity Service (Corporate Use)
|
9,706
|
10,368
|
6.8%
|
IP Service(4)
|
6,923
|
6,957
|
0.5%
|
IIJ FiberAccess/F and IIJ
DSL/F
|
2,158
|
2,196
|
1.7%
|
IIJ Mobile Service(5)
|
363
|
994
|
173.7%
|
Others
|
262
|
221
|
(15.4%)
|
Connectivity Service (Home Use)
|
4,859
|
5,134
|
5.7%
|
Under IIJ Brand
|
762
|
775
|
1.7%
|
hi-ho
|
3,682
|
3,934
|
6.9%
|
OEM
|
415
|
425
|
2.4%
|
Outsourcing Services
|
11,376
|
12,099
|
6.4%
|
Total Connectivity and Outsourcing
Services
|
25,941
|
27,601
|
6.4%
|
(3) Contracts for mobile data communication service for home use
is included in Connectivity service (home use).
|
(4) IP Service revenues include revenues from the Data Center
Connectivity Service.
|
(5) Revenue from mobile data communication service for home use
is included in Connectivity service (home
use).
|
Cost and expense
Cost of revenues was JPY38,693 million (down 6.2% YoY).
Cost of Connectivity and Outsourcing Services revenue was
JPY22,878 million, up 4.7% YoY largely affected by the increase in
network operation related costs, outsourcing related costs. Circuit
related cost also increased in relation to the growth of mobile
data communication service. Backbone cost was JPY2,745 million,
down 1.1% YoY. Gross margin was JPY4,722 million, up 15.5% YoY and
gross margin ratio was 17.1%, up 1.3% points YoY.
Cost of SI revenues was JPY14,751 million (down 20.3%
YoY) largely due to the decrease in outsourcing related costs 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 JPY5,414 million, down 3.3% YoY and
gross margin ratio was 26.8%, up 3.6% points YoY.
Cost of Equipment Sales revenues was JPY380 million (down
40.5% YoY).
Cost of ATM Operation Business revenues was JPY684
million compared to JPY261 million for the nine months ended
December 2008 as it is in its start-up phase.
SG&A Expenses and R&D
Sales and marketing expenses were JPY3,928 million (up
12.0% YoY). There were increase in personnel related expenses,
disposal of non-amortized intangible assets and amortization
related to the back-office system which began its operation from
this quarter.
General and administrative expenses were JPY3,444
million, down 13.2% 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 JPY 241 million,
up 11.4% YoY as expenses related to IIJ Innovation Institute Inc.
Increased.
Operating income
Operating income increased by 8.8% YoY to JPY 2,007 million.
While operating loss related to the new 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 expense of JPY224 million
compared to net other expense of JPY602 million for the nine months
ended December 2008 as impairment losses on equity securities and
interest expense decreased compared to the nine months ended
December 2008.
Income before income tax expenses
Income before income tax expenses was JPY1,783 million, up 43.6%
YoY.
Net Income
Net income was JPY868 million compared to JPY95 million for the
nine months ended December 2008.
Income tax expense was JPY1,042 million compared to
JPY1,192 million for the nine months ended December 2008. Deferred
tax expenses was JPY790 million compared to JPY972 million for the
nine months ended December 2008.
Equity in net income of equity method investees was
JPY127 million compared to JPY45 million for the nine months ended
December 2008.
Net income attributable to IIJ
Net income attributable to IIJ was JPY 1,133 million, up 219.8%
YoY.
Net losses attributable to noncontrolling interests was
JPY265 million compared to JPY259 million for the nine months ended
December 2008, both related to GDX Japan Inc. and Trust Networks
Inc.
Nine Months Financial Condition
Balance Sheets
As of December 31, 2009, the balance of total assets was
JPY49,002 million, a decrease of JPY3,300 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 JPY1,722 million, accounts receivables decreased by JPY1,682
million, inventories related to SI projects increased by JPY693
million and prepaid expenses related to network equipment
maintenance increased by JPY561 million, respectively. As for
current liabilities, as compared to each of the respective balances
as of March 31, 2009, short-term borrowings decreased by JPY2,250
million and accounts payable decreased by JPY1,029 million.
Noncurrent capital lease obligations decreased by JPY932 million
from the balances as of March 31, 2009.
As of December 31, 2009, we had net deferred tax asset (current)
of JPY492 million and net deferred tax asset (non-current) of
JPY1,770 million, respectively.
The balance of other investments as of December 31, 2009 was
JPY2,117 million, an increase of JPY202 million from the balance as
of March 31, 2009. The breakdown of other investments were JPY1,036
million in nonmarketable equity securities, JPY727 million in
available-for-sale securities and JPY354 million in other.
As of December 31, 2009, the balance of non-amortized intangible
assets (excluding telephone rights) such as goodwill was JPY5,368
million and the balance of amortized intangible assets were JPY227
million. The breakdown of non-amortized intangible assets were
JPY2,639 million in goodwill, JPY2,537 million in customer
relationships and JPY192 million in trademark. The breakdown of
amortized intangible assets were JPY122 million in customer
relationships and JPY105 million in licenses.
Total IIJ shareholders' equity as of December 31, 2009 was
JPY25,818 million, an increase of JPY649 million from the balance
as of March 31, 2009. IIJ Shareholders' equity ratio (IIJ
shareholders' equity/total assets) as of December 31, 2009 was
52.7%, up 4.6 points compared to March 31, 2009.
Cash Flows
Cash and cash equivalents as of December 31, 2009 were JPY8,466
million compared to JPY8,955 million as of December 31, 2008.
Net cash provided by operating activities for the nine
months ended December 31, 2009 was JPY6,261 million compared to net
cash provided by operating activities of JPY5,351 million for the
nine months ended December 31, 2008. While operating income
increased due to the increase in gross margin from connectivity and
outsourcing service and the decrease general and administrative
expenses, there were changes in operating assets and liabilities
during the nine months ended December 31, 2009, mainly resulting
from the decrease in accounts receivables of JPY1,657 million
(decrease of JPY2,656 million for the nine months ended December
31, 2008), increase in inventories and prepaid expenses of JPY638
million (increase of JPY1,249 million for the nine months ended
December 31, 2008) and decrease in accounts payable related to
on-going SI projects of JPY669 million (decrease of JPY2,122
million for the nine months ended December 31, 2008).
Net cash used in investing activities for the nine months
ended December 31, 2009 was JPY2,798 million compared to net cash
used in investing activities of JPY2,926 million for the nine
months ended December 31, 2008, mainly due to payment of JPY2,625
million for the purchase of property and equipment (payment of
JPY2,663 million for the nine months ended December 31, 2008) and
the purchase of short-term and other investments of JPY250 million
(purchase of JPY125 million for the nine months ended December 31,
2008).
Net cash used in financing activities for the nine months
ended December 31, 2009 was JPY5,163 million compared to net cash
used in financing activities of JPY4,911 million for the nine
months ended December 31, 2008, mainly due to principal payments
under capital leases of JPY2,658 million (payment of JPY2,848
million for the nine months ended December 31, 2008), net repayment
of short-term borrowings with initial maturities less than three
months of JPY2,250 million (net repayment of JPY1,350 million for
the nine months ended December 31, 2008) 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 in our consolidated statements of income that
are prepared in accordance with U.S. GAAP.
Adjusted EBITDA
|
|
Nine months ended
Dec 31, 2008
|
Nine months ended
Dec 31, 2009
|
|
JPY millions
|
JPY millions
|
Adjusted EBITDA
|
5,798
|
5,942
|
Depreciation and Amortization
|
3,954
|
3,935
|
Operating Income
|
1,844
|
2,007
|
Other Income (Expense)
|
(602)
|
(224)
|
Income Tax Expense
|
1,192
|
1,042
|
Equity in Net Income (Loss) of Equity
Method Investees
|
45
|
127
|
Net income
|
95
|
868
|
Net income attributable to noncontrolling
interests
|
259
|
265
|
Net Income attributable to IIJ
|
354
|
1,133
|
|
|
|
CAPEX
|
|
Nine months ended
Dec 31, 2008
|
Nine months ended
Dec 31, 2009
|
|
JPY millions
|
JPY millions
|
CAPEX, including capital leases
|
6,348
|
4,187
|
Acquisition of Assets by Entering into
Capital Leases
|
3,685
|
1,563
|
Purchase of Property and
Equipment
|
2,663
|
2,624
|
FY2009 Financial Targets (announced on May 15, 2009)
Our targets for the fiscal year ending March 31, 2010 are as
follows:
(JPY in millions)
|
|
Revenues
|
Operating
Income
|
Income before
Income Tax
Expense
(Benefit)
|
Net Income
attributable to IIJ
|
Full FY2009
|
68,000
|
3,300
|
2,700
|
1,700
|
Revenues for the nine months ended December 31, 2009 was below
our target mainly because systems integration revenues was heavily
affected by the tough business environment with companies
continuing to withhold their investments and keeping a tight grip
on spending. On the contrary, operating income for the nine months
ended December 31, 2009 was in line with our target so far, as
outsourcing related costs and general and administrative expenses
decreased as a result of tight cost control.
For the Full FY2009 target, we have revised downward our revenue
target from JPY73,000 million to JPY68,000 million by taking into
account the revenue level and the SI and equipment sales order
backlog. Targets for operating income, income before income tax
expense (benefit) and net income attributable to IIJ remain
unchanged considering the income level for the nine months ended
December 31, 2009 and this fourth quarter revenue target.
Changes in accounting principles, procedures and
disclosures in quarterly consolidated financial
statements
Accounting Standards Codification
Effective July 1, 2009, IIJ adopted the FASB Accounting
Standards Codification ("ASC") 105, "Generally Accepted Accounting
Principles (the provisions of which were previously included in
SFAS No. 168 "Accounting Standards Codification and the hierarchy
of generally accepted accounting principles"). This pronouncement
prescribes the change which divides non-governmental U.S. GAAP into
the authoritative Codification and the non-authoritative guidance,
doing away with the previous fourlevel hierarchy. Accordingly,
IIJ's consolidated financial statements from the second quarter of
fiscal year ending March 2010 follows the Codification in place of
legacy accounting pronouncements.
Business Combinations
Effective April 1, 2009, IIJ adopted ASC805, "Business
Combinations". ASC805 requires an acquirer in a business
combination to generally recognize and measure all the identifiable
assets acquired, the liabilities assumed, goodwill and any
noncontrolling interest in the acquiree at their fair values as of
the acquisition date. The adoption of ASC805 did not have any
impact on IIJ's results of operations and financial position as
there were no business combinations during the nine months ended
December 31, 2009, however the impact in the future would depend on
the size and the detail of the business combination.
Noncontrolling Interests in Consolidated Financial
Statements
Effective April 1, 2009, IIJ adopted ASC810 " Consolidations".
ASC810 requires noncontrolling interest held by parties other than
the parent be clearly identified, labeled and presented in the
consolidated statement of financial position within equity, but
separate from the parent's equity. ASC810 also require changes in
parent's ownership interest while the parent retains its
controlling financial interest in its subsidiary be accounted for
as equity transactions. Upon the adoption of ASC810,
"Noncontrolling interests", which were previously referred to as
"Minority interests" and classified between "Total liabilities" and
"Shareholders' equity" in the consolidated balance sheets, are now
included as a separate component of "Equity". In addition, "Net
income" in the consolidated statements of income now includes net
income attributable to noncontrolling interests, which was
previously referred to as "Minority interests" and deducted. As a
result, the adoption of ASC810 changed the presentation and
disclosure of noncontrolling interest in the consolidated financial
statements retrospectively, but did not have a material impact on
IIJ's results of operations and financial position.
Presentation
Presentation Materials will be posted on our web site
(http://www.iij.ad.jp/en/IR/) on February 12, 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.
Tables to follow
Internet Initiative Japan Inc.
|
|
Quarterly Consolidated Balance Sheets
(Unaudited)
|
|
(As of March 31, 2009 and December 31,
2009)
|
|
|
|
As of March 31, 2009
|
As of December 31, 2009
|
|
Thousands of
JPY
|
%
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
%
|
ASSETS
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
Cash and cash equivalents
|
10,187,724
|
|
90,955
|
8,466,102
|
|
Accounts receivable, net of allowance for
doubtful accounts of JPY 22,072 thousand and
JPY 29,207 thousand at March 31, 2009
and December 31, 2009, respectively
|
10,256,527
|
|
92,120
|
8,574,513
|
|
Inventories
|
529,756
|
|
13,139
|
1,222,961
|
|
Prepaid expenses
|
1,771,955
|
|
25,063
|
2,332,852
|
|
Deferred tax assets — Current
|
762,221
|
|
5,289
|
492,273
|
|
Other current assets, net of allowance for
doubtful accounts of JPY 11,720 thousand and
JPY 720 thousand at March 31, 2009 and
December 31, 2009, respectively
|
848,586
|
|
6,268
|
583,468
|
|
Total current assets
|
24,356,769
|
46.6
|
232,834
|
21,672,169
|
44.2
|
INVESTMENTS IN EQUITY METHOD INVESTEES
|
947,626
|
1.8
|
11,794
|
1,097,765
|
2.2
|
OTHER INVESTMENTS
|
1,914,594
|
3.7
|
22,742
|
2,116,827
|
4.3
|
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of JPY 16,444,517
thousand and JPY 18,830,595 thousand at March
31, 2009 and December 31, 2009, respectively
|
13,172,891
|
25.2
|
141,394
|
13,160,935
|
26.9
|
GOODWILL
|
2,639,319
|
5.0
|
28,355
|
2,639,319
|
5.4
|
OTHER INTANGIBLE ASSETS — Net
|
3,201,806
|
6.1
|
31,856
|
2,965,166
|
6.1
|
GUARANTEE DEPOSITS
|
2,072,652
|
4.0
|
22,209
|
2,067,234
|
4.2
|
Deferred tax assets — Noncurrent
|
2,253,464
|
4.3
|
19,021
|
1,770,496
|
3.6
|
OTHER ASSETS, net of allowance for doubtful
accounts of JPY 72,800 thousand and JPY 89,100
thousand at March 31, 2009 and December 31 2009,
respectively, and net of loan loss valuation
allowance of JPY 16,701 thousand at March 31,
2009 and December 31 2009, respectively
|
1,742,078
|
3.3
|
16,241
|
1,511,710
|
3.1
|
TOTAL
|
52,301,199
|
100.0
|
526,446
|
49,001,621
|
100.0
|
|
|
|
As of March 31, 2009
|
As of December 31, 2009
|
|
Thousands of
JPY
|
%
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
%
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
Short-term borrowings
|
7,350,000
|
|
54,792
|
5,100,000
|
|
Capital lease obligations —current portion
|
3,272,257
|
|
33,417
|
3,110,449
|
|
Accounts payable
|
6,064,829
|
|
54,099
|
5,035,574
|
|
Accrued expenses
|
1,069,310
|
|
13,413
|
1,248,453
|
|
Accrued retirement and pension costs —current
|
11,959
|
|
128
|
11,959
|
|
Deferred income
|
1,255,749
|
|
14,128
|
1,315,029
|
|
Other current liabilities
|
763,544
|
|
7,807
|
726,688
|
|
Total current liabilities
|
19,787,648
|
37.8
|
177,784
|
16,548,152
|
33.8
|
CAPITAL LEASE OBLIGATIONS —Noncurrent
|
4,866,120
|
9.3
|
42,270
|
3,934,469
|
8.0
|
ACCRUED RETIREMENT AND PENSION COSTS
—Noncurrent
|
1,399,592
|
2.7
|
17,598
|
1,638,013
|
3.3
|
OTHER NONCURRENT LIABILITIES
|
1,004,920
|
1.9
|
10,225
|
951,781
|
2.0
|
Total Liabilities
|
27,058,280
|
51.7
|
247,877
|
23,072,415
|
47.1
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY:
|
|
|
|
|
|
INTERNET INITIATIVE JAPAN INC.
SHAREHOLDERS' EQUITY:
|
|
|
|
|
|
Common-stock — authorized, 377,600 shares;
issued and outstanding, 206,478 shares at
March 31, 2009 and December 31, 2009,
respectively
|
16,833,847
|
32.2
|
180,854
|
16,833,847
|
34.4
|
Additional paid-in capital
|
27,611,737
|
52.8
|
295,009
|
27,459,397
|
56.0
|
Accumulated deficit
|
(18,549,142)
|
(35.5)
|
(191,458)
|
(17,820,937)
|
(36.4)
|
Accumulated other comprehensive loss
|
(320,711)
|
(0.6)
|
(2,659)
|
(247,515)
|
(0.5)
|
Treasury stock—3,934 shares held by
the company at March 31, 2009 and
December 31, 2009, respectively
|
(406,547)
|
(0.8)
|
(4,368)
|
(406,547)
|
(0.8)
|
Total Internet Initiative Japan Inc. shareholders'
equity
|
25,169,184
|
48.1
|
277,378
|
25,818,245
|
52.7
|
NONCONTROLLING INTERESTS
|
73,735
|
0.2
|
1,192
|
110,961
|
0.2
|
Total equity
|
25,242,919
|
48.3
|
278,570
|
25,929,206
|
52.9
|
TOTAL
|
52,301,199
|
100.0
|
526,446
|
49,001,621
|
100.0
|
|
(Note1) The U.S. dollar amounts represent translations of
yen amounts at the rate of JPY 93.08 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 December 31, 2009.
|
(Note2) The above presentation as of March 31, 2009 has
been changed to conform to the presentation as of December 31,
2009.
|
Internet Initiative Japan Inc.
|
Quarterly Consolidated Statements of Income
(Unaudited)
|
(For the nine months ended December 31, 2008 and
December 31, 2009)
|
|
|
Nine Months Ended
December 31, 2008
|
Nine Months Ended
December 31, 2009
|
|
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)
|
9,705,875
|
|
111,382
|
10,367,448
|
|
Connectivity (home use)
|
4,859,054
|
|
55,156
|
5,133,887
|
|
Outsourcing services
|
11,375,933
|
|
129,986
|
12,099,128
|
|
Total
|
25,940,862
|
|
296,524
|
27,600,463
|
|
Systems integration:
|
|
|
|
|
|
Systems Construction
|
10,014,019
|
|
65,911
|
6,134,986
|
|
Systems Operation and Maintenance
|
14,091,056
|
|
150,735
|
14,030,403
|
|
Total
|
24,105,075
|
|
216,646
|
20,165,389
|
|
Equipment sales
|
725,801
|
|
4,713
|
438,710
|
|
ATM operation business
|
17,265
|
|
1,163
|
108,217
|
|
Total revenues
|
50,789,003
|
100.0
|
519,046
|
48,312,779
|
100.0
|
COST AND EXPENSES:
|
|
|
|
|
|
Cost of connectivity and outsourcing services
|
21,851,462
|
|
245,792
|
22,878,358
|
|
Cost of systems integration
|
18,503,892
|
|
158,479
|
14,751,253
|
|
Cost of equipment sales
|
639,053
|
|
4,082
|
379,946
|
|
Cost of ATM operation business
|
260,587
|
|
7,341
|
683,253
|
|
Total cost
|
41,254,994
|
81.3
|
415,694
|
38,692,810
|
80.1
|
Sales and marketing
|
3,506,005
|
6.9
|
42,198
|
3,927,736
|
8.1
|
General and administrative
|
3,967,468
|
7.8
|
37,001
|
3,444,078
|
7.1
|
Research and development
|
216,194
|
0.4
|
2,588
|
240,924
|
0.5
|
Total cost and expenses
|
48,944,661
|
96.4
|
497,481
|
46,305,548
|
95.8
|
OPERATING INCOME
|
1,844,342
|
3.6
|
21,565
|
2,007,231
|
4.2
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
Interest income
|
32,542
|
|
193
|
17,990
|
|
Interest expense
|
(310,146)
|
|
(2,591)
|
(241,172)
|
|
Foreign exchange losses
|
(9,529)
|
|
(41)
|
(3,804)
|
|
Net gains on sales of other investments
|
17,680
|
|
222
|
20,640
|
|
Losses on write-down of other investments
|
(329,216)
|
|
(531)
|
(49,441)
|
|
Other—net
|
(3,513)
|
|
341
|
31,762
|
|
Other expense — net
|
(602,182)
|
(1.2)
|
(2,407)
|
(224,025)
|
(0.5)
|
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME IN
EQUITY METHOD INVESTEES
|
1,242,160
|
2.4
|
19,158
|
1,783,206
|
3.7
|
INCOME TAX EXPENSE
|
1,192,429
|
2.3
|
11,197
|
1,042,191
|
2.2
|
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES
|
45,107
|
0.1
|
1,366
|
127,164
|
0.3
|
NET INCOME
|
94,838
|
0.2
|
9,327
|
868,179
|
1.8
|
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
259,484
|
0.5
|
2,848
|
265,114
|
0.5
|
NET INCOME ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC.
|
354,322
|
0.7
|
12,175
|
1,133,293
|
2.3
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
December 31, 2008
|
Nine Months Ended
December 31, 2009
|
NET INCOME PER SHARE (ADS)
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares)
|
206,023
|
|
202,544
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares)
|
206,063
|
|
202,544
|
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs)
|
82,409,200
|
|
81,017,600
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs)
|
82,425,200
|
|
81,017,600
|
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER SHARE (JPY / U.S. Dollars / JPY)
|
1,719.82
|
60.11
|
5,595.29
|
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER SHARE (JPY / U.S. Dollars / JPY)
|
1,719.48
|
60.11
|
5,595.29
|
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER ADS (JPY / U.S. Dollars / JPY)
|
4.30
|
0.15
|
13.99
|
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER ADS (JPY / U.S. Dollars / JPY)
|
4.30
|
0.15
|
13.99
|
|
(Note1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.08 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 December 31, 2009.
|
(Note2) The above presentation for the nine months ended
December 31, 2008 has been changed to conform to the
presentation for the nine months ended December 31, 2009.
|
Internet Initiative Japan Inc.
|
Quarterly Consolidated Statements of Cash Flows
(Unaudited)
|
(For the nine months ended December 31, 2008 and
December 31, 2009)
|
|
|
Nine Months Ended
December 31, 2008
|
Nine Months Ended
December 31, 2009
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
OPERATING ACTIVITIES:
|
|
|
|
Net Income
|
94,838
|
9,327
|
868,179
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
Depreciation and amortization
|
3,953,643
|
42,270
|
3,934,464
|
Provision for retirement and pension costs,
less payments
|
194,953
|
2,562
|
238,421
|
Provision for allowance for doubtful accounts
and advances
|
17,752
|
291
|
27,074
|
Loss on disposal of property and equipment
|
163,772
|
244
|
22,750
|
Net gains on sales of other investments
|
(17,680)
|
(222)
|
(20,640)
|
Losses on write-down of other investments
|
329,216
|
531
|
49,441
|
Foreign exchange losses
|
20,828
|
174
|
16,213
|
Equity in net income of equity method
investees (net of dividend)
|
(14,727)
|
(1,366)
|
(127,164)
|
Deferred income tax expense
|
972,197
|
8,493
|
790,481
|
Others
|
1,972
|
--
|
--
|
Changes in operating assets and liabilities net of effects
from acquisition of business and a company:
|
|
|
|
Decrease in accounts receivable
|
2,656,278
|
17,803
|
1,657,103
|
Increase in inventories, prepaid expenses and
other current and noncurrent assets
|
(1,248,854)
|
(6,856)
|
(638,113)
|
Decrease in accounts payable
|
(2,122,235)
|
(7,188)
|
(669,050)
|
Decrease in income taxes payable
|
(326,868)
|
(1,220)
|
(113,578)
|
Increase in accrued expenses and other
current and
noncurrent liabilities
- net
|
675,782
|
2,417
|
225,018
|
Net cash
provided by operating activities
|
5,350,867
|
67,260
|
6,260,599
|
INVESTING ACTIVITIES:
|
|
|
|
Purchase of property and equipment
|
(2,663,014)
|
(28,196)
|
(2,624,507)
|
Purchase of available-for-sale securities
|
(99,992)
|
(314)
|
(29,184)
|
Purchase of short-term and other investments
|
(125,264)
|
(2,686)
|
(250,016)
|
Investment in an equity method investee
|
--
|
(245)
|
(22,834)
|
Proceeds from sales of available-for-sale securities
|
--
|
610
|
56,824
|
Proceeds from sales and redemption of short-term and other
investments
|
48,882
|
726
|
67,592
|
Payments of guarantee deposits
|
(82,904)
|
(647)
|
(60,250)
|
Refund of guarantee deposits
|
27,349
|
696
|
64,750
|
Payments for refundable insurance policies
|
(38,504)
|
(450)
|
(41,866)
|
Refund from insurance policies
|
7,382
|
429
|
39,959
|
Other
|
(53)
|
16
|
1,498
|
Net cash used in
investing activities
|
(2,926,118)
|
(30,061)
|
(2,798,034)
|
|
|
|
Nine Months Ended
December 31, 2008
|
Nine Months Ended
December 31, 2009
|
|
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
|
10,500,000
|
61,775
|
5,750,000
|
Repayments of short-term borrowings with initial
maturities over three months
|
(11,550,000)
|
(112,269)
|
(10,450,000)
|
Principal payments under capital leases
|
(2,847,726)
|
(28,557)
|
(2,658,062)
|
Net increase (decrease) in short-term borrowings with
initial
maturities less than three months
|
(300,000)
|
26,321
|
2,450,000
|
Proceeds from issuance of subsidiary stock to
minority shareholders
|
--
|
1,612
|
150,000
|
Dividends paid
|
(412,956)
|
(4,352)
|
(405,088)
|
Payments for acquisition of treasury stock
|
(300,555)
|
--
|
--
|
Net cash used in
financing activities
|
(4,911,237)
|
(55,470)
|
(5,163,150)
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
|
(29,045)
|
(225)
|
(21,037)
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(2,515,533)
|
(18,496)
|
(1,721,622)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD
|
11,470,980
|
109,451
|
10,187,724
|
CASH AND CASH EQUIVALENTS, END
OF
THE PERIOD
|
8,955,447
|
90,955
|
8,466,102
|
|
ADDITIONAL CASH FLOW INFORMATION:
|
|
|
|
Interest paid
|
309,719
|
2,613
|
243,173
|
Income tax paid
|
774,751
|
1,722
|
160,263
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
Acquisition of assets by entering into capital leases
|
3,685,356
|
16,792
|
1,562,959
|
Facilities purchase liabilities
|
154,107
|
1,878
|
174,772
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.08 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 December 31, 2009.
|
(Note 2) The above presentation for the nine months ended
December 31, 2008 has been changed to conform to the
presentation for the nine months ended December 31, 2009.
|
Going Concern Assumption (Unaudited)
|
|
|
For the nine months ended December 31, 2008
|
|
|
Nothing to be reported.
|
|
|
|
|
|
For the nine months ended December 31, 2009
|
|
|
Nothing to be reported.
|
|
|
|
|
|
Segment Information (Unaudited)
|
|
|
Business Segments:
|
|
|
Revenues:
|
|
|
|
|
Nine Months Ended December 31, 2008
|
Nine Months Ended December 31, 2009
|
|
Thousands of JPY
|
Thousands of JPY
|
Network service and systems integration business
|
50,934,525
|
48,524,786
|
Customers
|
50,771,738
|
48,204,562
|
Intersegment
|
162,787
|
320,224
|
ATM operation business
|
17,265
|
108,217
|
Customers
|
17,265
|
108,217
|
Intersegment
|
--
|
--
|
Elimination
|
162,787
|
320,224
|
Consolidated total
|
50,789,003
|
48,312,779
|
Segment profit or loss:
|
|
|
|
Nine Months Ended December 31, 2008
|
Nine Months Ended December 31, 2009
|
|
Thousands of JPY
|
Thousands of JPY
|
Network service and systems integration business
|
2,326,526
|
2,753,891
|
ATM operation business
|
(456,396)
|
(730,462)
|
Elimination
|
25,788
|
16,198
|
Consolidated operating income
|
1,844,342
|
2,007,231
|
|
Substantially all revenues are from customers operating in
Japan. Geographic information is not presented due to
immateriality of revenue attributable to international
operations.
|
|
|
|
Material Changes In Shareholders' Equity
(Unaudited)
|
|
For the nine months ended December 31, 2008
|
|
|
Nothing to be reported.
|
|
|
|
|
|
For the nine months ended December 31, 2009
|
|
|
Nothing to be reported.
|
|
|
3rd Quarter FY2009 Consolidated Financial Results (3
months)
The following tables are highlight data of 3rd Quarter FY2009
consolidated financial results (unaudited, from October 1, 2009 to
December 31, 2009).
Operating Results Summary
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
Total Revenues:
|
17,535
|
16,038
|
(8.5%)
|
Connectivity and Outsourcing
Services
|
8,940
|
9,297
|
4.0%
|
SI
|
8,388
|
6,542
|
(22.0%)
|
Equipment Sales
|
201
|
129
|
(36.0%)
|
ATM Operation Business
|
6
|
70
|
1,012.6%
|
Cost of Revenues:
|
14,170
|
12,656
|
(10.7%)
|
Connectivity and Outsourcing
Services
|
7,510
|
7,567
|
0.8%
|
SI
|
6,326
|
4,702
|
(25.7%)
|
Equipment Sales
|
174
|
111
|
(36.5%)
|
ATM Operation Business
|
160
|
276
|
72.3%
|
SG&A Expenses and R&D
|
2,526
|
2,541
|
0.6%
|
Operating Income
|
839
|
841
|
0.3%
|
Income before Income Tax Expense
|
476
|
758
|
59.1%
|
Net Income attributable to IIJ
|
(13)
|
418
|
--
|
|
|
|
|
Connectivity and Outsourcing Services Revenues Breakdown
and Cost
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
Connectivity and Outsourcing Services
Revenues
|
8,940
|
9,297
|
4.0%
|
Connectivity Service (Corporate
Use)
|
3,378
|
3,480
|
3.0%
|
IP
Service
|
2,358
|
2,308
|
(2.1%)
|
IIJ
FiberAccess/F and IIJ DSL/F
|
725
|
740
|
2.2%
|
IIJ Mobile
Service
|
212
|
361
|
70.3%
|
Others
|
83
|
71
|
(15.4%)
|
Connectivity Service (Home
Use)
|
1,648
|
1,724
|
4.6%
|
Under IIJ
Brand
|
251
|
262
|
4.5%
|
hi-ho
|
1,257
|
1,322
|
5.2%
|
OEM
|
140
|
140
|
(0.2%)
|
Outsourcing Services
|
3,914
|
4,093
|
4.6%
|
Cost of Connectivity and Outsourcing
Services
|
7,510
|
7,567
|
0.8%
|
Backbone Cost (included in the
cost
of Connectivity and Outsourcing
Service)
|
930
|
915
|
(1.6%)
|
Connectivity and Outsourcing Services Gross
Margin Ratio
|
16.0%
|
18.6%
|
―
|
|
|
|
|
SI Revenue Breakdown and Cost
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
SI Revenues
|
8,388
|
6,542
|
(22.0%)
|
Systems
Construction
|
3,724
|
1,987
|
(46.6%)
|
Systems
Operation and Maintenance
|
4,664
|
4,555
|
(2.3%)
|
Cost of SI
|
6,326
|
4,702
|
(25.7%)
|
SI Gross Margin Ratio
|
24.6%
|
28.1%
|
―
|
|
|
|
|
SI and Equipment Sales Order Backlog
|
13,544
|
14,987
|
10.7%
|
|
|
|
|
|
|
|
|
Equipment Sales Revenue and Cost
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
Equipment Sales Revenues
|
201
|
129
|
(36.0%)
|
Cost of Equipment Sales
|
174
|
111
|
(36.5%)
|
Equipment Sales Gross Margin Ratio
|
13.6%
|
14.3%
|
―
|
|
|
|
|
|
|
|
|
ATM Operation Business Revenue and Cost
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
ATM Operation Business Revenues
|
6
|
70
|
1,012.6%
|
Cost of ATM Operation Business
|
160
|
276
|
72.3%
|
|
|
|
|
|
|
|
|
Other Financial Statistics
|
|
3Q08
|
3Q09
|
YoY
Change
|
|
JPY millions
|
JPY millions
|
|
Adjusted EBITDA
|
2,194
|
2,132
|
(2.8%)
|
CAPEX, including capital leases
|
1,832
|
1,574
|
(14.1%)
|
Depreciation and amortization
|
1,355
|
1,291
|
(4.7%)
|
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
|
|
3Q08
|
3Q09
|
|
JPY millions
|
JPY millions
|
Adjusted EBITDA
|
2,194
|
2,132
|
Depreciation and Amortization
|
(1,355)
|
(1,291)
|
Operating Income
|
839
|
841
|
Other Income (Expense)
|
(363)
|
(84)
|
Income Tax Expense
|
653
|
514
|
Equity in Net Income (Loss) of Equity Method
Investees
|
44
|
85
|
Net income
|
(133)
|
328
|
Net income attributable to noncontrolling
interests
|
120
|
90
|
Net Income attributable to IIJ
|
(13)
|
418
|
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
|
|
3Q08
|
3Q09
|
|
JPY millions
|
JPY millions
|
CAPEX, including capital leases
|
1,832
|
1,574
|
Acquisition of Assets by Entering into
Capital Leases
|
917
|
899
|
Purchase of Property and Equipment
|
915
|
675
|
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income
(Unaudited)
(Three Months ended December 31, 2008 and December 31,
2009)
|
|
|
|
|
Three Months Ended
December 31, 2008
|
|
Three Months Ended
December 31, 2009
|
|
|
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)
|
3,378,154
|
|
|
|
37,390
|
|
3,480,241
|
|
|
|
Connectivity (home use)
|
1,647,803
|
|
|
|
18,520
|
|
1,723,836
|
|
|
|
Outsourcing services
|
3,913,676
|
|
|
|
43,969
|
|
4,092,688
|
|
|
|
Total
|
8,939,633
|
|
|
|
99,879
|
|
9,296,765
|
|
|
|
Systems integration:
|
|
|
|
|
|
|
|
|
|
|
Systems Construction
|
3,724,073
|
|
|
|
21,347
|
|
1,986,972
|
|
|
|
Systems Operation and Maintenance
|
4,663,447
|
|
|
|
48,935
|
|
4,554,855
|
|
|
|
Total
|
8,387,520
|
|
|
|
70,282
|
|
6,541,827
|
|
|
|
Equipment sales
|
201,714
|
|
|
|
1,388
|
|
129,124
|
|
|
|
ATM operation business
|
6,295
|
|
|
|
752
|
|
70,039
|
|
|
|
Total revenues
|
17,535,162
|
|
100.0
|
|
172,301
|
|
16,037,755
|
|
100.0
|
|
COST AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
Cost of connectivity and outsourcing services
|
7,510,069
|
|
|
|
81,297
|
|
7,567,089
|
|
|
|
Cost of systems integration
|
6,325,592
|
|
|
|
50,513
|
|
4,701,783
|
|
|
|
Cost of equipment sales
|
174,212
|
|
|
|
1,189
|
|
110,631
|
|
|
|
Cost of ATM operation business
|
160,603
|
|
|
|
2,973
|
|
276,736
|
|
|
|
Total cost
|
14,170,476
|
|
80.8
|
|
135,972
|
|
12,656,239
|
|
78.9
|
|
Sales and marketing
|
1,154,972
|
|
6.6
|
|
14,333
|
|
1,334,099
|
|
8.3
|
|
General and administrative
|
1,298,297
|
|
7.4
|
|
12,122
|
|
1,128,380
|
|
7.1
|
|
Research and development
|
72,517
|
|
0.4
|
|
837
|
|
77,889
|
|
0.5
|
|
Total cost and expenses
|
16,696,262
|
|
95.2
|
|
163,264
|
|
15,196,607
|
|
94.8
|
|
OPERATING INCOME
|
838,900
|
|
4.8
|
|
9,037
|
|
841,148
|
|
5.2
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
6,299
|
|
|
|
53
|
|
4,904
|
|
|
|
Interest expense
|
(103,739)
|
|
|
|
(784)
|
|
(72,983)
|
|
|
|
Foreign exchange loss
|
(13,527)
|
|
|
|
(91)
|
|
(8,423)
|
|
|
|
Net gains on sales of other investments
|
17,680
|
|
|
|
100
|
|
9,338
|
|
|
|
Losses on write-down of other investments
|
(268,124)
|
|
|
|
(196)
|
|
(18,269)
|
|
|
|
Other—net
|
(1,379)
|
|
|
|
20
|
|
1,878
|
|
|
|
Other expense — net
|
(362,790)
|
|
(2.1)
|
|
(898)
|
|
(83,555)
|
|
(0.5)
|
|
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME
IN EQUITY METHOD INVESTEES
|
476,110
|
|
2.7
|
|
8,139
|
|
757,593
|
|
4.7
|
|
INCOME TAX EXPENSE
|
653,305
|
|
3.7
|
|
5,526
|
|
514,382
|
|
3.2
|
|
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES
|
44,272
|
|
0.2
|
|
913
|
|
85,017
|
|
0.5
|
|
NET INCOME (LOSS)
|
(132,923)
|
|
(0.8)
|
|
3,526
|
|
328,228
|
|
2.0
|
|
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
|
119,691
|
|
0.7
|
|
964
|
|
89,678
|
|
0.6
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN INC.
|
(13,232)
|
|
(0.1)
|
|
4,490
|
|
417,906
|
|
2.6
|
|
|
|
|
Three Months Ended
December 31, 2008
|
|
Three Months Ended
December 31, 2009
|
|
NET INCOME PER SHARE (ADS)
|
|
|
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares)
|
205,117
|
|
|
|
202,544
|
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares)
|
205,117
|
|
|
|
202,544
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs)
|
82,046,800
|
|
|
|
81,017,600
|
|
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs)
|
82,046,800
|
|
|
|
81,017,600
|
|
BASIC NET INCOME (LOSS)
ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. PER SHARE
(JPY / U.S. Dollars / JPY)
|
(64.51)
|
|
22.17
|
|
2,063.29
|
|
DILUTED NET INCOME (LOSS)
ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. PER SHARE
(JPY / U.S. Dollars / JPY)
|
(64.51)
|
|
22.17
|
|
2,063.29
|
|
BASIC NET INCOME (LOSS)
ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. PER ADS
(JPY / U.S. Dollars / JPY)
|
(0.16)
|
|
0.06
|
|
5.16
|
|
DILUTED NET INCOME (LOSS)
ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. PER ADS
(JPY / U.S. Dollars / JPY)
|
(0.16)
|
|
0.06
|
|
5.16
|
|
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.08 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 December 31, 2009.
|
(Note 2) The above presentation for the three months ended
December 31, 2008 has been changed to conform to the
presentation for the three months ended December 31, 2009.
|
Internet Initiative Japan Inc.
|
Quarterly Consolidated Statements of Cash Flows
(Unaudited)
|
(Three Months ended December 31, 2008 and December 31,
2009)
|
|
|
Three Months Ended
December 31, 2008
|
Three Months Ended
December 31, 2009
|
|
Thousands of
JPY
|
Thousands of
U.S. Dollars
|
Thousands of
JPY
|
OPERATING ACTIVITIES:
|
|
|
|
Net income (losses)
|
(132,923)
|
3,526
|
328,228
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
Depreciation and amortization
|
1,354,538
|
13,869
|
1,290,948
|
Provision for retirement and pension costs,
less payments
|
65,470
|
989
|
92,052
|
Provision for allowance for doubtful
accounts and advances
|
9,361
|
298
|
27,720
|
Loss on disposal of property and equipment
|
128,044
|
48
|
4,499
|
Net gains on sales of other investments
|
(17,680)
|
(100)
|
(9,338)
|
Losses on write-down of other investments
|
268,124
|
196
|
18,269
|
Foreign exchange losses (gains)
|
11,961
|
(21)
|
(1,999)
|
Equity in net income of equity method investees
|
(44,272)
|
(913)
|
(85,017)
|
Deferred income tax expense
|
594,214
|
4,487
|
417,616
|
Others
|
265
|
--
|
--
|
Changes in operating assets and liabilities net of effects
from acquisition of business and a company:
|
|
|
|
Decrease in accounts receivable
|
400,457
|
1,309
|
121,875
|
Increase in inventories, prepaid expenses and
other current and noncurrent assets
|
(837,254)
|
(4,313)
|
(401,483)
|
Decrease in accounts payable
|
(884,216)
|
(1,655)
|
(154,017)
|
Increase (decrease) in income taxes payable
|
30,525
|
(747)
|
(69,577)
|
Increase (decrease) in
accrued expenses, other current
and noncurrent
liabilities — net
|
399,665
|
(1,197)
|
(111,391)
|
Net cash provided by operating activities
|
1,346,279
|
15,776
|
1,468,385
|
INVESTING ACTIVITIES:
|
|
|
|
Purchase of property and equipment
|
(915,042)
|
(7,257)
|
(675,456)
|
Purchase of available-for-sale securities
|
--
|
(138)
|
(12,817)
|
Purchase of short-term and other investments
|
(6,001)
|
(537)
|
(50,000)
|
Proceeds from sales of available-for-sale securities
|
--
|
374
|
34,800
|
Proceeds from sales and redemption of short-term and
other investments
|
36,873
|
104
|
9,693
|
Payments of guarantee deposits
|
(4,186)
|
(168)
|
(15,607)
|
Refund of guarantee deposits
|
9,467
|
303
|
28,188
|
Payments for refundable insurance policies
|
(12,890)
|
(139)
|
(12,936)
|
Other
|
51
|
13
|
1,179
|
Net cash used in investing activities
|
(891,728)
|
(7,445)
|
(692,956)
|
|
|
Three Months Ended
December 31, 2008
|
Three Months Ended
December 31, 2009
|
|
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
|
5,100,000
|
6,983
|
650,000
|
Repayments of short-term borrowings with initial
maturities over three months
|
(5,675,000)
|
(54,792)
|
(5,100,000)
|
Principal payments under capital leases
|
(1,103,879)
|
(10,184)
|
(947,971)
|
Net increase (decrease) in short-term borrowings with
initial maturities less than three months
|
1,375,000
|
25,247
|
2,350,000
|
Proceeds from issuance of subsidiary stock to
 minority shareholders
|
--
|
1,612
|
150,000
|
Dividends paid
|
(206,478)
|
(2,176)
|
(202,544)
|
Payments for acquisition of treasury
stock
|
(300,555)
|
--
|
--
|
Net cash
used in financing activities
|
(810,912)
|
(33,310)
|
(3,100,515)
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
|
(7,427)
|
23
|
2,171
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(363,788)
|
(24,956)
|
(2,322,915)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD
|
9,319,235
|
115,911
|
10,789,017
|
CASH AND
CASH EQUIVALENTS, END OF
THE
PERIOD
|
8,955,447
|
90,955
|
8,466,102
|
|
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 93.08 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 December 31, 2009.
|
(Note 2) The above presentation for the three months ended
December 31, 2008 has been changed to conform to the
presentation for the three months ended December 31, 2009.
|
Note: The following information is provided to disclose Internet
Initiative Japan Inc. ("IIJ") financial results (unaudited) for the
nine month ended December 31, 2009 in the form defined by the Tokyo
Stock Exchange.
Consolidated Financial Results for the Nine Months Ended
December 31, 2009
[Under accounting principles generally accepted in the United
States ("U.S. GAAP")]
February
12, 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, Director and
CFO
TEL: (03) 5259-6500
Filing of quarterly report (Shihanki-hokokusho) to the
regulatory organization in Japan: February 15, 2010 (Scheduled)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine months Ended
December 31, 2009
(April 1, 2009 to December 31, 2009)
(1) Consolidated Results of Operations
|
|
(% shown is YoY change)
|
|
|
Total Revenues
|
Operating Income
|
Income before Income
Tax Expense (Benefit)
|
Net Income
attributable to IIJ
|
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
Nine months ended December 31, 2009
|
48,313
|
(4.9)
|
2,007
|
8.8
|
1,783
|
43.6
|
1,133
|
219.8
|
Nine months ended December 31, 2008
|
50,789
|
5.0
|
1,844
|
(37.5)
|
1,242
|
(54.2)
|
354
|
(91.3)
|
|
|
Basic Net Income attributable to IIJ per Share
|
Diluted Net Income attributable to IIJ per Share
|
|
JPY
|
JPY
|
Nine months ended December 31, 2009
|
5,595.29
|
5,595.29
|
Nine months ended December 31, 2008
|
1,719.82
|
1,719.48
|
|
|
|
(Note) Effective April 1, 2009, we adopted FASB
Accounting Standards Codification ("ASC") 810, "Consolidations"
(the provisions of which were previously included in SFAS No. 160
"Noncontrolling Interests in Consolidated Financial Statements – an
amendment of ARB No. 51"). According to this, in this document,
Income before income tax expense (benefit) represents income from
operations before income tax expense and equity in net income in
equity method investees 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
|
IIJ Shareholders' Equity
|
IIJ Shareholders' Equity as a percentage of
Total Assets
|
IIJ Shareholders'
Equity per share
|
|
JPY millions
|
JPY millions
|
%
|
JPY
|
December 31, 2009
|
49,002
|
25,818
|
52.7
|
127,469.81
|
March 31, 2009
|
52,301
|
25,169
|
48.1
|
124,265.27
|
(Note) With the adoption of ASC810, Shareholders' equity,
shareholders' equity as a percentage of total assets and
shareholders' equity per share were renamed to IIJ Shareholders'
equity, IIJ shareholders' equity as a percentage of total assets
and IIJ shareholders' equity per share, respectively, from fiscal
year ending March 31, 2010.
|
|
|
|
|
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
|
--
|
--
|
--
|
Fiscal year ending March 31, 2010 (Target)
|
--
|
--
|
--
|
1,000.00
|
2,000.00
|
(Note) Changes to Dividend Target during the three months ended
December 31, 2009: None
|
|
|
|
|
|
3. Target of Consolidated Financial Results for the Fiscal
Year Ending March 31, 2010
(April 1, 2009 through March 31,
2010)
(% shown is YoY change)
|
|
|
|
|
Total Revenues
|
Operating Income
|
Income before Income Tax Expense (Benefit)
|
|
JPY millions
|
%
|
JPY millions
|
%
|
JPY millions
|
%
|
Fiscal year ending March 31, 2010
|
68,000
|
(2.5)
|
3,300
|
13.1
|
2,700
|
32.7
|
(Note) Changes to target for year-end consolidated financial
results for the fiscal year ending March 31, 2010 during the three
months ended September 30, 2009: Yes
|
|
|
|
|
|
|
Net income attributable to IIJ:
|
|
|
|
|
|
|
Fiscal year ending March 31, 2010: JPY1,700 million
|
|
|
|
|
|
|
Basic net income per share attributable to IIJ shareholders:
|
|
|
|
|
|
|
Fiscal year ending March 31, 2010: JPY8,393.24
|
|
|
|
|
|
|
4. Others
(1) Change of Condition in Consolidated Subsidiaries during the
Nine Months Ended December 31, 2009
(Change of Condition in Specific
Consolidated Subsidiaries with a Change of Scope of Consolidation):
None
(2) Application of Simplified Accounting Method or Specific
Accounting Principles for quarterly consolidated financial
statements: None
(3) Changes in Significant Accounting and Reporting Policies for
Consolidated Financial Statements
1) Changes due to the revision of accounting standards: Yes
2) Others: None
(4) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding (inclusive of treasury
stock):
As of December 31,
2009:
206,478 shares
As of March 31, 2009:
206,478 shares
2) The number of treasury stock:
As of December 31,
2009: 3,934 shares
As of March 31,
2009:
3,934 shares
3) The weighted average number of shares outstanding:
For the nine months ended December 31,
2009: 202,544 shares
For the nine months ended December 31,
2008: 202,544 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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