EXHIBIT 99.1
IIJ Announces Full Year and Fourth Quarter Financial Results for the Fiscal Year Ended March 31, 2011
TOKYO, May 13, 2011 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) today announced its full year ("FY2010") and 4th quarter ("4Q10") consolidated financial results for the fiscal year ended March 31, 2011.1
| Highlights of Financial Results for FY2011 | ||
| FY2010 Actual Results | FY2011 Target | |
| Revenues | JPY82,418 million ($996 million) | JPY100,000 million |
| Operating Income | JPY4,141 million ($ 50 million) | JPY6,300 million |
| Net Income attributable to IIJ | JPY3,203 million ($ 39 million) | JPY3,400 million |
- Revenues were up 21.2% YoY. Outsourcing services steadily grew and there were 7 months contribution from IIJ Global Solutions Inc. ("IIJ-GS"). Systems Integration ("SI") was down 2.1% YoY.
- Operating income was up 21.4% YoY. Gross margin of network services steadily increased and operating loss related to ATM operation business decreased. Gross margin of SI decreased in relation to the scale down of a large contract, downside effect from the earthquake and initial burden related to the commencement of cloud computing services.
- Net income attributable to IIJ was JPY3,203 million ($39 million), up 43.4% YoY.
Highlights of Fourth Quarter FY2010 Financial Results
- Revenues were JPY25,622 million ($310 million), up 30.1% YoY.
- Operating income was JPY1,711 million ($21 million), up 21.8% YoY. Gross margin of SI largely decreased as there was a contract of very low margin.
- Net income attributable to IIJ was JPY1,206 million ($15 million), up 9.6% YoY.
Financial Targets for FY2011
- IIJ targets revenues of JPY100 billion, operating income of JPY6.3billion, income before income tax expense (benefit) of JPY5.6 billion and net income attributable to IIJ of JPY3.4 billion for FY2011.
- IIJ targets cash dividend of JPY3,000 per share of common stock for FY20112 (JPY1,500 cash dividend for interim-period and fiscal year-end, respectively.)
1Unless 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 JPY82.76 per US$1.00, which was the noon buying rate on March 31, 2011.
2IIJ's 1 common stock is equivalent to 400 ADSs
Overview of FY2010 Financial Results and Business Outlook
"IIJ ended FY2010 with positive growth expectations for the coming years, amid the tough economic environment," said Koichi Suzuki, President and CEO of IIJ.
"During FY2010, we continued our business strategy to enrich our service line-ups to enhance cross-selling. Among many others, the business development of IIJ GIO, our cloud computing service commenced this fiscal year, was especially encouraging. As of FY2010 end, we are servicing over 430 cloud computing projects to both clients we had prior contact with and whom are new to us. FY2010 revenues of IIJ GIO was approximately JPY0.6 billion and monthly revenue for March 2011 has reached JPY120 million. In FY2011, we expect IIJ GIO to earn over JPY3 billion in revenue."
"Another of our FY2010 achievement was the acquisition of IIJ Global Solutions Inc. from AT&T Japan for JPY9.2 billion. For FY2010, revenues and operating income related to IIJ-GS of 7 month were JPY15,094 million and JPY1,190 million."
"As for our FY2010 financial results, our total revenue and income fell short from target as our SI business suffered due to JPY5 billion of revenue decrease by a single large SI contract, the initial cost burden related to IIJ GIO and downside effect from the earthquake. However, with the acquisition of IIJ-GS and the continuous growth from our outsourcing service revenues, our full year revenue increased by 21.2% YoY and operating income increased by 21.4% YoY, respectively."
"For FY2011 financial targets, we target revenue of JPY100 billion and operating income of JPY6.3 billion. Revenues from our network services will continue to increase, large revenue decrease from SI such we had in FY2010 is not anticipated and there will be a full year contribution from IIJ-GS. Operating income is expected to increase by JPY2.2 billion YoY as we expect continuous increase in network services and SI revenues including IIJ GIO, additional profit contribution from IIJ-GS of around JPY0.5 billion and ATM operation business loss to decrease by around JPY0.6 billion."
"FY2010 was just the beginning year for cloud computing in Japan and FY2011 may be an epidemic year. It may bring further paradigm shift to the communication and SI business community. This situation of accelerating outsourcing trend combined with our 15 years of experience providing outsourcing services, pioneering technological skills to develop network services with our own operated network-facilities throughout Japan and strong relationships with over 6,500 blue chip customers, would be a great business opportunity for us. Under these business environment, we would like to further accelerate our business developments aiming for our business to dramatically scale-up to the level such as doubled in the coming five years, with our every effort."
FY2010 Nine Months Financial Results Summary
| Operating Results Summary | |||
| FY2009 | FY2010 | YoY % change | |
| JPY millions | JPY millions | ||
| Total Revenues | 68,006 | 82,418 | 21.2 |
| Network Services3 | 36,972 | 51,662 | 39.7 |
| SI | 30,071 | 29,444 | (2.1) |
| Equipment Sales | 756 | 796 | 5.3 |
| ATM Operation Business | 207 | 516 | 150.0 |
| Total Costs | 54,050 | 65,828 | 21.8 |
| Network Services | 30,533 | 41,678 | 36.5 |
| SI | 21,904 | 22,467 | 2.6 |
| Equipment Sales | 649 | 683 | 5.2 |
| ATM Operation Business | 964 | 1,000 | 3.8 |
| SG&A Expenses and R&D | 10,544 | 12,449 | 18.1 |
| Operating Income | 3,412 | 4,141 | 21.4 |
| Income before Income Tax Expense | 2,859 | 3,834 | 34.1 |
| Net income attributable to IIJ | 2,234 | 3,203 | 43.4 |
| 3From the second quarter of FY2010, "Connectivity and Outsourcing Services Revenues" has been renamed to "Network Services Revenues". | |||
| Segment Summary | ||
| FY2009 | FY2010 | |
| JPY millions | JPY millions | |
| Net Revenues | 68,006 | 82,418 |
| Network services and SI business | 68,228 | 82,357 |
| ATM operation business | 207 | 516 |
| Elimination | 429 | 455 |
| Operating Income (Loss) | 3,412 | 4,141 |
| Network service and SI business | 4,435 | 4,813 |
| ATM operation business | (1,001) | (643) |
| Elimination | 22 | 29 |
We have omitted segment analysis because most of our revenues are dominated by Network services and SI business.
FY2010 Results of Operation
Revenues
Revenues were JPY82,418 million, up 21.2% YoY. Additional revenue of 7 months related to IIJ-GS was JPY15,094 million.
Network Services revenue were JPY51,662 million, up 39.7% YoY.
Revenues for Internet connectivity services for corporate use were JPY14,005 million, up 1.1% YoY. While IP service revenues were affected by the migration of certain large IP contracts and price down pressure at the beginning of the fiscal year, IIJ mobile service and broadband connectivity services increased, respectively.
Revenues for Internet connectivity services for home use were JPY 6,525 million, down 4.8% YoY due to the continuous cancellation of old network services and the planned service termination of one of our OEM clients. There were also affects from exemption of services fees for those individual users affected by the Tohoku Pacific Earthquake.
WAN Services revenue were JPY16,100 million, up 530.5% YoY. There were additional revenues related to IIJ-GS of 7 months.
Outsourcing services revenue were JPY15,032 million, up 9.6% YoY. Services such as anti-spam email services, web security service, data center related services and contents delivery services increased, respectively.
| Number of Contracts for Connectivity Services | |||
| as of March 31, 2010 | as of March 31, 2011 | YoY Change | |
| Internet Connectivity Services (Corporate Use)4 | 63,998 | 86,803 | 22,805 |
| IP Service (-99Mbps) | 926 | 908 | (18) |
| IP Service (100Mbps-999Mbps) | 254 | 305 | 51 |
| IP Service (1Gbps-) | 125 | 126 | 1 |
| IIJ Data Center Connectivity Service | 315 | 305 | (10) |
| IIJ FiberAccess/F and IIJ DSL/F | 28,663 | 42,851 | 14,188 |
| IIJ Mobile Service5 | 32,315 | 40,988 | 8,673 |
| Others | 1,400 | 1,320 | (80) |
| Internet Connectivity Services (Home Use) | 400,667 | 374,328 | (26,339) |
| Under IIJ Brand | 46,900 | 41,176 | (5,724) |
| hi-ho | 168,223 | 151,828 | (16,395) |
| OEM | 185,544 | 181,324 | (4,220) |
| Total Contracted Bandwidth | 650.4 Gbps | 733.4 Gbps | 83.0 Gbps |
| 4From the second quarter of FY2010, "Connectivity Services" has been renamed to "Internet Connectivity Services ". | |||
| 5Contracts of IIJ Mobile Service are of mobile data communication service for corporate use. | |||
| Network Services Revenues Breakdown | |||
| FY2009 | FY2010 | YoY % change | |
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Corporate Use) | 13,847 | 14,005 | 1.1 |
| IP Service6 | 9,214 | 8,962 | (2.7) |
| IIJ FiberAccess/F and IIJ DSL/F | 2,948 | 3,047 | 3.4 |
| IIJ Mobile Service7 | 1,395 | 1,738 | 24.5 |
| Others | 290 | 258 | (11.3) |
| Internet Connectivity Service (Home Use) | 6,854 | 6,525 | (4.8) |
| Under IIJ Brand | 1,034 | 989 | (4.4) |
| hi-ho | 5,254 | 4,996 | (4.9) |
| OEM | 566 | 540 | (4.5) |
| WAN Services8 | 2,553 | 16,100 | 530.5 |
| Outsourcing Services | 13,718 | 15,032 | 9.6 |
| Total Network Services | 36,972 | 51,662 | 39.7 |
SI revenues were JPY29,444 million, down 2.1% YoY. As for systems construction, despite the scale-down from a certain large client (decrease in revenues by JPY3 billion YoY) and affects by the Tohoku Pacific Earthquake, mid- to small sized construction projects accumulated and systems construction projects accompanied by the introduction of cloud computing services increased. As a result, systems construction revenues increased to JPY11,937 million, up 5.1% YoY. Systems operation and maintenance revenues, a recurring revenue, was JPY17,507 million, down 6.5% YoY. Revenues in relation to cloud computing services steadily increased, but the scale-down from a certain large client was very large (decrease in revenues by JPY2 billion YoY).
The order backlog for systems construction and equipment sales was JPY3,796 million, up 20.0% YoY. The order backlog for systems operation and maintenance was JPY 11,347 million, up 9.2% YoY.
Equipment sales revenues were JPY796 million, up 5.3% YoY.
ATM Operation Business revenues were JPY516 million (JPY207 million in FY2009). The ATM operation business is operated by Trust Networks Inc., IIJ's consolidated subsidiary, and it receives a commission for each bank withdrawal transaction when a customer uses its serviced ATMs. As of May 13, 2011, 280 ATMs are placed.
Cost and expense
Cost of revenues was JPY65,828 million, up 21.8% YoY. Cost of revenues related to IIJ-GS of 7 months were JPY12,137 million.
Cost of Network Services revenue was JPY41,678 million, up 36.5% YoY due to the increase in circuit related and outsourcing related costs mainly related to IIJ-GS of 7 months. Gross margin for network services was JPY9,984 million, up 55.0% YoY and gross margin ratio was 19.3%, up 1.9% YoY.
Cost of SI revenues was JPY22,467 million, up 2.6% YoY mainly due to the increase in network operation related and personnel related costs. Gross margin for SI was JPY6,977 million, down 14.6% YoY in relation to the scale down of a large contract, downside effect from the earthquake, the increase in network operation related and personnel related costs from the commencement of cloud computing service "IIJ GIO" and a low margin project in 4Q10.Gross margin ratio was 23.7%.
Cost of Equipment Sales revenues was JPY683million, up 5.2% YoY. Gross margin was JPY113 million and gross margin ratio was 14.2%.
Cost of ATM Operation Business revenues was JPY1,000 million. Gross loss of ATM operation business was JPY484 million, compared to JPY757 million of gross loss for FY2009.
6IP Service revenues include revenues from the Data Center Connectivity Service.
7Revenue from mobile data communication service for home use is included in Internet Connectivity service (home use).
8From 2Q10, "WAN services", which were components of "Outsourcing servicesrevenues" were separately disclosed.
SG&A and R&D Expenses
SG&A and R&D expenses were JPY12,449 million, up 18.1% YoY. SG&A expenses related to IIJ-GS of 7 months was JPY1,767million.
Sales and marketing expenses were JPY6,616 million, up 22.4% YoY mainly due to the increase in personnel related expenses and depreciation and amortization increased. Amortization of customer relationship related to IIJ-GS was JPY255 million and loss on disposal of non-amortized intangible assets was JPY120 million.
General and administrative expenses were JPY5,479 million, up 13.5% YoY mainly due to the increase in personnel related expenses and depreciation and amortization. There were expenses of JPY70 million in relation to asset retirement obligations and restoration expenses, to return the leased office space to its original state, of JPY48 million in relation to FY2011 new office plan.
Research and development expenses were JPY354 million, up 13.0% YoY.
Operating income
Operating income was JPY4,141 million, up 21.4% YoY as gross margin for network services increased and operation loss related to ATM operation business decreased, while SI gross margin decreased resulting from the scale-down of a certain large client.
Other income (expenses)
Other income (expenses) was net other expense of JPY307 million (expense of JPY553 million for FY2009) as losses on write-down of other investments decreased, gains on sale of available-for-sale equity securities increased and interest expenses decreased.
Income before income tax expenses
Income before income tax expenses was JPY3,834 million, up 34.1% YoY (JPY2,859 million for FY2009).
Net Income
Income tax expense was JPY956 million (JPY 1,132million for FY2009). Deferred income tax expenses was JPY607 million (JPY756 million for FY2009).
Equity in net income of equity method investees was JPY123 million (JPY159 million for FY2009).
Net income was JPY 3,001million, up 59.1% YoY (JPY1,886 million for FY2009).
Net income attributable to IIJ
Net loss attributable to noncontrolling interests was JPY202 million (JPY348 million for FY2009), related to Trust Networks Inc. and GDX Japan Inc.
Net income attributable to IIJ was JPY3,203 million, up 43.4% YoY (JPY2,234 million for FY2009).
FY2010 Financial Condition
Balance Sheets
As of March 31, 2011, the balance of total assets was JPY71,497 million, increased by JPY19,377 million from the balance as of March 31, 2010 as a result of the acquisition of IIJ-GS.
For current assets, as compared to each of the respective balances as of March 31, 2010, accounts receivable increased by JPY5,035 million and cash and cash equivalents increased by JPY4,549 million. As for noncurrent assets, property and equipments increased by JPY3,511 million, other intangible assets (net) increased by JPY3,043 million and goodwill increased by JPY2,360 million. As for current liabilities, as compared to each of the respective balances as of March 31, 2010, short-term borrowings increased by JPY8,980 million mainly for the acquisition of IIJ-GS and accounts payable increased by JPY6,606 million. As for noncurrent liabilities, as compared to each of the respective balances as of March 31, 2010, deferred income-noncurrent increased by JPY710 million.
As of March 31, 2011, the balance of other investments was JPY2,794 million, an increased of JPY212 million from the balance as of March 31, 2010. The breakdown of other investments were JPY1,893 million in nonmarketable equity securities, JPY741 million in available-for-sale securities and JPY160 million in other.
As of March 31, 2011, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY5,980 million, and the breakdown of non-amortized intangible assets were JPY5,788 million in goodwill and JPY192 in trademark. As of March 31, 2011, the balance of amortized intangible assets, which was customer relationships, was JPY5,844 million.
Total IIJ shareholders' equity as of March 31, 2011 was JPY29,652 million, an increase of JPY2,333 million from the balance as of March 31, 2010. IIJ Shareholders' equity ratio (total IIJ shareholders' equity/total assets) as of March 31, 2011 was 41.5%.
Cash Flows
Cash and cash equivalents as of March 31, 2011 were JPY13,314 million compared to JPY8,764 million as of March 31, 2010.
Net cash provided by operating activities for FY2010 was JPY12,564 million compared to net cash provided by operating activities of JPY9,621 million for FY2009. Operating income increased YoY mainly due to the increase in gross margin for network services. In addition, there were changes in operating assets and liabilities during FY2010, mainly from the Increase in inventories, prepaid expenses and other current and noncurrent assets of JPY1,021 million, increase in accounts payable of JPY1,995 million and the decrease in account receivable of JPY430 million.
Net cash used in investing activities for FY2010 was JPY13,493 million compared to net cash used in investing activities of JPY3,788 million for FY2009, mainly due to the acquisition of IIJ-GS for JPY9,170 million, the purchase of property and equipments of JPY 3,839million and payment of guarantee deposits of JPY 687 million.
Net cash provided by financing activities for FY2010 was JPY5,521 million compared to net cash used in financing activities of JPY7,238 million for FY2009, mainly due to the net increase in short-term borrowings of JPY8,980 million, principal payments under capital leases of JPY2,989 million and JPY507million for FY2009 year-end and FY2010 interim dividends payments.
FY2011 Financial Targets
Our targets for the fiscal year ending March 31, 2012 are as follows:
| (JPY in millions) | ||||
| Revenues | Operating Income | Income before Income Tax Expense (Benefit) | Net Income attributable to IIJ | |
| 1H FY2011 Target | 47,500 | 2,000 | 1,700 | 1,000 |
| Full FY2011 Target | 100,000 | 6,300 | 5,600 | 3,400 |
Revenue is expected to increase to JPY100 billion as we expect revenues from our network services will continue to increase, large revenue decrease from SI such we had in FY2010 is not anticipated and there will be a full year contribution from IIJ-GS.
Operating income is expected to increase by JPY2.2 billion YoY as we expect continuous increase in network services and SI revenues including IIJ GIO, additional profit contribution from IIJ-GS of around JPY0.5 billion and ATM operation business loss to decrease by around JPY0.6 billion.
Tax rate will be back to normal from FY11.
FY2011 Dividend Forecast
Our FY2011 dividend forecasts are as follows:
| Interim | Year-end | Full-Year | |
| FY2011 Dividend (forecast) | JPY1,500 (forecast) | JPY1,500 (forecast) | JPY3,000 (forecast) |
| FY2010 Dividend | JPY1,250 | JPY1,500 | JPY2,750 |
Other Information
From the second quarter of FY2010, to reflect the acquisition of IIJ Global Solutions Inc. on September 1, 2010, "WAN services", which were components of "Outsourcing services revenues" were separately disclosed to clarify the contents of WAN services revenues. In addition, "Connectivity Services" was renamed to "Internet Connectivity Services".
"Deferred income —Noncurrent" which were in "other noncurrent liabilities" has been reclassified and shown in a separate line due to materiality.
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 | ||
| FY2009 | FY2010 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 8,718 | 10,210 |
| Depreciation and Amortization9 | (5,306) | (5,851) |
| Impairment loss on other intangible assets | -- | (218) |
| Operating Income | 3,412 | 4,141 |
| Other Income (Expense) | (553) | (307) |
| Income Tax Expense | 1,132 | 956 |
| Equity in Net Income of Equity Method Investees | 159 | 123 |
| Net income | 1,886 | 3,001 |
| Net loss attributable to noncontrolling interests | 348 | 202 |
| Net Income attributable to IIJ | 2,234 | 3,203 |
| CAPEX | ||
| FY2009 | FY2010 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 5,584 | 6,752 |
| Acquisition of Assets by Entering into Capital Leases | 2,330 | 2,913 |
| Purchase of Property and Equipment | 3,254 | 3,839 |
Presentation
Presentation Materials will be posted on our web site (http://www.iij.ad.jp/en/IR/) on May 13, 2011.
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 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
For inquiries, contact:
YUKO KAZAMA
IIJ Investor Relations Office
Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp URL: http://www.iij.ad.jp/en/IR
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.
9Depreciation and amortization includes impairment loss on other intangible assets. (See IIJ's consolidated financial statements for details).
| Internet Initiative Japan Inc. | |||||
| Consolidated Balance Sheets (Unaudited) | |||||
| (As of March 31, 2010 and March 31, 2011) | |||||
| As of March 31, 2010 | As of March 31, 2011 | ||||
| Thousands of JPY | % | Thousands of U.S. Dollars | Thousands of JPY | % | |
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | 8,764,415 | 160,870 | 13,313,615 | ||
| Accounts receivable, net of allowance for doubtful accounts of JPY 37,178 thousand and JPY 44,002 thousand at March 31, 2010 and March 31, 2011, respectively | 11,396,597 | 198,542 | 16,431,374 | ||
| Inventories | 807,803 | 7,263 | 601,088 | ||
| Prepaid expenses | 1,593,000 | 20,302 | 1,680,158 | ||
| Deferred tax assets —Current | 1,570,746 | 11,820 | 978,263 | ||
| Other current assets, net of allowance for doubtful accounts of JPY 720 thousand and JPY 43,640 thousand at March 31, 2010 and March 31, 2011, respectively | 762,081 | 18,526 | 1,533,185 | ||
| Total current assets | 24,894,642 | 47.8 | 417,323 | 34,537,683 | 48.3 |
| INVESTMENTS IN EQUITY METHOD INVESTEES | 1,131,354 | 2.2 | 15,128 | 1,251,990 | 1.8 |
| OTHER INVESTMENTS | 2,581,610 | 5.0 | 33,761 | 2,794,046 | 3.9 |
| PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 17,653,271 thousand and JPY 21,891,126 thousand at March 31, 2010 and March 31, 2011, respectively | 12,970,152 | 24.9 | 199,139 | 16,480,724 | 23.1 |
| GOODWILL | 3,620,342 | 6.9 | 72,261 | 5,980,333 | 8.4 |
| OTHER INTANGIBLE ASSETS —Net | 2,819,187 | 5.4 | 70,838 | 5,862,503 | 8.2 |
| GUARANTEE DEPOSITS | 2,003,862 | 3.8 | 22,835 | 1,889,796 | 2.6 |
| Deferred tax assets —Noncurrent | 685,370 | 1.3 | 198 | 16,393 | 0.0 |
| OTHER ASSETS, net of allowance for doubtful accounts of JPY91,319 thousand and JPY81,448 thousand at March 31, 2010 and March 31, 2011, respectively, and net of loan loss valuation allowance of JPY 16,701thousand at March 31, 2010 and March 31 2011, respectively | 1,389,954 | 2.7 | 32,135 | 2,659,521 | 3.7 |
| TOTAL | 52,096,473 | 100.0 | 863,618 | 71,472,989 | 100.0 |
| As of March 31, 2010 | As of March 31, 2011 | ||||
| Thousands of JPY | % | Thousands of U.S. Dollars | Thousands of JPY | % | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Short-term borrowings | 4,450,000 | 162,277 | 13,430,000 | ||
| Capital lease obligations —Current portion | 2,729,673 | 33,687 | 2,787,955 | ||
| Accounts payable | 6,967,654 | 164,018 | 13,574,152 | ||
| Accrued expenses | 1,184,483 | 22,836 | 1,889,891 | ||
| Accrued retirement and pension costs —Current | 14,539 | -- | -- | ||
| Deferred income —current | 1,445,174 | 20,147 | 1,667,336 | ||
| Other current liabilities | 922,345 | 9,861 | 816,117 | ||
| Total current liabilities | 17,713,868 | 34.0 | 412,826 | 34,165,451 | 47.8 |
| CAPITAL LEASE OBLIGATIONS —Noncurrent | 3,657,657 | 7.0 | 43,820 | 3,626,565 | 5.1 |
| ACCRUED RETIREMENT AND PENSION COSTS —Noncurrent | 1,302,054 | 2.5 | 18,935 | 1,567,050 | 2.2 |
| DEFERRED TAX LIABILITIRES —Noncurrent | 1,193,796 | 2.3 | 7,364 | 609,412 | 0.8 |
| DEFERRED INCOME —Noncurrent | 560,677 | 1.1 | 15,358 | 1,270,984 | 1.8 |
| OTHER NONCURRENT LIABILITIES | 304,718 | 0.6 | 7,155 | 592,177 | 0.8 |
| Total Liabilities | 24,732,770 | 47.5 | 505,458 | 41,831,639 | 58.5 |
| COMMITMENTS AND CONTINGENCIES | |||||
| SHAREHOLDERS' EQUITY: | |||||
| Common-stock—authorized, 377,600 shares; issued and outstanding, 206,478 shares at March 31, 2010 and March 31, 2011 | 16,833,847 | 32.3 | 203,406 | 16,833,847 | 23.6 |
| Additional paid-in capital | 27,443,600 | 52.7 | 330,098 | 27,318,912 | 38.2 |
| Accumulated deficit | (16,720,092) | (32.1) | (169,445) | (14,023,259) | (19.6) |
| Accumulated other comprehensive income (loss) | 168,769 | 0.3 | (1,029) | (85,134) | (0.1) |
| Treasury stock—3,934 shares and 3,794 shares held by the company at March 31, 2010 and March 31, 2011, respectively | (406,547) | (0.8) | (4,738) | (392,079) | (0.6) |
| Total Internet Initiative Japan Inc. shareholders' equity | 27,319,577 | 52.4 | 358,292 | 29,652,287 | 41.5 |
| NONCONTROLLING INTERESTS | 44,126 | 0.1 | (132) | (10,937) | (0.0) |
| Total equity | 27,363,703 | 52.5 | 358,160 | 29,641,350 | 41.5 |
| TOTAL | 52,096,473 | 100.0 | 863,618 | 71,472,989 | 100.0 |
| (Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||||
| (Note2) The above presentation as of March 31, 2010 has been changed to conform to the presentation as of March 31, 2011. | |||||
| Internet Initiative Japan Inc. | |||||
| Consolidated Statements of Income (Unaudited) | |||||
| (For the fiscal year ended March 31, 2010 and March 31, 2011) | |||||
| Fiscal Year Ended March 31, 2010 | Fiscal Year Ended March 31, 2011 | ||||
| Thousands of JPY | % of total revenues | Thousands of U.S. Dollars | Thousands of JPY | % of total revenues | |
| REVENUES: | |||||
| Network services: | |||||
| Internet connectivity services (corporate use) | 13,847,116 | 169,220 | 14,004,608 | ||
| Internet connectivity services (home use) | 6,854,258 | 78,844 | 6,525,128 | ||
| WAN services | 2,553,551 | 194,539 | 16,100,046 | ||
| Outsourcing services | 13,717,705 | 181,631 | 15,031,785 | ||
| Total | 36,972,630 | 624,234 | 51,661,567 | ||
| Systems integration: | |||||
| Systems construction | 11,353,598 | 144,231 | 11,936,581 | ||
| Systems operation and maintenance | 18,716,978 | 211,541 | 17,507,099 | ||
| Total | 30,070,576 | 355,772 | 29,443,680 | ||
| Equipment sales | 756,517 | 9,622 | 796,385 | ||
| ATM operation business | 206,657 | 6,242 | 516,574 | ||
| Total revenues | 68,006,380 | 100.0 | 995,870 | 82,418,206 | 100.0 |
| COST AND EXPENSES: | |||||
| Cost of network services | 30,533,726 | 503,601 | 41,678,052 | ||
| Cost of systems integration | 21,903,699 | 271,465 | 22,466,436 | ||
| Cost of equipment sales | 649,315 | 8,256 | 683,285 | ||
| Cost of ATM operation business | 963,862 | 12,089 | 1,000,470 | ||
| Total cost | 54,050,602 | 79.5 | 795,411 | 65,828,243 | 79.9 |
| Sales and marketing | 5,405,075 | 7.9 | 79,942 | 6,616,013 | 8.0 |
| General and administrative | 4,826,006 | 7.1 | 66,206 | 5,479,176 | 6.7 |
| Research and development | 313,112 | 0.5 | 4,274 | 353,732 | 0.4 |
| Total cost and expenses | 64,594,795 | 95.0 | 945,833 | 78,277,164 | 95.0 |
| OPERATING INCOME | 3,411,585 | 5.0 | 50,037 | 4,141,042 | 5.0 |
| OTHER INCOME (EXPENSE): | |||||
| Interest income | 28,691 | 279 | 23,113 | ||
| Interest expense | (306,208) | (3,240) | (268,129) | ||
| Foreign exchange losses | (395) | (386) | (31,975) | ||
| Net gains on sales of other investments | 49,512 | 1,272 | 105,252 | ||
| Losses on write-down of other investments | (342,796) | (2,173) | (179,829) | ||
| Other—net | 18,673 | 538 | 44,515 | ||
| Other expense — net | (552,523) | (0.8) | (3,710) | (307,053) | (0.3) |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 2,859,062 | 4.2 | 46,327 | 3,833,989 | 4.7 |
| INCOME TAX EXPENSE | 1,132,093 | 1.7 | 11,548 | 955,697 | 1.2 |
| EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 159,423 | 0.3 | 1,482 | 122,667 | 0.1 |
| NET INCOME | 1,886,392 | 2.8 | 36,261 | 3,000,959 | 3.6 |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 347,746 | 0.5 | 2,446 | 202,409 | 0.3 |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 2,234,138 | 3.3 | 38,707 | 3,203,368 | 3.9 |
| Fiscal Year Ended March 31, 2010 | Fiscal Year Ended March 31, 2011 | ||||
| NET INCOME PER SHARE | |||||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,544 | 202,644 | |||
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,544 | 202,644 | |||
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,017,600 | 81,057,600 | |||
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,017,600 | 81,057,600 | |||
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 11,030.38 | 191.01 | 15,807.86 | ||
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 11,030.38 | 191.01 | 15,807.86 | ||
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 27.58 | 0.48 | 39.52 | ||
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 27.58 | 0.48 | 39.52 | ||
| (Note 1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||||
| (Note2) The above presentation for the fiscal year ended March 31, 2010 has been changed to conform to the presentation for the fiscal year ended March 31, 2011. | |||||
| Internet Initiative Japan Inc. | |||||||||
| Consolidated Statements of Shareholders' Equity (Unaudited) | |||||||||
| (For the fiscal year ended March 31, 2010 and March 31, 2011) | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
| Total equity | Comprehensive income (loss) | Accumulated deficit | Accumulated other comprehensive income (loss) | Shares of common stock outstanding | Common Stock | Treasury Stock | Additional Paid-in Capital | NON CONTROLLING INTERESTS | |
| Thousands of JPY | Thousands of JPY | Thousands of JPY | Thousands of JPY | Shares | Thousands of JPY | Thousands of JPY | Thousands of JPY | Thousands of JPY | |
| BALANCE, APRIL 1, 2009 | 25,242,919 | (18,549,142) | (320,711) | 206,478 | 16,833,847 | (406,547) | 27,611,737 | 73,735 | |
| Subsidiary stock issuance | 150,000 | (168,137) | 318,137 | ||||||
| Comprehensive income (loss) : | |||||||||
| Net Income(loss) | 1,886,392 | 1,886,392 | 2,234,138 | (347,746) | |||||
| Other Comprehensive income, net of tax | 489,480 | 489,480 | 489,480 | ||||||
| Total comprehensive income | 2,375,872 | 2,375,872 | |||||||
| Dividends paid | (405,088) | (405,088) | |||||||
| BALANCE, MARCH 31, 2010 | 27,363,703 | (16,720,092) | 168,769 | 206,478 | 16,833,847 | (406,547) | 27,443,600 | 44,126 | |
| Subsidiary stock issuance | -- | (147,346) | 147,346 | ||||||
| Comprehensive income (loss): | |||||||||
| Net Income (loss) | 3,000,959 | 3,000,959 | 3,203,368 | (202,409) | |||||
| Other Comprehensive loss, net of tax | (253,903) | (253,903) | (253,903) | ||||||
| Total comprehensive income: | 2,747,056 | 2,747,056 | |||||||
| Dividends paid | (506,535) | (506,535) | |||||||
| Disposal of Treasury stock | 37,126 | 14,468 | 22,658 | ||||||
| BALANCE, MARCH 31, 2011 | 29,641,350 | (14,023,259) | (85,134) | 206,478 | 16,833,847 | (392,079) | 27,318,912 | (10,937) | |
| (For the fiscal year ended March 31, 2011 (In USD)) | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
| Total equity | Comprehensive income (loss) | Accumulated deficit | Accumulated other comprehensive income (loss) | Shares of common stock outstanding | Common Stock | Treasury Stock | Additional Paid-in Capital | NON CONTROLLING INTERESTS | |
| Thousands of USD | Thousands of USD | Thousands of USD | Thousands of USD | Shares | Thousands of USD | Thousands of USD | Thousands of USD | Thousands of USD | |
| BALANCE, APRIL 1, 2010 | 330,639 | (202,031) | 2,039 | 206,478 | 203,406 | (4,913) | 331,605 | 533 | |
| Subsidiary stock issuance | -- | (1,781) | 1,781 | ||||||
| Comprehensive income (loss): | |||||||||
| Net Income (loss) | 36,261 | 36,261 | 38,707 | (2,446) | |||||
| Other Comprehensive loss, net of tax | (3,068) | (3,068) | (3,068) | ||||||
| Total comprehensive income: | 33,193 | 33,193 | |||||||
| Dividends paid | (6,121) | (6,121) | |||||||
| Disposal of Treasury stock | 449 | 175 | 274 | ||||||
| BALANCE, MARCH 31, 2011 | 358,160 | (169,445) | (1,029) | 206,478 | 203,406 | (4,738) | 330,098 | (132) | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||||||||
| Internet Initiative Japan Inc. | |||
| Consolidated Statements of Cash Flows (Unaudited) | |||
| (For the fiscal year ended March 31, 2010 and March 31, 2011) | |||
| Fiscal Year Ended March 31, 2010 | Fiscal Year Ended March 31, 2011 | ||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | |
| OPERATING ACTIVITIES: | |||
| Net income | 1,886,392 | 36,261 | 3,000,959 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 5,306,826 | 70,697 | 5,850,882 |
| Impairment loss on other intangible assets | -- | 2,635 | 218,073 |
| Provision for retirement and pension costs, less payments | 225,915 | 3,067 | 253,818 |
| Provision for (reversal of) allowance for doubtful accounts | 40,467 | (127) | (10,522) |
| Loss on disposal of property and equipment | 639,160 | 285 | 23,588 |
| Net gains on sales of other investments | (49,512) | (1,272) | (105,252) |
| Impairment of other investments | 342,796 | 2,173 | 179,829 |
| Gain on receipt of investment securities | -- | (218) | (18,060) |
| Foreign exchange losses, net | 15,116 | 330 | 27,309 |
| Equity in net income of equity method investees | (159,423) | (1,482) | (122,667) |
| Deferred income tax expense | 756,422 | 7,333 | 606,875 |
| Others | 13,000 | 205 | 16,960 |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | |||
| Decrease (increase) in accounts receivable | (1,179,388) | 5,192 | 429,691 |
| Decrease (increase) in inventories, prepaid expenses and other current and noncurrent assets | 485,711 | (10,045) | (831,338) |
| Increase in accounts payable | 808,845 | 24,110 | 1,995,375 |
| Increase in income taxes payable | 95,819 | 332 | 27,490 |
| Increase in accrued expenses and other current and noncurrent liabilities | 392,948 | 12,339 | 1,021,206 |
| Net cash provided by operating activities | 9,621,094 | 151,815 | 12,564,216 |
| INVESTING ACTIVITIES: | |||
| Purchase of property and equipment | (3,253,629) | (46,387) | (3,839,011) |
| Proceeds from sales of property and equipment | 205,548 | 2,106 | 174,334 |
| Purchase of available-for-sale securities | (73,236) | (1,704) | (141,020) |
| Purchase of other investments | (875,016) | (2,417) | (200,000) |
| Investment in an equity method investee | (22,834) | -- | -- |
| Proceeds from sales of available-for-sale securities | 123,880 | 1,880 | 155,571 |
| Proceeds from sales of other investments | 78,250 | 798 | 66,047 |
| Payments of guarantee deposits | (83,833) | (8,299) | (686,825) |
| Refund of guarantee deposits | 128,192 | 1,996 | 165,193 |
| Payments for refundable insurance policies | (55,020) | (268) | (22,188) |
| Refund from insurance policies | 39,959 | 358 | 29,642 |
| Acquisition of a newly controlled company, net of cash acquired | -- | (110,802) | (9,170,000) |
| Other | -- | (300) | (24,860) |
| Net cash used in investing activities | (3,787,739) | (163,039) | (13,493,117) |
| Fiscal Year Ended March 31, 2010 | Fiscal Year Ended March 31, 2011 | ||
| 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 | 6,000,000 | 19,333 | 1,600,000 |
| Repayments of short-term borrowings with initial maturities over three months | (11,100,000) | (18,729) | (1,550,000) |
| Principal payments under capital leases | (4,082,908) | (36,122) | (2,989,471) |
| Net increase in short-term borrowings with initial maturities less than three months | 2,200,000 | 107,902 | 8,930,000 |
| Proceeds from issuance of subsidiary stock to minority shareholders | 150,000 | -- | -- |
| Dividends paid | (405,088) | (6,121) | (506,535) |
| Proceeds from sales of treasury stock | -- | 449 | 37,126 |
| Net cash provided by (used in) financing activities | (7,237,996) | 66,712 | 5,521,120 |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (18,668) | (520) | (43,019) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,423,309) | 54,968 | 4,549,200 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR | 10,187,724 | 105,902 | 8,764,415 |
| CASH AND CASH EQUIVALENTS, END OF THE YEAR | 8,764,415 | 160,870 | 13,313,615 |
| ADDITIONAL CASH FLOW INFORMATION: | |||
| Interest paid | 307,045 | 3,235 | 267,750 |
| Income taxes paid | 160,398 | 4,188 | 346,561 |
| NONCASH INVESTING AND FINANCING ACTIVITIES: | |||
| Acquisition of assets by entering into capital leases | 2,330,077 | 35,196 | 2,912,806 |
| Facilities purchase liabilities | 628,905 | 18,842 | 1,559,343 |
| Acquisition of a company: | |||
| Assets acquired | -- | 180,524 | 14,940,164 |
| Cash paid | -- | (110,802) | (9,170,000) |
| Liabilities assumed | -- | 69,722 | 5,770,164 |
| (Note 1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||
| (Note2) The above presentation for the fiscal year ended March 31, 2010 has been changed to conform to the presentation for the fiscal year ended March 31, 2011. | |||
4th Quarter FY2010 Consolidated Financial Results (3 months)
The following tables are highlight data of 4th Quarter FY2010 consolidated financial results (unaudited, from January 1, 2011 to March 31, 2011).
| Operating Results Summary | |||
| 4Q09 | 4Q10 | YoY % Change | |
| JPY millions | JPY millions | ||
| Total Revenues: | 19,694 | 25,622 | 30.1 |
| Network Services | 9,372 | 15,552 | 65.9 |
| SI | 9,905 | 9,659 | (2.5) |
| Equipment Sales | 318 | 247 | (22.4) |
| ATM Operation Business | 99 | 164 | 66.3 |
| Cost of Revenues: | 15,358 | 20,572 | 33.9 |
| Network Services | 7,655 | 12,474 | 62.9 |
| SI | 7,152 | 7,591 | 6.1 |
| Equipment Sales | 270 | 210 | (22.1) |
| ATM Operation Business | 281 | 297 | 5.9 |
| SG&A Expenses and R&D | 2,932 | 3,339 | 13.9 |
| Operating Income | 1,404 | 1,711 | 21.8 |
| Income before Income Tax Expense | 1,076 | 1,659 | 54.2 |
| Net Income attributable to IIJ | 1,101 | 1,206 | 9.6 |
| Connectivity and Outsourcing Services Revenues Breakdown and Cost | |||
| 4Q09 | 4Q10 | YoY % Change | |
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Corporate Use) | 3,480 | 3,572 | 2.6 |
| IP Service | 2,257 | 2,256 | (0.0) |
| IIJ FiberAccess/F and IIJ DSL/F | 752 | 782 | 4.1 |
| IIJ Mobile Service | 401 | 471 | 17.3 |
| Others | 70 | 63 | (9.8) |
| Internet Connectivity Service (Home Use) | 1,720 | 1,551 | (9.9) |
| Under IIJ Brand | 260 | 236 | (9.3) |
| hi-ho | 1,320 | 1,178 | (10.8) |
| OEM | 140 | 137 | (2.4) |
| WAN Services | 647 | 6,398 | 889.1 |
| Outsourcing Services | 3,525 | 4,031 | 14.4 |
| Network Services Revenues | 9,372 | 15,552 | 65.9 |
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 | ||
| 4Q09 | 4Q10 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 2,776 | 3,543 |
| Depreciation and Amortization | (1,372) | (1,832) |
| Operating Income | 1,404 | 1,711 |
| Other Income (Expense) | (328) | (52) |
| Income Tax Expense | 90 | 496 |
| Equity in Net Income (Loss) of Equity Method Investees | 92 | (7) |
| Net income | 1,018 | 1,156 |
| Net income attributable to noncontrolling interests | 83 | 50 |
| Net Income attributable to IIJ | 1,101 | 1,206 |
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 | ||
| 4Q09 | 4Q10 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 1,218 | 2,212 |
| Acquisition of Assets by Entering into Capital Leases | 767 | 1,410 |
| Purchase of Property and Equipment | 451 | 802 |
| Internet Initiative Japan Inc. | |||||
| Quarterly Consolidated Statements of Income (Unaudited) | |||||
| (Three Months ended March 31, 2010 and March 31, 2011) | |||||
| Three Months Ended March 31, 2010 | Three Months Ended March 31, 2011 | ||||
| Thousands of JPY | % of total revenues | Thousands of U.S. Dollars | Thousands of JPY | % of total revenues | |
| REVENUES: | |||||
| Network services: | |||||
| Internet connectivity services (corporate use) | 3,479,668 | 43,159 | 3,571,836 | ||
| Internet connectivity services (home use) | 1,720,371 | 18,738 | 1,550,768 | ||
| WAN services | 646,856 | 77,307 | 6,397,936 | ||
| Outsourcing services | 3,525,272 | 48,710 | 4,031,223 | ||
| Total | 9,372,167 | 187,914 | 15,551,763 | ||
| Systems integration: | |||||
| Systems Construction | 5,218,612 | 60,610 | 5,016,059 | ||
| Systems Operation and Maintenance | 4,686,575 | 56,105 | 4,643,273 | ||
| Total | 9,905,187 | 116,715 | 9,659,332 | ||
| Equipment sales | 317,807 | 2,982 | 246,761 | ||
| ATM operation business | 98,440 | 1,978 | 163,690 | ||
| Total revenues | 19,693,601 | 100.0 | 309,589 | 25,621,546 | 100.0 |
| COST AND EXPENSES: | |||||
| Cost of network services | 7,655,368 | 150,721 | 12,473,729 | ||
| Cost of systems integration | 7,152,446 | 91,716 | 7,590,400 | ||
| Cost of equipment sales | 269,369 | 2,537 | 209,940 | ||
| Cost of ATM operation business | 280,609 | 3,590 | 297,104 | ||
| Total cost | 15,357,792 | 78.0 | 248,564 | 20,571,173 | 80.3 |
| Sales and marketing | 1,477,339 | 7.5 | 22,477 | 1,860,161 | 7.2 |
| General and administrative | 1,381,928 | 7.0 | 16,731 | 1,384,663 | 5.4 |
| Research and development | 72,188 | 0.4 | 1,143 | 94,574 | 0.4 |
| Total cost and expenses | 18,289,247 | 92.9 | 288,915 | 23,910,571 | 93.3 |
| OPERATING INCOME | 1,404,354 | 7.1 | 20,674 | 1,710,975 | 6.7 |
| OTHER INCOME (EXPENSE): | |||||
| Interest income | 10,701 | 75 | 6,161 | ||
| Interest expense | (65,036) | (902) | (74,625) | ||
| Foreign exchange gains (loss) | 3,409 | (33) | (2,722) | ||
| Net gains on sales of other investments | 28,872 | 620 | 51,327 | ||
| Losses on write-down of other investments | (293,355) | (96) | (7,966) | ||
| Other—net | (13,089) | (288) | (23,813) | ||
| Other expense — net | (328,498) | (1.6) | (624) | (51,638) | (0.2) |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD INVESTEES | 1,075,856 | 5.5 | 20,050 | 1,659,337 | 6.5 |
| INCOME TAX EXPENSE | 89,902 | 0.5 | 5,997 | 496,288 | 2.0 |
| EQUITY IN NET INCOME (LOSS) OF EQUITY METHOD INVESTEES | 32,259 | 0.2 | (81) | (6,692) | (0.0) |
| NET INCOME | 1,018,213 | 5.2 | 13,972 | 1,156,357 | 4.5 |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 82,632 | 0.4 | 604 | 49,923 | 0.2 |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 1,100,845 | 5.6 | 14,576 | 1,206,280 | 4.7 |
| Three Months Ended March 31, 2010 | Three Months Ended March 31, 2011 | ||||
| NET INCOME PER SHARE | |||||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,544 | 202,684 | |||
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,544 | 202,684 | |||
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,017,600 | 81,073,600 | |||
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,017,600 | 81,073,600 | |||
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 5,435.09 | 71.91 | 5,951.53 | ||
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 5,435.09 | 71.91 | 5,951.53 | ||
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 13.59 | 0.18 | 14.88 | ||
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 13.59 | 0.18 | 14.88 | ||
| (Note 1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||||
| (Note2) The above presentation for the three months ended March 31, 2010 has been changed to conform to the presentation for the three months ended March 31, 2011. | |||||
| Internet Initiative Japan Inc. | |||
| Quarterly Consolidated Statements of Cash Flows (Unaudited) | |||
| (Three Months ended March 31, 2010 and March 31, 2011) | |||
| Three Months Ended March 31, 2010 | Three Months Ended March 31, 2011 | ||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | |
| OPERATING ACTIVITIES: | |||
| Net income | 1,018,213 | 13,972 | 1,156,357 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 1,372,362 | 20,711 | 1,714,029 |
| Impairment loss on other intangible assets | -- | 1,427 | 118,073 |
| Provision for (reversal of) retirement and pension costs, less payments | (12,506) | 632 | 52,322 |
| Provision for allowance for doubtful accounts | 13,393 | 141 | 11,649 |
| Loss on disposal of property and equipment | 616,410 | 99 | 8,186 |
| Net gains on sales of other investments | (28,872) | (620) | (51,327) |
| Impairment of other investments | 293,355 | 96 | 7,966 |
| Foreign exchange gains, net | (1,097) | (20) | (1,629) |
| Equity in net (income) losses of equity method investees | (32,259) | 81 | 6,692 |
| Deferred income tax expense (benefit) | (34,059) | 4,412 | 365,171 |
| Others | 13,000 | (541) | (44,817) |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | |||
| Increase in accounts receivable | (2,836,491) | (3,767) | (311,785) |
| Decrease (increase) in inventories, prepaid expenses and other current and noncurrent assets | 1,123,824 | (1,324) | (109,567) |
| Increase (decrease) in accounts payable | 1,477,895 | (23,617) | (1,954,506) |
| Increase in income taxes payable | 209,397 | 1,915 | 158,475 |
| Increase in accrued expenses and other current and noncurrent liabilities | 167,930 | 36,875 | 3,051,766 |
| Net cash provided by operating activities | 3,360,495 | 50,472 | 4,177,055 |
| INVESTING ACTIVITIES: | |||
| Purchase of property and equipment | (450,852) | (9,690) | (801,940) |
| Proceeds from sales of property and equipment | 27,278 | 2,056 | 170,187 |
| Purchase of available-for-sale securities | (44,052) | (1,142) | (94,552) |
| Purchase of other investments | (625,000) | (604) | (50,000) |
| Proceeds from sales of available-for-sale securities | 56,288 | 1,232 | 101,966 |
| Proceeds from sales of other investments | 21,426 | 437 | 36,146 |
| Payments of guarantee deposits | (23,583) | (3,121) | (258,296) |
| Refund of guarantee deposits | 63,442 | 504 | 41,768 |
| Payments for refundable insurance policies | (13,154) | (60) | (4,998) |
| Other | (1,498) | (51) | (4,238) |
| Net cash used in financing activities | (989,705) | (10,439) | (863,957) |
| Three Months Ended March 31, 2010 | Three Months Ended March 31, 2011 | ||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | |
| FINANCING ACTIVITIES: | |||
| Proceeds from issuance of short-term borrowings with initial maturities over three months | 250,000 | 3,625 | 300,000 |
| Repayments of short-term borrowings with initial maturities over three months | (650,000) | (15,104) | (1,250,000) |
| Principal payments under capital leases | (1,424,846) | (9,423) | (779,830) |
| Net Increase (decrease) in short-term borrowings with initial maturities less than three months | (250,000) | 11,237 | 930,000 |
| Net cash used in financing activities | (2,074,846) | (9,665) | (799,830) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 2,369 | 5 | 444 |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 298,313 | 30,373 | 2,513,712 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 8,466,102 | 130,497 | 10,799,903 |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 8,764,415 | 160,870 | 13,313,615 |
| (Note 1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 82.76 which was the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York prevailing as of March 31, 2011. | |||
| (Note2) The above presentation for the three months ended March 31, 2010 has been changed to conform to the presentation for the three months ended March 31, 2011. | |||
Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the Fiscal Year Ended March 31, 2011("FY2010") in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Fiscal Year Ended March 31, 2011
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]
May 13, 2011
Company name: Internet Initiative Japan Inc. Exchange listed: Tokyo Stock Exchange First Section
Stock code number: 3774 URL: http://www.iij.ad.jp/
Representative: Koichi Suzuki, President and Representative Director
Contact: Akihisa Watai, Managing Director and CFO TEL: (03) 5259-6500
Annual general shareholder's meeting: scheduled on June 28, 2011
Payment of dividend: Scheduled to be started on June 29, 2011
Filing of annual report (Yuka-shoken-houkokusho) to the regulatory organization in Japan: Scheduled on June 30, 2011
Supplemental material on Fiscal year results: Yes
Presentation on Fiscal year results: Yes (for institutional investors and analysts)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2011
(April 1, 2010 to March 31, 2011)
| (1) Consolidated Results of Operations | (% shown is YoY change) | |||||||
| Total Revenues | Operating Income | Income before Income Tax Expense | Net Income attributable to IIJ | |||||
| JPY millions | ％ | JPY millions | ％ | JPY millions | ％ | JPY millions | ％ | |
| Fiscal year ended March 31, 2011 | 82,418 | 21.2 | 4,141 | 21.4 | 3,834 | 34.1 | 3,203 | 43.4 |
| Fiscal year ended March 31, 2010 | 68,006 | (2.5) | 3,412 | 16.9 | 2,859 | 40.5 | 2,234 | 57.4 |
| (Note1) Total comprehensive income | Fiscal Year ended March 31, 2011: JPY2,747 million (up 15.6% YoY) | |||||||
| Fiscal Year ended March 31, 2010: JPY2,376 million | ||||||||
| (Note2) Income before income tax expense represents income from operations before income tax expense and equity in net income in equity method investees, respectively, in IIJ's consolidated financial statements. | ||||||||
| Basic Net Income attributable to IIJ per Share | Diluted Net Income attributable to IIJ per Share | Net Income attributable to IIJ to Total Shareholders' Equity | Income before Income Tax Expense to Total Assets | Total Revenues Operating Margin Ratio | |
| JPY | JPY | % | % | % | |
| Fiscal year ended March 31, 2011 | 15,807.86 | 15,807.86 | 11.2 | 6.2 | 5.0 |
| Fiscal year ended March 31, 2010 | 11,030.38 | 11,030.38 | 8.5 | 5.5 | 5.0 |
| (Reference) Equity in net income of equity method investees | Fiscal Year ended March 31, 2011: JPY123 million | ||||
| Fiscal Year ended March 31, 2010: JPY159 million | |||||
| (2) Consolidated Financial Position | |||||
| Total Assets | Total Equity | Total IIJ Shareholders' Equity | Total IIJ Shareholders' Equity to Total Assets | Shareholders' Equity per share | |
| JPY millions | JPY millions | JPY millions | % | JPY | |
| March 31, 2011 | 71,473 | 29,641 | 29,652 | 41.5 | 146,298.11 |
| March 31, 2010 | 52,096 | 27,364 | 27,320 | 52.4 | 134,882.18 |
| (3) Consolidated Cash Flow | ||||
| Operating Activities | Investing Activities | Financing Activities | Cash and Cash Equivalents (End of the Period) | |
| JPY millions | JPY millions | JPY millions | JPY millions | |
| Fiscal year ended March 31, 2011 | 12,564 | (13,493) | 5,521 | 13,314 |
| Fiscal year ended March 31, 2010 | 9,621 | (3,788) | (7,238) | 8,764 |
2. Dividends
| Dividend per Shares | |||||||||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total | Total cash dividends for the year | Payout Ratio (consolidated) | Ratio of Dividends to Shareholder's Equity (consolidated) | ||||
| JPY | JPY | JPY | JPY | JPY | JPY millions | % | % | ||||
| Fiscal year ended March 31, 2010 | -- | 1,000.00 | -- | 1,250.00 | 2,250.00 | 456 | 20.4 | 1.7 | |||
| Fiscal year ended March 31, 2011 | -- | 1,250.00 | -- | 1,500.00 | 2,750.00 | 557 | 17.4 | 2.0 | |||
| Fiscal year ending March 31, 2012 (Target) | -- | 1,500.00 | -- | 1,500.00 | 3,000.00 | 17.9 | |||||
3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2012
(April 1, 2011 through March 31, 2012)
| (% shown is YoY change) | |||||||||
| Total Revenues | Operating Income | Income before Income Tax Expense (Benefit) | Net Income Attributable to IIJ | Basic Net Income attributable to IIJ per Share | |||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY | |
| Interim Period Ending September 30, 2011 | 47,500 | 38.6 | 2,000 | 66.5 | 1,700 | 69.0 | 1,000 | 16.4 | 4,933.79 |
| Fiscal year ending March 31, 2012 | 100,000 | 21.3 | 6,300 | 54.2 | 5,600 | 48.0 | 3,400 | 6.1 | 16,774.88 |
4. Others
(1) Changes in significant subsidiaries for the Fiscal Year ended March 31, 2011
(Changes in significant subsidiaries for the Fiscal year ended March 31, 2011 which resulted in changes in scope of consolidation): yes
Newly Consolidated (Name: IIJ Global Solutions Inc.) Excluded: (Name: IIJ Technology Inc.)
(2) Changes in Significant Accounting and Reporting Policies for Consolidated Financial Statements
1) Changes due to the revision of accounting standards: No
2) Others: Yes
(3) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding (inclusive of treasury stock):
As of March 31, 2011: 206,478 shares
As of March 31, 2010: 206,478 shares
2) The number of treasury stock:
As of March 31, 2011: 3,794 shares
As of March 31, 2010: 3,934 shares
3) The weighted average number of shares outstanding:
For the Fiscal Year ended March 31, 2011: 202,644 shares
For the Fiscal Year ended March 31, 2010: 202,544 shares
[English Translation]
May 13, 2011
Company name: 1-105 Kanda Jimbo-cho, Chiyoda-ku, Tokyo
Internet Initiative Japan Inc.
Company representative: Koichi Suzuki, President and Representative Director
(Stock Code Number: 3774 The First Section of the Tokyo Stock Exchange)
Contact: Akihisa Watai, Managing Director and CFO
TEL: 03-5259-6500
Information Pertaining to Controlling Shareholders
1. Name of Controlling Shareholders
(as of March 31, 2010)
| Name | Relationship | Its Ownership Percentage (%) | Securities Exchanges where its Shares are Listed |
| Nippon Telegraph and Telephone Corporation | IIJ is NTT's affiliate company | 29.9 (5.0) | Tokyo Stock Exchange, Inc. (First Section) Osaka Securities Exchange, Co., Ltd. (First Section) Nagoya Stock Exchange, Inc. (First Section) Fukuoka Stock Exchange Sapporo Stock Exchange New York Stock Exchange, Inc. London Stock Exchange plc. |
| (Notes) The percentage in parentheses is the indirect ownership by NTT included in the figure above. | |||
2. Position of the Listed Company (IIJ) within Parent Company's Corporate Group and other Parent Company Relationships
a. Position of the Listed Company (IIJ) within the Group of the Parent Company
The ownership percentage by NTT, which is IIJ's largest shareholder, was 29.9% as of March 31, 2011, including its indirect ownership. However, IIJ's sales activities are not affected by NTT's ownership in IIJ and IIJ is maintaining its management independence.
b. Personal Relationships with the Parent Company, other Related Company and their Group Companies
IIJ's board of directors consists of 14 members including 4 outside directors. Takashi Hiroi, an outside director (part-time director) of IIJ, is an employee of NTT (Senior Manager, Strategic Business Development Division of NTT). However, he is monitoring IIJ's business operations as an outside director and does not have any personal relationships, such as family relationships, with IIJ's other directors and auditors. He did not acquire any interest such as capital or business relationships upon becoming an outside director.
3. Business Relationship with NTT Group
IIJ uses services provided by Nippon Telegraph and Telephone East Corporation ("NTT East") and Nippon Telegraph and Telephone West Corporation ("NTT West") for a significant portion of its access circuits, and services provided by NTT Communications Corporation ("NTT Communications") for a significant portion of its domestic and international backbones. The amount paid to NTT East and West, and to NTT Communications for their telecommunication circuits was JPY1,324 million and JPY3,219 million, respectively for the fiscal year ended March 31, 2011.
IIJ leases a part of Internet data center facilities from NTT Group companies to provide our Internet data center services to our customers and the amount paid to NTT Group related to the lease of Internet data center facilities are JPY1,524 million.
Business transactions with the NTT Group are within the scope of normal business practices, and there is no special contract made in relation to the investment by NTT Group.
CONTACT: Internet Initiative Japan Inc.
E-mail: ir@iij.ad.jp Tel: +81-3-5259-6500
URL: http://www.iij.ad.jp/en/IR