EXHIBIT 99.1
TOKYO, Feb. 8, 2012 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) announced today its consolidated financial results for the nine months of Fiscal Year Ending March 31, 2012 (from April 1 to December 31, 2011, "3Q11").1
| Highlights of 3Q11 Financial Results | |
| Revenues | JPY70,752 million ($919.1 million) |
| Operating Income | JPY3,998 million ($51.9 million) |
| Net Income attributable to IIJ | JPY2,390 million ($31.0 million) |
| ▪ 3Q11 revenue increased by 24.6% YoY followed by steady demands for our recurring type services and the additional revenue related to IIJ Global Solutions ("IIJ-Global"), a consolidated subsidiary from Sep. 1, 2010. |
| ▪ 3Q11 operating income increased by 64.5% YoY and net income attributable to IIJ increased by 19.7%. |
| ▪ Full FY2011 revenue target was revised from JPY1,000 million to JPY970 million mainly due to weak SI revenues. Profit target remain unchanged. |
Overview of 3rd Quarter FY2011 Financial Results and Business Outlook
"Outsourcing trend for Japanese IT systems has been a tailwind for us. Our business continued to show steady growth and we remain confident with our overall business strategy. For this fiscal year, we have some cost burden related to our new services and projects, especially cloud computing, FX services and ATM operation business, yet they are showing good progress so far and would contribute to income growth next fiscal year," said Koichi Suzuki, President and CEO of IIJ.
"Regarding our cloud computing service "IIJ GIO", the numbers of clients are continuously increasing and leveraging our client bases, we are now providing "IIJ GIO" to many blue-chip companies such as NTT DOCOMO, Nippon Life Insurance, Sumitomo Forestry, Japan Mint, Tokyo Stock Exchange, Ricoh and more. Transaction volumes from Social Game Provider are also increasing alongside with their increasing usage. Cloud computing revenues for the 9 months ended December 2011 has reached over 2 billion yen."
"Related to our global business expansion, IIJ-Global has established a subsidiary in Shanghai, China in January 2012. As a Group, in effort to meet and supply demands from Japanese companies that are making inroads into foreign market, we will continue to expand our global network services. We are now providing private cloud computing service in the United States to our largest Japanese Social Game client and we expect to bring our cloud computing service to the Asian region soon."
"Systems construction revenues for this third quarter decreased YoY as orders received in the second quarter were low affected by the weak Japanese economic situation. However, we accumulated order backlogs during this third quarter and expect revenues to realize going forward."
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 JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011.
| Operating Results Summary | |||
| 3Q10 | 3Q11 | YoY % change | |
| JPY millions | JPY millions | ||
| Total Revenues | 56,797 | 70,752 | 24.6 |
| Network Services | 36,110 | 47,242 | 30.8 |
| SI | 19,784 | 21,709 | 9.7 |
| Equipment Sales | 550 | 879 | 59.9 |
| ATM Operation Business | 353 | 922 | 161.4 |
| Total Costs | 45,257 | 56,654 | 25.2 |
| Network Services | 29,205 | 37,587 | 28.7 |
| SI | 14,876 | 17,267 | 16.1 |
| Equipment Sales | 473 | 787 | 66.2 |
| ATM Operation Business | 703 | 1,013 | 44 |
| SG&A Expenses and R&D | 9,110 | 10,100 | 10.9 |
| Operating Income | 2,430 | 3,998 | 64.5 |
| Income before Income Tax Expense | 2,175 | 3,780 | 73.8 |
| Net income attributable to IIJ | 1,997 | 2,390 | 19.7 |
| Segment Summary | ||
| 3Q10 | 3Q11 | |
| JPY millions | JPY millions | |
| Net Revenues | 56,797 | 70,752 |
| Network services and SI business | 56,776 | 70,204 |
| ATM operation business | 353 | 922 |
| Elimination | 332 | 374 |
| Operating Income (Loss) | 2,430 | 3,998 |
| Network service and SI business | 2,922 | 4,250 |
| ATM operation business | -465 | (194) |
| Elimination | 27 | 58 |
| We have omitted segment analysis because most of our revenues are dominated by Network services and SI business. | ||
3rd Quarter FY2011 Results of Operation
Revenues
Revenues were JPY70,752 million, up 24.6% YoY. In addition to the revenues from IIJ-Global of JPY19,442 million (9months) and continuous growth of network services revenues contributed to total revenue growth.
Network Services revenues were JPY47,242 million, up 30.8% YoY.
Revenues for Internet connectivity services for corporate use were JPY10,920 million, up 4.7% YoY. Both the number of contracts for IIJ Mobile Service and IP Service increased. Due to the cancellation of old type connectivity services, the revenues for Internet connectivity services for home use decreased to JPY4,328 million, down 13.0% YoY.
WAN Services revenues were JPY19,177 million, up 97.7% YoY. There was additional revenue related to IIJ-Global as well as the increase in the number of new contracts of IIJ's own WAN service.
Outsourcing services revenues were JPY12,817 million, up 16.5% YoY. Data center service, IIJ GIO Hosting Package Service and web security-related services grew continuously.
| Network Services Revenues Breakdown | ||||||
| 3Q10 | 3Q11 | YoY % change | ||||
| JPY millions | JPY millions | |||||
| Internet Connectivity Services (Corporate Use) | 10,433 | 10,920 | 4.7 | |||
| IP Service2 | 6,705 | 6,911 | 3.1 | |||
| IIJ FiberAccess/F and IIJ DSL/F | 2,265 | 2,352 | 3.8 | |||
| IIJ Mobile Service3 | 1,268 | 1,473 | 16.3 | |||
| Others | 195 | 184 | (5.4) | |||
| Internet Connectivity Services (Home Use) | 4,974 | 4,328 | (13.0) | |||
| Under IIJ Brand | 753 | 671 | (11.0) | |||
| hi-ho | 3,818 | 3,222 | (15.6) | |||
| OEM | 403 | 435 | 7.9 | |||
| WAN Services | 9,702 | 19,177 | 97.7 | |||
| Outsourcing Services | 11,001 | 12,817 | 16.5 | |||
| Total Network Services | 36,110 | 47,242 | 30.8 | |||
| Number of Contracts for Connectivity Services and Total Contracted Bandwidth | ||||||
| as of December 31, 2010 | as of December 31, 2011 | YoY Change | ||||
| Internet Connectivity Services (Corporate Use) | 75,287 | 93,345 | 18,058 | |||
| IP Service (-99Mbps) | 903 | 938 | 35 | |||
| IP Service (100Mbps-999Mbps) | 281 | 342 | 61 | |||
| IP Service (1Gbps--) | 127 | 132 | 5 | |||
| IIJ Data Center Connectivity Service | 307 | 303 | (4) | |||
| IIJ FiberAccess/F and IIJ DSL/F | 38,034 | 43,425 | 5,391 | |||
| IIJ Mobile Service4 | 34,303 | 46,964 | 12,661 | |||
| Others | 1,332 | 1,241 | (91) | |||
| Internet Connectivity Services (Home Use) | 378,985 | 383,745 | 4,760 | |||
| Under IIJ Brand | 43,057 | 37,322 | (5,735) | |||
| hi-ho | 159,725 | 148,856 | (10,869) | |||
| OEM | 176,203 | 197,567 | 21,364 | |||
| Total Contracted Bandwidth | 702.0 Gbps | 853.0 Gbps | 151.0 Gbps | |||
| 2 IP Service revenues include revenues from the Data Center Connectivity Service. | ||||||
| 3 Revenue from mobile data communication service for home use is included in Internet Connectivity service (home use). | ||||||
| 4 Contracts of IIJ Mobile Service are of mobile data communication service for corporate use. | ||||||
SI revenues were JPY 21,709 million, up 9.7% YoY. Systems construction revenue, a one-time revenue, increased by 6.2% YoY to JPY 7,349 million. System operation and maintenance revenues, a recurring revenue, increased by 11.6% YoY to JPY14,360 million due to the increased demands for IIJ GIO Component Service and customer-oriented system operation and maintenance.
The order backlog for systems construction and equipment sales as of Dec. 31, 2011 was JPY5,741 million, down 3.1% YoY. The order backlog for systems operation and maintenance as of Dec. 31, 2011 was JPY13,039 million, up 19.8% YoY.
Equipment sales revenues were JPY879 million, up 59.9% YoY.
ATM Operation Business revenues were JPY922 million, up 161.4% YoY. 389 ATMs are placed as of Feb. 8, 2012.
Cost and expense
Cost of revenues was JPY56,654 million, up 25.2% YoY. Cost of revenues related to IIJ-Global was JPY 15,625 million (JPY6,976 million for 3Q10).
Cost of Network Services revenue was JPY37,587 million, up 28.7% YoY due to the increase in circuit-related and outsourcing-related costs of IIJ-Global. Gross margin for network services was JPY9,655 million, up 39.8% YoY and gross margin ratio was 20.4%, up 1.3% YoY.
Cost of SI revenues was JPY17,267 million, up 16.1% YoY (JPY 14,876 million for 3Q10). Outsourcing-related costs and network operation-related costs mainly for IIJ GIO increased. Gross margin for SI was JPY4,441 million, down 9.5% YoY and gross margin ration was 20.5%, down 4.4% YoY.
Cost of Equipment Sales revenues was JPY787 million, up 66.2% YoY. Gross margin was JPY92 million, up 20.8% YoY and gross margin ratio was 10.5%.
Cost of ATM Operation Business revenues increased to JPY1,013 million (JPY703 million for 3Q10) in relation to the increase in the number of ATMs. Gross loss of ATM operation business decreased to JPY91 million from gross loss of JPY350 million for 3Q10.
SG&A and R&D Expenses
SG&A and R&D expenses were JPY10,100 million, up 10.9% YoY. SG&A expenses related to IIJ-Global was JPY2,273 million.
Sales and marketing expenses were JPY5,940 million, up 24.9% YoY mainly due to the increase in personnel-related and advertisement expenses. Amortization of customer relationship related to IIJ-Global was JPY319 million.
General and administrative expenses were JPY3,921 million, down 4.2% YoY. We had no large one-time disposal of fixed assets like the one we had in 3Q10.
Research and development expenses were JPY239 million, down 7.6% YoY.
Operating income
Operating income was JPY3,998 million, up 64.5% YoY as gross margin of network services revenues increased and gross loss of ATM operation business decreased.
Other income (expenses)
Other income (expenses) was expense of JPY218 million, mainly due to interest expenses and losses on write-down of other investments.
Income before income tax expenses
Income before income tax expenses was JPY3,780 million, up 73.8% YoY (JPY2,175 million in 3Q10).
Net Income
Income tax expense was JPY1,603 million (JPY459 million in 3Q10).
Equity in net income of equity method investees was JPY153 million (JPY129 million in 3Q10). Net income was JPY2,330 million, up 26.3% YoY (JPY1,845 million in 3Q10).
Net income attributable to IIJ
Net loss attributable to noncontrolling interests was JPY60 million (JPY152 million in 3Q10), mainly related to Trust Networks Inc.
Net income attributable to IIJ was JPY2,390 million, up 19.7% YoY (JPY1,997 million in 3Q10).
3rd Quarter FY2011 Financial Condition
Balance Sheets
As of December 31, 2011, the balance of total assets was JPY71,004 million, decreased by JPY469 million from the balance as of March 31, 2011.
For current assets, as compared to each of the respective balances as of March 31, 2011, cash and cash equivalents decreased by JPY2,386 million, accounts receivable decreased by JPY976 million and prepaid expenses increased by JPY1,017 million. As for noncurrent assets, as compared to the respective balance as of March 31, 2011, property and equipments increased by JPY2,493 million, resulting from investment in servers, network equipments and facilities for cloud computing service and others . As for current liabilities, as compared to each of the respective balance as of March 31, 2011, accounts payable decreased by JPY5,040 million and income taxes payable increased by JPY845 million. Capital lease obligations – noncurrent increased by JPY1,290 million.
As for the bank borrowings as of December 31, 2011, the balance of short-term borrowings decreased by JPY4,430 million, long-term borrowings -current portion increased by JPY1,010 million and long-term borrowing increased by JPY1,990 million, respectively. Bank borrowings to purchase the stocks of IIJ-Global was partially repaid and refinanced.
As of December 31, 2011, the balance of other investments was JPY2,897 million, an increase of JPY103 million from the balance as of March 31, 2011. The breakdown of other investments were JPY1,949 million in nonmarketable equity securities, JPY794 million in available-for-sale securities and JPY154 million in other.
As of December 31, 2011, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY5,980 million, and its breakdown was JPY5,788 million in goodwill and JPY192 million in trademark. As of December 31, 2011, the balance of amortized intangible assets, which was customer relationships, was JPY5,383 million.
Total IIJ shareholders' equity as of December 31, 2011 was JPY31,423 million, an increase of JPY1,771 million from the balance as of March 31, 2011. IIJ Shareholders' equity ratio (total IIJ shareholders' equity/total assets) as of December 31, 2011 was 44.3%.
Cash Flows
Cash and cash equivalents as of December 31, 2011 were JPY10,928 million compared to JPY10,800 million as of December 31, 2010.
Net cash provided by operating activities for 3Q11 was JPY6,580 million (3Q10 was net cash provided by operating activities of JPY8,387 million). Net cash provided by operating activities for 3Q11 mainly reflected the increase in operating income mainly due to the increase in gross margin for network services and decrease in loss for ATM operation business. There were also effects of changes in operating assets and liabilities such as decrease in accounts payable and increase in accrued expenses and other current liabilities.
Net cash used in investing activities for 3Q11 was JPY4,391 million (3Q10 was net cash used in investing activities of JPY12,629 million), mainly due to payments for purchase of property and equipment of JPY4,534 million (JPY3,037 million for 3Q10).
Net cash used in financing activities for 3Q10 was JPY4,541 million (3Q10 was net cash provided by financing activities of JPY6,321 million), mainly due to proceeds from issuance of long-term borrowings of JPY3,000 million, net repayments of short-term borrowings of JPY4,430 million (net proceeds from issuance of short-term borrowings of JPY9,000 million for 3Q10), principle payments under capital leases of JPY2,503 million (JPY2,210 million for 3Q10) and JPY608 million in total for FY2010 year-end dividends and FY2011 interim dividends payments (JPY507 million for 3Q10).
FY2011 Financial Targets
During the nine months ended December 31, 2011, our revenues, especially for systems integration and ATM operation business were below our initial target. Systems integration projects were generally mid- to-small sizes reflecting the cautious attitude towards systems investment due to weak Japanese economic situation. As for ATM operation business, revenue and income are continuously improving quarter by quarter with the increasing number of ATMs in place, but the progress was slower than our initial expectation. Profit level is in line with our initial target due to cost control, despite the increase in initial investment related to our cloud computing services.
Considering our FY2011 nine months results and the weak order backlog for systems construction and equipment sales, we changed our full FY2011 revenue target from JPY1,000 million to JPY970 million. Targets for operating income, income before income tax expense and net income attributable to IIJ remain unchanged.
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 | ||
| 3Q10 | 3Q11 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 6,667 | 9,249 |
| Depreciation and Amortization5 | 4,137 | 5,251 |
| Impairment loss on other intangible assets | 100 | -- |
| Operating Income | 2,430 | 3,998 |
| Other Income (Expense) | (255) | (218) |
| Income Tax Expense | 459 | 1,603 |
| Equity in Net Income of Equity Method Investees | 129 | 153 |
| Net income | 1,845 | 2,330 |
| Net loss attributable to noncontrolling interests | 152 | 60 |
| Net Income attributable to IIJ | 1,997 | 2,390 |
| CAPEX | ||
| 3Q10 | 3Q11 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 4,539 | 8,652 |
| Acquisition of Assets by Entering into Capital Leases | 1,502 | 4,118 |
| Purchase of Property and Equipment | 3,037 | 4,534 |
| 5 Depreciation and amortization includes impairment loss on other intangible assets. (See IIJ's consolidated financial statements for details). | ||
Presentation
Presentation Materials will be posted on our web site (http://www.iij.ad.jp/en/IR/) on February 8, 2012.
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
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 FY2011 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. | |||
| Consolidated Balance Sheets (Unaudited) | |||
| (As of March 31, 2011 and December 31, 2011) | |||
| As of March 31, 2011 | As of December 31, 2011 | ||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | |
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | 13,313,615 | 141,958 | 10,927,971 |
| Accounts receivable, net of allowance for doubtful accounts of JPY44,002 thousand and JPY72,645 thousand at March 31, 2011 and December 31, 2011, respectively | 16,431,374 | 200,775 | 15,455,622 |
| Inventories | 601,088 | 13,324 | 1,025,676 |
| Prepaid expenses | 1,680,158 | 35,036 | 2,697,060 |
| Deferred tax assets -Current | 978,263 | 11,425 | 879,529 |
| Other current assets, net of allowance for doubtful accounts of JPY720 thousand and JPY10,733 thousand at March 31, 2011 and December 31, 2011, respectively | 1,533,185 | 10,081 | 776,036 |
| Total current assets | 34,537,683 | 412,599 | 31,761,894 |
| INVESTMENTS IN EQUITY METHOD INVESTEES | 1,251,990 | 18,646 | 1,435,377 |
| OTHER INVESTMENTS | 2,794,046 | 37,633 | 2,897,004 |
| PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY21,891,126 thousand and JPY25,381,779 thousand at March 31, 2011 and December 31, 2011, respectively | 16,480,724 | 246,481 | 18,974,061 |
| GOODWILL | 5,788,333 | 75,193 | 5,788,333 |
| OTHER INTANGIBLE ASSETS -Net | 6,054,503 | 72,662 | 5,593,530 |
| GUARANTEE DEPOSITS | 1,889,796 | 24,530 | 1,888,311 |
| DEFERRED TAX ASSETS -Noncurrent | 16,393 | 290 | 22,347 |
| OTHER ASSETS, net of allowance for doubtful accounts of JPY81,448 thousand and JPY82,249 thousand at March 31, 2011 and December 31, 2011, respectively | 2,659,521 | 34,341 | 2,643,570 |
| TOTAL | 71,472,989 | 922,375 | 71,004,427 |
| As of March 31, 2011 | As of December 31, 2011 | ||||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Short-term borrowings | 13,430,000 | 116,913 | 9,000,000 | ||
| Long-term borrowings -Current portion | -- | 13,120 | 1,010,000 | ||
| Capital lease obligations -Current portion | 2,787,955 | 40,444 | 3,113,376 | ||
| Accounts payable | 13,574,152 | 110,863 | 8,534,228 | ||
| Income taxes payable | 355,183 | 15,594 | 1,200,409 | ||
| Accrued expenses | 1,889,891 | 29,008 | 2,232,999 | ||
| Deferred income -Current | 1,667,336 | 32,337 | 2,489,321 | ||
| Other current liabilities | 460,934 | 8,703 | 669,908 | ||
| Total current liabilities | 34,165,451 | 366,982 | 28,250,241 | ||
| LONG-TERM BORROWINGS | -- | 25,851 | 1,990,000 | ||
| CAPITAL LEASE OBLIGATIONS -Noncurrent | 3,626,565 | 63,870 | 4,916,678 | ||
| ACCRUED RETIREMENT AND PENSION COSTS -Noncurrent | 1,567,050 | 22,458 | 1,728,787 | ||
| DEFERRED TAX LIABILITIRES -Noncurrent | 609,412 | 8,158 | 628,006 | ||
| DEFERRED INCOME -Noncurrent | 1,270,984 | 18,072 | 1,391,203 | ||
| OTHER NONCURRENT LIABILITIES | 592,177 | 9,456 | 727,977 | ||
| Total Liabilities | 41,831,639 | 514,847 | 39,632,892 | ||
| COMMITMENTS AND CONTINGENCIES | |||||
| SHAREHOLDERS' EQUITY: | |||||
| Common-stock - authorized, 377,600 shares; issued and outstanding, 206,478 shares at March 31, 2011 and December 31, 2011 | 16,833,847 | 218,678 | 16,833,847 | ||
| Additional paid-in capital | 27,318,912 | 354,864 | 27,317,412 | ||
| Accumulated deficit | (14,023,259) | (159,024) | (12,241,664) | ||
| Accumulated other comprehensive loss | (85,134) | (1,227) | (94,434) | ||
| Treasury stock - 3,794 shares held by the company at March 31, 2011 and December 31, 2011, respectively | (392,079) | (5,093) | (392,079) | ||
| Total Internet Initiative Japan Inc. shareholders' equity | 29,652,287 | 408,198 | 31,423,082 | ||
| NONCONTROLLING INTERESTS | (10,937) | (670) | (51,547) | ||
| Total equity | 29,641,350 | 407,528 | 31,371,535 | ||
| TOTAL | 71,472,989 | 922,375 | 71,004,427 | ||
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. | |||||
| Internet Initiative Japan Inc. | ||||
| Quarterly Consolidated Statements of Income (Unaudited) | ||||
| (For The Nine Months ended December 31, 2010 and December 31, 2011) | ||||
| Nine Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | |||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | ||
| REVENUES: | ||||
| Network services: | ||||
| Internet connectivity services (corporate use) | 10,432,772 | 141,850 | 10,919,624 | |
| Internet connectivity services (home use) | 4,974,360 | 56,222 | 4,327,929 | |
| WAN services | 9,702,110 | 249,120 | 19,177,295 | |
| Outsourcing services | 11,000,562 | 166,502 | 12,817,335 | |
| Total | 36,109,804 | 613,694 | 47,242,183 | |
| Systems integration: | ||||
| Systems construction | 6,920,522 | 95,463 | 7,348,767 | |
| Systems operation and maintenance | 12,863,826 | 186,536 | 14,359,541 | |
| Total | 19,784,348 | 281,999 | 21,708,308 | |
| Equipment sales | 549,624 | 11,416 | 878,749 | |
| ATM operation business | 352,884 | 11,982 | 922,352 | |
| Total revenues | 56,796,660 | 919,091 | 70,751,592 | |
| COST AND EXPENSES: | ||||
| Cost of network services | 29,204,323 | 488,270 | 37,587,001 | |
| Cost of systems integration | 14,876,036 | 224,306 | 17,267,064 | |
| Cost of equipment sales | 473,345 | 10,218 | 786,589 | |
| Cost of ATM operation business | 703,366 | 13,162 | 1,013,198 | |
| Total cost | 45,257,070 | 735,956 | 56,653,852 | |
| Sales and marketing | 4,755,852 | 77,165 | 5,940,188 | |
| General and administrative | 4,094,513 | 50,929 | 3,920,530 | |
| Research and development | 259,158 | 3,111 | 239,440 | |
| Total cost and expenses | 54,366,593 | 867,161 | 66,754,010 | |
| OPERATING INCOME | 2,430,067 | 51,930 | 3,997,582 | |
| OTHER INCOME (EXPENSE): | ||||
| Interest income | 16,952 | 325 | 25,047 | |
| Interest expense | (193,504) | (2,950) | (227,127) | |
| Foreign exchange losses | (29,253) | (175) | (13,469) | |
| Net gains (losses) on sales of other investments -net | 53,925 | (2) | (170) | |
| Losses on write-down of other investments | (171,863) | (1,099) | (84,577) | |
| Other -net | 68,328 | 1,073 | 82,631 | |
| Other income (expense) -net | (255,415) | (2,828) | (217,665) | |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 2,174,652 | 49,102 | 3,779,917 | |
| INCOME TAX EXPENSE | 459,409 | 20,831 | 1,603,606 | |
| EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 129,359 | 1,992 | 153,336 | |
| NET INCOME | 1,844,602 | 30,263 | 2,329,647 | |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 152,486 | 779 | 60,000 | |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 1,997,088 | 31,042 | 2,389,647 | |
| Nine Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | |||
| NET INCOME PER SHARE | ||||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,632 | 202,684 | ||
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,632 | 202,769 | ||
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,052,800 | 81,073,600 | ||
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,052,800 | 81,107,600 | ||
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 9,855.74 | 153.16 | 11,790.01 | |
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 9,855.74 | 153.09 | 11,785.07 | |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 24.64 | 0.38 | 29.48 | |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 24.64 | 0.38 | 29.46 | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. | ||||
| Internet Initiative Japan Inc. | |||||||||
| Quarterly Consolidated Statements of Shareholders' Equity (Unaudited) | |||||||||
| (For The Nine Months ended December 31, 2010 and December 31, 2011) | |||||||||
| For the nine months ended December 31, 2010 | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
| Total equity | Comprehensive income | 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, 2010 | 27,363,703 | (16,720,092) | 168,769 | 206,478 | 16,833,847 | (406,547) | 27,443,600 | 44,126 | |
| Subsidiary stock issuance | -- | (100,740) | 100,740 | ||||||
| Comprehensive income: | |||||||||
| Net Income | 1,844,602 | 1,844,602 | 1,997,088 | (152,486) | |||||
| Other Comprehensive loss, net of tax | (50,581) | (50,581) | (50,581) | ||||||
| Total comprehensive income | 1,794,021 | 1,794,021 | |||||||
| Dividends paid | (506,535) | (506,535) | |||||||
| Disposal of Treasury stock | 37,126 | 14,468 | 22,658 | ||||||
| BALANCE, DECEMBER 31, 2010 | 28,688,315 | (15,229,539) | 118,188 | 206,478 | 16,833,847 | (392,079) | 27,365,518 | (7,620) | |
| For the nine months ended December 31, 2011 | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
| Total equity | Comprehensive income | 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, 2011 | 29,641,350 | (14,023,259) | (85,134) | 206,478 | 16,833,847 | (392,079) | 27,318,912 | (10,937) | |
| Changes in ownership for non-controlling interests | (5) | (19,395) | 19,390 | ||||||
| Stock-based compensation | 17,895 | 17,895 | |||||||
| Comprehensive income: | |||||||||
| Net Income | 2,329,647 | 2,329,647 | 2,389,647 | (60,000) | |||||
| Other Comprehensive loss, net of tax | (9,300) | (9,300) | (9,300) | ||||||
| Total comprehensive income | 2,320,347 | 2,320,347 | |||||||
| Dividends paid | (608,052) | (608,052) | |||||||
| BALANCE, DECEMBER 31, 2011 | 31,371,535 | (12,241,664) | (94,434) | 206,478 | 16,833,847 | (392,079) | 27,317,412 | (51,547) | |
| For the nine months ended December 31, 2011 (In USD) | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
| Total equity | Comprehensive income | 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, 2011 | 385,052 | (182,168) | (1,106) | 206,478 | 218,678 | (5,093) | 354,883 | (142) | |
| Changes in ownership for non-controlling interests | (0) | (252) | 252 | ||||||
| Stock-based compensation | 233 | 233 | |||||||
| Comprehensive income: | |||||||||
| Net Income | 30,263 | 30,263 | 31,043 | (780) | |||||
| Other Comprehensive loss, net of tax | (121) | (121) | (121) | ||||||
| Total comprehensive income | 30,142 | 30,142 | |||||||
| Dividends paid | (7,899) | (7,899) | |||||||
| BALANCE, DECEMBER 31, 2011 | 407,528 | (159,024) | (1,227) | 206,478 | 218,678 | (5,093) | 354,864 | (670) | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. |
| Internet Initiative Japan Inc. | ||||
| Quarterly Consolidated Statements of Cash Flows (Unaudited) | ||||
| (For The Nine Months ended December 31, 2010 and December 31, 2011) | ||||
| Nine Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | |||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | ||
| OPERATING ACTIVITIES: | ||||
| Net income | 1,844,602 | 30,263 | 2,329,647 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 4,136,853 | 68,219 | 5,251,482 | |
| Impairment loss on other intangible assets | 100,000 | -- | -- | |
| Provision for retirement and pension costs, less payments | 201,496 | 1,937 | 149,105 | |
| Provision for (reversal of) allowance for doubtful accounts | (22,171) | 596 | 45,852 | |
| Loss on disposal of property and equipment | 15,402 | 515 | 39,616 | |
| Net losses (gains) on sales of other investments | (53,925) | 2 | 170 | |
| Impairment of other investments | 171,863 | 1,099 | 84,577 | |
| Gain on receipt of investment securities | (18,060) | -- | -- | |
| Foreign exchange losses, net | 28,938 | 417 | 32,088 | |
| Equity in net income of equity method investees | (129,359) | (1,992) | (153,336) | |
| Deferred income tax expense | 241,704 | 1,405 | 108,174 | |
| Others | 61,777 | 451 | 34,705 | |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | ||||
| Decrease in accounts receivable | 741,476 | 12,059 | 928,294 | |
| Decrease in net investment in sales-type lease -noncurrent | 159,445 | 2,953 | 227,371 | |
| Increase in inventories, prepaid expenses and other current and noncurrent assets | (881,216) | (13,614) | (1,047,996) | |
| Increase (decrease) in accounts payable | 3,949,881 | (50,205) | (3,864,764) | |
| Increase (decrease) in income taxes payable | (130,985) | 10,819 | 832,873 | |
| Decrease in deferred income -noncurrent | (516,730) | (1,562) | (120,220) | |
| Increase (decrease) in accrued expenses and other current liabilities | (1,513,830) | 22,114 | 1,702,329 | |
| Net cash provided by operating activities | 8,387,161 | 85,476 | 6,579,967 | |
| INVESTING ACTIVITIES: | ||||
| Purchase of property and equipment | (3,037,071) | (58,902) | (4,534,276) | |
| Proceeds from sales of property and equipment | 4,147 | 3,822 | 294,265 | |
| Purchase of available-for-sale securities | (46,468) | (1,545) | (118,948) | |
| Purchase of other investments | (150,000) | (1,378) | (106,115) | |
| Investment in an equity method investee | -- | (320) | (24,647) | |
| Proceeds from sales of available-for-sale securities | 53,605 | 50 | 3,879 | |
| Proceeds from sales of other investments | 29,901 | 808 | 62,205 | |
| Acquisition of a newly controlled company, net of cash acquired | (9,170,000) | -- | -- | |
| Payments of guarantee deposits | (428,529) | (263) | (20,269) | |
| Refund of guarantee deposits | 123,425 | 277 | 21,314 | |
| Payments for refundable insurance policies | (17,190) | (83) | (6,422) | |
| Refund from insurance policies | 29,642 | 558 | 42,948 | |
| Other | (20,622) | (60) | (4,577) | |
| Net cash used in investing activities | (12,629,160) | (57,036) | (4,390,643) | |
| Nine Months Ended December 31, 2010 | Nine Months Ended December 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 and long-term borrowings | 1,300,000 | 43,778 | 3,370,000 | |
| Repayments of short-term borrowings with initial maturities over three months | (300,000) | (8,054) | (620,000) | |
| Principal payments under capital leases | (2,209,641) | (32,510) | (2,502,602) | |
| Net increase (decrease) in short-term borrowings with initial maturities less than three months | 8,000,000 | (54,300) | (4,180,000) | |
| Dividends paid | (506,535) | (7,899) | (608,052) | |
| Proceeds from sales of treasury stock | 37,126 | -- | -- | |
| Net cash provided by (used in) financing activities | 6,320,950 | (58,985) | (4,540,654) | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (43,463) | (445) | (34,314) | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,035,488 | (30,990) | (2,385,644) | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 8,764,415 | 172,949 | 13,313,615 | |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 10,799,903 | 141,959 | 10,927,971 | |
| ADDITIONAL CASH FLOW INFORMATION: | ||||
| Interest paid | 192,977 | 2,933 | 225,749 | |
| Income taxes paid | 349,843 | 6,241 | 480,415 | |
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||
| Acquisition of assets by entering into capital leases | 1,502,423 | 53,496 | 4,118,138 | |
| Facilities purchase liabilities | 181,945 | 5,002 | 385,074 | |
| Asset retirement obligation | -- | 549 | 42,273 | |
| Acquisition of a company: | ||||
| Assets acquired | 14,956,137 | -- | -- | |
| Cash paid | (9,170,000) | -- | -- | |
| Liabilities assumed | 5,786,137 | -- | -- | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. | ||||
| Going Concern Assumption (Unaudited) | ||
| Nothing to be reported. | ||
| Segment Information (Unaudited) | ||
| Business Segments: | ||
| Revenues: | ||
| Nine Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | |
| Thousands of JPY | Thousands of JPY | |
| Network service and systems integration business | 56,776,195 | 70,204,107 |
| Customers | 56,443,776 | 69,829,240 |
| Intersegment | 332,419 | 374,867 |
| ATM operation business | 352,884 | 922,352 |
| Customers | 352,884 | 922,352 |
| Intersegment | － | － |
| Elimination | 332,419 | 374,867 |
| Consolidated total | 56,796,660 | 70,751,592 |
| Segment profit or loss: | ||
| Nine Months Ended December 31, 2010 | Nine Months Ended December 31, 2011 | |
| Thousands of JPY | Thousands of JPY | |
| Network service and systems integration business | 2,922,142 | 4,249,778 |
| ATM operation business | (465,460) | (194,337) |
| Elimination | 26,615 | 57,859 |
| Consolidated operating income | 2,430,067 | 3,997,582 |
| 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)
Nothing to be reported.
Subsequent Events (Unaudited)
Nothing to be reported.
3rd Quarter FY2011 Consolidated Financial Results (3 months)
The following tables are highlight data of 3rd Quarter FY2011 consolidated financial results (unaudited, from October 1, 2011 to December 31, 2011).
| Operating Results Summary | |||
| 3Q10 | 3Q11 | YoY % Change | |
| JPY millions | JPY millions | ||
| Total Revenues: | 22,525 | 23,545 | 4.5 |
| Network Services | 15,424 | 15,922 | 3.2 |
| SI | 6,797 | 6,994 | 2.9 |
| Equipment Sales | 179 | 268 | 49.9 |
| ATM Operation Business | 125 | 361 | 190.3 |
| Cost of Revenues: | 17,827 | 18,683 | 4.8 |
| Network Services | 12,402 | 12,541 | 1.1 |
| SI | 5,017 | 5,541 | 10.4 |
| Equipment Sales | 160 | 241 | 50.1 |
| ATM Operation Business | 248 | 360 | 45.7 |
| SG&A Expenses and R&D | 3,469 | 3,313 | (4.5) |
| Operating Income | 1,229 | 1,549 | 26.1 |
| Income before Income Tax Expense | 1,169 | 1,489 | 27.4 |
| Net Income attributable to IIJ | 1,138 | 1,028 | (9.6) |
| Network Service Revenue Breakdown | |||
| 3Q10 | 3Q11 | YoY % Change | |
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Corporate Use) | 3,492 | 3,643 | 4.3 |
| IP Service | 2,227 | 2,277 | 2.3 |
| IIJ FiberAccess/F and IIJ DSL/F | 771 | 788 | 2.1 |
| IIJ Mobile Service | 430 | 517 | 20.2 |
| Others | 64 | 61 | (4.5) |
| Internet Connectivity Service (Home Use) | 1,622 | 1,398 | (13.9) |
| Under IIJ Brand | 245 | 217 | (11.5) |
| hi-ho | 1,241 | 1,033 | (16.8) |
| OEM | 136 | 148 | 9.1 |
| WAN Services | 6,405 | 6,476 | 1.1 |
| Outsourcing Services | 3,905 | 4,405 | 12.8 |
| Network Services Revenues | 15,424 | 15,922 | 3.2 |
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 | ||||
| 3Q10 | 3Q11 | |||
| JPY millions | JPY millions | |||
| Adjusted EBITDA | 2,747 | 3,376 | ||
| Depreciation and Amortization | 1,518 | 1,827 | ||
| Operating Income | 1,229 | 1,549 | ||
| Other Income (Expense) | (60) | (60) | ||
| Income Tax Expense | 179 | 548 | ||
| Equity in Net Income (Loss) of Equity Method Investees | 97 | 77 | ||
| Net income | 1,087 | 1,018 | ||
| Net income attributable to noncontrolling interests | 51 | 10 | ||
| Net Income attributable to IIJ | 1,138 | 1,028 | ||
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 | ||
| 3Q10 | 3Q11 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 1,515 | 2,208 |
| Acquisition of Assets by Entering into Capital Leases | 641 | 1,055 |
| Purchase of Property and Equipment | 874 | 1,153 |
| Internet Initiative Japan Inc. | ||||
| Quarterly Consolidated Statements of Income (Unaudited) | ||||
| (For The Three Months ended December 31, 2010 and December 31, 2011) | ||||
| Three Months Ended December 31, 2010 | Three Months Ended December 31, 2011 | |||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | ||
| REVENUES: | ||||
| Network services: | ||||
| Internet connectivity services (corporate use) | 3,491,817 | 47,321 | 3,642,759 | |
| Internet connectivity services (home use) | 1,622,533 | 18,158 | 1,397,782 | |
| WAN services | 6,404,689 | 84,120 | 6,475,568 | |
| Outsourcing services | 3,904,810 | 57,227 | 4,405,320 | |
| Total | 15,423,849 | 206,826 | 15,921,429 | |
| Systems integration: | ||||
| Systems Construction | 2,421,784 | 27,986 | 2,154,424 | |
| Systems Operation and Maintenance | 4,375,565 | 62,870 | 4,839,702 | |
| Total | 6,797,349 | 90,856 | 6,994,126 | |
| Equipment sales | 178,874 | 3,482 | 268,064 | |
| ATM operation business | 124,508 | 4,696 | 361,465 | |
| Total revenues | 22,524,580 | 305,860 | 23,545,084 | |
| COST AND EXPENSES: | ||||
| Cost of network services | 12,401,754 | 162,916 | 12,541,295 | |
| Cost of systems integration | 5,017,343 | 71,978 | 5,540,863 | |
| Cost of equipment sales | 160,184 | 3,123 | 240,402 | |
| Cost of ATM operation business | 247,248 | 4,681 | 360,344 | |
| Total cost | 17,826,529 | 242,698 | 18,682,904 | |
| Sales and marketing | 1,872,826 | 26,283 | 2,023,213 | |
| General and administrative | 1,490,717 | 15,753 | 1,212,669 | |
| Research and development | 105,532 | 999 | 76,923 | |
| Total cost and expenses | 21,295,604 | 285,733 | 21,995,709 | |
| OPERATING INCOME | 1,228,976 | 20,127 | 1,549,375 | |
| OTHER INCOME (EXPENSE): | ||||
| Interest income | 4,521 | 118 | 9,097 | |
| Interest expense | (75,156) | (941) | (72,438) | |
| Foreign exchange losses | (11,805) | (53) | (4,111) | |
| Net gains (losses) on sales of other investments -net | 21,422 | -- | -- | |
| Losses on write-down of other investments | (1,772) | (93) | (7,117) | |
| Other—net | 2,502 | 186 | 14,302 | |
| Other expense — net | (60,288) | (783) | (60,267) | |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD INVESTEES | 1,168,688 | 19,344 | 1,489,108 | |
| INCOME TAX EXPENSE | 179,199 | 7,123 | 548,352 | |
| EQUITY IN NET INCOME (LOSS) OF EQUITY METHOD INVESTEES | 97,538 | 995 | 76,627 | |
| NET INCOME | 1,087,027 | 13,216 | 1,017,383 | |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 50,784 | 141 | 10,814 | |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 1,137,811 | 13,357 | 1,028,197 | |
| Three Months Ended December 31, 2010 | Three Months Ended December 31, 2011 | |||
| NET INCOME PER SHARE | ||||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,684 | 202,684 | ||
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 202,684 | 202,822 | ||
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,073,600 | 81,073,600 | ||
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,073,600 | 81,128,800 | ||
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 5,613.72 | 65.90 | 5,072.91 | |
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 5,613.72 | 65.85 | 5,069.45 | |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 14.03 | 0.16 | 12.68 | |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 14.03 | 0.16 | 12.67 | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. | ||||
| Internet Initiative Japan Inc. | ||||
| Quarterly Consolidated Statements of Cash Flows (Unaudited) | ||||
| (For The Three Months ended December 31, 2010 and December 31, 2011) | ||||
| Three Months Ended December 31, 2010 | Three Months Ended December 31, 2011 | |||
| Thousands of JPY | Thousands of U.S. Dollars | Thousands of JPY | ||
| OPERATING ACTIVITIES: | ||||
| Net income | 1,087,027 | 13,216 | 1,017,383 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 1,517,730 | 23,734 | 1,827,054 | |
| Provision for retirement and pension costs, less payments | 76,791 | 782 | 60,234 | |
| Reversal of allowance for doubtful accounts and advances | (7,328) | (9) | (699) | |
| Loss on disposal of property and equipment | 9,889 | 230 | 17,699 | |
| Net gains on sales of other investments | (21,422) | -- | -- | |
| Impairment of other investments | 1,772 | 92 | 7,117 | |
| Foreign exchange losses (gains), net | 3,043 | (48) | (3,708) | |
| Equity in net income of equity method investees | (97,538) | (995) | (76,627) | |
| Deferred income tax expense (benefit) | 78,006 | (748) | (57,608) | |
| Others | 37,319 | (182) | (13,981) | |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | ||||
| Decrease (increase) in accounts receivable | 1,495,960 | (13,039) | (1,003,770) | |
| Decrease (increase) in net investment in sales-type lease | (125,524) | 1,379 | 106,180 | |
| Increase in inventories, prepaid expenses and other current and noncurrent assets | (663,335) | (11,012) | (847,734) | |
| Increase in accounts payable | 4,127,102 | 406 | 31,242 | |
| Increase in income taxes payable | 49,229 | 4,769 | 367,105 | |
| Decrease in deferred income -noncurrent | (180,596) | (808) | (62,218) | |
| Increase (decrease) in accrued expenses, other current and noncurrent liabilities | (4,109,538) | 12,003 | 924,045 | |
| Net cash provided by operating activities | 3,278,587 | 29,770 | 2,291,714 | |
| INVESTING ACTIVITIES: | ||||
| Purchase of property and equipment | (873,339) | (14,976) | (1,152,846) | |
| Proceeds from sales of property and equipment | -- | 983 | 75,699 | |
| Purchase of other investments | (50,000) | (650) | (50,000) | |
| Investment in an equity method investee | -- | (320) | (24,647) | |
| Proceeds from sales of available-for-sale securities | 25,674 | -- | -- | |
| Proceeds from sales of other investments | 9,881 | -- | -- | |
| Payments of guarantee deposits | (315) | (23) | (1,802) | |
| Refund of guarantee deposits | 808 | 10 | 741 | |
| Payments for refundable insurance policies | (5,015) | (2) | (183) | |
| Other | -- | (53) | (4,061) | |
| Net cash used in financing activities | (892,306) | (15,031) | (1,157,099) | |
| Three Months Ended December 31, 2010 | Three Months Ended December 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 and long-term borrowings | 950,000 | 649 | 50,000 | |
| Repayments of short-term borrowings with initial maturities over three months | -- | (1,559) | (120,000) | |
| Principal payments under capital leases | (729,507) | (11,809) | (909,092) | |
| Net Increase (decrease) in short-term borrowings with initial maturities less than three months | (950,000) | 1,299 | 100,000 | |
| Dividends paid | (253,355) | (3,949) | (304,026) | |
| Net cash used in financing activities | (982,862) | (15,369) | (1,183,118) | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (11,547) | 26 | 2,021 | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,391,872 | (604) | (46,482) | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 9,408,031 | 142,563 | 10,974,453 | |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 10,799,903 | 141,959 | 10,927,971 | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY76.98 per US$1.00, which was the noon buying rate on December 30, 2011. | ||||
Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the nine months ended December 31, 2011 in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Nine Months Ended December 31, 2011
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]
February 8, 2012
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
Filing of quarterly report: Scheduled on February 13, 2012
Payment of dividend: -
Supplemental material on quarterly results: Yes
Presentation on quarterly results: Yes (for institutional investors and analysts)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine Months Ended December 31, 2011
(April 1, 2011 to December 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 | ％ | |
| Nine months ended December 31, 2011 | 70,752 | 24.6 | 3,998 | 64.5 | 3,780 | 73.8 | 2,390 | 19.7 |
| Three months ended December 31, 2010 | 56,797 | 17.6 | 2,430 | 21.1 | 2,175 | 22.0 | 1,997 | 76.2 |
| (Note1) Total comprehensive income | Nine Months Ended December 31, 2011: JPY 2,320 million (up 29.3% YoY) |
| Nine Months Ended December 31, 2010: JPY 1,794 million | |
| (Note2) Income before income tax expense represents income from operations before income tax expense and equity in net income in equity method investees in IIJ's consolidated financial statements. | |
| Basic Net Income attributable to IIJ per Share | Diluted Net Income attributable to IIJ per Share | |
| JPY | JPY | |
| Nine months ended December 31, 2011 | 11,790.01 | 11,785.07 |
| Nine months ended December 31, 2010 | 9,855.74 | 9,855.74 |
| (2) Consolidated Financial Position | ||||
| Total Assets | Total Equity | Total IIJ Shareholders' Equity | Total IIJ Shareholders' Equity to Total Assets | |
| JPY millions | JPY millions | JPY millions | % | |
| December 31, 2011 | 71,004 | 31,372 | 31,423 | 44.3 |
| March 31, 2011 | 71,473 | 29,641 | 29,652 | 41.5 |
| 2. Dividends | |||||
| Dividend per Shares | |||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total | |
| JPY | JPY | JPY | JPY | JPY | |
| Fiscal year ended March 31, 2011 | -- | 1,250.00 | -- | 1,500.00 | 2,750.00 |
| Fiscal year ended March 31, 2012 | -- | 1,500.00 | -- | ||
| Fiscal year ending March 31, 2012 (Target) | 1,500.00 | 3,000.00 | |||
| Changes in dividends forecasts during the three months ended December 31, 2011: None | |||||
| 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 | |
| Fiscal year ending March 31, 2012 | 97,000 | 17.7 | 6,300 | 52.1 | 5,600 | 46.1 | 3,400 | 6.1 | 16,774.88 |
| Changes in earnings forecasts during the three months ended December 31, 2011: Yes | |||||||||
| 4. Others | |
| (1) Changes in significant subsidiaries during the nine months ended December 31, 2011 | |
| (Changes in significant subsidiaries during the nine months ended December 31, 2011 which resulted in changes in scope of consolidation): No | |
| (2) Application of simplified or exceptional accounting | |
| (Application of simplified or exceptional accounting for quarterly consolidated financial statements): No | |
| (3) Changes in Significant Accounting and Reporting Policies for Consolidated Financial Statements | |
| 1) Changes due to the revision of accounting standards: Yes | |
| 2) Others: Yes | |
| (4) Number of Shares Outstanding (Shares of Common Stock) | |
| 1) The number of shares outstanding (inclusive of treasury stock): | |
| As of December 31, 2011: | 206,478 shares |
| As of March 31, 2011: | 206,478 shares |
| 2) The number of treasury stock: | |
| As of December 31, 2011: | 3,794 shares |
| As of March 31, 2011: | 3,794 shares |
| 3) The weighted average number of shares outstanding: | |
| For the nine months ended December 31, 2011: | 202,684 shares |
| For the nine months ended December 31, 2010: | 202,632 shares |
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