TOKYO, May 15, 2009 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) today announced its full year and 4th quarter consolidated financial results for fiscal year ended March 31, 2009 ("FY2008").(1)
Highlights of Full FY2008 Financial Results
-- Revenue was JPY69,731 million ($703 million), up 4.3% YoY lead
by the steady increase in recurring revenues which were up 14.3%
YoY. One-time revenues from systems construction were down 18.7%
YoY heavily affected by the decrease in IT related investments in
Japan.
-- Operating income was JPY2,917 million ($29 million), down 38.7%
YoY affected by the decrease in gross margin from systems
integration and operating loss of JPY1.3 billion related to 4 new
subsidiaries.
-- Net income was JPY1,419 million ($14 million), down 72.6% largely
affected by deferred tax expense of JPY637 million whereas we had
deferred tax benefit of JPY1,653 million in FY2007.
Highlights of Fourth Quarter FY2008 Results
-- Revenue was JPY18,942 million ($191 million), up 2.5% from 4Q07,
up 8.0% from 3Q08.
-- Operating income was JPY1,073 million ($11 million), down 40.6%
from 4Q07. Operating loss related to 4 new subsidiaries was
JPY449 million, the largest in the previous 4 quarters.
-- Net income was JPY1,065 million ($11 million), down 2.2% from
4Q07. We recorded deferred tax benefit of JPY335 million in 4Q08
compared to deferred tax expense of JPY137 million in 4Q07.
Financial Targets for FY2009
-- IIJ targets revenues of JPY73.0 billion, operating income of
JPY3.3 billion, income before income tax expense (benefit)(2) of
JPY2.7 billion and net income of JPY1.7 billion for FY2009.
-- IIJ targets cash dividend of JPY2,000 per share of common stock
for FY2009.
Overview of Full FY2008 Financial Results and Business Outlook
"Affected by the weakening Japanese economy, we had a very tough year and our one time revenue from systems construction were heavily affected by the lack of IT related investments," said Koichi Suzuki, President and CEO of IIJ. "However, amid the tough economic situation, our recurring revenues which accounted for 77.5% of our total revenues for FY2008 continued its steady growth," continued Suzuki.
"Our strategy is to continuously focus on introducing new services and new features that add value and strengthens our connectivity and outsourcing service line ups, especially for corporate customers whom are keen for security, reliability and quality. This strategy allows us to achieve steady growth in our recurring services and as a result strengthens the basis of our business even in this tough economic situation. In FY2008, we introduced many features for IIJ Mobile Service, such as Mobile SMF, IIJ Mobile Secure Link, IIJ Direct Access and static IP address. For outsourcing services, IIJ Secure Web Gateway Service, Contents Delivery Service for gigabit-class distribution and new features for Secure MX Service such as DKIM Sender Authentication, GDX Mail Option and others were released."
"Internet connectivity, especially contracts of over 1Gbps are increasing as content business operators and ISPs are adding bandwidth to their networks. Mobile data communication services for both corporate and home use are performing well reaching its break even point and nearly 23,000 contracts. Outsourcing services are continuously increasing supported by steady demand for security and email related services and data center. Systems operation and maintenance are also increasing as they accumulate followed by the completion of systems construction projects. However, systems construction revenues were down 18.7% YoY. Although there were steady orders from governmental sectors and also for network related small projects such as server replacements, demands for large system construction and application projects were heavily hit."
"As for cost, in the beginning of FY2008, we had anticipated the same level of growth as FY2007 and had increased our costs such as personnel and outsourcing related. Along with the sudden downturn of the economy, however, we shifted towards tightened cost control, especially from the latter half of the year to respond to the challenging economic conditions. Headcounts for outsourcing personnel have declined and other costs and expenses were reduced. As a result, our gross margin improved quarter by quarter this fiscal year. Yet the decrease in gross margin YoY from systems integration due to the decrease in revenues and operating loss related to 4 new subsidiaries of JPY1.3 billion lead to the decrease in operating income YoY."
"For FY2009, we target increase in both revenue and operating income. While our recurring revenues are expected to show steady growth, we will continue to aggressively manage our costs and expenses in order to improve profitability even in a weak economic condition. Operating loss related to 4 new consolidated subsidiaries is also expected to decrease compared to FY2008 to around JPY1 billion. However, in the first half of the year, especially the first quarter, we estimate that our profit will be weak because the operating loss related to 4 new subsidiaries is expected to be larger in 1Q09 while revenues tend to be the weakest in the first quarter."
Full FY2008 Financial Results
From FY2008, we have disclosed revenues and costs related to ATM Operation Business. Due to this change, revenues and costs are now disclosed in two segments, the "Network services and Systems Integration Business" and "ATM Operation Business". However, because most of our revenues are dominated by Network services and Systems Integration Business, we have omitted segment analysis.
Operating Results Summary
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
Total Revenues 69,731 66,835 4.3%
--------------------------------------------------------------------
Total Costs 56,146 52,883 6.2%
--------------------------------------------------------------------
SG&A Expenses and R&D 10,668 9,193 16.0%
--------------------------------------------------------------------
Operating Income 2,917 4,759 (38.7%)
--------------------------------------------------------------------
Income before Income Tax Expense 2,034 4,362 (53.4%)
--------------------------------------------------------------------
Net Income 1,419 5,177 (72.6%)
--------------------------------------------------------------------
Segment Reporting Summary
--------------------------------------------------------------------
FY2008
--------------------------------------------------------------------
JPY millions
--------------------------------------------------------------------
Operating Revenues 69,731
--------------------------------------------------------------------
Network services and Systems Integration Business 69,961
--------------------------------------------------------------------
ATM Operation Business 23
--------------------------------------------------------------------
Inter-Segment 253
--------------------------------------------------------------------
Operating Income (losses) 2,917
--------------------------------------------------------------------
Network services and Systems Integration Business 3,663
--------------------------------------------------------------------
ATM Operation Business (705)
--------------------------------------------------------------------
Inter-Segment 41
--------------------------------------------------------------------
Results of Operation
Revenues
Revenues totaled JPY69,731 million, an increase of 4.3% YoY.
Revenues
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
Total Revenues: 69,731 66,835 4.3%
--------------------------------------------------------------------
Connectivity and Outsourcing
Services 35,076 31,303 12.1%
--------------------------------------------------------------------
SI 33,647 34,018 (1.1%)
--------------------------------------------------------------------
Equipment Sales 985 1,514 (35.0%)
--------------------------------------------------------------------
ATM Operation Business 23 -- --
--------------------------------------------------------------------
Connectivity and Outsourcing Services revenue were JPY35,076 million, up 12.1% YoY followed by the steady increase in outsourcing service and the use of internet connectivity services.
SI revenues were JPY33,647 million, down 1.1% YoY because of weak systems construction revenues as a result of the downturn in the economic situation while systems operation and maintenance increased as they accumulate as recurring revenues.
Equipment sales revenues were JPY985 million, down 35.0% YoY.
ATM Operation Business revenues were JPY23 million. The ATM Operation Business is conducted by our consolidated subsidiary, Trust Networks which operates ATMs and its network systems to provide ATMs service. It receives commission for each bank withdrawal transaction when customers use their ATMs. During FY2008, Trust Networks completed its field test of ATMs operations. As of March 31, 2008, Trust Networks operates 10 ATMs and aims to increase the number of ATMs from FY2009 and up to around 8,000 ATMs in 4 to 5 years.
Cost and expense
Cost of revenues was JPY56,146 million, an increase of 6.2% YoY.
Cost of Revenues
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
Cost of Revenues: 56,146 52,883 6.2%
--------------------------------------------------------------------
Connectivity and Outsourcing
Services 29,318 26,040 12.6%
--------------------------------------------------------------------
SI 25,543 25,543 0.0%
--------------------------------------------------------------------
Equipment Sales 863 1,300 (33.6%)
--------------------------------------------------------------------
ATM Operation Business 422 -- --
--------------------------------------------------------------------
Cost of Connectivity and Outsourcing Services revenue was JPY29,318 million, up 12.6% YoY largely affected by the increase in network operation related costs including upgrade of large backbone routers and cost incurred by hi-ho of 12 months compared to 10 months in FY2007. There were also increases in circuit and personnel related costs and initial costs related to the newly established subsidiaries of JPY162 million. Gross margin ratio was 16.4% compared to 16.8% for FY2007.
Cost of SI revenues was JPY25,543 million, nearly the same as FY2007. While purchasing costs largely decreased along with the decrease in systems construction revenues, outsourcing and personnel related and network operation related costs increased. Gross margin ratio was 24.1% compared to 24.9% of FY2007.
Cost of Equipment Sales revenues was JPY863 million, down 33.6% YoY due to the decrease in equipment sales revenues. Gross margin ratio was 12.3%.
Cost of ATM Operation Business revenues was JPY422 million and gross margin was a loss of JPY399 million.
SG&A Expenses and R&D
Sales and marketing expenses were JPY4,631 million, up 7.0% YoY. The increase was largely due to the increase in personnel related expenses as well as expenses related to hi-ho of 12 months.
General and administrative expenses were JPY5,622 million, up 21.6% YoY. The increase was mainly due to the increase in expenses related to 4 new subsidiaries and personnel related expenses. There were also losses of JPY424 million in 4Q08 including disposal of property and equipment for our service and others.
Research and development expenses were JPY415 million, up 72.7% YoY.
Operating income
Operating income was JPY2,917 million, down 38.7% YoY as gross margin for systems construction decreased while there were operating loss for 4 new subsidiaries of JPY1,272 million.
Other income (expenses)
Other income (expenses) in FY2008 was net other expenses of JPY883 million compared to net other expenses of JPY398 million in FY2007. We recorded net impairment losses of JPY524 million on nonmarketable and available-for-sale equity securities and interest expense of JPY408 million.
Income before income tax expenses
Income before income tax expenses was JPY2,034 million, down 53.4% YoY due to the decrease in operating income and the increase in other expenses.
Others
Income tax expense was JPY1,003 million largely due to deferred tax expense of JPY637 million whereas there was deferred tax benefit of JPY1,653 million in FY2007 resulting from the release of the valuation allowance against deferred tax assets.
Minority interests in losses of subsidiaries were JPY352 million related to GDX and Trust Networks Inc. compared to minority interests in losses of subsidiaries of JPY97 million in FY2007.
Equity in net income of equity method investees was JPY35 million compared to equity in net loss of equity method investees of JPY143 million in FY2007.
Net income was JPY1,419 million, down 72.6% YoY.
Financial Condition
Balance Sheets
As of March 31, 2009, the balance of total assets was JPY52,301 million, which was a decrease of JPY3,401 million from the balance as of March 31, 2008.
For current assets, as compared to each of the respective balances as of March 31, 2008, accounts receivable decreased by JPY1,999 million; cash and cash equivalents decreased by JPY1,283 million; inventories decreased by JPY654 million. Property and equipment increased by JPY1,433 million from the balance as of March 31, 2008, mainly due to an increase in property for our internal use. Other investment decreased by JPY449 million from the balance as of March 31, 2008, mainly due to decrease in their fair value. As for current liabilities, short-term borrowings decreased by JPY1,800 million due to repayment; and accounts payable decreased by JPY1,830 million, from each of the respective balances as of March 31, 2008.
As of March 31, 2009, we had net deferred tax asset (current) of JPY762 million and net deferred tax asset (non-current) of JPY2,253 million, respectively.
The balance of other investments as of March 31, 2009 was JPY1,915 million, which decreased by JPY449 million from the balance as of March 31, 2008. The breakdown of other investments were JPY674 million in available-for-sale securities, JPY863 million in nonmarketable equity securities and JPY378 million in other.
As of March 31, 2009, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY5,535 million, an increase of JPY19 million compared to March 31, 2008, and the balance of amortized intangible was JPY297 million, a decrease of JPY82 million. The breakdown of non-amortized intangible assets were JPY2,703 million in customer relationships, JPY2,639 million in goodwill and JPY192 million in trademark. The breakdown of amortized intangible assets were JPY171 million in customer relationships and JPY126 million in licenses.
Total shareholders' equity as of March 31, 2009 was JPY25,169 million, an increase of JPY188 million from the balance as of March 31, 2008. Shareholder's equity ratio (shareholder's equity/total assets) as of March 31, 2009 was 48.1%, up by 3.3% compared to March 31, 2008.
Cash Flows
Cash and cash equivalents as of the end of FY2008 were JPY10,188 million, a decrease by JPY1,283 million compared to the balance as of the end of FY2007.
Net cash provided by operating activities in FY2008 was JPY8,631 million, compared to net cash provided by operating activities of JPY4,537 million in FY2007. Though operating income in FY2008 (JPY2,917 million) decreased from that of FY2007 (JPY4,759 million), changes in net cash provided by operating activities in FY2008 were also due to changes in operating assets and liabilities during FY2008, mainly resulting from the decrease in accounts receivable of JPY1,947 million, decrease in inventories and prepaid expenses of JPY467 million, decrease in accounts payable related to systems integration projects of JPY2,005 million and payment of income tax of JPY774 million.
Net cash used in investing activities in FY2008 was JPY3,328 million, compared to net cash used in investing activities of JPY5,444 million in FY2007, mainly due to payment of JPY2,991 million for the purchase of property (payment of JPY1,856 million in FY2007), JPY188 million for the purchase of available-for-sale securities (payment of JPY610 million in FY2007) and JPY175 million for the purchase of short-term and other investments (payment of JPY232 million in FY2007).
Net cash used in financing activities in FY2008 was JPY6,573 million, compared to net cash used in financing activities of JPY1,152 million in FY2008, mainly due to repayments of short-term borrowings of JPY1,800 million (net) (increase in short-term borrowings of JPY2,810 million in FY2007), principal payments under capital leases of JPY3,954 million (principal payments under capital leases of JPY3,507 million in FY2007), payments for dividends of JPY413 million and payments of JPY407 million for acquisition of treasury stock.
FY2008 Business Overview
Analysis by Service
Connectivity and Outsourcing Services
Connectivity services revenues for corporate use was JPY13,142 million, up 8.2% YoY. IP service increased by 2.8% YoY and broadband services increased by 8.7% YoY as a result of steady demands for network expansion and the shift to higher bandwidths. Contracts of over 1Gbps increased to 94 compared to 70 contracts at the end of March 2008, especially among contents business operators and ISPs. IIJ Mobile service has reached its break even point contributing to revenue growth.
Connectivity services revenues for home use was JPY6,538 million, up 20.4% with the full contribution from hi-ho of JPY4,971 million (12 months) compared to JPY3,766 million (10 months). We are still seeing shifts from dial-up and ADSL services to optical line services which charge higher monthly fees. The mobile data communication service for home use which was introduced in Dec. 2008 is also doing well and is expected to contribute to revenue in the coming months.
Outsourcing services revenues was JPY15,396 million, up 12.2% YoY as revenues from email related, security-related and data center-related increased respectively.
Number of Contracts for Connectivity Services
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March 31, March 31, YoY
2008 2007 Change
--------------------------------------------------------------------
Connectivity Services
(Corporate Use) 48,802 27,955 20,847
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IP Service (-99Mbps) 938 855 83
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IP Service (100Mbps-999Mbps) 225 201 24
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IP Service (1Gbps-) 94 70 24
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IIJ Data Center Connectivity
Service 298 288 10
--------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 26,023 23,539 2,484
--------------------------------------------------------------------
Others(3) 21,224 3,002 18,222
--------------------------------------------------------------------
Connectivity Services (Home Use) 443,412 473,266 (29,854)
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Under IIJ Brand 46,901 51,051 (4,150)
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hi-ho 179,786 189,700 (9,914)
--------------------------------------------------------------------
OEM 216,725 232,515 (15,790)
--------------------------------------------------------------------
Total Contracted Bandwidth 530.5 Gbps 392.4 Gbps 138.1 Gbps
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Connectivity and Outsourcing Services Revenues Breakdown and Cost
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
Connectivity Service
(Corporate Use) 13,142 12,149 8.2%
--------------------------------------------------------------------
IP Service(4) 9,275 9,022 2.8%
--------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 2,894 2,664 8.7%
--------------------------------------------------------------------
Others(5) 973 463 110.4%
--------------------------------------------------------------------
Connectivity Service (Home Use) 6,538 5,430 20.4%
--------------------------------------------------------------------
Under IIJ Brand 1,009 1,099 (8.2%)
--------------------------------------------------------------------
hi-ho 4,971 3,766 32.0%
--------------------------------------------------------------------
OEM 558 565 (1.4%)
--------------------------------------------------------------------
Outsourcing Services 15,396 13,724 12.2%
--------------------------------------------------------------------
Total Connectivity and
Outsourcing Services 35,076 31,303 12.1%
--------------------------------------------------------------------
Cost of Connectivity and
Outsourcing Services 29,318 26,040 12.6%
--------------------------------------------------------------------
Backbone Cost (included in the
cost of Connectivity and
Outsourcing Service) 3,692 3,470 6.4%
--------------------------------------------------------------------
Connectivity and Outsourcing
Services Gross Margin Ratio 16.4% 16.8% --
--------------------------------------------------------------------
SI
One-time revenues from systems construction was JPY14,658 million, down 18.7% YoY while recurring revenues from systems construction and maintenance increased by 18.7% YoY to JPY18,989 million. Systems construction revenue was strongly affected by the weak Japanese economy, especially many large projects which were delayed or postponed. Also, in the third quarter of FY2007, there was the completion of a remarkable large-scale network and application development project, which as a result had an adverse effect on FY2008 revenue growth rate.
Order backlog for SI and equipment sales as of March 31, 2009 was JPY14,871 million, down 6.5% YoY and orders received for FY2008 was JPY33,594 million, down 20.0% YoY. The order backlog and orders received for systems construction including equipment sales was JPY2,863 million (down 39.9% YoY) and JPY13,744 million (down 33.9% YoY), respectively. The order backlog and orders received for systems operation and maintenance was JPY12,008 million (up 7.7% YoY) and JPY19,850 million (down 6.3% YoY), respectively.
SI Revenue Breakdown and Cost
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
SI Revenues 33,647 34,018 (1.1%)
--------------------------------------------------------------------
Systems Construction 14,658 18,025 (18.7%)
--------------------------------------------------------------------
Systems Operation and Maintenance 18,989 15,993 18.7%
--------------------------------------------------------------------
Cost of SI 25,543 25,543 0.0%
--------------------------------------------------------------------
SI Gross Margin Ratio 24.1% 24.9% --
--------------------------------------------------------------------
Order Backlog for SI and Equipment Sales
--------------------------------------------------------------------
March 31, March 31, YoY %
2008 2007 Change
--------------------------------------------------------------------
JPY JPY
millions millions
SI and Equipment Sales Order
Backlog 14,871 15,909 (6.5%)
--------------------------------------------------------------------
Equipment Sales
---------------
Equipment Sales Revenue and Cost
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
Equipment Sales Revenues 985 1,514 (35.0%)
--------------------------------------------------------------------
Cost of Equipment Sales 863 1,300 (33.6%)
--------------------------------------------------------------------
Equipment Sales Gross Margin Ratio 12.3% 14.2% --
--------------------------------------------------------------------
ATM Operation Business
----------------------
ATM Operation Business Revenue and Cost
--------------------------------------------------------------------
FY2008 FY2007 YoY %
change
--------------------------------------------------------------------
JPY JPY
millions millions
ATM Operation Business Revenues 23 -- --
--------------------------------------------------------------------
Cost of ATM Operation Business 422 -- --
--------------------------------------------------------------------
Segment Information
Operating Revenues
------------------
--------------------------------------------------------------------
FY2008
--------------------------------------------------------------------
JPY millions
--------------------------------------------------------------------
Network services and Systems Integration Business 69,961
--------------------------------------------------------------------
External Customers 69,708
--------------------------------------------------------------------
Inter-Segment 253
--------------------------------------------------------------------
ATM Operation Business 23
--------------------------------------------------------------------
External Customers 23
--------------------------------------------------------------------
Inter-Segment --
--------------------------------------------------------------------
Elimination 253
--------------------------------------------------------------------
Consolidated 69,731
--------------------------------------------------------------------
Operating Income (losses)
-------------------------
--------------------------------------------------------------------
FY2008
--------------------------------------------------------------------
JPY millions
--------------------------------------------------------------------
Network services and Systems Integration Business 3,663
--------------------------------------------------------------------
ATM Operation Business (705)
--------------------------------------------------------------------
Elimination 41
--------------------------------------------------------------------
Consolidated 2,917
--------------------------------------------------------------------
FY2009 Financial Targets
Our targets for the fiscal year ending March 31, 2010 are as follows:
(JPY in millions)
---------------------------------------------------------------------
Income before
Income Tax Net Income
Operating Expense attributable
Revenues Income (Benefit) to IIJ
---------------------------------------------------------------------
1H FY2009 33,500 800 550 300
---------------------------------------------------------------------
Full FY2009 73,000 3,300 2,700 1,700
---------------------------------------------------------------------
IIJ targets revenue of JPY73,000 million (up 4.7% YoY), operating income of JPY3,300 million (up 13.1% YoY), income before income tax expense (benefit) of JPY2,700 million (up 32.7% YoY) and net income attributable to IIJ of JPY1,700 million (up 19.8% YoY) for the full FY2009 financial targets.
We expect our connectivity and outsourcing service revenues, a recurring revenue, will continue to increase steadily along with its ordinary course of growth. As for the systems construction revenues, we expect a decrease of approximately JPY2 billion in revenues compared to the previous fiscal year affected by the weak economic conditions. Systems operation and maintenance revenue is expected to increase although with a lower growth rate compared to the previous fiscal year due to the decrease in systems construction revenues. Operating loss related to 4 new subsidiaries is expected to decrease compared to the previous fiscal year to approximately JPY1 billion. The operating loss related to 4 new subsidiaries is expected to have larger effect on our operating income in the first half of FY2009, and for this, we expect operating income for 1Q08 to decrease compared to 1Q08.
Presentation
Presentation Materials will be posted on our web site (http://www.iij.ad.jp/en/IR/) on May 15, 2009.
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design. Moreover, IIJ has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ was listed on the U.S. NASDAQ Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in 2006.
The Internet Initiative Japan Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4613
Statements made in this press release regarding IIJ's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ's and managements' current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding FY2008 revenues and operating and net profitability, are subject to various risks, uncertainties and other factors that could cause IIJ's actual results to differ materially from those contained in any forward-looking statement. These risks, uncertainties and other factors include: IIJ's ability to maintain and increase revenues from higher-margin services such as systems integration and outsourcing services; the possibility that revenues from connectivity services may decline substantially as a result of competition and other factors; the ability to compete in a rapidly evolving and competitive marketplace; the impact on IIJ's profits of fluctuations in costs such as backbone costs and subcontractor costs; the impact on IIJ's profits of fluctuations in the price of available-for-sale securities; the impact of technological changes in its industry; IIJ's ability to raise additional capital to cover its indebtedness; the possibility that NTT, IIJ's largest shareholder, may decide to exercise substantial influence over IIJ; and other risks referred to from time to time in IIJ's filings on Form 20-F of its annual report and other filings with the United States Securities and Exchange Commission.
(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 JPY99.15 per US$1.00, which was the noon buying
rate on March 31, 2009.
(2) In this document, income before income tax expense represents
income from operations before income tax expense (benefit),
minority interests and equity in net loss of equity method
investees in our consolidated financial statements.
(3) The number of contracts for IIJ Mobile Service is included in
"Others" of "Number of Contracts for Connectivity Services".
(4) IP Service revenues include revenues from the Data Center
Connectivity Service.
(5) The revenue for IIJ Mobile Service is included in "Others" of
"Connectivity and Outsourcing Services Revenues Breakdown and
Cost".
Internet Initiative Japan Inc.
Consolidated Balance Sheets (Unaudited)
(As of March 31, 2008 and March 31, 2009)
As of As of
March 31, 2008 March 31, 2009
---------------------------------------------------
Thousands Thousands Thousands
of of of
JPY % U.S. Dollars JPY %
---------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents 11,470,980 102,751 10,187,724
Short-term
investments 12,181 -- --
Accounts
receivable,
net of
allowance for
doubtful
accounts of
JPY 24,677
thousand and
JPY 22,072
thousand at
March 31, 2008
and March 31,
2009,
respectively 12,255,163 103,445 10,256,527
Inventories 1,184,160 5,343 529,756
Prepaid
expenses 2,005,274 17,871 1,771,955
Other current
assets, net of
allowance for
doubtful
accounts of
JPY 7,470
thousand and
JPY 11,720
thousand at
March 31, 2008
and March 31,
2009,
respectively 1,557,869 16,246 1,610,807
----------- -------------------------
Total
current
assets 28,485,627 51.1 245,656 24,356,769 46.6
----------- -------------------------
INVESTMENTS IN
AND ADVANCES TO
EQUITY METHOD
INVESTEES, net of
loan loss
valuation
allowance of
JPY 16,701
thousand at
March 31, 2008
and March 31,
2009,
respectively 991,237 1.8 9,906 982,171 1.9
OTHER INVESTMENTS 2,363,770 4.2 19,310 1,914,594 3.7
PROPERTY AND
EQUIPMENT, net of
accumulated
depreciation and
amortization of
JPY 14,029,785
thousand and JPY
16,444,517
thousand at March
31, 2008 and
March 31, 2009,
respectively 11,740,210 21.1 132,858 13,172,891 25.2
GOODWILL 2,507,258 4.5 26,619 2,639,319 5.0
OTHER INTANGIBLE
ASSETS-Net 3,400,117 6.1 32,293 3,201,806 6.1
GUARANTEE DEPOSITS 2,037,165 3.7 20,904 2,072,652 4.0
OTHER ASSETS, net
of allowance for
doubtful accounts
of JPY 64,796
thousand and
JPY 72,800
thousand at
March 31, 2008
and March 31,
2009,
respectively 4,177,162 7.5 39,950 3,960,997 7.5
----------- -------------------------
TOTAL 55,702,546 100.0 527,496 52,301,199 100.0
----------- -------------------------
As of As of
March 31, 2008 March 31, 2009
-----------------------------------------------
Thousands Thousands Thousands
of of of
JPY % U.S. Dollars JPY %
---------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term
borrowings 9,150,000 74,130 7,350,000
Capital lease
obligations
-current
portion 3,455,948 33,003 3,272,257
Accounts
payable 7,895,238 61,168 6,064,829
Accrued
expenses 994,138 10,785 1,069,310
Accrued
retirement and
pension costs
-current 11,436 121 11,959
Deferred income 1,552,896 12,665 1,255,749
Other current
liabilities 864,366 7,701 763,544
----------- -------------------------
Total current
liabilities 23,924,022 42.9 199,573 19,787,648 37.8
----------- -------------------------
CAPITAL LEASE
OBLIGATIONS
-Noncurrent 4,738,359 8.5 49,079 4,866,120 9.3
ACCRUED
RETIREMENT
AND PENSION
COSTS-Noncurrent 1,101,951 2.0 14,116 1,399,592 2.7
OTHER NONCURRENT
LIABILITIES 663,399 1.2 10,135 1,004,920 1.9
----------- -------------------------
Total
Liabilities 30,427,731 54.6 272,903 27,058,280 51.7
----------- -------------------------
MINORITY INTEREST 294,102 0.6 744 73,735 0.2
----------- -------------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common-stock-
authorized,
377,600 shares;
issued and
outstanding,
206,478 shares
at March 31,
2008 and
March 31, 2009 16,833,847 30.2 169,782 16,833,847 32.2
Additional
paid-in
capital 27,611,737 49.6 278,484 27,611,737 52.8
Accumulated
deficit (19,555,489) (35.1) (187,082) (18,549,141) (35.5)
Accumulated
other
comprehensive
income (loss) 90,618 0.1 (3,235) (320,712) (0.6)
Treasury stock-
3,934 shares
held by the
company at
March 31, 2009 -- -- (4,100) (406,547) (0.8)
----------- -------------------------
Total
shareholders'
equity 24,980,713 44.8 253,849 25,169,184 48.1
----------- -------------------------
TOTAL 55,702,546 100.0 527,496 52,301,199 100.0
----------- -------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 99.15 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, 2009.
(Note 2) The above presentation as of March 31, 2008 has been changed
to conform to the presentation as of March 31, 2009.
Internet Initiative Japan Inc.
Consolidated Statements of Income (Unaudited)
(For the fiscal year ended March 31, 2008 and March 31, 2009)
Fiscal Year Ended Fiscal Year Ended
March 31, 2008 March 31, 2009
----------------- ---------------------------
Thousands
% of of % of
Thousands total U.S. Thousands total
of JPY revenues Dollars of JPY revenues
----------------------------------------------
REVENUES:
Connectivity and
outsourcing
services:
Connectivity
(corporate use) 12,148,490 132,551 13,142,393
Connectivity
(home use) 5,429,955 65,934 6,537,370
Outsourcing
services 13,724,218 155,278 15,395,833
---------- -------------------
Total 31,302,663 353,763 35,075,596
---------- -------------------
Systems
integration:
Systems
Construction 18,025,250 147,841 14,658,502
Systems Operation
and Maintenance 15,992,843 191,514 18,988,595
---------- -------------------
Total 34,018,093 339,355 33,647,097
---------- -------------------
Equipment sales 1,514,543 9,930 984,585
ATM operation
business -- 237 23,452
---------- -------------------
Total revenues 66,835,299 100.0 703,285 69,730,730 100.0
---------- -------------------
COST AND EXPENSES:
Cost of
connectivity and
outsourcing
services 26,039,660 295,690 29,317,645
Cost of systems
integration 25,543,168 257,617 25,542,758
Cost of equipment
sales 1,299,793 8,704 863,031
Cost of ATM
operation
business -- 4,259 422,285
---------- -------------------
Total cost 52,882,621 79.1 566,270 56,145,719 80.5
---------- -------------------
Sales and marketing 4,328,598 6.5 46,703 4,630,579 6.6
General and
administrative 4,624,293 6.9 56,701 5,621,870 8.1
Research and
development 240,423 0.4 4,187 415,180 0.6
---------- -------------------
Total cost
and expenses 62,075,935 92.9 673,861 66,813,348 95.8
---------- -------------------
OPERATING INCOME 4,759,364 7.1 29,424 2,917,382 4.2
---------- -------------------
OTHER INCOME
(EXPENSE):
Interest income 63,030 455 45,153
Interest expense (438,163) (4,117) (408,152)
Foreign exchange
gains (losses) 1,409 (288) (28,515)
Net gains on sales
of other
investments 217,957 158 15,631
Losses on
write-down of
other investments (288,643) (5,288) (524,287)
Other--net 46,715 175 17,276
---------- -------------------
Other expense --
net (397,695) (0.6) (8,905) (882,894) (1.3)
---------- -------------------
INCOME FROM
OPERATIONS BEFORE
INCOME TAX EXPENSE
(BENEFIT),
MINORITY INTERESTS
AND EQUITY IN NET
INCOME (LOSS)
OF EQUITY METHOD
INVESTEES 4,361,669 6.5 20,519 2,034,488 2.9
INCOME TAX EXPENSE
(BENEFIT) (861,414) (1.3) 10,113 1,002,711 1.4
MINORITY INTERESTS
IN LOSSES OF
SUBSIDIARIES 96,706 0.1 3,554 352,428 0.5
EQUITY IN NET INCOME
(LOSS) OF EQUITY
METHOD INVESTEES (143,200) (0.2) 355 35,099 0.0
---------- -------------------
NET INCOME 5,176,589 7.7 14,315 1,419,304 2.0
----------------------------------------------
Fiscal Year
Ended
March 31, Fiscal Year Ended
2008 March 31, 2009
------------ ------------------
NET INCOME PER SHARE
BASIC WEIGHTED-AVERAGE
NUMBER OF SHARES (shares) 206,240 205,165
DILUTED WEIGHTED-AVERAGE
NUMBER OF SHARES (shares) 206,465 205,195
BASIC WEIGHTED-AVERAGE
NUMBER OF ADS
EQUIVALENTS (ADSs) 82,495,987 82,065,978
DILUTED WEIGHTED-AVERAGE
NUMBER OF ADS EQUIVALENTS
(ADSs) 82,586,176 82,077,978
BASIC NET INCOME PER
SHARE (JPY / U.S.
Dollars / JPY) 25,099.83 69.77 6,917.87
DILUTED NET INCOME PER
SHARE (JPY / U.S.
Dollars / JPY) 25,072.48 69.76 6,916.85
BASIC NET INCOME PER
ADS EQUIVALENT
(JPY / U.S. Dollars / JPY) 62.75 0.17 17.29
DILUTED NET INCOME PER
ADS EQUIVALENT
(JPY / U.S. Dollars / JPY) 62.68 0.17 17.29
-----------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 99.15 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, 2009.
(Note 2) The above presentation for the fiscal year ended March 31,
2008 has been changed to conform to the presentation for the
fiscal year ended March 31, 2009.
Internet Initiative Japan Inc.
Consolidated Statements of Shareholders' Equity (Unaudited)
(For the fiscal year ended March 31, 2008 and March 31, 2009)
Shares
of Common Additional
Stock Common Paid-in Accumulated
Outstanding Stock Capital Deficit
----------------------------------------------
Thousands Thousands Thousands
Shares of JPY of JPY of JPY
----------------------------------------------
BALANCE,
APRIL 1, 2007 204,300 16,833,847 26,599,217 (24,270,769)
----------------------------------------------
Net Income 5,176,589
Other Comprehensive
loss, net of tax
Total comprehensive
income
Payment of
dividends (461,309)
Issuance of common
stock related to
share exchanges,
net of issuance
cost 2,178 1,012,520
----------------------------------------------
BALANCE,
MARCH 31, 2008 206,478 16,833,847 27,611,737 (19,555,489)
----------------------------------------------
Net Income 1,419,304
Other Comprehensive
loss, net of tax
Total comprehensive
income
Payment of
dividends (412,956)
Acquisition of
treasury stock
----------------------------------------------
BALANCE,
MARCH 31, 2009 206,478 16,833,847 27,611,737 (18,549,141)
----------------------------------------------
Accumulated
Other
Comprehensive
Income Treasury
(Loss) Stock Total
------------------------------------------
Thousands Thousands Thousands
of JPY of JPY of JPY
------------------------------------------
BALANCE,
APRIL 1, 2007 949,709 -- 20,112,004
------------------------------------------
Net Income 5,176,589
Other Comprehensive
loss, net of tax (859,091) (859,091)
-----------
Total comprehensive
income 4,317,498
Payment of
dividends (461,309)
Issuance of common
stock related to
share exchanges,
net of issuance
cost 1,012,520
------------------------------------------
BALANCE,
MARCH 31, 2008 90,618 -- 24,980,713
------------------------------------------
Net Income 1,419,304
Other Comprehensive
loss, net of tax (411,330) (411,330)
-----------
Total comprehensive
income 1,007,974
Payment of
dividends (412,956)
Acquisition of
treasury stock (406,547) (406,547)
------------------------------------------
BALANCE,
MARCH 31, 2009 (320,712) (406,547) 25,169,184
------------------------------------------
Shares
of Common Additional
Stock Common Paid-in Accumulated
Outstanding Stock Capital Deficit
----------------------------------------------
Thousands Thousands Thousands
Shares U.S. Dollars U.S. Dollars U.S. Dollars
----------------------------------------------
BALANCE,
APRIL 1, 2008 206,478 169,782 278,484 (197,231)
Net Income 14,315
Other Comprehensive
loss, net of tax
Total
comprehensive
income
Payment of
dividends (4,166)
Acquisition of
treasury stock
BALANCE,
MARCH 31, 2009 206,478 169,782 278,484 (187,082)
Accumulated
Other
Comprehensive
Income Treasury
(Loss) Stock Total
------------------------------------------
Thousands Thousands Thousands
U.S. Dollars U.S. Dollars U.S. Dollars
------------------------------------------
BALANCE,
APRIL 1, 2008 914 -- 251,949
Net Income 14,315
Other Comprehensive
loss, net of tax (4,149) (4,149)
--------
Total
comprehensive
income 10,166
Payment of
dividends (4,166)
Acquisition of
treasury stock (4,100) (4,100)
BALANCE,
MARCH 31, 2009 (3,235) (4,100) 253,849
(Note) The U.S. dollar amounts represent translations of yen amounts
at the rate of JPY 99.15 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, 2009.
Consolidated Statements of Cash Flows (Unaudited)
(For the fiscal year ended March 31, 2008 and March 31, 2009)
-
Fiscal Year
Ended Fiscal Year Ended
March 31, 2008 March 31, 2009
--------------------------------------
Thousands Thousands Thousands
of of of
JPY U.S. Dollars JPY
--------------------------------------
OPERATING ACTIVITIES:
Net income 5,176,589 14,315 1,419,304
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 4,774,804 53,044 5,259,296
Provision for retirement
and pension costs, less
payments 191,057 1,288 127,662
Provision for (reversal
of) allowance for
doubtful accounts and
advances (416) 262 26,020
Loss on disposal of
property and equipment 72,086 6,195 614,224
Net gains on sales of
other investments (217,957) (159) (15,631)
Losses on write-down of
other investments 288,643 5,288 524,287
Foreign exchange losses 10,415 97 9,605
Equity in net loss (income)
of equity method
investees (net of
dividend) 143,200 (48) (4,719)
Minority interests in
losses of subsidiaries (96,706) (3,554) (352,428)
Deferred income tax
expense (benefit) (1,653,275) 6,423 636,818
Others -- 18 1,741
Changes in operating assets
and liabilities net of
effects from acquisition of
business and a company:
Decrease (increase) in
accounts receivable (2,584,327) 19,642 1,947,490
Decrease (increase) in
inventories, prepaid
expenses and other
current and noncurrent
assets (995,434) 4,710 467,023
Decrease in accounts
payable (668,481) (20,223) (2,005,074)
Decrease in income taxes
payable (274,475) (1,901) (188,517)
Increase in accrued
expenses, other current
and noncurrent liabilities 372,023 1,652 163,768
-----------------------------------
Net cash provided by
operating activities 4,537,746 87,049 8,630,869
-----------------------------------
INVESTING ACTIVITIES:
Purchase of property and
equipment (1,856,249) (30,170) (2,991,378)
Purchase of available-for-
sale securities (609,787) (1,891) (187,516)
Purchase of short-term and
other investments (232,122) (1,768) (175,264)
Investment in equity method
investee (273,909) -- --
Purchases of subsidiary stock
from minority shareholders (1,975,123) -- --
Proceeds from sales of
available-for-sale securities 616,920 -- 2
Proceeds from sales and
redemption of short-term
and other investments 69,722 1,159 114,924
Payments of guarantee
deposits (353,911) (1,109) (109,929)
Refund of guarantee deposits 11,847 667 66,124
Payments for refundable
insurance policies (49,753) (528) (52,364)
Refund from insurance
policies 3,905 74 7,382
Acquisition of a newly
controlled company, net of
cash acquired (788,608) -- --
Other (6,698) -- (53)
------------------------------------
Net cash used in
investing
activities (5,443,766) (33,566) (3,328,072)
------------------------------------
Fiscal Year
Ended Fiscal Year Ended
March 31, 2008 March 31, 2009
---------------------------------------
Thousands Thousands Thousands
of of of
JPY U.S. Dollars JPY
--------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of
short-term borrowings with
initial maturities over
three months 17,525,000 108,422 10,750,000
Repayments of short-term
borrowings with initial
maturities over three
months and long-term
borrowings (15,940,000) (122,289) (12,125,000)
Principal payments under
capital leases (3,506,842) (39,877) (3,953,834)
Net increase (decrease) in
short-term borrowings with
initial maturities less
than three months 1,225,000 (4,287) (425,000)
Proceeds from issuance of
subsidiary stock to
minority shareholders 6,000 -- --
Dividends paid (461,309) (4,166) (412,956)
Payments for acquisition of
treasury stock -- (4,100) (406,547)
------------------------------------
Net cash used in
financing activities (1,152,151) (66,297) (6,573,337)
------------------------------------
EFFECT OF EXCHANGE
RATE CHANGES ON CASH
AND CASH EQUIVALENTS (25,393) (128) (12,716)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (2,083,564) (12,942) (1,283,256)
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 13,554,544 115,693 11,470,980
------------------------------------
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD 11,470,980 102,751 10,187,724
------------------------------------
ADDITIONAL CASH FLOW
INFORMATION:
Interest paid 438,850 4,122 408,712
Income tax paid 1,083,341 7,810 774,409
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of assets by
entering into capital leases 4,221,807 40,490 4,014,537
Purchase of minority
interests of consolidated
subsidiaries through share
exchanges 1,012,520 -- --
ACQUISITION OF BUSINESS AND
A COMPANY:
Assets acquired 2,319,277 -- --
Cash paid (1,715,450) -- --
Liabilities assumed 367,989 -- --
Minority interests
assumed 235,838 -- --
------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 99.15 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, 2009.
(Note 2) The above presentation for the fiscal year ended March 31,
2008 has been changed to conform to the presentation for
the fiscal year ended March 31, 2009.
4th Quarter FY2008 Consolidated Financial Results (3 months)
The following tables are highlight data of 4th Quarter FY2008 consolidated financial results (unaudited, from January 1, 2009 to March 31, 2009).
Operating Results Summary
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
Total Revenues: 18,942 18,486 2.5%
---------------------------------------------------------------------
Connectivity and Outsourcing Services 9,135 8,447 8.1%
---------------------------------------------------------------------
SI 9,542 9,805 (2.7%)
---------------------------------------------------------------------
Equipment Sales 259 234 10.5%
---------------------------------------------------------------------
ATM Operation Business 6 -- --
---------------------------------------------------------------------
Cost of Revenues: 14,891 14,221 4.7%
---------------------------------------------------------------------
Connectivity and Outsourcing Services 7,466 7,034 6.1%
---------------------------------------------------------------------
SI 7,039 6,985 0.8%
---------------------------------------------------------------------
Equipment Sales 224 202 11.1%
---------------------------------------------------------------------
ATM Operation Business 162 -- --
---------------------------------------------------------------------
SG&A Expenses and R&D 2,978 2,458 21.2%
---------------------------------------------------------------------
Operating Income 1,073 1,807 (40.6%)
---------------------------------------------------------------------
Income before Income Tax Expense 792 1,647 (51.9%)
---------------------------------------------------------------------
Net Income (Loss) 1,065 1,089 (2.2%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services Revenues Breakdown and Cost
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
Connectivity and Outsourcing Services
Revenues 9,135 8,447 8.1%
---------------------------------------------------------------------
Connectivity Service (Corporate Use) 3,437 3,144 9.3%
---------------------------------------------------------------------
IP Service 2,351 2,340 0.5%
---------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 736 704 4.5%
---------------------------------------------------------------------
Others 350 100 250.8%
---------------------------------------------------------------------
Connectivity Service (Home Use) 1,678 1,622 3.5%
---------------------------------------------------------------------
Under IIJ Brand 247 268 (8.0%)
---------------------------------------------------------------------
hi-ho 1,289 1,228 5.0%
---------------------------------------------------------------------
OEM 142 125 13.4%
---------------------------------------------------------------------
Outsourcing Services 4,020 3,681 9.2%
---------------------------------------------------------------------
Cost of Connectivity and Outsourcing
Services 7,466 7,034 6.1%
---------------------------------------------------------------------
Backbone Cost (included in the cost
of Connectivity and Outsourcing Service) 916 896 2.2%
---------------------------------------------------------------------
Connectivity and Outsourcing Services Gross
Margin Ratio 18.3% 16.7% --
=====================================================================
SI Revenue Breakdown and Cost
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
SI Revenues 9,542 9,805 (2.7%)
---------------------------------------------------------------------
Systems Construction 4,644 5,384 (13.7%)
---------------------------------------------------------------------
Systems Operation and Maintenance 4,898 4,420 10.8%
---------------------------------------------------------------------
Cost of SI 7,039 6,985 0.8%
=====================================================================
SI Gross Margin Ratio 26.2% 28.8% --
=====================================================================
Equipment Sales Revenue and Cost
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
Equipment Sales Revenues 259 234 10.5%
---------------------------------------------------------------------
Cost of Equipment Sales 224 202 11.1%
=====================================================================
Equipment Sales Gross Margin Ratio 13.4% 14.0 % --
=====================================================================
ATM Operation Business Revenue and Cost
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
ATM Operation Business Revenues 6 -- --
---------------------------------------------------------------------
Cost of ATM Operation Business 162 -- --
---------------------------------------------------------------------
Other Financial Statistics
---------------------------------------------------------------------
4Q08 4Q07 YoY
Change
---------------------------------------------------------------------
JPY millions
Adjusted EBITDA 2,379 3,101 (23.3%)
CAPEX, including capital leases 657 1,546 (57.5%)
Depreciation and amortization 1,306 1,293 0.9%
---------------------------------------------------------------------
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
------------------------------------------------------------------
4Q08 4Q07
------------------------------------------------------------------
JPY millions
Adjusted EBITDA 2,379 3,101
------------------------------------------------------------------
Depreciation and Amortization 1,306 (1,293)
------------------------------------------------------------------
Operating Income 1,073 1,807
------------------------------------------------------------------
Other Income (Expense) (281) (160)
------------------------------------------------------------------
Income Tax Expense (190) 552
------------------------------------------------------------------
Minority Interests in Losses of Subsidiaries 93 45
------------------------------------------------------------------
Equity in Net Income (Loss) of Equity Method
Investees (10) (52)
------------------------------------------------------------------
Net Income (Loss) 1,065 1,089
------------------------------------------------------------------
The following table summarizes the reconciliation of capital expenditures to the purchase of property and equipment in our consolidated statements of cash flows that are prepared and presented in accordance with U.S. GAAP.
CAPEX
------------------------------------------------------------------
4Q08 4Q07
------------------------------------------------------------------
JPY millions
CAPEX, including capital leases 657 1,546
------------------------------------------------------------------
Acquisition of Assets by Entering into
Capital Leases 329 1,305
------------------------------------------------------------------
Purchase of Property and Equipment 328 241
------------------------------------------------------------------
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(Three Months ended March 31, 2008 and March 31, 2009)
Three Months Ended Three Months Ended
March 31, 2008 March 31, 2009
------------------ ---------------------------
Thousands
% of of % of
Thousands total U.S. Thousands total
of JPY revenues Dollars of JPY revenues
-----------------------------------------------
REVENUES:
Connectivity and
outsourcing
services:
Connectivity
(corporate
use) 3,143,769 34,660 3,436,518
Connectivity
(home use) 1,621,966 16,927 1,678,316
Outsourcing
services 3,681,322 40,544 4,019,900
---------- ------- ----------
Total 8,447,057 92,131 9,134,734
Systems
integration:
Systems
Construction 5,384,115 46,843 4,644,483
Systems
Operation
and
Maintenance 4,420,481 49,395 4,897,539
---------- ------- ----------
Total 9,804,596 96,238 9,542,022
---------- ------- ----------
Equipment sales 234,240 2,610 258,784
ATM operation
business -- 62 6,187
---------- ------- ----------
Total
revenues 18,485,893 100.0 191,041 18,941,727 100.0
---------- ------- ----------
COST AND EXPENSES:
Cost of
connectivity
and outsourcing
services 7,034,489 75,302 7,466,183
Cost of systems
integration 6,985,004 70,992 7,038,866
Cost of equipment
sales 201,526 2,259 223,978
Cost of ATM
operation
business -- 1,631 161,698
---------- ------- ----------
Total cost 14,221,019 76.9 150,184 14,890,725 78.6
---------- ------- ----------
Sales and
marketing 1,177,093 6.4 11,342 1,124,574 5.9
General and
administrative 1,219,673 6.6 16,686 1,654,402 8.7
Research and
development 60,935 0.3 2,007 198,986 1.1
---------- ------- ----------
Total cost
and expenses 16,678,720 90.2 180,219 17,868,687 94.3
---------- ------- ----------
OPERATING INCOME 1,807,173 9.8 10,822 1,073,040 5.7
---------- ------- ----------
OTHER INCOME
(EXPENSE):
Interest income 22,786 127 12,611
Interest expense (109,116) (988) (98,006)
Foreign exchange
gains (loss) (921) (191) (18,986)
Losses on sales
of other
investments -- (21) (2,049)
Losses on
write-down of
other
investments (104,365) (1,967) (195,071)
Other--net 31,306 209 20,789
---------- ------- ----------
Other expense
-- net (160,310) (0.9) (2,831) (280,712) (1.5)
---------- ------- ----------
INCOME FROM
OPERATIONS BEFORE
INCOME TAX EXPENSE
(BENEFIT),
MINORITY
INTERESTS AND
EQUITY IN NET
LOSS OF EQUITY
METHOD INVESTEES 1,646,863 8.9 7,991 792,328 4.2
INCOME TAX EXPENSE
(BENEFIT) 551,688 3.0 (1,914) (189,718) (1.0)
MINORITY INTERESTS
IN LOSSES OF
SUBSIDIARIES 45,100 0.3 937 92,944 0.5
EQUITY IN NET LOSS
OF EQUITY METHOD
INVESTEES (51,677) (0.3) (101) (10,008) (0.1)
---------- ------- ----------
NET INCOME 1,088,598 5.9 10,741 1,064,982 5.6
-----------------------------------------------
Three
Months
Ended
March 31, Three Months Ended
2008 March 31, 2009
---------- ------------------
NET INCOME
PER SHARE
BASIC WEIGHTED-
AVERAGE NUMBER
OF SHARES
(shares) 206,478 202,544
DILUTED WEIGHTED-
AVERAGE NUMBER
OF SHARES
(shares) 206,565 202,544
BASIC WEIGHTED-
AVERAGE NUMBER
OF ADS
EQUIVALENTS
(ADSs) 82,591,200 81,017,600
DILUTED WEIGHTED-
AVERAGE NUMBER
OF ADS
EQUIVALENTS
(ADSs) 82,625,891 81,017,600
BASIC NET INCOME
PER SHARE
(JPY / U.S.
Dollars / JPY) 5,272.22 53.03 5,258.03
DILUTED NET
INCOME PER SHARE
(JPY / U.S.
Dollars / JPY) 5,270.00 53.03 5,258.03
BASIC NET INCOME
PER ADS
EQUIVALENT
(JPY / U.S.
Dollars / JPY) 13.18 0.13 13.15
DILUTED NET
INCOME PER ADS
EQUIVALENT
(JPY / U.S.
Dollars / JPY) 13.18 0.13 13.15
-------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 99.15 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, 2009.
(Note 2) The above presentation for the three months ended March 31,
2008 has been changed to conform to the presentation for the
three months ended March 31, 2009.
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(Three Months ended March 31, 2008 and March 31, 2009)
Three Months
Ended
March 31, Three Months Ended
2008 March 31, 2009
------------ -----------------------
Thousands
Thousands of U.S. Thousands
of JPY Dollars of JPY
-------------------------------------
OPERATING ACTIVITIES:
Net income 1,088,598 10,741 1,064,982
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 1,293,410 13,168 1,305,653
Provision for (reversal
of) retirement and pension
costs, less payments 62,686 (679) (67,291)
Provision for allowance for
doubtful accounts
and advances 6,653 83 8,268
Loss on disposal of
property and equipment 56,404 4,543 450,452
Loss on sales of other
investments -- 21 2,049
Losses on write-down of
other investments 104,365 1,967 195,071
Foreign exchange losses
(gains) 6,460 (113) (11,223)
Equity in net loss of
equity method investees 51,677 101 10,008
Minority interests in
losses of subsidiaries (45,100) (936) (92,944)
Deferred income tax
expense (benefit) 137,116 (3,383) (335,379)
Others -- (2) (231)
Changes in operating
assets and liabilities
net of effects from
acquisition of business
and a company:
Increase in accounts
receivable (462,870) (7,149) (708,788)
Decrease in inventories,
prepaid expenses and other
current and noncurrent
assets 355,753 17,306 1,715,877
Increase in accounts
payable 956,746 1,182 117,161
Increase (decrease) in
accrued expenses, other
current and noncurrent
liabilities 471,341 (3,769) (373,663)
-------------------------------------
Net cash provided by
operating activities 4,083,239 33,081 3,280,002
-------------------------------------
INVESTING ACTIVITIES:
Purchase of property and
equipment (241,255) (3,312) (328,364)
Purchase of
available-for-sale
securities (92,512) (883) (87,524)
Purchase of short-term and
other investments (148) (504) (50,000)
Proceeds from sales of
available-for-sale
securities -- 0 2
Proceeds from sales and
redemption of short-term
and other investments 49,143 666 66,042
Investment in equity
method investee (23,520) -- --
Payments of guarantee
deposits (66,191) (273) (27,025)
Refund of guarantee deposits 3,451 391 38,775
Payments for refundable
insurance policies (13,297) (139) (13,860)
Refund from insurance
policies 3,905 -- --
Other -- -- --
-------------------------------------
Net cash used in
investing activities (380,424) (4,054) (401,954)
-------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of
short-term borrowings with
initial maturities over
three months 1,625,000 2,521 250,000
Repayments of short-term
borrowings with initial
maturities over
three months (400,000) (5,799) (575,000)
Principal payments under
capital leases (942,700) (11,156) (1,106,108)
Net Increase in short-term
borrowings with initial
maturities less than
three months (1,725,000) (1,260) (125,000)
Acquisition of a newly
controlled company, net of
cash acquired 6,000 -- --
Payments for acquisition of
treasury stock -- (1,069) (105,992)
-------------------------------------
Net cash used in financing
activities (1,436,700) (16,763) (1,662,100)
-------------------------------------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS (9,582) 164 16,329
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,256,533 12,428 1,232,277
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 9,214,447 90,323 8,955,447
-------------------------------------
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD 11,470,980 102,751 10,187,724
-------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 99.15 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, 2009.
(Note 2) The above presentation for the three months ended March 31,
2008 has been changed to conform to the presentation for the
three months ended March 31, 2009.
Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the fiscal year ended March 31, 2009 ("FY2008") in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the
Fiscal Year Ended March 31, 2009
[Under accounting principles generally accepted in the United States
("U.S. GAAP")]
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Fiscal Year
Ended March 31, 2009
(April 1, 2008 to March 31, 2009)
(1) Consolidated Results of Operations (% shown is YoY change)
---------------------------------------------------------------------
Income
before
Income
Tax
Total Operating Expense Net
Revenues Income (Benefit) Income
---------------------------------------------------------------------
JPY % JPY % JPY % JPY %
millions millions millions millions
Fiscal year
ended March 69,731 4.3 2,917 (38.7) 2,034 (53.4) 1,419 (72.6)
31, 2009
Fiscal year
ended March 66,835 17.1 4,759 36.0 4,362 (13.6) 5,177 (4.3)
31, 2008
---------------------------------------------------------------------
Basic Diluted Net Income to Income Operating
Net Net Total before Margin
Income Income Shareholders' Income Tax Ratio
per per Share Equity Expense
Share (Benefit)
to Total
Assets
---------------------------------------------------------------------
JPY JPY % % %
Fiscal year
ended March 6,917.87 6,916.85 5.7 3.8 4.2
31, 2009
Fiscal year
ended March 25,099.83 25,072.48 23.0 8.4 7.1
31, 2008
---------------------------------------------------------------------
(Reference) Equity in net earning (loss) of equity method investees:
FY2008: JPY 35 millions FY2007: JPY (143) millions
(Note) In this document, income before income tax expense (benefit)
represents income from operations before income tax expense
(benefit), minority interests and equity in net loss of equity
method investees in IIJ's consolidated financial statements
for the fiscal year ended March 31, 2009.
(2) Consolidated Financial Position
---------------------------------------------------------------------
Shareholders'
Equity as a Shareholders'
Shareholders' percentage of Equity
Total Assets Equity Total Assets per share
---------------------------------------------------------------------
JPY millions JPY millions % JPY
Fiscal year
ended March 52,301 25,169 48.1 124,265.27
31, 2009
Fiscal year
ended March 55,703 24,981 44.8 120,984.87
31, 2008
---------------------------------------------------------------------
(Note) Shareholders' equity, shareholders' equity as a percentage of
total assets and shareholders' equity per share are calculated
and presented in accordance with U.S. GAAP.
(3) Consolidated Cash Flow
---------------------------------------------------------------------
Operating Investing Financing Cash and Cash
Activities Activities Activities Equivalents
(End of
the Period)
---------------------------------------------------------------------
JPY millions JPY millions JPY millions JPY millions
Fiscal year
ended March 8,631 (3,328) (6,573) 10,188
31, 2009
Fiscal year
ended March 4,538 (5,444) (1,152) 11,471
31, 2008
---------------------------------------------------------------------
2. Dividends
---------------------------------------------------------------------
Dividend per Shares
---------------------------------------------------------------------
1st 2nd 3rd Year-end Total
quarter-end quarter-end quarter-end
---------------------------------------------------------------------
Yen Yen Yen Yen Yen
Fiscal year
ended March
31, 2008 -- 750.00 -- 1,000.00 1,750.00
---------------------------------------------------------------------
Fiscal year
ended March
31, 2009 -- 1,000.00 -- 1,000.00 2,000.00
---------------------------------------------------------------------
Fiscal year
ending March
31, 2010
(Target) -- 1,000.00 -- 1,000.00 2,000.00
---------------------------------------------------------------------
Total cash Payout Ratio Ratio of Dividends
dividends (consolidated) to Shareholder's
for the year Equity (consolidated)
---------------------------------------------------------------------
JPY millions % %
Fiscal year
ended March
31, 2008 361 7.0 1.6
---------------------------------------------------------------------
Fiscal year
ended March
31, 2009 409 28.9 1.6
---------------------------------------------------------------------
Fiscal year
ending March
31, 2010
(Target) 23.8
---------------------------------------------------------------------
3. Target of Consolidated Financial Results for the
Fiscal Year Ending March 31, 2010
(April 1, 2009 through March 31, 2010) (% shown is YoY change)
---------------------------------------------------------------------
Total Revenues Operating Income before
Income Income Tax
Expense (Benefit)
---------------------------------------------------------------------
JPY % JPY % JPY %
millions millions millions
Interim period ending
September 30, 2009 33,500 0.7 800 (20.4) 550 (28.2)
Fiscal year ending
March 31, 2010 73,000 4.7 3,300 13.1 2,700 32.7
---------------------------------------------------------------------
Net income attributable to IIJ:
Interim period ending September 30, 2009: JPY300 million
Fiscal year ending March 31, 2010: JPY1,700 million
Basic net income per share attributable to IIJ shareholders:
Interim period ending September 30, 2009: JPY1,481.16
Fiscal year ending March 31, 2010: JPY8,393.24
(Note1)"Net income attributable to IIJ" presented above is comparable
to the caption "Net income" appearing in the consolidated
financial statements for fiscal years ended as of or prior to
March 31, 2009.
(Note2)Basic net income per share attributable to IIJ shareholder is
computed by dividing net income by 202,544 shares (Excluding
3,934 treasury stock from the 206,478 shares outstanding as of
March 31, 2009).
4. Others
(1) Change of Condition in Consolidated Subsidiaries during the
fiscal year ended March 31, 2009
(Change of Condition in Specific Consolidated Subsidiaries with
a Change of Scope of Consolidation): None
(2) Changes in Significant Accounting and Reporting Policies for
Consolidated Financial Statements
1)Changes due to the revision of accounting standards: Yes
2)Others: Yes
(3) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding (including treasury stock):
As of March 31, 2009: 206,478 shares
As of March 31, 2008: 206,478 shares
2) The number of treasury stock:
As of March 31, 2009: 3,934 shares
As of March 31, 2008: 0 shares
3) The weighted average number of shares outstanding:
As of March 31, 2009: 205,165 shares
As of March 31, 2008: 206,240 shares