TOKYO, May 15, 2015 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) today announced its full year ("FY2014") and 4th quarter ("4Q14") consolidated financial results for the fiscal year ended March 31, 2015 (from April 1, 2014 to March 31, 2015).1
| Highlights of Financial Results for FY2014 | ||
| Revenues | JPY123,050 million | (up 7.7% YoY) |
| Operating Income | JPY5,075 million | (down 11.3% YoY) |
| Income before Income Tax Expense | JPY5,139 million | (down 18.1% YoY) |
| Net Income attributable to IIJ | JPY3,322 million | (down 25.2% YoY) |
| Financial Targets for FY2015 | ||
| Revenues | JPY139,000 million | (up 13.0% YoY) |
| Operating Income | JPY6,500 million | (up 28.1% YoY) |
| Income before Income Tax Expense | JPY6,400 million | (up 24.5% YoY) |
| Net Income attributable to IIJ | JPY4,000 million | (up 20.4% YoY) |
| Annual Cash Dividend | JPY22.00 per share | |
Overview of FY2014 Financial Results and Business Outlook
"Business environment continues to be favorable along with the growing outsourcing demands and the return of Japanese corporate IT investment appetite. Under such positive momentum, we're continuously enhancing our business investment. We hired 155 new graduates this April, and allocate more resources in areas of MVNO (Mobile Virtual Network Operator), Cloud, and systems integration where we're focusing on services and solutions developments in particular. We also promote overseas businesses aggressively by establishing affiliated companies and through partnerships. These forward-looking investments require some time to be reflected in financial results and thus our overall costs have increased. In the meantime, we saw an accelerated revenues growth, especially in the latter half of FY2014 where the total revenues grew by 10.0% year over year. We shall continue to execute our business expansion strategies for middle-to-long term growth," said Koichi Suzuki, Founder and CEO of IIJ.
"MVNO and Cloud continue to be strong growth drivers, which we started in January 2008 and December 2009. MVNO revenues for FY2014 grew by 63.5% to JPY7.7 billion and its subscription as of March 31, 2015 increased by 289 thousand to 673 thousand from a year ago. Consumer MVNO services, which became popular in FY2014 for their cost-effectiveness, can be anticipated to achieve a significant market penetration within two to three years as only about 1.3%2 of total mobile phone users in Japan are using these services currently. We're different from competitors as we can improve the infrastructure efficiency by gathering consumer and enterprise traffic, leveraging our blue-chip corporate client base. As for Cloud services, its revenue has grown to JPY12.3 billion in five years, which represents 10.0% of our FY2014 total revenues. We see some large Japanese companies began to use Cloud for their mission-critical and core business operation systems, such as online banking security systems by a major commercial bank. We expect it might take time but this trend gradually becomes prominent in the middle term," followed Eijiro Katsu, COO and President of IIJ.
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.
2 The figure is calculated by dividing the total mobile subscription (154.75 million) by MVNO's SIM card subscription (1.95 million) as of December 31, 2014. These figures are published by the Ministry of Internal Affairs and Communications in March and April of 2015. http://www.soumu.go.jp/menu_news/s-news/01kiban02_02000151.html
"As for FY2014 financial results, revenues continuously increased mainly with consumer MVNO services, Cloud services, and systems integration. On the other hand, operating income decreased year over year primarily because the operating costs such as personnel-related and outsourcing-related are on an increasing trend due to our enhanced business investment while the accumulation of recurring revenue services was not as strong as planned. In addition, mobile data communication charge from NTT DOCOMO, Inc. hadn't decreased largely against our initial expectation," continued Katsu.
"For FY2015 earnings, we target revenues and operating income to increase by 13.0% and 28.1% respectively from FY2014. Our business investment should start to make contribution by accelerating revenue growth. Operating income growth should be achieved mainly by accumulating recurring revenues, increasing Cloud services profit, decreasing overseas business deficit, and improving system integration gross margin. We remain committed to returning to an operating income growth and further scale up of our business," concluded Katsu.
FY2014 Financial Results Summary
| Operating Results Summary | |||
| FY2013 | FY2014 | YoY % | |
| Change | |||
| JPY millions | JPY millions | ||
| Total Revenues | 114,272 | 123,050 | 7.7 |
| Network Services | 67,286 | 69,006 | 2.6 |
| Systems Integration (SI) | 42,469 | 48,237 | 13.6 |
| Equipment Sales | 1,690 | 2,167 | 28.2 |
| ATM Operation Business | 2,827 | 3,640 | 28.8 |
| Total Costs | 93,206 | 100,978 | 8.3 |
| Network Services | 53,046 | 54,932 | 3.6 |
| Systems Integration (SI) | 36,510 | 41,562 | 13.8 |
| Equipment Sales | 1,527 | 1,932 | 26.6 |
| ATM Operation Business | 2,123 | 2,552 | 20.2 |
| SG&A Expenses and R&D | 15,343 | 16,997 | 10.8 |
| Operating Income | 5,723 | 5,075 | (11.3) |
| Income before Income Tax Expense | 6,275 | 5,139 | (18.1) |
| Net Income attributable to IIJ | 4,442 | 3,322 | (25.2) |
| Segment Results Summary | ||
| FY2013 | FY2014 | |
| JPY millions | JPY millions | |
| Total Revenues | 114,272 | 123,050 |
| Network services and SI business | 111,901 | 119,819 |
| ATM Operation Business | 2,827 | 3,640 |
| Elimination | 456 | 409 |
| Operating Income | 5,723 | 5,075 |
| Network service and SI business | 5,275 | 4,335 |
| ATM Operation Business | 578 | 886 |
| Elimination | 130 | 146 |
We have omitted segment analysis because most of our revenues are dominated by Network services and Systems Integration (SI) business.
FY2014 Results of Operation
Revenues
Total revenues were JPY123,050 million, up 7.7% YoY.
Network Services revenue was JPY69,006 million, up 2.6% YoY.
Revenues for Internet connectivity services for enterprise were JPY16,350 million, down 1.4% YoY from JPY16,585 million for FY2013. There were increase in enterprise mobile service revenues and decrease in IP services revenues including data center connectivity services revenues.
Revenues for Internet connectivity services for consumer were JPY8,222 million, up 36.5% YoY from JPY6,025 million for FY2013, mainly due to the large revenue growth of consumer mobile services "IIJmio High-speed Mobile/D service," consumer mobile services which offers inexpensive data communication and voice services with SIM cards.
WAN services revenues were JPY24,326 million, down 2.7% YoY compared to JPY25,006 million for FY2013.
Outsourcing services revenues were JPY20,108 million, up 2.2% YoY from JPY19,670 million for FY2013, mainly by the increase in revenues of "IIJ GIO Hosting Package Services."
| Network Services Revenues Breakdown | |||
| YoY % | |||
| FY2013 | FY2014 | Change | |
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Enterprise)3 | 16,585 | 16,350 | (1.4) |
| IP Service4 | 10,357 | 9,831 | (5.1) |
| IIJ FiberAccess/F and IIJ DSL/F | 3,147 | 3,143 | (0.1) |
| IIJ Mobile Service(Enterprise) | 2,850 | 3,143 | 10.3 |
| Others | 231 | 233 | 1.0 |
| Internet Connectivity Service (Consumer)3 | 6,025 | 8,222 | 36.5 |
| Under IIJ Brand | 2,273 | 4,781 | 110.3 |
| hi-ho | 3,047 | 2,793 | (8.3) |
| OEM | 705 | 648 | (8.1) |
| WAN Services | 25,006 | 24,326 | (2.7) |
| Outsourcing Services | 19,670 | 20,108 | 2.2 |
| Total Network Services | 67,286 | 69,006 | 2.6 |
| Number of Contracts for Connectivity Services | |||
| as of | as of | YoY | |
| March 31, 2014 | March 31, 2015 | Change | |
| Internet Connectivity Services (Enterprise) | 142,655 | 172,613 | 29,958 |
| IP Service (-99Mbps) | 847 | 763 | (84) |
| IP Service (100Mbps-999Mbps) | 448 | 504 | 56 |
| IP Service (1Gbps-) | 271 | 340 | 69 |
| IIJ Data Center Connectivity Service | 288 | 278 | (10) |
| IIJ FiberAccess/F and IIJ DSL/F | 56,384 | 62,926 | 6,542 |
| IIJ Mobile Service(Enterprise) | 83,124 | 106,493 | 23,369 |
| Others | 1,293 | 1,309 | 16 |
| Internet Connectivity Services (Consumer) | 625,297 | 894,009 | 268,712 |
| Under IIJ Brand | 171,968 | 373,125 | 201,157 |
| hi-ho | 155,177 | 150,776 | (4,401) |
| OEM | 298,152 | 370,108 | 71,956 |
| Total Contracted Bandwidth | 1,539.3Gbps | 1,730.8Gbps | 191.5Gbps |
| 3 We have renamed Internet Connectivity Service (for Corporate Use) and Internet Connectivity Service (for home use) to Internet Connectivity Service (Enterprise) and Internet Connectivity Service (Consumer), respectively in June 2014. | |||
| 4 IP Service revenues include revenues from the Data Center Connectivity Service. | |||
SI revenues were JPY48,237 million, up 13.6% YoY.
Systems construction revenue, a one-time revenue, was JPY20,437 million, up 9.4% YoY. Revenue increased mainly due to the increase in the scale of systems construction projects. Systems operation and maintenance revenue, a recurring revenue, was JPY27,800 million, up 16.8% YoY. "IIJ GIO Component Services" revenues increased and systems construction projects that were completed and shifted to operation and maintenance phase contributed to the revenue increase of systems operation and maintenance.
Orders received for SI and equipment sales totaled JPY55,149 million, up 14.0% YoY; orders received for systems construction and equipment sales were JPY22,236 million, up 2.2% YoY and orders received for systems operation and maintenance were JPY32,913 million, up 23.6% YoY.
Order backlog for SI and equipment sales as of March 31, 2015 amounted to JPY29,053 million, up 19.5% YoY; order backlog for systems construction and equipment sales was JPY4,734 million, down 7.2% YoY and order backlog for systems operation and maintenance was JPY24,319 million, up 26.6% YoY.
Equipment sales revenues were JPY2,167 million, up 28.2% YoY.
ATM Operation Business revenues were JPY3,640 million, up 28.8% YoY. The increase was in accordance with the increase in the number of placed ATMs. As of March 31, 2015, 1,059 ATMs are in operation.
Cost and expense
Total cost of revenues was JPY100,978 million, up 8.3% YoY.
Cost of Network Services revenue was JPY54,932 million, up 3.6% YoY. The increase was mainly due to the increase in outsourcing-related costs6 along with the increase in mobile-related services revenues, and the increase in depreciation and amortization cost along with the expansion and upgrade of network facilities. Gross margin was JPY14,073 million, down 1.2% YoY and gross margin ratio was 20.4%.
Cost of SI revenues was JPY41,562 million, up 13.8% YoY. The increase was mainly due to the increase in personnel-related costs and outsourcing-related costs along with the revenue growth and solution development, increase in purchasing costs along with the systems construction revenue growth, and the increase in depreciation and amortization costs was due to the expansion of service facility such as for Cloud services. Gross margin was JPY6,676 million, up 12.0% YoY and gross margin ratio was 13.8%.
Cost of Equipment Sales revenues was JPY1,932 million, up 26.6% YoY. Gross margin was JPY235 million, up 43.5% YoY and gross margin ratio was 10.8%.
Cost of ATM Operation Business revenues was JPY2,552 million, up 20.2% YoY in accordance with increase in the number of placed ATMs. Gross margin was JPY1,089 million and gross margin ratio was 29.9%.
SG&A and R&D Expenses
SG&A and R&D expenses in total were JPY16,997 million, up 10.8% YoY (JPY15,343 million in FY2013).
Sales and marketing expenses were JPY9,188 million, up 7.5% YoY. The increase was mainly due to the increase in personnel-related and sales commission expenses.
General and administrative expenses were JPY7,368 million, up 15.6% YoY. The increase was mainly due to the expenses related to the headquarter relocation and an increase in personnel-related expenses.
Research and development expenses were JPY441 million, up 4.7% YoY.
Operating income
Operating income was JPY5,075 million, down 11.3% YoY (JPY5,723 million for FY2013).
5 IIJ provides mobile communications service through an MVNO scheme by purchasing mobile infrastructure from NTT Docomo. IIJ pays wholesale telecommunications service charge which is recognized in outsourcing-related costs in our cost of network services revenue.
Other income (expenses)
Other income (expenses) was an income of JPY64 million (an income of JPY552 million for FY2013), mainly due to distribution from other investments of JPY171 million (included in other-net of JPY209 million), dividend income of JPY63 million, net gain on sales of other investments of JPY41 million,and interest expense of JPY238 million.
Income before income tax expenses
Income before income tax expense was JPY5,139 million, down 18.1% YoY(JPY6,275 million for FY2013) .
Net Income
Income tax expense was JPY1,897 million (JPY1,795 million for FY2013).
Equity in net income of equity method investees was JPY155 million (JPY204 million for FY2013) mainly due to net income of Internet Revolution, Inc. and Internet Multifeed Co.
As a result of the above, net income was JPY3,397 million, down 27.5% YoY (JPY4,684 million for FY2013).
Net income attributable to IIJ
Net income attributable to non-controlling interests was JPY75 million mainly related to net income of Trust Networks Inc. (JPY242 million for FY2013).
Net income attributable to IIJ was JPY3,322 million, down 25.2% YoY (JPY4,442 million for FY2013).
FY2014 Financial Condition
Balance Sheets
As of March 31, 2015, the balance of total assets was JPY108,705 million, increased by JPY4,839 million from the balance as of March 31, 2014 of JPY103,867 million.
As for current assets as of March 31, 2015, as compared to the respective balances as of March 31, 2014, accounts receivable increased by JPY3,038 million, current portion of guarantee deposits decreased by JPY1,462 million along with our headquarter relocation, and cash and cash equivalents decreased by JPY1,327 million mainly related to the repayment of bank borrowings. As for noncurrent assets as of March 31, 2015, as compared to the respective balances as of March 31, 2014, property and equipment increased by JPY2,399 million and guarantee deposits increased by JPY1,536 million. As for current liabilities as of March 31, 2015, as compared to the respective balances as of March 31, 2014, accounts payable increased by JPY1,084 million, accrued expenses increased by JPY915 million and current portion of long-term borrowings decreased by JPY980 million.
As for the balances of capital lease obligations as of March 31, 2015, as compared to the respective balances as of March 31, 2014, capital lease obligations-current portion decreased by JPY231 million to JPY3,522 million and capital lease obligations-noncurrent decreased by JPY263 million to JPY4,340 million.
As of March 31, 2015, the balance of other investments increased by JPY305 million to JPY6,661 million. The breakdown of other investments were JPY4,314 million in available-for-sale securities, JPY2,263 million in nonmarketable equity securities and JPY83 million in other.
As of March 31, 2015, the breakdown of major non-amortized intangible assets were JPY6,170 million in goodwill and JPY107 million in trademark. The balance of amortized intangible assets, which was customer relationships, was JPY3,805 million.
Total IIJ shareholders' equity as of March 31, 2015 compared to the balance as of March 31, 2014, increased by JPY2,592 million to JPY62,504 million. IIJ shareholders' equity ratio (total IIJ shareholders' equity/total assets) as of March 31, 2015 was 57.5%.
Cash Flows
Cash and cash equivalents as of March 31, 2015 were JPY21,094 million compared to JPY22,421 million as of March 31, 2014.
Net cash provided by operating activities for FY2014 was JPY12,912 million compared to net cash provided by operating activities of JPY8,787 million for FY2013. Net income for FY2014 decreased from FY2013, however, non-cash operating expense such as depreciation and amortization cost increased. Additionally, in relation to the changes in operating assets and liabilities, there were positive effects to operating cash flow from increase in advance receipts from long-term systems maintenance projects, decrease in other receivable, increase in accrued expenses and increase in accounts payables.
Net cash used in investing activities for FY2014 was JPY8,073 million compared to net cash used in investing activities of JPY10,203 million for FY2013, mainly due to payments for purchase of property and equipment of JPY8,157 million (JPY9,124 million for FY2013), payments of guarantee deposits of JPY1,636 million (JPY689 million for FY2013), payments for purchase of other investments of JPY282 million (JPY1,186 million for FY2013) and refund of guarantee deposits of JPY1,573 million (JPY20 million for FY2013).
Net cash used in financing activities for FY2014 was JPY6,283 million compared to net cash provided by financing activities of JPY11,382 million for FY2013, mainly due to principal payments under capital leases of JPY4,194 million (JPY3,969 million for FY2013), net repayments of borrowings of JPY1,130 million (JPY1,010 million for FY2013) and FY2013 year-end and FY2014 interim dividend payments of JPY1,011 million (JPY911 million for FY2013).
FY2015 Financial Targets
| Our financial targets for FY2015 are as follows: | ||||
| (JPY in millions) | ||||
| Operating | Income before Income | Net Income | ||
| Revenues | Income | Tax Expense | attributable to IIJ | |
| 1H FY2015 Target | 64,000 | 2,450 | 2,400 | 1,500 |
| Full FY2015 Target | 139,000 | 6,500 | 6,400 | 4,000 |
With the steady recovery of the Japanese economy, IT investment in Japan should continue during FY2015. We see a great business opportunity for the middle-to-long term as we expect enterprises' adoption of Cloud-related services to penetrate further, mobile-related services to become more popular, and the demands for outsourcing corporate IT systems to continue. As for FY2015, we shall increase revenue as well as operating income mainly by largely expanding consumer mobile services revenues, accumulating enterprise network services, increasing systems integration revenue and improving its profitability, and decreasing overseas business deficit by half.
We target revenue of JPY139 billion, up 13.0% YoY. We expect mobile services-related revenue to reach JPY13 billion, Cloud-related revenue to reach over JPY15 billion, systems integration revenue to increase, its profitability to improve, and ATM operation business revenue to continuously increase.
We target operating income of JPY6.5 billion, up 28.1% YoY. We expect SG&A and R&D expenses to increase around the same amount as in FY2014 while gross margin to increase along with revenue growth.
We target income before income tax expense (benefit) of JPY6.4 billion, up 24.5% YoY, considering interest expenses and others.
We target net income attributable to IIJ of JPY4.0 billion, up 20.4% YoY, considering taxes calculated by a normal statutory rate and income of equity method investees and non-controlling interests.
FY2015 Dividend Forecast
| Our FY2015 dividend forecast is as follows: | |||
| Interim | Year-end | Full Year | |
| FY2015 Dividend (forecast) | JPY11.00 (forecast) | JPY11.00 (forecast) | JPY22.00 (forecast) |
| FY2014 Dividend (scheduled) | JPY11.00 (paid) | JPY11.00 (scheduled) | JPY22.00 (scheduled) |
Based on our Company's Article of Incorporation, we plan to pay our dividend twice a year, at interim and at fiscal year-end. The dividends for interim and fiscal year-end are decided at the Company's board of directors and at the general meeting of shareholders, respectively.
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 | ||
| FY2013 | FY2014 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 14,546 | 14,752 |
| Depreciation and Amortization 6 | (8,823) | (9,677) |
| Operating Income | 5,723 | 5,075 |
| Other Income | 552 | 64 |
| Income Tax Expense | 1,795 | 1,897 |
| Equity in Net Income of Equity Method Investees | 204 | 155 |
| Net income | 4,684 | 3,397 |
| Less: Net income attributable to noncontrolling interests | (242) | (75) |
| Net Income attributable to IIJ | 4,442 | 3,322 |
| CAPEX | ||
| FY2013 | FY2014 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 12,560 | 11,835 |
| Acquisition of Assets by Entering into Capital Leases | 3,436 | 3,678 |
| Purchase of Property and Equipment | 9,124 | 8,157 |
Presentation
Presentation materials will be posted on our web site (http://www.iij.ad.jp/en/ir/) on May 15, 2015.
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 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, and cloud computing. Moreover, IIJ has built one of the largest Internet backbone networks in Japan that is connected to the United States, the United Kingdom and Asia. IIJ listed on the U.S. NASDAQ Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in 2006.
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 FY2015 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.
| Internet Initiative Japan Inc. | ||
| Consolidated Balance Sheets (Unaudited) | ||
| (As of March 31, 2014 and March 31, 2015) | ||
| As of March 31, 2014 | As of March 31, 2015 | |
|
Thousands of JPY |
Thousands of JPY |
|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | 22,421,100 | 21,093,633 |
| Accounts receivable, net of allowance for doubtful accounts of JPY 53,871 thousand and JPY 54,590 thousand at March 31, 2014 and March 31, 2015, respectively | 19,214,248 | 22,251,818 |
| Inventories | 1,670,258 | 1,229,463 |
| Prepaid expenses | 3,128,290 | 3,691,643 |
| Deferred tax assets—current | 1,392,971 | 1,547,474 |
| Guarantee deposits—current | 1,462,223 | -- |
| Other current assets, net of allowance for doubtful accounts of JPY 720 thousand at March 31, 2014 and March 31, 2015, respectively | 2,411,376 | 2,272,605 |
| Total current assets | 51,700,466 | 52,086,636 |
| INVESTMENTS IN EQUITY METHOD INVESTEES | 2,085,689 | 2,560,557 |
| OTHER INVESTMENTS | 6,355,817 | 6,660,706 |
| PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 34,725,611 thousand and JPY 39,591,769 thousand at March 31, 2014 and March 31, 2015, respectively | 26,971,485 | 29,370,054 |
| GOODWILL | 5,969,951 | 6,169,609 |
| OTHER INTANGIBLE ASSETS—Net | 4,338,944 | 3,941,279 |
| GUARANTEE DEPOSITS | 1,264,535 | 2,800,201 |
| DEFERRED TAX ASSETS—Noncurrent | 636,807 | 471,087 |
| NET INVESTMENT IN SALES-TYPE LEASES—Noncurrent | 752,774 | 762,159 |
| Prepaid expenses—Noncurrent | 2,633,154 | 2,914,375 |
| OTHER ASSETS, net of allowance for doubtful accounts of JPY 62,800 thousand and JPY 92,935 thousand at March 31, 2014 and March 31, 2015, respectively | 1,156,953 | 968,652 |
| TOTAL | 103,866,575 | 108,705,315 |
| As of March 31, 2014 | As of March 31, 2015 | |
|
Thousands of JPY |
Thousands of JPY |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Short-term borrowings | 9,400,000 | 9,250,000 |
| Long-term borrowings—current portion | 980,000 | -- |
| Capital lease obligations—current portion | 3,753,026 | 3,522,113 |
| Accounts payable—trade | 11,491,666 | 12,182,908 |
| Accounts payable—other | 1,050,429 | 1,442,810 |
| Income taxes payable | 1,079,480 | 499,104 |
| Accrued expenses | 2,053,550 | 2,968,139 |
| Deferred income—current | 1,560,603 | 2,143,480 |
| Other current liabilities | 1,098,173 | 1,732,781 |
| Total current liabilities | 32,466,927 | 33,741,335 |
| CAPITAL LEASE OBLIGATIONS—Noncurrent | 4,603,322 | 4,340,421 |
| ACCRUED RETIREMENT AND PENSION COSTS—Noncurrent | 2,274,540 | 2,792,617 |
| DEFERRED TAX LIABILITIES—Noncurrent | 1,092,863 | 1,097,650 |
| DEFERRED INCOME—Noncurrent | 2,711,347 | 2,943,975 |
| OTHER NONCURRENT LIABILITIES | 536,950 | 945,537 |
| Total Liabilities | 43,685,949 | 45,861,535 |
| COMMITMENTS AND CONTINGENCIES | ||
| SHAREHOLDERS' EQUITY: | ||
| Common-stock | ||
| —authorized, 75,520,000 shares; issued and outstanding, 46,697,800 shares at March 31, 2014 | 25,497,022 | 25,499,857 |
| —authorized, 75,520,000 shares; issued and outstanding, 46,701,000 shares at March 31, 2015 | ||
| Additional paid-in capital | 35,961,995 | 36,014,128 |
| Accumulated deficit | (2,867,548) | (556,162) |
| Accumulated other comprehensive income | 1,712,786 | 1,938,649 |
| Treasury stock —758,709 shares held by the company at March 31, 2014 and March 31, 2015, respectively | (392,070) | (392,070) |
| Total Internet Initiative Japan Inc. shareholders' equity | 59,912,185 | 62,504,402 |
| NONCONTROLLING INTERESTS | 268,441 | 339,378 |
| Total equity | 60,180,626 | 62,843,780 |
| TOTAL | 103,866,575 | 108,705,315 |
| Internet Initiative Japan Inc. | ||
| Consolidated Statements of Income (Unaudited) | ||
| (For the fiscal year ended March 31, 2014 and March 31, 2015) | ||
|
Fiscal Year Ended March 31, 2014 |
Fiscal Year Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| REVENUES: | ||
| Network services: | ||
| Internet connectivity services (enterprise) | 16,585,175 | 16,349,785 |
| Internet connectivity services (consumer) | 6,024,560 | 8,222,015 |
| WAN services | 25,005,867 | 24,325,951 |
| Outsourcing services | 19,670,127 | 20,107,850 |
| Total | 67,285,729 | 69,005,601 |
| Systems integration: | ||
| Systems construction | 18,673,638 | 20,437,326 |
| Systems operation and maintenance | 23,795,927 | 27,800,132 |
| Total | 42,469,565 | 48,237,458 |
| Equipment sales | 1,690,225 | 2,166,928 |
| ATM operation business | 2,826,832 | 3,640,128 |
| Total revenues | 114,272,351 | 123,050,115 |
| COST AND EXPENSES: | ||
| Cost of network services | 53,045,814 | 54,932,285 |
| Cost of systems integration | 36,510,328 | 41,561,621 |
| Cost of equipment sales | 1,526,618 | 1,932,180 |
| Cost of ATM operation business | 2,123,168 | 2,551,437 |
| Total cost | 93,205,928 | 100,977,523 |
| Sales and marketing | 8,547,693 | 9,188,425 |
| General and administrative | 6,374,057 | 7,367,600 |
| Research and development | 421,361 | 441,329 |
| Total cost and expenses | 108,549,039 | 117,974,877 |
| OPERATING INCOME | 5,723,312 | 5,075,238 |
| OTHER INCOME (EXPENSE): | ||
| Dividend income | 51,003 | 63,143 |
| Interest income | 26,719 | 23,111 |
| Interest expense | (256,371) | (238,260) |
| Foreign exchange gains (losses) | 219,381 | (5,045) |
| Net gain on sales of other investments | 107,655 | 41,251 |
| Net gain on other investments | 313,393 | -- |
| Impairment of other investments | -- | (29,117) |
| Other —net | 89,799 | 208,671 |
| Other income—net | 551,579 | 63,754 |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 6,274,891 | 5,138,992 |
| INCOME TAX EXPENSE | 1,795,305 | 1,896,865 |
| EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 204,046 | 154,626 |
| NET INCOME | 4,683,632 | 3,396,753 |
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (241,395) | (74,672) |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 4,442,237 | 3,322,081 |
|
Fiscal Year Ended March 31, 2014 |
Fiscal Year Ended March 31, 2015 |
|
| NET INCOME PER SHARE | ||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 44,306,680 | 45,942,291 |
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 44,361,083 | 46,014,737 |
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 88,613,360 | 91,884,582 |
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 88,722,166 | 92,029,474 |
| BASIC NET INCOME PER SHARE (JPY) | 100.26 | 72.31 |
| DILUTED NET INCOME PER SHARE (JPY) | 100.14 | 72.20 |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY) | 50.13 | 36.15 |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY) | 50.07 | 36.10 |
| Consolidated Statements of Other Comprehensive Income (Unaudited) | ||
|
Fiscal Year Ended March 31, 2014 |
Fiscal Year Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| NET INCOME | 4,683,632 | 3,396,753 |
| Comprehensive income (loss): | ||
| Foreign currency translation adjustments | 419,557 | 243,538 |
| Unrealized holding gain (loss) on securities | 988,139 | 61,590 |
| Defined benefit pension plans | 41,115 | (83,000) |
| Total comprehensive income | 6,132,443 | 3,618,881 |
| Less: Comprehensive income attributable to noncontrolling interests | (241,251) | (70,937) |
| Comprehensive income attributable to Internet Initiative Japan Inc. | 5,891,192 | 3,547,944 |
| Internet Initiative Japan Inc. | ||||||||
| Consolidated Statements of Shareholders' Equity (Unaudited) | ||||||||
| (For the fiscal year ended March 31, 2014 and March 31, 2015) | ||||||||
| Internet Initiative Japan Inc. shareholders' equity | ||||||||
|
Total equity |
Accumulated deficit |
Accumulated other comprehensive income |
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 |
Shares |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
|
| BALANCE, MARCH 31, 2013 | 37,634,178 | (6,399,088) | 263,770 | 41,295,600 | 16,833,847 | (392,079) | 27,300,325 | 27,403 |
| Acquisition of noncontrolling interests in consolidated subsidiaries | -- | 61 | 53 | 99 | (213) | |||
| Issuance of common stock, net of issuance cost | 17,271,204 | 5,400,000 | 8,661,600 | 8,609,604 | ||||
| Issuance of common stock upon exercise of stock options | 3,151 | 2,200 | 1,575 | 1,576 | ||||
| Stock-based compensation | 50,391 | 50,391 | ||||||
| Comprehensive income (loss): | ||||||||
| Net Income | 4,683,632 | 4,442,237 | 241,395 | |||||
| Other Comprehensive income (loss), net of tax | 1,448,811 | 1,448,955 | (144) | |||||
| Total comprehensive income | 6,132,443 | |||||||
| Dividends paid | (910,697) | (910,697) | ||||||
| Purchase of treasury stock | (44) | (44) | ||||||
| BALANCE, MARCH 31, 2014 | 60,180,626 | (2,867,548) | 1,712,786 | 46,697,800 | 25,497,022 | (392,070) | 35,961,995 | 268,441 |
| Issuance of common stock upon exercise of stock options | 5,671 | 3,200 | 2,835 | 2,836 | ||||
| Stock-based compensation | 49,297 | 49,297 | ||||||
|
Comprehensive income (loss): |
||||||||
| Net Income | 3,396,753 | 3,322,081 | 74,672 | |||||
| Other Comprehensive income (loss), net of tax | 222,128 | 225,863 | (3,735) | |||||
| Total comprehensive income: | 3,618,881 | |||||||
| Dividends paid | (1,010,695) | (1,010,695) | ||||||
| BALANCE, MARCH 31, 2015 | 62,843,780 | (556,162) | 1,938,649 | 46,701,000 | 25,499,857 | (392,070) | 36,014,128 | 339,378 |
| Internet Initiative Japan Inc. | ||
| Consolidated Statements of Cash Flows (Unaudited) | ||
| (For the fiscal year ended March 31, 2014 and March 31, 2015) | ||
|
Fiscal Year Ended March 31, 2014 |
Fiscal Year Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| OPERATING ACTIVITIES: | ||
| Net income | 4,683,632 | 3,396,753 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 8,822,981 | 9,677,339 |
| Provision for retirement and pension costs, less payments | 226,599 | 256,661 |
| Provision for (reversal of) allowance for doubtful accounts | (46,935) | 33,158 |
| Gain on sales of property and equipment | -- | (29,733) |
| Loss on disposal of property and equipment | 83,487 | 101,189 |
| Net gain on sales of other investments | (107,655) | (41,251) |
| Net gain on other investments | (313,393) | -- |
| Impairment of other investments | -- | 29,117 |
| Foreign exchange gains, net | (129,916) | (18,259) |
| Equity in net income of equity method investees, less dividends received | (204,046) | (122,286) |
| Deferred income tax expense (benefit) | (699,826) | 211,230 |
| Others | 71,448 | 8,560 |
| Changes in operating assets and liabilities net of effects from acquisition of a company: | ||
| Increase in accounts receivable | (342,391) | (2,819,564) |
| Decrease (increase) in net investment in sales-type lease — noncurrent | 145,266 | (9,385) |
| Decrease (increase) in inventories | (365,533) | 450,256 |
| Increase in prepaid expenses | (612,802) | (542,770) |
| Decrease (increase) in other current and noncurrent assets | (1,801,403) | 715,132 |
| Increase in accounts payable | 476,860 | 648,562 |
| Decrease in income taxes payable | (594,782) | (718,737) |
| Increase (decrease) in accrued expenses | (219,277) | 873,815 |
| Increase (decrease) in deferred income-current | (158,972) | 465,469 |
| Increase (decrease) in deferred income-noncurrent | 91,462 | (248,061) |
| Increase (decrease) in other current and noncurrent liabilities | (217,925) | 595,178 |
| Net cash provided by operating activities | 8,786,879 | 12,912,373 |
| INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (9,123,998) | (8,157,115) |
| Proceeds from sales of property and equipment | 456,330 | 772,226 |
| Purchase of available-for-sale securities | (167,545) | (4,104) |
| Purchase of other investments | (1,185,985) | (282,478) |
| Investment in an equity method investee | (199,920) | (338,240) |
| Proceeds from sales of available-for-sale securities | 391,814 | -- |
| Proceeds from sales of other investments | 351,740 | 40,501 |
| Payments of guarantee deposits | (688,902) | (1,635,910) |
| Refund of guarantee deposits | 20,233 | 1,572,885 |
| Payments for refundable insurance policies | (18,787) | (47,831) |
| Refund from insurance policies | 16,026 | -- |
| Proceeds from subsidies | -- | 200,000 |
| Acquisition of a newly controlled company, net of cash acquired | -- | (167,678) |
| Other | (53,766) | (25,000) |
| Net cash used in investing activities | (10,202,760) | (8,072,744) |
|
Fiscal Year Ended March 31, 2014 |
Fiscal Year Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| FINANCING ACTIVITIES: | ||
| Proceeds from issuance of short-term borrowings with initial maturities over three months | 250,000 | 50,000 |
| Repayments of short-term borrowings with initial maturities over three months and long-term borrowings | (1,260,000) | (1,030,000) |
| Principal payments under capital leases | (3,968,724) | (4,193,654) |
| Proceeds from sale and lease back | -- | 50,847 |
| Net decrease in short-term borrowings with initial maturities less than three months | -- | (150,000) |
| Dividends paid | (910,697) | (1,010,695) |
| Proceeds from issuance of common stock, net of issuance cost | 17,271,204 | -- |
| Other | 109 | 3 |
| Net cash provided by (used in) financing activities | 11,381,892 | (6,283,499) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 196,217 | 116,403 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 10,162,228 | (1,327,467) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 12,258,872 | 22,421,100 |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 22,421,100 | 21,093,633 |
| ADDITIONAL CASH FLOW INFORMATION: | ||
| Interest paid | 256,722 | 239,940 |
| Income taxes paid | 2,707,784 | 2,405,067 |
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
| Acquisition of assets by entering into capital leases | 3,436,245 | 3,678,012 |
| Facilities purchase liabilities | 1,050,429 | 1,442,810 |
| Asset retirement obligation | 170,814 | 287,036 |
| Acquisition of a company: | ||
| Assets acquired | -- | 1,064,736 |
| Liabilities assumed | -- | 464,736 |
| Cash paid | -- | (600,000) |
| Cash acquired | -- | 432,322 |
| Acquisition of a newly controlled company, net of cash acquired | -- | (167,678) |
Fourth Quarter FY2014 Consolidated Financial Results (3 months)
The following tables are highlight data of 4th Quarter FY2014 (3 months) consolidated financial results (unaudited, for the 3 months ended March 31, 2015).
| Operating Results Summary | |||
| YoY % | |||
| 4Q13 | 4Q14 | Change | |
| JPY millions | JPY millions | ||
| Total Revenues: | 31,526 | 35,204 | 11.7 |
| Network Services | 16,984 | 17,844 | 5.1 |
| Systems Integration (SI) | 13,273 | 15,593 | 17.5 |
| Equipment Sales | 512 | 801 | 56.5 |
| ATM Operation Business | 757 | 966 | 27.7 |
| Cost of Revenues: | 25,977 | 29,579 | 13.9 |
| Network Services | 13,282 | 14,801 | 11.4 |
| Systems Integration (SI) | 11,684 | 13,382 | 14.5 |
| Equipment Sales | 465 | 736 | 58.4 |
| ATM Operation Business | 546 | 660 | 20.8 |
| SG&A Expenses and R&D | 4,036 | 4,336 | 7.4 |
| Operating Income | 1,513 | 1,289 | (14.8) |
| Income before Income Tax Expense | 1,649 | 1,250 | (24.2) |
| Net Income attributable to IIJ | 1,518 | 1,008 | (33.6) |
| Network Service Revenue Breakdown | |||
| YoY % | |||
| 4Q13 | 4Q14 | Change | |
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Enterprise) | 4,085 | 4,062 | (0.6) |
| IP Service | 2,539 | 2,406 | (5.3) |
| IIJ FiberAccess/F and IIJ DSL/F | 779 | 777 | (0.4) |
| IIJ Mobile Service | 709 | 819 | 15.6 |
| Others | 58 | 60 | 3.2 |
| Internet Connectivity Service (Consumer) | 1,628 | 2,469 | 51.7 |
| Under IIJ Brand | 696 | 1,639 | 135.4 |
| hi-ho | 749 | 679 | (9.4) |
| OEM | 183 | 151 | (17.1) |
| WAN Services | 6,220 | 6,181 | (0.6) |
| Outsourcing Services | 5,051 | 5,132 | 1.6 |
| Network Services Revenues | 16,984 | 17,844 | 5.1 |
Reconciliation of Non-GAAP Financial Measures (4th Quarter FY2014 (3 months))
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 | ||
| 4Q13 | 4Q14 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 3,832 | 3,749 |
| Depreciation and Amortization | (2,319) | (2,460) |
| Operating Income | 1,513 | 1,289 |
| Other Income (Expense) | 136 | (39) |
| Income Tax Expense (Benefit) | (47) | 264 |
| Equity in Net Income of Equity Method Investees | 13 | 40 |
| Net income | 1,709 | 1,026 |
| Less: Net income attributable to noncontrolling interests | (191) | (18) |
| Net Income attributable to IIJ | 1,518 | 1,008 |
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 | ||
| 4Q13 | 4Q14 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 2,697 | 2,545 |
| Acquisition of Assets by Entering into Capital Leases | 801 | 957 |
| Purchase of Property and Equipment | 1,896 | 1,588 |
| Internet Initiative Japan Inc. | ||
| Quarterly Consolidated Statements of Income (Unaudited) | ||
| (Three Months ended March 31, 2014 and March 31, 2015) | ||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| REVENUES: | ||
| Network services: | ||
| Internet connectivity services (enterprise) | 4,085,649 | 4,061,514 |
| Internet connectivity services (consumer) | 1,627,764 | 2,469,183 |
| WAN services | 6,219,920 | 6,180,534 |
| Outsourcing services | 5,050,931 | 5,132,426 |
| Total | 16,984,264 | 17,843,657 |
| Systems integration: | ||
| Systems Construction | 7,038,521 | 7,943,514 |
| Systems Operation and Maintenance | 6,234,333 | 7,649,665 |
| Total | 13,272,854 | 15,593,179 |
| Equipment sales | 512,236 | 801,566 |
| ATM operation business | 756,554 | 965,915 |
| Total revenues | 31,525,908 | 35,204,317 |
| COST AND EXPENSES: | ||
| Cost of network services | 13,281,985 | 14,801,381 |
| Cost of systems integration | 11,684,188 | 13,382,379 |
| Cost of equipment sales | 464,561 | 735,718 |
| Cost of ATM operation business | 546,532 | 660,158 |
| Total cost | 25,977,266 | 29,579,636 |
| Sales and marketing | 2,201,980 | 2,359,361 |
| General and administrative | 1,728,538 | 1,899,867 |
| Research and development | 105,561 | 76,551 |
| Total cost and expenses | 30,013,345 | 33,915,415 |
| OPERATING INCOME | 1,512,563 | 1,288,902 |
| OTHER INCOME (EXPENSE): | ||
| Dividend income | 2,744 | 4,172 |
| Interest income | 8,049 | 8,121 |
| Interest expense | (62,263) | (58,165) |
| Foreign exchange gains (losses) | 16,783 | (32,460) |
| Net gain on sales of other investments | 140,970 | 35,934 |
| Impairment of other investments | -- | (29,117) |
| Other—net | 30,613 | 33,031 |
| Other income (expense) — net | 136,896 | (38,484) |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 1,649,459 | 1,250,418 |
| INCOME TAX EXPENSE (BENEFIT) | (46,385) | 264,016 |
| EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 12,842 | 39,140 |
| NET INCOME | 1,708,686 | 1,025,542 |
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (190,519) | (17,372) |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 1,518,167 | 1,008,170 |
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2015 |
|
| NET INCOME PER SHARE | ||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 45,939,091 | 45,942,291 |
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 45,998,489 | 46,024,884 |
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 91,878,182 | 91,884,582 |
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 91,996,978 | 92,049,768 |
| BASIC NET INCOME PER SHARE (JPY) | 33.05 | 21.94 |
| DILUTED NET INCOME PER SHARE (JPY) | 33.00 | 21.90 |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY) | 16.52 | 10.97 |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY) | 16.50 | 10.95 |
| Quarterly Consolidated Statements of Other Comprehensive Income (Unaudited) | ||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| NET INCOME | 1,708,686 | 1,025,542 |
| Comprehensive income (loss): | ||
| Foreign currency translation adjustments | 140,450 | 179,163 |
| Unrealized holding gain (loss) on securities | (640,291) | 119,942 |
| Defined benefit pension plans | 40,937 | (83,178) |
| Total comprehensive income | 1,249,782 | 1,241,469 |
| Less: Comprehensive income attributable to noncontrolling interests | (190,214) | (14,998) |
| Comprehensive income attributable to Internet Initiative Japan Inc. | 1,059,568 | 1,226,471 |
| Internet Initiative Japan Inc. | ||
| Quarterly Consolidated Statements of Cash Flows (Unaudited) | ||
| (Three Months ended March 31, 2014 and March 31, 2015) | ||
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| OPERATING ACTIVITIES: | ||
| Net income | 1,708,686 | 1,025,542 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 2,318,779 | 2,460,495 |
| Provision for retirement and pension costs, less payments | 53,784 | 80,147 |
| Provision for (reversal of) allowance for doubtful accounts | (1,127) | 30,993 |
| Loss on disposal of property and equipment | 72,044 | 9,201 |
| Net gain on sales of other investments | -- | (35,934) |
| Net gain on other investments | (140,970) | -- |
| Impairment of other investments | -- | 29,117 |
| Foreign exchange losses (gains), net | 25,478 | (2,869) |
| Equity in net income of equity method investees, less dividends received | (12,842) | (39,140) |
| Deferred income tax benefit | (1,090,417) | (55,310) |
| Others | 17,881 | 23,820 |
| Changes in operating assets and liabilities net of effects from acquisition of a company: | ||
| Increase in accounts receivable | (2,419,892) | (4,473,038) |
| Decrease in net investment in sales-type lease―noncurrent | 37,794 | 103,036 |
| Decrease in inventories | 848,410 | 1,082,978 |
| Decrease in prepaid expenses | 849,097 | 998,990 |
| Decrease (increase) in other current and noncurrent assets | (1,039,069) | 775,633 |
| Increase in accounts payable | 1,234,546 | 1,089,640 |
| Increase in income taxes payable | 898,628 | 162,205 |
| Increase in deferred income― noncurrent | 99,854 | 65,862 |
| Decrease in accrued expenses, other current and noncurrent liabilities | (405,831) | (430,868) |
| Net cash provided by operating activities | 3,054,833 | 2,900,500 |
| INVESTING ACTIVITIES: | ||
| Purchase of property and equipment | (1,896,347) | (1,588,189) |
| Proceeds from sales of property and equipment | 219,831 | 236,698 |
| Purchase of available-for-sale securities | (69,051) | -- |
| Purchase of other investments | (58,154) | (100,800) |
| Investment in an equity method investee | (199,920) | (288,240) |
| Proceeds from sales of other investments | 331,740 | 10,000 |
| Payments of guarantee deposits | (7,524) | (24,412) |
| Refund of guarantee deposits | 12,415 | 13,486 |
| Payments for refundable insurance policies | (14,090) | (13,452) |
| Other | (41,557) | -- |
| Net cash used in investing activities | (1,722,657) | (1,754,909) |
|
Three Months Ended March 31, 2014 |
Three Months Ended March 31, 2015 |
|
|
Thousands of JPY |
Thousands of JPY |
|
| FINANCING ACTIVITIES: | ||
| Principal payments under capital leases | (1,026,718) | (1,053,366) |
| Proceeds from sale and lease back | -- | 50,847 |
| Net decrease in short-term borrowings with initial maturities less than three months | -- | (150,000) |
| Other | 150 | -- |
| Net cash used in financing activities | (1,026,568) | (1,152,519) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 13,142 | 53,561 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 318,750 | 46,633 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 22,102,350 | 21,047,000 |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 22,421,100 | 21,093,633 |
Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the fiscal year ended March 31, 2015 ("FY2014") in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Fiscal Year Ended March 31, 2015
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]
| May 15, 2015 | |
| Company name: Internet Initiative Japan Inc. | Exchange listed: Tokyo Stock Exchange First Section |
| Stock code number: 3774 | URL: http://www.iij.ad.jp/ |
| Representative: Eijiro Katsu, President and Representative Director | |
| Contact: Akihisa Watai, Managing Director and CFO | TEL: (03) 5205-6500 |
| Scheduled date for annual general shareholder's meeting: June 26, 2015 | |
| Scheduled date for dividend payment: June 29, 2015 | |
| Scheduled date for filing of annual report (Yuka-shoken-houkokusho) to Japan's regulatory organization: June 30, 2015 | |
| Supplemental material on annual results: Yes | |
| Presentation on annual results: Yes (for institutional investors and analysts) | |
1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2015
(April 1, 2014 to March 31, 2015)
| (1) Consolidated Results of Operations | (% shown is YoY change) | |||||||
| Total | Operating | Income before Income | Net Income attributable to | |||||
| Revenues | Income | Tax Expense | IIJ | |||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | |
| Fiscal Year Ended March 31, 2015 | 123,050 | 7.7 | 5,075 | (11.3) | 5,139 | (18.1) | 3,322 | (25.2) |
| Fiscal Year Ended March 31, 2014 | 114,272 | 7.6 | 5,723 | (26.2) | 6,275 | (19.1) | 4,442 | (16.2) |
(Note1) Total comprehensive income attributable to IIJ
Fiscal Year Ended March 31, 2015: JPY3,548 million (down 39.8% YoY)
Fiscal Year Ended March 31, 2014: JPY5,891 million (up 5.4% YoY)
(Note2) Income before income tax expense represents income from operations before income tax expense and equity in net income in equity method investees, respectively, in IIJ's consolidated financial statements.
| Diluted Net | Net Income | Income before | |||
| Basic Net Income | Income | attributable to IIJ to | Income Tax | Total Revenues | |
| attributable to IIJ | attributable to IIJ | Total Shareholders' | Expense to Total | Operating Margin | |
| per Share | per Share | Equity | Assets | Ratio | |
| JPY | JPY | % | % | % | |
| Fiscal Year Ended March 31, 2015 | 72.31 | 72.20 | 5.4 | 4.8 | 4.1 |
| Fiscal Year Ended March 31, 2014 | 100.26 | 100.14 | 9.1 | 6.7 | 5.0 |
(Reference) Equity in net income of equity method investees
Fiscal Year Ended March 31, 2015: JPY155 million
Fiscal Year Ended March 31, 2014: JPY204 million
| (2) Consolidated Financial Position | |||||
| Total IIJ | Total IIJ | Total IIJ | |||
| Total | Total | Shareholders' | Shareholders' Equity | Shareholders' Equity | |
| Assets | Equity | Equity | to Total Assets | per Share | |
| JPY millions | JPY millions | JPY millions | % | JPY | |
| As of March 31, 2015 | 108,705 | 62,844 | 62,504 | 57.5 | 1,360.50 |
| As of March 31, 2014 | 103,867 | 60,181 | 59,912 | 57.7 | 1,304.17 |
| (3) Consolidated Cash Flow | ||||
| Cash and Cash Equivalents | ||||
| Operating Activities | Investing Activities | Financing Activities | (End of the Period) | |
| JPY millions | JPY millions | JPY millions | JPY millions | |
| Fiscal year ended March 31, 2015 | 12,912 | (8,073) | (6,283) | 21,094 |
| Fiscal year ended March 31, 2014 | 8,787 | (10,203) | 11,382 | 22,421 |
2. Dividends
| Dividend per Shares | Ratio of | |||||||
| Total cash | Dividends to | |||||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total | dividends for | Payout Ratio | Shareholder's | |
| the year | (consolidated) | Equity | ||||||
| (consolidated) | ||||||||
| JPY | JPY | JPY | JPY | JPY | JPY millions | % | % | |
| Fiscal Year Ended March 31, 2014 | -- | 11.00 | -- | 11.00 | 22.00 | 1,011 | 21.9 | 2.0 |
| Fiscal Year Ended March 31, 2015 | -- | 11.00 | -- | 11.00 | 22.00 | 1,011 | 30.4 | 1.7 |
| Fiscal Year Ending March 31, 2016 (forecast) | -- | 11.00 | -- | 11.00 | 22.00 | 25.3 | ||
| (Note) Change from the latest released dividend forecasts: No. | ||||||||
3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2016
| April 1, 2015 through March 31, 2016) | (% shown is YoY change) | ||||||||
| Income before | Basic Net Income | ||||||||
| Total | Operating | Income Tax | Net Income | attributable to IIJ | |||||
| Revenues | Income | Expense (Benefit) | attributable to IIJ | per Share | |||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY | |
| Interim Period Ending September 30, 2015 | 64,000 | 11.9 | 2,450 | 1.4 | 2,400 | (3.7) | 1,500 | 3.9 | 32.65 |
| Fiscal Year Ending March 31, 2016 | 139,000 | 13.0 | 6,500 | 28.1 | 6,400 | 24.5 | 4,000 | 20.4 | 87.07 |
| * Notes |
| (1) Changes in Significant Subsidiaries for the Fiscal Year Ended March 31, 2015 |
| (Changes in significant subsidiaries for the Fiscal Year Ended March 31, 2015 which resulted in changes in scope of consolidation): None |
| (2) Changes in Significant Accounting and Reporting Policies for the Consolidated Financial Statements |
| 1) Changes due to the revision of accounting standards: No |
| 2) Others: No |
| (3) Number of Shares Outstanding (Shares of Common Stock) |
| 1) The number of shares outstanding (inclusive of treasury stock): |
| As of March 31, 2015: 46,701,000 shares |
| As of March 31, 2014: 46,697,800 shares |
| 2) The number of treasury stock: |
| As of March 31, 2015: 758,709 shares |
| As of March 31, 2014: 758,709 shares |
| 3) The weighted average number of shares outstanding: |
| For the Fiscal Year Ended March 31, 2015: 45,942,291 shares |
| For the Fiscal Year Ended March 31, 2014: 44,306,680 shares |
| May 15, 2015 |
| Company name: Internet Initiative Japan Inc. |
| Company representative: Eijiro Katsu, President and Representative Director |
| (Stock Code Number: 3774 The First Section of the Tokyo Stock Exchange) |
| Contact: Akihisa Watai, Managing Director and CFO |
| TEL: 81-3-5205-6500 |
Information Pertaining to Our Largest Shareholder
1. About Our Largest Shareholder (As of March 31, 2015)
| Its Ownership Percentage (%) | Securities Exchanges where its | ||||
| Name | Relationship | Direct | Indirect | Shares are Listed | |
| ownership | ownership | Total | |||
| Nippon Telegraph and Telephone Corporation("NTT") | IIJ is NTT's affiliate company | 22.0 | 4.4 | 26.4 | Tokyo Stock Exchange (First Section) New York Stock Exchange |
2. Position of the Listed Company (IIJ) within NTT Group and other relationships
a) Position of the Listed Company (IIJ) within NTT Group
The ownership percentage by NTT, which is IIJ's largest shareholder, was 26.4% as of March 31, 2015, including its indirect ownership. However, IIJ's business activities are not affected by NTT's ownership in IIJ and IIJ is maintaining its management independence.
b) Personal Relationships with NTT Group
IIJ's board of directors consists of 12 members including 4 outside directors as of May 15, 2015. Takashi Hiroi, an outside director (part-time director) of IIJ, is an employee of NTT (Senior Vice President, Finance and Accounting of NTT). Mr. Hiroi is monitoring IIJ's business operations as an outside director and does not have any personal relationships, such as family relationships, with IIJ's other directors and auditors. He did not acquire any interest such as capital or business relationships upon becoming an outside director.
3. Business Relationship with NTT Group
IIJ uses services provided by Nippon Telegraph and Telephone East Corporation ("NTT East") and Nippon Telegraph and Telephone West Corporation ("NTT West") for a significant portion of IIJ's access circuits, services provided by NTT Communications Corporation ("NTT Communications") for a significant portion of IIJ's domestic and international backbone circuits, and wholesale telecommunications services provided by NTT DOCOMO, INC ("NTT Docomo") for a significant portion of IIJ's mobile infrastructure. The aggregate amount paid to NTT East, NTT West, NTT Communications and NTT Docomo for these services was JPY7,076 million for the fiscal year ended March 31, 2015.
IIJ leases a part of Internet data center facilities from NTT Group companies to provide Internet data center services to IIJ's customers. The amount paid to NTT Group related to the lease of Internet data center facilities was JPY1,564 million for the fiscal year ended March 31, 2015.
4. Policy Concerning Measures to Protect Minority Shareholders in Transactions with NTT Group
Business transactions with the NTT Group are within the scope of normal business practices and there is no special contract made in relation to the investment by NTT Group.