IIJ Announces Nine Months Financial Results for the Fiscal Year Ending March 31, 2017


TOKYO, Feb. 08, 2017 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (NASDAQ:IIJI) (TSE:3774) today announced its consolidated financial results for the nine months of the fiscal year ending March 31, 2017 (“3Q16”, from April 1, 2016 to December 31, 2016).1

Highlights of Financial Results for 3Q16
 
RevenuesJPY113,602 million(up 14.3% YoY)
Operating Income JPY3,155 million(down 22.5% YoY)
Net Income attributable to IIJ JPY1,910 million(down 25.8% YoY)

Overview of 3Q16 Financial Results and Business Outlook

“Our continuous business and service developments are reflected in our strong revenue accumulation. 3Q16 three-month revenue growth year over year was 16.0%: 2Q16 12.0%, 1Q16 15.0%, 4Q15 17.2% and 3Q15 11.0%. We continue to focus on investing in the fields of cloud, mobile, security, and next generation network usage such as IoT and BigData. Mainly due to the overall cost increase along with the recent aggressive business investments and the deterioration of systems integration gross margin from 1H162, 3Q16 nine-month operating income decreased year over year,” said Eijiro Katsu, President and COO of IIJ.

“Mobile services continued to be a leading revenue growth driver. 3Q16 nine-month revenue grew by 78.0% year over year to JPY19.1 billion and the total subscription as of 3Q16-end reached to 1.7 million, an increase of 59.4% year over year. Transactions by our 124 MVNE clients, including MVNOs, prominent retailers, and many cable TV operators, continued to expand. Other contributing factors for the strong 3Q16 revenue growth were an export project of our container type data center to the Republic of Laos3 and continuous revenue accumulation of cloud services and non-mobile network services,” said Katsu.

“We’re making continuous progresses of our business developments this fiscal year. We’ll be the first Japanese full-MVNO service provider as we aim to capture enterprises’ mobile needs such as IoT and BigData type of usages which are expected to be implemented much more widely in the near future. We established a joint venture4 with a major Japanese broadcasting company, Nippon Television Netowrk Corporation, to become a main CDN5 provider in the coming age of Internet-based broadcasting including 4K. Regarding security services, we further enhanced “IIJ DDoS Protection Services” by constructing worldwide network systems to protect our clients from global DDoS attacks. We launched “IIJ IoT Services,” packaged service offering necessary function to build IoT systems. We believe our recent actions shall make our role and value as a service platform provider of network, cloud, mobile, security and network outstanding in the middle to long term. We also expect that expansion of service revenues from these continuous business developments should generate continuous gross margin improvement which leads to operating income growth going forward,” concluded Koichi Suzuki, Founder, Chairman and CEO 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 For details on our downward revision for FY2016 financial target, please refer to our press release titled ”IIJ Revises its First Half and Full-Year Financial Targets for FY2016” which can be found at http://www.iij.ad.jp/en/ir/news/2016/pdf/FY16revision_E.pdf

3 For details on our involvement on Laos project, please refer to our press release titled “’Lao PDR Energy Efficient Datacenter Project’ Cloud Datacenter Using Joint crediting Mechanism Starts Demonstration Operation” which can be found at http://www.iij.ad.jp/en/news/pressrelease/2016/1130.html

4 For details on the establishment of the joint venture, please refer to our press release titled “IIJ and Nippon TV to Establish a Joint Venture for Video Distribution Platforms” which can be found at http://www.iij.ad.jp/en/news/pressrelease/2016/1201.html

5 CDN (Contents Distribution Network) is an optimized network to distribute contents such as pictures and videos.

3Q16 Financial Results Summary

Operating Results Summary
 3Q153Q16YoY
Change
 JPY millionsJPY millions%
Total revenues99,382113,60214.3 
Network services58,21668,48117.6 
Systems integration (SI)35,92139,85811.0 
Equipment sales2,3652,207(6.6)
ATM operation business2,8803,0566.1 
Total costs81,58995,77217.4 
Network services47,07956,27419.5 
Systems integration (SI)30,45535,64417.0 
Equipment sales2,1252,024(4.7)
ATM operation business1,9301,830(5.2)
Total gross margin17,79317,8300.2 
Network services11,13712,2079.6 
Systems integration (SI)5,4674,214(22.9)
Equipment sales239183(23.5)
ATM operation business9501,22629.0 
SG&A expenses and R&D13,72014,6757.0 
Operating income4,0733,155(22.5)
Income before income tax expense4,1783,433(17.8)
Net income attributable to IIJ2,5731,910(25.8)


Segment Results Summary
 3Q153Q16
 JPY millionsJPY millions
Total revenues99,382 113,602 
Network services and SI business96,789 110,831 
ATM operation business2,880 3,056 
Elimination(287)(285)
Operating income4,073 3,155 
Network service and SI business3,356 2,178 
ATM operation business819 1,088 
Elimination(102)(111)

We have omitted segment analysis because most of our revenues are dominated by network services and systems integration (SI) business.

3Q16 Revenues and Income

Revenues

Total revenues were JPY113,602 million, up 14.3% YoY (JPY99,382 million for 3Q15).

Network services revenue was JPY68,481 million, up 17.6% YoY (JPY58,216 million for 3Q15).

Revenues for Internet connectivity services for enterprise were JPY16,461 million, up 27.9% YoY from JPY12,871 million for 3Q15 mainly due to an increase in mobile-related services revenues along with an expansion of MVNE business clients’ business transaction.

Revenues for Internet connectivity services for consumers were JPY15,903 million, up 48.5% YoY from JPY10,708 million for 3Q15, mainly due to the revenue growth of “IIJmio Mobile Services,” consumer mobile services which offer inexpensive data communication and voice services with SIM cards.

Revenues for WAN services were JPY19,848 million, up 5.4% YoY compared to JPY18,826 million for 3Q15.

Revenues for Outsourcing services were JPY16,269 million, up 2.9% YoY from JPY15,811 million for 3Q15.

Network Services Revenues Breakdown
 3Q153Q16YoY %
Change
 JPY millionsJPY millions 
Internet connectivity services (Enterprise)12,87116,46127.9 
IP service*17,2197,3311.5 
IIJ FiberAccess/F and IIJ DSL/F2,3092,279(1.3)
IIJ Mobile service (Enterprise)3,1406,680112.8 
IIJ Mobile MVNO Platform Service*21,2834,358239.5 
Others203171(15.8)
Internet connectivity services (Consumer)10,70815,90348.5 
IIJ8,76714,29063.0 
IIJmio Mobile Service*37,59512,43763.7 
hi-ho1,9411,613(16.9)
WAN services18,82619,8485.4 
Outsourcing services15,81116,2692.9 
Total network services58,21668,48117.6 

*1. IP service revenues include revenues from the data center connectivity service.
*2. From 1Q16, the revenue from “IIJ Mobile MVNO Platform Service”, which is included in “IIJ Mobile service (Enterprise),” is disclosed. “IIJ Mobile MVNO Platform Service” provides MVNO platform to our MVNE clients.
*3. From 1Q16, the revenue from “IIJmio Mobile Service” (formerly known as ”IIJmio High Speed Mobile Service” until September 30, 2016), which is included in “Internet connectivity services (Consumer)” provided by IIJ, is disclosed.

Number of Contracts and Subscription for Connectivity Services*1
 as of
Dec. 31, 2015
as of
Dec. 31, 2016
YoY
Change
Internet connectivity services (Enterprise)412,615824,546411,931 
IP service (1Gbps-)34241371 
IP service (100Mbps-999Mbps)51857759 
IP service (-99Mbps)702622(80)
IIJ Data center connectivity service272258(14)
IIJ FiberAccess/F and IIJ DSL/F74,32672,132(2,194)
IIJ Mobile service (Enterprise)335,193749,484414,291 
IIJ Mobile MVNO Platform Service*2181,859501,374319,515 
Others1,2621,060(202)
Internet connectivity services (Consumer) 1,165,6671,377,529211,862 
IIJ1,015,9941,241,399225,405 
IIJmio Mobile Service*3685,044912,394227,350 
hi-ho149,673136,130(13,543)
Total contracted bandwidth*42,089.9Gbps2,636.7Gbps546.8Gbps

*1. Numbers in the table above show number of contracts except for “IIJ Mobile service (Enterprise),” “IIJ” and “hi-ho” which show number of subscriptions.

*2. From 1Q16, the number of subscription for “IIJ Mobile MVNO Platform Service”, which is included in “IIJ Mobile service (Enterprise)”, is disclosed.

*3. From 1Q16, the number of subscription for “IIJmio Mobile Service” (formerly known as ”IIJmio High Speed Mobile Service” until September 30, 2016), which is included in “Internet connectivity services (Consumer)” provided by IIJ, is disclosed.

*4. Regarding IP service, data center connectivity service and IIJ FiberAccess/F and IIJ DSL/F of Internet connectivity services (Enterprise), total contracted bandwidths are calculated by multiplying number of contracts by contracted bandwidths respectively.

SI revenues were JPY39,858 million, up 11.0% YoY (JPY35,921 million for 3Q15).

Systems construction revenue, a one-time revenue, was JPY13,973 million, up 21.0% YoY, mainly due to the revenue recognition of an export project of our container type data center in 3Q16. Systems operation and maintenance revenue, a recurring revenue, was JPY25,885 million, up 6.2% YoY, mainly due to an increase in private cloud services’ revenues although certain relatively large systems operation and maintenance projects were cancelled in 1H16.

Orders received for SI and equipment sales totaled JPY51,730 million, up 19.6% YoY; orders received for systems construction and equipment sales were JPY21,031 million, up 4.3% YoY and orders received for systems operation and maintenance were JPY30,699 million, up 33.0% YoY.

Order backlog for SI and equipment sales as of December 31, 2016 amounted to JPY43,309 million, up 27.3% YoY; order backlog for systems construction and equipment sales was JPY10,928 million, down 0.5% YoY and order backlog for systems operation and maintenance was JPY32,381 million, up 40.6% YoY.

Equipment sales revenues were JPY2,207 million, down 6.6% YoY (JPY2,365 million for 3Q15).

ATM operation business revenues were JPY3,056 million, up 6.1% YoY (JPY2,880 million for 3Q15). As of December 31, 2016, 1,066 ATMs have been placed.

Cost and expense

Total cost of revenues was JPY95,772 million, up 17.4% YoY (JPY81,589 million for 3Q15).

Cost of network services revenue was JPY56,274 million, up 19.5% YoY (JPY47,079 million for 3Q15). There were an increase in outsourcing-related costs with our mobile infrastructure enhancement along with our mobile-related revenue increase, an increase in circuit-related costs along with our WAN services revenue increase, and an increase in network operation-related costs with our network enhancement and the launch of “IIJ Omnibus Service.” Gross margin was JPY12,207 million, up 9.6% YoY and gross margin ratio was 17.8% compared to 19.1% in 3Q15.

Cost of SI revenues was JPY35,644 million, up 17.0% YoY (JPY30,455 million for 3Q15). There were an increase in outsourcing-related and purchasing costs along with our SI revenue increase, an increase in personnel-related, and an increase in network operation-related costs mainly along with the launch of “IIJ GIO Infrastructure P2.” Gross margin was JPY4,214 million, down 22.9% YoY and gross margin ratio was 10.6% compared to 15.2% in 3Q15. It was mainly due to profit deterioration of our cloud-related services and especially 1H16 profit deterioration resulted from low productivity of systems engineers and the delay in offering some functions of our ASP-type foreign exchange system.

Cost of equipment sales revenues was JPY2,024 million, down 4.7% YoY (JPY2,125 million for 3Q15). Gross margin was JPY183 million (JPY239 million for 3Q15) and gross margin ratio was 8.3% compared to 10.1% in 3Q15.

Cost of ATM operation business revenues was JPY1,830 million, down 5.2% YoY (JPY1,930 million for 3Q15). Gross margin was JPY1,226 million (JPY950 million for 3Q15) and gross margin ratio was 40.1% compared to 33.0% in 3Q15.

SG&A and R&D expenses

SG&A and R&D expenses in total were JPY14,675 million, up 7.0% YoY (JPY13,720 million for 3Q15).

Sales and marketing expenses were JPY8,392 million, up 7.0% YoY (JPY7,842 million for 3Q15) mainly due to increases in sales commission expenses and advertising expenses.

General and administrative expenses were JPY5,928 million, up 7.2% YoY (JPY5,532 million for 3Q15) mainly due to increases in office rent expenses, commission expenses and taxes and public dues.

Research and development expenses were JPY355 million, up 2.5% YoY (JPY346 million for 3Q15).

Operating income

Operating income was JPY3,155 million, down 22.5% YoY (JPY4,073 million for 3Q15).

Other income (expenses)

Other income (expenses) was an income of JPY278 million (an income of JPY105 million for 3Q15), mainly because of net gain on sales of other investments of JPY214 million (JPY24 million for 3Q15), distribution from fund investment of JPY208 million (included in other-net, JPY144 million for 3Q15), dividend income of JPY106 million from other investments (JPY88 million for 3Q15), interest expense of JPY218 million (JPY171 million for 3Q15) and foreign exchange losses of JPY23 million (JPY11 million for 3Q15).

Income before income tax expenses

Income before income tax expenses was JPY3,433 million, down 17.8% YoY (JPY4,178 million for 3Q15).

Net income

Income tax expense was JPY1,466 million (JPY1,697 million for 3Q15).

Equity in net income of equity method investees was JPY69 million (JPY207 million for 3Q15) mainly due to net income of Internet Multifeed Co.

As a result of the above, net income was JPY2,036 million, down 24.2% YoY (JPY2,688 million for 3Q15).

Net income attributable to IIJ

Net income attributable to non-controlling interests was JPY126 million mainly related to net income of Trust Networks Inc. (JPY115 million for 3Q15).

Net income attributable to IIJ was JPY1,910 million, down 25.8% YoY (JPY2,573 million for 3Q15).

3Q16 Balance Sheets and Cash Flows

Balance sheets

As of December 31, 2016, the balance of total assets was JPY130,915 million, increased by JPY13,081 million from the balance as of March 31, 2016 of JPY117,835 million.

As of December 31, 2016, the balance of current assets was JPY60,683 million, increased by JPY7,277 million from the balance as of March 31, 2016 of JPY53,406 million. The major breakdown of current assets was an increase in prepaid expenses by JPY2,410 million to JPY7,180 million, an increase in cash and cash equivalents by JPY1,697 million to JPY21,266 million and an increase in inventories by JPY1,572 million to JPY3,576 million. As of December 31, 2016, the balance of noncurrent assets was JPY70,233 million, increased by JPY5,804 million from the balance as of March 31, 2016 of JPY64,429 million. The major breakdown of noncurrent assets was an increase in property and equipment by JPY2,757 million to JPY37,081 million, an increase in other investments by JPY1,362 million to JPY7,310 million mainly due to change an increase in the fair value of available-for-sale securities, and increase in prepaid expenses-noncurrent by JPY1,291 million to JPY6,278 million. Other investments as of December 31, 2016, mainly consisted of JPY5,258 million in available-for-sale securities (including JPY4,920 million of strategic shareholdings), JPY1,124 million in nonmarketable equity securities and JPY929 million in investments in funds, including some through a trust. As of December 31, 2016, the major breakdown of non-amortized intangible assets was JPY6,170 million in goodwill and JPY96 million in trademark. The balance of amortized intangible assets, which was customer relationships, was JPY3,132 million.

As of December 31, 2016, the balance of current liabilities was JPY36,219 million, increased by JPY153 million from the balance as of March 31, 2016 of JPY36,066 million mainly due to an increase in capital lease obligations-current portion by JPY524 million to JPY4,479 million. As of December 31, 2016, the balance of noncurrent liabilities was JPY28,931 million, increased by JPY12,506 million from the balance as of March 31, 2016 of JPY16,425 million. The major breakdown of noncurrent liabilities was an increase in long-term borrowings by JPY8,500 million to JPY8,500 million and an increase in capital lease obligations-noncurrent by JPY1,752 million to JPY9,532 million.

As of December 31, 2016, the balance of total IIJ shareholders’ equity was JPY65,167 million, increased by JPY322 million from the balance as of March 31, 2016 of JPY64,845 million. There was an increase in treasury stock by JPY982 million to JPY1,374 million due to the repurchase of own shares, authorized at the meeting of IIJ’s Board of Directors held on November 4, 2016. IIJ shareholders’ equity ratio (total IIJ shareholders’ equity divided by total assets) as of December 31, 2016 was 49.8%.

Cash flows

Cash and cash equivalents as of December 31, 2016 were JPY21,266 million (JPY18,234 million as of December 31, 2015).

Net cash provided by operating activities for 3Q16 was JPY4,408 million (net cash provided by operating activities of JPY7,811 million for 3Q15.) There were net income of JPY2,036 million, depreciation and amortization of JPY8,006 million and net cash out flow of JPY5,979 million from changes in operating assets and liabilities. As for changes in operating assets and liabilities, there were an increase in prepaid expenses (including prepaid expenses-noncurrent) in relation to up front payment for software licenses and maintenance cost for service facilities, an increase in inventories due to the increase in systems construction projects, an increase in prepaid expenses for seasonal bonus payments to our employees and an increase mainly in accounts receivable in relation to an export project of our container type data center in 3Q16.

Net cash used in investing activities for 3Q16 was JPY5,389 million (net cash used in investing activities of JPY6,634 million for 3Q15), mainly due to payments for purchase of property and equipment of JPY7,940 million (JPY8,454 million for 3Q15) and proceeds from sales of property and equipment, which include sales and leaseback, of JPY2,219 million (JPY1,093 million for 3Q15).

Net cash provided by financing activities for 3Q16 was JPY2,831 million (net cash used in financing activities of JPY4,047 million for 3Q15), mainly due to proceeds from long-term borrowings of JPY8,500 million, principal payments under capital leases of JPY3,535 million (JPY3,040 million for 3Q15), FY2015 year-end and FY2016 interim dividend payments of JPY1,126 million (JPY1,011 million for 3Q15) and payments for purchase of treasury stock of JPY982 million.

FY2016 Financial Targets

On November 4, 2016, we revised our financial targets for FY2016 which was announced on May 13, 2016. Due to seasonal factors, our fourth quarter revenue and income volume tend to be the largest. Therefore, our financial target announced on November 4, 2016 remain unchanged.

We conducted the repurchase of our own shares which was authorized at the meeting of our Board of Directors held on November 4, 2016. Final results of share repurchase is as follows; period of repurchase: from November 7, 2016 to January 31, 2017, total number of shares repurchased: 892,200 shares, aggregate repurchased amount: JPY1,499,933 thousand.

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
 3Q153Q16
 JPY millionsJPY millions
Adjusted EBITDA11,367 11,161 
Depreciation and Amortization(7,294)(8,006)
Operating Income4,073 3,155 
Other Income105 278 
Income Tax Expense1,697 1,466 
Equity in Net Income of Equity Method Investees207 69 
Net income2,688 2,036 
Less: Net income attributable to noncontrolling interests(115)(126)
Net Income attributable to IIJ2,573 1,910 


CAPEX
 3Q153Q16
 JPY millionsJPY millions
CAPEX, including capital leases12,21112,258
Acquisition of Assets by Entering into Capital Leases3,7575,843
Purchase of Property and Equipment8,4546,415

Presentation

Presentation materials will be posted on our web site (http://www.iij.ad.jp/en/ir/) on February 8, 2017.

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 Internet connectivity services, systems integration, cloud computing services, security services and mobile services. 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.

For inquiries, contact:

IIJ Investor Relations
Tel: +81-3-5205-6500 E-mail: ir@iij.ad.jp URL: http://www.iij.ad.jp/en/ir

Statements made in this press release regarding IIJ’s or management’s intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ’s and managements’ current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding FY2016 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, 2016 and December 31, 2016) 
       
  As of March 31, 2016 As of December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 ASSETS     
 CURRENT ASSETS:     
 Cash and cash equivalents19,569,095  21,266,218   
 Accounts receivable, net of allowance for doubtful accounts of JPY 74,229 thousand and JPY 82,175 thousand at March 31, 2016 and December 31, 2016, respectively23,746,683  23,701,119   
 Inventories2,003,573  3,575,776   
 Prepaid expenses—current4,769,988  7,180,146   
 Deferred tax assets—current1,481,651  957,448   
 Other current assets, net of allowance for doubtful accounts of JPY 15,693 thousand and JPY 15,193 thousand at March 31, 2016 and December 31, 2016, respectively1,834,951  4,001,890   
 Total current assets53,405,941  60,682,597   
 INVESTMENTS IN EQUITY METHOD INVESTEES2,979,652  3,061,198   
 OTHER INVESTMENTS5,948,741  7,310,426   
 PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 45,345,543 thousand and JPY 49,000,397 thousand at March 31, 2016 and December 31, 2016, respectively34,324,150  37,081,355   
 GOODWILL6,169,609  6,169,609   
 OTHER INTANGIBLE ASSETS—Net3,549,459  3,263,886   
 GUARANTEE DEPOSITS3,084,681  3,029,012   
 DEFERRED TAX ASSETS—Noncurrent224,316  171,150   
 NET INVESTMENT IN SALES-TYPE LEASES—Noncurrent2,444,848  2,044,458   
 Prepaid expenses—Noncurrent4,987,193  6,277,978   
 OTHER ASSETS, net of allowance for doubtful accounts of JPY 61,593 thousand and JPY 61,610 thousand at March 31, 2016 and December 31, 2016, respectively716,314  1,823,824   
 TOTAL117,834,904  130,915,493   
       
       
  As of March 31, 2016 As of December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 LIABILITIES AND SHAREHOLDERS' EQUITY     
 CURRENT LIABILITIES:     
 Short-term borrowings9,250,000  9,250,000   
 Capital lease obligations—current portion3,954,386  4,478,624   
 Accounts payable—trade13,906,703  14,045,710   
 Accounts payable—other1,497,767  899,852   
 Income taxes payable1,078,412  310,920   
 Accrued expenses2,932,653  2,932,400   
 Deferred income—current2,528,885  2,629,239   
 Other current liabilities917,300  1,671,891   
 Total current liabilities36,066,106  36,218,636   
 LONG-TERM BORROWINGS-  8,500,000   
 CAPITAL LEASE OBLIGATIONS—Noncurrent7,779,367  9,531,762   
 ACCRUED RETIREMENT AND PENSION COSTS—Noncurrent3,581,426  3,751,911   
 DEFERRED TAX LIABILITIES—Noncurrent710,055  863,323   
 DEFERRED INCOME—Noncurrent3,092,562  3,362,629   
 OTHER NONCURRENT LIABILITIES1,261,413  2,921,230   
 Total Liabilities52,490,929  65,149,491   
 COMMITMENTS AND CONTINGENCIES     
       
 SHAREHOLDERS' EQUITY:     
 Common-stock—authorized, 75,520,000 shares; issued and outstanding, 46,711,400 shares at March 31, 2016 and December 31, 2016, respectively25,509,499  25,509,499   
 Additional paid-in capital36,059,833  36,102,931   
 Retained earnings2,471,276  3,255,696   
 Accumulated other comprehensive income1,196,669  1,673,124   
 Treasury stock —758,709 shares and 1,360,809 shares held by the company at March 31, 2016 and December 31, 2016, respectively(392,070) (1,374,177)  
 Total Internet Initiative Japan Inc. shareholders' equity64,845,207  65,167,073   
 NONCONTROLLING INTERESTS498,768  598,929   
 Total equity65,343,975  65,766,002   
 TOTAL117,834,904  130,915,493   
       
       

 

Internet Initiative Japan Inc. 
Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income (Unaudited)
 
(For the nine months ended December 31, 2015 and December 31, 2016) 
       
       
  Nine Months Ended Nine Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 REVENUES:     
 Network services:     
 Internet connectivity services (enterprise)12,870,620  16,461,205   
 Internet connectivity services (consumer)10,707,905  15,902,952   
 WAN services18,826,362  19,847,736   
 Outsourcing services15,810,470  16,268,643   
 Total58,215,357  68,480,536   
 Systems integration:     
 Systems construction11,547,216  13,972,807   
 Systems operation and maintenance24,374,157  25,885,221   
 Total35,921,373  39,858,028   
 Equipment sales2,364,695  2,207,649   
 ATM operation business2,880,146  3,055,739   
 Total revenues99,381,571  113,601,952   
 COSTS AND EXPENSES:     
 Cost of network services47,078,490  56,273,528   
 Cost of systems integration30,454,411  35,644,158   
 Cost of equipment sales2,125,085  2,024,262   
 Cost of ATM operation business1,930,186  1,830,095   
 Total costs81,588,172  95,772,043   
 Sales and marketing7,842,190  8,392,014   
 General and administrative5,532,088  5,928,165   
 Research and development345,878  354,411   
 Total costs and expenses95,308,328  110,446,633   
 OPERATING INCOME4,073,243  3,155,319   
 OTHER INCOME (EXPENSES):     
 Dividend income88,248  106,336   
 Interest income15,371  26,781   
 Interest expense(170,762) (218,204)  
 Foreign exchange gain (loss), net(11,273) (23,072)  
 Net gain on sales of other investments23,765  213,938   
 Impairment of other investments-  (30,554)  
 Other —net159,048  202,486   
 Other income —net104,397  277,711   
 INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES4,177,640  3,433,030   
 INCOME TAX EXPENSE 1,696,936  1,465,852   
 EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES206,823  69,244   
 NET INCOME2,687,527  2,036,422   
 LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(114,704) (126,161)  
 NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC.2,572,823  1,910,261   
       
       
  Nine Months Ended Nine Months Ended  
  December 31, 2015 December 31, 2016  
 NET INCOME PER SHARE     
 BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares)45,949,250  45,846,887   
 DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares)46,039,920  45,962,442   
 BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs)91,898,500  91,693,774   
 DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs)92,079,840  91,924,884   
 BASIC NET INCOME PER SHARE  (JPY)55.99  41.67   
 DILUTED NET INCOME PER SHARE  (JPY)55.88  41.56   
 BASIC NET INCOME PER ADS  EQUIVALENT  (JPY)28.00  20.83   
 DILUTED NET INCOME PER ADS  EQUIVALENT  (JPY)27.94  20.78   
       
   
 Quarterly Consolidated Statements of Comprehensive Income (Unaudited)    
  Nine Months Ended Nine Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 NET INCOME2,687,527  2,036,422   
 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:     
 Foreign currency translation adjustments(74,544) (455,158)  
 Unrealized holding gain (loss) on securities(85,123) 920,735   
 Defined benefit pension plans(1,246) 10,878   
 TOTAL COMPREHENSIVE INCOME 2,526,614  2,512,877   
 LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(118,662) (126,161)  
 COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC.2,407,952  2,386,716   
       

 

  
Internet Initiative Japan Inc. 
Consolidated Statements of Cash Flows (Unaudited) 
(For the nine months ended December 31, 2015 and December 31, 2016) 
       
  Nine Months Ended Nine Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 OPERATING ACTIVITIES:     
 Net income2,687,527  2,036,422   
 Adjustments to reconcile net income to net cash provided by operating activities:     
 Depreciation and amortization7,293,768  8,006,049   
 Provision for retirement and pension costs, less payments141,614  188,923   
 Provision for allowance for doubtful accounts26,692  19,989   
 Gain on sales of property and equipment(37,972) (15,410)  
 Loss on disposal of property and equipment37,345  54,481   
 Net gain on sales of other investments(23,765) (213,938)  
 Impairment of other investments-  30,554   
 Foreign exchange gain, net(24,118) (277)  
 Equity in net income of equity method investees, less dividends received(158,313) (18,162)  
 Deferred income tax expense308,241  349,735   
 Others(12,709) (51,716)  
 Changes in operating assets and liabilities:     
 Decrease (increase) in accounts receivable1,985,303  (64,287)  
 Decrease (increase) in net investment in sales-type lease — noncurrent(17,099) 400,390   
 Increase in inventories(1,505,965) (1,586,556)  
 Increase in prepaid expenses(1,690,890) (2,454,437)  
 Increase in other current and noncurrent assets(1,297,325) (4,534,405)  
 Increase (decrease) in accounts payable(165,442) 160,327   
 Increase (decrease) in income taxes payable10,500  (767,172)  
 Increase in accrued expenses228,883  18,639   
 Increase in deferred income—current405,211  140,038   
 Increase (decrease) in deferred income—noncurrent(175,389) 302,157   
 Increase (decrease) in other current and noncurrent liabilities(204,940) 2,406,335   
 Net cash provided by operating activities7,811,157  4,407,679   
 INVESTING ACTIVITIES:     
 Purchase of property and equipment(8,454,171) (7,940,090)  
 Proceeds from sales of property and equipment1,093,078  2,219,179   
 Purchase of available-for-sale securities(59,490) -   
 Purchase of other investments(273,686) (316,171)  
 Investment in an equity method investee(39,974) (99,000)  
 Proceeds from sales of available-for-sale securities141,235  -   
 Proceeds from sales of other investments804,236  534,249   
 Payments of guarantee deposits(21,132) (17,102)  
 Refund of guarantee deposits9,040  87,704   
 Payments for refundable insurance policies(42,272) (42,385)  
 Refund from insurance policies10,108  -   
 Proceeds from subsidies200,000  200,000   
 Other(678) (15,000)  
 Net cash used in investing activities(6,633,706) (5,388,616)  
  Nine Months Ended Nine Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 FINANCING ACTIVITIES:     
 Proceeds from issuance of short-term borrowings with initial maturities over three months and long-term borrowings1,550,000  8,550,000   
 Repayments of short-term borrowings with initial maturities over three months(1,550,000) (50,000)  
 Principal payments under capital leases(3,039,877) (3,534,887)  
 Proceeds from issuance of subsidiary stock to noncontrolling interests3,692  -   
 Payments for purchase of treasury stock-  (982,107)  
 Dividends paid(1,010,844) (1,125,841)  
 Other10  (26,000)  
 Net cash provided by (used in) financing activities(4,047,019) 2,831,165   
       
 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS9,673  (153,105)  
       
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(2,859,895) 1,697,123   
 CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD21,093,633  19,569,095   
 CASH AND CASH EQUIVALENTS, END OF THE PERIOD18,233,738  21,266,218   
       
 ADDITIONAL CASH FLOW INFORMATION:     
 Interest paid170,903  217,414   
 Income taxes paid1,392,230  1,961,521   
       
 NONCASH INVESTING AND FINANCING ACTIVITIES:     
 Acquisition of assets by entering into capital leases3,757,319  5,842,869   
 Facilities purchase liabilities905,351  899,852   
 Asset retirement obligation7,349  -   
       
       


 Going Concern Assumption (Unaudited)  
   Nothing to be reported.  
         
 Material Changes In Shareholders' Equity  (Unaudited) 
   Nothing to be reported.
         
 Segment Information (Unaudited)  
   Business Segments:  
    Revenues:  
     Nine Months EndedNine Months Ended
       December 31, 2015December 31, 2016
       Thousands of JPYThousands of JPY
    Network service and systems integration business96,789,223 110,830,849 
     Customers96,501,425 110,546,213 
     Intersegment287,798 284,636 
    ATM operation business2,880,146 3,055,739 
     Customers 2,880,146 3,055,739 
     Intersegment- - 
    Elimination(287,798)(284,636)
    Consolidated total99,381,571 113,601,952 
    Segment profit or loss:  
     Nine Months EndedNine Months Ended
       December 31, 2015December 31, 2016
       Thousands of JPYThousands of JPY
    Network service and systems integration business3,356,483 2,177,784 
    ATM operation business818,647 1,088,056 
    Elimination(101,887)(110,521)
    Consolidated operating income4,073,243 3,155,319 
         
    Geographic information is not presented due to immateriality of revenue attributable to international operations.
         
 Subsequent Events (Unaudited)  
   Nothing to be reported.  
         

Third Quarter FY2016 Consolidated Financial Results (3 months)

The following tables are highlight data of 3rd Quarter FY2016 (3 months) consolidated financial results (unaudited, for the three months ended December 31, 2016).

Operating Results Summary
 3Q153Q16YoY %
Change
 JPY millionsJPY millions 
Total Revenues:34,04839,47916.0 
Network Services20,21623,64517.0 
Systems Integration (SI)12,19614,09015.5 
Equipment Sales7267412.0 
ATM Operation Business9101,00310.3 
Cost of Revenues:27,96233,49719.8 
Network Services16,57719,55818.0 
Systems Integration (SI)10,11412,65125.1 
Equipment Sales6456815.6 
ATM Operation Business626607(3.1)
SG&A Expenses and R&D4,5764,7744.3 
Operating Income1,5101,208(20.0)
Income before Income Tax Expense1,5311,328(13.3)
Net Income attributable to IIJ920802(12.8)


Network Service Revenue Breakdown
 3Q153Q16YoY %
Change
 JPY millionsJPY millions 
Internet Connectivity Service (Enterprise)4,5145,88430.4 
IP Service*12,4462,4570.5 
IIJ FiberAccess/F and IIJ DSL/F771762(1.2)
IIJ Mobile Service1,2282,608112.4 
IIJ Mobile MVNO Platform Service*25841,784205.7 
Others6957(17.8)
Internet Connectivity Service (Consumer)4,1115,57535.6 
IIJ3,4915,06445.0 
IIJmio Mobile Service*33,0314,40245.2 
hi-ho620511(17.6)
WAN Services6,2696,5594.6 
Outsourcing Services5,3225,6275.7 
Network Services Revenues20,21623,64517.0 

*1 IP service revenues include revenues from the data center connectivity service.
*2 From 1Q16, the revenue from “IIJ Mobile MVNO Platform Service”, which is included in “IIJ Mobile service (Enterprise),” is disclosed. “IIJ Mobile MVNO Platform Service” provides MVNO platform to our MVNE clients.
*3 From 1Q16, the revenue from “IIJmio Mobile Service” (formerly known as ”IIJmio High Speed Mobile Service” until September 30, 2016), which is included in “Internet connectivity services (Consumer)” provided by IIJ, is disclosed.

Reconciliation of Non-GAAP Financial Measures (3rd Quarter FY2016 (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
 3Q153Q16
 JPY millionsJPY millions
Adjusted EBITDA4,004 3,930 
Depreciation and Amortization(2,494)(2,722)
Operating Income1,510 1,208 
Other Income21 120 
Income Tax Expense657 512 
Equity in Net Income of Equity Method Investees69 27 
Net income943 843 
Less: Net income attributable to noncontrolling interests(23)(41)
Net Income attributable to IIJ920 802 

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
 3Q153Q16
 JPY millionsJPY millions
CAPEX, including capital leases4,2683,886
Acquisition of Assets by Entering into Capital Leases1,1352,051
Purchase of Property and Equipment3,1331,835


  
Internet Initiative Japan Inc. 
Quarterly Consolidated Statements of Income and
Quarterly Consolidated Statements of Comprehensive Income (Unaudited)
 
(Three Months ended December 31, 2015 and December 31, 2016) 
        
  Three Months Ended Three Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 REVENUES:      
 Network services:      
 Internet connectivity services (enterprise)4,513,952   5,884,331   
 Internet connectivity services (consumer)4,111,346   5,574,632   
 WAN services6,268,555   6,559,024   
 Outsourcing services5,321,941   5,626,783   
 Total20,215,794   23,644,770   
 Systems integration:      
 Systems construction3,904,016   5,389,388   
 Systems operation and maintenance8,291,772   8,700,314   
 Total12,195,788   14,089,702   
 Equipment sales726,672   740,991   
 ATM operation business909,583   1,003,219   
 Total revenues34,047,837   39,478,682   
 COST AND EXPENSES:      
 Cost of network services16,577,185   19,558,238   
 Cost of systems integration10,113,828   12,651,235   
 Cost of equipment sales644,961   681,145   
 Cost of ATM operation business626,050   606,601   
 Total costs27,962,024   33,497,219   
 Sales and marketing2,676,708   2,756,066   
 General and administrative1,785,263   1,907,809   
 Research and development113,684   109,971   
 Total costs and expenses32,537,679   38,271,065   
 OPERATING INCOME1,510,158   1,207,617   
 OTHER INCOME (EXPENSE):      
 Dividend income14,040   14,929   
 Interest income4,259   8,263   
 Interest expense(59,202)  (75,859)  
 Foreign exchange gain (loss), net2,793   82,844   
 Net gain on sales of other investments23,765   -   
 Other—net34,870   89,881   
 Other income —net20,525   120,058   
 INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES1,530,683   1,327,675   
 INCOME TAX EXPENSE657,051   512,174   
 EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES69,422   27,598   
 NET INCOME943,054   843,099   
 LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(22,730)  (40,772)  
 NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC.920,324   802,327   
        
  Three Months Ended Three Months Ended  
  December 31, 2015 December 31, 2016  
 NET INCOME PER SHARE    
 BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares)45,952,691  45,636,429   
 DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares)46,048,049  45,758,296   
 BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs)91,905,382  91,272,858   
 DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs)92,096,098  91,516,592   
 BASIC NET INCOME PER SHARE  (JPY)20.03  17.58   
 DILUTED NET INCOME PER SHARE  (JPY)19.99  17.53   
 BASIC NET INCOME PER ADS EQUIVALENT (JPY)10.01  8.79   
 DILUTED NET INCOME PER ADS EQUIVALENT (JPY)9.99  8.77   
        
        
 Quarterly Consolidated Statements of Comprehensive Income (Unaudited)     
  Three Months Ended Three Months Ended  
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 NET INCOME943,054  843,099   
 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:     
 Foreign currency translation adjustments(95,236) (45,068)  
 Unrealized holding gain (loss) on securities90,452  469,974   
 Defined benefit pension plans(415) 3,626   
 TOTAL COMPREHENSIVE INCOME 937,855  1,271,631   
 LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(22,730) (40,772)  
 COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC.915,125  1,230,859   

 

   
Internet Initiative Japan Inc. 
Quarterly Consolidated Statements of Cash Flows (Unaudited) 
(Three Months ended December 31, 2015 and December 31, 2016) 
       
  Three Months Ended Three Months Ended   
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 OPERATING ACTIVITIES:     
 Net income943,054  843,099   
 Adjustments to reconcile net income to net cash provided by operating activities:     
 Depreciation and amortization2,493,478  2,722,545   
 Provision for retirement and pension costs, less payments71,204  66,477   
 Provision for allowance for doubtful accounts3,380  14,856   
 Gain on sales of property and equipment(17,030) (7,706)  
 Loss on disposal of property and equipment5,493  18,825   
 Net gain on sales of other investments(23,765) -   
 Foreign exchange gain, net(25,102) (83,375)  
 Equity in net income of equity method investees, less dividends received(69,422) (27,598)  
 Deferred income tax expense190,568  66,553   
 Other2,337  (46,536)  
 Changes in operating assets and liabilities:     
 Increase in accounts receivable(179,928) (560,123)  
 Decrease (increase) in net investment in sales-type lease — noncurrent(13,836) 101,218   
 Increase in inventories(676,714) (874,042)  
 Increase in prepaid expenses(523,982) (1,046,904)  
 Increase in other current and noncurrent assets(1,012,756) (2,849,833)  
 Increase (decrease) in accounts payable187,324  (357,834)  
 Decrease in income taxes payable(289,427) (174,286)  
 Increase in accrued expenses68,502  65,056   
 Increase in deferred income—current191,119  92,031   
 Increase (decrease) in deferred income—noncurrent(111,647) 178,857   
 Increase in other current and noncurrent liabilities518,229  2,193,546   
 Net cash provided by operating activities1,731,079  334,826   
 INVESTING ACTIVITIES:     
 Purchase of property and equipment(3,132,977) (2,581,985)  
 Proceeds from sales of property and equipment603,115  1,009,711   
 Purchase of other investments(26,704) (29,113)  
 Investment in an equity method investee-  (99,000)  
 Proceeds from sales of other investments501,330  229,707   
 Payments of guarantee deposits(4,070) (2,699)  
 Refund of guarantee deposits4,722  10,228   
 Payments for refundable insurance policies(14,091) (14,204)  
 Other-  (15,000)  
 Net cash used in investing activities(2,068,675) (1,492,355)  
  Three Months Ended Three Months Ended   
  December 31, 2015 December 31, 2016  
  Thousands of
JPY
 Thousands of
JPY
  
 FINANCING ACTIVITIES:     
 Proceeds from issuance of short-term borrowings with initial maturities over three months and long-term borrowings50,000  5,550,000   
 Repayments of short-term borrowings with initial maturities over three months(50,000) (50,000)  
 Principal payments under capital leases(1,020,122) (1,221,124)  
 Proceeds from issuance of subsidiary stock to noncontrolling interests3,692  -   
 Payments for purchase of treasury stock-  (982,107)  
 Dividends paid(505,479) (620,361)  
 Net cash used in financing activities(1,521,909) 2,676,408   
       
 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(5,226) 79,517   
       
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(1,864,731) 1,598,396   
 CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD20,098,469  19,667,822   
 CASH AND CASH EQUIVALENTS, END OF THE PERIOD18,233,738  21,266,218   
       

Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the nine months ended December 31, 2016 (“3Q16”) in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Nine Months ended December 31, 2016
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]

February 8, 2017
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 filing of quarterly report (Shihanki -houkokusho) to Japan’s regulatory organization: February 14, 2017
Scheduled date for dividend payment: -
Supplemental material on annual results: Yes
Presentation on quarterly report: Yes (for institutional investors and analysts)

(Amounts of less than JPY one million are rounded)

1. Consolidated Financial Results for the Nine Months ended December 31, 2016
(April 1, 2016 to December 31, 2016)

(1) Consolidated Results of Operations (% shown is YoY change)
 Total revenuesOperating incomeIncome before
income tax expense
Net income
attributable to IIJ
 JPY millions%JPY millions%JPY millions%JPY millions%
Nine Months Ended
December 31, 2016
113,60214.33,155(22.5)3,433(17.8)1,910(25.8)
Nine Months Ended
December 31, 2015
99,38213.14,0737.6 4,1787.4 2,57311.2 


(Note1)Total comprehensive income attributable to IIJ
 For the nine months ended December 31, 2016: JP2,387 million (down 0.9% YoY)
 For the nine months ended December 31, 2015: JPY2,408 million (up 3.7% 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.


 

 Basic net income
attributable to IIJ per share
Diluted net income
attributable to IIJ per share
 JPYJPY
Nine Months Ended
December 31, 2016
41.6741.56
Nine Months Ended
December 31, 2015
55.9955.88


(2) Consolidated Financial Position   
 Total assetsTotal equityTotal IIJ shareholders'
equity
Total IIJ shareholders'
equity to total assets
 JPY millionsJPY millionsJPY millions%
As of December 31, 2016130,91565,76665,16749.8
As of March 31, 2016117,83565,34464,84555.0

2. Dividends

 Dividend per Shares
1Q-end2Q-end3Q-endYear-endTotal
 JPYJPYJPYJPYJPY
Fiscal Year Ended
March 31, 2016
-11.00-11.0022.00
Fiscal Year Ended
March 31, 2017
-13.50-  
Fiscal Year Ending
March 31, 2017
(forecast)
   13.5027.00

(Note) Change from the latest released dividend forecasts: No.

3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2017

(April 1, 2016 through March 31, 2017)    (% shown is YoY change)
 Total RevenuesOperating IncomeIncome before
Income Tax
Expense (Benefit)
Net Income
attributable to IIJ
Basic Net Income
attributable to IIJ
per Share
 JPY
millions
%JPY
 millions
%JPY
 millions
%JPY
millions
%JPY
Fiscal Year Ending
March 31, 2017
158,00012.35,000(18.6)5,100(17.7)3,000(25.7)65.71

(Note1) Changes from the latest forecasts released: No

* Notes

(1)Changes in significant subsidiaries for the nine months ended December 31, 2016
 (Changes in significant subsidiaries for the nine months ended December 31, 2016 which resulted in changes in scope of consolidation): None
  
(2)Application of simplified or exceptional accounting: No
 
(3)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
 
(4)Number of shares outstanding (shares of common stock)
 1) The number of shares outstanding (inclusive of treasury stock):
 As of December 31, 2016: 46,711,400 shares
 As of March 31, 2016: 46,711,400 shares
 2) The number of treasury stock:
 As of December 31, 2016: 1,360,809 shares
 As of March 31, 2016: 758,709 shares
 3) The weighted average number of shares outstanding:
 For the nine months ended December 31, 2016: 45,846,887 shares
 For the nine months ended December 31, 2015: 45,949,250 shares
 
(5)Regarding the basic net income attributable to IIJ per share and the repurchase of own shares:
 The basic net income attributable to IIJ per share for the fiscal year ending March 31, 2017 disclosed in this document was calculated by taking the repurchase of own shares into consideration. (Period of repurchase: from November 7, 2016 to January 31, 2017, total number of shares repurchased: 892,200 shares, total amount repurchased: JPY1,499,933 thousand.)