IIJ Announces Nine Months Financial Results for Fiscal Year Ending March 31, 2009
- Press Release
- Source: Internet Initiative Japan Inc.
- On 10:05 pm EST, Wednesday February 11, 2009
TOKYO, Feb. 12, 2009 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (``IIJ'') (NasdaqGS:IIJI - News) (Toronto:3774.TO - News) today announced its consolidated financial results for the nine months ended December 31, 2008.(1)
Highlights of Financial Results for the nine months ended Dec 2008
* Revenue was JPY50,789 million ($559 million), up 5.0% YoY lead by
the steady increase in recurring revenues which was up 16.3% YoY.
One-time revenues of systems construction revenues were weak
affected by the deteriorating Japanese economy.
* Operating income was JPY1,844 million ($20 million), down 37.5%
YoY mainly due to operating loss for the 4 newly established
consolidated subsidiaries of JPY823 million.
* Net income was JPY354 million ($4 million), down 91.3% YoY
largely affected by deferred tax expense of JPY972 million
whereas we had deferred tax benefit of JPY1,791 million for the
nine months ended December 31, 2007.
Revised Full FY2008 Financial Targets
Previous Target New Target (2/12/2009)
---------------------- ----------------------
Revenues JPY73,000 million JPY69,300 million
Operating Income JPY3,800 million JPY2,800 million
Net Income JPY2,800 million JPY1,300 million
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| IIJI | 4.93 | -0.01 |
Nine Months Overview and Business Outlook
``In a very tough environment where the Japanese economy is further deteriorating from the second half of FY2008, IIJ's total revenue increased by 5.0% YoY,'' said Koichi Suzuki, President and CEO of IIJ. ``Connectivity service grew by 13.7%, outsourcing service by 13.3% and systems operation and maintenance by 21.8% YoY. These recurring revenues which accounts for 79% of our total revenues are supporting our steady growth,'' continued Suzuki.
``Connectivity services were stronger than expected with contracts of over Gbps reaching 82 contracts, up 21 contracts YoY. Increased usage of video streaming or IPTV among Japanese consumers has lead CATVs and ISPs to also increase their contracted bandwidth with us. IIJ Mobile service with around 18,000 contracts as of December 2008 has reached its break even point at its gross margin level. Outsourcing services remain on track with additional revenue from the newly opening Nerima DC expected to come in from the 4th quarter of FY2008.''
``With this continuous growth from recurring revenues and tightened cost control, profitability is improving quarter on quarter this fiscal year,'' said Suzuki. ``Operating margin ratio was 4.8% in 3Q08, up 1.3 points compared to 2Q08 and up 2.3 points compared to 1Q08 respectively.''
``However, the situation for systems construction was not as strong as we had initially anticipated,'' continued Suzuki. ``Many projects are being either postponed or delayed due to the tightened SI investments by Japanese companies, and as a result has affected our revenue and income growth. Because the recovery for SI investments depends strongly on economic recovery, and as SI order backlogs are weak, we have revise downward our Full FY2008 financial targets for the second time this year.''
``Nevertheless, our overall position and our competitiveness in the Japanese ICT market has not changed and therefore, we will continue to take decisive steps for us to return to double-digit growth in a post recession economy. We will build a strong business foundation for mid- to long-term growth.''
Nine Months Financial Results
Results of Operation
Operating Results Summary
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
Total Revenues 50,789 48,349 5.0%
--------------------------------------------------------------------
Total Costs 41,255 38,662 6.7%
--------------------------------------------------------------------
SG&A Expenses and R&D 7,690 6,736 14.2%
--------------------------------------------------------------------
Operating Income 1,844 2,952 (37.5%)
--------------------------------------------------------------------
Income before
Income Tax Expense 1,242 2,715 (54.2%)
--------------------------------------------------------------------
Net Income 354 4,088 (91.3%)
--------------------------------------------------------------------
Revenues
Revenues totaled JPY50,789 million, an increase of 5.0% YoY.
Revenues
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
Total Revenues: 50,789 48,349 5.0%
--------------------------------------------------------------------
Connectivity and
Outsourcing Services 25,941 22,856 13.5%
--------------------------------------------------------------------
SI 24,105 24,213 (0.4%)
--------------------------------------------------------------------
Equipment Sales 726 1,280 (43.3%)
--------------------------------------------------------------------
ATM Operation
Business(2) 17 -- --
--------------------------------------------------------------------
Connectivity and Outsourcing Services revenue were JPY25,941 million, an increase of 13.5% YoY lead by the increase in connectivity services and outsourcing services. Connectivity service for corporate use increased by 7.8% YoY reflecting strong demands for larger bandwidth connectivity. Connectivity service for home use increased by 27.6% YoY with the full contribution from hi-ho, which we acquired in June 2007, of JPY3,682 million (9 months) compared to JPY2,537 million (7 months). Outsourcing services were up 13.3% YoY reflecting steady needs for email and data center related services.
SI revenues were JPY24,105 million, a slight decrease of 0.4% YoY. Systems construction revenues were down 20.8% YoY as revenues fell short of our budget affected by the weak Japanese economy whereas in the third quarter of FY2007, a remarkably large-scale systems construction project was completed. Systems operation and maintenance revenues were up 21.8% YoY.
Equipment sales revenues were JPY726 million, a decrease of 43.3% YoY.
ATM Operation Business revenues were JPY17 million.
Cost and expense
Cost of revenues was JPY41,255 million, an increase of 6.7% YoY.
Cost of Revenues
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
Cost of Revenues: 41,255 38,662 6.7%
--------------------------------------------------------------------
Connectivity and
Outsourcing Services 21,851 19,005 15.0%
--------------------------------------------------------------------
SI 18,504 18,558 (0.3%)
--------------------------------------------------------------------
Equipment Sales 639 1,098 (41.8%)
--------------------------------------------------------------------
ATM Operation
Business 261 -- --
--------------------------------------------------------------------
Cost of Connectivity and Outsourcing Services revenue were JPY21,851 million, up 15.0% YoY due to the increase in network operation related, circuit related and personnel related costs. There was also cost incurred by hi-ho for 9 months and costs related to GDX Japan Inc. (``GDX'') and On-Demand Solutions Inc. (``ODS'') of JPY121 million. Gross margin was 15.8% compared to 16.8% for the nine months ended December 31, 2007.
Cost of SI revenues was JPY18,504 million, down 0.3% YoY as purchasing cost decreased along with the decrease in systems construction revenue while outsourcing cost increased. However, on a quarterly basis, outsourcing cost decreased compared to 2Q08 as a result of cost control. Gross margin was 23.2% compared to 23.4% for the nine months ended December 31, 2007.
Cost of Equipment Sales revenues was JPY639 million, down 41.8% YoY due to decrease in equipment sales revenues. Gross margin ratio was 12.0%.
Cost of ATM Operation Business revenues was JPY261 million and gross margin was a loss of JPY243 million.
SG&A Expenses and R&D
Sales and marketing expenses were JPY3,506 million, an increase of 11.2% YoY. The increase was mainly due to the increase in personnel related expenses as well as expenses related to hi-ho of 9 months.
General and administrative expenses were JPY3,967 million, an increase of 16.5% YoY. The increases were mainly due to the increase in rent and personnel related expenses. There were also expenses related to the 4 new subsidiaries.
Research and development expenses were JPY216 million, an increase of 20.5% YoY.
Operating income
Operating income was JPY1,844 million, a decrease of 37.5% YoY as gross margin from systems construction decreased, SG&A expenses and R&D increased by JPY954 million and there were operating loss from 4 new subsidiaries of JPY823 million.
Other income (expenses)
Other income (expenses) was JPY602 million compared to net other expenses of JPY237 million for the nine months ended December 31, 2007. We recorded net losses on equity securities of JPY312 million including impairment losses of JPY329 million on nonmarketable and available-for-sale equity securities compared to net gains of JPY34 million for the nine months ended December 31, 2007.
Income before income tax expenses
Income before income tax expenses was JPY1,242 million, down 54.2% YoY due to the decrease in operating income and the increase in other expenses.
Others
Income tax expense was JPY1,192 million mainly due to deferred tax expense of JPY972 million whereas for the nine months ended December 31, 2007, there were deferred tax benefits of JPY1,791 million resulting from the release of the valuation allowance against deferred tax assets.
Minority interests in losses of subsidiaries were JPY259 million related to GDX and Trust Networks Inc. compared to minority interest in losses of subsidiaries of JPY52 million for the nine months ended December 31, 2007.
Equity in net income of equity method investees was JPY45 million compared to equity in net loss of equity method investees of JPY92 million for the nine months ended December 31, 2007.
Net income was JPY354 million, a decrease of 91.3% YoY.
Financial Condition
Balance Sheets
Total assets as of December 31, 2008 was JPY52,558 million, decreased by JPY3,144 million from the previous fiscal year end (March 31, 2008).
For current assets, inventories increased by JPY434 million, mainly for ongoing SI projects; prepaid expenses increased by JPY429 million, mainly for bonus payments to our employees and maintenance expenses related to SI projects; and accounts receivable decreased by JPY2,685 million, each from the respective amount as of March 31, 2008. Property and Equipment increased by JPY2,065 million mainly due to an increase in property for our internal use. For current liabilities, short-term borrowings decreased by JPY1,350 million due to repayments; and accounts payable decreased by JPY2,325 million, each from the respective amount as of March 31, 2008.
IIJ Group has a large amount of tax operating loss carryforwards (JPY14,878 million as of March 31, 2008), and as of December 31, 2008, we had deferred tax asset (current) of JPY790 million and deferred tax asset (noncurrent) of JPY1,896 million, respectively. Other investments as of December 31, 2008 was JPY2,030 million (JPY813 million in nonmarketable equity securities, JPY615 million in available-for-sale securities and others of JPY602 million), a decrease of JPY333 million from March 31, 2008. As of December 31, 2008, non-amortized intangible assets (excluding telephone rights) such as goodwill were JPY5,516 million and amortized intangible assets of such as customer relationship were JPY321 million.
Total shareholders' equity as of December 31, 2008 was JPY24,382 million and shareholder's equity ratio (shareholder's equity/total assets) as of December 31, 2008 was 46.4%.
Cash Flows (Nine months ended December 31, 2008)
Cash and cash equivalents as of December 31, 2008 decreased by JPY2,516 million to JPY8,955 million, from JPY11,471 million as of March 31, 2008.
Net cash provided by operating activities for the nine months ended December 31, 2008 was JPY5,351 million, compared to net cash provided by operating activities of JPY455 million for the nine months ended December 31, 2007, mainly due to operating income of JPY1,844 million, decrease in accounts receivable which tends to be large at the end of March due to seasonal fluctuations was JPY2,656 million, increase in inventories mainly related to SI projects, decrease in accounts payable mainly related to SI projects and payment of income taxes.
Net cash used in investing activities for the nine months ended December 31, 2008 was JPY2,926 million, compared to net cash used in investing activities of JPY5,063 million for the nine months ended December 31, 2007, mainly due to payment of JPY2,663 million for the purchase of property and equipment, JPY125 million for the purchase of short-term and other investments, and JPY100 million for the purchase of available-for-sale securities.
Net cash used in financing activities for the nine months ended December 31, 2008 was JPY4,911 million, compared to net cash provided by financing activities of JPY285 million for the nine months ended December 31, 2007, mainly due to repayments of short-term borrowings of JPY1,350 million (net), principal payments under capital leases of JPY2,848 million, payments for dividends of JPY413 million and payments of JPY301 million for acquisition of treasury stock.
Nine Months Business Overview
Analysis by Service
Connectivity and Outsourcing Services
Connectivity services revenues for corporate use increased by 7.8% YoY reflecting the strong needs for broadband connectivity. IP Services was up 3.6% YoY as number of contracts for over Gbps services grew more than expected and other IP services has also increased respectively. Broadband services were up 10.2% YoY. Others which include dial-up connectivity and IIJ Mobile increased by 71.9% YoY. The contracted number for IIJ Mobile has reached around 18,000 contracts as of December 31, 2008 though there was a large cancellation from one client.
Connectivity services revenues for home use increased by 27.6% YoY with the full contribution from hi-ho of JPY3,682 million (9 months) compared to JPY2,537 million (7 months). High-speed mobile data communications service for home users was introduced in December 2008.
Outsourcing services revenues increased by 13.3% YoY as demands for email services and data center remains strong.
Number of Contracts for Connectivity Services
--------------------------------------------------------------------
December 31, December 31, YoY
2008 2007 Change
--------------------------------------------------------------------
Connectivity Services
(Corporate Use) 47,277 24,877 22,400
--------------------------------------------------------------------
IP Service (-99Mbps) 936 805 131
--------------------------------------------------------------------
IP Service
(100Mbps-999Mbps) 223 191 32
--------------------------------------------------------------------
IP Service (1Gbps-) 82 61 21
--------------------------------------------------------------------
IIJ Data Center
Connectivity Service 301 293 8
--------------------------------------------------------------------
IIJ FiberAccess/F and
IIJ DSL/F 25,295 21,573 3,722
--------------------------------------------------------------------
Others 20,440 1,954 18,486
--------------------------------------------------------------------
Connectivity Services
(Home Use) 450,708 481,352 (30,644)
--------------------------------------------------------------------
Under IIJ Brand 47,327 51,820 (4,493)
--------------------------------------------------------------------
hi-ho 183,416 190,808 (7,392)
--------------------------------------------------------------------
OEM1(3) 219,965 238,724 (18,759)
--------------------------------------------------------------------
Total Contracted Bandwidth 476.6 Gbps 346.0 Gbps 130.6 Gbps
--------------------------------------------------------------------
Connectivity and Outsourcing Services Revenues Breakdown and Cost
--------------------------------------------------------------------
Nine months Nine months YoY %
ended Dec 31, 2008 ended Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
Connectivity Service
(Corporate Use) 9,706 9,005 7.8%
--------------------------------------------------------------------
IP Service(4) 6,923 6,682 3.6%
--------------------------------------------------------------------
IIJ FiberAccess/F and
IIJ DSL/F 2,158 1,959 10.2%
--------------------------------------------------------------------
Others 625 363 71.9%
--------------------------------------------------------------------
Connectivity Service
(Home Use) 4,859 3,808 27.6%
--------------------------------------------------------------------
Under IIJ Brand 762 831 (8.3%)
--------------------------------------------------------------------
hi-ho 3,682 2,537 45.1%
--------------------------------------------------------------------
OEM 415 440 (5.6%)
--------------------------------------------------------------------
Outsourcing Services 11,376 10,043 13.3%
--------------------------------------------------------------------
Total Connectivity and
Outsourcing Services 25,941 22,856 13.5%
--------------------------------------------------------------------
Cost of Connectivity
and Outsourcing Services 21,851 19,005 15.0%
--------------------------------------------------------------------
Backbone Cost (included
in the cost of Connectivity
and Outsourcing Service) 2,776 2,574 7.9%
--------------------------------------------------------------------
Connectivity and Outsourcing
Services Gross Margin Ratio 15.8 % 16.8 % --
--------------------------------------------------------------------
SI
One-time revenues from systems construction decreased by 20.8% YoY while recurring revenues from systems operation and maintenance increased by 21.8% YoY.
Order backlog as of December 31, 2008 and order received for the nine months ended December 31, 2008 for SI and equipment sales were JPY13,544 million (down 16.6% YoY) and JPY22,465 million (down 30.4% YoY), respectively. The order backlog and order received for systems construction including equipment sales was JPY4,236 million (down 42.8% YoY) and JPY10,214 million (down 42.7% YoY), respectively. The order backlog and order received for systems operation and maintenance were JPY9,307 million (up 5.4% YoY) and JPY12,252 million (down 15.2% YoY), respectively.
SI Revenue Breakdown and Cost
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
SI Revenues 24,105 24,213 (0.4%)
--------------------------------------------------------------------
Systems Construction 10,014 12,641 (20.8%)
--------------------------------------------------------------------
Systems Operation and
Maintenance 14,091 11,572 21.8%
--------------------------------------------------------------------
Cost of SI 18,504 18,558 (0.3%)
--------------------------------------------------------------------
SI Gross Margin Ratio 23.2 % 23.4 % --
--------------------------------------------------------------------
Order Backlog for SI and Equipment Sales
--------------------------------------------------------------------
December 31, December 31, YoY %
2008 2007 Change
--------------------------------------------------------------------
JPY millions JPY millions
SI and Equipment Sales
Order Backlog 13,544 16,242 (16.6%)
--------------------------------------------------------------------
Equipment Sales
Equipment Sales Revenue and Cost
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
Equipment Sales Revenues 726 1,280 (43.3%)
--------------------------------------------------------------------
Cost of Equipment Sales 639 1,098 (41.8%)
--------------------------------------------------------------------
Equipment Sales Gross
Margin Ratio 12.0% 14.2% --
--------------------------------------------------------------------
ATM Operation Business
ATM Operation Business Revenue and Cost
--------------------------------------------------------------------
Nine months ended Nine months ended YoY %
Dec 31, 2008 Dec 31, 2007 change
--------------------------------------------------------------------
JPY millions JPY millions
ATM Operation Business
Revenues 17 -- --
--------------------------------------------------------------------
Cost of ATM Operation
Business 261 -- --
--------------------------------------------------------------------
Segment Information
Operating Revenues
Nine months ended
Dec. 31, 2008
--------------------------------------------------------------------
JPY millions
Network services and Systems
Integration Business 50,935
--------------------------------------------------------------------
External Customers 50,772
--------------------------------------------------------------------
Inter-Segment 163
--------------------------------------------------------------------
ATM Operation Business 17
--------------------------------------------------------------------
External Customers 17
--------------------------------------------------------------------
Inter-Segment --
--------------------------------------------------------------------
Elimination 163
--------------------------------------------------------------------
Consolidated 50,789
--------------------------------------------------------------------
Operating Income (losses)
--------------------------------------------------------------------
Nine months ended
Dec 31, 2008
--------------------------------------------------------------------
JPY millions
Network services and Systems Integration
Business 2,326
--------------------------------------------------------------------
ATM Operation Business (456)
--------------------------------------------------------------------
Elimination 26
--------------------------------------------------------------------
Consolidated 1,844
--------------------------------------------------------------------
Full FY2008 and Mid-term Financial Targets
Full FY2008 Financial Target
The Japanese economy has further deteriorated from the second half of FY2008 and there were large drops in corporate earnings and capital expenditures.
For IIJ group, although our recurring revenues are steadily increasing, our one-time revenues from systems construction will be affected by the further tightening SI investments from the third quarter of this year. Taking into consideration the amount of SI order received in the third quarter and its order backlogs as of December 31, 2008, we will revise downward our full FY2008 financial targets from the target announced on October 24, 2008.
We estimate full year consolidated revenue of JPY69,300 million as systems construction revenues will be lower than our initial expectations. Operating income of JPY2,800 million as gross margin will decrease with the decrease in revenues even with the reduction in costs such as SI outsourcing related. Income before income tax expenses of JPY1,900 million with the decrease in operating income. Net income of JPY1,300 million as deferred tax benefit expected in 4Q08 will decrease by approximately JPY400 million reflecting the result of income before income tax expenses for the nine months ended December 31, 2008.
Mid-term Financial Target
The IIJ group targets its mid-term target beginning from FY2008 to achieve over JPY100 billion in revenues and JPY10 billion in operating income by March 2011. However, mainly due to the decrease in systems integration revenues affected by the deteriorating Japanese economy from 3Q08, we are unlikely to achieve our initial target for this fiscal year announced on May 15, 2008 and we think we are approximately 1 year behind against our mid-term target. The tightened SI investments may further affect our revenue and we recognize it would be difficult for us to achieve our mid-term target by March 2011 in the current situation.
Nevertheless, we are certain our position and our competitiveness in the Japanese ICT market has not changed and the need to facilitate the use of ICT and to improve work efficiency are essential in the mid- and long-term, thus we will continue to make effort to achieve our mid-term target by continuously increasing our current business together with new businesses seeded in FY2007. However, the timing of when we will reach our mid-term target depends strongly on economic recovery.
Presentation
Presentation Materials will be posted on our web site (http://www.iij.ad.jp/en/IR/) on February 12, 2009.
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design. Moreover, IIJ has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ was listed on the U.S. NASDAQ Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in 2006.
The Internet Initiative Japan Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4613
For inquiries, contact:
YUKO KAZAMA IIJ Investor Relations Office Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp URL: http://www.iij.ad.jp /en/IR
Statements made in this press release regarding IIJ's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ's and managements' current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding FY2008 revenues and operating and net profitability, are subject to various risks, uncertainties and other factors that could cause IIJ's actual results to differ materially from those contained in any forward-looking statement. These risks, uncertainties and other factors include: IIJ's ability to maintain and increase revenues from higher-margin services such as systems integration and outsourcing services; the possibility that revenues from connectivity services may decline substantially as a result of competition and other factors; the ability to compete in a rapidly evolving and competitive marketplace; the impact on IIJ's profits of fluctuations in costs such as backbone costs and subcontractor costs; the impact on IIJ's profits of fluctuations in the price of available-for-sale securities; the impact of technological changes in its industry; IIJ's ability to raise additional capital to cover its indebtedness; the possibility that NTT, IIJ's largest shareholder, may decide to exercise substantial influence over IIJ; and other risks referred to from time to time in IIJ's filings on Form 20-F of its annual report and other filings with the United States Securities and Exchange Commission.
(1) Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP. All
financial figures are unaudited and consolidated. The
translations of Japanese yen into U.S. dollars are solely for the
convenience of readers outside of Japan. The rate used for the
translation was JPY90.79 per US$1.00, which was the noon buying
rate on December 31, 2008.
(2) From 1Q08, we have disclosed revenues and costs related to ATM
Operation Business.
(3) OEM services provided to other service providers.
(4) IP Service revenues include revenues from the Data Center
Connectivity Service.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Balance Sheets (Unaudited)
-------------------------------------------------
(As of December 31, 2008 and March 31, 2008)
--------------------------------------------------------------------
As of December 31, 2008 As of March 31, 2008
--------------------------------------------------------------------
Thousands Thousands % Thousands %
of U.S. of JPY of JPY
Dollars
--------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents 98,639 8,955,447 11,470,980
Short term
investments -- -- 12,181
Accounts
receivable,
net of allowance
for doubtful
accounts of
JPY 32,321
thousand and
JPY 24,677
thousand at
December 31,
2008 and March
31, 2008,
respectively 105,412 9,570,348 12,255,163
Inventories 17,819 1,617,815 1,184,160
Prepaid expenses 26,811 2,434,191 2,005,274
Other current
assets, net of
allowance for
doubtful accounts
of JPY 10,170
thousand and
JPY 7,470 thousand
at December 31,
2008 and March
31, 2008,
respectively 18,005 1,634,596 1,557,869
-------------------- ----------
Total current
assets 266,686 24,212,397 46.1 28,485,627 51.1
INVESTMENTS IN
AND ADVANCES
TO EQUITY
METHOD INVESTEES,
net of loan loss
valuation allowance
of JPY 16,701
thousand at December
31,2008 and March
31, 2008,
respectively 10,965 995,494 1.9 991,237 1.8
OTHER INVESTMENTS 22,363 2,030,317 3.8 2,363,770 4.2
PROPERTY AND EQUIPMENT,
net of accumulated
depreciation and
amortization of
JPY 16,611,464
thousand and JPY
14,029,785 thousand
at December 31,
2008 and March 31,
2008, respectively 152,059 13,805,470 26.2 11,740,210 21.1
GOODWILL 27,616 2,507,258 4.8 2,507,258 4.5
OTHER INTANGIBLE
ASSETS -- Net 36,773 3,338,633 6.4 3,400,117 6.1
GUARANTEE DEPOSITS 23,006 2,088,738 4.0 2,037,165 3.7
OTHER ASSETS, net
of allowance for
doubtful accounts
of JPY 70,285
thousand and
JPY 64,796 thousand
at December 31, 2008
and March 31, 2008,
respectively 39,432 3,579,988 6.8 4,177,162 7.5
-------------------- ----------
TOTAL 578,900 52,558,295 100.0 55,702,546 100.0
-------------------- ----------
---------------------------------------------------------------------
As of December 31, 2008 As of March 31, 2008
---------------------------------------------------------------------
Thousands Thousands % Thousands %
of U.S. of JPY of JPY
Dollars
---------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term
borrowings 85,913 7,800,000 9,150,000
Capital lease
obligations --
current portion 39,406 3,577,629 3,455,948
Accounts payable 61,354 5,570,313 7,895,238
Accrued expenses 13,231 1,201,241 994,138
Accrued retirement
and pension costs
-- current 126 11,436 11,436
Deferred income 20,767 1,885,443 1,552,896
Other current
liabilities 4,745 430,817 864,366
-------------------- ----------
Total current
liabilities 225,541 20,476,879 39.0 23,924,022 42.9
CAPITAL LEASE
OBLIGATIONS --
Noncurrent 59,112 5,366,787 10.2 4,738,359 8.5
ACCRUED RETIREMENT
AND PENSION COSTS
-- Noncurrent 14,285 1,296,904 2.5 1,101,951 2.0
OTHER NONCURRENT
LIABILITIES 11,030 1,001,377 1.9 663,399 1.2
-------------------- ----------
Total Liabilities 309,968 28,141,947 53.6 30,427,731 54.6
-------------------- ----------
MINORITY INTEREST 381 34,618 (0.0) 294,102 0.6
-------------------- ----------
COMMITMENTS AND
CONTINGENCIES
SHAREHOLDERS'
EQUITY:
Common-stock --
authorized,
377,600
shares;
issued and
outstanding,
206,478 shares
at December
31, 2008 and
March 31, 2008 185,415 16,833,847 32.0 16,833,847 30.2
Additional
paid-in capital 304,127 27,611,737 52.5 27,611,737 49.6
Accumulated deficit (216,038) (19,614,123) (37.3) (19,555,489) (35.1)
Accumulated other
comprehensive
income (loss) (1,643) (149,176) (0.2) 90,618 0.1
Treasury stock --
2,745 shares
held by
the company
at December 31,
2008 (3,310) (300,555) (0.6) -- --
-------------------- ----------
Total
shareholders'
equity 268,551 24,381,730 46.4 24,980,713 44.8
-------------------- ----------
TOTAL 578,900 52,558,295 100.0 55,702,546 100.0
-------------------- ----------
---------------------------------------------------------------------
(Note1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 90.79 which was the noon buying
rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal
Reserve Bank of New York prevailing as of December 31, 2008.
(Note2) The above presentation as of December 31, 2007 has been
changed to conform to the presentation as of December 31,
2008.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Income (Unaudited)
-------------------------------------------------------
(Nine Months ended December 31, 2008 and December 31, 2007)
--------------------------------------------------------------------
Nine Months Ended Nine Months Ended
Dec. 31, 2008 Dec. 31, 2007
--------------------------------------------------------------------
Thousands Thousands % of Thousands % of
of U.S. of JPY total of JPY total
Dollars revenues revenues
--------------------------------------------------------------------
REVENUES:
Connectivity
and
outsourcing
services:
Connectivity
(corporate
use) 106,905 9,705,875 9,004,721
Connectivity
(home use) 53,520 4,859,054 3,807,989
Outsourcing
services 125,299 11,375,933 10,042,896
----------------------- -----------
Total 285,724 25,940,862 22,855,606
Systems
integration:
Systems
Construction 110,299 10,014,019 12,641,135
Systems
Operation
and
Maintenance 155,205 14,091,056 11,572,362
----------------------- -----------
Total 265,504 24,105,075 24,213,497
Equipment
sales 7,994 725,801 1,280,303
ATM operation
business 190 17,265 --
----------------------- -----------
Total
revenues 559,412 50,789,003 100.0 48,349,406 100.0
----------------------- -----------
COST AND
EXPENSES:
Cost of
connectivity
and
outsourcing
services 240,681 21,851,462 19,005,171
Cost of
systems
integration 203,810 18,503,892 18,558,164
Cost of
equipment
sales 7,039 639,053 1,098,267
Cost of ATM
operation
business 2,870 260,587 --
----------------------- -----------
Total cost 454,400 41,254,994 81.3 38,661,602 80.0
Sales and
marketing 38,617 3,506,005 6.9 3,151,505 6.5
General and
administra-
tive 43,699 3,967,468 7.8 3,404,620 7.0
Research and
development 2,381 216,194 0.4 179,488 0.4
----------------------- -----------
Total cost
and expenses 539,097 48,944,661 96.4 45,397,215 93.9
----------------------- -----------
OPERATING
INCOME 20,315 1,844,342 3.6 2,952,191 6.1
----------------------- -----------
OTHER INCOME
(EXPENSE):
Interest
income 358 32,542 40,244
Interest
expense (3,416) (310,146) (329,047)
Foreign
exchange
gains (loss) (105) (9,529) 2,330
Net gains on
sales of
other
investments 195 17,680 217,957
Losses on
write-down
of other
investments (3,626) (329,216) (184,278)
Other -- net (39) (3,513) 15,409
----------------------- -----------
Other income
(expense)
-- net (6,633) (602,182) (1.2) (237,385) (0.5)
----------------------- -----------
INCOME FROM
OPERATIONS
BEFORE INCOME
TAX EXPENSE
(BENEFIT),
MINORITY
INTERESTS AND
EQUITY IN NET
INCOME
(LOSS) OF
EQUITY METHOD
INVESTEES 13,682 1,242,160 2.4 2,714,806 5.6
INCOME TAX
EXPENSE
(BENEFIT) 13,134 1,192,429 2.3 (1,413,102) (2.9)
MINORITY
INTERESTS IN
LOSSES OF
SUBSIDIARIES 2,858 259,484 0.5 51,606 0.1
EQUITY IN NET
INCOME (LOSS)
OF EQUITY
METHOD
INVESTEES 497 45,107 0.1 (91,523) (0.1)
----------------------- -----------
NET INCOME 3,903 354,322 0.7 4,087,991 8.5
--------------------------------------------------------------------
--------------------------------------------------------------------
Nine Months Nine Months
Ended Ended
December 31, 2008 December 31, 2007
--------------------------------------------------------------------
NET INCOME PER SHARE
BASIC WEIGHTED-AVERAGE
NUMBER OF SHARES
(shares) 206,023 206,161
DILUTED WEIGHTED-
AVERAGE NUMBER
OF SHARES (shares) 206,063 206,432
BASIC WEIGHTED-AVERAGE
NUMBER OF ADS
EQUIVALENTS (ADSs) 82,409,084 82,400,774
DILUTED WEIGHTED-
AVERAGE NUMBER
OF ADS EQUIVALENTS
(ADSs) 82,425,011 82,491,200
BASIC NET INCOME
PER SHARE
(U.S. Dollars
/ JPY / JPY) 18.94 1,719.82 19,829.12
DILUTED NET INCOME
PER SHARE
(U.S. Dollars
/ JPY / JPY) 18.94 1,719.48 19,803.09
BASIC NET INCOME
PER ADS EQUIVALENT
(U.S. Dollars /
JPY / JPY) 0.05 4.30 42.20
DILUTED NET INCOME
PER ADS EQUIVALENT
(U.S. Dollars /
JPY / JPY) 0.05 4.30 42.14
--------------------------------------------------------------------
(Note1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 90.79 which was the noon buying
rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the
Federal Reserve Bank of New York prevailing as of
December 31, 2008.
(Note2) The above presentation for the nine months ended December
31, 2007 has been changed to conform to the presentation
for the nine months ended December 31, 2008.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Cash Flows (Unaudited)
-----------------------------------------------------------
(Nine Months ended December 31, 2008 and December 31, 2007)
--------------------------------------------------------------------
Nine Months Nine Months
Ended Ended
Dec. 31, Dec. 31,
2008 2007
-----------------------------------
Thousands Thousands Thousands
of U.S. of JPY of JPY
Dollars
--------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income 3,903 354,322 4,087,991
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 43,547 3,953,643 3,481,394
Provision for retirement and
pension costs, less payments 2,147 194,953 128,371
Provision for (reversal of)
allowance for doubtful
accounts and advances 196 17,752 (7,069)
Loss on disposal of property
and equipment 1,804 163,772 15,682
Net gains on sales of other
investments (195) (17,680) (217,957)
Losses on write-down of other
investments 3,626 329,216 184,278
Foreign exchange losses 229 20,828 3,955
Equity in net loss (income)
of equity method investees
(net of dividend) (162) (14,727) 91,523
Minority interests in losses
of subsidiaries (2,858) (259,484) (51,606)
Deferred income tax expense
(benefit) 10,708 972,197 (1,790,391)
Others 22 1,972 --
Changes in operating assets and
liabilities net of effects
from acquisition of business
and a company:
Decrease (increase) in
accounts receivable 29,257 2,656,278 (2,121,457)
Increase in inventories,
prepaid expenses and other
current and noncurrent
assets (13,755) (1,248,854) (1,351,187)
Decrease in accounts payable (23,375) (2,122,235) (1,625,227)
Increase (decrease) in
accrued expenses, other
current and noncurrent
liabilities 3,843 348,914 (373,793)
--------------------------------------------------------------------
Net cash provided by
operating activities 58,937 5,350,867 454,507
--------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property and
equipment (29,332) (2,663,014) (1,614,994)
Purchase of available-for-sale
securities (1,101) (99,992) (517,275)
Purchase of short-term and
other investments (1,380) (125,264) (231,974)
Investment in equity method
investee -- -- (250,389)
Purchases of subsidiary stock
from minority shareholders -- -- (1,975,123)
Proceeds from sales of
available-for-sale securities -- -- 616,920
Proceeds from sales and
redemption of short-term and
other investments 539 48,882 20,579
Acquisition of a newly
controlled company, net of
cash acquired -- -- (788,608)
Payments of guarantee deposits (913) (82,904) (287,720)
Refund of guarantee deposits 301 27,349 8,396
Payments for refundable
insurance policies (424) (38,504) (36,456)
Refund from insurance policies 81 7,382 --
Other (1) (53) (6,698)
--------------------------------------------------------------------
Net cash used in investing
activities (32,230) (2,926,118) (5,063,342)
--------------------------------------------------------------------
--------------------------------------------------------------------
Nine Months Nine Months
Ended Ended
Dec. 31, Dec. 31,
2008 2007
-----------------------------------
Thousands Thousands Thousands
of U.S. of JPY of JPY
Dollars
--------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of
short-term borrowings with
initial maturities over
three months 115,651 10,500,000 15,900,000
Repayments of short-term
borrowings with initial
maturities over three months
and long-term borrowings (127,217)(11,550,000)(15,540,000)
Principal payments under
capital leases (31,366) (2,847,726) (2,564,142)
Net increase (decrease) in
short-term borrowings with
initial maturities less than
three months (3,304) (300,000) 2,950,000
Dividends paid (4,548) (412,956) (461,309)
Payments for acquisition of
treasury stock (3,310) (300,555) --
--------------------------------------------------------------------
Net cash provided by (used
in) financing activities (54,094) (4,911,237) 284,549
--------------------------------------------------------------------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS (320) (29,045) (15,811)
NET DECREASE IN CASH AND CASH
EQUIVALENTS (27,707) (2,515,533) (4,340,097)
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 126,346 11,470,980 13,554,544
--------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD 98,639 8,955,447 9,214,447
--------------------------------------------------------------------
--------------------------------------------------------------------
ADDITIONAL CASH FLOW INFORMATION:
Interest paid 3,411 309,719 329,316
Income tax paid 8,533 774,751 933,930
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Acquisition of assets by
entering into capital leases 40,592 3,685,356 2,917,146
Purchase of minority interests
of consolidated subsidiaries
through share exchanges -- -- 1,012,520
ACQUISITION OF BUSINESS AND A
COMPANY:
Assets acquired -- -- 2,319,277
Cash paid -- -- (1,715,450)
Liabilities assumed -- -- 367,989
Minority interests assumed -- -- 235,838
--------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 90.79 which was the noon buying
rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal
Reserve Bank of New York prevailing as of December 31, 2008.
(Note 2) The above presentation for the nine months December 31,
2007 has been changed to conform to the presentation for
the nine months ended December 31, 2008.
3rd Quarter FY2008 Consolidated Financial Results (3 months)
The following tables are highlight data of 3rd Quarter FY2008 consolidated financial results (unaudited, from October 1, 2008 to December 31, 2008).
Operating Results Summary
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
Total Revenues: 17,535 18,359 (4.5%)
---------------------------------------------------------------------
Connectivity and
Outsourcing Services 8,940 8,049 11.1%
---------------------------------------------------------------------
SI 8,388 9,911 (15.4%)
---------------------------------------------------------------------
Equipment Sales 201 399 (49.4%)
---------------------------------------------------------------------
ATM Operation Business 6 -- --
---------------------------------------------------------------------
Cost of Revenues: 14,170 14,851 (4.6%)
---------------------------------------------------------------------
Connectivity and
Outsourcing Services 7,510 6,738 11.5%
---------------------------------------------------------------------
SI 6,326 7,771 (18.6%)
---------------------------------------------------------------------
Equipment Sales 174 342 (49.0%)
---------------------------------------------------------------------
ATM Operation Business 160 -- --
---------------------------------------------------------------------
SG&A Expenses and R&D 2,526 2,372 6.5%
---------------------------------------------------------------------
Operating Income 839 1,136 (26.2%)
---------------------------------------------------------------------
Income before Income
Tax Expense 476 1,017 (53.2%)
---------------------------------------------------------------------
Net Income (Loss) (13) 611 (10.2%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services Revenues Breakdown and Cost
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
Connectivity and
Outsourcing Services
Revenues 8,940 8,049 11.1%
---------------------------------------------------------------------
Connectivity Service
(Corporate Use) 3,378 3,023 11.7%
---------------------------------------------------------------------
IP Service 2,358 2,239 5.3%
---------------------------------------------------------------------
IIJ FiberAccess/F
and IIJ DSL/F 725 680 6.6%
---------------------------------------------------------------------
Others 295 104 183.4%
---------------------------------------------------------------------
Connectivity Service
(Home Use) 1,648 1,513 8.9%
---------------------------------------------------------------------
Under IIJ Brand 251 271 (7.7%)
---------------------------------------------------------------------
hi-ho 1,257 1,118 12.4%
---------------------------------------------------------------------
OEM 140 124 13.7%
---------------------------------------------------------------------
Outsourcing Services 3,914 3,513 11.4%
---------------------------------------------------------------------
Cost of Connectivity
and Outsourcing Services 7,510 6,738 11.5%
---------------------------------------------------------------------
Backbone Cost (included
in the cost of
Connectivity and
Outsourcing Service) 930 905 2.7%
---------------------------------------------------------------------
Connectivity and Outsourcing
Services Gross Margin Ratio 16.0% 16.3% --
---------------------------------------------------------------------
SI Revenue Breakdown and Cost
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
SI Revenues 8,388 9,911 (15.4%)
---------------------------------------------------------------------
Systems Construction 3,724 5,920 (37.1%)
---------------------------------------------------------------------
Systems Operation
and Maintenance 4,664 3,991 16.8%
---------------------------------------------------------------------
Cost of SI 6,326 7,771 (18.6%)
---------------------------------------------------------------------
SI Gross Margin Ratio 24.6% 21.6% --
---------------------------------------------------------------------
Equipment Sales Revenue and Cost
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
Equipment Sales Revenues 201 399 (49.4%)
---------------------------------------------------------------------
Cost of Equipment Sales 174 342 (49.0%)
---------------------------------------------------------------------
Equipment Sales Gross
Margin Ratio 13.6% 14.3% --
---------------------------------------------------------------------
ATM Operation Business Revenue and Cost
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
ATM Operation Business
Revenues 6 -- --
---------------------------------------------------------------------
Cost of ATM
Operation Business 160 -- --
---------------------------------------------------------------------
Other Financial Statistics
---------------------------------------------------------------------
3Q08 3Q07 YoY
Change
---------------------------------------------------------------------
JPY millions JPY millions
Adjusted EBITDA 2,194 2,379 (7.8%)
---------------------------------------------------------------------
CAPEX, including
capital leases 1,832 1,242 47.5%
---------------------------------------------------------------------
Depreciation and
amortization 1,355 1,243 9.0%
---------------------------------------------------------------------
Reconciliation of Non-GAAP Financial Measures
The following table summarizes the reconciliation of adjusted EBITDA to net income in our consolidated statements of income that are prepared in accordance with U.S. GAAP.
Adjusted EBITDA
---------------------------------------------------------------------
3Q08 3Q07
---------------------------------------------------------------------
JPY millions JPY millions
Adjusted EBITDA 2,194 2,379
---------------------------------------------------------------------
Depreciation and
Amortization (1,355) (1,243)
---------------------------------------------------------------------
Operating Income 839 1,136
---------------------------------------------------------------------
Other Income (Expense) (363) (119)
---------------------------------------------------------------------
Income Tax Expense 653 392
---------------------------------------------------------------------
Minority Interests
in Losses of Subsidiaries 120 27
---------------------------------------------------------------------
Equity in Net Income
(Loss) of Equity Method
Investees 44 (42)
---------------------------------------------------------------------
Net Income (Loss) (13) 611
---------------------------------------------------------------------
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
---------------------------------------------------------------------
3Q08 3Q07
---------------------------------------------------------------------
JPY millions JPY millions
CAPEX, including capital
leases 1,832 1,242
---------------------------------------------------------------------
Acquisition of Assets
by Entering into
Capital Leases 917 619
---------------------------------------------------------------------
Purchase of Property
and Equipment 915 623
---------------------------------------------------------------------
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Income (Unaudited)
-------------------------------------------------------
(Three Months ended December 31, 2008 and December 31, 2007)
--------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
-----------------------------------------------
Thousands Thousands % of Thousands % of
of U.S. of total of total
Dollars JPY revenues JPY revenues
--------------------------------------------------------------------
REVENUES:
Connectivity and
outsourcing
services:
Connectivity
(corporate use) 37,208 3,378,154 3,023,437
Connectivity
(home use) 18,150 1,647,803 1,513,141
Outsourcing
services 43,107 3,913,676 3,512,322
-------- ---------- ----------
Total 98,465 8,939,633 8,048,900
Systems integration:
Systems
Construction 41,019 3,724,073 5,920,223
Systems Operation
and Maintenance 51,365 4,663,447 3,991,086
-------- ---------- ----------
Total 92,384 8,387,520 9,911,309
Equipment sales 2,222 201,714 398,953
ATM operation
business 69 6,295 --
-------- ---------- ----------
Total revenues 193,140 17,535,162 100.0 18,359,162 100.0
-------- ---------- ----------
COST AND EXPENSES:
Cost of connectivity
and outsourcing
services 82,719 7,510,069 6,737,501
Cost of systems
integration 69,673 6,325,592 7,771,305
Cost of equipment
sales 1,919 174,212 341,881
Cost of ATM
operation business 1,769 160,603 --
-------- ---------- ----------
Total cost 156,080 14,170,476 80.8 14,850,687 80.9
Sales and marketing 12,721 1,154,972 6.6 1,124,352 6.1
General and
administrative 14,300 1,298,297 7.4 1,184,997 6.5
Research and
development 799 72,517 0.4 63,043 0.3
-------- ---------- ----------
Total cost and
expenses 183,900 16,696,262 95.2 17,223,079 93.8
-------- ---------- ----------
OPERATING INCOME 9,240 838,900 4.8 1,136,083 6.2
-------- ---------- ----------
OTHER INCOME
(EXPENSE):
Interest income 69 6,299 8,689
Interest expense (1,143) (103,739) (113,769)
Foreign exchange
gains (loss) (149) (13,527) 1,407
Gains on sales of
other investments 195 17,680 4,427
Losses on write-down
of other
investments (2,953) (268,124) (20,222)
Other--net (15) (1,379) 707
-------- ---------- ----------
Other income
(expense) -- net (3,996) (362,790) (2.1) (118,761) (0.7)
-------- ---------- ----------
INCOME FROM
OPERATIONS BEFORE
INCOME TAX EXPENSE,
MINORITY INTERESTS
TAX EXPENSE,
MINORITY INTERESTS
AND EQUITY IN NET
INCOME (LOSS) OF
EQUITY METHOD
INVESTEES 5,244 476,110 2.7 1,017,322 5.5
INCOME TAX EXPENSE 7,196 653,305 3.7 391,731 2.1
MINORITY INTERESTS
IN LOSSES OF
SUBSIDIARIES 1,318 119,691 0.7 27,394 0.1
EQUITY IN NET INCOME
(LOSS) OF EQUITY
METHOD INVESTEES 488 44,272 0.2 (42,394) (0.2)
-------- ---------- ----------
NET INCOME (LOSS) (146) (13,232) (0.1) 610,591 3.3
--------------------------------------------------------------------
--------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
--------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE
BASIC WEIGHTED-AVERAGE
NUMBER OF SHARES (shares) 205,117 206,478
DILUTED WEIGHTED-AVERAGE
NUMBER OF SHARES (shares) 205,117 206,839
BASIC WEIGHTED-AVERAGE
NUMBER OF ADS
EQUIVALENTS (ADSs) 82,046,830 82,591,200
DILUTED WEIGHTED-AVERAGE
NUMBER OF ADS
EQUIVALENTS (ADSs) 82,046,830 82,735,483
BASIC NET INCOME (LOSS)
PER SHARE (U.S.
Dollars/JPY/JPY) -0.71 (64.51) 2,957.17
DILUTED NET INCOME
(LOSS) PER SHARE
(U.S. Dollars/JPY/JPY) -0.71 (64.51) 2,952.01
BASIC NET INCOME (LOSS) PER
ADS EQUIVALENT (U.S.
Dollars/JPY/JPY) 0.00 -0.16 7.39
DILUTED NET INCOME (LOSS)
PER ADS EQUIVALENT (U.S.
Dollars/JPY/JPY) 0.00 -0.16 7.38
--------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 90.79 which was the noon buying
rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal
Reserve Bank of New York prevailing as of December 31, 2008.
(Note 2) The above presentation for the three months December 31,
2007 has been changed to conform to the presentation for
the three months ended December 31, 2008.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Cash Flows (Unaudited)
-----------------------------------------------------------
(Three Months ended December 31, 2008 and December 31, 2007)
--------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
-------------------------------------------------
Thousands of Thousands of Thousands of
U.S. Dollars JPY JPY
--------------------------------------------------------------------
OPERATING
ACTIVITIES:
Net income (loss) (146) (13,232) 610,591
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities:
Depreciation and
amortization 14,919 1,354,538 1,242,764
Provision for
retirement and
pension costs, 721 65,470 43,648
less payments
Provision for
(reversal of)
allowance for
doubtful
accounts and
advances 103 9,361 (2,145)
Loss on disposal
of property and
equipment 1,410 128,044 4,158
Gains on sales of
other
investments (195) (17,680) (4,427)
Losses on write-
down of other
investments 2,953 268,124 20,222
Foreign exchange
losses 132 11,961 558
Equity in net
loss (income) of
equity method
investees (488) (44,272) 42,394
Minority
interests in
losses of
subsidiaries (1,318) (119,691) (27,394)
Deferred income
tax expense 6,545 594,214 179,046
Others 3 265 --
Changes in
operating assets
and liabilities
net of effects
from acquisition
of business and a
company:
Decrease
(increase) in
accounts
receivable 4,411 400,457 (2,697,964)
Decrease
(increase) in
inventories,
prepaid expenses (9,222) (837,254) 287,832
and other
current and
noncurrent
assets
Increase
(decrease) in
accounts payable (9,739) (884,216) 558,649
Increase in
accrued
expenses, other
current and
noncurrent
liabilities 4,739 430,190 79,867
--------------------------------------------------------------------
Net cash
provided by
operating
activities 14,828 1,346,279 337,799
--------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of
property and
equipment (10,079) (915,042) (623,435)
Purchase of
available-for-
sale securities -- -- (3,380)
Purchase of short-
term and other
investments (66) (6,001) (200,152)
Acquisition of a
newly controlled
company, net of -- -- 123,842
cash acquired
Proceeds from
sales of
available-for-
sale securities -- -- 7,808
Proceeds from
sales and
redemption of
short-term and 406 36,873 13,828
other investments
Payments of
guarantee
deposits (46) (4,186) (21,870)
Refund of
guarantee
deposits 104 9,467 5,035
Payments for
refundable
insurance
policies (142) (12,890) (13,017)
Other 1 51 (8)
--------------------------------------------------------------------
Net cash used in
investing
activities (9,822) (891,728) (711,349)
--------------------------------------------------------------------
--------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
-------------------------------------------------
Thousands of Thousands of Thousands of
U.S. Dollars JPY JPY
--------------------------------------------------------------------
FINANCING
ACTIVITIES:
Proceeds from
issuance of
short-term
borrowings with
initial
maturities over
three months 56,174 5,100,000 5,500,000
Repayments of
short-term
borrowings with
initial
maturities over
three months and
long-term
borrowings (62,507) (5,675,000) (9,200,000)
Principal payments
under capital
leases (12,159) (1,103,879) (906,201)
Net Increase in
short-term
borrowings with
initial
maturities less
than three
months 15,145 1,375,000 2,700,000
Dividends paid (2,274) (206,478) (154,859)
Payments for
acquisition of
treasury stock (3,310) (300,555) --
--------------------------------------------------------------------
Net cash used in
financing
activities (8,931) (810,912) (2,061,060)
--------------------------------------------------------------------
EFFECT OF
EXCHANGE RATE
CHANGES ON CASH
AND CASH
EQUIVALENTS (82) (7,427) (20,819)
NET DECREASE IN
CASH AND CASH
EQUIVALENTS (4,007) (363,788) (2,455,429)
CASH AND CASH
EQUIVALENTS,
BEGINNING OF THE
PERIOD 102,646 9,319,235 11,669,876
--------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
END OF THE
PERIOD 98,639 8,955,447 9,214,447
--------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 90.79 which was the noon buying
rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal
Reserve Bank of New York prevailing as of December 31, 2008.
(Note 2) The above presentation for the three months December 31,
2007 has been changed to conform to the presentation for
the three months ended December 31, 2008.
Note: The following information is provided to disclose IIJ's financial results (unaudited) for the nine months ended December 31, 2008 in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Nine Months Ended
December 31, 2008
(Under accounting principles generally accepted in the
United States ("U.S. GAAP"))
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine Months Ended
December 31, 2008 (April 1, 2008 to December 31, 2008)
(1) Consolidated Results of Operations (% shown is YoY change)
---------------------------------------------------------------------
Total Operating Income Net
Revenues Income before Income Income
Tax Expense
(Benefit)
---------------------------------------------------------------------
JPY JPY JPY JPY
millions % millions % millions % millions %
Nine months
ended
December
31, 2008 50,789 -- 1,844 -- 1,242 -- 354 --
Nine months
ended
December
31, 2007 48,349 20.8 2,952 25.3 2,715 (27.6) 4,088 (4.0)
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic Net Diluted Net
Income per Share Income per Share
---------------------------------------------------------------------
JPY JPY
Nine months ended 1,719.82 1,719.48
December 31, 2008
Nine months ended 19,829.12 19,803.09
December 31, 2007
---------------------------------------------------------------------
(Note) In this document, income before income tax expense
(benefit) represents income from operations before income
tax expense (benefit), minority interests and equity in net
loss of equity method investees in IIJ's consolidated
financial statements for the nine months ended December 31,
2008.
(2) Consolidated Financial Position
---------------------------------------------------------------------
Total Shareholders' Shareholders' Shareholders'
Assets Equity Equity Equity
as a percentage per share
of Total Assets
---------------------------------------------------------------------
JPY millions JPY millions % JPY
Nine months
ended
December
31, 2008 52,558 24,382 46.4 119,674.92
Fiscal year
ended March
31, 2008 55,703 24,981 44.8 120,984.87
---------------------------------------------------------------------
(Note) Shareholders' equity, shareholders' equity as a percentage
of total assets and shareholders' equity per share are
calculated and presented in accordance with U.S. GAAP.
2. Dividends
---------------------------------------------------------------------
Dividend per Share
---------------------------------------------------------------------
End of the End of the End of the Year-end Total
first second third
quarter quarter quarter
---------------------------------------------------------------------
Yen Yen Yen Yen Yen
Fiscal Year
Ended March
31, 2008 -- 750.00 -- 1,000.00 1,750.00
---------------------------------------------------------------------
Fiscal Year
Ending March
31, 2009 -- 1,000.00 -- -- --
---------------------------------------------------------------------
Fiscal Year
Ending March
31, 2009
(Target) -- -- -- 1,000.00 2,000.00
---------------------------------------------------------------------
(Note) Scheduled revision to dividends during the nine months
ended December 31, 2008: None
3. Target of Consolidated Financial Results for the Fiscal Year
Ending March 31, 2009
(April 1, 2008 through March 31, 2009) (% shown is YoY change)
---------------------------------------------------------------------
Total Operating Income Net Basic
Revenues Income before Expense Income Net
Income Tax Income
(Benefit) per
Share
---------------------------------------------------------------------
JPY % JPY % JPY % JPY % JPY
millions millions millions millions
Fiscal
year
ending
March
31,
2009 69,300 3.7 2,800 (41.2) 1,900 (56.4) 1,300 (74.9) 6,336.36
---------------------------------------------------------------------
(Note 1) Changes in target for year-end consolidated financial
results for the fiscal year ending March 31, 2009: Yes
(Note 2) Basic net income per common share is computed by dividing
net income by 205,165 shares (Forecasted weighted-average
number of shares of common stock outstanding during FY2008.)
4. Others
(1) Change of Condition in Consolidated Subsidiaries
during the Nine Months Ended December 31, 2008 (Change of
Condition in Specific Consolidated Subsidiaries with a
Change of Scope of Consolidation): None
(2) Application of Simplified Accounting Method or Specific
Accounting Principles for quarterly consolidated financial
statements : None
(3) Changes in Significant Accounting and Reporting Policies for
Consolidated Financial Statements
1) Changes duet to the revision of accounting standards: Yes
2) Others: Yes
(4) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding:
As of December 31, 2008: 206,478 shares
As of March 31, 2008: 206,478 shares
2) The number of treasury stock:
As of December 31, 2008: 2,745 shares
As of March 31, 2008: 0 shares
3) The weighted average number of shares outstanding:
As of December 31, 2008: 206,023 shares
As of December 31, 2007: 206,161 shares
Contact:
Internet Initiative Japan Inc.
+81-3-5259-6500
ir@iij.ad.jp
http://www.iij.ad.jp/
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