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IIJ Announces First Six Months Financial Results for the Fiscal Year Ending March 31, 2010
(GlobeNewswire Via Acquire Media NewsEdge)
TOKYO, Nov. 13, 2009 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (Nasdaq:IIJI) (TSE:3774) ("IIJ") today announced its consolidated financial results for the first six months of Fiscal Year Ending March 31, 2010 (from April 1 to September 30, 2009, "1H09").(1)
1H09 Financial Results
Actual Results Target Announced
-------------- ----------------
Revenues JPY32,275 million ($360.7 million) JPY33,500 million
Operating
Income JPY1,166 million ($13.0 million) JPY800 million
Net Income
attributable
to IIJ JPY 715 million ($8.0 million) JPY300 million
* Revenue was JPY32,275 million, down 2.9% YoY. While recurring
revenues increased by 5.1% YoY, systems construction revenues
decreased by 34.1% YoY.
* Operating income was JPY1,166 million, up 16.0% YoY as a result of
continuous cost control. Operating loss related to our new ATM
operation business was JPY467 million (JPY227 million in 1H08).
* Net income attributable to IIJ(2) was JPY715 million, up 94.6% YoY.
* Cash dividend for FY2009 interim period of IIJ's common stock:
JPY1,000 per share. The same amount for FY2008 interim period
(IIJ's 1 common stock is equivalent to 400 ADSs).
(1) Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP. All
financial figures are unaudited and consolidated. The translation
of Japanese yen into U.S. dollars is solely for the convenience
of readers outside of Japan. The rate used for the translation
was JPY89.49 per US$1.00, which was the noon buying rate on
September 30, 2009.
(2) Effective April 1, 2009, we have adopted
ASC810, "Consolidations". For details, please refer to page 6 in
this presentation material.
Overview of 1H FY2009 Financial Results and Business Outlook
"We exceeded our profit target announced on May 15, 2009. Our continued effort in tight cost control resulted in the good outcome in profit despite the weakness in revenue growth," said Koichi Suzuki, President and CEO of IIJ.
"During the first half of FY2009, companies continued to withhold their investments and kept a tight grip on spending. Our business environment were tough and pressure from clients to reduce costs were severe. In such economic situation, our connectivity and outsourcing service revenues increased by 7.7% YoY. Demands for over 1Gbps connectivity service, mobile data communication service and outsourcing services lead to the overall growth. We believe that outsourcing service should continue to grow as the trend from owning to renting would continue. We also believe there will be new demands for cloud computing. From November 2009, we introduced our cloud computing service, "IIJ GIO" which is doing well in pre-sales.
"As for systems construction, revenues were down 34.1% YoY. However, the situation such as orders received are improving compared to the latter half of FY2008. The number of projects, despite each project being smaller in sizes, are also increasing. When the economic situation improves and IT investments return, we anticipate our SI revenues to increase, although it is still difficult to say when the IT investment will return.
"For our new ATM operation business operated by our consolidated subsidiary Trust Networks Inc. ("Trust Networks"), new ATMs were placed in the Kansai area from April 2009 and from early November 2009, they begun placing ATMs in the Kanto area, as planned. The ATM operation business are starting to pick up.
"For the latter half of FY2009, while revenue growth is expected to be weak and a drastic economic recovery is unlikely to occur, we will continue to focus on tight cost control toward FY2010. For mid-term growth, we will continue to introduce new service which we believe will result in strengthening the basis of our business. During the first half of FY2009, we have launched new services such as "IIJ GIO" and "LaIT". We have also introduced additional features for our services such as IIJ Direct Access and encryption features for email services and many more. We hope that through introducing new services and new developments, we will also contribute to the innovation of the internet.
1H FY2009 Financial Results Summary
Operating Results Summary
---------------------------------------------------------------------
YoY %
1H08 1H09 change
---------------------------------------------------------------------
JPY JPY
millions millions
Total Revenues 33,254 32,275 (2.9%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services 17,001 18,304 7.7%
---------------------------------------------------------------------
SI 15,718 13,624 (13.3%)
---------------------------------------------------------------------
Equipment Sales 524 309 (40.9%)
---------------------------------------------------------------------
ATM Operation Business 11 38 248.0%
---------------------------------------------------------------------
Total Costs 27,085 26,037 (3.9%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services 14,341 15,311 6.8%
---------------------------------------------------------------------
SI 12,178 10,050 (17.5%)
---------------------------------------------------------------------
Equipment Sales 466 269 (42.1%)
---------------------------------------------------------------------
ATM Operation Business 100 407 306.6%
---------------------------------------------------------------------
SG&A Expenses and R&D 5,164 5,072 (1.8%)
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Operating Income 1,005 1,166 16.0%
---------------------------------------------------------------------
Income before Income Tax Expense 766 1,026 33.9%
---------------------------------------------------------------------
Net income attributable to IIJ 368 715 94.6%
---------------------------------------------------------------------
Segment Summary
---------------------------------------------------------------------
1H08 1H09
---------------------------------------------------------------------
JPY millions JPY millions
Net Revenues 33,254 32,275
---------------------------------------------------------------------
Network services and SI business 33,323 32,443
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ATM operation business 11 38
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Elimination 80 206
---------------------------------------------------------------------
Operating Income (Loss) 1,005 1,166
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Network service and SI business 1,253 1,644
---------------------------------------------------------------------
ATM operation business (234) (459)
---------------------------------------------------------------------
Elimination 14 19
---------------------------------------------------------------------
We have omitted segment analysis because most of our revenues are dominated by Network services and systems integration business.
1H FY2009 Results of Operation
Revenues
Revenues were JPY32,275 million (down 2.9% YoY).
Connectivity and Outsourcing Services revenue were JPY18,304 million in 1H09 (up 7.7% YoY). Connectivity service increased by 7.9% YoY to JPY10,297 million and outsourcing services increased by 7.3% YoY to JPY8,006 million. The increase in connectivity service for corporate use was attributable to the growth in IIJ Mobile service. Over 1Gbps IP connectivity services also steadily increased, reaching 106 contracts as of September 30, 2009 (up 30 contracts YoY). For connectivity service for home use, the shift from ADSL to optical fiber service which charge higher monthly fees has contributed to the increase in revenue as well as the increase in mobile data communication service for home use. Outsourcing services steadily increased YoY as email, network related and security related services continued its growth.
SI revenues were JPY13,624 million in 1H09 (down 13.3% YoY). Systems construction revenues were JPY4,148 million (down 34.1% YoY) heavily affected by the weak Japanese economy. Systems operation and maintenance, which are recurring revenues, were JPY9,476 million (up 0.5% YoY). Order backlog for SI and equipment sales was JPY16,243 million (down 6.1% YoY) as of September 30, 2009. The order backlog for systems construction including equipment sales and systems operation and maintenance was JPY4,429 million (down 19.5% YoY) and JPY11,814 million (up 0.2% YoY) as of September 30, 2009, respectively.
Equipment sales revenues were JPY309 million (down 40.9% YoY).
ATM Operation Business revenues were JPY38 million (up 248.0% YoY). Trust Networks placed 34 ATMs in the Kansai area during 2Q09 and operates 60 ATMs as of September 30, 2009 (10 ATMs as of March 31, 2009).
Number of Contracts for Connectivity Services
---------------------------------------------------------------------
Sep 30, Sep 30, YoY
2008 2009 Change
---------------------------------------------------------------------
Connectivity Services (Corporate
Use) 40,611 57,200 16,589
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IP Service (-99Mbps) 895 926 31
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IP Service (100Mbps-999Mbps) 213 228 15
---------------------------------------------------------------------
IP Service (1Gbps-) 76 106 30
---------------------------------------------------------------------
IIJ Data Center Connectivity
Service 299 295 (4)
---------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 25,101 26,865 1,764
---------------------------------------------------------------------
IIJ Mobile Service(3) 12,373 27,327 14,954
---------------------------------------------------------------------
Others 1,654 1,453 (201)
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Connectivity Services (Home Use) 457,289 414,154 (43,135)
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Under IIJ Brand 48,287 48,263 (24)
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hi-ho 186,396 173,410 (12,986)
---------------------------------------------------------------------
OEM 222,606 192,481 (30,125)
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Total Contracted Bandwidth 449.1 Gbps 619.8 Gbps 170.7 Gbps
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Connectivity and Outsourcing Services Revenues Breakdown
---------------------------------------------------------------------
1H08 1H09 YoY %
change
---------------------------------------------------------------------
JPY JPY
millions millions
Connectivity Service (Corporate Use) 6,328 6,888 8.8%
---------------------------------------------------------------------
IP Service(4) 4,565 4,648 1.8%
---------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 1,434 1,456 1.5%
---------------------------------------------------------------------
IIJ Mobile Service(5) 151 634 318.5%
---------------------------------------------------------------------
Others 178 150 (15.4%)
---------------------------------------------------------------------
Connectivity Service (Home Use) 3,211 3,410 6.2%
---------------------------------------------------------------------
Under IIJ Brand 512 513 0.3%
---------------------------------------------------------------------
hi-ho 2,425 2,612 7.7%
---------------------------------------------------------------------
OEM 274 285 3.7%
---------------------------------------------------------------------
Outsourcing Services 7,462 8,006 7.3%
---------------------------------------------------------------------
Total Connectivity and Outsourcing
Services 17,001 18,304 7.7%
---------------------------------------------------------------------
(3) Contracts for mobile data communication service for home use is
included in Connectivity service (home use).
(4) IP Service revenues include revenues from the Data Center
Connectivity Service.
(5) Revenue from mobile data communication service for home use is
included in Connectivity service (home use).
Cost and expense
Cost of revenues was JPY26,037 million (down 3.9% YoY).
Cost of Connectivity and Outsourcing Services revenue was JPY15,311 million (up 6.8% YoY) largely affected by the increase in network operation related and circuit related costs. Circuit related costs increased corresponding with the growth of mobile data communication services. Backbone cost was JPY1,830 million, down 0.9% YoY. Gross margin was JPY2,992 million, up 12.5% YoY and gross margin ratio was 16.3%.
Cost of SI revenues was JPY10,050 million (down 17.5% YoY) largely due to the decrease in outsourcing related costs as a result of reduction of full-time outsourcing personnel. Purchasing costs also decreased along with the decrease in systems construction revenues. Gross margin was JPY3,574 million, up 1.0% YoY and gross margin ratio was 26.2%.
Cost of Equipment Sales revenues was JPY269 million (down 42.1% YoY).
Cost of ATM Operation Business revenues was JPY407 million compared to JPY100 million in 1H08 as the ATM operation business has moved on to business start up.
SG&A Expenses and R&D
Sales and marketing expenses were JPY2,594 million (up 10.3% YoY) largely due to the increase in disposal of intangible assets. There were also increase in personnel related expenses.
General and administrative expenses were JPY2,315 million (down 13.2% YoY) mainly due to the decrease in outsourcing related expenses and general expenses as a result of tight cost control.
Research and development expenses were JPY163 million (up 13.5% YoY) as expenses related to IIJ Innovation Institute Inc. increased.
Operating income
Operating income increased by 16.0% YoY to JPY1,166 million. While operating loss related to ATM operation business increased, gross margin for connectivity and outsourcing services increased and general and administrative expenses decreased.
Other income (expenses)
Other income (expenses) was net other expenses of JPY140 million compared to net other expenses of JPY239 million in 1H08. There were decrease in interest expense and losses on write-down of other investments.
Income before income tax expenses
Income before income tax expenses was JPY1,026 million, an increase of 33.9% YoY.
Net Income
Net income was JPY540 million compared to JPY228 million in 1H08.
Income tax expense was JPY528 million compared to JPY539 million in 1H08. Deferred tax expenses was JPY373 million compared to expenses of JPY378 million in 1H08.
Equity in net income of equity method investees was JPY42 million compared to JPY1 million in 1H08.
Net income attributable to IIJ
Net income attributable to IIJ was JPY715 million, up 94.6% YoY.
Net losses attributable to noncontrolling interests was JPY175 million compared to JPY140 million in 1H08, both related to GDX Japan Inc. and Trust Networks Inc.
1H FY2009 Financial Condition
Balance Sheets
As of September 30, 2009, the balance of total assets was JPY51,389 million, a decrease of JPY912 million from the balance as of March 31, 2009.
For current assets, as compared to each of the respective balances as of March 31, 2009, accounts receivable decreased by JPY1,530 million and prepaid expenses increased by JPY442 million mainly for maintenance expenses related to SI projects increased. As for current liabilities, as compared to each of the respective balances as of March 31, 2009, short-term borrowings decreased by JPY150 million, accounts payable decreased by JPY679 million and deferred income increased by JPY232 million. Noncurrent capital lease obligations decreased by JPY852 million from the balances as of March 31, 2009.
As of September 30, 2009, we had net deferred tax asset (current) of JPY424 million and net deferred tax asset (non-current) of JPY2,240 million, respectively.
The balance of other investments as of September 30, 2009 was JPY2,171 million, an increase of JPY257 million from the balance as of March 31, 2009. The breakdown of other investments were JPY809 million in available-for-sale securities, JPY998 million in nonmarketable equity securities and JPY364 million in other.
As of September 30, 2009, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY5,393 million and the balance of amortized intangible assets were JPY250 million. The breakdown of non-amortized intangible assets were JPY2,639 million in goodwill, JPY2,562 million in customer relationships and JPY192 million in trademark. The breakdown of amortized intangible assets were JPY138 million in customer relationships and JPY112 million in licenses.
Total IIJ shareholders' equity as of September 30, 2009 was JPY25,641 million, an increase of JPY471 million from the balance as of March 31, 2009. IIJ Shareholders' equity ratio (IIJ shareholders' equity/total assets) as of September 30, 2009 was 49.9%, up 1.8% compared to March 31, 2009.
Cash Flows
Cash and cash equivalents as of September 30, 2009 were JPY10,789 million compared to JPY9,319 million as of September 30, 2008.
Net cash provided by operating activities in 1H09 was JPY4,792 million, compared to net cash provided by operating activities of JPY4,005 million in 1H08. While operating income increased due to the increase in gross margin from connectivity and outsourcing service, there were changes in operating assets and liabilities during 1H09, mainly resulting from the decrease in accounts receivable of JPY1,535 million (decrease of JPY2,256 million in 1H08), increase in inventories and prepaid expenses of JPY237 million (increase of JPY412 million in 1H08) and decrease in accounts payable related to on-going SI projects of JPY515 million (decrease of JPY1,238 million in 1H08).
Net cash used in investing activities in 1H09 was JPY2,105 million, compared to net cash used in investing activities of JPY2,034 million in 1H08, mainly due to payment of JPY1,949 million for the purchase of property and equipment (JPY1,748 million in 1H08) and purchase of short-term and other investments of JPY200 million.
Net cash used in financing activities in 1H09 was JPY2,063 million, compared to net cash used in financing activities of JPY4,100 million in 1H08, mainly due to principal payments under capital leases of JPY1,710 million (JPY1,744 million in 1H08), net repayment of short-term borrowings with initial maturities less than three months of JPY150 million (net repayment of JPY2,150 million in 1H08) and payments of JPY203 million for the year-end dividends for the fiscal year ended March 31, 2009.
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
---------------------------------------------------------------------
1H08 1H09
---------------------------------------------------------------------
JPY millions JPY millions
Adjusted EBITDA 3,604 3,810
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Depreciation and Amortization 2,599 2,644
---------------------------------------------------------------------
Operating Income 1,005 1,166
---------------------------------------------------------------------
Other Income (Expense) (239) (140)
---------------------------------------------------------------------
Income Tax Expense 539 528
---------------------------------------------------------------------
Equity in Net Income (Loss) of Equity
Method Investees 1 42
---------------------------------------------------------------------
Net income 228 540
---------------------------------------------------------------------
Net income attributable to noncontrolling
interests 140 175
---------------------------------------------------------------------
Net Income attributable to IIJ 368 715
---------------------------------------------------------------------
CAPEX
---------------------------------------------------------------------
1H08 1H09
---------------------------------------------------------------------
JPY millions JPY millions
CAPEX, including capital leases 4,516 2,613
---------------------------------------------------------------------
Acquisition of Assets by Entering into 2,768 664
Capital Leases
---------------------------------------------------------------------
Purchase of Property and Equipment 1,748 1,949
---------------------------------------------------------------------
Changes in accounting principles, procedures and disclosures in quarterly consolidated financial statements
Accounting Standards Codification
Effective July 1, 2009, IIJ adopted the FASB Accounting Standards Codification ("ASC") 105, "Generally Accepted Accounting Principles (the provisions of which were previously included in SFAS No. 168 "Accounting Standards Codification and the hierarchy of generally accepted accounting principles"). This pronouncement prescribes the change which divides non-governmental U.S. GAAP into the authoritative Codification and the non-authoritative guidance, doing away with the previous four-level hierarchy. Accordingly, IIJ's consolidated financial statements from the second quarter of fiscal year ending March 2010 follows the Codification in place of legacy accounting pronouncements.
Business Combinations
Effective April 1, 2009, IIJ adopted ASC805, "Business Combinations". ASC805 requires an acquirer in a business combination to generally recognize and measure all the identifiable assets acquired, the liabilities assumed, goodwill and any noncontrolling interest in the acquiree at their fair values as of the acquisition date. The adoption of ASC805 did not have any impact on IIJ's results of operations and financial position as there were no business combinations during the three months ended September 30, 2009, however the impact in the future would depend on the size and the detail of the business combination.
Noncontrolling Interests in Consolidated Financial Statements
Effective April 1, 2009, IIJ adopted ASC810 "Consolidations". ASC810 requires noncontrolling interest held by parties other than the parent be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. ASC810 also require changes in parent's ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for as equity transactions. Upon the adoption of ASC810, "Noncontrolling interests", which were previously referred to as "Minority interests" and classified between "Total liabilities" and "Shareholders' equity" in the consolidated balance sheets, are now included as a separate component of "Equity". In addition, "Net income" in the consolidated statements of income now includes net income attributable to noncontrolling interests, which was previously referred to as "Minority interests" and deducted. As a result, the adoption of ASC810 changed the presentation and disclosure of noncontrolling interest in the consolidated financial statements retrospectively, but did not have a material impact on IIJ's results of operations and financial position.
FY2009 Financial Targets (announced on May 15, 2009)
Our targets for the fiscal year ending March 31, 2010 are as follows:
(JPY in millions)
---------------------------------------------------------------------
Income before
Income Tax
Operating Expense Net Income
Revenues Income (Benefit) attributable to IIJ
---------------------------------------------------------------------
Full FY2009 73,000 3,300 2,700 1,700
---------------------------------------------------------------------
While the economy is anticipated to move towards recovery, we must pay attention to the downward risks such as further deterioration in employment, worldwide financial economic crisis and the downward pressure towards world economy.
During the first half of FY2009, revenues were JPY33,275 million, 3.7% below the target announced on May 15, 2009 as systems construction projects were stopped and postponed because companies withheld their IT related investments due to the weak economy. However, profit exceeded our target. Operating income was JPY1,166 million, up 45.8% compared to the target as a result of continuous cost control such as reduction of outsourcing personnel and general and administrative expenses. Income before income tax expense (benefit) and net income attributable to IIJ has also exceeded the target due to the increase in operating income.
Generally speaking, revenue and profit for the first half of the year are smaller compared to the latter half of the year and whether achieving our full year target largely depends on the continuous increase in recurring revenues and the revenues from systems construction for the fourth quarter of the fiscal year which becomes the largest due to seasonal factors. For revenue, while the economy seems to be recovering, it is unclear when the corporate IT related investments that is expected to follow the economic recovery will contribute to business results. For profit, however, we will continue to focus on tight cost control. Considering the above, we have not changed our FY2009 financial target announced on May 15, 2009.
Presentation
Presentation Materials will be posted on our web site (http://www.iij.ad.jp/en/IR/) on November 13, 2009.
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design. Moreover, IIJ has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ was listed on the U.S. NASDAQ Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in 2006.
The Internet Initiative Japan Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4613
Statements made in this press release regarding IIJ's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ's and managements' current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding FY2008 revenues and operating and net profitability, are subject to various risks, uncertainties and other factors that could cause IIJ's actual results to differ materially from those contained in any forward-looking statement. These risks, uncertainties and other factors include: IIJ's ability to maintain and increase revenues from higher-margin services such as systems integration and outsourcing services; the possibility that revenues from connectivity services may decline substantially as a result of competition and other factors; the ability to compete in a rapidly evolving and competitive marketplace; the impact on IIJ's profits of fluctuations in costs such as backbone costs and subcontractor costs; the impact on IIJ's profits of fluctuations in the price of available-for-sale securities; the impact of technological changes in its industry; IIJ's ability to raise additional capital to cover its indebtedness; the possibility that NTT, IIJ's largest shareholder, may decide to exercise substantial influence over IIJ; and other risks referred to from time to time in IIJ's filings on Form 20-F of its annual report and other filings with the United States Securities and Exchange Commission.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Balance Sheets (Unaudited)
-------------------------------------------------
(As of March 31, 2009 and September 30, 2009)
---------------------------------------------------------------------
As of March 31, As of September 30,
2009 2009
---------------------------------------------------------------------
Thousands % Thousands of Thousands %
of JPY U.S. Dollars of JPY
---------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents 10,187,724 120,561 10,789,017
Accounts receivable,
net of allowance
for doubtful
accounts of
JPY 22,072 thousand
and JPY 24,386
thousand at
March 31, 2009 and
September 30, 2009,
respectively 10,256,527 97,515 8,726,598
Inventories 529,756 8,130 727,560
Prepaid expenses 1,771,955 24,737 2,213,662
Deferred
tax assets
--Current 762,221 4,742 424,380
Other current
assets, net of
allowance for
doubtful accounts
of JPY 11,720
thousand and
JPY 720 thousand at
March 31, 2009 and
September 30, 2009,
respectively 848,586 5,926 530,309
---------- -----------------------
Total current
assets 24,356,769 46.6 261,611 23,411,526 45.6
---------- -----------------------
INVESTMENTS IN
EQUITY METHOD
INVESTEES 947,626 1.8 11,322 1,013,224 2.0
OTHER
INVESTMENTS 1,914,594 3.7 24,263 2,171,310 4.2
PROPERTY AND
EQUIPMENT, net of
accumulated
depreciation
and amortization
of JPY 16,444,517
thousand and
JPY 18,111,332
thousand at
March 31, 2009 and
September 30, 2009,
respectively 13,172,891 25.2 147,173 13,170,532 25.6
GOODWILL 2,639,319 5.0 29,493 2,639,319 5.1
OTHER INTANGIBLE
ASSETS --Net 3,201,806 6.1 33,674 3,013,492 5.9
GUARANTEE DEPOSITS 2,072,652 4.0 23,270 2,082,460 4.1
Deferred tax assets
--Noncurrent 2,253,464 4.3 25,032 2,240,080 4.4
OTHER ASSETS, net of
allowance for
doubtful accounts
of JPY 72,800
thousand and
JPY 78,832 thousand
at March 31, 2009
and September 30
2009, respectively,
and net of loan loss
valuation allowance
of JPY 16,701
thousand at
March 31, 2009 and
September 30 2009,
respectively 1,742,078 3.3 18,409 1,647,459 3.2
---------- -----------------------
TOTAL 52,301,199 100.0 574,247 51,389,402 100.0
---------- -----------------------
---------------------------------------------------------------------
As of As of
March 31, 2009 September 30, 2009
---------------------------------------------------------------------
Thousands % Thousands of Thousands %
of JPY U.S. Dollars of JPY
---------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Short-term
borrowings 7,350,000 80,456 7,200,000
Capital lease
obligations
--current
portion 3,272,257 34,438 3,081,879
Accounts
payable 6,064,829 60,187 5,386,158
Accrued
expenses 1,069,310 12,352 1,105,352
Accrued
retirement
and pension
costs
--current 11,959 134 11,959
Deferred income 1,255,749 16,621 1,487,439
Other current
liabilities 763,544 8,072 722,399
---------- -------------------------
Total current
liabilities 19,787,648 37.8 212,260 18,995,186 37.0
---------- -------------------------
CAPITAL LEASE
OBLIGATIONS
--Noncurrent 4,866,120 9.3 44,861 4,014,599 7.8
ACCRUED RETIREMENT
AND PENSION COSTS 1,399,592 2.7 17,276 1,545,961 3.0
--Noncurrent
OTHER NONCURRENT
LIABILITIES 1,004,920 1.9 12,279 1,098,866 2.1
---------- ------------------------
Total
Liabilities 27,058,280 51.7 286,676 25,654,612 49.9
---------- ------------------------
COMMITMENTS AND
CONTINGENCIES
SHAREHOLDERS'
EQUITY:
INTERNET
INITIATIVE
JAPAN INC
SHAREHOLDERS'
EQUITY:
Common-stock--
authorized,
377,600 shares;
issued and
outstanding,
206,478 shares
at
March 31, 2009
and
Sept. 30, 2009,
respectively 16,833,847 32.2 188,108 16,833,847 32.8
Additional
paid-in
capital 27,611,737 52.8 306,356 27,415,772 53.3
Accumulated
deficit (18,549,142) (35.5) (201,545) (18,036,299) (35.1)
Accumulated
other
comprehensive
loss (320,711) (0.6) (1,858) (166,247) (0.3)
Treasury stock--
3,934 shares
held by the
company at
March 31, 2009
and
Sept. 30, 2009,
respectively (406,547) (0.8) (4,543) (406,547) (0.8)
---------- ------------------------
Total Internet
Initiative
Japan Inc.
share-
holders'
equity 25,169,184 48.1 286,518 25,640,526 49.9
---------- -------------------------
NONCONTROLLING
INTERESTS 73,735 0.2 1,053 94,264 0.2
---------- -------------------------
Total equity 25,242,919 48.3 287,571 25,734,790 50.1
---------- -------------------------
TOTAL 52,301,199 100.0 574,247 51,389,402 100.0
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(Note1) The U.S. dollar amounts represent translations of yen amounts
at the rate of JPY 89.49 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 September 30, 2009.
(Note2) The above presentation as of March 31, 2009 has been changed
to conform to the presentation as of September 30, 2009.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Income (Unaudited)
-------------------------------------------------------
(For the six months ended September 30, 2008 and September 30, 2009)
----------------------------------------------------------------------
Six Months Ended Six Months Ended
September 30, 2008 September 30, 2009
----------------------------------------------------
Thousands % of Thousands Thousands % of
of JPY total of U.S. of JPY total
revenues Dollars revenues
----------------------------------------------------------------------
REVENUES:
Connect-
ivity and
outsour-
cing
services:
Connect-
ivity
(corporate
use) 6,327,721 76,961 6,887,207
Connec-
tivity
(home use) 3,211,251 38,105 3,410,051
Outsourcing
services 7,462,257 89,467 8,006,440
---------- ---------------------
Total 17,001,229 204,533 18,303,698
---------- ---------------------
Systems
integration:
Systems
Constru-
ction 6,289,946 46,352 4,148,014
Systems
Operation
and
Maintenance 9,427,609 105,884 9,475,548
---------- ---------------------
Total 15,717,555 152,236 13,623,562
---------- ---------------------
Equipment
sales 524,087 3,459 309,586
ATM operation
business 10,970 427 38,178
---------- ---------------------
Total
revenues 33,253,841 100.0 360,655 32,275,024 100.0
---------- ---------------------
COST AND
EXPENSES:
Cost of
connect-
ivity
and outsou-
rcing
services 14,341,393 171,095 15,311,269
Cost of
systems
integration 12,178,300 112,297 10,049,470
Cost of
equipment
sales 464,841 3,009 269,315
Cost of ATM
operation
business 99,984 4,543 406,517
---------- ---------------------
Total cost 27,084,518 81.5 290,944 26,036,571 80.7
---------- ---------------------
Sales and
marketing 2,351,033 7.1 28,982 2,593,637 8.0
General and
admini-
strative 2,669,171 8.0 25,877 2,315,698 7.2
Research and
development 143,677 0.4 1,822 163,035 0.5
---------- ---------------------
Total
cost
and
expenses 32,248,399 97.0 347,625 31,108,941 96.4
---------- ---------------------
OPERATING
INCOME 1,005,442 3.0 13,030 1,166,083 3.6
---------- ---------------------
OTHER INCOME
(EXPENSE):
Interest
income 26,243 146 13,086
Interest
expense (206,407) (1,879) (168,189)
Foreign
exchange
gains 3,998 52 4,619
Net gains on
sales of
other
investments -- 126 11,302
Losses on
write-down
of other
investments (61,092) (348) (31,172)
Other--net (2,134) 334 29,884
---------- ---------------------
Other expense
-- net (239,392) (0.7) (1,569) (140,470) (0.4)
---------- ---------------------
INCOME FROM
OPERATIONS
BEFORE INCOME
TAX EXPENSE
AND EQUITY IN
NET INCOME IN
EQUITY METHOD
INVESTEES 766,050 2.3 11,461 1,025,613 3.2
---------- ---------------------
INCOME TAX
EXPENSE 539,124 1.6 5,898 527,809 1.6
EQUITY IN
NET INCOME
OF EQUITY
METHOD
INVESTEES 835 0.0 471 42,147 0.1
---------- ---------------------
NET INCOME 227,761 0.7 6,034 539,951 1.7
---------- ---------------------
LESS: NET LOSS
ATTRIBUTABLE TO
NONCONTROLLING
INTERESTS 139,793 0.4 1,960 175,436 0.5
---------- ---------------------
NET INCOME
ATTRIBUTABLE
TO INTERNET
INITIATIVE
JAPAN INC 367,554 1.1 7,994 715,387 2.2
----------------------------------------------------------------------
---------------------------------------------------------------------
Six Months Ended Six Months Ended
September 30, September 30, 2009
2008
---------------------------------------------------------------------
NET INCOME
PER SHARE (ADS)
BASIC WEIGHTED-
AVERAGE NUMBER
OF SHARES (shares) 206,478 202,544
DILUTED WEIGHTED
-AVERAGE NUMBER
OF SHARES (shares) 206,538 202,544
BASIC WEIGHTED
-AVERAGE NUMBER
OF ADS EQUIVALENTS
(ADSs) 82,591,200 81,017,600
DILUTED WEIGHTED-
AVERAGE NUMBER
OF ADS EQUIVALENTS
(ADSs) 82,639,332 81,017,600
BASIC NET INCOME
ATTRIBUTABLE TO
INTERNET INITIATIVE
JAPAN INC.
PER SHARE (JPY /
U.S. Dollars / JPY) 1,780.11 39.47 3,532.01
DILUTED
NET INCOME
ATTRIBUTABLE TO
INTERNET
INITIATIVE
JAPAN INC.
PER SHARE
(JPY /
U.S. Dollars / JPY) 1,779.60 39.47 3,532.01
BASIC
NET INCOME
ATTRIBUTABLE TO
INTERNET
INITIATIVE
JAPAN INC.
PER ADS (JPY /
U.S. Dollars/ JPY) 4.45 0.10 8.83
DILUTED
NET INCOME
ATTRIBUTABLE
TO INTERNET
INITIATIVE
JAPAN INC.
PER ADS (JPY /
U.S. Dollars /JPY) 4.45 0.10 8.83
---------------------------------------------------------------------
(Note1) The U.S. dollar amounts represent translations of yen amounts
at the rate of JPY 89.49 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 September 30, 2009.
(Note2) The above presentation for the six months ended September 30,
2009 has been changed to conform to the presentation for the
six months ended September 30, 2009.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Cash Flows (Unaudited)
-----------------------------------------------------------
(For the six months ended September 30, 2008 and September 30,
2009)
---------------------------------------------------------------------
Six Months
Ended
September 30, Six Months Ended
2008 September 30, 2009
-----------------------------------------
Thousands of Thousands of Thousands of
JPY U.S. Dollars JPY
---------------------------------------------------------------------
OPERATING ACTIVITIES:
Net Income 227,761 6,034 539,951
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 2,599,105 29,540 2,643,516
Provision for retirement
and pension costs, less
payments 129,483 1,635 146,369
Provision for (reversal
of)allowance for
doubtful accounts and
advances 8,391 (7) (646)
Loss on disposal of
property and equipment 35,728 204 18,251
Net gains on sales of
other investments -- (126) (11,302)
Losses on write-down of
other investments 61,092 348 31,172
Foreign exchange losses 8,867 203 18,212
Equity in net (income)
loss of equity method
investees (net of
dividend) 29,545 (471) (42,147)
Deferred income tax
expense 377,983 4,167 372,865
Others 1,707 -- --
Changes in operating assets
and liabilities net of
effects from acquisition
of business and a company:
Decrease in accounts
receivable 2,255,821 17,155 1,535,228
Increase in inventories,
prepaid expenses and
other current and
noncurrent assets (411,600) (2,644) (236,630)
Decrease in accounts
payable (1,238,019) (5,755) (515,033)
Decrease in income taxes
payable (357,393) (492) (44,001)
Increase in accrued
expenses and other
current and noncurrent
liabilities - net 276,117 3,759 336,409
---------------------------------------------------------------------
Net cash provided by
operating activities 4,004,588 53,550 4,792,214
---------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property and
equipment (1,747,972) (21,780) (1,949,051)
Purchase of available-for-
sale securities (99,992) (183) (16,367)
Purchase of short-term and
other investments (119,263) (2,235) (200,016)
Investment in an equity
method investee -- (255) (22,834)
Proceeds from sales of
available-for-sale
securities -- 366 32,792
Proceeds from sales and
redemption of short-term
and other investments 12,009 527 47,131
Payments of guarantee
deposits (78,718) (499) (44,643)
Refund of guarantee
deposits 17,882 409 36,562
Payments for refundable
insurance policies (25,614) (323) (28,930)
Refund from insurance
policies 7,382 446 39,959
Other (104) 4 319
---------------------------------------------------------------------
Net cash used in
investing activities (2,034,390) (23,523) (2,105,078)
---------------------------------------------------------------------
---------------------------------------------------------------------
Six Months
Ended
September 30, Six Months Ended
2008 September 30, 2009
-----------------------------------------
Thousands of Thousands of Thousands of
JPY U.S. Dollars JPY
---------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of
short-term borrowings with
initial maturities over
three months 5,400,000 56,989 5,100,000
Repayments of short-term
borrowings with initial
maturities over three
months (5,875,000) (59,783) (5,350,000)
Principal payments under
capital leases (1,743,847) (19,109) (1,710,091)
Net increase (decrease) in
short-term borrowings with
initial maturities less
than three months (1,675,000) 1,117 100,000
Dividends paid (206,478) (2,263) (202,544)
---------------------------------------------------------------------
Net cash used in
financing activities (4,100,325) (23,049) (2,062,635)
---------------------------------------------------------------------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND
CASH EQUIVALENTS (21,618) (259) (23,208)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (2,151,745) 6,719 601,293
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 11,470,980 113,842 10,187,724
---------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS, END OF
THE PERIOD 9,319,235 120,561 10,789,017
---------------------------------------------------------------------
---------------------------------------------------------------------
ADDITIONAL CASH FLOW
INFORMATION:
Interest paid 205,700 1,925 172,311
Income tax paid (refunded) 401,943 (194) (17,350)
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Acquisition of assets by
entering into capital
leases 2,768,002 7,424 664,353
Facilities purchase
liabilities 493,530 4,137 370,203
---------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 89.49 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 June 30, 2009.
(Note 2) The above presentation for the six months ended
September 30, 2008 has been changed to conform to the
presentation for the six months ended September 30, 2009.
Going Concern Assumption (Unaudited)
------------------------------------
For the six months ended September 30, 2008
Nothing to be reported.
For the six months ended September 30, 2009
Nothing to be reported.
Segment Information (Unaudited)
-------------------------------
Business Segments:
Revenues:
---------------------------------------------------------------------
Six Months Six Months
Ended Ended
September 30, September 30,
2008 2009
---------------------------
Thousands of Thousands of
JPY JPY
---------------------------------------------------------------------
Network service and systems integration
business 33,322,671 32,443,033
---------------------------------------------------------------------
Customers 33,242,871 32,236,846
-------------------------------------------------------------------
Intersegment 79,800 206,187
-------------------------------------------------------------------
ATM operation business 10,970 38,178
---------------------------------------------------------------------
Customers 10,970 38,178
-------------------------------------------------------------------
Intersegment -- --
---------------------------------------------------------------------
Elimination 79,800 206,187
---------------------------------------------------------------------
Consolidated total 33,253,841 32,275,024
---------------------------------------------------------------------
Segment profit or loss:
---------------------------------------------------------------------
Six Months Six Months
Ended Ended
September 30, September 30,
2008 2009
---------------------------
Thousands of Thousands of
JPY JPY
---------------------------------------------------------------------
Network service and systems integration
business 1,252,716 1,644,563
---------------------------------------------------------------------
ATM operation business (233,403) (459,262)
---------------------------------------------------------------------
Elimination 13,871 19,218
---------------------------------------------------------------------
Consolidated operating income 1,005,442 1,166,083
---------------------------------------------------------------------
Substantially all revenues are from customers operating in Japan.
Geographic information is not presented due to immateriality of
revenue attributable to international operations.
Material Changes In Shareholders' Equity (Unaudited)
-----------------------------------------------------
For the six months ended September 30, 2008
Nothing to be reported.
For the six months ended September 30, 2009
Nothing to be reported.
2nd Quarter FY2009 Consolidated Financial Results (3 months)
------------------------------------------------------------
The following tables are highlight data of 2nd Quarter FY2009 consolidated financial results (unaudited, from July 1, 2009 to September 30, 2009).
Operating Results Summary
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
Total Revenues: 16,926 16,441 (2.9%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services 8,605 9,178 6.7%
---------------------------------------------------------------------
SI 8,029 7,059 (12.1%)
---------------------------------------------------------------------
Equipment Sales 286 173 (39.5%)
---------------------------------------------------------------------
ATM Operation Business 6 31 400.7%
---------------------------------------------------------------------
Cost of Revenues: 13,782 13,200 (4.2%)
---------------------------------------------------------------------
Connectivity and Outsourcing Services 7,276 7,661 5.3%
---------------------------------------------------------------------
SI 6,154 5,174 (15.9%)
---------------------------------------------------------------------
Equipment Sales 266 150 (43.4%)
---------------------------------------------------------------------
ATM Operation Business 86 215 151.7%
---------------------------------------------------------------------
SG&A Expenses and R&D 2,550 2,426 (4.9%)
---------------------------------------------------------------------
Operating Income 594 815 37.2%
---------------------------------------------------------------------
Income before Income Tax Expense 456 726 59.0%
---------------------------------------------------------------------
Net Income attributable to IIJ 198 535 169.5%
---------------------------------------------------------------------
Connectivity and Outsourcing Services Revenues Breakdown and Cost
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
Connectivity and Outsourcing Services
Revenues 8,605 9,178 6.7%
---------------------------------------------------------------------
Connectivity Service (Corporate Use) 3,218 3,439 6.9%
---------------------------------------------------------------------
IP Service 2,295 2,301 0.3%
---------------------------------------------------------------------
IIJ FiberAccess/F and IIJ DSL/F 721 729 1.1%
---------------------------------------------------------------------
IIJ Mobile Service 115 335 191.1%
---------------------------------------------------------------------
Others 87 74 (15.1%)
---------------------------------------------------------------------
Connectivity Service (Home Use) 1,615 1,712 6.0%
---------------------------------------------------------------------
Under IIJ Brand 254 260 2.6%
---------------------------------------------------------------------
hi-ho 1,222 1,310 7.2%
---------------------------------------------------------------------
OEM 139 142 1.9%
---------------------------------------------------------------------
Outsourcing Services 3,772 4,027 6.8%
---------------------------------------------------------------------
Cost of Connectivity and Outsourcing
Services 7,276 7,661 5.3%
---------------------------------------------------------------------
Backbone Cost (included in the cost of
Connectivity and Outsourcing Service) 951 912 (4.2%)
=====================================================================
Connectivity and Outsourcing Services
Gross Margin Ratio 15.4% 16.5% --
=====================================================================
SI Revenue Breakdown and Cost
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
SI Revenues 8,029 7,059 (12.1%)
---------------------------------------------------------------------
Systems Construction 3,254 2,344 (28.0%)
---------------------------------------------------------------------
Systems Operation and Maintenance 4,775 4,715 (1.3%)
---------------------------------------------------------------------
Cost of SI 6,154 5,174 (15.9%)
=====================================================================
SI Gross Margin Ratio 23.3% 26.7% --
=====================================================================
---------------------------------------------------------------------
SI and Equipment Sales Order Backlog 17,296 16,243 (6.1%)
---------------------------------------------------------------------
Equipment Sales Revenue and Cost
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
Equipment Sales Revenues 286 173 (39.5%)
---------------------------------------------------------------------
Cost of Equipment Sales 266 150 (43.4%)
=====================================================================
Equipment Sales Gross Margin Ratio 7.0% 13.1% --
=====================================================================
ATM Operation Business Revenue and Cost
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
ATM Operation Business Revenues 6 31 400.7%
---------------------------------------------------------------------
Cost of ATM Operation Business 86 215 151.7%
---------------------------------------------------------------------
Other Financial Statistics
---------------------------------------------------------------------
YoY
2Q08 2Q09 Change
---------------------------------------------------------------------
JPY JPY
millions millions
Adjusted EBITDA 1,948 2,099 7.7%
---------------------------------------------------------------------
CAPEX, including capital leases 2,685 1,124 (58.1%)
---------------------------------------------------------------------
Depreciation and amortization 1,354 1,284 (5.2%)
---------------------------------------------------------------------
Reconciliation of Non-GAAP Financial Measures
---------------------------------------------
The following table summarizes the reconciliation of adjusted EBITDA to net income in our consolidated statements of income that are prepared in accordance with U.S. GAAP.
Adjusted EBITDA
---------------------------------------------------------------------
2Q08 2Q09
---------------------------------------------------------------------
JPY millions JPY millions
Adjusted EBITDA 1,948 2,099
---------------------------------------------------------------------
Depreciation and Amortization 1,354 1,284
---------------------------------------------------------------------
Operating Income 594 815
---------------------------------------------------------------------
Other Income (Expense) (138) (89)
---------------------------------------------------------------------
Income Tax Expense 326 284
---------------------------------------------------------------------
Equity in Net Income (Loss) of Equity
Method Investees (17) 11
---------------------------------------------------------------------
Net income 113 453
---------------------------------------------------------------------
Net income attributable to noncontrolling
interests 85 82
---------------------------------------------------------------------
Net Income attributable to IIJ 198 535
---------------------------------------------------------------------
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
---------------------------------------------------------------------
2Q08 2Q09
---------------------------------------------------------------------
JPY millions JPY millions
CAPEX, including capital leases 2,685 1,124
---------------------------------------------------------------------
Acquisition of Assets by Entering into 1,705 269
Capital Leases
---------------------------------------------------------------------
Purchase of Property and Equipment 980 855
---------------------------------------------------------------------
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Income (Unaudited)
-------------------------------------------------------
(Three Months ended September 30, 2008 and September 30, 2009)
---------------------------------------------------------------------
Three Months Ended Three Months Ended
September 30, 2008 September 30, 2009
----------------------------------------------------
% of % of
Thousands total Thousands of Thousands total
of JPY revenues U.S. Dollars of JPY revenues
---------------------------------------------------------------------
REVENUES:
Connectivity and
outsourcing
services:
Connectivity
(corporate
use) 3,217,967 38,426 3,438,714
Connectivity
(home use) 1,615,048 19,132 1,712,157
Outsourcing
services 3,771,761 44,999 4,026,997
----------- ------------------------
Total 8,604,776 102,557 9,177,868
----------- ------------------------
Systems
integration:
Systems
Construction 3,254,198 26,197 2,344,379
Systems
Operation and
Maintenance 4,774,533 52,682 4,714,537
----------- ------------------------
Total 8,028,731 78,879 7,058,916
----------- ------------------------
Equipment sales 286,066 1,934 173,011
ATM operation
business 6,135 343 30,719
----------- ------------------------
Total
revenues 16,925,708 100.0 183,713 16,440,514 100.0
----------- ------------------------
COST AND EXPENSES:
Cost of
connectivity and
outsourcing
services 7,276,321 85,605 7,660,765
Cost of systems
integration 6,154,063 57,814 5,173,745
Cost of equipment
sales 265,915 1,680 150,388
Cost of ATM
operation
business 85,303 2,400 214,748
----------- ------------------------
Total cost 13,781,602 81.4 147,499 13,199,646 80.3
----------- ------------------------
Sales and
marketing 1,178,307 7.0 14,177 1,268,757 7.7
General and
administrative 1,286,463 7.6 11,963 1,070,553 6.5
Research and
development 85,156 0.5 965 86,353 0.5
----------- ------------------------
Total cost
and
expenses 16,331,528 96.5 174,604 15,625,309 95.0
----------- ------------------------
OPERATING INCOME 594,180 3.5 9,109 815,205 4.9
----------- ------------------------
OTHER INCOME
(EXPENSE):
Interest income 18,287 82 7,372
Interest expense (100,204) (907) (81,165)
Foreign exchange
gains (loss) 6,401 (56) (5,044)
Net gains on
sales of other
investments -- 126 11,302
Losses on write-
down of other
investments (53,701) (332) (29,668)
Other--net (8,484) 87 7,755
----------- -----------------------
Other expense --
net (137,701) (0.8) (1,000) (89,448) (0.5)
----------- -----------------------
INCOME FROM
OPERATIONS
BEFORE INCOME
TAX EXPENSE AND
EQUITY IN NET
INCOME IN EQUITY
METHOD INVESTEES 456,479 2.7 8,109 725,757 4.4
----------- -----------------------
INCOME TAX
EXPENSE 325,909 1.9 3,172 283,866 1.7
EQUITY IN NET
INCOME (LOSS) OF
EQUITY METHOD
INVESTEES (16,859) (0.1) 119 10,634 0.1
----------- -----------------------
NET INCOME 113,711 0.7 5,056 452,525 2.8
----------- -----------------------
LESS: NET LOSS
ATTRIBUTABLE TO
NONCONTROLLING
INTERESTS 84,766 0.5 921 82,384 0.5
----------- ------------------------
NET INCOME
ATTRIBUTABLE TO
INTERNET
INITIATIVE JAPAN
INC. 198,477 1.2 5,977 534,909 3.3
---------------------------------------------------------------------
---------------------------------------------------------------------
Three Months Three Months
Ended Ended
September 30, September 30,
2008 2009
---------------------------------------------------------------------
NET INCOME PER SHARE (ADS)
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares) 206,478 202,544
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) 206,478 202,544
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs) 82,591,200 81,017,600
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) 82,591,200 81,017,600
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER SHARE (JPY / U.S. Dollars /
JPY) 961.25 29.51 2,640.95
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER SHARE (JPY / U.S. Dollars /
JPY) 961.25 29.51 2,640.95
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER ADS (JPY / U.S. Dollars /
JPY) 2.40 0.07 6.60
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN INC.
PER ADS (JPY / U.S. Dollars /
JPY) 2.40 0.07 6.60
---------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 89.49 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 September 30,
2009.
(Note 2) The above presentation for the three months ended September
30, 2008 has been changed to conform to the presentation for
the three months ended September 30, 2009.
Internet Initiative Japan Inc.
------------------------------
Quarterly Consolidated Statements of Cash Flows (Unaudited)
-----------------------------------------------------------
(Three Months ended September 30, 2008 and September 30, 2009)
---------------------------------------------------------------------
Three
Months
Ended
Sept. 30, Three Months Ended
2008 September 30, 2009
----------------------------------
Thousands Thousands of Thousands
of JPY U.S. Dollars of JPY
---------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income 113,711 5,057 452,525
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,354,192 14,345 1,283,696
Provision for (reversal of)
retirement and pension
costs, less payments 57,227 980 87,687
Provision for allowance
for doubtful accounts
and advances 7,699 49 4,403
Loss on disposal of
property and equipment 6,040 104 9,286
Net gains on sales of
other investments -- (126) (11,302)
Losses on write-down
of other investments 53,701 331 29,668
Foreign exchange losses 1,946 70 6,294
Equity in net loss (income)
of equity method investees 16,859 (119) (10,634)
Deferred income tax expense 251,271 2,088 186,883
Others 1,707 -- --
Changes in operating assets
and liabilities net of effects
from acquisition of business
and a company:
Increase in accounts
receivable (1,184,692) (2,228) (199,373)
Decrease in inventories,
prepaid expenses and
other current and
noncurrent assets 533,012 2,953 264,303
Increase in
accounts payable 573,285 4,710 421,485
Increase in income
taxes payable 71,483 1,246 111,466
Increase (decrease)
in accrued expenses,
other current and
noncurrent liabilities
-- net 129,313 (90) (8,053)
---------------------------------------------------------------------
Net cash provided by
operating activities 1,986,754 29,370 2,628,334
---------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of property
and equipment (979,895) (9,551) (854,753)
Purchase of
available-for-sale
securities (99,992) (107) (9,617)
Purchase of short-term
and other investments (119,263) (2,235) (200,016)
Investment in equity
method investee -- (255) (22,834)
Proceeds from sales
of available-for-sale
securities -- 366 32,792
Proceeds from sales and
redemption of short-term
and other investments 6,728 375 33,631
Payments of guarantee deposits (13,855) (116) (10,414)
Refund of guarantee deposits 1,965 382 34,225
Payments for
refundable insurance policies (12,676) (171) (15,315)
Refund from insurance policies 7,382 138 12,346
Other (52) 4 319
---------------------------------------------------------------------
Net cash used in
investing activities (1,209,658) (11,170) (999,636)
---------------------------------------------------------------------
Three
Months
Ended
Sept. 30, Three Months Ended
2008 September 30, 2009
---------------------------------------------------------------------
Thousands Thousands of Thousands
of JPY U.S. Dollars of JPY
---------------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of
short-term borrowings with
initial maturities over
three months 300,000 -- --
Repayments of short-term
borrowings with initial
maturities over three months (525,000) (2,794) (250,000)
Principal payments under
capital leases (904,912) (8,721) (780,466)
Net increase (decrease)
in short-term borrowings
with initial maturities
less than three months (275,000) 3,352 300,000
---------------------------------------------------------------------
Net cash used in
financing activities (1,404,912) (8,163) (730,466)
---------------------------------------------------------------------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND
CASH EQUIVALENTS 3,846 (74) (6,651)
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS (623,970) 9,963 891,581
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 9,943,205 110,598 9,897,436
---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD 9,319,235 120,561 10,789,017
---------------------------------------------------------------------
(Note 1) The U.S. dollar amounts represent translations of yen
amounts at the rate of JPY 89.49 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 September 30,
2009.
(Note 2) The above presentation for the three months ended March 31,
2008 has been changed to conform to the presentation for
the three months ended September 30, 2009.
Note: The following information is provided to disclose Internet
Initiative Japan Inc. ("IIJ") financial results (unaudited) for
the six month ended September 30, 2009 in the form defined by the
Tokyo Stock Exchange.
Consolidated Financial Results for the Six Months Ended September 30,
2009
(Under accounting principles generally accepted in the United States
("U.S. GAAP"))
November 13, 2009
Company name: Internet Initiative Exchange listed: Tokyo Stock
Japan Inc. Exchange First
Section
Stock code number: 3774 URL: http://www.iij.ad.jp/
Representative: Koichi Suzuki, President and Representative Director
Contact: Akihisa Watai, Director and CFO TEL: (03) 5259-6500
Filing of quarterly report (Shihanki-hokokusho) to the regulatory
organization in Japan: November 16, 2009 (Scheduled)
Payment of dividend: Scheduled to start on December 4, 2009
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Six months Ended September
30, 2009 (April 1, 2009 to September 30, 2009)
(1) Consolidated Results of Operations (% shown is YoY change)
---------------------------------------------------------------------
Income before
Income Tax Net Income
Total Operating Expense attributable
Revenues Income (Benefit) to IIJ
---------------------------------------------------------------------
JPY JPY JPY JPY
millions % millions % millions % millions %
Six months
ended
September 30,
2009 32,275 (2.9) 1,166 16.0 1,026 33.9 715 94.6
Six months
ended
September 30,
2008 33,254 10.9 1,005 (44.6) 766 (54.9) 368 (89.4)
---------------------------------------------------------------------
Basic Net Diluted Net
Income Income
attributable attributable
to IIJ per to IIJ per
Share Share
---------------------------------------------------------------------
JPY JPY
Six months ended
September 30, 2009 3,532.01 3,532.01
Six months ended
September 30, 2008 1,780.11 1,779.60
---------------------------------------------------------------------
(Note) Effective April 1, 2009, we adopted FASB Accounting Standards
Codification ("ASC") 810, "Consolidations" (the provisions of
which were previously included in SFAS No. 160
"Noncontrolling Interests in Consolidated Financial
Statements - an amendment of ARB No. 51"). According to this,
in this document, Income before income tax expense (benefit)
represents income from operations before income tax expense
and equity in net income in equity method investees in IIJ's
consolidated financial statements. Additionally, Net income
attributable to IIJ is equivalent to net income in the former
presentation materials up to FY2008.
(2) Consolidated Financial Position
---------------------------------------------------------------------
IIJ
Shareholders' IIJ
IIJ Equity as a Shareholders'
Total Shareholders' percentage of Equity per
Assets Equity Total Assets share
---------------------------------------------------------------------
JPY
millions JPY millions % JPY
Six months
ended
September 30,
2009 51,389 25,641 49.9 126,592.37
Fiscal Year
Ended
March 31, 2008 52,301 25,169 48.1 124,265.27
---------------------------------------------------------------------
(Note) With the adoption of ASC810, Shareholders' equity,
shareholders' equity as a percentage of total assets and
shareholders' equity per share were renamed to IIJ
Shareholders' equity, IIJ shareholders' equity as a percentage
of total assets and IIJ shareholders' equity per share,
respectively, from fiscal year ending March 31, 2010.
2. Dividends
---------------------------------------------------------------------
Dividend per Shares
---------------------------------------------------------------------
1st 2nd 3rd
quarter-end quarter-end quarter-end Year-end Total
---------------------------------------------------------------------
Yen Yen Yen Yen Yen
Fiscal year
ended
March 31,
2009 -- 1,000.00 -- 1,000.00 2,000.00
---------------------------------------------------------------------
Fiscal year
ending
March 31,
2010 -- 1,000.00 -- -- --
---------------------------------------------------------------------
Fiscal year
ending
March 31,
2010
(Target) -- -- -- 1,000.00 2,000.00
---------------------------------------------------------------------
(Note) Changes to Dividend Target during the three months ended
September 30, 2009: None
3. Target of Consolidated Financial Results for the Fiscal Year
Ending March 31, 2010
(April 1, 2009 through March 31, 2010) (% shown is YoY change)
---------------------------------------------------------------------
Income before Income
Total Revenues Operating Income Expense (Benefit)
---------------------------------------------------------------------
JPY
millions % JPY millions % JPY millions %
Fiscal year
ending
March 31,
2010 73,000 4.7 3,300 13.1 2,700 32.7
--------------------------------------------------------------------
(Note) Changes to target for year-end consolidated financial results
for the fiscal year ending March 31, 2010 during the three
months ended September 30, 2009: None
Net income attributable to IIJ:
Fiscal year ending March 31, 2010: JPY1,700 million
Basic net income per share attributable to IIJ shareholders:
Fiscal year ending March 31, 2010: JPY8,393.24
4. Others
(1) Change of Condition in Consolidated Subsidiaries during the
Six Months Ended September 30, 2009
(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: None
(4) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding (inclusive of treasury stock):
As of September 30, 2009: 206,478 shares
As of March 31, 2009: 206,478 shares
2) The number of treasury stock:
As of September 30, 2009: 3,934 shares
As of March 31, 2009: 3,934 shares
3) The weighted average number of shares outstanding:
For the six months ended September 30, 2009: 202,544 shares
For the six months ended September 30, 2008: 206,478 shares
CONTACT: Internet Initiative Japan Inc.
Investor Relations Office
YUKO KAZAMA
+81-3-5259-6500
ir@iij.ad.jp URL:
http://www.iij.ad.jp/en/IR
2009 GlobeNewswire, Inc.
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