IIJ Announces Nine Months Financial Results for the Fiscal
Year Ending March 31, 2010
GlobeNewswire
2010-02-13
TOKYO, Feb. 12, 2010 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc.
(Nasdaq:IIJI) (TSE:3774) ("IIJ") today announced its consolidated
financial results for the nine months ended December 31, 2009.(1)
Highlights of Financial Results for the Nine Months Ended Dec 2009
-- Revenues were JPY48,313 million ($519.0 million), down 4.9% YoY due to
the continued decline in systems integration revenue.
-- Operating income was JPY2,007 million ($21.6 million), up 8.8% YoY with
continuous increase of connectivity and outsourcing service gross
margin. Operation loss related to the new ATM operation business was
JPY730 million ($7.8 million), up 57.0% YoY.
-- Net income attributable to IIJ(2) was JPY1,133 million ($12.2 million),
up 219.8% YoY.
-- FY2009 revenue target was revised down from JPY73,000 million to
JPY68,000 million, yet profit target remain unchanged.
-- IIJ to absorb two of its wholly-owned subsidiary on April 1, 2010
(Scheduled).
(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 JPY93.08 per US$1.00,
which was the noon buying rate on December 31, 2009.
(2) Effective April 1, 2009, we have adopted ASC810, "Consolidations". For details, please refer to page 7 in this
presentation material.
Nine Months Overview and Business Outlook
"We have achieved income growth for three consecutive quarters in these
tough economic environment," said Koichi Suzuki, President and CEO of
IIJ.
"During the nine months ended December 31, 2009, our business
environment were tough as companies continued to withhold their
investments and kept a tight grip on spending. Cost down pressure has
also been severe. In such economic environment, total revenue decreased
YoY dragged by the decrease in SI revenue. Both systems construction
and systems operation and maintenance were heavily affected resulting
in a weaker than expected outcome. Yet, in such economic situation,
connectivity service and outsourcing service revenues continued to
increase followed by steady demands. Over 1Gbps connectivity service,
mobile data communication service, and outsourcing services such as
email and security related continued to growth."
"Additionally, we continue to operate the company with discipline,"
continued Suzuki. "We have taken actions to lower our cost and expenses
to improve profitability. As a result, gross margin for connectivity
and outsourcing increased and general and administrative expenses
decreased YoY. Accordingly, despite the increase in losses related to
the ATM operation business which is in its start-up phase with 147 ATMs
placed as of December 31, 2009, our operating income is increasing and
our operating margin ratio is improving quarter by quarter."
"For our mid- to long-term growth, to best position ourselves in the
future IT outsourcing market, we have taken several actions. In
November 2009, we have launched our cloud computing service "IIJ GIO".
The pre-sales of this cloud computing service are doing well and has
already been adopted by several clients such as the Cabinet Office web
site."
"We have decided to absorb our two 100% owned consolidated
subsidiaries, which are engaging in systems integration business on
April 1, 2010. As seen in the cloud-computing concept, the trend to
outsource corporate information system with network element are
accelerating. To seize IT demands in this trends, we believe the best
solution would be to unite our internet related network technology and
the systems integration ability of our subsidiaries through this
merger. We will reform ourselves to best seize mid-term IT demands
which should continuously occur and become strong when the economic
situation recovers."
Nine Months Financial Results Summary
Operating Results Summary
------------------------------------------------------------
Nine Nine
months months
ended ended
Dec 31, Dec 31, YoY %
2008 2009 change
------------------------------ -------- -------- --------
JPY JPY
millions millions
Total Revenues 50,789 48,313 (4.9%)
------------------------------ -------- -------- --------
Connectivity and Outsourcing
Services 25,941 27,601 6.4%
------------------------------ -------- -------- --------
SI 24,105 20,165 (16.3%)
------------------------------ -------- -------- --------
Equipment Sales 726 439 (39.6%)
------------------------------ -------- -------- --------
ATM Operation Business 17 108 526.8%
------------------------------ -------- -------- --------
Total Costs 41,255 38,693 (6.2%)
------------------------------ -------- -------- --------
Connectivity and Outsourcing
Services 21,851 22,878 4.7%
------------------------------ -------- -------- --------
SI 18,504 14,751 (20.3%)
------------------------------ -------- -------- --------
Equipment Sales 639 380 (40.5%)
------------------------------ -------- -------- --------
ATM Operation Business 261 684 (162.2%)
------------------------------ -------- -------- --------
SG&A Expenses and R&D 7,690 7,613 (1.0%)
------------------------------ -------- -------- --------
Operating Income 1,844 2,007 8.8%
------------------------------ -------- -------- --------
Income before Income Tax
Expense 1,242 1,783 43.6%
------------------------------ -------- -------- --------
Net income attributable to IIJ 354 1,133 219.8%
------------------------------ -------- -------- --------
Segment Summary
--------------------------------------------------
Nine Nine
months months
ended ended
Dec 31, Dec 31,
2008 2009
------------------------------ -------- --------
JPY JPY
millions millions
Net Revenues 50,789 48,313
------------------------------ -------- --------
Network services and SI
business 50,935 48,525
------------------------------ -------- --------
ATM operation business 17 108
------------------------------ -------- --------
Elimination 163 320
------------------------------ -------- --------
Operating Income (Loss) 1,844 2,007
------------------------------ -------- --------
Network service and SI
business 2,326 2,754
------------------------------ -------- --------
ATM operation business (456) (731)
------------------------------ -------- --------
Elimination 26 16
------------------------------ -------- --------
We have omitted segment analysis because most of our revenues are
dominated by Network services and systems integration business.
Nine Months Financial Results
Revenues
Revenues were JPY48,313 million (down 4.9% YoY).
Connectivity and Outsourcing Services revenue were JPY27,601 million,
up 6.4% YoY. Connectivity service for corporate use increased by 6.8%
YoY. Over 1Gbps IP connectivity services increased, reaching 121
contracts as of December 31, 2009 (up 39 contracts YoY). IIJ Mobile
service also increased with contracts reaching over 36,000 contracts.
For connectivity service for home use, revenue increased by 5.7% YoY.
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, launched in December
2008, under hi-ho and IIJmio brands. For outsourcing services, email
related, network outsourcing related and security related services
contributed to the YoY increase.
SI revenues were JPY20,165 million, down 16.3% YoY. Systems
construction revenues decreased by 38.7% YoY to JPY6,135 million,
heavily affected by the weak Japanese economy. Systems operation and
maintenance revenues also slightly decreased by 0.4% YoY to JPY14,030
million as the decrease in systems construction revenue had affected
the new engagements of systems operation and maintenance contracts.
There were also severe cost down pressure from large accounts as they
are tightening cost reduction. The order backlog for systems
construction and equipment sales was JPY5,297 million (up 25.0% YoY)
and order backlog for systems operation and maintenance was JPY9,689
million (up 4.1% YoY) as of as of December 31, 2009, respectively.
Equipment sales revenues were JPY439 million, down 39.6% YoY.
ATM Operation Business revenues were JPY108 million compared to JPY17
million for the nine months ended December 2008. As of December 31,
2009, there are 147 ATMs placed in Japan.
Number of Contracts for Connectivity Services
---------------------------------------------------------------
as of Dec as of Dec YoY
31, 2008 31, 2009 Change
----------------------------- ---------- --------- ---------
Connectivity Services
(Corporate Use) 47,277 66,171 18,894
----------------------------- ---------- --------- ---------
IP Service (-99Mbps) 936 927 (9)
----------------------------- ---------- --------- ---------
IP Service (100Mbps-999Mbps) 223 244 21
----------------------------- ---------- --------- ---------
IP Service (1Gbps-) 82 121 39
----------------------------- ---------- --------- ---------
IIJ Data Center Connectivity
Service 301 299 (2)
----------------------------- ---------- --------- ---------
IIJ FiberAccess/F and IIJ
DSL/F 25,295 27,805 2,510
----------------------------- ---------- --------- ---------
IIJ Mobile Service(3) 18,830 35,357 16,527
----------------------------- ---------- --------- ---------
Others 1,610 1,418 (192)
----------------------------- ---------- --------- ---------
Connectivity Services (Home
Use) 450,708 404,700 (46,008)
----------------------------- ---------- --------- ---------
Under IIJ Brand 47,327 47,718 391
----------------------------- ---------- --------- ---------
hi-ho 183,416 171,511 (11,905)
----------------------------- ---------- --------- ---------
OEM 219,965 185,471 (34,494)
----------------------------- ---------- --------- ---------
Total Contracted Bandwidth 476.6 Gbps 647.2Gbps 170.6Gbps
----------------------------- ---------- --------- ---------
Connectivity and Outsourcing Services Revenues Breakdown
---------------------------------------------------------------
Nine Nine
months months
ended ended
Dec 31, Dec 31, YoY %
2008 2009 change
----------------------------- ---------- --------- ---------
JPY JPY
millions millions
Connectivity Service
(Corporate Use) 9,706 10,368 6.8%
----------------------------- ---------- --------- ---------
IP Service(4) 6,923 6,957 0.5%
----------------------------- ---------- --------- ---------
IIJ FiberAccess/F and IIJ
DSL/F 2,158 2,196 1.7%
----------------------------- ---------- --------- ---------
IIJ Mobile Service(5) 363 994 173.7%
----------------------------- ---------- --------- ---------
Others 262 221 (15.4%)
----------------------------- ---------- --------- ---------
Connectivity Service (Home
Use) 4,859 5,134 5.7%
----------------------------- ---------- --------- ---------
Under IIJ Brand 762 775 1.7%
----------------------------- ---------- --------- ---------
hi-ho 3,682 3,934 6.9%
----------------------------- ---------- --------- ---------
OEM 415 425 2.4%
----------------------------- ---------- --------- ---------
Outsourcing Services 11,376 12,099 6.4%
----------------------------- ---------- --------- ---------
Total Connectivity and
Outsourcing
Services 25,941 27,601 6.4%
----------------------------- ---------- --------- ---------
(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 JPY38,693 million (down 6.2% YoY).
Cost of Connectivity and Outsourcing Services revenue was JPY22,878
million, up 4.7% YoY largely affected by the increase in network
operation related costs, outsourcing related costs. Circuit related
cost also increased in relation to the growth of mobile data
communication service. Backbone cost was JPY2,745 million, down 1.1%
YoY. Gross margin was JPY4,722 million, up 15.5% YoY and gross margin
ratio was 17.1%, up 1.3% points YoY.
Cost of SI revenues was JPY14,751 million (down 20.3% YoY) largely due
to the decrease in outsourcing related costs as a result of reduction
of full-time outsourcing personnel. Purchasing cost also decreased
along with the decrease in systems construction revenues. Gross margin
was JPY5,414 million, down 3.3% YoY and gross margin ratio was 26.8%,
up 3.6% points YoY.
Cost of Equipment Sales revenues was JPY380 million (down 40.5% YoY).
Cost of ATM Operation Business revenues was JPY684 million compared to
JPY261 million for the nine months ended December 2008 as it is in its
start-up phase.
SG&A Expenses and R&D
Sales and marketing expenses were JPY3,928 million (up 12.0% YoY).
There were increase in personnel related expenses, disposal of
non-amortized intangible assets and amortization related to the
back-office system which began its operation from this quarter.
General and administrative expenses were JPY3,444 million, down 13.2%
YoY, largely due to the decrease of outsourcing related expenses and
general expenses as a result of tight cost control.
Research and development expenses were JPY 241 million, up 11.4% YoY as
expenses related to IIJ Innovation Institute Inc. Increased.
Operating income
Operating income increased by 8.8% YoY to JPY 2,007 million. While
operating loss related to the new ATM operation business increased,
gross margin of connectivity and outsourcing service increased and
general and administrative expenses decreased.
Other income (expenses)
Other income (expenses) was net other expense of JPY224 million
compared to net other expense of JPY602 million for the nine months
ended December 2008 as impairment losses on equity securities and
interest expense decreased compared to the nine months ended December
2008.
Income before income tax expenses
Income before income tax expenses was JPY1,783 million, up 43.6% YoY.
Net Income
Net income was JPY868 million compared to JPY95 million for the nine
months ended December 2008.
Income tax expense was JPY1,042 million compared to JPY1,192 million
for the nine months ended December 2008. Deferred tax expenses was
JPY790 million compared to JPY972 million for the nine months ended
December 2008.
Equity in net income of equity method investees was JPY127 million
compared to JPY45 million for the nine months ended December 2008.
Net income attributable to IIJ
Net income attributable to IIJ was JPY 1,133 million, up 219.8% YoY.
Net losses attributable to noncontrolling interests was JPY265 million
compared to JPY259 million for the nine months ended December 2008,
both related to GDX Japan Inc. and Trust Networks Inc.
Nine Months Financial Condition
Balance Sheets
As of December 31, 2009, the balance of total assets was JPY49,002
million, a decrease of JPY3,300 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, cash and cash equivalents decreased by JPY1,722
million, accounts receivables decreased by JPY1,682 million,
inventories related to SI projects increased by JPY693 million and
prepaid expenses related to network equipment maintenance increased by
JPY561 million, respectively. As for current liabilities, as compared
to each of the respective balances as of March 31, 2009, short-term
borrowings decreased by JPY2,250 million and accounts payable decreased
by JPY1,029 million. Noncurrent capital lease obligations decreased by
JPY932 million from the balances as of March 31, 2009.
As of December 31, 2009, we had net deferred tax asset (current) of
JPY492 million and net deferred tax asset (non-current) of JPY1,770
million, respectively.
The balance of other investments as of December 31, 2009 was JPY2,117
million, an increase of JPY202 million from the balance as of March 31,
2009. The breakdown of other investments were JPY1,036 million in
nonmarketable equity securities, JPY727 million in available-for-sale
securities and JPY354 million in other.
As of December 31, 2009, the balance of non-amortized intangible assets
(excluding telephone rights) such as goodwill was JPY5,368 million and
the balance of amortized intangible assets were JPY227 million. The
breakdown of non-amortized intangible assets were JPY2,639 million in
goodwill, JPY2,537 million in customer relationships and JPY192 million
in trademark. The breakdown of amortized intangible assets were JPY122
million in customer relationships and JPY105 million in licenses.
Total IIJ shareholders' equity as of December 31, 2009 was JPY25,818
million, an increase of JPY649 million from the balance as of March 31,
2009. IIJ Shareholders' equity ratio (IIJ shareholders' equity/total
assets) as of December 31, 2009 was 52.7%, up 4.6 points compared to
March 31, 2009.
Cash Flows
Cash and cash equivalents as of December 31, 2009 were JPY8,466 million
compared to JPY8,955 million as of December 31, 2008.
Net cash provided by operating activities for the nine months ended
December 31, 2009 was JPY6,261 million compared to net cash provided by
operating activities of JPY5,351 million for the nine months ended
December 31, 2008. While operating income increased due to the increase
in gross margin from connectivity and outsourcing service and the
decrease general and administrative expenses, there were changes in
operating assets and liabilities during the nine months ended December
31, 2009, mainly resulting from the decrease in accounts receivables of
JPY1,657 million (decrease of JPY2,656 million for the nine months
ended December 31, 2008), increase in inventories and prepaid expenses
of JPY638 million (increase of JPY1,249 million for the nine months
ended December 31, 2008) and decrease in accounts payable related to
on-going SI projects of JPY669 million (decrease of JPY2,122 million
for the nine months ended December 31, 2008).
Net cash used in investing activities for the nine months ended
December 31, 2009 was JPY2,798 million compared to net cash used in
investing activities of JPY2,926 million for the nine months ended
December 31, 2008, mainly due to payment of JPY2,625 million for the
purchase of property and equipment (payment of JPY2,663 million for the
nine months ended December 31, 2008) and the purchase of short-term and
other investments of JPY250 million (purchase of JPY125 million for the
nine months ended December 31, 2008).
Net cash used in financing activities for the nine months ended
December 31, 2009 was JPY5,163 million compared to net cash used in
financing activities of JPY4,911 million for the nine months ended
December 31, 2008, mainly due to principal payments under capital
leases of JPY2,658 million (payment of JPY2,848 million for the nine
months ended December 31, 2008), net repayment of short-term borrowings
with initial maturities less than three months of JPY2,250 million (net
repayment of JPY1,350 million for the nine months ended December 31,
2008) and payments of JPY405 million for FY2008 year-end dividends and
FY2009 interim period dividends.
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
-----------------------------------------------
Nine Nine
months months
ended ended
Dec 31, Dec 31,
2008 2009
--------------------------- -------- --------
JPY JPY
millions millions
Adjusted EBITDA 5,798 5,942
--------------------------- -------- --------
Depreciation and
Amortization 3,954 3,935
--------------------------- -------- --------
Operating Income 1,844 2,007
--------------------------- -------- --------
Other Income (Expense) (602) (224)
--------------------------- -------- --------
Income Tax Expense 1,192 1,042
--------------------------- -------- --------
Equity in Net Income (Loss)
of Equity
Method Investees 45 127
--------------------------- -------- --------
Net income 95 868
--------------------------- -------- --------
Net income attributable to
noncontrolling
interests 259 265
--------------------------- -------- --------
Net Income attributable to
IIJ 354 1,133
--------------------------- -------- --------
CAPEX
-----------------------------------------------
Nine Nine
months months
ended ended
Dec 31, Dec 31,
2008 2009
--------------------------- -------- --------
JPY JPY
millions millions
CAPEX, including capital
leases 6,348 4,187
--------------------------- -------- --------
Acquisition of Assets by
Entering into
Capital Leases 3,685 1,563
--------------------------- -------- --------
Purchase of Property and
Equipment 2,663 2,624
--------------------------- -------- --------
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 Net Income
Operating Expense attributable
Revenues Income (Benefit) to IIJ
---------------------- -------- --------- --------- ------------
Full FY2009 68,000 3,300 2,700 1,700
---------------------- -------- --------- --------- ------------
Revenues for the nine months ended December 31, 2009 was below our
target mainly because systems integration revenues was heavily affected
by the tough business environment with companies continuing to withhold
their investments and keeping a tight grip on spending. On the
contrary, operating income for the nine months ended December 31, 2009
was in line with our target so far, as outsourcing related costs and
general and administrative expenses decreased as a result of tight cost
control.
For the Full FY2009 target, we have revised downward our revenue target
from JPY73,000 million to JPY68,000 million by taking into account the
revenue level and the SI and equipment sales order backlog. Targets for
operating income, income before income tax expense (benefit) and net
income attributable to IIJ remain unchanged considering the income
level for the nine months ended December 31, 2009 and this fourth
quarter revenue target.
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 fourlevel 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
nine months ended December 31, 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.
Presentation
Presentation Materials will be posted on our web site
(http://www.iij.ad.jp/en/IR/) on February 12, 2010.
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.
Tables to follow
Internet Initiative Japan Inc.
Quarterly Consolidated Balance Sheets (Unaudited)
(As of March 31, 2009 and December 31, 2009)
------------------------------------------------------------------------------------------------
As of March 31, 2009 As of December 31, 2009
----------------------------------------- -------------------- -------------------------------
Thousands
of Thousands of
Thousands of U.S.
JPY % Dollars JPY %
----------------------------------------- ------------ ------ --------- ------------ ------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 10,187,724 90,955 8,466,102
Accounts receivable, net of allowance
for
doubtful accounts of JPY 22,072
thousand and
JPY 29,207 thousand at March 31, 2009
and December 31, 2009, respectively 10,256,527 92,120 8,574,513
Inventories 529,756 13,139 1,222,961
Prepaid expenses 1,771,955 25,063 2,332,852
Deferred tax assets -- Current 762,221 5,289 492,273
Other current assets, net of allowance
for
doubtful accounts of JPY 11,720
thousand and
JPY 720 thousand at March 31, 2009 and
December 31, 2009, respectively 848,586 6,268 583,468
------------ --------- ------------
Total current assets 24,356,769 232,834 21,672,169
------------ 46.6 --------- ------------ 44.2
INVESTMENTS IN EQUITY METHOD INVESTEES 947,626 1.8 11,794 1,097,765 2.2
OTHER INVESTMENTS 1,914,594 3.7 22,742 2,116,827 4.3
PROPERTY AND EQUIPMENT, net of
accumulated
depreciation and amortization of JPY
16,444,517
thousand and JPY 18,830,595 thousand at
March
31, 2009 and December 31, 2009,
respectively 13,172,891 25.2 141,394 13,160,935 26.9
GOODWILL 2,639,319 5.0 28,355 2,639,319 5.4
OTHER INTANGIBLE ASSETS -- Net 3,201,806 6.1 31,856 2,965,166 6.1
GUARANTEE DEPOSITS 2,072,652 4.0 22,209 2,067,234 4.2
Deferred tax assets -- Noncurrent 2,253,464 4.3 19,021 1,770,496 3.6
OTHER ASSETS, net of allowance for
doubtful
accounts of JPY 72,800 thousand and JPY
89,100
thousand at March 31, 2009 and December
31 2009,
respectively, and net of loan loss
valuation
allowance of JPY 16,701 thousand at
March 31,
2009 and December 31 2009, respectively 1,742,078 16,241 1,511,710
------------ 3.3 --------- ------------ 3.1
TOTAL 52,301,199 526,446 49,001,621
------------ 100.0 --------- ------------ 100.0
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
As of March 31, 2009 As of December 31, 2009
----------------------------------------- -------------------- -------------------------------
Thousands
Thousands of of Thousands of
U.S.
JPY % Dollars JPY %
----------------------------------------- ------------ ------ --------- ------------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings 7,350,000 54,792 5,100,000
Capital lease obligations --current
portion 3,272,257 33,417 3,110,449
Accounts payable 6,064,829 54,099 5,035,574
Accrued expenses 1,069,310 13,413 1,248,453
Accrued retirement and pension costs
--current 11,959 128 11,959
Deferred income 1,255,749 14,128 1,315,029
Other current liabilities 763,544 7,807 726,688
------------ --------- ------------
Total current liabilities 19,787,648 177,784 16,548,152
------------ 37.8 --------- ------------ 33.8
CAPITAL LEASE OBLIGATIONS --Noncurrent 4,866,120 9.3 42,270 3,934,469 8.0
ACCRUED RETIREMENT AND PENSION COSTS
--Noncurrent 1,399,592 2.7 17,598 1,638,013 3.3
OTHER NONCURRENT LIABILITIES 1,004,920 10,225 951,781
------------ 1.9 --------- ------------ 2.0
Total Liabilities 27,058,280 247,877 23,072,415
------------ 51.7 --------- ------------ 47.1
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 December 31, 2009,
respectively 16,833,847 32.2 180,854 16,833,847 34.4
Additional paid-in capital 27,611,737 52.8 295,009 27,459,397 56.0
Accumulated deficit (18,549,142) (35.5) (191,458) (17,820,937) (36.4)
Accumulated other comprehensive loss (320,711) (0.6) (2,659) (247,515) (0.5)
Treasury stock--3,934 shares held by
the company at March 31, 2009 and
December 31, 2009, respectively (406,547) (4,368) (406,547)
------------ (0.8) --------- ------------ (0.8)
Total Internet Initiative Japan Inc.
shareholders'
equity 25,169,184 277,378 25,818,245
------------ 48.1 --------- ------------ 52.7
NONCONTROLLING INTERESTS 73,735 1,192 110,961
------------ 0.2 --------- ------------ 0.2
Total equity 25,242,919 278,570 25,929,206
------------ 48.3 --------- ------------ 52.9
TOTAL 52,301,199 526,446 49,001,621
------------ 100.0 --------- ------------ 100.0
------------------------------------------------------------------------------------------------
(Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 93.08
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, 2009.
(Note2) The above presentation as of March 31, 2009 has been changed to conform to the
presentation as of December 31, 2009.
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(For the nine months ended December 31, 2008 and December 31, 2009)
----------------------------------------------------------------------------------------
Nine Months Ended Nine Months Ended
December 31, 2008 December 31, 2009
-------------------- -------------------------------
Thousands
Thousands % of of Thousands % of
of total U.S. of total
JPY revenues Dollars JPY revenues
--------------------------------- ---------- -------- --------- ---------- --------
REVENUES:
Connectivity and outsourcing
services:
Connectivity (corporate use) 9,705,875 111,382 10,367,448
Connectivity (home use) 4,859,054 55,156 5,133,887
Outsourcing services 11,375,933 129,986 12,099,128
---------- --------- ----------
Total 25,940,862 296,524 27,600,463
---------- --------- ----------
Systems integration:
Systems Construction 10,014,019 65,911 6,134,986
Systems Operation and
Maintenance 14,091,056 150,735 14,030,403
---------- --------- ----------
Total 24,105,075 216,646 20,165,389
---------- --------- ----------
Equipment sales 725,801 4,713 438,710
ATM operation business 17,265 1,163 108,217
---------- --------- ----------
Total revenues 50,789,003 519,046 48,312,779
---------- 100.0 --------- ---------- 100.0
COST AND EXPENSES:
Cost of connectivity and
outsourcing services 21,851,462 245,792 22,878,358
Cost of systems integration 18,503,892 158,479 14,751,253
Cost of equipment sales 639,053 4,082 379,946
Cost of ATM operation business 260,587 7,341 683,253
---------- --------- ----------
Total cost 41,254,994 415,694 38,692,810
---------- 81.3 --------- ---------- 80.1
Sales and marketing 3,506,005 6.9 42,198 3,927,736 8.1
General and administrative 3,967,468 7.8 37,001 3,444,078 7.1
Research and development 216,194 2,588 240,924
---------- 0.4 --------- ---------- 0.5
Total cost and expenses 48,944,661 497,481 46,305,548
---------- 96.4 --------- ---------- 95.8
OPERATING INCOME 1,844,342 21,565 2,007,231
---------- 3.6 --------- ---------- 4.2
OTHER INCOME (EXPENSE):
Interest income 32,542 193 17,990
Interest expense (310,146) (2,591) (241,172)
Foreign exchange losses (9,529) (41) (3,804)
Net gains on sales of other
investments 17,680 222 20,640
Losses on write-down of other
investments (329,216) (531) (49,441)
Other--net (3,513) 341 31,762
---------- --------- ----------
Other expense -- net (602,182) (2,407) (224,025)
---------- (1.2) --------- ---------- (0.5)
INCOME FROM OPERATIONS BEFORE
INCOME
TAX EXPENSE AND EQUITY IN NET
INCOME IN
EQUITY METHOD INVESTEES 1,242,160 19,158 1,783,206
---------- 2.4 --------- ---------- 3.7
INCOME TAX EXPENSE 1,192,429 2.3 11,197 1,042,191 2.2
EQUITY IN NET INCOME OF EQUITY
METHOD
INVESTEES 45,107 1,366 127,164
---------- 0.1 --------- ---------- 0.3
NET INCOME 94,838 9,327 868,179
---------- 0.2 --------- ---------- 1.8
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS 259,484 2,848 265,114
---------- 0.5 --------- ---------- 0.5
NET INCOME ATTRIBUTABLE TO
INTERNET
INITIATIVE JAPAN INC. 354,322 0.7 12,175 1,133,293 2.3
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Nine Months Ended Nine Months Ended
December 31, 2008 December 31, 2009
--------------------------------- -------------------- -------------------------------
NET INCOME PER SHARE (ADS)
BASIC WEIGHTED-AVERAGE NUMBER OF
SHARES (shares) 206,023 202,544
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) 206,063 202,544
BASIC WEIGHTED-AVERAGE NUMBER OF
ADS EQUIVALENTS (ADSs) 82,409,200 81,017,600
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) 82,425,200 81,017,600
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN
INC.
PER SHARE (JPY / U.S. Dollars /
JPY) 1,719.82 60.11 5,595.29
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN
INC.
PER SHARE (JPY / U.S. Dollars /
JPY) 1,719.48 60.11 5,595.29
BASIC NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN
INC.
PER ADS (JPY / U.S. Dollars /
JPY) 4.30 0.15 13.99
DILUTED NET INCOME ATTRIBUTABLE
TO INTERNET INITIATIVE JAPAN
INC.
PER ADS (JPY / U.S. Dollars /
JPY) 4.30 0.15 13.99
----------------------------------------------------------------------------------------
(Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY
93.08 which was the noon buying
|
