TOKYO, May 15, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) today announced its full year ("FY2012") and 4th quarter ("4Q12") consolidated financial results for the fiscal year ended March 31, 2013 (from April 1, 2012 to March 31, 2013). 1
| Highlights of Financial Results for FY2012 | ||||
| Revenues | JPY106,248 million | ($1,128.4 million, up 9.2% YoY) | ||
| Operating Income | JPY7,753 million | ($82.3 million, up 22.0% YoY) | ||
| Net Income attributable to IIJ | JPY5,301 million | ($56.3 million, up 45.6% YoY) | ||
| ▪ Revenues increased by 9.2% YoY. Revenues for network services, systems integration and ATM operation business each continued to grow YoY. | ||||
| ▪ Operating income increased by 22.0% YoY. Gross margin of network services, systems integration and ATM operation business each increased while SG&A slightly increased. | ||||
| Financial Target for FY2013 | ||||
| Revenues | JPY117,000 million | ($1,242.6 million, up 10.1% YoY) | ||
| Operating Income | JPY9,400 million | ($99.8 million, up 21.2% YoY) | ||
| Net Income attributable to IIJ | JPY6,000 million | ($63.7 million, up 13.2% YoY) | ||
| Annual Cash Dividend | JPY22.00 per share | (up 17.3% YoY) | ||
Overview of FY2012 Financial Results and Business Outlook
"We finished pretty well this fiscal year as each of our business progressed as planned. Our revenues exceeded JPY100 billion for the first time since the inception of the company. The business developments we accomplished should position IIJ for further growth in the coming years," said Koichi Suzuki, the founder and CEO of IIJ.
"We continue to enjoy greater network efficiency by having multiple revenue sources on our large network infrastructure. We remain as a top ISP choice for large network operators who require broader bandwidth and stable connectivity. As for systems integration, we're seeing more large scale projects, supported by the overall Japanese economy recovery. ATM operation business, a stock-type revenue, turned positive and has become a revenue and income driver. We're confident our strategic businesses continue to contribute to our overall revenue and earnings growth further.
"We've been working vigorously to expand cloud and overseas businesses this fiscal year. Our continued efforts to introduce and promote attractive cloud services that would encourage more cloud adoption by enterprises have led this fiscal year's cloud revenue to approximately JPY6.2 billion. Along with continued revenue growth, we decided to double the size of our container type datacenter in Matsue, the western suburbs of Japan. We're well positioned in the Japanese cloud market as we've been engaging in the operation of systems and network ever since the establishment which should differentiate us from competitors. We've also made good progress for overseas business by expanding service facilities and accumulating orders of large server construction and operation projects. Currently, these businesses would be small portion of our total revenue, but we expect them to be our business scale-up drivers.
"As the outsourcing of IT systems by business enterprises becomes a norm in the Japanese society gradually, we see a huge growth opportunity ahead of us. We target the increase of revenue and operating income by 10.1% and 21.2% YoY for FY2013.
"We're excited to announce we invited Mr. Katsu as our new President, Chief Operating Officer, and a representative director, which appointment should become effective at the next shareholders meeting this coming June. I will remain as CEO and co-work with him. This new management structure should further enhance our competitive advantages and take IIJ to the next level of growth. We must stay aggressive in taking effective means to scale up as a growing company in a growing market," concluded Suzuki.
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 JPY94.16 per US$1.00, which was the noon buying rate on March 29, 2013.
FY2012 Financial Results Summary
| Operating Results Summary | |||
| FY2011 | FY2012 |
YoY % Change |
|
| JPY millions | JPY millions | ||
| Total Revenues | 97,315 | 106,248 | 9.2 |
| Network Services | 63,410 | 65,232 | 2.9 |
| Systems Integration (SI) | 31,469 | 37,205 | 18.2 |
| Equipment Sales | 1,112 | 1,491 | 34.1 |
| ATM Operation Business | 1,324 | 2,320 | 75.2 |
| Total Costs | 77,326 | 84,394 | 9.1 |
| Network Services | 49,985 | 50,692 | 1.4 |
| Systems Integration (SI) | 24,979 | 30,425 | 21.8 |
| Equipment Sales | 980 | 1,318 | 34.5 |
| ATM Operation Business | 1,382 | 1,959 | 41.8 |
| SG&A Expenses and R&D | 13,636 | 14,101 | 3.4 |
| Operating Income | 6,353 | 7,753 | 22.0 |
| Income before Income Tax Expense | 5,976 | 7,757 | 29.8 |
| Net income attributable to IIJ | 3,641 | 5,301 | 45.6 |
| Segment Results Summary | ||
| FY2011 | FY2012 | |
| JPY millions | JPY millions | |
| Total Revenues | 97,315 | 106,248 |
| Network services and SI business | 96,497 | 104,487 |
| ATM operation business | 1,324 | 2,320 |
| Elimination | 506 | 559 |
| Operating Income (Loss) | 6,353 | 7,753 |
| Network service and SI business | 6,631 | 7,629 |
| ATM operation business | (194) | 239 |
| Elimination | 84 | 115 |
We have omitted segment analysis because most of our revenues are dominated by Network services and Systems Integration (SI) business.
FY2012 Results of Operation
Revenues
Total revenues were JPY106,248 million, up 9.2% YoY.
Network Services revenue was JPY65,232 million, up 2.9% YoY.
Revenues for Internet connectivity services for corporate use were JPY16,027 million, up 9.0% YoY. The increase was mainly due to the increasing demands for broader bandwidth by network operators.
Revenues for Internet connectivity services for home use were JPY5,466 million, down 4.4% YoY. While our LTE mobile data communication service, which was introduced in February 2012, has been accumulating orders continuously, the cancellations of old type connectivity services continued.
WAN services revenues were JPY25,168 million, down 1.9% YoY. There were some downward effects in revenues due to renewals and/or cancellations of contracts although we accumulated new orders during FY2012.
Outsourcing services revenues were JPY18,571 million, up 7.2% YoY. The revenue growth was mainly led by the continuous demands on "IIJ GIO Hosting Package Services" and datacenter-related services.
| Network Services Revenues Breakdown | |||
| FY2011 | FY2012 |
YoY % Change |
|
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Corporate Use) | 14,707 | 16,027 | 9.0 |
| IP Service2 | 9,299 | 10,217 | 9.9 |
| IIJ FiberAccess/F and IIJ DSL/F | 3,151 | 3,170 | 0.6 |
| IIJ Mobile Service3 | 2,013 | 2,401 | 19.3 |
| Others | 244 | 239 | (1.9) |
| Internet Connectivity Service (Home Use) | 5,717 | 5,466 | (4.4) |
| Under IIJ Brand | 911 | 1,350 | 48.2 |
| hi-ho | 4,222 | 3,489 | (17.4) |
| OEM | 584 | 627 | 7.3 |
| WAN Services | 25,667 | 25,168 | (1.9) |
| Outsourcing Services | 17,319 | 18,571 | 7.2 |
| Total Network Services | 63,410 | 65,232 | 2.9 |
| Number of Contracts for Connectivity Services | |||
|
as of March 31, 2012 |
as of March 31, 2013 |
YoY Change |
|
| Internet Connectivity Services (Corporate Use) | 93,807 | 114,614 | 20,807 |
| IP Service (-99Mbps) | 923 | 905 | (18) |
| IP Service (100Mbps-999Mbps) | 344 | 401 | 57 |
| IP Service (1Gbps-) | 132 | 207 | 75 |
| IIJ Data Center Connectivity Service | 323 | 306 | (17) |
| IIJ FiberAccess/F and IIJ DSL/F | 44,510 | 48,940 | 4,430 |
| IIJ Mobile Service4 | 46,329 | 62,517 | 16,188 |
| Others | 1,246 | 1,338 | 92 |
| Internet Connectivity Services (Home Use) | 397,191 | 489,223 | 92,032 |
| Under IIJ Brand | 42,721 | 102,256 | 59,535 |
| hi-ho | 153,901 | 149,000 | (4,901) |
| OEM | 200,569 | 237,967 | 37,398 |
| Total Contracted Bandwidth | 857.7 Gbps | 1,218.7Gbps | 361.0 |
2 IP Service revenues include revenues from the Data Center Connectivity Service.
3 Revenue from mobile data communication service for home use is included in Internet Connectivity service (home use).
4 Contracts of IIJ Mobile Service are of mobile data communication service for corporate use.
SI revenues were JPY37,205 million, up 18.2% YoY.
Systems construction revenue, a one-time revenue, was JPY15,825 million, up 31.9% YoY. The increase was led mainly by the increase in both number and scale of systems construction projects as well as the accumulation of overseas construction projects. Systems operation and maintenance revenue, a recurring revenue, was JPY21,380 million, up 9.8% YoY. The increase was mainly due to the continuous demands on "IIJ GIO Component Services."
The orders received for SI and equipment sales for FY2012 totaled JPY41,923 million, up 22.3% YoY. In the breakdown, the orders received for systems construction and equipment sales was JPY17,180 million, up 30.6% YoY, and the orders received for systems operation and maintenance was JPY24,743 million, up 17.1% YoY.
The order backlog for SI and equipment sales as of March 31, 2013 amounted to JPY20,081 million, up 19.1% YoY. In the breakdown, the order backlog for systems construction and equipment sales was JPY3,703 million, down 3.5% YoY, and the order backlog for systems operation and maintenance was JPY16,377 million, up 25.8% YoY.
Equipment sales revenues were JPY1,491 million, up 34.1% YoY.
ATM Operation Business revenues were JPY2,320 million, up 75.2% YoY. The increase was in accordance with the increase in the numbers of newly placed ATMs. As of May 15, 2013, 625 ATMs are placed.
Cost and expense
Total cost of revenues was JPY84,394 million, up 9.1% YoY.
Cost of Network Services revenue was JPY50,692 million, up 1.4% YoY, stayed almost flat. Gross margin was JPY14,540 million, up 8.3% YoY and gross margin ratio was 22.3%.
Cost of SI revenues was JPY30,425 million, up 21.8% YoY. The increase was mainly due to the increase in purchasing costs along with the increase in systems construction revenues as well as the increase in outsourcing-related and personnel-related costs. Gross margin was JPY6,780 million, up 4.5% YoY and gross margin ratio was 18.2%.
Cost of Equipment Sales revenues was JPY1,318 million, up 34.5% YoY. Gross margin was JPY173 million and gross margin ratio was 11.6%.
Cost of ATM Operation Business revenue swas JPY1,959 million, up 41.8% YoY. The increase was in accordance with the number of newly placed ATMs. Gross margin was JPY360 million compared to gross loss of JPY58 million for FY2011. Gross margin ratio was 15.5%.
SG&A and R&D Expenses
SG&A and R&D expenses in total were JPY14,101 million, up 3.4% YoY (JPY13,636 million in FY2011). The ratio of SG&A and R&D expenses to the total revenue was 13.3%, down 0.7 points compared to the ratio of FY2011.
Sales and marketing expenses were JPY8,059 million, up 1.4% YoY. The increase was mainly due to the increase in advertizing expenses. Amortization expenses of customer relationship related to IIJ Global Solutions Inc. was JPY367 million (JPY425 million in FY2011).
General and administrative expenses were JPY5,632 million, up 6.3% YoY. The increase was mainly due to the increase in personnel-related expenses (JPY5,300 million in FY2011).
Research and development expenses were JPY410 million, up 5.5% YoY (JPY389 million in FY2011).
Operating income
Operating income was JPY7,753 million, up 22.0% YoY mainly because gross margin of each revenue line increased.
Other income (expenses)
Other income (expenses), including interest expenses, dividend income and foreign currency gains, was an income of JPY4 million (an expense of JPY377 million for FY2011).
Income before income tax expenses
Income before income tax expenses was JPY7,757 million, up 29.8% YoY. (JPY5,976 million for FY2011)
Net Income
Income tax expense was JPY2,608 million (JPY2,525 million for FY2011), which consists of corporate, inhabitant and other income taxes of JPY2,551 million, enterprise taxes and other taxes of JPY584 million and deferred tax benefit of JPY527 million.
Equity in net income of equity method investees was JPY168 million (JPY124 million for FY2011) mainly due to net income of Internet Revolution, Inc. and Internet Multifeed Co.
As a result of the above, net income was JPY5,317 million, up 48.8% YoY (JPY3,575 million for FY2011).
Net income attributable to IIJ
Net income attributable to non-controlling interests was JPY16 million mainly related to net income of Trust Networks Inc (net loss of JPY66 million for FY2011).
Net income attributable to IIJ was JPY5,301 million, up 45.6% YoY (JPY3,641 million for FY2011).
FY2012 Financial Condition
Balance Sheets
As of March 31, 2013, the balance of total assets was JPY82,111 million, increased by JPY8,618 million from the balance as of March 31, 2012 (JPY73,493 million as of March 31, 2012).
As for current assets as of March 31, 2013, as compared to the respective balances as of March 31, 2012, accounts receivable increased by JPY3,043 million and cash and cash equivalents decreased by JPY1,278 million mainly due to the payment of income taxes and the repayment of borrowings. As for noncurrent assets, as compared to the respective balance as of March 31, 2012, property and equipment increased by JPY3,290 million, resulting mainly from investments in network and servers. As for current liabilities, as compared to the respective balance as of March 31, 2012, accounts payable increased by JPY2,169 million and income taxes payable decreased by JPY540 million.
As for the balances of capital lease obligations, as compared to the respective balances as of March 31, 2012, capital lease obligations-current portion increased by JPY508 million to JPY3,505 million and capital lease obligations-noncurrent increased by JPY629 million to JPY5,370 million due to investments in network and servers. The balance of long-term borrowings, including current portion, as of March 31, 2013 was decreased to JPY1,990 million, resulting from the repayment of JPY1,010 million.
As of March 31, 2013, the balance of other investments was JPY3,771 million, increased by JPY833 million from the respective balance as of March 31, 2012. The breakdown of other investments were JPY2,123 million in nonmarketable equity securities, JPY1,310 million in available-for-sale securities and JPY338 million in other.
As of March 31, 2013, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY6,077 million, and the breakdown of non-amortized intangible assets were JPY5,970 million in goodwill and JPY107 million in trademark. The balance of amortized intangible assets, which was customer relationships, was JPY4,665 million, decreased by JPY558 million as compared to the respective balance as of March 31, 2012.
Total IIJ shareholders' equity as of March 31, 2013 was JPY37,607 million, increased by JPY4,919 million from the respective balance as of March 31, 2012. IIJ shareholders' equity ratio (total IIJ shareholders' equity/total assets) as of March 31, 2013 was 45.8%.
Cash Flows
Cash and cash equivalents as of March 31, 2013 were JPY12,259 million compared to JPY13,537 million as of March 31, 2012.
Net cash provided by operating activities for FY2012 was JPY9,753 million compared to net cash provided by operating activities of JPY11,659 million for FY2011. While operating income increased compared to FY2011, there was an increase in accounts receivable as well as in payments for income taxes.
Net cash used in investing activities for FY2012 was JPY5,946 million compared to net cash used in investing activities of JPY5,954 million for FY2011 mainly due to payments for purchase of property and equipment of JPY5,589 million (JPY6,167 million for FY2011).
Net cash used in financing activities for FY2012 was JPY4,996 million compared to net cash used in financing activities of JPY5,464 million for FY2011, due to principal payments under capital leases of JPY3,679 million (JPY3,426 million for FY2011), FY2011 year-end dividends and FY2012 interim dividends payments of JPY709 million in total (JPY608 million for FY2011) and net repayment of borrowings of JPY610 million (net repayment of JPY1,430 million for FY2011).
FY2013 Financial Targets
Our financial targets for FY2013 are as follows:
| (JPY in millions) | ||||
| Revenues |
Operating Income |
Income before Income Tax Expense |
Net Income attributable to IIJ |
|
| 1H FY2013 Target | 54,500 | 3,400 | 3,200 | 2,000 |
| Full FY2013 Target | 117,000 | 9,400 | 9,000 | 6,000 |
We target revenue of JPY117.0 billion, up 10.1% YoY. We expect network services revenues to increase, our cloud-related revenues to be over JPY10 billion, systems construction revenue, a one-time revenue, to increase, overseas revenues to be accumulated and ATM operation business revenues to continuously increase.
For operating income, we target JPY9.4 billion, up 21.2% YoY. We expect gross margin and gross margin ratio of network services, systems integration and ATM operation business to increase along with each revenue growth. We also anticipate profit contribution from cloud as it turns positive. SG&A should increase but would not go up as much as the gross margin.
For income before income tax expense (benefit), we target JPY9.0 billion, up 16.0% YoY, considering interest expenses and others.
For net income attributable to IIJ, we target JPY6.0 billion, up 13.2% YoY, expecting income taxes benefit of approximately JPY0.7 billion related to a subsidiary, Trust Networks Inc.
FY2013 Dividend Forecast
Our FY2013 dividend forecast is as follows:
| Interim | Year-end | Full Year | |
| FY2013 Dividend (forecast) | JPY11.00 (forecast) | JPY11.00 (forecast) | JPY22.00 (forecast) |
| FY2012 Dividend (scheduled) | JPY8.75* (paid) | JPY10.00 (scheduled) | JPY18.75 (scheduled) |
While we give full consideration in securing our funds to strengthen our financial position and to prepare for our middle to long term operation and business development, we seek to achieve stable and continuous dividends to our shareholders.
Based on our Company's Article of Incorporation, we plan to pay our dividend twice a year, at interim and at fiscal year-end. The dividends for interim and fiscal year-end are decided at the Company's board of directors and at the general meeting of shareholders, respectively.
As for FY2012 year-end dividend, we have revised it from JPY8.75 to JPY10.00 per share of our common stock as announced on February 8, 2013. We have paid interim dividend of JPY8.75 per share of our common stock for FY2012 interim period. FY2012 total dividend per share of our common stock is scheduled to be JPY18.75.
For FY2013, we target to pay a total dividend of JPY22.00 per share of common stock (JPY11.00 for the interim period and JPY11.00 for the fiscal year-end).
*IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. The above figures are retroactively adjusted to the stock split.
Reconciliation of Non-GAAP Financial Measures
The following table summarizes the reconciliation of adjusted EBITDA to net income attributable to IIJ in our consolidated statements of income that are prepared in accordance with U.S. GAAP.
| Adjusted EBITDA | ||
| FY2011 | FY2012 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 13,534 | 15,309 |
| Depreciation and Amortization5 | (7,144) | (7,508) |
| Impairment loss on other intangible assets | (37) | (48) |
| Operating Income | 6,353 | 7,753 |
| Other Income (Expense) | (377) | 4 |
| Income Tax Expense | 2,525 | 2,608 |
| Equity in Net Income of Equity Method Investees | 124 | 168 |
| Net income | 3,575 | 5,317 |
| Net loss (income) attributable to noncontrolling interests | 66 | (16) |
| Net Income attributable to IIJ | 3,641 | 5,301 |
| CAPEX | ||
| FY2011 | FY2012 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 10,917 | 10,405 |
|
Acquisition of Assets by Entering into Capital Leases |
4,750 | 4,816 |
| Purchase of Property and Equipment | 6,167 | 5,589 |
5 Depreciation and amortization includes impairment loss on other intangible assets. (See IIJ's consolidated financial statements for details).
Presentation
Presentation materials will be posted on our web site (http://www.iij.ad.jp/en/ir/) on May 15, 2013.
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 listed on the U.S. NASDAQ Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in 2006.
Statements made in this press release regarding IIJ's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ's and managements' current expectations, assumptions, estimates and projections about its business and the industry. These forward-looking statements, such as statements regarding FY2012 revenues and operating and net profitability, are subject to various risks, uncertainties and other factors that could cause IIJ's actual results to differ materially from those contained in any forward-looking statement. These risks, uncertainties and other factors include: IIJ's ability to maintain and increase revenues from higher-margin services such as systems integration and outsourcing services; the possibility that revenues from connectivity services may decline substantially as a result of competition and other factors; the ability to compete in a rapidly evolving and competitive marketplace; the impact on IIJ's profits of fluctuations in costs such as backbone costs and subcontractor costs; the impact on IIJ's profits of fluctuations in the price of available-for-sale securities; the impact of technological changes in its industry; IIJ's ability to raise additional capital to cover its indebtedness; the possibility that NTT, IIJ's largest shareholder, may decide to exercise substantial influence over IIJ; and other risks referred to from time to time in IIJ's filings on Form 20-F of its annual report and other filings with the United States Securities and Exchange Commission.
| Internet Initiative Japan Inc. | |||
| Consolidated Balance Sheets (Unaudited) | |||
| (As of March 31, 2012 and March 31, 2013) | |||
| As of March 31, 2012 | As of March 31, 2013 | ||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| ASSETS | |||
| CURRENT ASSETS: | |||
| Cash and cash equivalents | 13,536,824 | 130,192 | 12,258,872 |
| Accounts receivable, net of allowance for doubtful accounts of JPY 107,919 thousand and 93,934 thousand at March 31, 2012 and March 31, 2013, respectively | 15,722,135 | 199,285 | 18,764,703 |
| Inventories | 752,075 | 13,824 | 1,301,684 |
| Prepaid expenses | 1,848,344 | 26,467 | 2,492,164 |
| Deferred tax assets -current | 939,370 | 11,118 | 1,046,828 |
| Other current assets, net of allowance for doubtful accounts of JPY 10,732 thousand at March 31, 2012 and March 31, 2013, respectively | 891,560 | 16,745 | 1,576,718 |
| Total current assets | 33,690,308 | 397,631 | 37,440,969 |
| INVESTMENTS IN EQUITY METHOD INVESTEES | 1,406,634 | 17,860 | 1,681,723 |
| OTHER INVESTMENTS | 2,938,146 | 40,052 | 3,771,262 |
| PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 25,693,163 thousand and JPY 29,516,394 thousand at March 31, 2012 and March 31, 2013, respectively | 19,735,546 | 244,539 | 23,025,755 |
| GOODWILL | 5,788,333 | 63,402 | 5,969,951 |
| OTHER INTANGIBLE ASSETS -Net | 5,396,469 | 50,886 | 4,791,431 |
| GUARANTEE DEPOSITS | 1,899,815 | 21,787 | 2,051,449 |
| DEFERRED TAX ASSETS -Noncurrent | 24,760 | 1,739 | 163,773 |
| NET INVESTMENT IN SALES-TYPE LEASES -Noncurrent | 935,446 | 9,538 | 898,040 |
| Prepaid expenses -Noncurrent | 1,536,932 | 23,376 | 2,201,108 |
| OTHER ASSETS, net of allowance for doubtful accounts of JPY86,388 thousand and JPY71,727 thousand at March 31, 2012 and March 31, 2013, respectively. | 140,857 | 1,230 | 115,805 |
| TOTAL | 73,493,246 | 872,040 | 82,111,266 |
| As of March 31, 2012 | As of March 31, 2013 | ||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| CURRENT LIABILITIES: | |||
| Short-term borrowings | 9,000,000 | 99,830 | 9,400,000 |
| Long-term borrowings -current portion | 1,010,000 | 10,726 | 1,010,000 |
| Foreign exchange gains (losses) | 2,997,292 | 37,229 | 3,505,471 |
| Accounts payable —trade | 9,093,657 | 116,537 | 10,973,120 |
| Accounts payable —other | 659,266 | 10,081 | 949,264 |
| Income taxes payable | 2,210,089 | 17,734 | 1,669,849 |
| Accrued expenses | 2,277,307 | 24,070 | 2,266,427 |
| Deferred income -current | 1,495,468 | 19,181 | 1,806,074 |
| Other current liabilities | 717,342 | 8,538 | 803,902 |
| Total current liabilities | 29,460,421 | 343,926 | 32,384,107 |
| LONG-TERM BORROWINGS | 1,990,000 | 10,408 | 980,000 |
| CAPITAL LEASE OBLIGATIONS -Noncurrent | 4,741,241 | 57,035 | 5,370,365 |
| ACCRUED RETIREMENT AND PENSION COSTS -Noncurrent | 1,805,683 | 22,431 | 2,112,085 |
| DEFERRED TAX LIABILITIRES -Noncurrent | 652,280 | 4,377 | 412,132 |
| DEFERRED INCOME -Noncurrent | 1,547,159 | 27,211 | 2,562,208 |
| OTHER NONCURRENT LIABILITIES | 600,215 | 6,969 | 656,191 |
| Total Liabilities | 40,796,999 | 472,357 | 44,477,088 |
| COMMITMENTS AND CONTINGENCIES | |||
| SHAREHOLDERS' EQUITY: | |||
| Common-stock—authorized, 75,520,000 shares; issued and outstanding, 41,295,600 shares at March 31, 2012 and March 31, 2013, respectively | 16,833,847 | 178,779 | 16,833,847 |
| Additional paid-in capital | 27,260,318 | 289,935 | 27,300,325 |
| Accumulated deficit | (10,990,348) | (67,959) | (6,399,088) |
| Accumulated other comprehensive loss | (23,533) | 2,801 | 263,770 |
| Treasury stock—758,800 shares held by the company at March 31, 2012 and March 31, 2013, respectively | (392,079) | (4,164) | (392,079) |
| Total Internet Initiative Japan Inc. shareholders' equity | 32,688,205 | 399,392 | 37,606,775 |
| NONCONTROLLING INTERESTS | 8,042 | 291 | 27,403 |
| Total equity | 32,696,247 | 399,683 | 37,634,178 |
| TOTAL | 73,493,246 | 872,040 | 82,111,266 |
| (Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. | |||
| Internet Initiative Japan Inc. | |||
| Consolidated Statements of Income (Unaudited) | |||
| (For the fiscal year ended March 31, 2012 and March 31, 2013) | |||
|
Fiscal Year Ended March 31, 2012 |
Fiscal Year Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| REVENUES: | |||
| Network services: | |||
| Internet connectivity services (corporate use) | 14,706,511 | 170,212 | 16,027,134 |
| Internet connectivity services (home use) | 5,717,417 | 58,052 | 5,466,198 |
| WAN services | 25,666,524 | 267,294 | 25,168,425 |
| Outsourcing services | 17,318,954 | 197,224 | 18,570,641 |
| Total | 63,409,406 | 692,782 | 65,232,398 |
| Systems integration: | |||
| Systems construction | 11,997,680 | 168,064 | 15,824,938 |
| Systems operation and maintenance | 19,471,641 | 227,062 | 21,380,158 |
| Total | 31,469,321 | 395,126 | 37,205,096 |
| Equipment sales | 1,111,722 | 15,834 | 1,490,906 |
| ATM operation business | 1,324,156 | 24,640 | 2,320,086 |
| Total revenues | 97,314,605 | 1,128,382 | 106,248,486 |
| COST AND EXPENSES: | |||
| Cost of network services | 49,984,821 | 538,362 | 50,692,190 |
| Cost of systems integration | 24,978,607 | 323,118 | 30,424,802 |
| Cost of equipment sales | 980,279 | 14,001 | 1,318,344 |
| Cost of ATM operation business | 1,382,194 | 20,811 | 1,959,597 |
| Total cost | 77,325,901 | 896,292 | 84,394,933 |
| Sales and marketing | 7,946,852 | 85,583 | 8,058,481 |
| General and administrative | 5,299,608 | 59,818 | 5,632,430 |
| Research and development | 388,761 | 4,354 | 410,000 |
| Total cost and expenses | 90,961,122 | 1,046,047 | 98,495,844 |
| OPERATING INCOME | 6,353,483 | 82,335 | 7,752,642 |
| OTHER INCOME (EXPENSE): | |||
| Interest income | 34,602 | 273 | 25,708 |
| Interest expense | (299,271) | (3,051) | (287,314) |
| Foreign exchange gains (losses) | (4,549) | 1,191 | 112,136 |
| Net gains (losses) on sales of other investments -net | (3,154) | 144 | 13,565 |
| Losses on write-down of other investments | (159,592) | (210) | (19,788) |
| Other -net | 54,701 | 1,698 | 159,915 |
| Other income (expense) -net | (377,263) | 45 | 4,222 |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 5,976,220 | 82,380 | 7,756,864 |
| INCOME TAX EXPENSE | 2,525,486 | 27,693 | 2,607,582 |
| EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES | 123,776 | 1,784 | 168,065 |
| NET INCOME | 3,574,510 | 56,471 | 5,317,347 |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 66,453 | (177) | (16,693) |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 3,640,963 | 56,294 | 5,300,654 |
|
Fiscal Year Ended March 31, 2012 |
Fiscal Year Ended March 31, 2013 |
||
| NET INCOME PER SHARE | |||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 40,536,800 | 40,536,800 | |
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 40,556,400 | 40,572,600 | |
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,073,600 | 81,073,600 | |
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,112,800 | 81,145,200 | |
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 89.82 | 1.39 | 130.76 |
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 89.78 | 1.39 | 130.65 |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 44.91 | 0.69 | 65.38 |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 44.89 | 0.69 | 65.32 |
|
(Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. |
|||
| Internet Initiative Japan Inc. | |||||||||
| Consolidated Statements of Shareholders' Equity (Unaudited) | |||||||||
| (For the fiscal year ended March 31, 2012 and March 31, 2013) | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
|
Total equity |
Comprehensive income （loss） |
Accumulated deficit |
Accumulated other comprehensive income (loss) |
Shares of common stock outstanding |
Common Stock |
Treasury Stock |
Additional Paid-in Capital |
NON CONTROLLING INTERESTS |
|
|
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
Shares |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
|
| BALANCE, APRIL 1, 2011 | 29,641,350 | (14,023,259) | (85,134) | 41,295,600 | 16,833,847 | (392,079) | 27,318,912 | (10,937) | |
| Purchase of noncontrolling interests of consolidated subsidiaries | (5) | (19,395) | 19,390 | ||||||
| Subsidiary stock issuance | -- | (66,042) | 66,042 | ||||||
| Stock-based compensation | 26,843 | 26,843 | |||||||
| Comprehensive income (loss): | |||||||||
| Net Income (loss) | 3,574,510 | 3,574,510 | 3,640,963 | (66,453) | |||||
| Other Comprehensive loss, net of tax | 61,601 | 61,601 | 61,601 | ||||||
| Total comprehensive income | 3,636,111 | 3,636,111 | |||||||
| Dividends paid | (608,052) | (608,052) | |||||||
| BALANCE, MARCH 31, 2012 | 32,696,247 | (10,990,348) | (23,533) | 41,295,600 | 16,833,847 | (392,079) | 27,260,318 | 8,042 | |
| Purchase of noncontrolling interests of consolidated subsidiaries | 2,688 | -- | 2,688 | ||||||
| Stock-based compensation | 40,007 | 40,007 | |||||||
| Comprehensive income (loss): | |||||||||
| Net Income (loss) | 5,317,347 | 5,317,347 | 5,300,654 | 16,693 | |||||
| Other Comprehensive income, net of tax | 287,283 | 287,283 | 287,303 | (20) | |||||
| Total comprehensive income: | 5,604,630 | 5,604,630 | |||||||
| Dividends paid | (709,394) | (709,394) | |||||||
| BALANCE, MARCH 31, 2013 | 37,634,178 | (6,399,088) | 263,770 | 41,295,600 | 16,833,847 | (392,079) | 27,300,325 | 27,403 | |
| (For the fiscal year ended March 31, 2013 (In USD)) | |||||||||
| Internet Initiative Japan Inc. shareholders' equity | |||||||||
|
Total equity |
Comprehensive income (loss) |
Accumulated deficit |
Accumulated other comprehensive income (loss) |
Shares of common stock outstanding |
Common Stock |
Treasury Stock |
Additional Paid-in Capital |
NON CONTROLLING INTERESTS |
|
| Foreign exchange gains (losses) |
Thousands of USD |
Thousands of USD |
Thousands of USD |
Thousands of USD |
Shares |
Thousands of USD |
Thousands of USD |
Thousands of USD |
Thousands of USD |
| BALANCE, APRIL 1, 2012 | 347,241 | (116,720) | (250) | 41,295,600 | 178,779 | (4,164) | 289,511 | 85 | |
| Purchase of noncontrolling interests of consolidated subsidiaries | 29 | -- | 29 | ||||||
| Stock-based compensation | 424 | 424 | |||||||
| Comprehensive income (loss) : | |||||||||
| Net Income (loss) | 56,471 | 56,471 | 56,294 | 177 | |||||
| Other Comprehensive income, net of tax | 3,051 | 3,051 | 3,051 | 0 | |||||
| Total comprehensive income: | 59,522 | 59,522 | |||||||
| Dividends paid | (7,533) | (7,533) | |||||||
| BALANCE, MARCH 31, 2013 | 399,683 | (67,959) | 2,801 | 41,295,600 | 178,779 | (4,164) | 289,935 | 291 | |
| (Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. | |||||||||
| Internet Initiative Japan Inc. | |||
| Consolidated Statements of Cash Flows (Unaudited) | |||
| (For the fiscal year ended March 31, 2012 and March 31, 2013) | |||
|
Fiscal Year Ended March 31, 2012 |
Fiscal Year Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| OPERATING ACTIVITIES: | |||
| Net income | 3,574,510 | 56,471 | 5,317,347 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 7,143,631 | 79,735 | 7,507,808 |
| Impairment loss on intangible assets | 37,000 | 510 | 48,000 |
| Provision for retirement and pension costs, less payments | 187,287 | 2,272 | 213,963 |
| Provision for (reversal of) allowance for doubtful accounts | 82,046 | (114) | (10,712) |
| Loss on disposal of property and equipment | 62,368 | 155 | 14,638 |
| Net (gain) loss on sales of other investments | 3,154 | (144) | (13,565) |
| Impairment of other investments | 159,592 | 210 | 19,788 |
| Foreign exchange losses, net | 14,202 | 614 | 57,829 |
| Equity in net income of equity method investees | (123,776) | (1,785) | (168,065) |
| Deferred income tax expense (benefit) | 35,714 | (5,598) | (527,128) |
| Others | 67,470 | 419 | 39,377 |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | |||
| Decrease (increase) in accounts receivable | 626,783 | (30,865) | (2,906,215) |
| Decrease in net investment in sales-type lease―noncurrent | 330,961 | 397 | 37,406 |
| Increase in inventories, prepaid expenses and other current and noncurrent assets | (161,418) | (25,725) | (2,422,332) |
| Increase (decrease) in accounts payable | (2,928,912) | 19,978 | 1,881,105 |
| Increase (decrease) in income taxes payable | 1,842,553 | (5,798) | (545,914) |
| Increase in deferred income-noncurrent | 276,175 | 10,780 | 1,015,049 |
| Increase in accrued expenses and other current and noncurrent liabilities | 429,998 | 2,063 | 194,201 |
| Net cash provided by operating activities | 11,659,338 | 103,575 | 9,752,580 |
| INVESTING ACTIVITIES: | |||
| Purchase of property and equipment | (6,167,434) | (59,354) | (5,588,815) |
| Proceeds from sales of property and equipment | 350,136 | 5,777 | 543,978 |
| Purchases of available-for-sale securities | (269,218) | (519) | (48,903) |
| Purchases of other investments | (186,115) | (4,966) | (467,622) |
| Investment in an equity method investee | (24,647) | (1,062) | (100,000) |
| Proceeds from sales of available-for-sale securities | 226,346 | -- | -- |
| Proceeds from sales of other investments | 94,285 | 1,168 | 109,944 |
| Payments of guarantee deposits | (39,403) | (1,746) | (164,417) |
| Refund of guarantee deposits | 26,045 | 184 | 17,349 |
| Payments for refundable insurance policies | (6,604) | (8) | (737) |
| Refund from insurance policies | 42,948 | -- | -- |
| Acquisition of a newly controlled company, net of cash acquired | -- | (2,433) | (229,058) |
| Other | (594) | (188) | (17,620) |
| Net cash used in investing activities | (5,954,255) | (63,147) | (5,945,901) |
|
Fiscal Year Ended March 31, 2012 |
Fiscal Year Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| FINANCING ACTIVITIES: | |||
| Proceeds from issuance of short-term borrowings with initial maturities over three months and long-term borrowings | 3,370,000 | 754 | 71,000 |
| Repayments of short-term borrowings with initial maturities over three months and long-term borrowings | (620,000) | (11,480) | (1,081,000) |
| Principal payments under capital leases | (3,425,680) | (39,071) | (3,678,940) |
| Net increase (decrease) in short-term borrowings with initial maturities less than three months | (4,180,000) | 4,248 | 400,000 |
| Proceeds from issuance of subsidiary stock to minority shareholders | -- | 27 | 2,570 |
| Dividends paid | (608,052) | (7,534) | (709,394) |
| Net cash used in financing activities | (5,463,732) | (53,056) | (4,995,764) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (18,142) | (944) | (88,867) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 223,209 | (13,572) | (1,277,952) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 13,313,615 | 143,764 | 13,536,824 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | 13,536,824 | 130,192 | 12,258,872 |
| ADDITIONAL CASH FLOW INFORMATION: | |||
| Interest paid | 297,862 | 3,050 | 287,158 |
| Income taxes paid | 481,580 | 37,468 | 3,527,987 |
| NONCASH INVESTING AND FINANCING ACTIVITIES: | |||
| Acquisition of assets by entering into capital leases | 4,749,695 | 51,150 | 4,816,248 |
| Facilities purchase liabilities | 659,266 | 10,081 | 949,264 |
| Asset retirement obligation | 42,273 | 283 | 26,620 |
| Acquisition of a company: | |||
| Assets acquired | -- | 4,292 | 404,139 |
| Liabilities assumed | -- | 1,108 | 104,321 |
| Noncontrolling interests | -- | 1 | 118 |
| Cash paid | -- | 3,183 | 299,700 |
| Cash including acquired assets | -- | 750 | 70,642 |
| Acquisition of a newly controlled company, net of cash acquired | -- | 2,433 | 229,058 |
| (Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. | |||
4th Quarter FY2012 Consolidated Financial Results (3 months)
The following tables are highlight data of 4th Quarter FY2012 (3 months) consolidated financial results (unaudited, for the 3 months ended March 31, 2013).
| Operating Results Summary | |||
| 4Q11 | 4Q12 |
YoY % Change |
|
| JPY millions | JPY millions | ||
| Total Revenues: | 26,563 | 29,558 | 11.3 |
| Network Services | 16,167 | 16,717 | 3.4 |
| Systems Integration (SI) | 9,761 | 11,604 | 18.9 |
| Equipment Sales | 233 | 623 | 167.7 |
| ATM Operation Business | 402 | 614 | 52.7 |
| Cost of Revenues: | 20,672 | 23,229 | 12.4 |
| Network Services | 12,398 | 12,720 | 2.6 |
| Systems Integration (SI) | 7,712 | 9,431 | 22.3 |
| Equipment Sales | 193 | 569 | 193.7 |
| ATM Operation Business | 369 | 509 | 38.0 |
| SG&A Expenses and R&D | 3,535 | 3,619 | 2.4 |
| Operating Income | 2,356 | 2,710 | 15.0 |
| Income before Income Tax Expense | 2,196 | 2,811 | 28.0 |
| Net Income attributable to IIJ | 1,251 | 2,188 | 74.9 |
| Network Service Revenue Breakdown | |||
| 4Q11 | 4Q12 |
YoY % Change |
|
| JPY millions | JPY millions | ||
| Internet Connectivity Service (Corporate Use) | 3,787 | 4,244 | 12.1 |
| IP Service | 2,389 | 2,782 | 16.5 |
| IIJ FiberAccess/F and IIJ DSL/F | 799 | 773 | (3.3) |
| IIJ Mobile Service | 539 | 629 | 16.6 |
| Others | 60 | 60 | 0.3 |
| Internet Connectivity Service (Home Use) | 1,389 | 1,356 | (2.4) |
| Under IIJ Brand | 241 | 382 | 58.6 |
| hi-ho | 1,000 | 811 | (18.9) |
| OEM | 148 | 163 | 9.1 |
| WAN Services | 6,489 | 6,288 | (3.1) |
| Outsourcing Services | 4,502 | 4,829 | 7.3 |
| Network Services Revenues | 16,167 | 16,717 | 3.4 |
Reconciliation of Non-GAAP Financial Measures (4th Quarter FY2012 (3 months))
The following table summarizes the reconciliation of adjusted EBITDA to net income in our consolidated statements of income that are prepared in accordance with U.S. GAAP.
| Adjusted EBITDA | ||
| 4Q11 | 4Q12 | |
| JPY millions | JPY millions | |
| Adjusted EBITDA | 4,285 | 4,722 |
| Depreciation and Amortization | (1,892) | (1,964) |
| Impairment loss on other intangible assets | (37) | (48) |
| Operating Income | 2,356 | 2,710 |
| Other Income (Expense) | (160) | 101 |
| Income Tax Expense | 922 | 653 |
| Equity in Net Income (loss) of Equity Method Investees | (29) | 36 |
| Net income | 1,245 | 2,194 |
| Net Loss (Income) attributable to non-controlling interests | 6 | (6) |
| Net Income attributable to IIJ | 1,251 | 2,188 |
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 | ||
| 4Q11 | 4Q12 | |
| JPY millions | JPY millions | |
| CAPEX, including capital leases | 2,265 | 1,953 |
| Acquisition of Assets by Entering into Capital Leases | 632 | 774 |
| Purchase of Property and Equipment | 1,633 | 1,179 |
| Internet Initiative Japan Inc. | |||
| Quarterly Consolidated Statements of Income (Unaudited) | |||
| (Three Months ended March 31, 2012 and March 31, 2013) | |||
|
Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| REVENUES: | |||
| Network services: | |||
| Internet connectivity services (corporate use) | 3,786,887 | 45,073 | 4,244,105 |
| Internet connectivity services (home use) | 1,389,488 | 14,396 | 1,355,560 |
| WAN services | 6,489,229 | 66,787 | 6,288,667 |
| Outsourcing services | 4,501,619 | 51,286 | 4,829,036 |
| Total | 16,167,223 | 177,542 | 16,717,368 |
| Systems integration: | |||
| Systems Construction | 4,648,913 | 63,729 | 6,000,759 |
| Systems Operation and Maintenance | 5,112,100 | 59,507 | 5,603,166 |
| Total | 9,761,013 | 123,236 | 11,603,925 |
| Equipment sales | 232,973 | 6,623 | 623,603 |
| ATM operation business | 401,804 | 6,516 | 613,500 |
| Total revenues | 26,563,013 | 313,917 | 29,558,396 |
| COST AND EXPENSES: | |||
| Cost of network services | 12,397,820 | 135,095 | 12,720,525 |
| Cost of systems integration | 7,711,543 | 100,161 | 9,431,170 |
| Cost of equipment sales | 193,690 | 6,043 | 568,947 |
| Cost of ATM operation business | 368,996 | 5,407 | 509,138 |
| Total cost | 20,672,049 | 246,706 | 23,229,780 |
| Sales and marketing | 2,006,664 | 21,534 | 2,027,664 |
| General and administrative | 1,379,078 | 15,774 | 1,485,233 |
| Research and development | 149,321 | 1,125 | 105,940 |
| Total cost and expenses | 24,207,112 | 285,139 | 26,848,617 |
| OPERATING INCOME | 2,355,901 | 28,778 | 2,709,779 |
| OTHER INCOME (EXPENSE): | |||
| Interest income | 9,555 | 62 | 5,819 |
| Interest expense | (72,144) | (737) | (69,417) |
| Foreign exchange gains | 8,920 | 1,326 | 124,841 |
| Net gains (losses) on sales of other investments -net | (2,984) | -- | -- |
| Losses on write-down of other investments | (75,015) | -- | -- |
| Other—net | (27,930) | 423 | 39,876 |
| Other expense — net | (159,598) | 1,074 | 101,119 |
| INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD INVESTEES | 2,196,303 | 29,852 | 2,810,898 |
| INCOME TAX EXPENSE | 921,880 | 6,939 | 653,414 |
| EQUITY IN NET INCOME (LOSS) OF EQUITY METHOD INVESTEES | (29,560) | 386 | 36,377 |
| NET INCOME | 1,244,863 | 23,299 | 2,193,861 |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 6,453 | (58) | (5,492) |
| NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. | 1,251,316 | 23,241 | 2,188,369 |
|
Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2013 |
||
| NET INCOME PER SHARE | |||
| BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 40,536,800 | 40,536,800 | |
| DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) | 40,564,400 | 40,583,800 | |
| BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,073,600 | 81,073,600 | |
| DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) | 81,128,800 | 81,167,600 | |
| BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 30.87 | 0.57 | 53.98 |
| DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) | 30.85 | 0.57 | 53.92 |
| BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 15.43 | 0.29 | 26.99 |
| DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) | 15.42 | 0.29 | 26.96 |
|
(Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. |
|||
| Internet Initiative Japan Inc. | |||
| Quarterly Consolidated Statements of Cash Flows (Unaudited) | |||
| (Three Months ended March 31, 2012 and March 31, 2013) | |||
|
Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| OPERATING ACTIVITIES: | |||
| Net income | 1,244,863 | 23,299 | 2,193,861 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 1,892,149 | 20,861 | 1,964,291 |
| Impairment loss on other intangible assets | 37,000 | 510 | 48,000 |
| Provision for retirement and pension costs, less payments | 38,182 | 517 | 48,701 |
| Provision for (reversal of) allowance for doubtful accounts and advances | 36,194 | (112) | (10,570) |
| Loss on disposal of property and equipment | 22,752 | 107 | 10,045 |
| Net losses on sales of other investments | 2,984 | -- | -- |
| Impairment of other investments | 75,015 | -- | -- |
| Foreign exchange losses (gains) | (17,886) | 798 | 75,113 |
| Equity in net loss (income) of equity method investees (net of dividend) | 29,560 | (386) | (36,377) |
| Deferred income tax benefit | (72,460) | (7,212) | (679,103) |
| Others | 32,765 | 279 | 26,224 |
| Changes in operating assets and liabilities net of effects from acquisition of business and a company: | |||
| Increase in accounts receivable | (301,511) | (35,488) | (3,341,586) |
| Decrease (increase) in net investment in sales-type lease―noncurrent | 103,590 | (2,150) | (202,461) |
| Decrease in inventories, prepaid expenses and other current and noncurrent assets | 886,578 | 5,629 | 530,039 |
| Increase in accounts payable | 935,852 | 19,343 | 1,821,357 |
| Increase in income taxes payable | 1,009,680 | 13,534 | 1,274,354 |
| Increase in deferred income― noncurrent | 396,394 | 2,532 | 238,400 |
| Decrease in accrued expenses, other current and noncurrent liabilities | (1,272,330) | (930) | (87,505) |
| Net cash provided by operating activities | 5,079,371 | 41,130 | 3,872,783 |
| INVESTING ACTIVITIES: | |||
| Purchase of property and equipment | (1,633,158) | (12,518) | (1,178,696) |
| Proceeds from sales of property and equipment | 55,871 | 757 | 71,272 |
| Purchase of available-for-sale securities | (150,270) | (81) | (7,653) |
| Purchase of other investments | (80,000) | (644) | (60,620) |
| Proceeds from sales of available-for-sale securities | 222,467 | -- | -- |
| Proceeds from sales of other investments | 32,080 | 184 | 17,310 |
| Payments of guarantee deposits | (19,134) | (823) | (77,463) |
| Refund of guarantee deposits | 4,731 | 21 | 1,986 |
| Payments for refundable insurance policies | (182) | (2) | (183) |
| Other | 3,983 | (85) | (8,002) |
| Net cash used in financing activities | (1,563,612) | (13,191) | (1,242,049) |
|
Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2013 |
||
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
| FINANCING ACTIVITIES: | |||
| Principal payments under capital leases | (923,078) | (9,965) | (938,318) |
| Net cash used in financing activities | (923,078) | (9,965) | (938,318) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 16,172 | (869) | (81,840) |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,608,853 | 17,105 | 1,610,576 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 10,927,971 | 113,087 | 10,648,296 |
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD | 13,536,824 | 130,192 | 12,258,872 |
|
(Note1) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 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 March 29, 2013. |
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Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the fiscal year ended March 31, 2013 ("FY2012") in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Fiscal Year Ended March 31, 2013
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]
| May 15, 2013 | |||
| Company name: Internet Initiative Japan Inc. | Exchange listed: Tokyo Stock Exchange First Section | ||
| Stock code number: 3774 | URL: http://www.iij.ad.jp/ | ||
| Representative: Koichi Suzuki, President, Representative Director and CEO | |||
| Contact: Akihisa Watai, Managing Director and CFO | TEL: (03) 5259-6500 | ||
| Annual general shareholder's meeting: Scheduled on June 26, 2013 | |||
| Payment of dividend: Scheduled to be started on June 27, 2013 | |||
| Filing of annual report (Yuka-shoken-houkokusho) to the regulatory organization in Japan: Scheduled on June 28, 2013 | |||
| Supplemental material on this fiscal year results: Yes | |||
| Presentation on this fiscal year results: Yes (for institutional investors and analysts) | |||
| (Amounts of less than JPY one million are rounded) | ||||||||||||||||
| 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2013 | ||||||||||||||||
| (April 1, 2012 to March 31, 2013) | ||||||||||||||||
| (1) Consolidated Results of Operations | (% shown is YoY change) | |||||||||||||||
|
Total Revenues |
Operating Income |
Income before Income Tax Expense |
Net Income attributable to IIJ |
|||||||||||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | |||||||||
| Fiscal Year Ended March 31, 2013 | 106,248 | 9.2 | 7,753 | 22.0 | 7,757 | 29.8 | 5,301 | 45.6 | ||||||||
| Fiscal Year Ended March 31, 2012 | 97,315 | 18.1 | 6,353 | 53.4 | 5,976 | 55.9 | 3,641 | 13.7 | ||||||||
| (Note1) Total comprehensive income attributable to IIJ | Fiscal Year Ended March 31, 2013: JPY5,588 million (up 50.9% YoY) | |||||||||||||||
| Fiscal Year Ended March 31, 2012: JPY3,703 million (up 25.5% YoY) | ||||||||||||||||
| (Note2) Income before income tax expense represents income from operations before income tax expense and equity in net income in equity method investees, respectively, in IIJ's consolidated financial statements. | ||||||||||||||||
|
Basic Net Income attributable to IIJ per Share |
Diluted Net Income attributable to IIJ per Share |
Net Income attributable to IIJ to Total Shareholders' Equity |
Income before Income Tax Expense to Total Assets |
Total Revenues Operating Margin Ratio |
||||||
| JPY | JPY | % | % | % | ||||||
| Fiscal Year Ended March 31, 2013 | 130.76 | 130.65 | 15.1 | 10.0 | 7.3 | |||||
| Fiscal Year Ended March 31, 2012 | 89.82 | 89.78 | 11.7 | 8.2 | 6.5 | |||||
| (Reference) Equity in net income of equity method investees | Fiscal Year Ended March 31, 2013: JPY168 million | |||||||||
| Fiscal Year Ended March 31, 2012: JPY124 million | ||||||||||
| (Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. Accordingly, basic net income attributable to IIJ per share and diluted net income attributable to IIJ per share have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year. | ||||||||||
| (2) Consolidated Financial Position | |||||
|
Total Assets |
Total Equity |
Total IIJ Shareholders' Equity |
Total IIJ Shareholders' Equity to Total Assets |
Total IIJ Shareholders' Equity per Share |
|
| JPY millions | JPY millions | JPY millions | % | JPY | |
| As of March 31, 2013 | 82,111 | 37,634 | 37,607 | 45.8 | 927.72 |
| As of March 31, 2012 | 73,493 | 32,696 | 32,688 | 44.5 | 806.38 |
| (3) Consolidated Cash Flow | ||||
| Operating Activities | Investing Activities | Financing Activities |
Cash and Cash Equivalents (End of the Period) |
|
| JPY millions | JPY millions | JPY millions | JPY millions | |
|
Fiscal year ended March 31, 2013 |
9,753 | (5,946) | (4,996) | 12,259 |
|
Fiscal year ended March 31, 2012 |
11,659 | (5,954) | (5,464) | 13,537 |
| 2. Dividends | ||||||||
| Dividend per Shares | ||||||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total |
Total cash dividends for the year |
Payout Ratio (consolidated) |
Ratio of Dividends to Shareholder's Equity (consolidated) |
|
| JPY | JPY | JPY | JPY | JPY | JPY millions | % | % | |
|
Fiscal Year Ended March 31, 2012 |
-- | 1,500.00 | -- | 1,750.00 | 3,250.00 | 659 | 18.1 | 2.1 |
|
Fiscal Year Ended March 31, 2013 |
-- | 1,750.00 | -- | 10.00 | 1,760.00 | 760 | 14.3 | 2.2 |
|
Fiscal Year Ending March 31, 2014 (forecast) |
-- | 11.00 | -- | 11.00 | 22.00 | 14.9 | ||
| (Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. | ||||||||
| 3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2014 | ||||||||||||||||||
| (April 1, 2013 through March 31, 2014) | (% shown is YoY change) | |||||||||||||||||
|
Total Revenues |
Operating Income |
Income before Income Tax Expense (Benefit) |
Net Income attributable to IIJ |
Basic Net Income attributable to IIJ per Share |
||||||||||||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY | ||||||||||
|
Interim Period Ending September 30, 2013 |
54,500 | 6.6 | 3,400 | 4.2 | 3,200 | 0.8 | 2,000 | (0.3) | 49.34 | |||||||||
|
Fiscal Year Ending March 31, 2014 |
117,000 | 10.1 | 9,400 | 21.2 | 9,000 | 16.0 | 6,000 | 13.2 | 148.01 | |||||||||
* Notes
(1) Changes in Significant Subsidiaries for the Fiscal Year Ended March 31, 2013
(Changes in significant subsidiaries for the Fiscal Year Ended March 31, 2013 which resulted in changes in scope of consolidation): None
(2) Changes in Significant Accounting and Reporting Policies for the Quarterly Consolidated Financial Statements
1) Changes due to the revision of accounting standards: Yes
2) Others: No
(3) Number of Shares Outstanding (Shares of Common Stock)
1) The number of shares outstanding (inclusive of treasury stock):
As of March 31, 2013: 41,295,600 shares
As of March 31, 2012: 41,295,600 shares
2) The number of treasury stock:
As of March 31, 2013: 758,800 shares
As of March 31, 2012: 758,800 shares
3) The weighted average number of shares outstanding:
For the Fiscal Year Ended March 31, 2013: 40,536,800 shares
For the Fiscal Year Ended March 31, 2012: 40,536,800 shares
(Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. Number of shares outstanding (shares of common stock) in the above have been calculated as if the stock split was conducted at the beginning of the previous fiscal year (the fiscal year ended March 31, 2012).
(4) Others
IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. The below table provides the dividends retroactively adjusted to reflect the stock split.
| Dividend per Shares | |||
| 2Q-end | Year-end | Total | |
| JPY | JPY | JPY | |
| Fiscal Year Ended March 31, 2012 | 7.50 | 8.75 | 16.25 |
| Fiscal Year Ended March 31, 2013 | 8.75 | 10.00 | 18.75 |
| [English Translation] |
| May 15, 2013 |
| Company name: 1-105 Kanda Jimbo-cho, Chiyoda-ku, Tokyo |
| Internet Initiative Japan Inc. |
| Company representative: Koichi Suzuki, President and Representative Director |
| (Stock Code Number: 3774 The First Section of the Tokyo Stock Exchange) |
| Contact: Akihisa Watai, Managing Director and CFO |
| TEL: 03-5259-6500 |
Information Pertaining to Our Largest Shareholder
| 1. About Our Largest Shareholder (As of March 31, 2013) | |||
| Name | Relationship |
Its Ownership Percentage (%) |
Securities Exchanges where its Shares are Listed |
| Tokyo Stock Exchange, Inc. (First Section) | |||
| Nippon | Osaka Securities Exchange, Co., Ltd. (First Section) | ||
| Telegraph and | IIJ is NTT's affiliate | 29.9 | Nagoya Stock Exchange, Inc. (First Section) |
| Telephone | company | (5.0) | Fukuoka Stock Exchange |
| Corporation | Sapporo Stock Exchange | ||
| ("NTT") | New York Stock Exchange, Inc. | ||
| London Stock Exchange plc. | |||
| (Notes) The percentage in parentheses is the indirect ownership by NTT included in the figure above. | |||
2. Position of the Listed Company (IIJ) within NTT Group and other relationships
a) Position of the Listed Company (IIJ) within NTT Group
The ownership percentage by NTT, which is IIJ's largest shareholder, was 29.9% as of March 31, 2013, including its indirect ownership. However, IIJ's business activities are not affected by NTT's ownership in IIJ and IIJ is maintaining its management independence.
b) Personal Relationships with NTT Group
IIJ's board of directors consists of 12 members including 4 outside directors. Takashi Hiroi, an outside director (part-time director) of IIJ, is an employee of NTT (General Manager of Business Planning Division of NTT). However, he is monitoring IIJ's business operations as an outside director and does not have any personal relationships, such as family relationships, with IIJ's other directors and auditors. He did not acquire any interest such as capital or business relationships upon becoming an outside director.
3. Business Relationship with NTT Group
IIJ uses services provided by Nippon Telegraph and Telephone East Corporation ("NTT East") and Nippon Telegraph and Telephone West Corporation ("NTT West") for a significant portion of IIJ's access circuits as well as services provided by NTT Communications Corporation ("NTT Communications") for a significant portion of IIJ's domestic and international backbones. The amount paid to NTT East and West, and to NTT Communications for their telecommunication circuits was JPY1,455 million and JPY3,311 million, respectively for the fiscal year ended March 31, 2013.
IIJ leases a part of Internet data center facilities from NTT Group companies to provide Internet data center services to IIJ's customers. The amount paid to NTT Group related to the lease of Internet data center facilities were JPY1,695 million for the fiscal year ended March 31, 2013.
4. Policy Concerning Measures to Protect Minority Shareholders in Transactions with NTT Group
Business transactions with the NTT Group are within the scope of normal business practices and there is no special contract made in relation to the investment by NTT Group.