TOKYO, Nov. 8, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774) today announced its consolidated financial results for the first six months of the fiscal year ending March 31, 2014 (from April 1, 2013 to September 30, 2013, "1H FY2013," "1H13").1
Highlights of 1H FY2013 Financial Results | ||||
Revenues | JPY54,397 million | ($553 million, up 6.4% YoY) | ||
Operating Income | JPY3,009 million | ($31 million, down 7.8% YoY) | ||
Net Income attributable to IIJ | JPY2,205 million | ($22 million, up 9.9% YoY) | ||
▪ 1H13 revenues increased by 6.4% YoY due to the revenue growth in network services, systems integration and ATM operation business. | ||||
▪ 1H13 operating income decreased by 7.8% YoY mainly due to the increase in SG&A expenses along with business expansion. | ||||
▪ 1H13 net income attributable to IIJ increased by 9.9% YoY due to the increase in non-operating income. |
Overview of 1H FY2013 Financial Results and Business Outlook
"Overall, our surrounding business environment continues to be solid. We're seeing increasing systems integration demand among Japanese companies this fiscal year. IT investment has been withheld since the Lehman Shock, yet with Abenomics, they're now more inclined to invest in IT. The demand for disaster recovery systems, renewing existing systems, adopting cloud services and so on is on the rise," said Koichi Suzuki, Chairman and CEO of IIJ.
"As the concept of cloud computing has received wide recognition, Japanese blue-chip companies are beginning to look at their IT systems differently," followed Eijiro Katsu, President and COO of IIJ. "The shift from owning heavy IT assets to using cloud services is a great business opportunity for us as cloud requires our strengths: reliable and secure network and system operation. We're continuously expanding our enterprise cloud service lineups to support such transition. For instance, we provide SAP, Oracle DB, VMware and many other business familiar products on top of our cloud. We're also devoting R&D efforts in SDN (Software Defined Network) technology and have been continuously releasing and developing its software platform. Some major network operators in Japan have started to use them for evaluation purpose."
"1H13 revenue reflects strong systems integration demand. The result didn't exceed our interim target as certain large SNS and telecommunications clients decreased their network services usage. Weak operating income was due to the increase in expenses as we expand business both domestically and internationally while the revenue suffered from the above individual factor," continued Katsu.
"Having great market opportunity, our priority is to expand the scale of IIJ business. We consider M&As and business alliances as one of the possible means to do so. In the era of network traffic explosion together with the growing demand to outsource IT systems, our expertise in providing reliable network services and systems operation for blue-chip companies is increasingly vital. We continue to strategically expand our business to move toward the next stage of growth," 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 JPY98.29 per US$1.00, which was the noon buying rate on September 30, 2013.
1H FY2013 Financial Results Summary | ||||||
Operating Results Summary | ||||||
1H12 | 1H13 |
YoY % Change |
||||
JPY millions | JPY millions | |||||
Total Revenues | 51,109 | 54,397 | 6.4 | |||
Network Services | 32,259 | 33,611 | 4.2 | |||
Systems Integration (SI) | 17,127 | 18,673 | 9.0 | |||
Equipment Sales | 641 | 755 | 17.7 | |||
ATM Operation Business | 1,082 | 1,358 | 25.5 | |||
Total Costs | 40,961 | 43,967 | 7.3 | |||
Network Services | 25,383 | 26,465 | 4.3 | |||
Systems Integration (SI) | 14,089 | 15,765 | 11.9 | |||
Equipment Sales | 551 | 681 | 23.6 | |||
ATM Operation Business | 938 | 1,056 | 12.6 | |||
SG&A Expenses and R&D | 6,885 | 7,421 | 7.8 | |||
Operating Income | 3,263 | 3,009 | (7.8) | |||
Income before Income Tax Expense | 3,176 | 3,348 | 5.4 | |||
Net Income attributable to IIJ | 2,007 | 2,205 | 9.9 |
Segment Results Summary | ||||
1H12 | 1H13 | |||
JPY millions | JPY millions | |||
Total Revenues | 51,109 | 54,397 | ||
Network Services and SI Business | 50,311 | 53,296 | ||
ATM Operation Business | 1,082 | 1,358 | ||
Elimination | 284 | 257 | ||
Operating Income | 3,263 | 3,009 | ||
Network Service and SI Business | 3,260 | 2,829 | ||
ATM Operation Business | 83 | 241 | ||
Elimination | 80 | 61 |
We have omitted segment analysis because most of our revenues are dominated by Network Services and Systems Integration (SI) Business.
1H FY2013 Results of Operation
Revenues
Total revenues were JPY54,397 million, up 6.4% YoY.
Network Services revenue was JPY33,611 million, up 4.2% YoY.
Revenues for Internet connectivity services for corporate use were JPY8,358 million, up 6.9% YoY. The increase was mainly due to the increasing demands for broader bandwidth and mobile service.
Revenues for Internet connectivity services for home use were JPY2,856 million, up 3.2% YoY. The revenue grew both YoY and QoQ as we continue to accumulate orders for LTE mobile data communication service.
WAN services revenues were JPY12,619 million, stayed almost flat compared to 1H12.
Outsourcing services revenues were JPY9,778 million, up 7.5% YoY. The revenue growth was mainly due to revenue increase in "IIJ GIO Hosting Package Services" and datacenter-related services.
Network Services Revenues Breakdown | ||||||
1H12 | 1H13 |
YoY % Change |
||||
JPY millions | JPY millions | |||||
Internet Connectivity Service (Corporate Use) | 7,816 | 8,358 | 6.9 | |||
IP Service2 | 4,934 | 5,268 | 6.8 | |||
IIJ FiberAccess/F and IIJ DSL/F | 1,606 | 1,575 | (1.9) | |||
IIJ Mobile Service3 | 1,156 | 1,401 | 21.2 | |||
Others | 120 | 114 | (4.6) | |||
Internet Connectivity Service (Home Use) | 2,768 | 2,856 | 3.2 | |||
Under IIJ Brand | 621 | 980 | 57.9 | |||
hi-ho | 1,841 | 1,532 | (16.8) | |||
OEM | 306 | 344 | 12.1 | |||
WAN Services | 12,577 | 12,619 | 0.3 | |||
Outsourcing Services | 9,098 | 9,778 | 7.5 | |||
Total Network Services | 32,259 | 33,611 | 4.2 |
Number of Contracts for Connectivity Services | ||||||
as of Sep. 30, 2012 |
as of Sep. 30, 2013 |
YoY Change |
||||
Internet Connectivity Services (Corporate Use) | 100,282 | 123,334 | 23,052 | |||
IP Service (-99Mbps) | 911 | 879 | (32) | |||
IP Service (100Mbps-999Mbps) | 369 | 428 | 59 | |||
IP Service (1Gbps-) | 164 | 255 | 91 | |||
IIJ Data Center Connectivity Service | 315 | 299 | (16) | |||
IIJ FiberAccess/F and IIJ DSL/F | 45,741 | 52,374 | 6,633 | |||
IIJ Mobile Service4 | 51,488 | 67,789 | 16,301 | |||
Others | 1,294 | 1,310 | 16 | |||
Internet Connectivity Services (Home Use) | 431,620 | 552,993 | 121,373 | |||
Under IIJ Brand | 65,808 | 123,920 | 58,112 | |||
hi-ho | 152,031 | 155,045 | 3,014 | |||
OEM | 213,781 | 274,028 | 60,247 | |||
Total Contracted Bandwidth | 1,003.3Gbps | 1,454.8Gbps | 451.5Gbps |
SI revenues were JPY18,673 million, up 9.0% YoY.
Systems construction revenue, a one-time revenue, was JPY7,151 million, up 6.8% YoY, mainly due to the continuous accumulation of orders. Systems operation and maintenance revenue, a recurring revenue, was JPY11,522 million, up 10.4% YoY. The increase was mainly due to the increase in revenue of "IIJ GIO Component Services."
The orders received for SI and equipment sales were JPY25,203 million, up 21.2% YoY. In the breakdown, the orders received for systems construction and equipment sales were JPY10,466 million, up 26.1% YoY, and the orders received for systems operation and maintenance were JPY14,737 million, up 18.0% YoY.
The order backlog for SI and equipment sales as of September 30, 2013 amounted to JPY25,855 million, up 30.1% YoY. In the breakdown, the order backlog for systems construction and equipment sales was JPY6,263 million, up 30.4% YoY, and the order backlog for systems operation and maintenance was JPY19,592 million, up 30.0% YoY.
Equipment sales revenues were JPY755 million, up 17.7% YoY.
ATM Operation Business revenues were JPY1,358 million, up 25.5% YoY. The increase was mainly in accordance with the increase in the numbers of newly placed ATMs. 698 ATMs were placed as of November 8, 2013.
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.
Cost and expense
Total cost of revenues was JPY43,967 million, up 7.3% YoY.
Cost of Network Services revenues was JPY26,465 million, up 4.3% YoY. Gross margin was JPY7,146 million, up 3.9% YoY. Gross margin ratio was 21.3%, almost the same as 1H12. The increase was mainly due to the increase in circuit-related, personnel-related and network operation related costs.
Cost of SI revenues was JPY15,765 million, up 11.9% YoY. The increase was mainly due to the increase in outsourcing-related and personnel-related costs. Gross margin was JPY2,908 million, down 4.3% YoY and gross margin ratio was 15.6%.
Cost of Equipment Sales revenues was JPY681 million, up 23.6% YoY. Gross margin was JPY74 million and gross margin ratio was 9.8%.
Cost of ATM Operation Business revenues was JPY1,056 million, up 12.6% YoY. The increase was in accordance with the number of newly placed ATMs. Gross margin was JPY302 million and gross margin ratio was 22.2%.
SG&A and R&D expenses
SG&A and R&D expenses were JPY7,421 million, up 7.8% YoY.
Sales and Marketing expenses were JPY4,162 million, up 5.9% YoY. The increase was mainly due to the increase in personnel-related expenses, rent expenses related to expanded office spaces, and sales commission expenses related to Internet connectivity services for home use.
General and Administrative expenses were JPY3,037 million, up 10.6% YoY. The increase was mainly due to the increase in personnel-related expenses related to the increase in employees, rent expenses related to the expanded office spaces and depreciation and other expenses related to the office relocation.
Research and Development expenses were JPY222 million, up 6.4% YoY.
Operating income
Operating income was JPY3,009 million, down 7.8% YoY. The decrease was mainly due to the increase in SG&A expenses along with business expansion.
Other income (expenses)
Other income (expenses) was an income of JPY339 million (an expense of JPY87 million for 1H12), mainly due to foreign currency gains of JPY139 million (foreign currency losses of JPY50 million for 1H12) and net gain on other investments of JPY172 million.
Income before income tax expense
Income before income tax expense was JPY3,348 million, up 5.4% YoY (JPY3,176 million for 1H12) as a result that the increase in non-operating income exceeded the decrease in operating income.
Net income
Income tax expense was JPY1,243 million (JPY1,251 million for 1H12).
Equity in net income of equity method investees was JPY127 million (JPY83 million for 1H12) mainly due to net income of Internet Revolution, Inc. and Internet Multifeed Co.
As a result of the above, net income was JPY2,232 million, up 11.1% YoY (JPY2,008 million for 1H12).
Net income attributable to IIJ
Net income attributable to non-controlling interests was JPY27 million mainly related to net income of Trust Networks Inc (Net loss attributable to non-controlling interests of JPY1 million for 1H12).
Net income attributable to IIJ was JPY2,205 million, up 9.9 % YoY (JPY2,007 million for 1H12).
1H FY2013 Financial Condition
Balance Sheets
As of September 30, 2013, the balance of total assets was JPY97,842 million, increased by JPY15,731 million from the balance as of March 31, 2013 (JPY82,111 million as of March 31, 2013).
As for current assets as of September 30, 2013, as compared to the respective balances as of March 31, 2013, cash and cash equivalents increased by JPY13,523 million mainly due to the equity finance in 1H13, accounts receivable decreased by JPY2,058 million, and prepaid expenses increased by JPY944 million. As for noncurrent assets, as compared to the respective balance as of March 31, 2013, property and equipment increased by JPY758 million and guarantee deposits increased by JPY658 million along with our office expansion. As for current liabilities, as compared to the respective balance as of March 31, 2013, accounts payable decreased by JPY1,554 million and income taxes payable decreased by JPY793 million.
As for the balances of capital lease obligations, as compared to the respective balances as of March 31, 2013, capital lease obligations-current portion increased by JPY187 million to JPY3,692 million and capital lease obligations-noncurrent decreased by JPY293 million to JPY5,077 million.
As of September 30, 2013, the balance of other investments increased by JPY1,408 million to JPY5,180 million. The breakdown of other investments were JPY3,205 million in nonmarketable equity securities, JPY1,262 million in available-for-sale securities and JPY712 million in other.
As of September 30, 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 JPY4,432 million.
Total IIJ shareholders' equity as of September 30, 2013 increased by JPY19,547 million from the respective balance as of March 31, 2013 as a result of equity finance and net income in 1H13, JPY57,153 million. IIJ shareholders' equity ratio (total IIJ shareholders' equity/total assets) as of September 30, 2013 was 58.4%.
Cash Flows
Cash and cash equivalents as of September 30, 2013 were JPY25,782 million compared to JPY11,670 million as of September 30, 2012.
Net cash provided by operating activities for 1H13 was JPY3,696 million compared to net cash provided by operating activities of JPY3,970 million for 1H12. The decrease was mainly due to accounts payable and other current liabilities decreased, while net income and depreciation and amortization, which are non-cash expenses, increased.
Net cash used in investing activities for 1H13 was JPY4,202 million compared to net cash used in investing activities of JPY3,054 million for 1H12, mainly due to payments for purchase of property and equipment of JPY2,784 million (JPY2,785 million for 1H12), payments for purchase of other investments of JPY1,083 million (JPY374 million for 1H12) and payments for guarantee deposits of JPY662 million (JPY22 million for 1H12).
Net cash provided by financing activities for 1H13 was JPY13,883 million compared to net cash used in financing activities of JPY2,756 million for 1H12, mainly due to proceeds from issuance of common stock of JPY17,271 million, principal payments under capital leases of JPY1,972 million (JPY1,813 million for 1H12), payment of FY2012 year-end dividends of JPY405 million (JPY355 million for 1H12).
FY2013 Financial Targets (announced on May 15, 2013)
Due to seasonal factors, our revenue volume tends to be larger in the second half than the first half while our fixed type expenses such as personnel-related tend to increase from the beginning of a fiscal year. 1H13 operating income decreased compared to 1H12 mainly due to: the increase in the fixed type expenses such as personnel- and offices- related expenses, reflecting the increased number of new employees accordingly with our business expansion strategy, the relatively small systems construction revenue recognition while we accumulated a large number of order backlog which will be realized as revenue in 2H13, and the decrease in recurring revenues from certain large telecommunication and SNS game clients for pricing revision at the beginning of FY2013 and reduction in their server usage.
Our FY2013 financial targets announced on May 15, 2013 remain unchanged as the orders for systems construction continue to be accumulated at a good pace toward 2H13. Also, the monthly recurring revenues of network services and systems operation and maintenance should continue to grow.
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 | ||||
1H12 | 1H13 | |||
JPY millions | JPY millions | |||
Adjusted EBITDA | 6,902 | 7,247 | ||
Depreciation and Amortization5 | 3,639 | 4,238 | ||
Operating Income | 3,263 | 3,009 | ||
Other Income (Expense) | (87) | 339 | ||
Income Tax Expense | 1,251 | 1,243 | ||
Equity in Net Income of Equity Method Investees | 83 | 127 | ||
Net Income | 2,008 | 2,232 | ||
Less: Net Income attributable to Noncontrolling Interests | (1) | (27) | ||
Net Income attributable to IIJ | 2,007 | 2,205 |
CAPEX | ||||
1H12 | 1H13 | |||
JPY millions | JPY millions | |||
CAPEX, including Capital Leases | 5,903 | 4,647 | ||
Acquisition of Assets by Entering into Capital Leases | 3,118 | 1,863 | ||
Purchase of Property and Equipment | 2,785 | 2,784 |
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 November 8, 2013.
About Internet Initiative Japan Inc.
Founded in 1992, Internet Initiative Japan Inc. is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality systems integration, security services, Internet access, and cloud computing. Moreover, IIJ has built one of the largest Internet backbone networks in Japan that is connected to the United States and the United Kingdom. IIJ listed on NASDAQ in 1999 and on the First Section of the Tokyo Stock Exchange in 2006. For more information about IIJ, visit the IIJ Web site at http://www.iij.ad.jp/en/.
Statements made in this press release regarding IIJ's or managements' 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 revenues, 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 but not limited to: a decrease of corporate spending or capital expenditure due to depression in the Japanese economy and/or corporate earnings decreased, an inability to achieve anticipated results and cause negative impact on profitability, a possibility that less of reliability for our services and loss of business chances due to interrupt or suspend of our services, an excess increase in network rerated cost and outsourcing cost, personnel cost etc, a possibility to lose business opportunity due to our inadequate resources in personnel and others, an increase in competition and strong pricing pressure, the recording of an impairment loss as a results of an impairment test on the non-amortized intangible assets such as goodwill, a decline in value and trending value of our holding securities. Please refer to IIJ's filings on Form 20-F of its annual report and other filings with the United States Securities and Exchange Commission ("SEC") for other risks.
Internet Initiative Japan Inc. | ||||||
Quarterly Consolidated Balance Sheets (Unaudited) | ||||||
(As of March 31, 2013 and September 30, 2013) | ||||||
As of March 31, 2013 | As of September 30, 2013 | |||||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | 12,258,872 | 262,302 | 25,781,630 | |||
Accounts receivable, net of allowance for doubtful accounts of JPY 93,934 thousand and JPY 54,390 thousand at March 31, 2013 and September 30, 2013, respectively |
18,764,703 | 169,973 | 16,706,721 | |||
Inventories | 1,301,684 | 20,982 | 2,062,306 | |||
Prepaid expenses | 2,492,164 | 34,958 | 3,436,081 | |||
Deferred tax assets —current | 1,046,828 | 10,598 | 1,041,654 | |||
Other current assets, net of allowance for doubtful accounts of JPY 10,732 thousand and JPY 719 thousand at March 31, 2013 and September 30, 2013, respectively |
1,576,718 | 14,752 | 1,449,953 | |||
Total current assets | 37,440,969 | 513,565 | 50,478,345 | |||
INVESTMENTS IN EQUITY METHOD INVESTEES | 1,681,723 | 18,406 | 1,809,081 | |||
OTHER INVESTMENTS | 3,771,262 | 52,697 | 5,179,525 | |||
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 29,516,394 thousand and JPY 32,636,483 thousand at March 31, 2013 and September 30, 2013, respectively |
23,025,755 | 241,978 | 23,784,050 | |||
GOODWILL | 5,969,951 | 60,738 | 5,969,951 | |||
OTHER INTANGIBLE ASSETS —Net | 4,791,431 | 46,468 | 4,567,370 | |||
GUARANTEE DEPOSITS | 2,051,449 | 27,570 | 2,709,872 | |||
DEFERRED TAX ASSETS —Noncurrent | 163,773 | 1,347 | 132,412 | |||
NET INVESTMENT IN SALES-TYPE LEASES —Noncurrent | 898,040 | 8,476 | 833,065 | |||
Prepaid expenses —Noncurrent | 2,201,108 | 22,983 | 2,258,981 | |||
OTHER ASSETS, net of allowance for doubtful accounts of JPY 71,727 thousand and JPY 71,432 thousand at March 31, 2013 and September 30, 2013, respectively |
115,805 | 1,213 | 119,198 | |||
TOTAL | 82,111,266 | 995,441 | 97,841,850 | |||
As of March 31, 2013 | As of September 30, 2013 | |||||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Short-term borrowings | 9,400,000 | 95,635 | 9,400,000 | |||
Long-term borrowings —current portion | 1,010,000 | 9,971 | 980,000 | |||
Capital lease obligations —current portion | 3,505,471 | 37,566 | 3,692,346 | |||
Accounts payable —trade | 10,973,120 | 96,443 | 9,479,379 | |||
Accounts payable —other | 949,264 | 9,041 | 888,669 | |||
Income taxes payable | 1,669,849 | 8,916 | 876,399 | |||
Accrued expenses | 2,266,427 | 20,152 | 1,980,780 | |||
Deferred income —current | 1,806,074 | 18,627 | 1,830,818 | |||
Other current liabilities | 803,902 | 9,340 | 917,982 | |||
Total current liabilities | 32,384,107 | 305,691 | 30,046,373 | |||
LONG-TERM BORROWINGS | 980,000 | -- | -- | |||
CAPITAL LEASE OBLIGATIONS —Noncurrent | 5,370,365 | 51,654 | 5,077,037 | |||
ACCRUED RETIREMENT AND PENSION COSTS —Noncurrent |
2,112,085 | 22,684 | 2,229,624 | |||
DEFERRED TAX LIABILITIES —Noncurrent | 412,132 | 6,162 | 605,585 | |||
DEFERRED INCOME —Noncurrent | 2,562,208 | 22,722 | 2,233,363 | |||
OTHER NONCURRENT LIABILITIES | 656,191 | 4,498 | 442,127 | |||
Total Liabilities | 44,477,088 | 413,411 | 40,634,109 | |||
COMMITMENTS AND CONTINGENCIES | ||||||
SHAREHOLDERS' EQUITY: | ||||||
Common-stock —authorized, 75,520,000 shares; issued and outstanding, 41,295,600 shares at March 31, 2013 |
16,833,847 | 259,406 | 25,497,022 | |||
—authorized, 75,520,000 shares; issued and outstanding, 46,697,800 shares at September 30, 2013 |
||||||
Additional paid-in capital | 27,300,325 | 365,582 | 35,933,105 | |||
Accumulated deficit | (6,399,088) | (46,796) | (4,599,585) | |||
Accumulated other comprehensive income | 263,770 | 7,274 | 714,970 | |||
Treasury stock —758,800 shares and 758,813 shares held by the company at March 31, 2013 and September 30, 2013, respectively |
(392,079) | (3,989) | (392,122) | |||
Total Internet Initiative Japan Inc. shareholders' equity | 37,606,775 | 581,477 | 57,153,390 | |||
NONCONTROLLING INTERESTS | 27,403 | 553 | 54,351 | |||
Total equity | 37,634,178 | 582,030 | 57,207,741 | |||
TOTAL | 82,111,266 | 995,441 | 97,841,850 | |||
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
Internet Initiative Japan Inc. | |||
Quarterly Consolidated Statements of Income and | |||
Quarterly Consolidated Statements of Other Comprehensive Income (Unaudited) | |||
(For the six months ended September 30, 2012 and September 30, 2013) | |||
Quarterly Consolidated Statements of Income | |||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
REVENUES: | |||
Network services: | |||
Internet connectivity services (corporate use) | 7,815,625 | 85,035 | 8,358,114 |
Internet connectivity services (home use) | 2,768,151 | 29,055 | 2,855,790 |
WAN services | 12,577,216 | 128,379 | 12,618,348 |
Outsourcing services | 9,097,610 | 99,484 | 9,778,277 |
Total | 32,258,602 | 341,953 | 33,610,529 |
Systems integration: | |||
Systems construction | 6,693,586 | 72,757 | 7,151,242 |
Systems operation and maintenance | 10,433,028 | 117,222 | 11,521,775 |
Total | 17,126,614 | 189,979 | 18,673,017 |
Equipment sales | 641,780 | 7,684 | 755,309 |
ATM operation business | 1,082,005 | 13,817 | 1,358,104 |
Total revenues | 51,109,001 | 553,433 | 54,396,959 |
COST AND EXPENSES: | |||
Cost of network services | 25,382,614 | 269,247 | 26,464,339 |
Cost of systems integration | 14,089,358 | 160,395 | 15,765,185 |
Cost of equipment sales | 551,245 | 6,930 | 681,162 |
Cost of ATM operation business | 938,041 | 10,743 | 1,055,944 |
Total cost | 40,961,258 | 447,315 | 43,966,630 |
Sales and marketing | 3,931,676 | 42,350 | 4,162,559 |
General and administrative | 2,745,077 | 30,900 | 3,037,201 |
Research and development | 208,283 | 2,255 | 221,590 |
Total cost and expenses | 47,846,294 | 522,820 | 51,387,980 |
OPERATING INCOME | 3,262,707 | 30,613 | 3,008,979 |
OTHER INCOME (EXPENSE): | |||
Dividend income | 34,762 | 364 | 35,760 |
Interest income | 14,823 | 130 | 12,801 |
Interest expense | (145,163) | (1,348) | (132,467) |
Foreign exchange gains (losses) | (49,997) | 1,417 | 139,285 |
Net gain on sales of other investments | 13,565 | 843 | 82,852 |
Net gain on other investments | -- | 1,754 | 172,423 |
Losses on write-down of other investments | (19,788) | -- | -- |
Other —net | 65,389 | 285 | 27,965 |
Other income (expense) —net | (86,409) | 3,445 | 338,619 |
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES |
3,176,298 | 34,058 | 3,347,598 |
INCOME TAX EXPENSE | 1,251,172 | 12,648 | 1,243,173 |
EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES |
83,088 | 1,296 | 127,358 |
NET INCOME | 2,008,214 | 22,706 | 2,231,783 |
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
(1,058) | (274) | (26,912) |
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. |
2,007,156 | 22,432 | 2,204,871 |
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
||
NET INCOME PER SHARE | |||
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
40,536,800 | 42,683,242 | |
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
40,564,800 | 42,734,376 | |
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
81,073,600 | 85,366,484 | |
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
81,129,600 | 85,468,752 | |
BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) |
49.51 | 0.53 | 51.66 |
DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) |
49.48 | 0.52 | 51.59 |
BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
24.76 | 0.26 | 25.83 |
DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
24.74 | 0.26 | 25.80 |
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
|||
Quarterly Consolidated Statements of Other Comprehensive Income | |||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
NET INCOME | 2,008,214 | 22,706 | 2,231,783 |
Comprehensive income (loss): | |||
Foreign currency translation adjustments | 3,299 | 2,770 | 272,253 |
Unrealized holding gain (loss) on securities | (13,379) | 1,820 | 178,865 |
Defined benefit pension plans | 119 | 1 | 118 |
Total comprehensive income | 1,998,253 | 27,297 | 2,683,019 |
Less: Comprehensive income attributable to noncontrolling interests |
(1,058) | (274) | (26,948) |
Comprehensive income attributable to Internet Initiative Japan Inc. |
1,997,195 | 27,023 | 2,656,071 |
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
Internet Initiative Japan Inc. | ||||||
Quarterly Consolidated Statements of Cash Flows (Unaudited) | ||||||
(For the six months ended September 30, 2012 and September 30, 2013) | ||||||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
|||||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
||||
OPERATING ACTIVITIES: | ||||||
Net income | 2,008,214 | 22,706 | 2,231,783 | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
Depreciation and amortization | 3,639,342 | 43,122 | 4,238,476 | |||
Provision for retirement and pension costs, less payments |
106,730 | 1,198 | 117,723 | |||
Provision for (reversal of) allowance for doubtful accounts | 86 | (480) | (47,200) | |||
Loss on disposal of property and equipment | 2,315 | 37 | 3,616 | |||
Net gain on sales of other investments | (13,565) | (843) | (82,852) | |||
Net gain on other investments | -- | (1,754) | (172,423) | |||
Impairment of other investments | 19,788 | -- | -- | |||
Foreign exchange losses (gains), net | 36,218 | (896) | (88,024) | |||
Equity in net income of equity method investees | (83,088) | (1,296) | (127,358) | |||
Deferred income tax expense | 124,330 | 1,725 | 169,584 | |||
Others | 967 | 10 | 934 | |||
Changes in operating assets and liabilities net of effects from acquisition of a company: |
||||||
Decrease in accounts receivable | 177,411 | 21,733 | 2,136,106 | |||
Decrease in net investment in sales-type lease — noncurrent |
141,255 | 661 | 64,975 | |||
Increase in inventories | (782,389) | (7,718) | (758,645) | |||
Increase in prepaid expenses | (949,899) | (9,493) | (933,077) | |||
Decrease in other current and noncurrent assets | 48,180 | 1,547 | 152,072 | |||
Increase (decrease) in accounts payable | 301,591 | (15,391) | (1,512,769) | |||
Decrease in income taxes payable | (1,320,716) | (8,075) | (793,648) | |||
Increase (decrease) in deferred income-noncurrent | 276,090 | (3,832) | (376,601) | |||
Increase (decrease) in accrued expenses and other current and noncurrent liabilities |
237,403 | (5,362) | (527,057) | |||
Net cash provided by operating activities | 3,970,263 | 37,599 | 3,695,615 | |||
INVESTING ACTIVITIES: | ||||||
Purchase of property and equipment | (2,785,190) | (28,324) | (2,783,991) | |||
Proceeds from sales of property and equipment | 375,005 | 1,252 | 123,086 | |||
Purchase of available-for-sale securities | (19,606) | (345) | (33,902) | |||
Purchase of other investments | (373,909) | (11,015) | (1,082,640) | |||
Investment in an equity method investee | (100,000) | -- | -- | |||
Proceeds from sales of available-for-sale securities | -- | 2,232 | 219,362 | |||
Proceeds from sales of other investments | 89,117 | 41 | 4,000 | |||
Payments of guarantee deposits | (22,473) | (6,738) | (662,283) | |||
Refund of guarantee deposits | 12,397 | 72 | 7,112 | |||
Payments for refundable insurance policies | (368) | -- | -- | |||
Refund from insurance policies | -- | 163 | 16,026 | |||
Acquisition of a newly controlled company, net of cash acquired |
(229,058) | -- | -- | |||
Other | 60 | (94) | (9,250) | |||
Net cash used in investing activities | (3,054,025) | (42,756) | (4,202,480) | |||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 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 |
21,000 | 2,035 | 200,000 | |||
Repayments of short-term borrowings with initial maturities over three months and long-term borrowings |
(1,010,000) | (12,311) | (1,210,000) | |||
Principal payments under capital leases | (1,812,654) | (20,068) | (1,972,457) | |||
Net increase in short-term borrowings with initial maturities less than three months |
400,000 | -- | -- | |||
Dividends paid | (354,697) | (4,124) | (405,368) | |||
Proceeds from issuance of common stock, net of issuance cost | -- | 175,717 | 17,271,204 | |||
Other | -- | (0) | (41) | |||
Net cash provided by (used in) financing activities | (2,756,351) | 141,249 | 13,883,338 | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(26,261) | 1,488 | 146,285 | |||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(1,866,374) | 137,580 | 13,522,758 | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
13,536,824 | 124,722 | 12,258,872 | |||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
11,670,450 | 262,302 | 25,781,630 | |||
ADDITIONAL CASH FLOW INFORMATION: | ||||||
Interest paid | 145,876 | 1,351 | 132,774 | |||
Income taxes paid | 2,288,440 | 15,604 | 1,533,720 | |||
NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||
Acquisition of assets by entering into capital leases | 3,118,126 | 18,955 | 1,863,053 | |||
Facilities purchase liabilities | 804,789 | 9,041 | 888,669 | |||
Asset retirement obligation | -- | 560 | 55,066 | |||
Acquisition of a company: | ||||||
Assets acquired | 404,140 | -- | -- | |||
Liabilities assumed | 104,321 | -- | -- | |||
Noncontrolling interests | 119 | -- | -- | |||
Cash paid | (299,700) | -- | -- | |||
Cash acquired | 70,642 | -- | -- | |||
Acquisition of a newly controlled company, net of cash acquired |
(229,058) | -- | -- | |||
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
Going Concern Assumption (Unaudited) | ||||
Nothing to be reported. | ||||
Material Changes In Shareholders' Equity (Unaudited) | ||||
IIJ issued new shares by way of public offering with payment due July 18, 2013 and by way of third-party allotment in connection with secondary offering of shares by way of over-allotment with payment due August 5, 2013. As a result, common stock and additional paid-in capital increased by JPY8,662 million and JPY8,610 million, respectively, for the second quarter of fiscal year ending March 31, 2014. The balances of common stock and additional paid-in capital as of September 30, 2013 were JPY25,497 million and JPY 35,933 million, respectively. | ||||
Segment Information (Unaudited) | ||||
Business Segments: | ||||
Revenues: | ||||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
|||
Thousands of JPY | Thousands of JPY | |||
Network service and systems integration business | 50,310,706 | 53,295,762 | ||
Customers | 50,026,996 | 53,038,855 | ||
Intersegment | 283,710 | 256,907 | ||
ATM operation business | 1,082,005 | 1,358,104 | ||
Customers | 1,082,005 | 1,358,104 | ||
Intersegment | -- | -- | ||
Elimination | 283,710 | 256,907 | ||
Consolidated total | 51,109,001 | 54,396,959 | ||
Segment profit or loss: | ||||
Six Months Ended September 30, 2012 |
Six Months Ended September 30, 2013 |
|||
Thousands of JPY | Thousands of JPY | |||
Network service and systems integration business | 3,260,156 | 2,829,032 | ||
ATM operation business | 82,920 | 240,882 | ||
Elimination | 80,369 | 60,935 | ||
Consolidated operating income | 3,262,707 | 3,008,979 | ||
Geographic information is not presented due to immateriality of revenue attributable to international operations. | ||||
Subsequent Events (Unaudited) | ||||
Nothing to be reported. |
2nd Quarter FY2013 Consolidated Financial Results (3 months)
The following tables are highlight data of 2nd Quarter FY2013 consolidated financial results (unaudited, from July 1, 2013 to September 30, 2013).
Operating Results Summary | ||||||
2Q12 | 2Q13 |
YoY % Change |
||||
JPY millions | JPY millions | |||||
Total Revenues: | 26,268 | 27,956 | 6.4 | |||
Network Services | 16,167 | 16,825 | 4.1 | |||
Systems Integration (SI) | 9,175 | 9,981 | 8.8 | |||
Equipment Sales | 311 | 437 | 40.3 | |||
ATM Operation Business | 615 | 713 | 16.1 | |||
Cost of Revenues: | 20,939 | 22,555 | 7.7 | |||
Network Services | 12,619 | 13,223 | 4.8 | |||
Systems Integration (SI) | 7,526 | 8,415 | 11.8 | |||
Equipment Sales | 277 | 396 | 42.5 | |||
ATM Operation Business | 517 | 521 | 0.8 | |||
SG&A Expenses and R&D | 3,440 | 3,697 | 7.5 | |||
Operating Income | 1,889 | 1,704 | (9.8) | |||
Income before Income Tax Expense | 1,803 | 1,917 | 6.3 | |||
Net Income attributable to IIJ | 1,110 | 1,251 | 12.7 |
Network Services Revenues Breakdown | ||||||
2Q12 | 2Q13 |
YoY % Change |
||||
JPY millions | JPY millions | |||||
Internet Connectivity Service (Corporate Use) | 3,951 | 4,167 | 5.5 | |||
IP Service | 2,495 | 2,587 | 3.7 | |||
IIJ FiberAccess/F and IIJ DSL/F | 804 | 792 | (1.4) | |||
IIJ Mobile Service | 592 | 731 | 23.5 | |||
Others | 60 | 57 | (4.9) | |||
Internet Connectivity Service (Home Use) | 1,340 | 1,459 | 8.9 | |||
Under IIJ Brand | 303 | 525 | 73.4 | |||
hi-ho | 882 | 759 | (13.9) | |||
OEM | 155 | 175 | 12.9 | |||
WAN Services | 6,264 | 6,308 | 0.7 | |||
Outsourcing Services | 4,612 | 4,891 | 6.0 | |||
Network Services Revenues | 16,167 | 16,825 | 4.1 |
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 | ||||
2Q12 | 2Q13 | |||
JPY millions | JPY millions | |||
Adjusted EBITDA | 3,730 | 3,871 | ||
Depreciation and Amortization | 1,841 | 2,167 | ||
Operating Income | 1,889 | 1,704 | ||
Other Income (Expense) | (86) | 213 | ||
Income Tax Expense | 736 | 706 | ||
Equity in Net Income of Equity Method Investees | 50 | 62 | ||
Net income | 1,117 | 1,273 | ||
Less: Net income attributable to noncontrolling interests | (7) | (22) | ||
Net Income attributable to IIJ | 1,110 | 1,251 |
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 | ||||
2Q12 | 2Q13 | |||
JPY millions | JPY millions | |||
CAPEX, including capital leases | 2,606 | 1,754 | ||
Acquisition of Assets by Entering into Capital Leases | 1,479 | 688 | ||
Purchase of Property and Equipment | 1,127 | 1,065 |
Internet Initiative Japan Inc. | |||
Quarterly Consolidated Statements of Income (Unaudited) | |||
(For the three months ended September 30, 2012 and September 30, 2013) | |||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2013 |
||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
|
REVENUES: | |||
Network services: | |||
Internet connectivity services (corporate use) | 3,950,858 | 42,396 | 4,167,105 |
Internet connectivity services (home use) | 1,339,001 | 14,839 | 1,458,531 |
WAN services | 6,264,795 | 64,183 | 6,308,549 |
Outsourcing services | 4,612,416 | 49,761 | 4,891,009 |
Total | 16,167,070 | 171,179 | 16,825,194 |
Systems integration: | |||
Systems Construction | 3,933,690 | 42,601 | 4,187,234 |
Systems Operation and Maintenance | 5,241,338 | 58,942 | 5,793,403 |
Total | 9,175,028 | 101,543 | 9,980,637 |
Equipment sales | 311,145 | 4,442 | 436,616 |
ATM operation business | 614,495 | 7,258 | 713,411 |
Total revenues | 26,267,738 | 284,422 | 27,955,858 |
COST AND EXPENSES: | |||
Cost of network services | 12,618,608 | 134,527 | 13,222,659 |
Cost of systems integration | 7,525,533 | 85,619 | 8,415,537 |
Cost of equipment sales | 278,206 | 4,034 | 396,474 |
Cost of ATM operation business | 516,954 | 5,299 | 520,842 |
Total cost | 20,939,301 | 229,479 | 22,555,512 |
Sales and marketing | 2,001,385 | 20,832 | 2,047,534 |
General and administrative | 1,334,025 | 15,636 | 1,536,859 |
Research and development | 104,343 | 1,144 | 112,446 |
Total cost and expenses | 24,379,054 | 267,091 | 26,252,351 |
OPERATING INCOME | 1,888,684 | 17,331 | 1,703,507 |
OTHER INCOME (EXPENSE): | |||
Dividend income | 12,228 | 88 | 8,649 |
Interest income | 6,630 | 71 | 6,955 |
Interest expense | (73,726) | (652) | (64,116) |
Foreign exchange gains (losses) | (29,579) | 475 | 46,666 |
Net gain on sales of other investments | 13,563 | 274 | 26,932 |
Net gain on other investments | -- | 1,754 | 172,423 |
Losses on write-down of other investments | (17,825) | -- | -- |
Other—net | 3,043 | 163 | 16,060 |
Other income (expense) — net | (85,666) | 2,173 | 213,569 |
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD INVESTEES |
1,803,018 | 19,504 | 1,917,076 |
INCOME TAX EXPENSE | 736,412 | 7,180 | 705,754 |
EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES |
50,201 | 625 | 61,404 |
NET INCOME | 1,116,807 | 12,949 | 1,272,726 |
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
(6,358) | (221) | (21,665) |
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. |
1,110,449 | 12,728 | 1,251,061 |
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2013 |
||
NET INCOME PER SHARE | |||
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
40,536,800 | 44,804,204 | |
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
40,569,000 | 44,856,748 | |
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
81,073,600 | 89,608,408 | |
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
81,138,000 | 89,713,496 | |
BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) |
27.39 | 0.28 | 27.92 |
DILUTED NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) |
27.37 | 0.28 | 27.89 |
BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
13.70 | 0.14 | 13.96 |
DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
13.69 | 0.14 | 13.95 |
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
Internet Initiative Japan Inc. | ||||||
Quarterly Consolidated Statements of Cash Flows (Unaudited) | ||||||
(For the three months ended September 30, 2012 and September 30, 2013) | ||||||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 2013 |
|||||
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
||||
OPERATING ACTIVITIES: | ||||||
Net income | 1,116,807 | 12,949 | 1,272,726 | |||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
Depreciation and amortization | 1,841,047 | 22,054 | 2,167,716 | |||
Provision for retirement and pension costs, less payments |
53,919 | 614 | 60,353 | |||
Provision for (reversal of) allowance for doubtful accounts |
145 | (364) | (35,761) | |||
Loss on disposal of property and equipment | 1,271 | 30 | 2,971 | |||
Net gain on sales of other investments | (13,563) | (274) | (26,932) | |||
Net gain on other investments | -- | (1,754) | (172,423) | |||
Impairment of other investments | 17,825 | -- | -- | |||
Foreign exchange losses (gains), net | 2,373 | (82) | (8,072) | |||
Equity in net income of equity method investees |
(50,201) | (625) | (61,404) | |||
Deferred income tax benefit | (27,279) | (1,004) | (98,657) | |||
Others | 22,818 | (106) | (10,471) | |||
Changes in operating assets and liabilities net of effects from acquisition of a company: |
||||||
Increase in accounts receivable | (1,241,974) | (8,001) | (786,378) | |||
Decrease in net investment in sales-type lease―noncurrent |
98,205 | 687 | 67,556 | |||
Increase in inventories | (702,255) | (5,627) | (553,097) | |||
Decrease prepaid expenses | 617,321 | 4,933 | 484,823 | |||
Decrease in other current and noncurrent assets | 343,478 | 355 | 34,858 | |||
Increase in accounts payable | 175,983 | 4,568 | 448,979 | |||
Increase in income taxes payable | 724,293 | 7,074 | 695,246 | |||
Increase in deferred income― noncurrent | 271,080 | 749 | 73,650 | |||
Decrease in accrued expenses, other current and noncurrent liabilities |
(705,353) | (14,125) | (1,388,312) | |||
Net cash provided by operating activities | 2,545,940 | 22,051 | 2,167,371 | |||
INVESTING ACTIVITIES: | ||||||
Purchase of property and equipment | (1,126,849) | (10,840) | (1,065,478) | |||
Proceeds from sales of property and equipment | 210,799 | 544 | 53,482 | |||
Purchase of available-for-sale securities | (3,503) | (224) | (21,963) | |||
Purchase of other investments | (59,599) | (10,778) | (1,059,363) | |||
Proceeds from sales of available-for-sale securities | -- | 2,232 | 219,362 | |||
Proceeds from sales of other investments | 68,996 | -- | -- | |||
Payments of guarantee deposits | (21,708) | (13) | (1,310) | |||
Refund of guarantee deposits | 2,646 | 22 | 2,192 | |||
Payments for refundable insurance policies | (187) | -- | -- | |||
Refund from insurance policies | -- | 163 | 16,026 | |||
Other | 6,773 | (59) | (5,815) | |||
Net cash used in investing activities | (922,632) | (18,953) | (1,862,867) | |||
Three Months Ended September 30, 2012 |
Three Months Ended September 30, 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 |
21,000 | -- | -- | |||
Repayments of short-term borrowings with initial maturities over three months and long-term borrowings |
(1,010,000) | (12,311) | (1,210,000) | |||
Principal payments under capital leases | (935,440) | (10,085) | (991,296) | |||
Net increase in short-term borrowings with initial maturities less than three months |
500,000 | 2,035 | 200,000 | |||
Proceeds from issuance of common stock, net of issuance cost |
-- | 175,717 | 17,271,204 | |||
Net cash provided by (used in) financing activities | (1,424,440) | 155,356 | 15,269,908 | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
1,490 | (705) | (69,242) | |||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 200,358 | 157,749 | 15,505,170 | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
11,470,092 | 104,553 | 10,276,460 | |||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
11,670,450 | 262,302 | 25,781,630 | |||
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was the noon buying rate in New York City for cable transfers in foreign currencies as of September 30, 2013. |
Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the first six months ended September 30, 2013 in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the First Six Months Ended September 30, 2013 | ||
[Under accounting principles generally accepted in the United States ("U.S. GAAP")] | ||
November 8, 2013 | ||
Company name: Internet Initiative Japan Inc. | Exchange listed: First Section, Tokyo Stock Exchange | |
Stock code number: 3774 | URL: http://www.iij.ad.jp/ | |
Representative: Eijiro Katsu, President and Representative Director | ||
Contact: Akihisa Watai, Managing Director and CFO | TEL: (03) 5259-6500 | |
Filing of quarterly report (Shihanki-houkokusho) to the regulatory organization in Japan: Scheduled on November 14, 2013 | ||
Payment of dividend: December 6, 2013 | Supplemental material on quarterly results: Yes | |
Presentation on quarterly results: Yes (for institutional investors and analysts) | ||
(Amounts of less than JPY one million are rounded) |
1. Consolidated Financial Results for the First Six Months Ended September 30, 2013 | ||||||||||||||||
(April 1, 2013 to September 30, 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 | % | |||||||||
Six Months Ended September 30, 2013 | 54,397 | 6.4 | 3,009 | (7.8) | 3,348 | 5.4 | 2,205 | 9.9 | ||||||||
Six Months Ended September 30, 2012 | 51,109 | 8.3 | 3,263 | 33.3 | 3,176 | 38.7 | 2,007 | 47.4 |
(Note1) Total comprehensive income attributable to IIJ
Six Months Ended September 30, 2013: JPY2,656 million (up 33.0% YoY)
Six Months Ended September 30, 2012: JPY1,997 million (up 44.4% YoY)
(Note2) Income before income tax expense represents income from operations before income tax expense and equity in net income of equity method investees in IIJ's consolidated financial statements.
Basic Net Income attributable to IIJ per Share |
Diluted Net Income attributable to IIJ per Share |
|||
JPY | JPY | |||
Six Months Ended September 30, 2013 | 51.66 | 51.59 | ||
Six Months Ended September 30, 2012 | 49.51 | 49.48 |
(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 were conducted on April 1, 2012, at the beginning of the fiscal year ended March 31, 2013.
(2) Consolidated Financial Position | ||||||||
Total Assets | Total Equity |
Total IIJ Shareholders' Equity |
Total IIJ Shareholders' Equity to Total Assets |
|||||
JPY millions | JPY millions | JPY millions | % | |||||
As of September 30, 2013 | 97,842 | 57,208 | 57,153 | 58.4 | ||||
As of March 31, 2013 | 82,111 | 37,634 | 37,607 | 45.8 |
2. Dividends | ||||||||||
Dividends per Share | ||||||||||
1Q-end | 2Q-end | 3Q-end | Year-end | Total | ||||||
JPY | JPY | JPY | JPY | |||||||
Fiscal Year Ended March 31, 2013 |
-- | 1,750.00 | -- | 10.00 | 1,760.00 | |||||
Fiscal Year Ending March 31, 2014 |
-- | 11.00 | ||||||||
Fiscal Year Ending March 31, 2014 (forecast) |
-- | 11.00 | 22.00 | |||||||
(Note1) Changes in the latest forecasts released: None | ||||||||||
(Note2) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. 2Q-end dividend (interim dividend) for the fiscal year ended March 31, 2013 does not take the stock split into consideration. The dividends for 2Q-end and the total dividend for the fiscal year ended March 31, 2013 would have been JPY8.75 and JPY18.75 respectively if the stock split were conducted on April 1, 2012, at the beginning of the fiscal year ended March 31, 2013. |
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 | ||||||||||
Fiscal Year Ending March 31, 2014 | 117,000 |
10.1 |
9,400 | 21.2 | 9,000 | 16.0 | 6,000 | 13.2 | 135.42 | |||||||||
(Note1) Changes in the latest forecasts released: None | ||||||||||||||||||
(Note2) IIJ issued 4,700,000 shares of common stock by way of public offering on July 18, 2013. IIJ also issued 700,000 shares of common stock by way of third-party allotment in connection with secondary offering of shares by way of over-allotment on August 5, 2013. Basic Net Income attributable to IIJ per Share in the above "3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2014" was recalculated to reflect the increases in the number of shares outstanding. |
* Notes
(1) Changes in significant subsidiaries for the first six months ended September 30, 2013
(Changes in significant subsidiaries for the first six months ended September 30, 2013 which resulted in changes in scope of consolidation): None
(2) Application of simplified or exceptional accounting: None
(3) Changes in significant accounting and reporting policies for the quarterly consolidated financial statements
1) Changes due to the revision of accounting standards: None
2) Others: None
(4) Number of shares outstanding (shares of common stock)
1) The number of shares outstanding (inclusive of treasury stock):
As of September 30, 2013: 46,697,800 shares
As of March 31, 2013: 41,295,600 shares
2) The number of treasury stock:
As of September 30, 2013: 758,813 shares
As of March 31, 2013: 758,800 shares
3) The weighted average number of shares outstanding:
For the first six months ended September 30, 2013: 42,683,242 shares
For the first six months ended September 30, 2012: 40,536,800 shares
(Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. The number of shares outstanding (shares of common stock) in the above have been calculated as if the stock split were conducted on April 1, 2012, the beginning of the fiscal year ended March 31, 2013.