Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774)
today announced its consolidated financial results for the three
months ended June 30, 2010 ("1Q10").1
Highlights of First Quarter
FY2010 Financial Results
- Revenues were JPY15,813 million ($179 million), down 0.1% YoY.
While connectivity and outsourcing services steadily grew, systems
integration decreased mainly affected by the scale-down of a
contract from a certain large contract.
- Operating income was JP266 million ($3 million), down 24.3%
YoY, mainly due to the increase in SG&A expenses. Operating
loss related to the ATM operation business decreased to JPY160
million ($2 million).
- Net income attributable to IIJ was JPY247 million ($3 million),
up 36.8% YoY.
Overview of 1st Quarter FY2010 Financial Results and
Business Outlook
"We are seeing slight recovery in systems construction, however,
the Japanese economy is still struggling for full recovery and is
difficult to foresee," said Koichi Suzuki, President and CEO of
IIJ.
"As for our operating results, connectivity and outsourcing
service revenues steadily increased by 2.0% YoY followed by the
continuous demands for outsourcing services for cost reduction
purposes. For systems integration ("SI"), there were scale-down of
a contract from a certain large client for both construction and
operation and maintenance. Systems construction revenue increased
YOY with carried over projects from 4Q09, systems operation and
maintenance decreased YoY. As a result, our revenues were nearly
the same as 1Q09. And SG&A expenses increased as there were
increases in personnel related and other expenses which increases
annually at the beginning of the fiscal year.
"For the coming quarters, we expect connectivity and outsourcing
services to grow steadily as continuous demands for bandwidth and
outsourcing are anticipated and demands for cloud computing are
gradually growing. In addition, we would like to pursue getting
more systems construction projects toward the latter half of
FY2010, which we hope will increase along with the recovery of the
Japanese economy. We aim to complete the transaction to acquire the
subsidiary of AT&T Japan LLC on September 1, 2010. We believe
this business acquisition will broaden the basis of our business
growth.
"We will make sure to do our best to maintain our position as
one of the leading total network solution provider in Japan."
1st Quarter FY2010 Financial Results
Summary |
|
|
|
|
|
|
|
Operating Results
Summary |
|
1Q09 |
1Q10 |
YoY % change |
|
JPY millions |
JPY millions |
|
Total Revenues |
15,835 |
15,813 |
(0.1%) |
Connectivity and
Outsourcing Services |
9,126 |
9,304 |
2.0% |
SI |
6,565 |
6,259 |
(4.7%) |
Equipment
Sales |
137 |
144 |
5.7% |
ATM Operation
Business |
7 |
106 |
1,318.4% |
Total Costs |
12,837 |
12,788 |
(0.4%) |
Connectivity and
Outsourcing Services |
7,650 |
7,647 |
0.0% |
SI |
4,876 |
4,793 |
(1.7%) |
Equipment
Sales |
119 |
119 |
0.3% |
ATM Operation
Business |
192 |
229 |
19.5% |
SG&A Expenses and
R&D |
2,647 |
2,759 |
4.3% |
Operating Income |
351 |
266 |
(24.3%) |
Income before Income Tax
Expense |
300 |
279 |
(6.9%) |
Net income attributable to
IIJ |
180 |
247 |
36.8% |
Segment
Summary |
|
1Q09 |
1Q10 |
|
JPY millions |
JPY millions |
Net Revenues |
15,835 |
15,813 |
Network services
and SI business |
15,922 |
15,816 |
ATM operation
business |
7 |
106 |
Elimination |
94 |
109 |
Operating Income
(Loss) |
351 |
266 |
Network service
and SI business |
589 |
432 |
ATM operation
business |
(233) |
(160) |
Elimination |
5 |
6 |
We have omitted segment analysis because most of our revenues
are dominated by Network services and systems integration
business.
1st Quarter FY2010 Results of Operation
Revenues
Revenues were JPY15,813 million, down 0.1% YoY.
Connectivity and Outsourcing Services revenue were JPY9,304
million, up 2.0% YoY. Connectivity service for corporate use
revenue was JPY3,466 million, up 0.5% YoY. While contracts over
1Gbps IP service increased by 21 contracts YoY, there were affects
from cancellation due to corporate merger and migration of
contracted lines from certain large clients that occurred during
FY2009 and decrease in volume charge revenue which occurred in
4Q09. For IIJ mobile service, despite the cancellation from a large
client during this first quarter, revenue steadily increased.
Connectivity service for home use revenue was JPY1,694 million,
down 0.2% YoY. OEM service revenue decreased as one of our OEM
clients terminated their service as planned which resulted in the
decrease in our OEM service revenues.
Outsourcing service revenue was JPY4,144 million, up 4.1% YoY.
Services such as email related services, services that prevent
virus infection through a web browser and data center related
services increased, respectively.
Number of
Contracts for Connectivity Services |
|
as of June 30, 2009 |
as of June 30,
2010 |
YoY Change |
Connectivity Services
(Corporate Use) |
53,513 |
64,118 |
10,605 |
IP Service
(-99Mbps) |
925 |
904 |
(21) |
IP Service
(100Mbps-999Mbps) |
227 |
269 |
42 |
IP Service
(1Gbps-) |
102 |
123 |
21 |
IIJ Data Center
Connectivity Service |
298 |
301 |
3 |
IIJ FiberAccess/F
and IIJ DSL/F |
26,274 |
28,691 |
2,417 |
IIJ Mobile
Service2 |
24,201 |
32,466 |
8,265 |
Others |
1,486 |
1,364 |
(122) |
Connectivity Services (Home
Use) |
428,171 |
377,612 |
(50,559) |
Under IIJ
Brand |
48,053 |
45,790 |
(2,263) |
hi-ho |
176,225 |
163,922 |
(12,303) |
OEM |
203,893 |
167,900 |
(35,993) |
Total Contracted
Bandwidth |
584.7 Gbps |
660.9 Gbps |
76.2 Gbps |
|
|
|
|
Connectivity and
Outsourcing Services Revenues Breakdown |
|
1Q09 |
1Q10 |
YoY % change |
|
JPY millions |
JPY millions |
|
Connectivity Service (Corporate
Use) |
3,448 |
3,466 |
0.5% |
IP Service3 |
2,347 |
2,238 |
(4.7%) |
IIJ FiberAccess/F
and IIJ DSL/F |
726 |
740 |
1.9% |
IIJ Mobile Service4 |
299 |
422 |
41.1% |
Others |
76 |
66 |
(13.0%) |
Connectivity Service (Home
Use) |
1,698 |
1,694 |
(0.2%) |
Under IIJ
Brand |
253 |
257 |
1.7% |
hi-ho |
1,302 |
1,303 |
0.1% |
OEM |
143 |
134 |
(6.1%) |
Outsourcing
Services |
3,980 |
4,144 |
4.1% |
Total
Connectivity and Outsourcing Services |
9,126 |
9,304 |
2.0% |
SI revenues were JPY6,259 million, down 4.7% YoY.
SI transactions during the first quarter are seasonally low and
there were scale-down of a contract from a certain large client
(decrease of JPY0.6 billion in systems construction revenue and
JPY0.7 billion in systems operation and maintenance revenue YoY,
respectively). Systems construction revenue, a one-time revenue,
was JPY2,011 million, up 11.5% YoY with carried over projects from
4Q09. Systems operation and maintenance, a recurring revenue, was
JPY4,248 million, down 10.8% YoY as a result of scale-down in
contract from a certain large client.
The order backlog for systems construction and
equipment sales was JPY4,580 million, up 19.1% YoY and order
backlog for systems operation and maintenance was JPY12,258
million, down 1.9% YoY as of June 30, 2010, respectively.
Equipment sales revenues were JPY144 million, up 5.7% YoY.
ATM Operation Business revenues were JPY106 million.
Cost and expense
Cost of revenues was JPY12,788 million, down 0.4% YoY.
Cost of Connectivity and Outsourcing Services
revenue was JPY7,647 million, nearly the same as 1Q09. While
personnel related and outsourcing related costs increased, circuit
related cost decreased. Gross margin for connectivity and
outsourcing service was JPY1,657 million, up 12.3% YoY and gross
margin ratio was 17.8%, up 1.6% YoY.
Cost of SI revenues was JPY4,793 million, down 1.7%
YoY. While network operation related and outsourcing related costs
increased, purchasing cost decreased. Gross margin for SI was
JPY1,466 million, down 13.2% YoY and gross margin ratio was 23.4%,
down 2.3% YoY.
Cost of Equipment Sales revenues was JPY119 million, up 0.3%
YoY. Gross margin for equipment sales was JPY25 million and gross
margin ratio was 17.4%, up 4.5% YoY.
Cost of ATM Operation Business revenues was JPY229 million.
Outsourcing costs were reduced.
SG&A and R&D Expenses
SG&A and R&D expenses were JPY2,759 million, up 4.3%
YoY.
Sales and marketing expenses were JPY1,406 million,
up 6.2% YoY mainly due to continuous increase in personnel related
expenses.
General and administrative expenses were JPY1,265
million, up 1.6% YoY mainly due to the increase in depreciation
expenses.
Research and development expenses were JPY88 million, up 15.1%
YoY.
Operating income
Operating income was JPY266 million, down 24.3%
YoY. While gross margin was almost the same as 1Q09, there were
increases in SG&A and R&D expenses.
Other income (expenses)
Other income (expenses) was net other income of JPY14 million as
dividends received and gains on sales of other investments
increased and interest expense decreased.
Income before income tax expenses
Income before income tax expenses was JPY279 million, down 6.9%
YoY.
Net Income
Income tax expense was JPY120 million. Deferred tax expenses was
JPY88 million compared to expense of JPY186 million in 1Q09.
Equity in net income of equity method investees was JPY34
million.
Net income was JPY193 million, up 121.1% YoY.
Net income attributable to IIJ
Net loss attributable to noncontrolling interests was JPY54
million, related to GDX Japan Inc. and Trust Networks Inc.
Net income attributable to IIJ was JPY247 million, up 36.8%
YoY.
Full FY2009 Financial Condition
Balance Sheets
As of June 30, 2010, the balance of total assets
was JPY50,805 million, a decrease of JPY310 million from the
balance as of March 31, 2010.
For current assets, as compared to each of the
respective balances as of March 31, 2010, prepaid expense increased
by JPY1,426 million, accounts receivables decreased by JPY1,761
million and inventories decreased by JPY169 million. As for current
liabilities, as compared to each of the respective balances as of
March 31, 2010, deferred income increased by JPY466 million and
accounts payable decreased by JPY547 million. Noncurrent capital
lease obligations decreased by JPY351 million to JPY3,306
million.
The balance of other investments as of June 30,
2010 was JPY2,642 million, an increase of JPY60 million from the
balance as of March 31, 2010. The breakdown of other investments
were JPY1,486 million in nonmarketable equity securities, JPY888
million in available-for-sale securities and JPY268 million in
other.
As of June 30, 2010, the balance of non-amortized
intangible assets (excluding telephone rights) such as goodwill was
JPY2,806 million and the balance of amortized intangible assets was
JPY2,560 million. The breakdown of non-amortized intangible assets
were JPY2,614 million in goodwill and JPY192 million in trademark.
The breakdown of amortized intangible assets were JPY2,486 million
in customer relationships and JPY74 million in licenses.
Total IIJ shareholders' equity as of June 30, 2010
was JPY27,288 million, a decrease of JPY31 million from the balance
as of March 31, 2010. IIJ Shareholders' equity ratio (IIJ
shareholders' equity/total assets) as of June 30, 2010 was
53.7%.
Cash Flows
Cash and cash equivalents as of June 30, 2010 were JPY9,137
million compared to JPY9,897 million as of June 30, 2009.
Net cash provided by operating activities for 1Q10
was JPY2,274 million. While operating income was JPY266 million,
decreased compared to 1Q09, there were changes in operating assets
and liabilities during 1Q09, mainly resulting from the decrease in
accounts receivable of JPY1,768 million, increase in inventories,
prepaid expenses and other current and noncurrent assets of
JPY1,084 million, increase in accrued expenses, other current and
noncurrent liabilities of JPY1,085 million and decrease in accounts
payable of JPY812 million.
Net cash used in investing activities for 1Q10 was
JPY955 million mainly due to purchase of property and equipment of
JPY913 million.
Net cash used in financing activities for 1Q10 was
JPY928 million mainly due to principal payments under capital
leases of JPY745 million and payments of JPY253 million for FY2009
year-end dividends.
FY2010 Financial Targets (announced on June 1,
2010)
Our targets for the fiscal year ending March 31, 2011 are as
follows:
|
|
|
|
(JPY in
millions) |
|
|
|
|
|
|
Revenues |
Operating
Income |
Income before Income Tax
Expense (Benefit) |
Net Income attributable to
IIJ |
1H FY2010 |
32,300 |
1,200 |
1,100 |
800 |
Full FY2010 |
84,500 |
4,800 |
4,100 |
3,000 |
Our financial results tend to be weak in the fist quarter of
every fiscal year due to seasonal factor. For 1Q10, operating
income level slightly decreased YoY as revenue and gross margin
were almost the same but SG&A expenses increased as there were
annual increases in personnel related and other expenses at the
beginning of the fiscal year. Towards 4Q10 when revenue and income
level become the largest, we will focus on getting more systems
construction projects which we hope will gradually recover and
accumulate recurring revenues followed by steady demands while
keeping our control costs and expenses at an adequate level.
Considering the above, we have not changed our FY2010 financial
targets announced on June 1, 2010.
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 |
|
1Q09 |
1Q10 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
1,711 |
1,517 |
Depreciation and Amortization5 |
1,360 |
1,251 |
Operating Income |
351 |
266 |
Other Income
(Expense) |
(51) |
14 |
Income Tax
Expense |
244 |
121 |
Equity in Net Income of
Equity Method Investees |
31 |
34 |
Net income |
87 |
193 |
Net loss attributable
to noncontrolling interests |
93 |
54 |
Net Income attributable to
IIJ |
180 |
247 |
|
|
|
CAPEX |
|
1Q09 |
1Q10 |
|
JPY millions |
JPY millions |
CAPEX, including capital
leases |
1,489 |
1,221 |
Acquisition of Assets by
Entering into Capital Leases |
395 |
308 |
Purchase of Property and
Equipment |
1,094 |
913 |
Presentation
Presentation Materials will be posted on our web site
(http://www.iij.ad.jp/en/IR/) on August 13, 2010.
About Internet Initiative Japan Inc.
Founded in 1992, IIJ is one of Japan's leading Internet-access
and comprehensive network solutions providers. IIJ and its group of
companies provide total network solutions that mainly cater to
high-end corporate customers. IIJ's services include high-quality
systems integration and security services, Internet access,
hosting/housing, and content design. Moreover, IIJ has built one of
the largest Internet backbone networks in Japan, and between Japan
and the United States. IIJ was listed on the U.S. NASDAQ Stock
Market in 1999 and on the First Section of the Tokyo Stock Exchange
in 2006.
The Internet Initiative Japan Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4613
Statements made in this press release regarding IIJ's or
management's intentions, beliefs, expectations, or predictions for
the future are forward-looking statements that are based on IIJ's
and managements' current expectations, assumptions, estimates and
projections about its business and the industry. These
forward-looking statements, such as statements regarding FY2008
revenues and operating and net profitability, are subject to
various risks, uncertainties and other factors that could cause
IIJ's actual results to differ materially from those contained in
any forward-looking statement. These risks, uncertainties and other
factors include: IIJ's ability to maintain and increase revenues
from higher-margin services such as systems integration and
outsourcing services; the possibility that revenues from
connectivity services may decline substantially as a result of
competition and other factors; the ability to compete in a rapidly
evolving and competitive marketplace; the impact on IIJ's profits
of fluctuations in costs such as backbone costs and subcontractor
costs; the impact on IIJ's profits of fluctuations in the price of
available-for-sale securities; the impact of technological changes
in its industry; IIJ's ability to raise additional capital to cover
its indebtedness; the possibility that NTT, IIJ's largest
shareholder, may decide to exercise substantial influence over IIJ;
and other risks referred to from time to time in IIJ's filings on
Form 20-F of its annual report and other filings with the United
States Securities and Exchange Commission.
1Unless 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
JPY88.49 per US$1.00, which was the noon buying rate on June 30,
2010.
2Contracts of IIJ Mobile Service are of mobile data
communication service for corporate use.
3IP Service revenues include revenues from the Data Center
Connectivity Service.
4Revenue from mobile data communication service for home use is
included in Connectivity service (home use).
5Depreciation and amortization includes impairment loss on other
intangible assets. (See IIJ's consolidated financial statements for
details).
Internet Initiative
Japan Inc. |
Consolidated Balance
Sheets (Unaudited) |
(As of March 31, 2010
and June 30, 2010) |
|
|
|
|
As of March 31, 2010 |
As of June 30, 2010 |
|
Thousands of JPY |
% |
Thousands of U.S. Dollars |
Thousands of JPY |
% |
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
8,764,415 |
|
103,256 |
9,137,145 |
|
Accounts receivable, net of allowance for
doubtful accounts of JPY 37,178 thousand and JPY 29,583
thousand at March 31, 2010 and June 30, 2010,
respectively |
11,396,597 |
|
108,884 |
9,635,137 |
|
Inventories |
807,803 |
|
7,216 |
638,528 |
|
Prepaid expenses |
1,593,000 |
|
34,117 |
3,019,030 |
|
Deferred tax assets —Current |
1,570,746 |
|
16,339 |
1,445,824 |
|
Other current assets, net of allowance
for doubtful accounts of JPY 720 thousand at March 31, 2010
and June 30, 2010, respectively |
762,081 |
|
8,530 |
754,808 |
|
Total current assets |
24,894,642 |
48.7 |
278,342 |
24,630,472 |
48.5 |
INVESTMENTS IN EQUITY METHOD INVESTEES |
1,131,354 |
2.2 |
13,184 |
1,166,709 |
2.3 |
OTHER INVESTMENTS |
2,581,610 |
5.1 |
29,854 |
2,641,754 |
5.2 |
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of JPY 17,653,271
thousand and JPY 18,452,419 thousand at March 31, 2010
and June 30, 2010, respectively |
12,970,152 |
25.4 |
149,410 |
13,221,294 |
26.0 |
GOODWILL |
2,639,319 |
5.2 |
29,544 |
2,614,319 |
5.1 |
OTHER INTANGIBLE ASSETS —Net |
2,819,187 |
5.5 |
31,201 |
2,761,016 |
5.4 |
GUARANTEE DEPOSITS |
2,003,862 |
3.9 |
22,675 |
2,006,504 |
4.0 |
DEFERRED TAX ASSETS —Noncurrent |
685,370 |
1.3 |
6,480 |
573,454 |
1.1 |
OTHER ASSETS, net of allowance for doubtful
accounts of JPY91,319 thousand and JPY88,722 thousand
at March 31, 2010 and June 30, 2010, respectively, and net of
loan loss valuation allowance of JPY 720 thousand at March
31, 2010 and June 30 2010, respectively |
1,389,954 |
2.7 |
13,446 |
1,189,807 |
2.4 |
TOTAL |
51,115,450 |
100.0 |
574,136 |
50,805,329 |
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2010 |
As of June 30, 2010 |
|
Thousands of JPY |
% |
Thousands of U.S. Dollars |
Thousands of JPY |
% |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
Short-term borrowings |
4,450,000 |
|
51,079 |
4,520,000 |
|
Capital lease obligations —current
portion |
2,729,673 |
|
29,887 |
2,644,694 |
|
Accounts payable |
6,967,654 |
|
72,554 |
6,420,305 |
|
Accrued expenses |
1,184,483 |
|
14,890 |
1,317,647 |
|
Accrued retirement and pension costs
—current |
14,539 |
|
165 |
14,539 |
|
Deferred income —current |
1,445,174 |
|
21,592 |
1,910,711 |
|
Other current liabilities |
922,345 |
|
8,363 |
740,031 |
|
Total current liabilities |
17,713,868 |
34.7 |
198,530 |
17,567,927 |
34.6 |
CAPITAL LEASE OBLIGATIONS —Noncurrent |
3,657,657 |
7.2 |
37,363 |
3,306,208 |
6.5 |
ACCRUED RETIREMENT AND PENSION COSTS
—Noncurrent |
1,302,054 |
2.5 |
15,395 |
1,362,297 |
2.7 |
DEFERRED TAX ASSETS —Noncurrent |
212,773 |
0.4 |
574 |
50,766 |
0.1 |
DEFERRED INCOME—Noncurrent |
560,677 |
1.1 |
10,768 |
952,856 |
1.8 |
OTHER NONCURRENT LIABILITIES |
304,718 |
0.6 |
3,238 |
286,563 |
0.6 |
Total Liabilities |
23,751,747 |
46.5 |
265,868 |
23,526,617 |
46.3 |
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
Common-stock—authorized, 377,600 shares;
issued and outstanding, 206,478 shares at March 31,
2010 and June 30, 2010 |
16,833,847 |
32.9 |
190,235 |
16,833,847 |
33.1 |
Additional paid-in capital |
27,443,600 |
53.7 |
310,132 |
27,443,600 |
54.0 |
Accumulated deficit |
(16,720,092) |
(32.7) |
(189,019) |
(16,726,308) |
(32.9) |
Accumulated other comprehensive
income |
168,769 |
0.3 |
1,623 |
143,654 |
0.3 |
Treasury stock—3,934 shares held by
the company at March 31, 2010 and June 30, 2010 |
(406,547) |
(0.8) |
(4,594) |
(406,547) |
(0.8) |
Total Internet Initiative Japan Inc.
shareholders' equity |
27,319,577 |
53.4 |
308,377 |
27,288,246 |
53.7 |
NONCONTROLLING INTERESTS |
44,126 |
0.1 |
(109) |
(9,534) |
(0.0) |
Total equity |
27,363,703 |
53.5 |
308,268 |
27,278,712 |
53.7 |
TOTAL |
51,115,450 |
100.0 |
574,136 |
50,805,329 |
100.0 |
|
|
|
|
|
|
|
(Note1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY 88.49
which was the noon buying rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York prevailing as of June 30,
2010. |
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Income (Unaudited) |
(Three Months ended
June 30, 2009 and June 30, 2010) |
|
|
|
|
|
Three Months Ended
June 30, 2009 |
Three Months Ended June
30, 2010 |
|
Thousands of JPY |
% of total revenues |
Thousands of U.S. Dollars |
Thousands of JPY |
% of total revenues |
REVENUES: |
|
|
|
|
|
Connectivity and outsourcing
services: |
|
|
|
|
|
Connectivity (corporate use) |
3,448,493 |
|
39,166 |
3,465,820 |
|
Connectivity (home use) |
1,697,894 |
|
19,148 |
1,694,436 |
|
Outsourcing services |
3,979,443 |
|
46,828 |
4,143,759 |
|
Total |
9,125,830 |
|
105,142 |
9,304,015 |
|
Systems integration: |
|
|
|
|
|
Systems construction |
1,803,635 |
|
22,731 |
2,011,495 |
|
Systems operation and
maintenance |
4,761,011 |
|
48,000 |
4,247,529 |
|
Total |
6,564,646 |
|
70,731 |
6,259,024 |
|
Equipment sales |
136,575 |
|
1,632 |
144,423 |
|
ATM operation business |
7,459 |
|
1,196 |
105,801 |
|
Total revenues |
15,834,510 |
100.0 |
178,701 |
15,813,263 |
100.0 |
COST AND EXPENSES: |
|
|
|
|
|
Cost of connectivity and outsourcing
services |
7,650,504 |
|
86,414 |
7,646,798 |
|
Cost of systems integration |
4,875,725 |
|
54,163 |
4,792,872 |
|
Cost of equipment sales |
118,927 |
|
1,348 |
119,285 |
|
Cost of ATM operation business |
191,769 |
|
2,590 |
229,148 |
|
Total cost |
12,836,925 |
81.1 |
144,515 |
12,788,103 |
80.9 |
Sales and marketing |
1,324,880 |
8.4 |
15,893 |
1,406,371 |
8.9 |
General and administrative |
1,245,145 |
7.9 |
14,294 |
1,264,868 |
8.0 |
Research and development |
76,682 |
0.4 |
997 |
88,242 |
0.5 |
Total cost and expenses |
15,483,632 |
97.8 |
175,699 |
15,547,584 |
98.3 |
OPERATING INCOME |
350,878 |
2.2 |
3,002 |
265,679 |
1.7 |
OTHER INCOME (EXPENSE): |
|
|
|
|
|
Interest income |
5,714 |
|
63 |
5,568 |
|
Interest expense |
(87,024) |
|
(650) |
(57,513) |
|
Foreign exchange gains (loss) |
9,663 |
|
(36) |
(3,173) |
|
Net gains on sales of other
investments |
-- |
|
181 |
16,019 |
|
Losses on write-down of other
investments |
(1,504) |
|
(66) |
(5,887) |
|
Other—net |
22,129 |
|
661 |
58,489 |
|
Other income (expense) — net |
(51,022) |
(0.3) |
153 |
13,503 |
0.1 |
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD
INVESTEES |
299,856 |
1.9 |
3,155 |
279,182 |
1.8 |
|
|
|
|
|
|
INCOME TAX EXPENSE |
243,943 |
1.5 |
1,360 |
120,356 |
0.8 |
EQUITY IN NET INCOME OF EQUITY
METHOD INVESTEES |
31,513 |
0.2 |
389 |
34,478 |
0.2 |
NET INCOME |
87,426 |
0.6 |
2,184 |
193,304 |
1.2 |
LESS: NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS |
93,052 |
0.5 |
607 |
53,660 |
0.4 |
NET INCOME ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. |
180,478 |
1.1 |
2,791 |
246,964 |
1.6 |
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2009 |
Three Months Ended June
30, 2010 |
NET INCOME PER SHARE |
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
202,544 |
|
202,544 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
202,544 |
|
202,544 |
BASIC WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,017,600 |
|
81,017,600 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,017,600 |
|
81,017,600 |
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
891.06 |
13.78 |
1,219.31 |
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
891.06 |
13.78 |
1,219.31 |
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY) |
2.23 |
0.03 |
3.05 |
DILUTED NET INCOME PER
ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
2.23 |
0.03 |
3.05 |
(Note 1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY 88.49
which was the noon buying rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York prevailing as of June 30,
2010. |
|
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Cash Flows (Unaudited) |
(Three Months ended
June 30, 2009 and June 30, 2010) |
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2009 |
Three Months Ended June
30, 2010 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
|
Net income |
87,426 |
2,184 |
193,304 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
1,359,820 |
14,138 |
1,251,044 |
Provision for retirement and pension
costs, less payments |
58,682 |
681 |
60,243 |
Reversal of allowance for
doubtful accounts and advances |
(5,049) |
(60) |
(5,317) |
Loss on disposal of property and
equipment |
8,965 |
59 |
5,288 |
Net gains on sales of other
investments |
-- |
(181) |
(16,019) |
Losses on write-down of other
investments |
1,504 |
67 |
5,887 |
Gain on receipt of investment
securities |
-- |
(204) |
(18,060) |
Foreign exchange losses |
11,918 |
229 |
20,246 |
Equity in net income of equity method
investees |
(31,513) |
(390) |
(34,478) |
Deferred income tax expense |
185,982 |
998 |
88,313 |
Others |
-- |
551 |
48,798 |
Changes in operating assets and liabilities
net of effects from acquisition of business and a
company: |
|
|
|
Decrease in accounts
receivable |
1,734,601 |
19,975 |
1,767,614 |
Increase in inventories,
prepaid expenses and other current and noncurrent assets |
(500,933) |
(12,252) |
(1,084,214) |
Decrease in accounts
payable |
(936,518) |
(9,176) |
(812,009) |
Decrease in income taxes
payable |
(155,467) |
(3,189) |
(282,219) |
Increase in accrued
expenses, other current and noncurrent liabilities |
344,462 |
12,263 |
1,085,196 |
Net cash provided by
operating activities |
2,163,880 |
25,693 |
2,273,617 |
INVESTING ACTIVITIES: |
|
|
|
Purchase of property and
equipment |
(1,094,298) |
(10,313) |
(912,587) |
Purchase of available-for-sale
securities |
(6,750) |
(410) |
(36,283) |
Purchase of other
investments |
-- |
(565) |
(50,000) |
Proceeds from sales of
available-for-sale securities |
-- |
52 |
4,579 |
Proceeds from sales and
redemption of other investments |
13,500 |
226 |
20,000 |
Payments of guarantee
deposits |
(34,229) |
(51) |
(4,503) |
Refund of guarantee
deposits |
2,337 |
23 |
1,985 |
Payments for refundable
insurance policies |
(13,615) |
(84) |
(7,391) |
Refund from insurance
policies |
27,613 |
335 |
29,642 |
Net cash used in
investing activities |
(1,105,442) |
(10,787) |
(954,558) |
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2009 |
Three Months Ended June
30, 2010 |
|
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 |
5,100,000 |
565 |
50,000 |
Repayments of short-term
borrowings with initial maturities over three months |
(5,100,000) |
-- |
-- |
Principal payments under
capital leases |
(929,625) |
(8,416) |
(744,757) |
Net Increase (decrease) in
short-term borrowings with initial maturities less than three
months |
(200,000) |
226 |
20,000 |
Dividends paid |
(202,544) |
(2,861) |
(253,180) |
Net cash used in
financing activities |
(1,332,169) |
(10,486) |
(927,937) |
|
|
|
|
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS |
(16,557) |
(208) |
(18,392) |
|
|
|
|
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS |
(290,288) |
4,212 |
372,730 |
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
10,187,724 |
99,044 |
8,764,415 |
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
9,897,436 |
103,256 |
9,137,145 |
|
|
|
|
ADDITIONAL CASH FLOW
INFORMATION: |
|
|
|
Interest paid |
95,241 |
643 |
56,889 |
Income tax paid |
207,572 |
3,542 |
313,436 |
|
|
|
|
NONCASH INVESTING AND FINANCING
ACTIVITIES: |
|
|
|
Acquisition of assets by
entering into capital leases |
395,145 |
3,485 |
308,411 |
Facilities purchase
liabilities |
355,442 |
10,098 |
893,569 |
|
|
|
|
|
(Note 1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY 88.49
which was the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes
by the Federal Reserve Bank of New York prevailing as of June 30,
2010. |
|
Going Concern Assumption
(Unaudited) |
|
|
Nothing to be reported. |
|
|
|
|
|
|
|
|
Segment Information
(Unaudited) |
|
|
Business Segments: |
|
|
Revenues: |
|
|
|
|
|
|
Three Months Ended June 30, 2009 |
Three Months Ended June 30, 2010 |
|
Thousands of JPY |
Thousands of JPY |
Network service and systems integration
business |
15,921,322 |
15,815,529 |
Customers |
15,827,051 |
15,707,462 |
Intersegment |
94,271 |
108,067 |
ATM operation business |
7,459 |
105,801 |
Customers |
7,459 |
105,801 |
Intersegment |
-- |
-- |
Elimination |
94,271 |
108,067 |
Consolidated total |
15,834,510 |
15,813,263 |
Segment profit or loss: |
|
|
|
|
|
|
Three Months Ended June 30, 2009 |
Three Months Ended June 30, 2010 |
|
Thousands of JPY |
Thousands of JPY |
Network service and systems integration
business |
588,834 |
432,091 |
ATM operation business |
(232,912) |
(160,492) |
Elimination |
5,044 |
5,920 |
Consolidated operating income |
350,878 |
265,679 |
|
|
|
Substantially all revenues are
from customers operating in Japan. Geographic information is not
presented due to immateriality of revenue attributable to
international operations. |
|
|
|
|
|
Material Changes In
Shareholders' Equity (Unaudited) |
|
Nothing to be reported. |
|
|
CONTACT: IIJ Investor Relations Office
Yuko Kazama
+81-3-5259-6500
ir@iij.ad.jp
http://www.iij.ad.jp/en/IR
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