Internet Initiative Japan Inc. ("IIJ") (Nasdaq:IIJI) (TSE:3774)
today announced its full year ("FY2013") and 4th quarter ("4Q13")
consolidated financial results for the fiscal year ended March 31,
2014 (from April 1, 2013 to March 31, 2014).1
|
|
Highlights of
Financial Results for FY2013 |
|
|
|
|
Revenues |
JPY114,272 million (up
7.6% YoY) |
Operating Income |
JPY5,723
million (down 26.2% YoY) |
Net Income attributable to IIJ |
JPY4,442
million (down 16.2% YoY) |
|
|
|
Financial Targets
for FY2014 |
|
Revenues |
JPY123,000 million (up 7.6%
YoY) |
|
Operating Income |
JPY7,200
million (up 25.8% YoY) |
Net Income attributable to IIJ |
JPY4,500
million (up 1.3% YoY) |
Annual Cash Dividend |
JPY22.00 per share |
|
|
Overview of FY2013 Financial Results and Business
Outlook
"Our business bases have been largely strengthened with several
unconventional transactions in FY2013, while income results were
weak mainly due to certain large customers' revenues leveling off
as we reported in 3Q earnings. We've pursued some progressive
large-scale projects by leveraging our cloud facilities and
services, MVNO (Mobile Virtual Network Operator) infrastructure and
system integration features. We strongly believe these projects
should surely contribute to our continuous revenue and income
growth for the coming few years," said Koichi Suzuki, Founder and
CEO of IIJ.
"Our cloud services "IIJ GIO" continued to grow in revenue, the
number of customers, and system volume. Same as our prominent
connectivity business, we mainly target large institutions with our
reliable and value-added cloud service features. As seen in the
case of Sompo Japan, one of the largest Japanese insurance
companies, extensively adopting IIJ GIO to their IT system
platforms, we're starting to see the usage of cloud services by
some Japanese blue-chips becoming more advanced and conjugated. We
also anticipate that BigData trend should encourage the adoption of
cloud services. These recent changes in market momentum are
certainly tailwinds for IIJ in the middle term," followed Eijiro
Katsu, President and COO of IIJ.
"Triggered by our LTE SIM card offerings to consumers, our MVNO
business has largely expanded in FY2013. Consumers can enjoy much
cheaper smart-phones connectivity with our SIM card services than
mobile carriers' expensive services. These MVNO services are
relatively new in the Japanese market and we're anticipating
further penetration to continue. We're also receiving increasing
requirements from large institutions to act as MVNE (Mobile Virtual
Network Enabler), asking us to offer our established large MVNO
infrastructure. The demands for M2M (Machine to Machine connection)
are also continuously expanding. By grasping these business
opportunities for both corporate and consumers, we believe we'll be
able to have continuous income increase by improving our network
utilization," said Katsu.
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
JPY102.98 per US$1.00, which was the noon buying rate on March 31,
2014.
"As for systems integration, we continued to see great demands
supported by overall Japanese economic recovery. We've acquired
several flagship projects to which we jointly offer our network
services and systems integration. We believe strong demands for
network related systems investment and outsourcing from Japanese
corporate should continue and our role to offer total network
solutions become more important," continued Katsu.
"For FY2014, we shall devote ourselves to return to strong
profit growth. We'd like to pursue on selling profitable monthly
recurring revenue services more efficiently, increasing the number
of large accounts, implementing stricter control on systems
integration profitability and so on. At the same time, we will
continuously implement our middle- to long- term growth strategies,
including continuous recruitment of employees in aiming to
dramatically enlarge our business scale. And also, we'd like to
keep looking into M&A opportunities," concluded Katsu.
FY2013 Financial Results Summary
Operating Results
Summary |
|
FY2012 |
FY2013 |
YoY % |
|
|
|
Change |
|
JPY millions |
JPY millions |
|
Total Revenues |
106,248 |
114,272 |
7.6 |
Network
Services |
65,232 |
67,286 |
3.1 |
Systems
Integration (SI) |
37,205 |
42,469 |
14.1 |
Equipment
Sales |
1,491 |
1,690 |
13.4 |
ATM Operation
Business |
2,320 |
2,827 |
21.8 |
Total Costs |
84,394 |
93,206 |
10.4 |
Network
Services |
50,692 |
53,046 |
4.6 |
Systems
Integration (SI) |
30,425 |
36,510 |
20.0 |
Equipment
Sales |
1,318 |
1,527 |
15.8 |
ATM Operation
Business |
1,959 |
2,123 |
8.3 |
SG&A Expenses and
R&D |
14,101 |
15,343 |
8.8 |
Operating Income |
7,753 |
5,723 |
(26.2) |
Income before Income Tax
Expense |
7,757 |
6,275 |
(19.1) |
Net income attributable to
IIJ |
5,301 |
4,442 |
(16.2) |
Segment Results
Summary |
|
FY2012 |
FY2013 |
|
JPY millions |
JPY millions |
Total Revenues |
106,248 |
114,272 |
Network services
and SI business |
104,487 |
111,901 |
ATM operation
business |
2,320 |
2,827 |
Elimination |
559 |
456 |
Operating Income
(Loss) |
7,753 |
5,723 |
Network service
and SI business |
7,629 |
5,275 |
ATM operation
business |
239 |
578 |
Elimination |
115 |
130 |
We have omitted segment analysis because most of our revenues
are dominated by Network services and Systems Integration (SI)
business.
FY2013 Results of Operation
Revenues
Total revenues were JPY114,272 million, up 7.6% YoY.
Network Services revenue was JPY67,286 million, up 3.1% YoY.
Revenues for Internet connectivity services for corporate use
were JPY16,585 million, up 3.5% YoY. The increase was mainly due to
the increasing demands for mobile and broader bandwidth services.
However, revenues were weaker than expected as IP service revenues
from certain large network carrier with large IP contracts did not
increase as much as we initially targeted for FY2013.
Revenues for Internet connectivity services for home use were
JPY6,025 million, up 10.2% YoY. The increase in revenues from our
low-priced LTE SIM card offerings covered the decrease in both
contracts and revenues from our legacy-type home use internet
services. Number of contracts for LTE SIM card offerings reached
approximately 139,000 contracts as of March 31, 2014 (approximately
50,000 contracts as of March 31, 2013).
WAN services revenues were JPY25,006 million, down 0.6% YoY. The
price down pressure by certain large customers had negative impact
on revenues and income despite the continuous increase in revenues
from other customers.
Outsourcing services revenues were JPY19,670 million, up 5.9%
YoY, mainly due to the increase in revenues of "IIJ GIO Hosting
Package Services". However, revenues were weaker than expected as
cloud and data center revenues from certain large game providers
did not increase as much as we initially targeted for FY2013.
Network Services
Revenues Breakdown |
|
FY2012 |
FY2013 |
YoY % |
|
|
|
Change |
|
JPY millions |
JPY millions |
|
Internet Connectivity Service
(Corporate Use) |
16,027 |
16,585 |
3.5 |
IP
Service2 |
10,217 |
10,357 |
1.4 |
IIJ FiberAccess/F
and IIJ DSL/F |
3,170 |
3,147 |
(0.7) |
IIJ
Mobile Service3 |
2,401 |
2,850 |
18.7 |
Others |
239 |
231 |
(3.7) |
Internet Connectivity Service
(Home Use) |
5,466 |
6,025 |
10.2 |
Under IIJ
Brand |
1,350 |
2,273 |
68.3 |
hi-ho |
3,489 |
3,047 |
(12.7) |
OEM |
627 |
705 |
12.5 |
WAN Services |
25,168 |
25,006 |
(0.6) |
Outsourcing
Services |
18,571 |
19,670 |
5.9 |
Total Network
Services |
65,232 |
67,286 |
3.1 |
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).
Number of
Contracts for Connectivity Services |
|
as of |
as of |
YoY |
|
March 31, 2013 |
March 31, 2014 |
Change |
Internet Connectivity Services
(Corporate Use) |
114,614 |
142,655 |
28,041 |
IP Service
(-99Mbps) |
905 |
847 |
(58) |
IP Service
(100Mbps-999Mbps) |
401 |
448 |
47 |
IP Service
(1Gbps--) |
207 |
271 |
64 |
IIJ Data Center
Connectivity Service |
306 |
288 |
(18) |
IIJ FiberAccess/F
and IIJ DSL/F |
48,940 |
56,384 |
7,444 |
IIJ Mobile
Service4 |
62,517 |
83,124 |
20,607 |
Others |
1,338 |
1,293 |
(45) |
Internet Connectivity Services
(Home Use) |
489,223 |
625,297 |
136,074 |
Under IIJ
Brand |
102,256 |
171,968 |
69,712 |
hi-ho |
149,000 |
155,177 |
6,177 |
OEM |
237,967 |
298,152 |
60,185 |
Total Contracted
Bandwidth |
1,218.7Gbps |
1,539.3Gbps |
320.6 |
SI revenues were JPY42,469 million, up 14.1%
YoY.
Systems construction revenue, a one-time revenue, was JPY18,673
million, up 18.0% YoY. Both number and scale of systems
construction projects increased. Systems operation and maintenance
revenue, a recurring revenue, was JPY23,796 million, up 11.3% YoY.
The increase was mainly due to the continuous demands on "IIJ GIO
Component Services." However, systems operation and maintenance
revenues were weaker than expected as systems operation and
maintenance revenues from certain large game providers did not
increase as much as we initially targeted for FY2013.
The orders received for SI and equipment sales for FY2013
totaled JPY48,387 million, up 15.4% YoY. In the breakdown, the
orders received for systems construction and equipment sales was
JPY21,763 million, up 26.7% YoY, and the orders received for
systems operation and maintenance was JPY26,624 million, up 7.6%
YoY.
The order backlog for SI and equipment sales as of March 31,
2014 amounted to JPY24,308 million, up 21.1% YoY. In the breakdown,
the order backlog for systems construction and equipment sales was
JPY5,102million, up 37.8% YoY, and the order backlog for systems
operation and maintenance was JPY19,206 million, up 17.3% YoY.
Equipment sales revenues were JPY1,690 million, up 13.4%
YoY.
ATM Operation Business revenues were JPY2,827 million, up 21.8%
YoY. The increase was in accordance with the continuous increase in
the numbers of newly placed ATMs. As of May 15, 2014, 855 ATMs are
placed (625 ATMs as of May 15, 2013).
Cost and expense
Total cost of revenues was JPY93,206 million, up 10.4% YoY.
Cost of Network Services revenue was JPY53,046 million, up 4.6%
YoY, The increase was mainly due to the increase in network
operation related costs, circuit-related costs and
personnel-related costs. Gross margin was JPY14,240 million, down
2.1 % YoY and gross margin ratio was 21.2%.
Cost of SI revenues was JPY36,510 million, up 20.0% YoY. The
increase was mainly due to the increase in purchasing costs along
with the increase in systems construction revenues as well as
outsourcing-related and personnel-related costs. Gross margin was
JPY5,959 million, down 12.1% YoY and gross margin ratio was
14.0%.
Cost of Equipment Sales revenues was JPY1,527 million, up 15.8%
YoY. Gross margin was JPY164 million, down 5.2% YoY and gross
margin ratio was 9.7%.
Cost of ATM Operation Business revenues was JPY2,123 million, up
8.3% YoY in accordance with the number of newly placed ATMs. Gross
margin was JPY704 million, up 95.2% YoY and gross margin ratio was
24.9%.
4 Contracts of IIJ Mobile Service are of mobile data
communication service for corporate use.
SG&A and R&D Expenses
SG&A and R&D expenses in total were JPY15,343 million,
up 8.8% YoY (JPY14,101 million in FY2012).
Sales and marketing expenses were JPY8,548 million, up 6.1% YoY.
The increase was mainly due to the increase in personnel-related
expenses and sales commission expenses related to Internet
connectivity services for home use.
General and administrative expenses were JPY6,374 million, up
13.2% YoY. The increase was mainly due to the increase in
personnel-related expenses, rent expenses and depreciation related
to asset retirement obligation, and commission expenses related to
the procurement of employees.
Research and development expenses were JPY421 million, up 2.8%
YoY.
Operating income
Operating income was JPY5,723 million, down 26.2% YoY.
Other income (expenses)
Other income (expenses) was an income of JPY552 million (an
income of JPY4 million for FY2012), mainly due to net gain on other
investments of JPY313 million, foreign currency gains of JPY219
million (JPY112 million for FY2012), and interest expense of JPY256
million (JPY287million for FY2012).
Income before income tax expenses
Income before income tax expenses was JPY6,275 million, down
19.1% YoY. (JPY7,757 million for FY2012)
Net Income
Income tax expense was JPY1,795 million (JPY2,608 million for
FY2012), including deferred income tax benefit of JPY822 million
related to Trust Networks Inc., a subsidiary of IIJ.
Equity in net income of equity method investees was JPY204
million (JPY168 million for FY2012) mainly due to net income of
Internet Revolution, Inc. and Internet Multifeed Co.
As a result of the above, net income was JPY4,684 million, down
11.9% YoY (JPY5,317 million for FY2012).
Net income attributable to IIJ
Net income attributable to non-controlling interests was JPY242
million mainly related to net income of Trust Networks Inc. (JPY16
million for FY2012).
Net income attributable to IIJ was JPY4,442 million, down 16.2%
YoY (JPY5,301 million for FY2012).
FY2013 Financial Condition
Balance Sheets
As of March 31, 2014, the balance of total assets was JPY103,867
million, increased by JPY21,755 million from the balance as of
March 31, 2013 (JPY82,111 million as of March 31, 2013).
As for current assets as of March 31, 2014, as compared to the
respective balances as of March 31, 2013, cash and cash equivalents
increased by JPY10,162 million mainly due to the equity finance in
2Q13, prepaid expense increased by JPY636 million, accounts
receivable increased by JPY450 million and inventories increased by
JPY369 million. As for noncurrent assets, as compared to the
respective balances as of March 31, 2013, other investments
increased by JPY2,585 million mainly due to new investments for our
business partner and the increase in fair value, and property and
equipment increased by JPY3,946 million resulting from the
continuous investment mainly for network infrastructure and servers
including cloud-related. Guarantee deposits (current and
noncurrent) increased by JPY674 million along with our office
expansion. As for current liabilities, as compared to the
respective balances as of March 31, 2013, accounts payable
increased by JPY620 million and income taxes payable decreased by
JPY590 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 JPY248 million to JPY3,753
million and capital lease obligations-noncurrent decreased by
JPY767 million to JPY4,603 million.
As of March 31, 2014, the balance of other investments was
JPY6,356 million. The breakdown of other investments were JPY3,751
million in available-for-sale securities, JPY2,530 million in
nonmarketable equity securities and JPY75 million in other.
As of March 31, 2014, the breakdown of major 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 JPY4,202 million.
Total IIJ shareholders' equity as of March 31, 2014 was
JPY59,912 million, increased by JPY22,305 million from the
respective balance as of March 31, 2013, mainly due to the equity
finance in 2Q13. IIJ shareholders' equity ratio (total IIJ
shareholders' equity/total assets) as of March 31, 2014 was
57.7%.
Cash Flows
Cash and cash equivalents as of March 31, 2014 were JPY22,421
million compared to JPY12,259 million as of March 31, 2013.
Net cash provided by operating activities for FY2013 was
JPY8,787 million compared to net cash provided by operating
activities of JPY9,639 million for FY2012 mainly due to the
decrease in net income and increase in depreciation and
amortization, while the increase in cash inflow from accounts
receivable was smaller than the increase in cash outflow from such
as accounts payable.
Net cash used in investing activities for FY2013 was JPY10,203
million compared to net cash used in investing activities of
JPY5,946 million for FY2012 mainly due to payments for purchase of
property and equipment of JPY9,124 million (JPY5,589 million for
FY2012), payments for purchase of other investments of JPY1,186
million (JPY468 million for FY2012) and payments of guarantee
deposits of JPY689 million (JPY164 million for FY2012).
Net cash provided by financing activities for FY2013 was
JPY11,382 million compared to net cash used in financing activities
of JPY4,996 million for FY2012, mainly due to proceeds from
issuance of common stock of JPY17,271 million net of issuance cost,
principal payments under capital leases of JPY3,969 million
(JPY3,679 million for FY2012), net repayment of borrowings of
JPY1,010 million (net repayment of JPY610 million for FY2012) and
dividends payments for FY2012 year-end and FY2013 interim dividends
of JPY911 million (JPY709 million for FY2012).
FY2014 Financial Targets
Our financial targets for FY2014 are as
follows:
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|
|
|
(JPY in millions) |
|
|
|
|
|
|
Revenues |
Operating Income |
Income before Income Tax Expense |
Net Income attributable to IIJ |
1H FY2014 Target |
57,500 |
2,800 |
2,700 |
1,750 |
Full FY2014 Target |
123,000 |
7,200 |
7,000 |
4,500 |
With the steady recovery of the Japanese economy, IT investment
in Japan is expected to continue during FY2014. In mid- to
long-term, the ongoing demands to outsource corporate internal IT
systems and network including the full use of cloud services would
continue to be a great business opportunity, even with the intense
competition in such areas. Under such competitive market, in
FY2014, we should continue to make various business developments to
strengthen our business and competitiveness. We would also improve
gross margin for network service and systems integration by further
focusing on increasing our stock revenues.
We target revenue of JPY123 billion, up 7.6% YoY. We expect our
monthly recurring revenue services to further accumulate including
a significant increase in the revenue for consumer LTE SIM card
offering, cloud-related revenues to reach approximately JPY13
billion, systems construction revenues to increase and ATM
operation business revenues to continuously increase.
We target operating cost and expenses of JPY115.8 billion, up
6.7% YoY. We expect continuous increase in personnel-related
expenses, increase in depreciation of network equipment, additional
expenses from the relocation of headquarter in the first half of
FY2014 and increase in costs related to purchasing and outsourcing
in relation to SI revenue growth.
For operating income, we target JPY7.2 billion, up 25.8% YoY. We
expect gross margin and gross margin ratio of recurring network
services and systems integration to increase along with recurring
revenue growth, as well as the profit contribution from our cloud
service "IIJ GIO" and ATM operation business.
We target income before income tax expense (benefit) of JPY7.0
billion, up 11.6% YoY, considering interest expenses and
others.
We target net income attributable to IIJ of JPY4.5 billion, up
1.3% YoY, considering taxes calculated by a normal statutory rate
and income of equity method investees and non-controlling
interests.
FY2014 Dividend Forecast
Our FY2014 dividend forecast is as follows:
|
|
|
|
|
Interim |
Year-end |
Full Year |
FY2014 Dividend
(forecast) |
JPY11.00
(forecast) |
JP11.00
(forecast) |
JPY22.00
(forecast) |
FY2013 Dividend (scheduled) |
JPY11.00 (paid) |
JPY11.00 (scheduled) |
JPY22.00 (scheduled) |
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.
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 |
|
FY2012 |
FY2013 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
15,309 |
14,546 |
Depreciation and
Amortization5 |
(7,508) |
(8,823) |
Impairment loss on other
intangible assets |
(48) |
-- |
Operating Income |
7,753 |
5,723 |
Other Income
(Expense) |
4 |
552 |
Income Tax
Expense |
2,608 |
1,795 |
Equity in Net Income of
Equity Method Investees |
168 |
204 |
Net income |
5,317 |
4,684 |
Net loss (income) attributable
to noncontrolling interests |
(16) |
(242) |
Net Income attributable to
IIJ |
5,301 |
4,442 |
|
|
|
CAPEX |
|
FY2012 |
FY2013 |
|
JPY millions |
JPY millions |
CAPEX, including capital
leases |
10,405 |
12,560 |
Acquisition of
Assets by Entering into Capital Leases |
4,816 |
3,436 |
Purchase of
Property and Equipment |
5,589 |
9,124 |
Presentation
Presentation materials will be posted on our web site
(http://www.iij.ad.jp/en/ir/) on May 15, 2014.
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, and
cloud computing. Moreover, IIJ has built one of the largest
Internet backbone networks in Japan that is connected to the United
States, the United Kingdom and Asia. 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 FY2014
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.
5 Depreciation 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, 2013
and March 31, 2014) |
|
|
|
|
|
As of March 31, 2013 |
As of March 31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
12,258,872 |
217,723 |
22,421,100 |
Accounts receivable, net of allowance for
doubtful accounts of JPY93,934 thousand and JPY53,871
thousand at March 31, 2013 and March 31, 2014,
respectively |
18,764,703 |
186,582 |
19,214,248 |
Inventories |
1,301,684 |
16,219 |
1,670,258 |
Prepaid expenses |
2,492,164 |
30,378 |
3,128,290 |
Deferred tax assets —current |
1,046,828 |
13,527 |
1,392,971 |
Current portion of guarantee
deposits |
1,200 |
14,199 |
1,462,223 |
Other current assets, net of allowance
for doubtful accounts of JPY10,732 thousand and JPY720
thousand at March 31, 2013 and March 31, 2014,
respectively |
1,575,518 |
23,416 |
2,411,376 |
|
|
|
|
Total current assets |
37,440,969 |
502,044 |
51,700,466 |
INVESTMENTS IN EQUITY METHOD INVESTEES |
1,681,723 |
20,253 |
2,085,689 |
OTHER INVESTMENTS |
3,771,262 |
61,719 |
6,355,817 |
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of JPY29,516,394 thousand
and JPY34,725,611 thousand at March 31, 2013 and March 31,
2014, respectively |
23,025,755 |
261,910 |
26,971,485 |
GOODWILL |
5,969,951 |
57,972 |
5,969,951 |
OTHER INTANGIBLE ASSETS —Net |
4,791,431 |
42,134 |
4,338,944 |
GUARANTEE DEPOSITS |
2,051,449 |
12,278 |
1,264,535 |
DEFERRED TAX ASSETS —Noncurrent |
163,773 |
6,184 |
636,807 |
NET INVESTMENT IN SALES-TYPE LEASES
—Noncurrent |
898,040 |
7,310 |
752,774 |
Prepaid expenses —Noncurrent |
2,201,108 |
25,570 |
2,633,154 |
OTHER ASSETS, net of allowance for doubtful
accounts of JPY71,727 thousand and JPY62,800 thousand
at March 31, 2013 and March 31, 2014, respectively. |
115,805 |
11,235 |
1,156,953 |
|
|
|
|
TOTAL |
82,111,266 |
1,008,609 |
103,866,575 |
|
|
|
|
|
|
|
|
|
As of March 31, 2013 |
As of March 31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Short-term borrowings |
9,400,000 |
91,280 |
9,400,000 |
Long-term borrowings —current
portion |
1,010,000 |
9,516 |
980,000 |
Capital lease obligations —current
portion |
3,505,471 |
36,444 |
3,753,026 |
Accounts payable —trade |
10,973,120 |
111,591 |
11,491,666 |
Accounts payable —other |
949,264 |
10,200 |
1,050,429 |
Income taxes payable |
1,669,849 |
10,483 |
1,079,480 |
Accrued expenses |
2,266,427 |
19,941 |
2,053,550 |
Deferred income —current |
1,806,074 |
15,155 |
1,560,603 |
Other current liabilities |
803,902 |
10,664 |
1,098,173 |
Total current liabilities |
32,384,107 |
315,274 |
32,466,927 |
LONG-TERM BORROWINGS |
980,000 |
-- |
-- |
CAPITAL LEASE OBLIGATIONS —Noncurrent |
5,370,365 |
44,701 |
4,603,322 |
ACCRUED RETIREMENT AND PENSION COSTS
-Noncurrent |
2,112,085 |
22,087 |
2,274,540 |
DEFERRED TAX LIABILITIES —Noncurrent |
412,132 |
10,613 |
1,092,863 |
DEFERRED INCOME —Noncurrent |
2,562,208 |
26,329 |
2,711,347 |
OTHER NONCURRENT LIABILITIES |
656,191 |
5,214 |
536,950 |
Total Liabilities |
44,477,088 |
424,218 |
43,685,949 |
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 |
247,592 |
25,497,022 |
—authorized, 75,520,000 shares;
issued and outstanding, 46,697,800 shares at March 31,
2014 |
|
|
|
Additional paid-in capital |
27,300,325 |
349,214 |
35,961,995 |
Accumulated deficit |
(6,399,088) |
(27,846) |
(2,867,548) |
Accumulated other comprehensive loss |
263,770 |
16,632 |
1,712,786 |
Treasury stock—758,800 shares and 758,709
shares held by the company at March 31, 2013 and March 31, 2014,
respectively |
(392,079) |
(3,807) |
(392,070) |
|
|
|
|
Total Internet Initiative Japan Inc.
shareholders' equity |
37,606,775 |
581,785 |
59,912,185 |
NONCONTROLLING INTERESTS |
27,403 |
2,606 |
268,441 |
Total equity |
37,634,178 |
584,391 |
60,180,626 |
TOTAL |
82,111,266 |
1,008,609 |
103,866,575 |
|
|
|
|
(Note1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
|
Internet Initiative
Japan Inc. |
Consolidated Statements
of Income (Unaudited) |
(For the fiscal year
ended March 31, 2013 and March 31, 2014) |
|
|
|
|
|
Fiscal Year Ended March 31, 2013 |
Fiscal Year Ended March
31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
REVENUES: |
|
|
|
Network services: |
|
|
|
Internet connectivity services (corporate
use) |
16,027,134 |
161,052 |
16,585,175 |
Internet connectivity services (home
use) |
5,466,198 |
58,502 |
6,024,560 |
WAN services |
25,168,425 |
242,823 |
25,005,867 |
Outsourcing services |
18,570,641 |
191,009 |
19,670,127 |
Total |
65,232,398 |
653,386 |
67,285,729 |
Systems integration: |
|
|
|
Systems construction |
15,824,938 |
181,333 |
18,673,638 |
Systems operation and maintenance |
21,380,158 |
231,073 |
23,795,927 |
Total |
37,205,096 |
412,406 |
42,469,565 |
Equipment sales |
1,490,906 |
16,413 |
1,690,225 |
ATM operation business |
2,320,086 |
27,451 |
2,826,832 |
Total revenues |
106,248,486 |
1,109,656 |
114,272,351 |
COST AND EXPENSES: |
|
|
|
Cost of network services |
50,692,190 |
515,108 |
53,045,814 |
Cost of systems integration |
30,424,802 |
354,538 |
36,510,328 |
Cost of equipment sales |
1,318,344 |
14,825 |
1,526,618 |
Cost of ATM operation business |
1,959,597 |
20,617 |
2,123,168 |
Total cost |
84,394,933 |
905,088 |
93,205,928 |
Sales and marketing |
8,058,481 |
83,003 |
8,547,693 |
General and administrative |
5,632,430 |
61,896 |
6,374,057 |
Research and development |
410,000 |
4,092 |
421,361 |
Total cost and expenses |
98,495,844 |
1,054,079 |
108,549,039 |
OPERATING INCOME |
7,752,642 |
55,577 |
5,723,312 |
OTHER INCOME (EXPENSE): |
|
|
|
Dividend income |
47,117 |
495 |
51,003 |
Interest income |
25,708 |
260 |
26,719 |
Interest expense |
(287,314) |
(2,489) |
(256,371) |
Foreign exchange gains |
112,136 |
2,130 |
219,381 |
Net gain on sales of other
investments |
13,565 |
1,045 |
107,655 |
Net gain on other investments |
-- |
3,043 |
313,393 |
Losses on write-down of other
investments |
(19,788) |
-- |
-- |
Other -net |
112,798 |
872 |
89,799 |
Other income (expense) —net |
4,222 |
5,356 |
551,579 |
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
7,756,864 |
60,933 |
6,274,891 |
INCOME TAX EXPENSE |
2,607,582 |
17,434 |
1,795,305 |
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
168,065 |
1,982 |
204,046 |
|
|
|
|
NET INCOME |
5,317,347 |
45,481 |
4,683,632 |
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS |
(16,693) |
(2,344) |
(241,395) |
NET INCOME ATTRIBUTABLE TO INTERNET
INITIATIVE JAPAN INC. |
5,300,654 |
43,137 |
4,442,237 |
|
|
|
|
|
Fiscal Year Ended March 31, 2013 |
Fiscal Year Ended March
31, 2014 |
NET INCOME PER SHARE |
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,536,800 |
|
44,306,680 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES (shares) |
40,572,600 |
|
44,361,083 |
BASIC WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,073,600 |
|
88,613,360 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,145,200 |
|
88,722,166 |
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
130.76 |
0.97 |
100.26 |
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
130.65 |
0.97 |
100.14 |
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY) |
65.38 |
0.49 |
50.13 |
DILUTED NET INCOME PER
ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
65.32 |
0.49 |
50.07 |
|
|
|
|
(Note) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
|
Internet Initiative
Japan Inc. |
Consolidated Statements
of Shareholders' Equity (Unaudited) |
(For the fiscal
year ended March 31, 2013 and March 31, 2014) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan
Inc. shareholders' equity |
|
|
Total equity |
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 |
Shares |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
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 |
Acquisition and establishment of
new consolidated subsidiaries |
2,688 |
|
|
|
|
|
|
2,688 |
Stock-based compensation |
40,007 |
|
|
|
|
|
40,007 |
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
|
Net Income |
5,317,347 |
5,300,654 |
|
|
|
|
|
16,693 |
Other Comprehensive income (loss),
net of tax |
287,283 |
|
287,303 |
|
|
|
|
(20) |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
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 |
Acquisition of noncontrolling
interests in consolidated subsidiaries |
-- |
|
61 |
|
|
53 |
99 |
(213) |
Issuance of common stock, net
of issuance cost |
17,271,204 |
|
|
5,400,000 |
8,661,600 |
|
8,609,604 |
|
Issuance of common stock upon
exercise of stock options |
3,151 |
|
|
2,200 |
1,575 |
|
1,576 |
|
Stock-based compensation |
50,391 |
|
|
|
|
|
50,391 |
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
|
Net Income |
4,683,632 |
4,442,237 |
|
|
|
|
|
241,395 |
Other Comprehensive income (loss),
net of tax |
1,448,811 |
|
1,448,955 |
|
|
|
|
(144) |
|
|
|
|
|
|
|
|
|
Total comprehensive income: |
6,132,443 |
|
|
|
|
|
|
|
Dividends paid |
(910,697) |
(910,697) |
|
|
|
|
|
|
Purchase of treasury stock |
(44) |
|
|
|
|
(44) |
|
|
BALANCE, MARCH 31, 2014 |
60,180,626 |
(2,867,548) |
1,712,786 |
46,697,800 |
25,497,022 |
(392,070) |
35,961,995 |
268,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(For the fiscal year
ended March 31, 2014 (In USD)) |
|
|
|
|
|
|
Internet Initiative Japan
Inc. shareholders' equity |
|
|
Total equity |
Accumulated deficit |
Accumulated other comprehensive
income |
Shares of common stock
outstanding |
Common stock |
Treasury stock |
Additional paid-in capital |
NON CONTROLLING INTERESTS |
|
Thousands of USD |
Thousands of USD |
Thousands of USD |
Shares |
Thousands of USD |
Thousands of USD |
Thousands of USD |
Thousands of USD |
BALANCE, MARCH 31, 2013 |
365,451 |
(62,139) |
2,561 |
41,295,600 |
163,467 |
(3,807) |
265,103 |
266 |
Acquisition of noncontrolling
interests in consolidated subsidiaries |
-- |
|
1 |
|
|
0 |
2 |
(3) |
Issuance of common stock, net
of issuance cost |
167,714 |
|
|
5,400,000 |
84,110 |
|
83,604 |
|
Issuance of common stock upon
exercise of stock options |
31 |
|
|
2,200 |
15 |
|
16 |
|
Stock-based compensation |
489 |
|
|
|
|
|
489 |
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
|
Net Income |
45,481 |
43,137 |
|
|
|
|
|
2,344 |
Other Comprehensive income (loss),
net of tax |
14,069 |
|
14,070 |
|
|
|
|
(1) |
|
|
|
|
|
|
|
|
|
Total comprehensive income: |
59,550 |
|
|
|
|
|
|
|
Dividends paid |
(8,844) |
(8,844) |
|
|
|
|
|
|
Purchase of treasury stock |
(0) |
|
|
|
|
(0) |
|
|
BALANCE, MARCH 31, 2014 |
584,391 |
(27,846) |
16,632 |
46,697,800 |
247,592 |
(3,807) |
349,214 |
2,606 |
|
|
|
|
|
|
|
|
|
(Note) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
|
Internet Initiative
Japan Inc. |
Consolidated Statements
of Cash Flows (Unaudited) |
(For the fiscal year
ended March 31, 2013 and March 31, 2014) |
|
|
|
|
|
|
|
|
Fiscal Year Ended March 31, 2013 |
Fiscal Year Ended March
31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
|
Net income |
5,317,347 |
45,481 |
4,683,632 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
7,507,808 |
85,677 |
8,822,981 |
Impairment loss on intangible assets |
48,000 |
-- |
-- |
Provision for retirement and pension
costs, less payments |
213,963 |
2,200 |
226,599 |
Reversal of allowance for doubtful
accounts |
(10,712) |
(456) |
(46,935) |
Loss on disposal of property and
equipment |
14,638 |
811 |
83,487 |
Net gain on sales of other
investments |
(13,565) |
(1,045) |
(107,655) |
Net gain on other investments |
-- |
(3,043) |
(313,393) |
Impairment of other investments |
19,788 |
-- |
-- |
Foreign exchange gains, net |
(55,983) |
(1,262) |
(129,916) |
Equity in net income of equity method
investees |
(168,065) |
(1,981) |
(204,046) |
Deferred income tax benefit |
(527,128) |
(6,796) |
(699,826) |
Others |
39,377 |
694 |
71,448 |
Changes in operating assets and
liabilities net of effects from acquisition of business and a
company: |
|
|
|
Increase in accounts
receivable |
(2,906,215) |
(3,325) |
(342,391) |
Decrease in net investment in
sales-type lease ―noncurrent |
37,406 |
1,411 |
145,266 |
Increase in inventories |
(492,022) |
(3,550) |
(365,533) |
Increase in prepaid
expenses |
(635,031) |
(5,951) |
(612,802) |
Increase in other current and
noncurrent assets |
(1,295,279) |
(17,493) |
(1,801,403) |
Increase in accounts
payable |
1,881,105 |
4,631 |
476,860 |
Decrease in income taxes
payable |
(545,914) |
(5,776) |
(594,782) |
Increase in deferred income
―noncurrent |
1,015,049 |
888 |
91,462 |
Increase (decrease) in
accrued expenses and other current and noncurrent
liabilities |
194,201 |
(5,789) |
(596,174) |
Net cash provided by
operating activities |
9,638,768 |
85,326 |
8,786,879 |
INVESTING ACTIVITIES: |
|
|
|
Purchases of property and
equipment |
(5,588,815) |
(88,600) |
(9,123,998) |
Proceeds from sales of property
and equipment |
543,978 |
4,431 |
456,330 |
Purchases of available-for-sale
securities |
(48,903) |
(1,627) |
(167,545) |
Purchases of other
investments |
(467,622) |
(11,517) |
(1,185,985) |
Investment in an equity method
investee |
(100,000) |
(1,941) |
(199,920) |
Proceeds from sales of
available-for-sale securities |
-- |
3,805 |
391,814 |
Proceeds from sales of other
investments |
109,944 |
3,416 |
351,740 |
Payments of guarantee
deposits |
(164,417) |
(6,690) |
(688,902) |
Refund of guarantee
deposits |
17,349 |
196 |
20,233 |
Payments for refundable
insurance policies |
(737) |
(182) |
(18,787) |
Refund from insurance
policies |
-- |
156 |
16,026 |
Acquisition of a newly
controlled company, net of cash acquired |
(229,058) |
-- |
-- |
Other |
(17,620) |
(522) |
(53,766) |
Net cash used in
investing activities |
(5,945,901) |
(99,075) |
(10,202,760) |
|
|
|
|
Fiscal Year Ended March 31, 2013 |
Fiscal Year Ended March
31, 2014 |
|
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 |
71,000 |
2,428 |
250,000 |
Repayments of short-term
borrowings with initial maturities over three months and
long-term borrowings |
(1,081,000) |
(12,235) |
(1,260,000) |
Principal payments under
capital leases |
(3,678,940) |
(38,539) |
(3,968,724) |
Net increase in short-term
borrowings with initial maturities less than three
months |
400,000 |
-- |
-- |
Proceeds from issuance of stock
to minority shareholders |
2,570 |
-- |
-- |
Dividends paid |
(709,394) |
(8,844) |
(910,697) |
Proceeds from issuance of
common stock, net of issuance cost |
-- |
167,714 |
17,271,204 |
Other |
-- |
1 |
109 |
Net cash provided by
(used in) financing activities |
(4,995,764) |
110,525 |
11,381,892 |
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS |
24,945 |
1,906 |
196,217 |
|
|
|
|
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS |
(1,277,952) |
98,682 |
10,162,228 |
CASH AND CASH
EQUIVALENTS, BEGINNING OF YEAR |
13,536,824 |
119,041 |
12,258,872 |
CASH AND CASH
EQUIVALENTS, END OF YEAR |
12,258,872 |
217,723 |
22,421,100 |
|
|
|
|
ADDITIONAL CASH FLOW INFORMATION: |
|
|
|
Interest paid |
287,158 |
2,493 |
256,722 |
Income taxes paid |
3,527,987 |
26,294 |
2,707,784 |
|
|
|
|
NONCASH INVESTING AND FINANCING
ACTIVITIES: |
|
|
|
Acquisition of assets by entering into
capital leases |
4,816,248 |
33,368 |
3,436,245 |
Facilities purchase liabilities |
949,264 |
10,200 |
1,050,429 |
Asset retirement obligation |
26,620 |
1,601 |
164,833 |
Acquisition of a company: |
|
|
|
Assets acquired |
404,139 |
-- |
-- |
Liabilities assumed |
104,321 |
-- |
-- |
Noncontrolling interests |
118 |
-- |
-- |
Cash paid |
(299,700) |
-- |
-- |
Cash acquired |
70,642 |
-- |
-- |
Acquisition of a
newly controlled company, net of cash acquired |
(229,058) |
-- |
-- |
|
|
|
|
(Note1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
4th Quarter FY2013 Consolidated Financial Results (3
months)
The following tables are highlight data of 4th Quarter FY2013 (3
months) consolidated financial results (unaudited, for the 3 months
ended March 31, 2014).
Operating Results
Summary |
|
|
|
|
|
4Q12 |
4Q13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Total Revenues: |
29,558 |
31,526 |
6.7 |
Network
Services |
16,717 |
16,984 |
1.6 |
Systems
Integration (SI) |
11,604 |
13,273 |
14.4 |
Equipment
Sales |
623 |
512 |
(17.9) |
ATM Operation
Business |
614 |
757 |
23.3 |
Cost of Revenues: |
23,229 |
25,977 |
11.8 |
Network
Services |
12,720 |
13,282 |
4.4 |
Systems
Integration (SI) |
9,431 |
11,684 |
23.9 |
Equipment
Sales |
569 |
465 |
(18.3) |
ATM Operation
Business |
509 |
546 |
7.3 |
SG&A Expenses and
R&D |
3,619 |
4,036 |
11.5 |
Operating Income |
2,710 |
1,513 |
(44.2) |
Income before Income Tax
Expense |
2,811 |
1,649 |
(41.3) |
Net Income attributable to
IIJ |
2,188 |
1,518 |
(30.6) |
Network Service
Revenue Breakdown |
|
4Q12 |
4Q13 |
YoY % Change |
|
JPY millions |
JPY millions |
|
Internet Connectivity Service
(Corporate Use) |
4,244 |
4,085 |
(3.7) |
IP
Service |
2,782 |
2,539 |
(8.8) |
IIJ
FiberAccess/F and IIJ DSL/F |
773 |
779 |
0.9 |
IIJ Mobile
Service |
629 |
709 |
12.8 |
Others |
60 |
58 |
(3.0) |
Internet Connectivity Service
(Home Use) |
1,356 |
1,628 |
20.1 |
Under IIJ
Brand |
382 |
696 |
82.2 |
hi-ho |
811 |
749 |
(7.7) |
OEM |
163 |
183 |
12.5 |
WAN Services |
6,288 |
6,220 |
(1.1) |
Outsourcing
Services |
4,829 |
5,051 |
4.6 |
Network Services
Revenues |
16,717 |
16,984 |
1.6 |
Reconciliation of Non-GAAP Financial Measures
(4th Quarter FY2013 (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 |
|
4Q12 |
4Q13 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
4,722 |
3,832 |
Depreciation and
Amortization |
(1,964) |
(2,319) |
Impairment loss on other
intangible assets |
(48) |
-- |
Operating Income |
2,710 |
1,513 |
Other Income
(Expense) |
101 |
136 |
Income Tax
Expense |
653 |
(47) |
Equity in Net Income (loss) of
Equity Method Investees |
36 |
13 |
Net income |
2,194 |
1,709 |
Net Loss (Income) attributable
to non-controlling interests |
(6) |
(191) |
Net Income attributable to
IIJ |
2,188 |
1,518 |
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 |
|
4Q12 |
4Q13 |
|
JPY millions |
JPY millions |
CAPEX, including capital
leases |
1,953 |
2,697 |
Acquisition of
Assets by Entering into Capital Leases |
774 |
801 |
Purchase of
Property and Equipment |
1,179 |
1,896 |
|
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Income (Unaudited) |
(Three Months ended
March 31, 2013 and March 31, 2014) |
|
|
|
|
|
Three Months Ended March 31,
2013 |
Three Months Ended March
31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
REVENUES: |
|
|
|
Network services: |
|
|
|
Internet connectivity services (corporate
use) |
4,244,105 |
39,674 |
4,085,649 |
Internet connectivity services (home
use) |
1,355,560 |
15,807 |
1,627,764 |
WAN services |
6,288,667 |
60,399 |
6,219,920 |
Outsourcing services |
4,829,036 |
49,048 |
5,050,931 |
Total |
16,717,368 |
164,928 |
16,984,264 |
Systems integration: |
|
|
|
Systems Construction |
6,000,759 |
68,349 |
7,038,521 |
Systems Operation and Maintenance |
5,603,166 |
60,539 |
6,234,333 |
Total |
11,603,925 |
128,888 |
13,272,854 |
Equipment sales |
623,603 |
4,974 |
512,236 |
ATM operation business |
613,500 |
7,346 |
756,554 |
Total revenues |
29,558,396 |
306,136 |
31,525,908 |
COST AND EXPENSES: |
|
|
|
Cost of network services |
12,720,525 |
128,976 |
13,281,985 |
Cost of systems integration |
9,431,170 |
113,461 |
11,684,188 |
Cost of equipment sales |
568,947 |
4,511 |
464,561 |
Cost of ATM operation business |
509,138 |
5,307 |
546,532 |
Total cost |
23,229,780 |
252,255 |
25,977,266 |
Sales and marketing |
2,027,664 |
21,383 |
2,201,980 |
General and administrative |
1,485,233 |
16,785 |
1,728,538 |
Research and development |
105,940 |
1,025 |
105,561 |
Total cost and expenses |
26,848,617 |
291,448 |
30,013,345 |
OPERATING INCOME |
2,709,779 |
14,688 |
1,512,563 |
OTHER INCOME (EXPENSE): |
|
|
|
Dividend income |
2,604 |
27 |
2,744 |
Interest income |
5,819 |
78 |
8,049 |
Interest expense |
(69,417) |
(605) |
(62,263) |
Foreign exchange gains |
124,841 |
163 |
16,783 |
Net gain on other investments |
-- |
1,369 |
140,970 |
Other—net |
37,272 |
297 |
30,613 |
Other expense — net |
101,119 |
1,329 |
136,896 |
INCOME FROM OPERATIONS BEFORE INCOME
TAX EXPENSE AND EQUITY IN NET INCOME IN EQUITY METHOD
INVESTEES |
2,810,898 |
16,017 |
1,649,459 |
INCOME TAX EXPENSE (BENEFIT) |
653,414 |
(450) |
(46,385) |
EQUITY IN NET INCOME OF EQUITY METHOD
INVESTEES |
36,377 |
125 |
12,842 |
|
|
|
|
NET INCOME |
2,193,861 |
16,592 |
1,708,686 |
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS |
(5,492) |
(1,850) |
(190,519) |
NET INCOME ATTRIBUTABLE TO
INTERNET INITIATIVE JAPAN INC. |
2,188,369 |
14,742 |
1,518,167 |
|
|
|
|
|
|
|
|
Three Months Ended March 31,
2013 |
Three Months Ended March
31, 2014 |
NET INCOME PER SHARE |
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER
OF SHARES |
40,536,800 |
|
45,939,091 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF SHARES |
40,583,800 |
|
45,998,489 |
BASIC WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,073,600 |
|
91,878,182 |
DILUTED WEIGHTED-AVERAGE NUMBER
OF ADS EQUIVALENTS (ADSs) |
81,167,600 |
|
91,996,978 |
BASIC NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
53.98 |
0.32 |
33.05 |
DILUTED NET INCOME PER SHARE
(JPY / U.S. Dollars / JPY) |
53.92 |
0.32 |
33.00 |
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars / JPY) |
26.99 |
0.16 |
16.52 |
DILUTED NET INCOME PER
ADS EQUIVALENT (JPY / U.S. Dollars / JPY) |
26.96 |
0.16 |
16.50 |
|
|
|
|
(Note) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
|
Internet Initiative
Japan Inc. |
Quarterly Consolidated
Statements of Cash Flows (Unaudited) |
(Three Months ended
March 31, 2013 and March 31, 2014) |
|
|
|
|
|
Three Months Ended March 31,
2013 |
Three Months Ended March
31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
|
Net income |
2,193,861 |
16,592 |
1,708,686 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
1,964,291 |
22,517 |
2,318,779 |
Impairment loss on other intangible
assets |
48,000 |
-- |
-- |
Provision for retirement and pension
costs, less payments |
48,701 |
522 |
53,784 |
Reversal of allowance for doubtful
accounts and advances |
(10,570) |
(11) |
(1,127) |
Loss on disposal of property and
equipment |
10,045 |
700 |
72,044 |
Net gain on sales of other
investments |
-- |
(1,369) |
(140,970) |
Foreign exchange losses (gains), net |
(38,699) |
247 |
25,478 |
Equity in net income of equity method
investees |
(36,377) |
(125) |
(12,842) |
Deferred income tax benefit |
(679,103) |
(10,588) |
(1,090,417) |
Others |
26,224 |
174 |
17,881 |
Changes in operating assets and
liabilities net of effects from acquisition of business and a
company: |
|
|
|
Increase in accounts receivable |
(3,341,586) |
(23,499) |
(2,419,892) |
Decrease (increase) in net investment in
sales-type lease ―noncurrent |
(202,461) |
367 |
37,794 |
Decrease in inventories |
489,685 |
8,239 |
848,410 |
Decrease in prepaid expenses |
757,088 |
8,245 |
849,097 |
Increase in other current and noncurrent
assets |
(716,734) |
(10,090) |
(1,039,069) |
Increase in accounts payable |
1,821,357 |
11,988 |
1,234,546 |
Increase in income taxes payable |
1,274,354 |
8,726 |
898,628 |
Increase in deferred income
―noncurrent |
238,400 |
970 |
99,854 |
Decrease in accrued expenses, other
current and noncurrent liabilities |
(87,505) |
(3,941) |
(405,831) |
|
|
|
|
Net cash provided by
operating activities |
3,758,971 |
29,664 |
3,054,833 |
INVESTING ACTIVITIES: |
|
|
|
Purchases of property and
equipment |
(1,178,696) |
(18,415) |
(1,896,347) |
Proceeds from sales of property
and equipment |
71,272 |
2,135 |
219,831 |
Purchases of available-for-sale
securities |
(7,653) |
(670) |
(69,051) |
Purchases of other
investments |
(60,620) |
(565) |
(58,154) |
Investment in an equity method
investee |
-- |
(1,941) |
(199,920) |
Proceeds from sales of other
investments |
17,310 |
3,221 |
331,740 |
Payments of guarantee
deposits |
(77,463) |
(73) |
(7,524) |
Refund of guarantee
deposits |
1,986 |
121 |
12,415 |
Payments for refundable
insurance policies |
(183) |
(137) |
(14,090) |
Other |
(8,002) |
(404) |
(41,557) |
Net cash used in
financing activities |
(1,242,049) |
(16,728) |
(1,722,657) |
|
|
|
|
Three Months Ended March 31,
2013 |
Three Months Ended March
31, 2014 |
|
Thousands of JPY |
Thousands of U.S. Dollars |
Thousands of JPY |
FINANCING ACTIVITIES: |
|
|
|
Principal payments under
capital leases |
(938,318) |
(9,970) |
(1,026,718) |
Other |
-- |
1 |
150 |
Net cash used in
financing activities |
(938,318) |
(9,969) |
(1,026,568) |
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS |
31,972 |
128 |
13,142 |
|
|
|
|
NET INCREASE IN CASH AND CASH
EQUIVALENTS |
1,610,576 |
3,095 |
318,750 |
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
10,648,296 |
214,628 |
22,102,350 |
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
12,258,872 |
217,723 |
22,421,100 |
|
|
|
|
(Note1) The U.S. dollar amounts
represent translations of yen amounts at the rate of JPY102.98
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 31, 2014. |
Note: The following information is provided to
disclose Internet Initiative Japan Inc. ("IIJ") financial results
(unaudited) for the fiscal year ended March 31, 2014 ("FY2013") in
the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Fiscal Year Ended
March 31, 2014 [Under accounting principles generally accepted in
the United States ("U.S. GAAP")]
|
|
May 15, 2014 |
Company name: Internet Initiative Japan
Inc. |
Exchange listed: Tokyo Stock
Exchange First Section |
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 |
|
Scheduled date for annual general
shareholder's meeting: June 25, 2014 |
|
Scheduled date for dividend payment: June 26,
2014 |
|
|
Scheduled date for filing of
annual report (Yuka-shoken-houkokusho) to Japan's regulatory
organization: June 27, 2014 |
Supplemental material on annual results:
Yes |
|
|
Presentation on annual 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, 2014 (April 1, 2013 to March 31,
2014)
(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, 2014 |
114,272 |
7.6 |
5,723 |
(26.2) |
6,275 |
(19.1) |
4,442 |
(16.2) |
Fiscal Year Ended March 31, 2013 |
106,248 |
9.2 |
7,753 |
22.0 |
7,757 |
29.8 |
5,301 |
45.6 |
|
|
|
|
(Note1) Total comprehensive
income attributable to IIJ |
|
|
Fiscal Year Ended March 31, 2014:
JPY5,891 million (up 5.4% YoY) |
|
|
|
|
Fiscal Year Ended March 31, 2013:
JPY5,588 million (up 50.9% 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, 2014 |
100.26 |
100.14 |
9.1 |
6.7 |
5.0 |
Fiscal Year Ended March 31, 2013 |
130.76 |
130.65 |
15.1 |
10 |
7.3 |
|
|
(Reference) Equity in net income
of equity method investees |
Fiscal Year Ended March 31, 2014:
JPY204 million |
|
|
|
Fiscal Year Ended March 31, 2013:
JPY168 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 would have
been calculated as if the stock split were conducted 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 |
Total IIJ Shareholders' Equity per
Share |
|
JPY millions |
JPY millions |
JPY millions |
% |
JPY |
As of March 31, 2014 |
103,867 |
60,181 |
59,912 |
57.7 |
1,304.17 |
As of March 31, 2013 |
82,111 |
37,634 |
37,607 |
45.8 |
927.72 |
|
|
|
|
|
|
(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, 2014 |
8,787 |
(10,203) |
11,382 |
22,421 |
Fiscal year ended March 31, 2013 |
9,639 |
(5,946) |
(4,996) |
12,259 |
|
|
|
|
|
|
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, 2013 |
-- |
1,750 |
-- |
10.00 |
1,760.00 |
760 |
14.3 |
2.2 |
Fiscal Year Ended March 31,
2014 |
-- |
11.00 |
-- |
11.00 |
22.00 |
1,011 |
21.9 |
2.0 |
Fiscal Year Ending March 31,
2015 (forecast) |
-- |
11.00 |
-- |
11.00 |
22.00 |
|
22.5 |
|
(Note) 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 at the
beginning of the fiscal year ended March 31, 2013. |
3. Target of
Consolidated Financial Results for the Fiscal Year Ending March 31,
2015 |
(April 1, 2014
through March 31, 2015) |
(% 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,
2014 |
57,500 |
5.7 |
2,800 |
(6.9) |
2,700 |
(19.3) |
1,750 |
(20.6) |
38.09 |
Fiscal Year Ending March 31, 2015 |
123,000 |
7.6 |
7,200 |
25.8 |
7,000 |
11.6 |
4,500 |
1.3 |
97.96 |
* Notes |
|
(1) Changes in Significant
Subsidiaries for the Fiscal Year Ended March 31, 2014 |
(Changes in significant
subsidiaries for the Fiscal Year Ended March 31, 2014 which
resulted in changes in scope of consolidation): None |
(2) Changes in Significant
Accounting and Reporting Policies for the Consolidated Financial
Statements |
1) Changes due to the
revision of accounting standards: No |
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, 2014: 46,697,800
shares |
|
As of March 31, 2013: 41,295,600
shares |
|
2) The number of treasury stock: |
|
As of March 31, 2014: 758,709
shares |
|
As of March 31, 2013: 758,800 shares |
|
3) The weighted average
number of shares outstanding: |
For the Fiscal Year Ended March 31, 2014:
44,306,680 shares |
|
For the Fiscal Year Ended March 31, 2013:
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 would have been calculated as if the stock split were
conducted at the beginning of the fiscal year ended March 31,
2013. |
[English Translation]
May 15, 2014
Company name: 1-105 Kanda Jimbo-cho, Chiyoda-ku,
Tokyo Internet Initiative Japan Inc. Company representative: Eijiro
Katsu, 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, 2014) |
Name |
Relationship |
Its Ownership Percentage (%) |
Securities Exchanges where its Shares
are Listed |
Nippon Telegraph and Telephone Corporation
("NTT") |
IIJ is NTT's affiliate company |
26.4 |
Tokyo Stock Exchange (First Section) |
|
|
(4.4) |
New York Stock Exchange |
|
(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 26.4% as of March 31, 2014,
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 as of May 15, 2014. Takashi
Hiroi, an outside director (part-time director) of IIJ, is an
employee of NTT (General Manager of Business Planning Division of
NTT), and also an outside company auditor of NTT Urban Development
Corporation. 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 JPY1,478
million and JPY3,260 million, respectively for the fiscal year
ended March 31, 2014. |
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 JPY1,607
million for the fiscal year ended March 31, 2014. |
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. |
CONTACT: IIJ Investor Relations
Tel: +81-3-5259-6500
E-mail: ir@iij.ad.jp
URL: http://www.iij.ad.jp/en/ir
Internet Initiative Japan (PK) (USOTC:IIJIY)
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Internet Initiative Japan (PK) (USOTC:IIJIY)
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