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IIJ Announces Nine Months Financial Results For The Fiscal Year Ending March 31, 2011

Stocks in this article: IIJI

Equipment sales revenues were JPY550 million, up 25.3% YoY.

ATM Operation Business revenues were JPY353 million. As of February 10, 2011, 200 ATMs are placed.

Cost and expense

Cost of revenues was JPY45,257 million, up 17.0% YoY. Cost of revenues related to IIJ-GS of 4 months were JPY6,976 million.

Cost of Network Services revenue was JPY29,205 million, up 27.7% YoY mainly due to the increase in circuit related and outsourcing related costs related to IIJ-GS of 4 months. Gross margin for network services was JPY6,905 million, up 46.2% YoY and gross margin ratio was 19.1%.

Cost of SI revenues was JPY14,876 million, up 0.8% YoY. While purchasing cost decreased, network operation related and personnel related costs increased. Gross margin for SI was JPY4,908 million, down 9.3% YoY and gross margin ratio was 24.8%.

Cost of Equipment Sales revenues was JPY473 million, up 24.6% YoY. Gross margin was JPY77 million and gross margin ratio was 13.9%.

Cost of ATM Operation Business revenues was JPY703 million. Outsourcing costs were reduced. We are additionally placing new ATMs and full FY2010 operating loss related to ATM operation business is expected to be around JPY0.6 billion.

SG&A and R&D Expenses

SG&A and R&D expenses were JPY9,110 million, up 19.7% YoY. SG&A expenses related to IIJ-GS of 4 months was JPY1,001 million.

Sales and marketing expenses were JPY4,756 million, up 21.1% YoY mainly due to the additional expenses related to IIJ-GS, personnel related expenses and depreciation and amortization increased. Amortization of customer relationship related to IIJ-GS was JPY129 million.

General and administrative expenses were JPY4,095 million, up 18.9% YoY mainly due to the additional expenses related to IIJ-GS, personnel related expenses and depreciation and amortization increased. In 3Q10, there were restoration expenses, to return the rented office to its original state, of JPY48 million in relation to next fiscal year's new office plan.

Research and development expenses were JPY259 million, up 7.6% YoY.

Operating income

Operating income was JPY2,430 million, up 21.1% YoY as gross margin for network services increased and operation loss related to ATM operation business decreased.

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