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TheStreet Open House

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

As of December 31, 2010, the balance of other investments was JPY2,934 million, an increase of JPY353 million from the balance as of March 31, 2010. The breakdown of other investments were JPY1,843 million in nonmarketable equity securities, JPY892 million in available-for-sale securities and JPY199 million in other.

As of December 31, 2010, the balance of non-amortized intangible assets (excluding telephone rights) such as goodwill was JPY4,306 million and the balance of amortized intangible assets was JPY7,228 million. The breakdown of non-amortized intangible assets were JPY4,114 million in goodwill (JPY594 million related to IIJ-GS) and JPY192 in trademark. The breakdown of amortized intangible assets were JPY7,191 million in customer relationships (JPY4,766 million related to IIJ-GS) and JPY37 million in licenses.

Total IIJ shareholders' equity as of December 31, 2010 was JPY28,696 million, an increase of JPY1,376 million from the balance as of March 31, 2010. IIJ Shareholders' equity ratio (IIJ shareholders' equity/total assets) as of December 31, 2010 was 42.7%.

The measurement of the assets acquired and liabilities assumed related to the acquisition of IIJ-GS is to be completed within a year from the acquisition date. The measurement has not yet been completed as of the end of December 31, 2010 and therefore, the preliminary estimates are subject to revisions.

Cash Flows

Cash and cash equivalents as of December 31, 2010 were JPY10,800 million compared to JPY8,466 million as of December 31, 2009.

Net cash provided by operating activities for the nine months ended December 31, 2010 was JPY8,387 million compared to net cash provided by operating activities of JPY6,261 million for the nine months ended December 31, 2009. While operating income increased YoY due to the increase in gross margin for network services, there were changes in operating assets and liabilities during the nine months ended December 31, 2010, mainly resulting from the Increase in inventories, prepaid expenses and other current and noncurrent assets of JPY722 million, increase in accounts payable of JPY3,950 million, decrease in accrued expenses and other current and noncurrent liabilities of JPY2,031 million.

Net cash used in investing activities for the nine months ended December 31, 2010 was JPY12,629 million compared to net cash used in investing activities of JPY2,798 million for the nine months ended December 31, 2009, mainly due to the acquisition of IIJ-GS for JPY9,170 million and the purchase of property and equipments of JPY3,037 million.

Net cash provided by financing activities for the nine months ended December 31, 2010 was JPY6,321 million compared to net cash used in financing activities of JPY5,163 million for the nine months ended December 31, 2009, mainly due to the net increase in short-term borrowings of JPY9,000 million, principal payments under capital leases of JPY2,210 million and payments of JPY507 million for FY2009 year-end and FY2010 interim dividends.

FY2010 Financial Targets (announced on June 1, 2010)

Generally speaking, our full year target largely depends on the outcome of the 4th quarter revenue and income results which becomes the largest due to seasonal factors. Taking into account our nine months ended December 31, 2010 results, we remain our full FY2010 target unchanged.

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