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IIJ Announces Nine Months Financial Results For The Fiscal Year Ending March 31, 2013

Stocks in this article: IIJI

Presentation

Presentation Materials will be posted on our web site ( http://www.iij.ad.jp/en/ir/) on February 8, 2013.

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 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

For inquiries, contact:

IIJ Investor Relations

Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp URL: http://www.iij.ad.jp/en/ir

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 FY2012 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.

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 JPY86.12 per US$1.00, which was the noon buying rate on December 28, 2012.

2 IP Service revenues include revenues from the Data Center Connectivity Service.

3 Revenue from mobile data communication service for home use is included in Internet Connectivity service (home use).

4 Contracts of IIJ Mobile Service are of mobile data communication service for corporate use.

5 Depreciation and amortization includes impairment loss on other intangible assets. (See IIJ's consolidated financial statements for details).

Internet Initiative Japan Inc.
Quarterly Consolidated Balance Sheets (Unaudited)
(As of March 31, 2012 and December 31, 2012)
       
 
  As of March 31, 2012 As of December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents 13,536,824 123,645 10,648,296
Accounts receivable, net of allowance for doubtful accounts of JPY 107,919 thousand and JPY 105,571 thousand at March 31, 2012 and December 31, 2012, respectively 15,722,135 178,692 15,388,973
Inventories 752,075 20,786 1,790,064
Prepaid expenses 1,848,344 37,646 3,242,103
Deferred tax assets -Current 939,370 7,826 674,011
Other current assets, net of allowance for doubtful accounts of JPY 10,732 thousand at March 31, 2012 and December 31, 2012, respectively 891,560 13,554 1,167,220
Total current assets 33,690,308 382,149 32,910,667
INVESTMENTS IN EQUITY METHOD INVESTEES 1,406,634 19,105 1,645,346
OTHER INVESTMENTS 2,938,146 40,250 3,466,298
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 25,693,163 thousand and JPY 28,190,585 thousand at March 31, 2012 and December 31, 2012, respectively 19,735,546 257,401 22,167,374
GOODWILL 5,788,333 69,321 5,969,951
OTHER INTANGIBLE ASSETS -Net 5,396,469 57,806 4,978,211
GUARANTEE DEPOSITS 1,899,815 22,940 1,975,580
DEFERRED TAX ASSETS -Noncurrent 24,760 657 56,585
NET INVESTMENT IN SALES-TYPE LEASES —Noncurrent 935,446 8,077 695,579
Prepaid expenses —Noncurrent 1,536,932 22,003 1,894,891
OTHER ASSETS, net of allowance for doubtful accounts of JPY86,388 thousand and JPY 79,338  thousand at March 31, 2012 and December 31, 2012,  respectively 140,857 1,528 131,648
TOTAL 73,493,246 881,237 75,892,130
     
 
  As of March 31, 2012 As of December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Short-term borrowings 9,000,000 109,150 9,400,000
Long-term borrowings —current portion 1,010,000 11,728 1,010,000
Capital lease obligations—current portion 2,997,292 40,146 3,457,410
Accounts payable —trade 9,093,657 106,253 9,150,548
Accounts payable —other 659,266 4,262 367,018
Income taxes payable 2,210,089 4,594 395,625
Accrued expenses 2,277,307 26,070 2,245,125
Deferred income―current 1,495,468 19,827 1,707,505
Other current liabilities 717,342 9,792 843,260
Total current liabilities 29,460,421 331,822 28,576,491
LONG-TERM BORROWINGS 1,990,000 11,379 980,000
CAPITAL LEASE OBLIGATIONS -Noncurrent 4,741,241 64,821 5,582,375
ACCRUED RETIREMENT AND PENSION COSTS -Noncurrent 1,805,683 22,883 1,970,667
DEFERRED TAX LIABILITIRES -Noncurrent 652,280 7,064 608,283
DEFERRED INCOME -Noncurrent 1,547,159 26,840 2,311,430
OTHER NONCURRENT LIABILITIES 600,215 7,486 644,672
Total Liabilities 40,796,999 472,294 40,673,918
COMMITMENTS AND CONTINGENCIES      
       
SHAREHOLDERS' EQUITY:      
Common-stock—authorized, 75,520,000 shares; issued and outstanding, 41,295,600 shares at March 31, 2012 and December 31, 2012 16,833,847 195,470 16,833,847
Additional paid-in capital 27,260,318 316,883 27,289,972
Accumulated deficit (10,990,348) (99,715) (8,587,457)
Accumulated other comprehensive income (loss) (23,533) 604 51,998
Treasury stock—758,800 shares held by the company at March 31, 2012 and December 31, 2012, respectively (392,079) (4,553) (392,079)
Total Internet Initiative Japan Inc. shareholders' equity 32,688,205 408,689 35,196,281
NONCONTROLLING INTERESTS 8,042 255 21,931
Total equity 32,696,247 408,942 35,218,212
TOTAL 73,493,246 881,237 75,892,130
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
 
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Other Comprehensive Income (Unaudited)
(For The Nine Months Ended December 31, 2011 and December 31, 2012)
       
Quarterly Consolidated Statements of Income
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
REVENUES:      
Network services:      
Internet connectivity services (corporate use) 10,919,624 136,821 11,783,029
Internet connectivity services (home use) 4,327,929 47,732 4,110,638
WAN services 19,177,295 219,226 18,879,758
Outsourcing services 12,817,335 159,563 13,741,605
Total 47,242,183 563,342 48,515,030
Systems integration:      
Systems construction 7,348,767 114,075 9,824,179
Systems operation and maintenance 14,359,541 183,198 15,776,992
Total 21,708,308 297,273 25,601,171
Equipment sales 878,749 10,071 867,303
ATM operation business 922,352 19,817 1,706,586
Total revenues 70,751,592 890,503 76,690,090
COST AND EXPENSES:      
Cost of network services 37,587,001 440,916 37,971,665
Cost of systems integration 17,267,064 243,772 20,993,632
Cost of equipment sales 786,589 8,702 749,397
Cost of ATM operation business 1,013,198 16,842 1,450,459
Total cost 56,653,852 710,232 61,165,153
Sales and marketing 5,940,188 70,028 6,030,817
General and administrative 3,920,530 48,156 4,147,197
Research and development 239,440 3,531 304,060
Total cost and expenses 66,754,010 831,947 71,647,227
OPERATING INCOME 3,997,582 58,556 5,042,863
OTHER INCOME (EXPENSE):      
Interest income 25,047 231 19,889
Interest expense (227,127) (2,530) (217,897)
Foreign exchange gains (losses) (13,469) (148) (12,705)
Net gains (losses) on sales of other investments -net (170) 158 13,565
Losses on write-down of other investments (84,577) (230) (19,788)
Other -net 82,631 1,394 120,039
Other expense — net (217,665) (1,125) (96,897)
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 3,779,917 57,431 4,945,966
INCOME TAX EXPENSE  1,603,606 22,691 1,954,168
EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 153,336 1,529 131,688
NET INCOME 2,329,647 36,269 3,123,486
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS 60,000 (130) (11,201)
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. 2,389,647 36,139 3,112,285
 
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
NET INCOME PER SHARE      
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 40,536,800   40,536,800
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 40,553,800   40,569,000
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 81,073,600   81,073,600
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 81,107,600   81,138,000
BASIC NET INCOME PER SHARE (JPY / U.S. Dollars / JPY) 58.95 0.89 76.78
DILUTED NET INCOME PER SHARE  (JPY / U.S. Dollars / JPY) 58.93 0.89 76.72
BASIC NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) 29.48 0.45 38.39
DILUTED NET INCOME PER ADS EQUIVALENT (JPY / U.S. Dollars / JPY) 29.46 0.45 38.36
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
 
Quarterly Consolidated Statements of Other comprehensive income
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
NET INCOME 2,329,647 36,269 3,123,486
Comprehensive income (loss), net of tax:      
Foreign currency translation adjustments (15,920) (168) (14,446)
Unrealized holding gain on securities 13,409 1,043 89,799
Defined benefit pension plans (6,789) 2 178
Total comprehensive income (loss) 2,320,347 37,146 3,199,017
Less: Comprehensive income (loss) attraibutable to noncontrolling interests 60,000 (130) (11,201)
Comprehensive income attributable to Internet Initiative Japan Inc. 2,380,347 37,016 3,187,816
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(For The Nine Months Ended December 31, 2011 and December 31, 2012)
       
 
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
OPERATING ACTIVITIES:      
Net income 2,329,647 36,269 3,123,486
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 5,251,482 64,370 5,543,517
Provision for retirement and pension costs, less payments 149,105 1,919 165,262
Provision for (reversal of) allowance for doubtful accounts 45,852 (2) (142)
Loss on disposal of property and equipment 39,616 53 4,593
Net losses (gains) on sales of other investments 170 (158) (13,565)
Impairment of other investments 84,577 230 19,788
Foreign exchange losses (gains), net 32,088 (201) (17,284)
Equity in net income of equity method investees (153,336) (1,529) (131,688)
Deferred income tax expense 108,174 1,765 151,975
Others 34,705 153 13,153
Changes in operating assets and liabilities net of effects from acquisition of a company:      
Decrease in accounts receivable 928,294 5,055 435,371
Decrease in net investment in sales-type lease―noncurrent 227,371 2,785 239,867
Increase in inventories, prepaid expenses and other current and noncurrent assets (1,047,996) (34,282) (2,952,371)
Increase (decrease) in accounts payable (3,864,764) 694 59,748
Increse (decrease) in income taxes payable 832,873 (21,136) (1,820,268)
Increase (decrease) in deferred income-noncurrent (120,220) 9,018 776,649
Increase in accrued expenses and other current and noncurrent liabilities 1,702,329 3,271 281,706
Net cash provided by operating activities 6,579,967 68,274 5,879,797
INVESTING ACTIVITIES:      
Purchase of property and equipment (4,534,276) (51,209) (4,410,119)
Proceeds from sales of property and equipment 294,265 5,489 472,706
Purchase of available-for-sale securities (118,948) (479) (41,250)
Purchase of other investments (106,115) (4,726) (407,002)
Investment in an equity method investee (24,647) (1,161) (100,000)
Proceeds from sales of available-for-sale securities 3,879 -- --
Proceeds from sales of other investments 62,205 1,076 92,634
Payments of guarantee deposits (20,269) (1,010) (86,954)
Refund of guarantee deposits 21,314 178 15,363
Payments for refundable insurance policies (6,422) (6) (554)
Refund from insurance policies 42,948 -- --
Acquisition of a newly controlled company, net of cash acquired -- (2,660) (229,058)
Other (4,577) (112) (9,618)
Net cash used in investing activities (4,390,643) (54,620) (4,703,852)
 
 
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  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 and long-term borrowings 3,370,000 824 71,000
Repayments of short-term borrowings with initial maturities over three months and long-term borrowings (620,000) (12,552) (1,081,000)
Principal payments under capital leases (2,502,602) (31,824) (2,740,622)
Net incrase (decrease) in short-term borrowings with initial maturities less than three months (4,180,000) 4,645 400,000
Proceeds from issuance of subsidiary stock to minority shareholders -- 30 2,570
Dividends paid (608,052) (8,237) (709,394)
Net cash used in financing activities (4,540,654) (47,114) (4,057,446)
       
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (34,314) (81) (7,027)
       
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,385,644) (33,541) (2,888,528)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 13,313,615 157,186 13,536,824
CASH AND CASH EQUIVALENTS, END OF THE PERIOD 10,927,971 123,645 10,648,296
 
ADDITIONAL CASH FLOW INFORMATION:      
Interest paid 225,749 2,535 218,322
Income taxes paid 480,415 40,461 3,484,499
       
NONCASH INVESTING AND FINANCING ACTIVITIES:      
Acquisition of assets by entering into capital leases 4,118,138 46,933 4,041,871
Facilities purchase liabilities 385,074 4,262 367,018
Asset retirement obligation 42,273 -- --
Acquisition of a company:      
Assets acquired -- 4,693 404,139
Liabilities assumed -- 1,211 104,321
Noncontrolling interests -- 1 118
Cash paid -- 3,480 299,700
Cash including acquired assets -- 819 70,642
Acquisition of a newly controlled company, net of cash acquired -- 2,660 229,058
 
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
 
Going Concern Assumption (Unaudited)
Nothing to be reported.
     
Segment Information (Unaudited)
Business Segments:
 
Revenues:
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  Thousands of JPY Thousands of JPY
Network service and systems integration business 70,204,107 75,399,477
Customers 69,829,240 74,983,504
Intersegment 374,867 415,973
ATM operation business 922,352 1,706,586
Customers 922,352 1,706,586
Intersegment
Elimination 374,867 415,973
Consolidated total 70,751,592 76,690,090
     
Segment profit or loss:
  Nine Months Ended December 31, 2011 Nine Months Ended  December 31, 2012
  Thousands of JPY Thousands of JPY
Network service and systems integration business 4,249,778 4,964,544
ATM operation business (194,337) 163,845
Elimination 57,859 85,526
Consolidated operating income 3,997,582 5,042,863
     
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.
     
Subsequent Events (Unaudited)
Nothing to be reported.

3rd Quarter FY2012 Consolidated Financial Results (3 months)

The following tables are highlight data of 3rd Quarter FY2012 (3 months) consolidated financial results (unaudited, from October 1, 2012 to December 31, 2012).

Operating Results Summary
  3Q11 3Q12 YoY % Change
  JPY millions JPY millions  
Total Revenues: 23,545 25,581 8.6
Network Services 15,922 16,256 2.1
Systems Integration (SI) 6,994 8,475 21.2
Equipment Sales 268 225 (15.9)
ATM Operation Business 361 625 72.8
Cost of Revenues: 18,683 20,204 8.1
Network Services 12,541 12,589 0.4
Systems Integration (SI) 5,541 6,904 24.6
Equipment Sales 241 198 (17.6)
ATM Operation Business 360 513 42.2
SG&A Expenses and R&D 3,313 3,597 8.6
Operating Income 1,549 1,780 14.9
Income before Income Tax Expense 1,489 1,770 18.8
Net Income attributable to IIJ 1,028 1,105 7.5
 
Network Service Revenue Breakdown
  3Q11 3Q12 YoY % Change
  JPY millions JPY millions  
Internet Connectivity Service (Corporate Use) 3,643 3,967 8.9
 IP Service 2,277 2,500 9.8
 IIJ FiberAccess/F and IIJ DSL/F 788 791 0.5
 IIJ Mobile Service 517 616 19.1
Others 61 60 (1.5)
Internet Connectivity Service (Home Use) 1,398 1,343 (4.0)
Under IIJ Brand 217 348 60.1
hi-ho 1,033 837 (18.9)
OEM 148 158 6.6
WAN Services 6,476 6,302 (2.7)
Outsourcing Services 4,405 4,644 5.4
Network Services Revenues 15,922 16,256 2.1

Reconciliation of Non-GAAP Financial Measures (3rd Quarter FY2012 (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
  3Q11 3Q12
  JPY millions JPY millions
Adjusted EBITDA 3,376 3,684
Depreciation and Amortization 1,827 1,904
Operating Income 1,549 1,780
Other Income (Expense) (60) (10)
Income Tax Expense 548 703
Equity in Net Income of Equity Method Investees 77 49
Net income 1,018 1,115
Net Loss (Income) attributable to non-controlling interests 10 (10)
Net Income attributable to IIJ 1,028 1,105

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
  3Q11 3Q12
  JPY millions JPY millions
CAPEX, including capital leases 2,208 2,549
Acquisition of Assets by Entering into Capital Leases 1,055 924
Purchase of Property and Equipment 1,153 1,625
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(Three Months ended December 31, 2011 and December 31, 2012)
       
  Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
REVENUES:      
Network services:      
Internet connectivity services (corporate use) 3,642,759 46,068 3,967,404
Internet connectivity services (home use) 1,397,782 15,589 1,342,487
WAN services 6,475,568 73,183 6,302,542
Outsourcing services 4,405,320 53,925 4,643,995
Total 15,921,429 188,765 16,256,428
Systems integration:      
Systems Construction 2,154,424 36,351 3,130,593
Systems Operation and Maintenance 4,839,702 62,053 5,343,964
Total 6,994,126 98,404 8,474,557
Equipment sales 268,064 2,619 225,523
ATM operation business 361,465 7,252 624,581
Total revenues 23,545,084 297,040 25,581,089
COST AND EXPENSES:      
Cost of network services 12,541,295 146,180 12,589,051
Cost of systems integration 5,540,863 80,170 6,904,274
Cost of equipment sales 240,402 2,302 198,152
Cost of ATM operation business 360,344 5,950 512,418
Total cost 18,682,904 234,602 20,203,895
Sales and marketing 2,023,213 24,374 2,099,141
General and administrative 1,212,669 16,281 1,402,120
Research and development 76,923 1,112 95,777
Total cost and expenses 21,995,709 276,369 23,800,933
OPERATING INCOME 1,549,375 20,671 1,780,156
OTHER INCOME (EXPENSE):      
Interest income 9,097 59 5,066
Interest expense (72,438) (845) (72,734)
Foreign exchange gains (losses) (4,111) 433 37,292
Losses on write-down of other investments (7,117) -       -      
Other—net 14,302 231 19,888
Other expense — net (60,267) (122) (10,488)
INCOME FROM OPERATIONS BEFORE INCOME  TAX EXPENSE AND EQUITY IN NET INCOME  IN EQUITY METHOD INVESTEES 1,489,108 20,549 1,769,668
INCOME TAX EXPENSE  548,352 8,163 702,996
EQUITY IN NET INCOME OF EQUITY  METHOD INVESTEES 76,627 564 48,600
NET INCOME 1,017,383 12,950 1,115,272
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO  NONCONTROLLING INTERESTS 10,814 (118) (10,143)
NET INCOME ATTRIBUTABLE TO  INTERNET INITIATIVE JAPAN INC. 1,028,197 12,832 1,105,129
 
  Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
NET INCOME PER SHARE      
BASIC WEIGHTED-AVERAGE NUMBER OF  SHARES (shares) 40,536,800   40,536,800
DILUTED WEIGHTED-AVERAGE NUMBER  OF SHARES (shares) 40,564,400   40,577,200
BASIC WEIGHTED-AVERAGE NUMBER OF  ADS EQUIVALENTS (ADSs) 81,073,600   81,073,600
DILUTED WEIGHTED-AVERAGE NUMBER  OF ADS EQUIVALENTS (ADSs) 81,128,800   81,154,400
BASIC NET INCOME PER SHARE  (JPY / U.S. Dollars / JPY) 25.36 0.32 27.26
DILUTED NET INCOME PER SHARE  (JPY / U.S. Dollars / JPY) 25.35 0.32 27.24
BASIC NET INCOME PER ADS  EQUIVALENT (JPY / U.S. Dollars / JPY) 12.68 0.16 13.63
DILUTED NET INCOME PER ADS  EQUIVALENT (JPY / U.S. Dollars / JPY) 12.67 0.16 13.62
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
 
       
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(Three Months ended December 31, 2011 and December 31, 2012)
       
 
  Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
  Thousands of JPY Thousands of U.S. Dollars Thousands of JPY
OPERATING ACTIVITIES:      
Net income 1,017,383 12,950 1,115,272
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 1,827,054 22,111 1,904,175
Provision for retirement and pension costs, less payments 60,234 680 58,532
Reversal of allowance for doubtful accounts (699) (3) (228)
Loss on disposal of property and equipment 17,699 26 2,278
Impairment of other investments 7,117 -- --
Foreign exchange gains, net (3,708) (621) (53,502)
Equity in net income of equity method investees (76,627) (564) (48,600)
Deferred income tax expense (benefit) (57,608) 321 27,645
Others (13,981) 142 12,186
Changes in operating assets and liabilities net of effects from acquisition of a company:      
Decrease (Increase) in accounts receivable (1,003,770) 2,995 257,960
Decrease in net investment in sales-type lease―noncurrent 106,180 1,145 98,612
Increase in inventories, prepaid expenses and other current and noncurrent assets (847,734) (14,726) (1,268,263)
Increase (decrease) in accounts payable 31,242 (2,808) (241,843)
Increase (decrease) in income taxes payable 367,105 (5,801) (499,552)
Increase (decrease) in deferred income― noncurrent (62,218) 5,812 500,559
Increase in accrued expenses, other current and noncurrent liabilities 924,045 514 44,303
Net cash provided by operating activities 2,291,714 22,173 1,909,534
INVESTING ACTIVITIES:      
Purchase of property and equipment (1,152,846) (18,868) (1,624,929)
Proceeds from sales of property and equipment 75,699 1,134 97,701
Purchase of available-for-sale securities -- (251) (21,644)
Purchase of other investments (50,000) (384) (33,093)
Proceeds from sales of other investments -- 41 3,517
Payments of guarantee deposits (1,802) (749) (64,481)
Refund of guarantee deposits 741 34 2,966
Payments for refundable insurance policies (183) (2) (186)
Other (4,061) (112) (9,678)
Net cash used in investing activities (1,157,099) (19,157) (1,649,827)
 
 
  Three Months Ended December 31, 2011 Three Months Ended December 31, 2012
  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 and  long-term borrowings 50,000 581 50,000
Repayments of short-term borrowings with initial maturities over three months long-term borrowings (120,000) (824) (71,000)
Principal payments under capital leases (909,092) (10,776) (927,968)
Net decrease in short-term borrowings with initial maturities less than three months 100,000 -- --
Proceeds from issuance of subsidiary stock to minority shareholders -- 30 2,570
Dividends paid (304,026) (4,119) (354,697)
Net cash used in financing activities (1,183,118) (15,108) (1,301,095)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2,021 223 19,234
NET DECREASE IN CASH AND CASH EQUIVALENTS (46,482) (11,869) (1,022,154)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 10,974,453 135,514 11,670,450
CASH AND CASH EQUIVALENTS, END OF THE PERIOD 10,927,971 123,645 10,648,296
       
(Note) The U.S. dollar amounts have been translated from yen, for convenience only, at the rate of JPY86.12 per 1U.S. dollar which was  the noon buying rate in New York City for cable transfers in foreign currencies as of December 28, 2012.
(Note2) The above presentation for the three months ended March 31, 2011 has been changed to conform to the presentation for   the three months ended March 31, 2012. 

Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the nine months ended December 31, 2012 in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Nine Months Ended December 31, 2012
[Under accounting principles generally accepted in the United States ("U.S. GAAP")]
   
  February 8, 2013  
   
Company name: Internet Initiative Japan Inc. Exchange listed: Tokyo Stock Exchange First Section
Stock code number: 3774 URL: http://www.iij.ad.jp/
Representative: Koichi Suzuki, President, Representative Director and CEO
Contact: Akihisa Watai, Managing Director and CFO TEL: (03) 5259-6500
Filing of quarterly report ( Shihanki-houkokusho) to the regulatory organization in Japan: Scheduled on February 14, 2013
Payment of dividend: --
Supplemental material on this Quarterly Results: Yes
Presentation on this Quarterly Results: Yes (for institutional investors and analysts)
               (Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine Months Ended December 31, 2012 (April 1, 2012 to December 31, 2012)
(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
Nine Months Ended December 31, 2012 76,690 8.4 5,043 26.1 4,946 30.8 3,112 30.2
Nine Months Ended December 31, 2011 70,752 24.6 3,998 64.5 3,780 73.8 2,390 19.7
(Note1) Total comprehensive income attributable to IIJ
Nine Months Ended December 31, 2012: JPY3,188 million (up 33.9% YoY)
Nine Months Ended December 31, 2011: JPY2,380 million (up 22.3% 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
  JPY JPY
Nine Months Ended December 31, 2012 76.78 76.72
Nine Months Ended December 31, 2011 58.95 58.93
(Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. Accordingly, basic net income attributable to IIJ per share and diluted net income attributable to IIJ per share have been calculated as if the stock split was conducted at the beginning of the previous consolidated fiscal year.
 
(2) Consolidated Financial Position
  Total Assets Total Equity Total IIJ Shareholders' Equity Total IIJ Shareholders' Equity to Total Assets
  JPY millions JPY millions JPY millions %
As of December 31, 2012 75,892 35,218 35,196 46.4
As of March 31, 2012 73,493 32,696 32,688 44.5
 
2. Dividends
  Dividend per Shares
  1Q-end 2Q-end 3Q-end Year-end Total
  JPY JPY JPY JPY JPY
Fiscal Year Ended March 31, 2012 -- 1,500.00 -- 1,750.00 3,250.00
Fiscal Year Ending March 31, 2013 -- 1,750.00 --    
Fiscal Year Ending March 31, 2013  (Forecast)       10.00 1,760.00
(Note1) Changes in the latest forecasts released: Yes
(Note2) The year-end dividend forecast for fiscal year ending March 31, 2013 reflects the stock split effective on October 1, 2012. For details, please refer to the "4. Others (4) Others" of this document.
      
  3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2013 (April 1, 2012 through March 31, 2013)    (% shown is YoY change)
  Total Revenues Operating Income Income before Income Tax Expense (Benefit) Net Income Attributable to IIJ Basic Net Income attributable to IIJ per Share
  JPY millions % JPY millions % JPY millions % JPY millions % JPY
Fiscal Year Ending March 31, 2013 107,000 10.0 7,500 18.0 6,900 15.5 4,000 9.9 98.68
(Note1) Changes in the latest target released: None
(Note2) Basic net income attributable to IIJ per share for the fiscal year ending March 31, 2013 reflects the stock split effective on October 1, 2012.

4. Others

(1) Changes in Significant Subsidiaries for the Nine Months Ended December 31, 2012

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