TOKYO, Feb. 08, 2017 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ") (NASDAQ:IIJI) (TSE:3774) today announced its consolidated financial results for the nine months of the fiscal year ending March 31, 2017 ("3Q16", from April 1, 2016 to December 31, 2016). 1
Highlights of Financial Results for 3Q16
 
Revenues JPY113,602 million (up 14.3% YoY)
Operating Income  JPY3,155 million (down 22.5% YoY)
Net Income attributable to IIJ  JPY1,910 million (down 25.8% YoY)

Overview of 3Q16 Financial Results and Business Outlook

"Our continuous business and service developments are reflected in our strong revenue accumulation. 3Q16 three-month revenue growth year over year was 16.0%: 2Q16 12.0%, 1Q16 15.0%, 4Q15 17.2% and 3Q15 11.0%. We continue to focus on investing in the fields of cloud, mobile, security, and next generation network usage such as IoT and BigData. Mainly due to the overall cost increase along with the recent aggressive business investments and the deterioration of systems integration gross margin from 1H16 2, 3Q16 nine-month operating income decreased year over year," said Eijiro Katsu, President and COO of IIJ.

"Mobile services continued to be a leading revenue growth driver. 3Q16 nine-month revenue grew by 78.0% year over year to JPY19.1 billion and the total subscription as of 3Q16-end reached to 1.7 million, an increase of 59.4% year over year. Transactions by our 124 MVNE clients, including MVNOs, prominent retailers, and many cable TV operators, continued to expand. Other contributing factors for the strong 3Q16 revenue growth were an export project of our container type data center to the Republic of Laos 3 and continuous revenue accumulation of cloud services and non-mobile network services," said Katsu.

"We're making continuous progresses of our business developments this fiscal year. We'll be the first Japanese full-MVNO service provider as we aim to capture enterprises' mobile needs such as IoT and BigData type of usages which are expected to be implemented much more widely in the near future. We established a joint venture 4 with a major Japanese broadcasting company, Nippon Television Netowrk Corporation, to become a main CDN 5 provider in the coming age of Internet-based broadcasting including 4K. Regarding security services, we further enhanced "IIJ DDoS Protection Services" by constructing worldwide network systems to protect our clients from global DDoS attacks. We launched "IIJ IoT Services," packaged service offering necessary function to build IoT systems. We believe our recent actions shall make our role and value as a service platform provider of network, cloud, mobile, security and network outstanding in the middle to long term. We also expect that expansion of service revenues from these continuous business developments should generate continuous gross margin improvement which leads to operating income growth going forward," concluded Koichi Suzuki, Founder, Chairman and CEO of IIJ.

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.

2 For details on our downward revision for FY2016 financial target, please refer to our press release titled "IIJ Revises its First Half and Full-Year Financial Targets for FY2016" which can be found at http://www.iij.ad.jp/en/ir/news/2016/pdf/FY16revision_E.pdf

3 For details on our involvement on Laos project, please refer to our press release titled "'Lao PDR Energy Efficient Datacenter Project' Cloud Datacenter Using Joint crediting Mechanism Starts Demonstration Operation" which can be found at http://www.iij.ad.jp/en/news/pressrelease/2016/1130.html

4 For details on the establishment of the joint venture, please refer to our press release titled "IIJ and Nippon TV to Establish a Joint Venture for Video Distribution Platforms" which can be found at http://www.iij.ad.jp/en/news/pressrelease/2016/1201.html

5 CDN (Contents Distribution Network) is an optimized network to distribute contents such as pictures and videos.

3Q16 Financial Results Summary
Operating Results Summary
  3Q15 3Q16 YoY Change
  JPY millions JPY millions %
Total revenues 99,382 113,602 14.3  
Network services 58,216 68,481 17.6  
Systems integration (SI) 35,921 39,858 11.0  
Equipment sales 2,365 2,207 (6.6 )
ATM operation business 2,880 3,056 6.1  
Total costs 81,589 95,772 17.4  
Network services 47,079 56,274 19.5  
Systems integration (SI) 30,455 35,644 17.0  
Equipment sales 2,125 2,024 (4.7 )
ATM operation business 1,930 1,830 (5.2 )
Total gross margin 17,793 17,830 0.2  
Network services 11,137 12,207 9.6  
Systems integration (SI) 5,467 4,214 (22.9 )
Equipment sales 239 183 (23.5 )
ATM operation business 950 1,226 29.0  
SG&A expenses and R&D 13,720 14,675 7.0  
Operating income 4,073 3,155 (22.5 )
Income before income tax expense 4,178 3,433 (17.8 )
Net income attributable to IIJ 2,573 1,910 (25.8 )

Segment Results Summary
  3Q15 3Q16
  JPY millions JPY millions
Total revenues 99,382   113,602  
Network services and SI business 96,789   110,831  
ATM operation business 2,880   3,056  
Elimination (287 ) (285 )
Operating income 4,073   3,155  
Network service and SI business 3,356   2,178  
ATM operation business 819   1,088  
Elimination (102 ) (111 )

We have omitted segment analysis because most of our revenues are dominated by network services and systems integration (SI) business.

3Q16 Revenues and Income

Revenues

Total revenues were JPY113,602 million, up 14.3% YoY (JPY99,382 million for 3Q15).

Network services revenue was JPY68,481 million, up 17.6% YoY (JPY58,216 million for 3Q15).

Revenues for Internet connectivity services for enterprise were JPY16,461 million, up 27.9% YoY from JPY12,871 million for 3Q15 mainly due to an increase in mobile-related services revenues along with an expansion of MVNE business clients' business transaction.

Revenues for Internet connectivity services for consumers were JPY15,903 million, up 48.5% YoY from JPY10,708 million for 3Q15, mainly due to the revenue growth of "IIJmio Mobile Services," consumer mobile services which offer inexpensive data communication and voice services with SIM cards.

Revenues for WAN services were JPY19,848 million, up 5.4% YoY compared to JPY18,826 million for 3Q15.

Revenues for Outsourcing services were JPY16,269 million, up 2.9% YoY from JPY15,811 million for 3Q15.
Network Services Revenues Breakdown
  3Q15 3Q16 YoY %Change
  JPY millions JPY millions  
Internet connectivity services (Enterprise) 12,871 16,461 27.9  
IP service*1 7,219 7,331 1.5  
IIJ FiberAccess/F and IIJ DSL/F 2,309 2,279 (1.3 )
IIJ Mobile service (Enterprise) 3,140 6,680 112.8  
IIJ Mobile MVNO Platform Service*2 1,283 4,358 239.5  
Others 203 171 (15.8 )
Internet connectivity services (Consumer) 10,708 15,903 48.5  
IIJ 8,767 14,290 63.0  
IIJmio Mobile Service*3 7,595 12,437 63.7  
hi-ho 1,941 1,613 (16.9 )
WAN services 18,826 19,848 5.4  
Outsourcing services 15,811 16,269 2.9  
Total network services 58,216 68,481 17.6  

*1. IP service revenues include revenues from the data center connectivity service.*2. From 1Q16, the revenue from "IIJ Mobile MVNO Platform Service", which is included in "IIJ Mobile service (Enterprise)," is disclosed. "IIJ Mobile MVNO Platform Service" provides MVNO platform to our MVNE clients.*3. From 1Q16, the revenue from "IIJmio Mobile Service" (formerly known as "IIJmio High Speed Mobile Service" until September 30, 2016), which is included in "Internet connectivity services (Consumer)" provided by IIJ, is disclosed.
Number of Contracts and Subscription for Connectivity Services*1
  as ofDec. 31, 2015 as of Dec. 31, 2016 YoY Change
Internet connectivity services (Enterprise) 412,615 824,546 411,931  
IP service (1Gbps-) 342 413 71  
IP service (100Mbps-999Mbps) 518 577 59  
IP service (-99Mbps) 702 622 (80 )
IIJ Data center connectivity service 272 258 (14 )
IIJ FiberAccess/F and IIJ DSL/F 74,326 72,132 (2,194 )
IIJ Mobile service (Enterprise) 335,193 749,484 414,291  
IIJ Mobile MVNO Platform Service*2 181,859 501,374 319,515  
Others 1,262 1,060 (202 )
Internet connectivity services (Consumer) 1,165,667 1,377,529 211,862  
IIJ 1,015,994 1,241,399 225,405  
IIJmio Mobile Service*3 685,044 912,394 227,350  
hi-ho 149,673 136,130 (13,543 )
Total contracted bandwidth*4 2,089.9Gbps 2,636.7Gbps 546.8Gbps

*1. Numbers in the table above show number of contracts except for "IIJ Mobile service (Enterprise)," "IIJ" and "hi-ho" which show number of subscriptions.

*2. From 1Q16, the number of subscription for "IIJ Mobile MVNO Platform Service", which is included in "IIJ Mobile service (Enterprise)", is disclosed.

*3. From 1Q16, the number of subscription for "IIJmio Mobile Service" (formerly known as "IIJmio High Speed Mobile Service" until September 30, 2016), which is included in "Internet connectivity services (Consumer)" provided by IIJ, is disclosed.

*4. Regarding IP service, data center connectivity service and IIJ FiberAccess/F and IIJ DSL/F of Internet connectivity services (Enterprise), total contracted bandwidths are calculated by multiplying number of contracts by contracted bandwidths respectively.

SI revenues were JPY39,858 million, up 11.0% YoY (JPY35,921 million for 3Q15).

Systems construction revenue, a one-time revenue, was JPY13,973 million, up 21.0% YoY, mainly due to the revenue recognition of an export project of our container type data center in 3Q16. Systems operation and maintenance revenue, a recurring revenue, was JPY25,885 million, up 6.2% YoY, mainly due to an increase in private cloud services' revenues although certain relatively large systems operation and maintenance projects were cancelled in 1H16.

Orders received for SI and equipment sales totaled JPY51,730 million, up 19.6% YoY; orders received for systems construction and equipment sales were JPY21,031 million, up 4.3% YoY and orders received for systems operation and maintenance were JPY30,699 million, up 33.0% YoY.

Order backlog for SI and equipment sales as of December 31, 2016 amounted to JPY43,309 million, up 27.3% YoY; order backlog for systems construction and equipment sales was JPY10,928 million, down 0.5% YoY and order backlog for systems operation and maintenance was JPY32,381 million, up 40.6% YoY.

Equipment sales revenues were JPY2,207 million, down 6.6% YoY (JPY2,365 million for 3Q15).

ATM operation business revenues were JPY3,056 million, up 6.1% YoY (JPY2,880 million for 3Q15). As of December 31, 2016, 1,066 ATMs have been placed.

Cost and expense

Total cost of revenues was JPY95,772 million, up 17.4% YoY (JPY81,589 million for 3Q15).

Cost of network services revenue was JPY56,274 million, up 19.5% YoY (JPY47,079 million for 3Q15). There were an increase in outsourcing-related costs with our mobile infrastructure enhancement along with our mobile-related revenue increase, an increase in circuit-related costs along with our WAN services revenue increase, and an increase in network operation-related costs with our network enhancement and the launch of "IIJ Omnibus Service." Gross margin was JPY12,207 million, up 9.6% YoY and gross margin ratio was 17.8% compared to 19.1% in 3Q15.

Cost of SI revenues was JPY35,644 million, up 17.0% YoY (JPY30,455 million for 3Q15). There were an increase in outsourcing-related and purchasing costs along with our SI revenue increase, an increase in personnel-related, and an increase in network operation-related costs mainly along with the launch of "IIJ GIO Infrastructure P2." Gross margin was JPY4,214 million, down 22.9% YoY and gross margin ratio was 10.6% compared to 15.2% in 3Q15. It was mainly due to profit deterioration of our cloud-related services and especially 1H16 profit deterioration resulted from low productivity of systems engineers and the delay in offering some functions of our ASP-type foreign exchange system.

Cost of equipment sales revenues was JPY2,024 million, down 4.7% YoY (JPY2,125 million for 3Q15). Gross margin was JPY183 million (JPY239 million for 3Q15) and gross margin ratio was 8.3% compared to 10.1% in 3Q15.

Cost of ATM o peration b usiness revenues was JPY1,830 million, down 5.2% YoY (JPY1,930 million for 3Q15). Gross margin was JPY1,226 million (JPY950 million for 3Q15) and gross margin ratio was 40.1% compared to 33.0% in 3Q15.

SG&A and R&D expenses

SG&A and R&D expenses in total were JPY14,675 million, up 7.0% YoY (JPY13,720 million for 3Q15).

Sales and marketing expenses were JPY8,392 million, up 7.0% YoY (JPY7,842 million for 3Q15) mainly due to increases in sales commission expenses and advertising expenses.

General and administrative expenses were JPY5,928 million, up 7.2% YoY (JPY5,532 million for 3Q15) mainly due to increases in office rent expenses, commission expenses and taxes and public dues.

Research and development expenses were JPY355 million, up 2.5% YoY (JPY346 million for 3Q15).

Operating income

Operating income was JPY3,155 million, down 22.5% YoY (JPY4,073 million for 3Q15).

Other income (expenses)

Other income (expenses) was an income of JPY278 million (an income of JPY105 million for 3Q15), mainly because of net gain on sales of other investments of JPY214 million (JPY24 million for 3Q15), distribution from fund investment of JPY208 million (included in other-net, JPY144 million for 3Q15), dividend income of JPY106 million from other investments (JPY88 million for 3Q15), interest expense of JPY218 million (JPY171 million for 3Q15) and foreign exchange losses of JPY23 million (JPY11 million for 3Q15).

Income before income tax expenses

Income before income tax expenses was JPY3,433 million, down 17.8% YoY (JPY4,178 million for 3Q15).

Net income

Income tax expense was JPY1,466 million (JPY1,697 million for 3Q15).

Equity in net income of equity method investees was JPY69 million (JPY207 million for 3Q15) mainly due to net income of Internet Multifeed Co.

As a result of the above, net income was JPY2,036 million, down 24.2% YoY (JPY2,688 million for 3Q15).

Net income attributable to IIJ

Net income attributable to non-controlling interests was JPY126 million mainly related to net income of Trust Networks Inc. (JPY115 million for 3Q15).

Net income attributable to IIJ was JPY1,910 million, down 25.8% YoY (JPY2,573 million for 3Q15).

3Q16 Balance Sheets and Cash Flows

Balance sheets

As of December 31, 2016, the balance of total assets was JPY130,915 million, increased by JPY13,081 million from the balance as of March 31, 2016 of JPY117,835 million.

As of December 31, 2016, the balance of current assets was JPY60,683 million, increased by JPY7,277 million from the balance as of March 31, 2016 of JPY53,406 million. The major breakdown of current assets was an increase in prepaid expenses by JPY2,410 million to JPY7,180 million, an increase in cash and cash equivalents by JPY1,697 million to JPY21,266 million and an increase in inventories by JPY1,572 million to JPY3,576 million. As of December 31, 2016, the balance of noncurrent assets was JPY70,233 million, increased by JPY5,804 million from the balance as of March 31, 2016 of JPY64,429 million. The major breakdown of noncurrent assets was an increase in property and equipment by JPY2,757 million to JPY37,081 million, an increase in other investments by JPY1,362 million to JPY7,310 million mainly due to change an increase in the fair value of available-for-sale securities, and increase in prepaid expenses-noncurrent by JPY1,291 million to JPY6,278 million. Other investments as of December 31, 2016, mainly consisted of JPY5,258 million in available-for-sale securities (including JPY4,920 million of strategic shareholdings), JPY1,124 million in nonmarketable equity securities and JPY929 million in investments in funds, including some through a trust. As of December 31, 2016, the major breakdown of non-amortized intangible assets was JPY6,170 million in goodwill and JPY96 million in trademark. The balance of amortized intangible assets, which was customer relationships, was JPY3,132 million.

As of December 31, 2016, the balance of current liabilities was JPY36,219 million, increased by JPY153 million from the balance as of March 31, 2016 of JPY36,066 million mainly due to an increase in capital lease obligations-current portion by JPY524 million to JPY4,479 million. As of December 31, 2016, the balance of noncurrent liabilities was JPY28,931 million, increased by JPY12,506 million from the balance as of March 31, 2016 of JPY16,425 million. The major breakdown of noncurrent liabilities was an increase in long-term borrowings by JPY8,500 million to JPY8,500 million and an increase in capital lease obligations-noncurrent by JPY1,752 million to JPY9,532 million.

As of December 31, 2016, the balance of total IIJ shareholders' equity was JPY65,167 million, increased by JPY322 million from the balance as of March 31, 2016 of JPY64,845 million. There was an increase in treasury stock by JPY982 million to JPY1,374 million due to the repurchase of own shares, authorized at the meeting of IIJ's Board of Directors held on November 4, 2016. IIJ shareholders' equity ratio (total IIJ shareholders' equity divided by total assets) as of December 31, 2016 was 49.8%.

Cash flows

Cash and cash equivalents as of December 31, 2016 were JPY21,266 million (JPY18,234 million as of December 31, 2015).

Net cash provided by operating activities for 3Q16 was JPY4,408 million (net cash provided by operating activities of JPY7,811 million for 3Q15.) There were net income of JPY2,036 million, depreciation and amortization of JPY8,006 million and net cash out flow of JPY5,979 million from changes in operating assets and liabilities. As for changes in operating assets and liabilities, there were an increase in prepaid expenses (including prepaid expenses-noncurrent) in relation to up front payment for software licenses and maintenance cost for service facilities, an increase in inventories due to the increase in systems construction projects, an increase in prepaid expenses for seasonal bonus payments to our employees and an increase mainly in accounts receivable in relation to an export project of our container type data center in 3Q16.

Net cash used in investing activities for 3Q16 was JPY5,389 million (net cash used in investing activities of JPY6,634 million for 3Q15), mainly due to payments for purchase of property and equipment of JPY7,940 million (JPY8,454 million for 3Q15) and proceeds from sales of property and equipment, which include sales and leaseback, of JPY2,219 million (JPY1,093 million for 3Q15).

Net cash provided by financing activities for 3Q16 was JPY2,831 million (net cash used in financing activities of JPY4,047 million for 3Q15), mainly due to proceeds from long-term borrowings of JPY8,500 million, principal payments under capital leases of JPY3,535 million (JPY3,040 million for 3Q15), FY2015 year-end and FY2016 interim dividend payments of JPY1,126 million (JPY1,011 million for 3Q15) and payments for purchase of treasury stock of JPY982 million.

FY2016 Financial Targets

On November 4, 2016, we revised our financial targets for FY2016 which was announced on May 13, 2016. Due to seasonal factors, our fourth quarter revenue and income volume tend to be the largest. Therefore, our financial target announced on November 4, 2016 remain unchanged.

We conducted the repurchase of our own shares which was authorized at the meeting of our Board of Directors held on November 4, 2016. Final results of share repurchase is as follows; period of repurchase: from November 7, 2016 to January 31, 2017, total number of shares repurchased: 892,200 shares, aggregate repurchased amount: JPY1,499,933 thousand.

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
  3Q15 3Q16
  JPY millions JPY millions
Adjusted EBITDA 11,367   11,161  
Depreciation and Amortization (7,294 ) (8,006 )
Operating Income 4,073   3,155  
Other Income 105   278  
Income Tax Expense 1,697   1,466  
Equity in Net Income of Equity Method Investees 207   69  
Net income 2,688   2,036  
Less: Net income attributable to noncontrolling interests (115 ) (126 )
Net Income attributable to IIJ 2,573   1,910  

CAPEX
  3Q15 3Q16
  JPY millions JPY millions
CAPEX, including capital leases 12,211 12,258
Acquisition of Assets by Entering into Capital Leases 3,757 5,843
Purchase of Property and Equipment 8,454 6,415

Presentation

Presentation materials will be posted on our web site (http://www.iij.ad.jp/en/ir/) on February 8, 2017.

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 companies provide total network solutions that mainly cater to high-end corporate customers. IIJ's services include high-quality Internet connectivity services, systems integration, cloud computing services, security services and mobile services. 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.

For inquiries, contact:

IIJ Investor RelationsTel: +81-3-5205-6500 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 FY2016 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.

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Internet Initiative Japan Inc.  
Consolidated Balance Sheets (Unaudited)  
(As of March 31, 2016 and December 31, 2016)  
             
    As of March 31, 2016   As of December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  ASSETS          
  CURRENT ASSETS:          
  Cash and cash equivalents 19,569,095     21,266,218      
  Accounts receivable, net of allowance for doubtful accounts of JPY 74,229 thousand and JPY 82,175 thousand at March 31, 2016 and December 31, 2016, respectively 23,746,683     23,701,119      
  Inventories 2,003,573     3,575,776      
  Prepaid expenses—current 4,769,988     7,180,146      
  Deferred tax assets—current 1,481,651     957,448      
  Other current assets, net of allowance for doubtful accounts of JPY 15,693 thousand and JPY 15,193 thousand at March 31, 2016 and December 31, 2016, respectively 1,834,951     4,001,890      
  Total current assets 53,405,941     60,682,597      
  INVESTMENTS IN EQUITY METHOD INVESTEES 2,979,652     3,061,198      
  OTHER INVESTMENTS 5,948,741     7,310,426      
  PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of JPY 45,345,543 thousand and JPY 49,000,397 thousand at March 31, 2016 and December 31, 2016, respectively 34,324,150     37,081,355      
  GOODWILL 6,169,609     6,169,609      
  OTHER INTANGIBLE ASSETS—Net 3,549,459     3,263,886      
  GUARANTEE DEPOSITS 3,084,681     3,029,012      
  DEFERRED TAX ASSETS—Noncurrent 224,316     171,150      
  NET INVESTMENT IN SALES-TYPE LEASES—Noncurrent 2,444,848     2,044,458      
  Prepaid expenses—Noncurrent 4,987,193     6,277,978      
  OTHER ASSETS, net of allowance for doubtful accounts of JPY 61,593 thousand and JPY 61,610 thousand at March 31, 2016 and December 31, 2016, respectively 716,314     1,823,824      
  TOTAL 117,834,904     130,915,493      
             
             
    As of March 31, 2016   As of December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  LIABILITIES AND SHAREHOLDERS' EQUITY          
  CURRENT LIABILITIES:          
  Short-term borrowings 9,250,000     9,250,000      
  Capital lease obligations—current portion 3,954,386     4,478,624      
  Accounts payable—trade 13,906,703     14,045,710      
  Accounts payable—other 1,497,767     899,852      
  Income taxes payable 1,078,412     310,920      
  Accrued expenses 2,932,653     2,932,400      
  Deferred income—current 2,528,885     2,629,239      
  Other current liabilities 917,300     1,671,891      
  Total current liabilities 36,066,106     36,218,636      
  LONG-TERM BORROWINGS -     8,500,000      
  CAPITAL LEASE OBLIGATIONS—Noncurrent 7,779,367     9,531,762      
  ACCRUED RETIREMENT AND PENSION COSTS—Noncurrent 3,581,426     3,751,911      
  DEFERRED TAX LIABILITIES—Noncurrent 710,055     863,323      
  DEFERRED INCOME—Noncurrent 3,092,562     3,362,629      
  OTHER NONCURRENT LIABILITIES 1,261,413     2,921,230      
  Total Liabilities 52,490,929     65,149,491      
  COMMITMENTS AND CONTINGENCIES          
             
  SHAREHOLDERS' EQUITY:          
  Common-stock—authorized, 75,520,000 shares; issued and outstanding, 46,711,400 shares at March 31, 2016 and December 31, 2016, respectively 25,509,499     25,509,499      
  Additional paid-in capital 36,059,833     36,102,931      
  Retained earnings 2,471,276     3,255,696      
  Accumulated other comprehensive income 1,196,669     1,673,124      
  Treasury stock —758,709 shares and 1,360,809 shares held by the company at March 31, 2016 and December 31, 2016, respectively (392,070 )   (1,374,177 )    
  Total Internet Initiative Japan Inc. shareholders' equity 64,845,207     65,167,073      
  NONCONTROLLING INTERESTS 498,768     598,929      
  Total equity 65,343,975     65,766,002      
  TOTAL 117,834,904     130,915,493      
             
             

 
Internet Initiative Japan Inc.  
Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Unaudited)  
(For the nine months ended December 31, 2015 and December 31, 2016)  
             
             
    Nine Months Ended   Nine Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  REVENUES:          
  Network services:          
  Internet connectivity services (enterprise) 12,870,620     16,461,205      
  Internet connectivity services (consumer) 10,707,905     15,902,952      
  WAN services 18,826,362     19,847,736      
  Outsourcing services 15,810,470     16,268,643      
  Total 58,215,357     68,480,536      
  Systems integration:          
  Systems construction 11,547,216     13,972,807      
  Systems operation and maintenance 24,374,157     25,885,221      
  Total 35,921,373     39,858,028      
  Equipment sales 2,364,695     2,207,649      
  ATM operation business 2,880,146     3,055,739      
  Total revenues 99,381,571     113,601,952      
  COSTS AND EXPENSES:          
  Cost of network services 47,078,490     56,273,528      
  Cost of systems integration 30,454,411     35,644,158      
  Cost of equipment sales 2,125,085     2,024,262      
  Cost of ATM operation business 1,930,186     1,830,095      
  Total costs 81,588,172     95,772,043      
  Sales and marketing 7,842,190     8,392,014      
  General and administrative 5,532,088     5,928,165      
  Research and development 345,878     354,411      
  Total costs and expenses 95,308,328     110,446,633      
  OPERATING INCOME 4,073,243     3,155,319      
  OTHER INCOME (EXPENSES):          
  Dividend income 88,248     106,336      
  Interest income 15,371     26,781      
  Interest expense (170,762 )   (218,204 )    
  Foreign exchange gain (loss), net (11,273 )   (23,072 )    
  Net gain on sales of other investments 23,765     213,938      
  Impairment of other investments -     (30,554 )    
  Other —net 159,048     202,486      
  Other income —net 104,397     277,711      
  INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 4,177,640     3,433,030      
  INCOME TAX EXPENSE  1,696,936     1,465,852      
  EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 206,823     69,244      
  NET INCOME 2,687,527     2,036,422      
  LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (114,704 )   (126,161 )    
  NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. 2,572,823     1,910,261      
             
             
    Nine Months Ended   Nine Months Ended    
    December 31, 2015   December 31, 2016    
  NET INCOME PER SHARE          
  BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 45,949,250     45,846,887      
  DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 46,039,920     45,962,442      
  BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 91,898,500     91,693,774      
  DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 92,079,840     91,924,884      
  BASIC NET INCOME PER SHARE  (JPY) 55.99     41.67      
  DILUTED NET INCOME PER SHARE  (JPY) 55.88     41.56      
  BASIC NET INCOME PER ADS  EQUIVALENT  (JPY) 28.00     20.83      
  DILUTED NET INCOME PER ADS  EQUIVALENT  (JPY) 27.94     20.78      
             
     
  Quarterly Consolidated Statements of Comprehensive Income (Unaudited)        
    Nine Months Ended   Nine Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  NET INCOME 2,687,527     2,036,422      
  OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:          
  Foreign currency translation adjustments (74,544 )   (455,158 )    
  Unrealized holding gain (loss) on securities (85,123 )   920,735      
  Defined benefit pension plans (1,246 )   10,878      
  TOTAL COMPREHENSIVE INCOME  2,526,614     2,512,877      
  LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (118,662 )   (126,161 )    
  COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. 2,407,952     2,386,716      
             

 
   
Internet Initiative Japan Inc.  
Consolidated Statements of Cash Flows (Unaudited)  
(For the nine months ended December 31, 2015 and December 31, 2016)  
             
    Nine Months Ended   Nine Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  OPERATING ACTIVITIES:          
  Net income 2,687,527     2,036,422      
  Adjustments to reconcile net income to net cash provided by operating activities:          
  Depreciation and amortization 7,293,768     8,006,049      
  Provision for retirement and pension costs, less payments 141,614     188,923      
  Provision for allowance for doubtful accounts 26,692     19,989      
  Gain on sales of property and equipment (37,972 )   (15,410 )    
  Loss on disposal of property and equipment 37,345     54,481      
  Net gain on sales of other investments (23,765 )   (213,938 )    
  Impairment of other investments -     30,554      
  Foreign exchange gain, net (24,118 )   (277 )    
  Equity in net income of equity method investees, less dividends received (158,313 )   (18,162 )    
  Deferred income tax expense 308,241     349,735      
  Others (12,709 )   (51,716 )    
  Changes in operating assets and liabilities:          
  Decrease (increase) in accounts receivable 1,985,303     (64,287 )    
  Decrease (increase) in net investment in sales-type lease — noncurrent (17,099 )   400,390      
  Increase in inventories (1,505,965 )   (1,586,556 )    
  Increase in prepaid expenses (1,690,890 )   (2,454,437 )    
  Increase in other current and noncurrent assets (1,297,325 )   (4,534,405 )    
  Increase (decrease) in accounts payable (165,442 )   160,327      
  Increase (decrease) in income taxes payable 10,500     (767,172 )    
  Increase in accrued expenses 228,883     18,639      
  Increase in deferred income—current 405,211     140,038      
  Increase (decrease) in deferred income—noncurrent (175,389 )   302,157      
  Increase (decrease) in other current and noncurrent liabilities (204,940 )   2,406,335      
  Net cash provided by operating activities 7,811,157     4,407,679      
  INVESTING ACTIVITIES:          
  Purchase of property and equipment (8,454,171 )   (7,940,090 )    
  Proceeds from sales of property and equipment 1,093,078     2,219,179      
  Purchase of available-for-sale securities (59,490 )   -      
  Purchase of other investments (273,686 )   (316,171 )    
  Investment in an equity method investee (39,974 )   (99,000 )    
  Proceeds from sales of available-for-sale securities 141,235     -      
  Proceeds from sales of other investments 804,236     534,249      
  Payments of guarantee deposits (21,132 )   (17,102 )    
  Refund of guarantee deposits 9,040     87,704      
  Payments for refundable insurance policies (42,272 )   (42,385 )    
  Refund from insurance policies 10,108     -      
  Proceeds from subsidies 200,000     200,000      
  Other (678 )   (15,000 )    
  Net cash used in investing activities (6,633,706 )   (5,388,616 )    
    Nine Months Ended   Nine Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  FINANCING ACTIVITIES:          
  Proceeds from issuance of short-term borrowings with initial maturities over three months and long-term borrowings 1,550,000     8,550,000      
  Repayments of short-term borrowings with initial maturities over three months (1,550,000 )   (50,000 )    
  Principal payments under capital leases (3,039,877 )   (3,534,887 )    
  Proceeds from issuance of subsidiary stock to noncontrolling interests 3,692     -      
  Payments for purchase of treasury stock -     (982,107 )    
  Dividends paid (1,010,844 )   (1,125,841 )    
  Other 10     (26,000 )    
  Net cash provided by (used in) financing activities (4,047,019 )   2,831,165      
             
  EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 9,673     (153,105 )    
             
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,859,895 )   1,697,123      
  CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 21,093,633     19,569,095      
  CASH AND CASH EQUIVALENTS, END OF THE PERIOD 18,233,738     21,266,218      
             
  ADDITIONAL CASH FLOW INFORMATION:          
  Interest paid 170,903     217,414      
  Income taxes paid 1,392,230     1,961,521      
             
  NONCASH INVESTING AND FINANCING ACTIVITIES:          
  Acquisition of assets by entering into capital leases 3,757,319     5,842,869      
  Facilities purchase liabilities 905,351     899,852      
  Asset retirement obligation 7,349     -      
             
             

  Going Concern Assumption (Unaudited)    
      Nothing to be reported.    
                 
  Material Changes In Shareholders' Equity   (Unaudited)  
      Nothing to be reported.
                 
  Segment Information (Unaudited)    
      Business Segments:    
        Revenues:    
          Nine Months Ended Nine Months Ended
              December 31, 2015 December 31, 2016
              Thousands of JPY Thousands of JPY
        Network service and systems integration business 96,789,223   110,830,849  
          Customers 96,501,425   110,546,213  
          Intersegment 287,798   284,636  
        ATM operation business 2,880,146   3,055,739  
          Customers   2,880,146   3,055,739  
          Intersegment -   -  
        Elimination (287,798 ) (284,636 )
        Consolidated total 99,381,571   113,601,952  
        Segment profit or loss:    
          Nine Months Ended Nine Months Ended
              December 31, 2015 December 31, 2016
              Thousands of JPY Thousands of JPY
        Network service and systems integration business 3,356,483   2,177,784  
        ATM operation business 818,647   1,088,056  
        Elimination (101,887 ) (110,521 )
        Consolidated operating income 4,073,243   3,155,319  
                 
        Geographic information is not presented due to immateriality of revenue attributable to international operations.
                 
  Subsequent Events (Unaudited)    
      Nothing to be reported.    
                 

Third Quarter FY2016 Consolidated Financial Results (3 months)

The following tables are highlight data of 3rd Quarter FY2016 (3 months) consolidated financial results (unaudited, for the three months ended December 31, 2016).
Operating Results Summary
  3Q15 3Q16 YoY % Change
  JPY millions JPY millions  
Total Revenues: 34,048 39,479 16.0  
Network Services 20,216 23,645 17.0  
Systems Integration (SI) 12,196 14,090 15.5  
Equipment Sales 726 741 2.0  
ATM Operation Business 910 1,003 10.3  
Cost of Revenues: 27,962 33,497 19.8  
Network Services 16,577 19,558 18.0  
Systems Integration (SI) 10,114 12,651 25.1  
Equipment Sales 645 681 5.6  
ATM Operation Business 626 607 (3.1 )
SG&A Expenses and R&D 4,576 4,774 4.3  
Operating Income 1,510 1,208 (20.0 )
Income before Income Tax Expense 1,531 1,328 (13.3 )
Net Income attributable to IIJ 920 802 (12.8 )

Network Service Revenue Breakdown
  3Q15 3Q16 YoY % Change
  JPY millions JPY millions  
Internet Connectivity Service (Enterprise) 4,514 5,884 30.4  
IP Service*1 2,446 2,457 0.5  
IIJ FiberAccess/F and IIJ DSL/F 771 762 (1.2 )
IIJ Mobile Service 1,228 2,608 112.4  
IIJ Mobile MVNO Platform Service*2 584 1,784 205.7  
Others 69 57 (17.8 )
Internet Connectivity Service (Consumer) 4,111 5,575 35.6  
IIJ 3,491 5,064 45.0  
IIJmio Mobile Service*3 3,031 4,402 45.2  
hi-ho 620 511 (17.6 )
WAN Services 6,269 6,559 4.6  
Outsourcing Services 5,322 5,627 5.7  
Network Services Revenues 20,216 23,645 17.0  

*1 IP service revenues include revenues from the data center connectivity service.*2 From 1Q16, the revenue from "IIJ Mobile MVNO Platform Service", which is included in "IIJ Mobile service (Enterprise)," is disclosed. "IIJ Mobile MVNO Platform Service" provides MVNO platform to our MVNE clients.*3 From 1Q16, the revenue from "IIJmio Mobile Service" (formerly known as "IIJmio High Speed Mobile Service" until September 30, 2016), which is included in "Internet connectivity services (Consumer)" provided by IIJ, is disclosed.

Reconciliation of Non-GAAP Financial Measures (3rd Quarter FY2016 (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
  3Q15 3Q16
  JPY millions JPY millions
Adjusted EBITDA 4,004   3,930  
Depreciation and Amortization (2,494 ) (2,722 )
Operating Income 1,510   1,208  
Other Income 21   120  
Income Tax Expense 657   512  
Equity in Net Income of Equity Method Investees 69   27  
Net income 943   843  
Less: Net income attributable to noncontrolling interests (23 ) (41 )
Net Income attributable to IIJ 920   802  

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
  3Q15 3Q16
  JPY millions JPY millions
CAPEX, including capital leases 4,268 3,886
Acquisition of Assets by Entering into Capital Leases 1,135 2,051
Purchase of Property and Equipment 3,133 1,835

   
Internet Initiative Japan Inc.  
Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income (Unaudited)  
(Three Months ended December 31, 2015 and December 31, 2016)  
               
    Three Months Ended   Three Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  REVENUES:            
  Network services:            
  Internet connectivity services (enterprise) 4,513,952       5,884,331      
  Internet connectivity services (consumer) 4,111,346       5,574,632      
  WAN services 6,268,555       6,559,024      
  Outsourcing services 5,321,941       5,626,783      
  Total 20,215,794       23,644,770      
  Systems integration:            
  Systems construction 3,904,016       5,389,388      
  Systems operation and maintenance 8,291,772       8,700,314      
  Total 12,195,788       14,089,702      
  Equipment sales 726,672       740,991      
  ATM operation business 909,583       1,003,219      
  Total revenues 34,047,837       39,478,682      
  COST AND EXPENSES:            
  Cost of network services 16,577,185       19,558,238      
  Cost of systems integration 10,113,828       12,651,235      
  Cost of equipment sales 644,961       681,145      
  Cost of ATM operation business 626,050       606,601      
  Total costs 27,962,024       33,497,219      
  Sales and marketing 2,676,708       2,756,066      
  General and administrative 1,785,263       1,907,809      
  Research and development 113,684       109,971      
  Total costs and expenses 32,537,679       38,271,065      
  OPERATING INCOME 1,510,158       1,207,617      
  OTHER INCOME (EXPENSE):            
  Dividend income 14,040       14,929      
  Interest income 4,259       8,263      
  Interest expense (59,202 )     (75,859 )    
  Foreign exchange gain (loss), net 2,793       82,844      
  Net gain on sales of other investments 23,765       -      
  Other—net 34,870       89,881      
  Other income —net 20,525       120,058      
  INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 1,530,683       1,327,675      
  INCOME TAX EXPENSE 657,051       512,174      
  EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES 69,422       27,598      
  NET INCOME 943,054       843,099      
  LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (22,730 )     (40,772 )    
  NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. 920,324       802,327      
               
    Three Months Ended   Three Months Ended    
    December 31, 2015   December 31, 2016    
  NET INCOME PER SHARE        
  BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 45,952,691     45,636,429      
  DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) 46,048,049     45,758,296      
  BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 91,905,382     91,272,858      
  DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) 92,096,098     91,516,592      
  BASIC NET INCOME PER SHARE  (JPY) 20.03     17.58      
  DILUTED NET INCOME PER SHARE  (JPY) 19.99     17.53      
  BASIC NET INCOME PER ADS EQUIVALENT (JPY) 10.01     8.79      
  DILUTED NET INCOME PER ADS EQUIVALENT (JPY) 9.99     8.77      
               
               
  Quarterly Consolidated Statements of Comprehensive Income (Unaudited)          
    Three Months Ended   Three Months Ended    
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  NET INCOME 943,054     843,099      
  OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:          
  Foreign currency translation adjustments (95,236 )   (45,068 )    
  Unrealized holding gain (loss) on securities 90,452     469,974      
  Defined benefit pension plans (415 )   3,626      
  TOTAL COMPREHENSIVE INCOME  937,855     1,271,631      
  LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (22,730 )   (40,772 )    
  COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN INC. 915,125     1,230,859      

 
     
Internet Initiative Japan Inc.  
Quarterly Consolidated Statements of Cash Flows (Unaudited)  
(Three Months ended December 31, 2015 and December 31, 2016)  
             
    Three Months Ended   Three Months Ended     
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  OPERATING ACTIVITIES:          
  Net income 943,054     843,099      
  Adjustments to reconcile net income to net cash provided by operating activities:          
  Depreciation and amortization 2,493,478     2,722,545      
  Provision for retirement and pension costs, less payments 71,204     66,477      
  Provision for allowance for doubtful accounts 3,380     14,856      
  Gain on sales of property and equipment (17,030 )   (7,706 )    
  Loss on disposal of property and equipment 5,493     18,825      
  Net gain on sales of other investments (23,765 )   -      
  Foreign exchange gain, net (25,102 )   (83,375 )    
  Equity in net income of equity method investees, less dividends received (69,422 )   (27,598 )    
  Deferred income tax expense 190,568     66,553      
  Other 2,337     (46,536 )    
  Changes in operating assets and liabilities:          
  Increase in accounts receivable (179,928 )   (560,123 )    
  Decrease (increase) in net investment in sales-type lease — noncurrent (13,836 )   101,218      
  Increase in inventories (676,714 )   (874,042 )    
  Increase in prepaid expenses (523,982 )   (1,046,904 )    
  Increase in other current and noncurrent assets (1,012,756 )   (2,849,833 )    
  Increase (decrease) in accounts payable 187,324     (357,834 )    
  Decrease in income taxes payable (289,427 )   (174,286 )    
  Increase in accrued expenses 68,502     65,056      
  Increase in deferred income—current 191,119     92,031      
  Increase (decrease) in deferred income—noncurrent (111,647 )   178,857      
  Increase in other current and noncurrent liabilities 518,229     2,193,546      
  Net cash provided by operating activities 1,731,079     334,826      
  INVESTING ACTIVITIES:          
  Purchase of property and equipment (3,132,977 )   (2,581,985 )    
  Proceeds from sales of property and equipment 603,115     1,009,711      
  Purchase of other investments (26,704 )   (29,113 )    
  Investment in an equity method investee -     (99,000 )    
  Proceeds from sales of other investments 501,330     229,707      
  Payments of guarantee deposits (4,070 )   (2,699 )    
  Refund of guarantee deposits 4,722     10,228      
  Payments for refundable insurance policies (14,091 )   (14,204 )    
  Other -     (15,000 )    
  Net cash used in investing activities (2,068,675 )   (1,492,355 )    
    Three Months Ended   Three Months Ended     
    December 31, 2015   December 31, 2016    
    Thousands of JPY   Thousands of JPY    
  FINANCING ACTIVITIES:          
  Proceeds from issuance of short-term borrowings with initial maturities over three months and long-term borrowings 50,000     5,550,000      
  Repayments of short-term borrowings with initial maturities over three months (50,000 )   (50,000 )    
  Principal payments under capital leases (1,020,122 )   (1,221,124 )    
  Proceeds from issuance of subsidiary stock to noncontrolling interests 3,692     -      
  Payments for purchase of treasury stock -     (982,107 )    
  Dividends paid (505,479 )   (620,361 )    
  Net cash used in financing activities (1,521,909 )   2,676,408      
             
  EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (5,226 )   79,517      
             
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,864,731 )   1,598,396      
  CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 20,098,469     19,667,822      
  CASH AND CASH EQUIVALENTS, END OF THE PERIOD 18,233,738     21,266,218      
             

Note: The following information is provided to disclose Internet Initiative Japan Inc. ("IIJ") financial results (unaudited) for the nine months ended December 31, 2016 ("3Q16") in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Nine Months ended December 31, 2016 [Under accounting principles generally accepted in the United States ("U.S. GAAP")]

February 8, 2017Company name: Internet Initiative Japan Inc.Exchange listed: Tokyo Stock Exchange First SectionStock code number: 3774URL: http://www.iij.ad.jp/Representative: Eijiro Katsu, President and Representative DirectorContact: Akihisa Watai, Managing Director and CFOTEL: (03) 5205-6500Scheduled date for filing of quarterly report ( Shihanki -houkokusho) to Japan's regulatory organization: February 14, 2017Scheduled date for dividend payment: -Supplemental material on annual results: YesPresentation on quarterly report: 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, 2016 (April 1, 2016 to December 31, 2016)
(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 EndedDecember 31, 2016 113,602 14.3 3,155 (22.5 ) 3,433 (17.8 ) 1,910 (25.8 )
Nine Months EndedDecember 31, 2015 99,382 13.1 4,073 7.6   4,178 7.4   2,573 11.2  

(Note1) Total comprehensive income attributable to IIJ
  For the nine months ended December 31, 2016: JP2,387 million (down 0.9% YoY)
  For the nine months ended December 31, 2015: JPY2,408 million (up 3.7% 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 incomeattributable to IIJ per share Diluted net incomeattributable to IIJ per share
  JPY JPY
Nine Months EndedDecember 31, 2016 41.67 41.56
Nine Months EndedDecember 31, 2015 55.99 55.88

(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, 2016 130,915 65,766 65,167 49.8
As of March 31, 2016 117,835 65,344 64,845 55.0

2. Dividends
  Dividend per Shares
1Q-end 2Q-end 3Q-end Year-end Total
  JPY JPY JPY JPY JPY
Fiscal Year Ended March 31, 2016 - 11.00 - 11.00 22.00
Fiscal Year Ended March 31, 2017 - 13.50 -    
Fiscal Year Ending March 31, 2017(forecast)       13.50 27.00

(Note) Change from the latest released dividend forecasts: No.

3. Target of Consolidated Financial Results for the Fiscal Year Ending March 31, 2017

(April 1, 2016 through March 31, 2017)         (% shown is YoY change)
  Total Revenues Operating Income Income beforeIncome Tax Expense (Benefit) Net Incomeattributable to IIJ Basic Net Incomeattributable to IIJper Share
  JPY millions % JPY millions % JPY millions % JPY millions % JPY
Fiscal Year EndingMarch 31, 2017 158,000 12.3 5,000 (18.6 ) 5,100 (17.7 ) 3,000 (25.7 ) 65.71

(Note1) Changes from the latest forecasts released: No

* Notes
(1 ) Changes in significant subsidiaries for the nine months ended December 31, 2016
  (Changes in significant subsidiaries for the nine months ended December 31, 2016 which resulted in changes in scope of consolidation): None
   
(2 ) Application of simplified or exceptional accounting: No
 
(3 ) 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
 
(4 ) Number of shares outstanding (shares of common stock)
  1) The number of shares outstanding (inclusive of treasury stock):
  As of December 31, 2016: 46,711,400 shares
  As of March 31, 2016: 46,711,400 shares
  2) The number of treasury stock:
  As of December 31, 2016: 1,360,809 shares
  As of March 31, 2016: 758,709 shares
  3) The weighted average number of shares outstanding:
  For the nine months ended December 31, 2016: 45,846,887 shares
  For the nine months ended December 31, 2015: 45,949,250 shares
 
(5 ) Regarding the basic net income attributable to IIJ per share and the repurchase of own shares:
  The basic net income attributable to IIJ per share for the fiscal year ending March 31, 2017 disclosed in this document was calculated by taking the repurchase of own shares into consideration. (Period of repurchase: from November 7, 2016 to January 31, 2017, total number of shares repurchased: 892,200 shares, total amount repurchased: JPY1,499,933 thousand.)

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