IIJ Announces 4th Quarter and Full Fiscal Year 2002 Results; Record Quarterly and Annual Revenues Surpass Expectations.Business Editors/High-Tech Writers TOKYO & NEW YORK--(BUSINESS WIRE)--May 20, 2003 Expected Continued Revenue Growth and Positive Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in 2003 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Initiative Japan Inc. (Nasdaq:IIJI IIJI Internet Initiative Japan, Inc. ) (IIJ IIJ Internet Initiative Japan IIJ Internet Initiative Japan Inc. (Internet Service Provider) IIJ Indo-Iranian Journal IIJ Is It Jazz (Boston band) ), one of Japan's leading Internet access See how to access the Internet. and comprehensive network solutions providers, today announced its financial results for the 4th quarter and full fiscal year 2002, ending March 31, 2003 ("fiscal 2002"). On May 21 at 9:00 am (EST EST electroshock therapy. EST abbr. electroshock therapy ), the Company will host a conference call to discuss the results and its outlook. There will be a simultaneous webcast available at www.vcall.com. A replay will also be available at the same URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. .
The 4th Quarter and full fiscal year 2002 Results Summary
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4th Quarter 2002:
Revenues totaled JPY 13 billion ($ 110 million), an increase of
7.7% compared to 4Q01 and 23.4% from 3Q02. Despite the lethargic
Japanese economy, IIJ was able to maintain its steady growth,
surpass guidance and achieve the highest total revenue amount in
the Company's history.
Operating loss narrowed to JPY 446 million ($ 3.8 million) from
JPY 567 million in 3Q02. This compares to a profit of JPY 186
million in 4Q01. The 4Q02 results include a non-recurring expense
related to the IIJ Group's move to its new headquarters in March.
Adjusted EBITDA(1) was JPY 459 million ($ 3.9 million), a
decrease of 52.6% compared to 4Q01 and an increase of 31.5% from
3Q02.
Full fiscal year 2002:
Revenues increased to JPY 44 billion ($ 373 million), a 10.3%
increase from the previous year, which was in line with our
guidance.
Operating loss was JPY 1.7 billion ($ 14 million).
Adjusted EBITDA was JPY 1.8 billion ($ 15 million).
Outlook:
For the 2003 fiscal year, IIJ expects total revenues to grow by
more than 10% compared to fiscal 2002. The Company also
anticipates that operating margins will move into positive
territory.
IIJ expects to raise additional equity capital on June 6, 2003.
We believe that the equity capital financing in a private
placement will provide IIJ with the financial means to continue
the implementation of its growth strategy.
(1) Adjusted EBITDA represents operating income (loss) plus
depreciation and amortization. Adjusted EBITDA is provided because
it is a measure commonly used by investors to analyze and compare
companies on the basis of operating performance. Adjusted EBITDA is
not a measurement of financial performance under generally accepted
accounting principles and should not be construed as a substitute
for operating income, net income or cash flows from operating
activities for purposes of analyzing our operating performance,
financial position and cash flows. Our adjusted EBITDA is not
necessarily comparable with similarly titled measures for other
companies.
Note: Translations of Japanese yen amounts into US dollars are solely
for the convenience of readers outside of Japan and have been made
at the rate of JPY118.07 = US$1, the approximate exchange rate on
March 31, 2003.
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Overview of 4Q02 and full fiscal year 2002 Results and Business Outlook Overview "Despite a difficult economic climate in fiscal 2002, IIJ has continued to implement its strategy for achieving greater shareholder value," said Koichi Koichi is a male Japanese given name. It can also be a surname. People with the given name Koichi
ever faithful to her mistress, especially in sorrow. [Ital. Opera: Puccini, Madama Butterfly, Westerman, 358] See : Loyalty , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of IIJ. "Our strategy for the Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and corporate market has been validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. with the addition of several large-scale large-scale adj. 1. Large in scope or extent. 2. Drawn or made large to show detail. large-scale Adjective 1. wide-ranging or extensive 2. contracts, including the Ricoh Ricoh Company, Ltd. (株式会社リコー Group, and we have achieved a record level of revenues. In fiscal 2002, we invested heavily in new services that will enable us to increase overall revenues in fiscal 2003 and beyond. We also worked hard to control our international and domestic backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. expenses through contract renegotiations and the rationalization rationalization, in psychology: see defense mechanism. of our infrastructure; we expect the full benefit of these efforts to generate significant cost reductions in 2003 and beyond. Furthermore, we believe that the recent establishment of our Network Integration Division will increase our penetration The successful unauthorized breach of a security perimeter. See penetration test. in the corporate sector, stimulate stimulate /stim·u·late/ (stim´u-lat) to excite functional activity. stim·u·late v. To arouse a body or a responsive structure to increased functional activity. corporate network outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. demand and help improve our cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. efforts. Finally, we will soon complete a capital increase that will strengthen the Company's financial base. We are confident that these measures and our increased focus on high margin products will position IIJ for operating and financial success in 2003." Operating Profitability IIJ's revenues for the fourth quarter were the highest in IIJ's history and surpassed the Company's guidance. Despite the non-recurring expenses that were caused by the move to the new headquarters in March, the operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the fourth quarter improved from the previous quarter's loss, but was worse than the operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. achieved in the same quarter of the previous fiscal year. The moving expenses are considered an operating cost under US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Revenue from the full 2002 fiscal year also marked the highest annual amount in the company's history. "Unfortunately, this was not sufficient to deliver a full year operating profit. An increase in certain connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. services revenues was not sufficient to offset a loss of connectivity service revenues. This was the result of contract cancellations by the telecom service arm of regional electric power company and by the shift of several smaller corporate clients from the IIJ T1 Standard Service and the IIJ Economy Service to cheaper services. We do not expect a repeat of such revenue losses and we believe that we will continue to expand our connectivity revenues as has been the case for many years. To make up for the loss of revenues, IIJ launched the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and service through the CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. (Content Delivery Network) platform and IIJ VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. Standard, a VPN (Virtual Private Network) service in the fiscal 2002 year. Though it will take some time to acquire new customers, we believe that these new services will contribute to make IIJ more profitable in fiscal year 2003. We expect total revenues to grow by more than 10% compared to fiscal 2002," said Yasuhiro Nishi Nishi may refer to:
Capital Improvement Plan IIJ is planning to issue 8,400 new shares of common stock at a price of JPY JPY In currencies, this is the abbreviation for the Japanese Yen. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 418,200 in a private placement to third parties. The subscription and payment date for the new shares is expected to be June June: see month. 6, 2003. We believe that the capital improvement will secure the financial means to allow IIJ to continue the implementation of its growth strategy. "Demonstrating a significant vote of confidence in IIJ's strategy, several major Japanese institutions will increase their financial commitment to IIJ while others will contribute capital for the first time," commented Yasuhiro Nishi. Details for the plan will be announced when finalized See finalization. . Strategies for Enterprise Markets IIJ's focus on the enterprise market, which is based on the Company's Systems Integration(SI) business and is further supported by company-wide cross-selling efforts, contributed to the Company's steady growth in fiscal year 2002. Revenue from the SI business increased 33% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen as a result of strong demand for network solutions, equipment sales that were directed to the enterprise market. Cross-selling IIJ has continued to successfully cross-sell its Value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: , Systems Integration and Data Center Services to existing users of its Dedicated Access Services. "With a strategic marketing focus on Data Center Services and a base of 6,000 corporate customers that value the quality of our technology and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , IIJ is well positioned to further increase our cross-selling rates in 2003," said Yasuhiro Nishi, CFO of IIJ. In fiscal year 2002, revenues from IIJ's top 150 customers accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. half of the Company's total revenues. Cross-selling rates for these customers in fiscal 2002 year are detailed in the following table. Approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. Cross-selling rates among Top 150 Customers in fiscal 2002 The following table shows the percentage of Dedicated Access Service customers who also use our Value-added Service A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. , our System Integrations Service and our Data Center Service.
Value-added System Data Center
Service Integration Service
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Dedicated Access Service 2001 2002 2001 2002 2001 2002
----------------------------------------
69.7% 70.6% 49.2% 58.2% 30.4% 35.3%
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Change in the Organizational Structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. In an effort to continuously maintain our competitive advantage, IIJ brought together parts of IIJ, Crosswave Communications, IIJ Technology and NetCare Netcare is a South African health care company with contracts in Britain via its UK subsidiary Netcare UK [1]. South-west Oxfordshire Primary Care Trust (PCT) [2] has a multi-million pound contract with Netcare to provide eye surgery and other non-urgent in order to create a new division called the "Network Integration (NI) Division," as of April 1, 2003. This division groups all technology and information platforms, from the planning and development to the maintenance and operation of various services. This division will make it possible to rapidly respond to demand in the construction of network communication systems for enterprises. Status of Overview and Business Outlook This Overview and Business Outlook contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and projections, such as statements regarding future total revenues and operating profitability, that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these statements. These risks and uncertainties include, but are not limited to, the factors noted at the end of this release and to the risk factors and other information contained in IIJ's filings on Form 20-F and Form 6-K, as well as other filings and documents furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to the Securities and Exchange Commission. IIJ plans to keep this press release publicly available on its Web site (www.iij.ad.jp), but may discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: this practice at any time. 4th Quarter and full fiscal year 2002 Operating Highlights Large-Scale Contracts Several major Japanese companies This is a list of companies from Japan. Note that 株式会社 can be (and frequently is) read both kabushiki kaisha and kabushiki gaisha (with or without a hyphen). See that article for more details. awarded large-scale contracts to IIJ during the 4th quarter, including the Ricoh Group and Japan Leisure Channel. In February February: see month. 2003, IIJ won a large-scale outsourcing contract for email gateway solutions, "IIJ Mail Gateway service," from the Ricoh Group, one of the world's leading suppliers of office automation equipment. In March, the Japan Leisure Channel Co. Ltd. (JLC JLC Jaeger–LeCoultre (Swiss watch maker) JLC Journal of Light Construction JLC Juvenile Law Center JLC Jewish Labor Committee JLC Joint Labour Committee JLC Junior League of Chicago JLC Junior League of Cleveland ) chose the IIJ Group to build and operate a large-scale broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). motorboat racing Motorboat racing takes several forms:
Additionally, IIJ launched "IIJ Web Gateway Service," a new security service that will be provided in cooperation with IIJ Technology Inc. (IIJ-Tech), our 64.1% owned subsidiary. The service meets a variety of enterprise needs by providing proxy-caching server operation and management functions that boost Web access efficiency. Service Development IIJ has continued to develop new services. In 4Q02, IIJ developed the IIJ SEIL One of the Slate Islands, Seil (Scottish Gaelic: Saoil) is small island on the east side of the Firth of Lorn, 7 miles (11 km) southwest of Oban, in Scotland. Management Framework system (IIJ SMF (1) (Standard Messaging Format) An electronic mail format for Novell's MHS messaging system. The application puts the data into this format in order to send an e-mail message. ), the world's first network service operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. that enables corporations to substantially automate To turn a set of manual steps into an operation that goes by itself. See automation. network configuration, and realize "plug-n-join" network services to control all networking processes, including network construction and operation. Customers can enjoy large cost reductions for the construction of network configurations by using this system. In addition, IIJ recently launched a new outsourcing solution of web-access filtering, "IIJ URL Filtering Service," to enable corporate customers to block access from their internal network to undesirable web sites in order to improve their productivity. IIJ's subsidiary, Net Care, Inc., launched a new IP (Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. ) telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. solution service for enterprises. The new service provides a comprehensive VoIP (Voice over IP) solution that seamlessly integrates the operation of telephone and data networks. The service includes consulting, equipment selection, system construction and implementation, supervision, operation and maintenance. Data Center In January January: see month. 2003, Crosswave Communications Inc. (a company which IIJ owns 37.9%) opened new data centers in Yokohama Yokohama (yō'kōhä`mä), city (1990 pop. 3,220,331), capital of Kanagawa prefecture, SE Honshu, Japan, on the western shore of Tokyo Bay. and Saitama Saitama (sī`tämä), prefecture (1990 pop. 6,405,319), E central Honshu, Japan. Urawa (the capital), Omiya, and Kawaguchi are the chief cities. . Unlike conventional data centers, these two new data centers offer a full range of integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. and SI (Systems Integration) services that use the IIJ Group's extensive range of network, system and engineering resources. The two new data centers are linked to other IIJ Group data centers nationwide, which help in dispersing capacity while providing further system back-up In cartography, an image printed on the reverse side of a map sheet already printed on one side. Also the printing of such images. . Network Infrastructure Development In 4Q02, IIJ increased the capacity of seven of its domestic backbone network A backbone network provides a path for the exchange of information between different LANs or subnetworks.[1] A backbone can tie together diverse networks in the same building, in different buildings in a campus environment, or over wide areas. lines. IIJ also upgraded its US backbone network that runs between Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Ashburn, Virginia Ashburn, Virginia is an unincorporated area located in Loudoun County, Virginia, 30 miles west of Washington, D.C., and is part of the Washington Metropolitan Area. The area serves as headquarters for the internet service provider Verizon Business, Old Dominion Brewing Company, . R&D (IPv6) In March 2003, IIJ launched a new IPv6 (Internet Protocol Version 6) service called "IPv6 Gateway Service". The new service will target leading companies in a variety of different industries. Besides offering IPv6 connectivity through IIJ's network, the service provides approximately 3 x 10 to the 26th power IP addresses (a block of /40) per contract, which enables customers to roll out their own IPv6 services by assigning as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. an IP address to each of their products or services. Hitachi Hitachi (hētä`chē), city (1990 pop. 202,141), Ibaraki prefecture, E central Honshu, Japan, on the Kashima Sea. The city is a leading producer of Japan's electrical equipment. Ltd. has already contracted this service from IIJ. Appointment of IIJ Engineers as IESG See Internet Engineering Task Force. IESG - Internet Engineering Steering Group & IAB (1) See Internet Architecture Board. (2) (Interactive Advertising Bureau, New York, www.iab.net) An industry association founded in 1996 to set standards and guidelines for interactive advertising and marketing. Members In March 2003, two of IIJ's engineers were appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. as Members of IESG* (Internet Engineering Steering Group See Internet Engineering Task Force. Internet Engineering Steering Group - (IESG) A body composed of the Internet Engineering Task Force Area Directors and the IETF Chair. ) and IAB* (Internet Architecture Board (www.iab.org) Founded in 1983 as the Internet Activities Board, it is a volunteer organization that provides architectural guidance to and adjudicates conflicts for the Internet Engineering Task Force (IETF). ). Mr. Randy Bush *IESG and IAB are organizations which are part of the IETF See Internet Engineering Task Force. IETF - Internet Engineering Task Force (Internet Engineering Task Force (c/o Corporation for National Research Initiatives (CNRI), Reston, VA, www.ietf.org) Founded in 1986, the IETF is a non-membership, open, voluntary standards organization dedicated to identifying problems and opportunities in IP data networks and proposing technical solutions to the ), which is a large open international community of network designers, operators, vendors, and researchers who are concerned with the evolution of the Internet's architecture and the smooth overall operation of the Internet. The IETF activities are grouped into eight areas, which are administered by the IESG Area Directors. The IAB is an international organization that provides architectural oversight
Oversight may refer to:
4th Quarter of FY2002 Financial Results Revenues Revenue in 4Q02 totaled JPY13,036 million, an increase of 7.7% compared to 4Q01, and an increase of 23.4% compared to 3Q02. Connectivity and value-added services revenue was JPY5,419 million in 4Q02, a decrease of 7.3% compared to 4Q01 and a decrease of 2.6% compared to 3Q02. Dedicated access services revenues were JPY3,341 million in 4Q02, a decrease of 8.3% compared to 4Q01 and a decrease of 1.8% compared to 3Q02. The decrease in year-over-year comparison was mainly due to the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. by the telecom service arm of a regional electric power company, but in sequential One after the other in some consecutive order such as by name or number. comparison, the downward trend in dedicated access services is being compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. by the rapid revenue growth of IIJ FiberAccess/F service(10-100Mbps) and the steady growth of Data center connectivity service. Dial-up access hot Dial-up access is a form of Internet access via telephone line. The client uses a modem connected to a computer and a telephone line to dial into an Internet service provider's (ISP) node to establish a modem-to-modem link, which is then routed to the Internet. service revenues were JPY765 million in 4Q02, a decrease of 9.4% compared to 4Q01 and a decrease of 1.4% compared to 3Q02. The revenues of IIJ's various OEM services, which include NTT's regional L-mode service and other network services that use the CDN platform, increased steadily, which offset the decline of IIJ4U service and other dial-up services An information service on demand. The term was popular when analog modems were the only way to connect to a remote system. See dial-up. for corporate customers. Value-added services revenues increased 13.2% to JPY931 million in 4Q02 compared to 4Q01 and 2.0% compared to 3Q02. These increases were mainly due to the revenue growth of security related services. Systems integration service revenues decreased 8.0% to JPY4,905 million in 4Q02 compared to 4Q01, but increased 33.2% compared to 3Q02. Equipment sales revenues were JPY2,712 million in 4Q02, an increase of 190.4% compared to 4Q01 and an increase of 105.7% compared to 3Q02. These revenues included sales of network equipment for the educational industries and governmental agencies, which we expect to develop as significant clients for our SI business.
Table 1. Number of Contracts
Internet Access Services 4Q02 3Q02 4Q01
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IP Service 64kbps - 128kbps 112 130 142
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192kbps - 768kbps 35 37 42
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1Mbps - 2Mbps 268 279 270
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3Mbps - 1.2Gbps 248 212 156
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Internet Data Center Connectivity Services(2) 156 139 110
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Others(3) 4,489 3,922 2,900
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Total Dedicated Access Services Contracts 5,308 4,719 3,620
======
(2) The figures of Internet data center connectivity services do not
include contracts for data center housing services.
(3) Others include, IIJ FiberAccess/F, IIJ Ethernet Standard, IIJ
DSL/F, IIJT1 Standard and IIJ Economy.
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IIJ4U (dialup services for individuals) 79,464 82,193 89,213
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Others 450,320 370,543 171,363
======================================================================
Total Dial-up Access Services Contracts 529,784 452,736 260,576
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Table 2. Revenue Breakdown in Dedicated Access Services
(JPY in millions)
4Q02 3Q02 4Q01
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Total IP Service + DC connectivity 2,518 2,548 2,651
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Others 823 856 992
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Table 3. Contracted Bandwidth (Unit: Giga bits per second)
4Q02 3Q02 4Q01
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Dedicated Access Services 32.1 23.3 9.4
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Internet Data Center Connectivity Service 9.9 7.0 2.0
======================================================================
Total Contracted Bandwidth 42.0 30.3 11.4
======================================================================
Cost and expenses Cost of total revenues was JPY11,919 million in 4Q02, an increase of 11.3% compared to 4Q01, and an increase of 24.1% compared to 3Q02. Backbone Costs International backbone costs were JPY315 million, a decrease of 28.8% compared to 4Q01 and a decrease of 27.0% compared to 3Q02. Domestic backbone costs were JPY1,075 million, an increase of 28.6% compared to 4Q01 and an increase of 19.2% compared to 3Q02. These increases were a result of an increase in connection fees with NTT's regional access networks (FLET'S).
Table 4. Backbone Costs (JPY in millions)
4Q02 3Q02 4Q01
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International Backbone Costs 315 432 443
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Domestic Backbone Costs 1,075 902 836
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Cost of SI (Systems Integration) revenues Cost of SI revenues was JPY 4,248 million in 4Q02, a decrease of 10.3% compared to 4Q01 and an increase of 33.9% compared to 3Q02. The gross margin ratio for SI improved to 13.4% in 4Q02 compared to 11.2% in 4Q01, and was almost flat compared to 3Q02. Sales and Marketing Expenses Sales and marketing expenses were JPY789 million in 4Q02, an increase of 5.5% compared to 4Q01 and a decrease of 11.8% compared to 3Q02. General and administrative expenses General and administrative expenses were JPY662 million in 4Q02, an increase of 37.7% compared to 4Q01 and an increase of 29.3% compared to 3Q02. General and administrative expenses for 4Q02 included the cost of the move to new office. Operating loss The operating loss was JPY446 million in 4Q02 as compared to the operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of JPY186 million in 4Q01 and a loss of JPY567 million in 3Q02. The operating loss for 4Q02, net of the cost of the move to the new headquarters, improved considerably from the previous quarter due mainly to the steady growth of our SI business. The operating income (loss)-to-revenue ratio for 4Q02 was (-)3.4%, compared to 1.5% in 4Q01, and to (-)5.4% in 3Q02. Other expenses Other expenses for 4Q02 were JPY360 million, compared to JPY338 million in 4Q01 and JPY228 million in 3Q02. Other expenses for 4Q02 were mainly composed of a JPY175 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss on certain equity security investments and a JPY190 million interest payment. Equity in net loss of equity method investees Equity in net loss of equity method investees amounted to JPY1,254 million in 4Q02, compared to JPY1,647 million in 4Q01, and JPY1,375 million in 3Q02. This is mostly attributed to the equity loss in Crosswave. Net loss Net loss was JPY2,137 million in 4Q02, compared to JPY1,667 million in 4Q01 and JPY2,266 million in 3Q02. Basic net loss per ADS equivalent was JPY(-)47.52 in 4Q02, compared to JPY(-)37.07 in 4Q01 and JPY(-)50.40 in 3Q02.
Table 5. Other Financial Statistics (JPY in millions)
4Q02 3Q02 4Q01
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Adjusted EBITDA 459 349 968
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CAPEX, including capitalized leases 936 1519 913
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Depreciation and amortization 933 943 812
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Reconciliation of Non-GAAP Financial Measures The following table summarizes the reconciliation of adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become to operating income (loss) per the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations prepared and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in Appendices ap·pen·di·ces n. A plural of appendix. 1 and 2:
(JPY in millions)
4Q02 3Q02 4Q01 FY2002 FY2001
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Adjusted EBITDA 459 349 968 1,799 2,960
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Depreciation and amortization(4) -905 -916 -782 -3,470 -2,906
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Operating income(loss) -446 -567 186 -1,671 54
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(4) Depreciation and amortization excludes amortization of issuance cost of convertible notes and of goodwill that were presented as other expenses. The following table summarizes the reconciliation of capital expenditures to purchase of property and equipment per the consolidated statements of cash flows prepared and presented in accordance with the U.S. generally accepted accounting principles in Appendices 4 and 5:
(JPY in millions)
4Q02 3Q02 4Q01
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Capital expenditures 936 1,519 913
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Acquisition of assets by entering into capital leases 772 1,014 411
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Purchase of property and equipment 164 505 502
----------------------------------------------------------------------
Company Information Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI) is Japan's leading Internet-access and comprehensive network solutions provider. The company has built one of the largest Internet backbone (communications, networking) Internet backbone - High-speed networks that carry Internet traffic. These communications networks are provided by companies such as AT&T, GTE, IBM, MCI, Netcom, Sprint, UUNET and consist of high-speed links in the T1, T3, OC1 and OC3 ranges. networks in Japan, and between Japan and the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . IIJ and its group of companies provide total network solutions that mainly cater to high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. corporate customers. Services range from the delivery of new generation network services over an optical-fiber infrastructure that is optimized for data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. , to the construction of pan-Asian IP backbone networks. The company also offers high-quality systems integration and security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the , internet access, hosting/housing, and content design. 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 4Q02 and fiscal year 2002 total revenues and operating 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 expectation that net losses will continue; IIJ's ability to raise additional capital to cover its accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. deficit; IIJ's ability to continue to increase subscribers to its connectivity services, particularly at higher bandwidths; IIJ's ability to generate significant revenues from its other services such as systems integration; the success of IIJ's investments in Crosswave; the ability to compete in a rapidly evolving and competitive marketplace; the impact of technological changes in its industry; and other risks referred to from time to time in IIJ's filings on Form 20F of its annual report and other filings with the United States Securities and Exchange Commission.
INTERNET INITIATIVE JAPAN INC. Appendix 1
-----------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
------------------------------------------------
For the Three Months Ended Mar 31, 2003, Mar 31, 2002 and Dec 31, 2002
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)
Except for Per Share and ADS Data) (1)
Year-over-year Comparison
Mar 31, 2003 Mar 31, 2002
------------ ------------
% of % of
Total Total YOY
USD (1) JPY Revenues JPY Revenues Chg %
------- --- -------- --- -------- -----
Revenues:
Connectivity and
value-added
services:
Dedicated access
services(2) 28,299 3,341,255 25.6% 3,643,141 30.1% (8.3%)
Dial-up access
services 6,479 764,958 5.9 844,279 7.0 (9.4)
Value-added
services(2) 7,888 931,399 7.2 823,137 6.8 13.2
Other 3,229 381,206 2.9 533,191 4.4 (28.5)
------- --------- ----- --------- ----- ------
Total
connectivity
and value-added
services 45,895 5,418,818 41.6 5,843,748 48.3 (7.3)
Systems integration
revenues 41,547 4,905,429 37.6 5,331,986 44.0 (8.0)
Equipment sales 22,971 2,712,192 20.8 934,040 7.7 190.4
------- --------- ----- --------- ----- ------
Total revenues 110,413 13,036,439 100.0 12,109,774 100.0 7.7
------- --------- ----- --------- ----- ------
Costs and expenses:
Cost of connectivity
and value-added
services 42,630 5,033,266 38.6 5,110,291 42.2 (1.5)
Cost of systems
integration
revenues 35,976 4,247,690 32.6 4,734,363 39.1 (10.3)
Cost of equipment
sales 22,345 2,638,334 20.2 865,354 7.1 204.9
------- --------- ----- --------- ----- ------
Total costs 100,951 11,919,290 91.4 10,710,008 88.4 11.3
Sales and marketing 6,684 789,234 6.0 665,204 5.5 18.6
General and
administrative 5,603 661,502 5.1 480,376 4.0 37.7
Research and
development 956 112,845 0.9 68,090 0.6 65.7
------- --------- ----- --------- ----- ------
Total costs
and expenses 114,194 13,482,871 103.4 11,923,678 98.5 13.1
------- --------- ----- --------- ----- ------
Operating income
(loss) (3,781) (446,432) (3.4) 186,096 1.5 (339.9)
------- --------- ----- --------- ----- ------
Other expenses (3,052) (360,292) (2.8) (337,694) (2.8) 6.7
------- --------- ----- --------- ----- ------
Loss before income
tax expense
(benefit) (6,833) (806,724) (6.2) (151,598) (1.3) 432.1
------- --------- ----- --------- ----- ------
Income tax expense
(benefit) 823 97,256 0.8 (140,381) (1.2)(169.3)
Minority interests
in consolidated
subsidiaries 181 21,342 0.2 (8,849) (0.1)(341.2)
Equity in net
loss of equity
method investees (10,620)(1,253,875) (9.6) (1,646,603)(13.6) (23.9)
------- --------- ----- --------- ------ -----
Net loss (18,095)(2,136,513)(16.4%)(1,666,669)(13.8%) 28.2%
======= ========= ===== ========= ====== =====
Basic Net Loss Per
Share (95,041) (74,140)
Basic Net Loss Per
ADS Equivalent (47.52) (37.07)
Weighted Average
Number of Shares 22,480 22,480
Weighted Average
Number of ADS
Equivalents 44,960,000 44,960,000
Sequential Comparison
Dec 31, 2002
--------------------------
% of
Total QOQ
JPY Revenues Chg %
----------- --------------
Revenues:
Connectivity and value-added
services:
Dedicated access services(2) 3,404,016 32.2% (1.8%)
Dial-up access services 776,173 7.4 (1.4)
Value-added services(2) 913,152 8.6 2.0
Other 467,629 4.4 (18.5)
----------- ------- ------
Total connectivity and value-
added services 5,560,970 52.6 (2.6)
Systems integration revenues 3,683,978 34.9 33.2
Equipment sales 1,318,630 12.5 105.7
----------- ------- ------
Total revenues 10,563,578 100.0 23.4
----------- ------- ------
Costs and expenses:
Cost of connectivity and value-added
services 5,179,920 49.0 (2.8)
Cost of systems integration revenues 3,173,211 30.0 33.9
Cost of equipment sales 1,254,073 11.9 110.4
----------- ------- ------
Total costs 9,607,204 90.9 24.1
Sales and marketing 894,340 8.5 (11.8)
General and administrative 511,604 4.9 29.3
Research and development 116,950 1.1 (3.5)
----------- ------- ------
Total costs
and expenses 11,130,098 105.4 21.1
----------- ------- ------
Operating income (loss) (566,520) (5.4) (21.2)
----------- ------- ------
Other expenses (228,058) (2.1) 58.0
----------- ------- ------
Loss before income tax expense(benefit) (794,578) (7.5) 1.5
----------- ------- ------
Income tax expense(benefit) 137,936 1.3 (29.5)
Minority interests in consolidated
subsidiaries 41,813 0.4 (49.0)
Equity in net loss of equity method
investees (1,375,338) (13.0) (8.8)
----------- ------- ------
Net loss (2,266,039) (21.4%) (5.7%)
=========== ======= ======
Basic Net Loss Per Share (100,802)
Basic Net Loss Per ADS Equivalent (50.40)
Weighted Average Number of Shares 22,480
Weighted Average Number of ADS Equivalents 44,960,000
Note (1):The translations of Japanese yen amounts into US dollar
amounts with respect to the three months ended Mar 31, 2003 are
included solely for the convenience of readers outside Japan and
have been made at the rate of JPY 118.07 =$1, the approximate rate
of exchange on Mar 31, 2003.
Note (2):IIJ datacenter connectivity services revenues have been
reclassified from value added services revenues into dedicated
access services revenues since the 1st quarter of FY2002. The 4th
quarter of FY2001 presented has been reclassified to conform to
the current presentation and such reclassification resulted in an
increase of dedicated access services revenues by Y257,599, as
compared to the previous classification method.
INTERNET INITIATIVE JAPAN INC. Appendix 2
--------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------------
For the Years Ended Dec 31, 2003 and Mar 31, 2002
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars
(USD) Except for Per Share and ADS Data) (1)
Year-over-year Comparison
Mar 31, 2003
----------------------------
% of
Total
USD (1) JPY Revenues
----------------------------
Revenues:
Connectivity and value-added
services:
Dedicated access services(2) 117,007 13,814,977 31.4%
Dial-up access services 26,723 3,155,137 7.2
Value-added services(2) 30,514 3,602,847 8.2
Other 14,616 1,725,736 3.9
----------------------------
Total connectivity and value-
added services 188,860 22,298,697 50.7
Systems integration revenues 127,150 15,012,633 34.1
Equipment sales 56,799 6,706,231 15.2
----------------------------
Total revenues 372,809 44,017,561 100.0
----------------------------
Costs and expenses:
Cost of connectivity and value-added
services 172,668 20,386,887 46.3
Cost of systems integration revenues 110,868 13,090,220 29.7
Cost of other equipment sales 54,345 6,416,525 14.6
----------------------------
Total costs 337,881 39,893,632 90.6
Sales and marketing 26,901 3,176,165 7.2
General and administrative 18,671 2,204,504 5.0
Research and development 3,508 414,149 1.0
----------------------------
Total costs and expenses 386,961 45,688,450 103.8
----------------------------
Operating income(loss) (14,152)(1,670,889) (3.8)
----------------------------
Other expenses (10,751)(1,269,433) (2.9)
----------------------------
Loss before income tax expense (24,903)(2,940,322) (6.7)
----------------------------
Income tax expense 7,719 911,365 2.1
Minority interests in consolidated
subsidiaries 1,298 153,251 0.4
Equity in net loss of affiliated companies (47,644)(5,625,299) (12.8)
----------------------------
Net loss (78,968)(9,323,735) (21.2%)
============================
Basic Net Loss Per Share (414,757)
Basic Net Loss Per ADS Equivalent (207.38)
Weighted Average Number of Shares 22,480
Weighted Average Number of ADS Equivalents 44,960,000
Mar 31, 2002
----------------------------
% of
Total YoY
JPY Revenues Chg %
----------------------------
Revenues:
Connectivity and value-added
services:
Dedicated access services(2) 14,303,342 35.8% (3.4%)
Dial-up access services 3,644,091 9.1 (13.4)
Value-added services(2) 3,099,791 7.8 16.2
Other 1,667,986 4.2 3.5
----------------------------
Total connectivity and value-
added services 22,715,210 56.9 (1.8)
Systems integration revenues 14,355,325 36.0 4.6
Equipment sales 2,834,078 7.1 136.6
----------------------------
Total revenues 39,904,613 100.0 10.3
----------------------------
Costs and expenses:
Cost of connectivity and value-added
services 19,799,402 49.6 3.0
Cost of systems integration revenues 12,314,158 30.9 6.3
Cost of other equipment sales 2,540,089 6.4 152.6
----------------------------
Total costs 34,653,649 86.9 15.1
Sales and marketing 3,038,412 7.6 4.5
General and administrative 1,839,525 4.6 19.8
Research and development 319,370 0.8 29.7
----------------------------
Total costs and expenses 39,850,956 99.9 14.6
----------------------------
Operating income(loss) 53,657 0.1 (3,214.0)
----------------------------
Other expenses (943,142) (2.3) 34.6
----------------------------
Loss before income tax expense (889,485) (2.2) 230.6
----------------------------
Income tax expense 1,099,035 2.8 (17.1)
Minority interests in consolidated
subsidiaries 24,467 0.1 526.4
Equity in net loss of affiliated companies(5,482,082) (13.8) 2.6
----------------------------
Net loss (7,446,135) (18.7%) 25.2%
============================
Basic Net Loss Per Share (331,234)
Basic Net Loss Per ADS Equivalent (165.62)
Weighted Average Number of Shares 22,480
Weighted Average Number of ADS Equivalents44,960,000
Note (1):The translations of Japanese yen amounts into US dollar
amounts with respect to the year ended Mar 31, 2003 are included
solely for the convenience of readers outside Japan and have been
made at the rate of JPY 118.07 =$1, the approximate rate of
exchange on Mar 31, 2003.
Note (2):IIJ datacenter connectivity services revenues have been
reclassified from value added services revenues into dedicated
access services revenues since the 1st quarter of FY2002. The 4th
quarter of FY2001 presented has been reclassified to conform to
the current presentation and such reclassification resulted in an
increase of dedicated access services revenues by Y761,362, as
compared to the previous classification method.
INTERNET INITIATIVE JAPAN INC. Appendix 3
------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
-------------------------------------------------------
As of Mar 31, 2003, Mar 31, 2002 and Dec 31, 2002
(Expressed in Thousands of Japanese Yen (JPY) and U.S.
Dollars (USD)) (1)
Mar 31, 2003
-----------------------------
USD (1) JPY %
--------- ------------ ------
ASSETS
----------------------------------------
Current Assets:
Cash 30,392 3,588,352 9.2%
Accounts receivable, net 86,839 10,253,096 26.1
Inventories 3,537 417,666 1.1
Prepaid expenses 4,781 564,501 1.4
Other current assets 7,901 932,873 2.4
--------- ------------ ------
Total current assets 133,450 15,756,488 40.2
Investments in and Advances to Equity
Method Investees 27,704 3,271,032 8.3
Other Investments 25,749 3,040,189 7.8
Property and Equipment, net 77,510 9,151,572 23.3
Restricted Cash 42,348 5,000,000 12.8
Guarantee Deposits 18,681 2,205,652 5.6
Other Assets 6,729 794,455 2.0
--------- ------------ ------
Total assets 332,171 39,219,388 100.0%
========= ============ ======
LIABILITIES AND
----------------------------------------
SHAREHOLDERS' EQUITY
----------------------------------------
Current Liabilities:
Short-term borrowings 40,854 4,823,599 12.3%
Accounts payable 71,196 8,406,170 21.4
Accrued expenses 3,299 389,495 1.0
Other current liabilities 4,675 551,985 1.4
Long-term borrowings-current portion 16,462 1,943,735 5.0
Capital lease obligations-current
portion 23,007 2,716,386 6.9
--------- ------------ ------
Total current liabilities 159,493 18,831,370 48.0
Long-term Borrowings 29,273 3,456,265 8.8
Convertible Notes 127,043 15,000,000 38.2
Capital Lease Obligations-Noncurrent 30,793 3,635,780 9.3
Accrued Retirement and Pension Costs 683 80,601 0.2
Other Noncurrent Liabilities 1,569 185,201 0.5
--------- ------------ ------
Total liabilities 348,854 41,189,217 105.0
--------- ------------ ------
Minority Interest 7,449 879,495 2.3
--------- ------------ ------
Shareholders' Equity:
Common stock 59,984 7,082,336 18.1
Additional paid-in capital 144,561 17,068,353 43.5
Accumulated deficit (233,185) (27,532,204) (70.2)
Accumulated other comprehensive income 4,508 532,191 1.3
--------- ------------ ------
Total shareholders' equity (24,132) (2,849,324) (7.3)
--------- ------------ ------
Total liabilities and
shareholders' equity 332,171 39,219,388 100.0%
========= ============ ======
Mar 31, 2002 Dec 31, 2002
------------------- -------------------
JPY % JPY %
------------ ------ ------------ ------
ASSETS
------------------------------
Current Assets:
Cash 11,045,919 24.4% 4,270,613 11.4%
Accounts receivable, net 8,981,912 19.9 7,305,169 19.5
Inventories 620,409 1.4 813,863 2.2
Prepaid expenses 416,945 0.9 882,854 2.4
Other current assets 143,798 0.3 135,828 0.4
------------ ------ ------------ ------
Total current
assets 21,208,983 46.9 13,408,327 35.9
Investments in and Advances to
Equity Method Investees 8,854,028 19.6 4,522,602 12.1
Other Investments 5,406,065 11.9 3,461,695 9.2
Property and Equipment, net 7,755,426 17.1 8,898,123 23.8
Restricted Cash 0 0.0 5,000,000 13.4
Guarantee Deposits 1,266,055 2.8 1,369,596 3.7
Other Assets 772,226 1.7 699,998 1.9
------------ ------ ------------ ------
Total assets 45,262,783 100.0% 37,360,341 100.0%
============ ====== ============ ======
LIABILITIES AND
------------------------------
SHAREHOLDERS' EQUITY
------------------------------
Current Liabilities:
Short-term borrowings 3,820,232 8.4% 4,510,000 12.1%
Accounts payable 7,085,579 15.7 5,852,779 15.7
Accrued expenses 247,606 0.5 364,366 1.0
Other current liabilities 506,797 1.1 570,719 1.5
Long-term borrowings-current
portion 1,400,000 3.1 1,200,000 3.2
Capital lease obligations-
current portion 1,973,769 4.4 2,424,701 6.5
------------ ------ ------------ ------
Total current
liabilities 15,033,983 33.2 14,922,565 40.0
Long-term Borrowings 3,400,000 7.5 3,400,000 9.1
Convertible Notes 15,000,000 33.2 15,000,000 40.1
Capital Lease Obligations-
Noncurrent 2,861,556 6.3 3,463,132 9.3
Accrued Retirement and Pension
Costs 100,841 0.2 75,047 0.2
Other Noncurrent Liabilities 108,376 0.2 184,847 0.5
------------ ------ ------------ ------
Total liabilities 36,504,756 80.6 37,045,591 99.2
------------ ------ ------------ ------
Minority Interest 1,032,746 2.3 900,837 2.4
------------ ------ ------------ ------
Shareholders' Equity:
Common stock 7,082,336 15.7 7,082,336 18.9
Additional paid-in capital 17,068,353 37.7 17,068,353 45.7
Accumulated deficit (18,208,469) (40.2) (25,395,691) (68.0)
Accumulated other
comprehensive income 1,783,061 3.9 658,915 1.8
------------ ------ ------------ ------
Total
shareholders'
equity 7,725,281 17.1 (586,087) (1.6)
------------ ------ ------------ ------
Total liabilities
and shareholders'
equity 45,262,783 100.0% 37,360,341 100.0%
============ ====== ============ ======
Note (1): The translations of Japanese yen amounts into US dollar
amounts with respect to Mar 31, 2003 are included solely for the
convenience of readers outside Japan and have been made at the
rate of JPY118.07 =$1, the approximate rate of exchange on Mar 31,
2003.
INTERNET INITIATIVE JAPAN INC. Appendix 4
---------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------
For the Three Months Ended Marach 31, 2003, March 31, 2002
and Dec 31, 2002
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars
(USD)) (1)
March 31, Dec 31,
March 31, 2003 2002 2002
-------------- ----------- -----------
USD (1) JPY JPY JPY
-----------------------------------------
Operating Activities:
Net loss (18,095)(2,136,513)(1,666,669)(2,266,039)
Depreciation and
amortization 7,905 933,374 811,652 942,854
Equity in net loss of
equity method
investees 10,620 1,253,875 1,646,603 1,375,338
Minority interests in
net (loss) income of
consolidated
subsidiaries (181) (21,342) 8,849 (41,813)
Foreign exchange
losses 1,264 149,262 3,990 32,834
Losses on other
investments 1,565 184,723 104,700 -
Decrease (increase)
in accounts
receivable (25,267)(2,983,254)(3,183,806) 493,961
Increase in accounts
payable 18,636 2,200,392 3,696,329 1,033,939
Decrease (increase)
in inventories 3,321 392,051 (398,876) (398,092)
Deferred income taxes 771 91,033 (145,560) 132,230
Other 3,614 426,737 214,793 (52,956)
-----------------------------------------
Net cash provided by
operating activities 4,153 490,338 1,092,005 1,252,256
-----------------------------------------
Investing Activities:
Purchase of property
and equipment (1,385) (163,592) (501,667) (505,169)
Proceeds from sale-
leaseback 567 66,940 - -
Investments in and
advances to equity
method investees - - (24,123) -
Purchase of other
investments - - (350,000) (28,377)
(Payment) refund of
guarantee deposits-
net (11,749)(1,387,210) (2,007) 22,972
Other 51 6,057 22,299 (30,506)
-----------------------------------------
Net cash used in
investing activities(12,516)(1,477,805) (855,498) (541,080)
-----------------------------------------
Financing Activities:
Proceeds from long-
term borrowings 16,939 2,000,000 - -
Repayments of long-
term borrowings (10,164)(1,200,000) - (200,000)
Principal payments
under capital leases (5,558) (656,238) (535,906) (651,546)
Net increase
(decrease) in short-
term borrowings 2,650 312,854 120,018 (322,254)
-----------------------------------------
Net cash provided by
(used in) financing
activities 3,867 456,616 (415,888)(1,173,800)
-----------------------------------------
Effect of Exchange Rate
Changes on Cash (1,282) (151,410) 59,223 (39,516)
-----------------------------------------
Net Decrease in Cash (5,778) (682,261) (120,158) (502,140)
-----------------------------------------
Cash, Beginning of Period 36,170 4,270,613 11,166,077 4,772,753
-----------------------------------------
Cash, End of Period 30,392 3,588,352 11,045,919 4,270,613
=========================================
Note (1): The translations of Japanese yen amounts into US dollar
amounts with respect to the three months ended Mar 31, 2003 are
included solely for the convenience of readers outside Japan and
have been made at the rate of JPY118.07 =$1, the approximate rate
of exchange on Mar 31, 2003.
INTERNET INITIATIVE JAPAN INC. Appendix 5
------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------
For the Year Ended Marach 31, 2003, March 31, 2002
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars
(USD)) (1)
March 31, 2003 March 31, 2002
------------------ --------------
USD (1) JPY JPY
-------- ----------- -----------
Operating Activities:
Net loss (78,968) (9,323,735) (7,446,135)
Depreciation and
amortization 30,323 3,580,212 3,027,587
Equity in net loss of equity
method investees 47,644 5,625,299 5,482,082
Minority interests in net
loss of consolidated
subsidiaries (1,298) (153,251) (24,467)
Foreign exchange losses
(gains) 2,353 277,856 (219,524)
Losses on other investments 2,348 277,162 432,952
Increase in accounts
receivable (11,446) (1,351,380) (3,559,335)
Increase in accounts payable 10,548 1,245,431 2,808,704
Decrease (increase) in
inventories 1,682 198,597 (671,177)
Deferred income taxes 7,498 885,331 1,081,241
Other 2,712 320,170 249,285
-------- ----------- -----------
Net cash provided by
operating activities 13,396 1,581,692 1,161,213
-------- ----------- -----------
Investing Activities:
Purchase of property and
equipment (11,141) (1,315,390) (1,237,434)
Proceeds from sale-leaseback 567 66,940 -
Investments in and advances
to equity method investees (476) (56,250) (362,714)
Purchase of other
investments (437) (51,671) (399,600)
Deposit to restricted cash (42,348) (5,000,000) -
Payment of guarantee
deposits-net (12,602) (1,487,911) (430,455)
Other (285) (33,639) (26,995)
-------- ----------- -----------
Net cash used in investing
activities (66,722) (7,877,921) (2,457,198)
-------- ----------- -----------
Financing Activities:
Proceeds from long-term
borrowings 16,939 2,000,000 2,000,000
Repayments of long-term
borrowings (11,857) (1,400,000) -
Principal payments under
capital leases (20,966) (2,475,433) (2,037,133)
Net increase (decrease) in
short-term borrowings 8,498 1,003,367 (1,799,768)
Proceeds from issuance of
common stock of a
subsidiary - - 375,000
-------- ----------- -----------
Net cash used in financing
activities (7,386) (872,066) (1,461,901)
-------- ----------- -----------
Effect of Exchange Rate Changes on
Cash (2,450) (289,272) 233,098
-------- ----------- -----------
Net Decrease in Cash (63,162) (7,457,567) (2,524,788)
-------- ----------- -----------
Cash, Beginning of Period 93,554 11,045,919 13,570,707
-------- ----------- -----------
Cash, End of Period 30,392 3,588,352 11,045,919
======== =========== ===========
Note (1): The translations of Japanese yen amounts into US dollar
amounts with respect to the year ended Mar 31, 2003 are included
solely for the convenience of readers outside Japan and have been
made at the rate of JPY118.07 =$1, the approximate rate of
exchange on Mar 31, 2003.
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