IIJ to Absorb a Consolidated Subsidiary

IIJ to Absorb a Consolidated Subsidiary

TOKYO, Nov. 7, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ")
(Nasdaq:IIJI) (TSE1:3774) announced that its Board of Directors resolved today
to absorb IIJ Exlayer Inc. ("IIJ-Exlayer"), a 99.9% owned subsidiary of IIJ.
The merger is expected to take effect on January 1, 2014. Details of the
merger are outlined below.

IIJ-Exlayer's revenues, operating income and net loss for the fiscal year
ended December 31, 2012 were JPY88 million, JPY0.4 million and JPY6 million,
respectively.

1. Purpose of merger

The purpose of merger with IIJ-Exlayer, which is IIJ's subsidiary in Japan
supervising as a holding company for overseas systems integration (SI)
subsidiaries, is to improve group management efficiency by centralizing
administrative operation. Simultaneously, the merger with IIJ America Inc.,
which is a U.S.-based subsidiary of IIJ providing network services, and IIJ
Exlayer USA LLC., which is a U.S.-based SI subsidiary of IIJ-Exlayer, was
resolved for the purpose of strengthening business in the United States.

The impact of the merger on IIJ's consolidated financial results will be
minor.

2. Details of merger
(1) Merger schedule

Board meeting for approval of the merger: November 7, 2013
Signing of the merger agreement:          November 7, 2013
Effective date of the merger:             January 1, 2014 (Scheduled)

(*) For IIJ, this merger will be a simplified merger under Article 796.3 of
the Corporation Act in Japan. Accordingly, general meeting of shareholders of
IIJ will not be held. For IIJ-Exlayer, the merger will be a short form merger
under Article 784.1 of the Corporation Act in Japan. Accordingly, general
meeting of shareholders of IIJ-Exlayer will not be held.

(2) Merger procedure
IIJ, as the surviving company, will absorb IIJ-Exlayer, which will be
subsequently dissolved.

(3) Details of allotment related to the merger

                           IIJ                     IIJ-Exlayer
                          (Surviving Company in   (Dissolving Company in
                           Absorption-type Merger) Absorption-type Merger)
Details of allotment       1 share of common stock 26 shares of common stock
with respect to the merger

(Note 1) Allotment Ratio of Shares
26 shares of IIJ common stock per one (1) share of IIJ-Exlayer common stock
will be allotted and delivered; provided that shares will not be allotted with
respect to IIJ-Exlayer shares held by IIJ (3,996 shares as of November 7,
2013) immediately before the merger takes effect.

(Note 2) Number of shares to be delivered in the merger
During the merger, a total of 104 shares of IIJ common stock will be allotted
to the shareholders of IIJ-Exlayer. No new IIJ shares will be issued, as IIJ
shares will be granted to shareholders of IIJ-Exlayer by using shares of IIJ
treasury stock held by IIJ.

(Note 3) Treatment of shares constituting less than one unit (tangen miman
kabushiki)
Since IIJ's shares are traded on the Tokyo Stock Exchange in units of 100
shares, those shareholders who will hold a fraction of a unit (i.e., IIJ
shares constituting less than 100 shares) upon the merger will not be able to
sell shares less than one unit at the securities exchange.

Shareholders who will own common shares of IIJ less than one unit are able to
utilize the procedures set forth below.

  (i) Procedure for additional purchase for shares less than one share unit
  A shareholder who holds a fraction of a unit (i.e., IIJ shares constituting
  less than 100 shares) may request that IIJ sell such fraction of a unit of
  IIJ shares at the market price, that, when combined with such fraction of a
  unit of IIJ shares already held by such holder, constitute a whole unit of
  IIJ shares.

  (ii) Procedure for acquisition for shares less than one share unit (sale of
  shares less than 100 shares)
  A shareholder who holds a fraction of a unit (i.e. IIJ shares constituting
  less than 100 shares) may request that IIJ purchase such fraction of a unit
  of IIJ shares at the market price from the relevant shareholder.

(4) Handling of share warrants and bonds with share warrants of the defunct
companies
None

3.Policy of calculation of the allotment ratio of shares

As a basis of the calculation of the allotment ratio of shares, IIJ and
IIJ-Exlayer conducted the following analysis. IIJ common stock is listed on
Tokyo Stock Exchange and IIJ's recent share prices have shown no abnormality.
Therefore, the analysis for IIJ was made with the average of the closing price
on the First Section of the Tokyo Stock Exchange for the consecutive 30
business days including and before October 31, 2013. Since common stock of
IIJ-Exlayer is non-listed, the analysis for IIJ-Exlayer was made with both the
price of the recent transaction and the share value calculated by adjusted net
assets method. The allotment ratio of shares has been determined as above
considering generally the results of the above analyses.

4.Basic information of IIJ and IIJ-Exlayer

                                                  
(1) Company name         Internet Initiative       IIJ Exlayer Inc.     
                         Japan Inc.
                        (Surviving company)        (Dissolving company)
(2) Address              1-105 Kanda               1-105 Kanda          
                         Jinbo-cho,                Jinbo-cho,
                        Chiyoda-ku, Tokyo          Chiyoda-ku, Tokyo
(3) Representative       Chairman and CEO          President            
                        Koichi Suzuki             Kenji Sakata         
                        President and COO                             
                        Eijiro Katsu               
                                                    Supervising as a
                         Internet                   holding company for
(4) Business description connectivity and          overseas systems     
                         outsourcing                integration (SI)
                                                    subsidiaries
                         service, systems
                        integration,                                  
                         equipment
                        sales and others           
(5) Capital              JPY22,958 million        JPY10 million       
                        (as of September 30, 2013) (as of September 30,
                                                    2013)
(6) Incorporated         December 3, 1992           October 1, 2009
(7) Number of shares     46,697,800 (as of          4,000 (as of September 30,
issued                   September 30, 2013)        2013)
(8) Fiscal year-end      March 31                   December 31
(9) Number of employee   1,555 (as of September 30, 2 (as of September 30,
                         2013)                      2013)
(10) Major shareholders  Nippon Telegraph    21.62% Internet Initiative  99.9%
andshareholding ratio   and                        Japan Inc.
                        Telephone                                    
                         Corporation
                        GOLDMAN, SACHS &    4.56%                      
                         CO. REG
                        Itochu Corporation  4.47%                      
                        NTT Communications  4.37%                      
                        Corporation                                 
                        Japan Trustee       3.95%                      
                         Services Bank,
                        Ltd (trust                                    
                         account)
                        Koichi Suzuki       3.86%  
(11) Financial condition
and business results for Consolidated fiscal       Fiscal year ended    
the most recent fiscal   year
year
                        ended March 31,           December 31, 2012    
                         2013
Shareholders' equity     JPY 37,607 million        JPY 83 million       
Total assets             JPY 82,111 million        JPY 134 million      
Shareholders' equity per JPY 927.72                JPY 20,856.44        
share
Total revenues           JPY 106,248 million       JPY 88 million       
Operating income         JPY 7,753 million         JPY 0.4 million      
Income before income tax JPY 7,757 million         Loss of JPY 6        
                                                    million
expenses                                                             
Net income               JPY 5,301 million         Loss of JPY 6        
                                                    million
Basic net income per     JPY 130.76                Loss of JPY1,485.46  
share

(Note 1) (10) Major shareholders and shareholding ratio are based on
shareholder registry as of September 30, 2013.

(Note 2) Mr. Koichi Suzuki jointly owns IIJ stocks through his wholly owned
company called KS Holdings which holds 810,000 shares of common stock, 1.73%
of IIJ's total outstanding shares.

(Note 3) IIJ issued new shares by way of public offering with payment due July
18, 2013 and by way of third-party allotment in connection with secondary
offering of shares by way of over-allotment with payment due August 5, 2013.
As a result, shareholders' equity and number of shares issued increased
JPY17,239 million and 5,400,000 shares, respectively. These increases are not
included in the above figures in (11) Financial condition and business results
for the most recent fiscal year.

5. Situation after the merger

There will be no changes in the company name, address, representative,
business description, capital or the fiscal year.

6. Future outlook

The impact of the merger on IIJ's consolidated financial results will be
minor.

(For References) Target
of consolidated
financial results for                             Income
the fiscal year ending  Total        Operating    before       Net income
March 31, 2014 and      revenues     income       income tax   attributable to
consolidated financial                            expense      IIJ
results for the fiscal
year ended March 31,
2013
                       JPY millions JPY millions JPY millions JPY millions
Target of consolidated
financial results       117,000      9,400        9,000        6,000
for the fiscal year
ending March 31, 2014
Consolidated financial
results                 106,248      7,753        5,976        3,641
for the fiscal year
ended March 31, 2013

The statements within this release contain forward-looking statements about
our future plans that involve risk and uncertainty. These statements may
differ materially from actual future events or results. Readers are referred
to the documents furnished by Internet Initiative Japan Inc. with the SEC,
specifically the most recent reports on Forms 20-F and 6-K, which identify
important risk factors that could cause actual results to differ from those
contained in the forward-looking statements.

CONTACT: For inquiries, contact IIJ Investor Relations:
         Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp
         URL: http://www.iij.ad.jp/en/ir

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