IIJ Announces First Six Months Financial Results for the Fiscal Year Ending March 31, 2014

IIJ Announces First Six Months Financial Results for the Fiscal Year Ending
March 31, 2014

TOKYO, Nov. 8, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ")
(Nasdaq:IIJI) (TSE:3774) today announced its consolidated financial results
for the first six months of the fiscal year ending March 31, 2014 (from April
1, 2013 to September 30, 2013, "1H FY2013," "1H13").^1

                                                                           
Highlights of 1H FY2013 Financial Results                                   
                                                
Revenues                      JPY54,397 million   ($553 million, up 6.4%
                                                  YoY)
Operating Income              JPY3,009 million    ($31 million, down 7.8%
                                                  YoY)
Net Income attributable to    JPY2,205 million    ($22 million, up 9.9%
IIJ                                               YoY)
                                                                           
▪1H13 revenues increased by 6.4% YoY due to the revenue growth in network  
services, systems integration and ATM operation business.
▪1H13 operating income decreased by 7.8% YoY mainly due to the increase    
in SG&A expenses along with business expansion.
▪1H13 net income attributable to IIJ increased by 9.9% YoY due to the      
increase in non-operating income.

Overview of 1H FY2013 Financial Results and Business Outlook

"Overall, our surrounding business environment continues to be solid. We're
seeing increasing systems integration demand among Japanese companies this
fiscal year. IT investment has been withheld since the Lehman Shock, yet with
Abenomics, they're now more inclined to invest in IT. The demand for disaster
recovery systems, renewing existing systems, adopting cloud services and so on
is on the rise," said Koichi Suzuki, Chairman and CEO of IIJ.

"As the concept of cloud computing has received wide recognition, Japanese
blue-chip companies are beginning to look at their IT systems differently,"
followed Eijiro Katsu, President and COO of IIJ. "The shift from owning heavy
IT assets to using cloud services is a great business opportunity for us as
cloud requires our strengths: reliable and secure network and system
operation. We're continuously expanding our enterprise cloud service lineups
to support such transition. For instance, we provide SAP, Oracle DB, VMware
and many other business familiar products on top of our cloud. We're also
devoting R&D efforts in SDN (Software Defined Network) technology and have
been continuously releasing and developing its software platform. Some major
network operators in Japan have started to use them for evaluation purpose."

"1H13 revenue reflects strong systems integration demand. The result didn't
exceed our interim target as certain large SNS and telecommunications clients
decreased their network services usage. Weak operating income was due to the
increase in expenses as we expand business both domestically and
internationally while the revenue suffered from the above individual factor,"
continued Katsu.

"Having great market opportunity, our priority is to expand the scale of IIJ
business. We consider M&As and business alliances as one of the possible means
to do so. In the era of network traffic explosion together with the growing
demand to outsource IT systems, our expertise in providing reliable network
services and systems operation for blue-chip companies is increasingly vital.
We continue to strategically expand our business to move toward the next stage
of growth," concluded Suzuki.

^1 Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP. All financial figures
are unaudited and consolidated. The translation of Japanese yen into U.S.
dollars is solely for the convenience of readers outside of Japan. The rate
used for the translation was JPY98.29 per US$1.00, which was the noon buying
rate on September 30, 2013.

1H FY2013 Financial Results Summary                                 
Operating Results Summary                                           
                                1H12         1H13         YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues                   51,109       54,397       6.4
Network Services                 32,259       33,611       4.2
Systems Integration (SI)         17,127       18,673       9.0
Equipment Sales                  641          755          17.7
ATM Operation Business           1,082        1,358        25.5
Total Costs                      40,961       43,967      7.3
Network Services                 25,383       26,465      4.3
Systems Integration (SI)         14,089       15,765      11.9
Equipment Sales                  551          681         23.6
ATM Operation Business           938          1,056       12.6
SG&A Expenses and R&D            6,885        7,421        7.8
Operating Income                 3,263        3,009        (7.8)
Income before Income Tax Expense 3,176        3,348        5.4
Net Income attributable to IIJ   2,007        2,205        9.9

                                      

Segment Results Summary                                     
                                1H12         1H13
                                JPY millions JPY millions
Total Revenues                   51,109       54,397
Network Services and SI Business 50,311       53,296
ATM Operation Business           1,082        1,358
Elimination                      284          257
Operating Income                 3,263        3,009
Network Service and SI Business  3,260        2,829
ATM Operation Business           83           241
Elimination                      80           61

We have omitted segment analysis because most of our revenues are dominated by
Network Services and Systems Integration (SI) Business.

1H FY2013 Results of Operation

Revenues

Total revenues were JPY54,397 million, up 6.4% YoY.

Network Services revenue was JPY33,611 million, up 4.2% YoY.

Revenues for Internet connectivity services for corporate use were JPY8,358
million, up 6.9% YoY. The increase was mainly due to the increasing demands
for broader bandwidth and mobile service.

Revenues for Internet connectivity services for home use were JPY2,856
million, up 3.2% YoY. The revenue grew both YoY and QoQ as we continue to
accumulate orders for LTE mobile data communication service.

WAN services revenues were JPY12,619 million, stayed almost flat compared to
1H12.

Outsourcing services revenues were JPY9,778 million, up 7.5% YoY. The revenue
growth was mainly due to revenue increase in "IIJ GIO Hosting Package
Services" and datacenter-related services.

Network Services Revenues Breakdown                                        
                                       1H12         1H13         YoY %
                                                                  Change
                                       JPY millions JPY millions 
Internet Connectivity Service           7,816        8,358        6.9
(Corporate Use)
IP Service^2                            4,934        5,268        6.8
IIJ FiberAccess/F and IIJ DSL/F         1,606        1,575        (1.9)
IIJ Mobile Service^3                    1,156        1,401        21.2
Others                                  120          114          (4.6)
Internet Connectivity Service (Home     2,768        2,856        3.2
Use)
Under IIJ Brand                         621          980          57.9
hi-ho                                   1,841        1,532        (16.8)
OEM                                     306          344          12.1
WAN Services                            12,577       12,619       0.3
Outsourcing Services                    9,098        9,778        7.5
Total Network Services                  32,259       33,611       4.2

                                      

Number of Contracts for Connectivity Services                              
                                  as of         as of         YoY
                                   Sep. 30, 2012 Sep. 30, 2013 Change
Internet Connectivity Services     100,282       123,334       23,052
(Corporate Use)
IP Service (-99Mbps)               911           879           (32)
IP Service (100Mbps-999Mbps)       369           428           59
IP Service (1Gbps-)                164           255           91
IIJ Data Center Connectivity       315           299           (16)
Service
IIJ FiberAccess/F and IIJ DSL/F    45,741        52,374        6,633
IIJ Mobile Service^4               51,488        67,789        16,301
Others                             1,294         1,310         16
Internet Connectivity Services     431,620       552,993       121,373
(Home Use)
Under IIJ Brand                    65,808        123,920       58,112
hi-ho                              152,031       155,045       3,014
OEM                                213,781       274,028       60,247
Total Contracted Bandwidth         1,003.3Gbps   1,454.8Gbps   451.5Gbps

SI revenues were JPY18,673 million, up 9.0% YoY.

Systems construction revenue, a one-time revenue, was JPY7,151 million, up
6.8% YoY, mainly due to the continuous accumulation of orders. Systems
operation and maintenance revenue, a recurring revenue, was JPY11,522 million,
up 10.4% YoY. The increase was mainly due to the increase in revenue of "IIJ
GIO Component Services."

The orders received for SI and equipment sales were JPY25,203 million, up
21.2% YoY. In the breakdown, the orders received for systems construction and
equipment sales were JPY10,466 million, up 26.1% YoY, and the orders received
for systems operation and maintenance were JPY14,737 million, up 18.0% YoY.

The order backlog for SI and equipment sales as of September 30, 2013 amounted
to JPY25,855 million, up 30.1% YoY. In the breakdown, the order backlog for
systems construction and equipment sales was JPY6,263 million, up 30.4% YoY,
and the order backlog for systems operation and maintenance was JPY19,592
million, up 30.0% YoY.

Equipment sales revenues were JPY755 million, up 17.7% YoY.

ATM Operation Business revenues were JPY1,358 million, up 25.5% YoY. The
increase was mainly in accordance with the increase in the numbers of newly
placed ATMs. 698 ATMs were placed as of November 8, 2013.

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

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

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

Cost and expense

Total cost of revenues was JPY43,967 million, up 7.3% YoY.

Cost of Network Services revenues was JPY26,465 million, up 4.3% YoY. Gross
margin was JPY7,146 million, up 3.9% YoY. Gross margin ratio was 21.3%, almost
the same as 1H12. The increase was mainly due to the increase in
circuit-related, personnel-related and network operation related costs.

Cost of SI revenues was JPY15,765 million, up 11.9% YoY. The increase was
mainly due to the increase in outsourcing-related and personnel-related costs.
Gross margin was JPY2,908 million, down 4.3% YoY and gross margin ratio was
15.6%.

Cost of Equipment Sales revenues was JPY681 million, up 23.6% YoY. Gross
margin was JPY74 million and gross margin ratio was 9.8%.

Cost of ATM Operation Business revenues was JPY1,056 million, up 12.6% YoY.
The increase was in accordance with the number of newly placed ATMs. Gross
margin was JPY302 million and gross margin ratio was 22.2%.

SG&A and R&D expenses

SG&A and R&D expenses were JPY7,421 million, up 7.8% YoY.

Sales and Marketing expenses were JPY4,162 million, up 5.9% YoY. The increase
was mainly due to the increase in personnel-related expenses, rent expenses
related to expanded office spaces, and sales commission expenses related to
Internet connectivity services for home use.

General and Administrative expenses were JPY3,037 million, up 10.6% YoY. The
increase was mainly due to the increase in personnel-related expenses related
to the increase in employees, rent expenses related to the expanded office
spaces and depreciation and other expenses related to the office relocation.

Research and Development expenses were JPY222 million, up 6.4% YoY.

Operating income

Operating income was JPY3,009 million, down 7.8% YoY. The decrease was mainly
due to the increase in SG&A expenses along with business expansion.

Other income (expenses)

Other income (expenses) was an income of JPY339 million (an expense of JPY87
million for 1H12), mainly due to foreign currency gains of JPY139 million
(foreign currency losses of JPY50 million for 1H12) and net gain on other
investments of JPY172 million.

Income before income tax expense

Income before income tax expense was JPY3,348 million, up 5.4% YoY (JPY3,176
million for 1H12) as a result that the increase in non-operating income
exceeded the decrease in operating income.

Net income

Income tax expense was JPY1,243 million (JPY1,251 million for 1H12).

Equity in net income of equity method investees was JPY127 million (JPY83
million for 1H12) mainly due to net income of Internet Revolution, Inc. and
Internet Multifeed Co.

As a result of the above, net income was JPY2,232 million, up 11.1% YoY
(JPY2,008 million for 1H12).

Net income attributable to IIJ

Net income attributable to non-controlling interests was JPY27 million mainly
related to net income of Trust Networks Inc (Net loss attributable to
non-controlling interests of JPY1 million for 1H12).

Net income attributable to IIJ was JPY2,205 million, up 9.9 % YoY (JPY2,007
million for 1H12).

1H FY2013 Financial Condition

Balance Sheets

As of September 30, 2013, the balance of total assets was JPY97,842 million,
increased by JPY15,731 million from the balance as of March 31, 2013
(JPY82,111 million as of March 31, 2013).

As for current assets as of September 30, 2013, as compared to the respective
balances as of March 31, 2013, cash and cash equivalents increased by
JPY13,523 million mainly due to the equity finance in 1H13, accounts
receivable decreased by JPY2,058 million, and prepaid expenses increased by
JPY944 million. As for noncurrent assets, as compared to the respective
balance as of March 31, 2013, property and equipment increased by JPY758
million and guarantee deposits increased by JPY658 million along with our
office expansion. As for current liabilities, as compared to the respective
balance as of March 31, 2013, accounts payable decreased by JPY1,554 million
and income taxes payable decreased by JPY793 million.

As for the balances of capital lease obligations, as compared to the
respective balances as of March 31, 2013, capital lease obligations-current
portion increased by JPY187 million to JPY3,692 million and capital lease
obligations-noncurrent decreased by JPY293 million to JPY5,077 million.

As of September 30, 2013, the balance of other investments increased by
JPY1,408 million to JPY5,180 million. The breakdown of other investments were
JPY3,205 million in nonmarketable equity securities, JPY1,262 million in
available-for-sale securities and JPY712 million in other.

As of September 30, 2013, the balance of non-amortized intangible assets
(excluding telephone rights) such as goodwill was JPY6,077 million, and the
breakdown of non-amortized intangible assets were JPY5,970 million in goodwill
and JPY107 million in trademark. The balance of amortized intangible assets,
which was customer relationships, was JPY4,432 million.

Total IIJ shareholders' equity as of September 30, 2013 increased by JPY19,547
million from the respective balance as of March 31, 2013 as a result of equity
finance and net income in 1H13, JPY57,153 million. IIJ shareholders' equity
ratio (total IIJ shareholders' equity/total assets) as of September 30, 2013
was 58.4%.

Cash Flows

Cash and cash equivalents as of September 30, 2013 were JPY25,782 million
compared to JPY11,670 million as of September 30, 2012.

Net cash provided by operating activities for 1H13 was JPY3,696 million
compared to net cash provided by operating activities of JPY3,970 million for
1H12. The decrease was mainly due to accounts payable and other current
liabilities decreased, while net income and depreciation and amortization,
which are non-cash expenses, increased.

Net cash used in investing activities for 1H13 was JPY4,202 million compared
to net cash used in investing activities of JPY3,054 million for 1H12, mainly
due to payments for purchase of property and equipment of JPY2,784 million
(JPY2,785 million for 1H12), payments for purchase of other investments of
JPY1,083 million (JPY374 million for 1H12) and payments for guarantee deposits
of JPY662 million (JPY22 million for 1H12).

Net cash provided by financing activities for 1H13 was JPY13,883 million
compared to net cash used in financing activities of JPY2,756 million for
1H12, mainly due to proceeds from issuance of common stock of JPY17,271
million, principal payments under capital leases of JPY1,972 million (JPY1,813
million for 1H12), payment of FY2012 year-end dividends of JPY405 million
(JPY355 million for 1H12).

FY2013 Financial Targets (announced on May 15, 2013)

Due to seasonal factors, our revenue volume tends to be larger in the second
half than the first half while our fixed type expenses such as
personnel-related tend to increase from the beginning of a fiscal year. 1H13
operating income decreased compared to 1H12 mainly due to: the increase in the
fixed type expenses such as personnel- and offices- related expenses,
reflecting the increased number of new employees accordingly with our business
expansion strategy, the relatively small systems construction revenue
recognition while we accumulated a large number of order backlog which will be
realized as revenue in 2H13, and the decrease in recurring revenues from
certain large telecommunication and SNS game clients for pricing revision at
the beginning of FY2013 and reduction in their server usage.

Our FY2013 financial targets announced on May 15, 2013 remain unchanged as the
orders for systems construction continue to be accumulated at a good pace
toward 2H13. Also, the monthly recurring revenues of network services and
systems operation and maintenance should continue to grow.

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                                                             
                                                1H12         1H13
                                                JPY millions JPY millions
Adjusted EBITDA                                  6,902        7,247
Depreciation and Amortization^5                  3,639        4,238
Operating Income                                 3,263        3,009
Other Income (Expense)                           (87)         339
Income Tax Expense                               1,251        1,243
Equity in Net Income of Equity Method Investees  83           127
Net Income                                       2,008        2,232
Less: Net Income attributable to Noncontrolling  (1)          (27)
Interests
Net Income attributable to IIJ                   2,007        2,205

                                      

CAPEX                                                                       
                                                1H12         1H13
                                                JPY millions JPY millions
CAPEX, including Capital Leases                  5,903        4,647
Acquisition of Assets by Entering into Capital   3,118        1,863
Leases
Purchase of Property and Equipment               2,785        2,784

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

Presentation

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

About Internet Initiative Japan Inc.

Founded in 1992, Internet Initiative Japan Inc. 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 systems integration,
security services, Internet access, and cloud computing. Moreover, IIJ has
built one of the largest Internet backbone networks in Japan that is connected
to the United States and the United Kingdom. IIJ listed on NASDAQ in 1999 and
on the First Section of the Tokyo Stock Exchange in 2006. For more information
about IIJ, visit the IIJ Web site at http://www.iij.ad.jp/en/.

Statements made in this press release regarding IIJ's or managements'
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
revenues, 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 but not limited to: a decrease
of corporate spending or capital expenditure due to depression in the Japanese
economy and/or corporate earnings decreased, an inability to achieve
anticipated results and cause negative impact on profitability, a possibility
that less of reliability for our services and loss of business chances due to
interrupt or suspend of our services, an excess increase in network rerated
cost and outsourcing cost, personnel cost etc, a possibility to lose business
opportunity due to our inadequate resources in personnel and others, an
increase in competition and strong pricing pressure, the recording of an
impairment loss as a results of an impairment test on the non-amortized
intangible assets such as goodwill, a decline in value and trending value of
our holding securities. Please refer to IIJ's filings on Form 20-F of its
annual report and other filings with the United States Securities and Exchange
Commission ("SEC") for other risks.

Internet Initiative Japan Inc.
Quarterly Consolidated Balance Sheets (Unaudited)
(As of March 31, 2013 and September 30, 2013)

                            As of March 31, As of September 30, 2013
                             2013
                            Thousands of    Thousands of  Thousands of
                             JPY             U.S. Dollars  JPY
ASSETS                                                   
CURRENT ASSETS:                                          
Cash and cash equivalents    12,258,872      262,302       25,781,630
Accounts receivable, net of
allowance for
doubtful accounts of JPY
93,934 thousand and          18,764,703      169,973       16,706,721
JPY 54,390 thousand at
March 31, 2013
and September 30, 2013,
respectively
Inventories                  1,301,684       20,982        2,062,306
Prepaid expenses             2,492,164       34,958        3,436,081
Deferred tax assets —current 1,046,828       10,598        1,041,654
Other current assets, net of
allowance for
doubtful accounts of JPY
10,732 thousand and          1,576,718       14,752        1,449,953
JPY 719 thousand at March
31, 2013 and
September 30, 2013,
respectively
Total current assets         37,440,969      513,565       50,478,345
INVESTMENTS IN EQUITY METHOD 1,681,723       18,406        1,809,081
INVESTEES
OTHER INVESTMENTS            3,771,262       52,697        5,179,525
PROPERTY AND EQUIPMENT, net
of accumulated
depreciation and
amortization of JPY
29,516,394                   23,025,755      241,978       23,784,050
thousand and JPY 32,636,483
thousand at March
31, 2013 and September 30,
2013, respectively
GOODWILL                     5,969,951       60,738        5,969,951
OTHER INTANGIBLE ASSETS —Net 4,791,431       46,468        4,567,370
GUARANTEE DEPOSITS           2,051,449       27,570        2,709,872
DEFERRED TAX ASSETS          163,773         1,347         132,412
—Noncurrent
NET INVESTMENT IN SALES-TYPE 898,040         8,476         833,065
LEASES—Noncurrent
Prepaid expenses —Noncurrent 2,201,108       22,983        2,258,981
OTHER ASSETS, net of
allowance for doubtful
accounts of JPY 71,727
thousand and JPY 71,432      115,805         1,213         119,198
thousand at March 31, 2013
and September 30, 2013,
respectively
TOTAL                        82,111,266      995,441       97,841,850


                            As of March 31, As of September 30, 2013
                             2013
                            Thousands of    Thousands of  Thousands of
                             JPY             U.S. Dollars  JPY
LIABILITIES AND                                          
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:                                     
Short-term borrowings        9,400,000       95,635        9,400,000
Long-term borrowings         1,010,000       9,971         980,000
—current portion
Capital lease obligations    3,505,471       37,566        3,692,346
—current portion
Accounts payable —trade      10,973,120      96,443        9,479,379
Accounts payable —other      949,264         9,041         888,669
Income taxes payable         1,669,849       8,916         876,399
Accrued expenses             2,266,427       20,152        1,980,780
Deferred income —current     1,806,074       18,627        1,830,818
Other current liabilities    803,902         9,340         917,982
Total current liabilities    32,384,107      305,691       30,046,373
LONG-TERM BORROWINGS         980,000         --            --
CAPITAL LEASE OBLIGATIONS    5,370,365       51,654        5,077,037
—Noncurrent
ACCRUED RETIREMENT AND
PENSION COSTS                2,112,085       22,684        2,229,624
—Noncurrent
DEFERRED TAX LIABILITIES     412,132         6,162         605,585
—Noncurrent
DEFERRED INCOME —Noncurrent  2,562,208       22,722        2,233,363
OTHER NONCURRENT LIABILITIES 656,191         4,498         442,127
Total Liabilities            44,477,088      413,411       40,634,109
COMMITMENTS AND                                          
CONTINGENCIES
                                                        
SHAREHOLDERS' EQUITY:                                    
Common-stock
—authorized, 75,520,000
shares;                      16,833,847      259,406       25,497,022
issued and outstanding,
41,295,600 shares at
March 31, 2013
—authorized, 75,520,000
shares;
issued and outstanding,                                 
46,697,800 shares at
September 30, 2013
Additional paid-in capital   27,300,325      365,582       35,933,105
Accumulated deficit          (6,399,088)     (46,796)      (4,599,585)
Accumulated other            263,770         7,274         714,970
comprehensive income
Treasury stock —758,800
shares and 758,813 shares
held by the company at      (392,079)       (3,989)       (392,122)
March 31, 2013 and
September 30, 2013,
respectively
Total Internet Initiative
Japan Inc. shareholders'     37,606,775      581,477       57,153,390
equity
NONCONTROLLING INTERESTS     27,403          553           54,351
Total equity                 37,634,178      582,030       57,207,741
TOTAL                        82,111,266      995,441       97,841,850
                                                                          
                                                        
(Note) The U.S. dollar amounts have been translated from yen, for
convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.



Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income and
Quarterly Consolidated Statements of Other Comprehensive Income (Unaudited)
(For the six months ended September 30, 2012 and September 30, 2013)

Quarterly Consolidated Statements of Income
                              Six Months Ended    Six Months Ended
                               September 30, 2012  September 30, 2013
                              Thousands of        Thousands of  Thousands of
                               JPY                 U.S. Dollars  JPY
REVENUES:                                                      
Network services:                                              
Internet connectivity services 7,815,625           85,035        8,358,114
(corporate use)
Internet connectivity services 2,768,151           29,055        2,855,790
(home use)
WAN services                   12,577,216          128,379       12,618,348
Outsourcing services           9,097,610           99,484        9,778,277
Total                          32,258,602          341,953       33,610,529
Systems integration:                                           
Systems construction           6,693,586           72,757        7,151,242
Systems operation and          10,433,028          117,222       11,521,775
maintenance
Total                          17,126,614          189,979       18,673,017
Equipment sales                641,780             7,684         755,309
ATM operation business         1,082,005           13,817        1,358,104
Total revenues                 51,109,001          553,433       54,396,959
COST AND EXPENSES:                                             
Cost of network services       25,382,614          269,247       26,464,339
Cost of systems integration    14,089,358          160,395       15,765,185
Cost of equipment sales        551,245             6,930         681,162
Cost of ATM operation business 938,041             10,743        1,055,944
Total cost                     40,961,258          447,315       43,966,630
Sales and marketing            3,931,676           42,350        4,162,559
General and administrative     2,745,077           30,900        3,037,201
Research and development       208,283             2,255         221,590
Total cost and expenses        47,846,294          522,820       51,387,980
OPERATING INCOME               3,262,707           30,613        3,008,979
OTHER INCOME (EXPENSE):                                        
Dividend income                34,762              364           35,760
Interest income                14,823              130           12,801
Interest expense               (145,163)           (1,348)       (132,467)
Foreign exchange gains         (49,997)            1,417         139,285
(losses)
Net gain on sales of other     13,565              843           82,852
investments
Net gain on other investments  --                  1,754         172,423
Losses on write-down of other  (19,788)            --            --
investments
Other —net                     65,389              285           27,965
Other income (expense) —net    (86,409)            3,445         338,619
INCOME FROM OPERATIONS BEFORE
INCOME
TAX EXPENSE AND EQUITY IN NET 3,176,298           34,058        3,347,598
INCOME
OF EQUITY METHOD INVESTEES
INCOME TAX EXPENSE            1,251,172           12,648        1,243,173
EQUITY IN NET INCOME OF EQUITY
METHOD                         83,088              1,296         127,358
INVESTEES
NET INCOME                     2,008,214           22,706        2,231,783
LESS: NET INCOME ATTRIBUTABLE
TO                             (1,058)             (274)         (26,912)
NONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE TO
INTERNET                       2,007,156           22,432        2,204,871
INITIATIVE JAPAN INC.


                              Six Months Ended    Six Months Ended
                               September 30, 2012  September 30, 2013
NET INCOME PER SHARE                                           
BASIC WEIGHTED-AVERAGE NUMBER
OF                             40,536,800                       42,683,242
SHARES (shares)
DILUTED WEIGHTED-AVERAGE
NUMBER                         40,564,800                       42,734,376
OF SHARES (shares)
BASIC WEIGHTED-AVERAGE NUMBER
OF                             81,073,600                       85,366,484
ADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE
NUMBER                         81,129,600                       85,468,752
OF ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE     49.51               0.53          51.66
(JPY / U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE   49.48               0.52          51.59
(JPY / U.S. Dollars / JPY)
BASIC NET INCOME PER ADS
EQUIVALENT(JPY / U.S.        24.76               0.26          25.83
Dollars / JPY)
DILUTED NET INCOME PER ADS
EQUIVALENT(JPY / U.S.        24.74               0.26          25.80
Dollars / JPY)

(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.

Quarterly Consolidated Statements of Other Comprehensive Income
                              Six Months Ended    Six Months Ended
                               September 30, 2012  September 30, 2013
                              Thousands of        Thousands of  Thousands of
                               JPY                 U.S. Dollars  JPY
NET INCOME                     2,008,214           22,706        2,231,783
Comprehensive income (loss):                                   
Foreign currency translation   3,299               2,770         272,253
adjustments
Unrealized holding gain (loss) (13,379)            1,820         178,865
on securities
Defined benefit pension plans  119                 1             118
Total comprehensive income    1,998,253           27,297        2,683,019
Less: Comprehensive income
attributable to                (1,058)             (274)         (26,948)
noncontrolling interests
Comprehensive income
attributable to Internet       1,997,195           27,023        2,656,071
Initiative Japan Inc.


(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.



Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(For the six months ended September 30, 2012 and September 30, 2013)

                              Six Months Ended Six Months Ended
                             September 30,    September 30, 2013
                              2012
                             Thousands of     Thousands of  Thousands of
                              JPY              U.S. Dollars  JPY
OPERATING ACTIVITIES:                                      
Net income                    2,008,214        22,706        2,231,783
Adjustments to reconcile net
income to net cash                                         
provided by operating
activities:
Depreciation and amortization 3,639,342        43,122        4,238,476
Provision for retirement and
pension costs,               106,730          1,198         117,723
 less payments
Provision for (reversal of)
allowance for doubtful        86               (480)         (47,200)
accounts
Loss on disposal of property  2,315            37            3,616
and equipment
Net gain on sales of other    (13,565)         (843)         (82,852)
investments
Net gain on other investments --               (1,754)       (172,423)
Impairment of other           19,788           --            --
investments
Foreign exchange losses       36,218           (896)         (88,024)
(gains), net
Equity in net income of       (83,088)         (1,296)       (127,358)
equity method investees
Deferred income tax expense   124,330          1,725         169,584
Others                        967              10            934
Changes in operating assets
and liabilities net of
effects                                                    
from acquisition of a
company:
Decrease in accounts          177,411          21,733        2,136,106
receivable
Decrease in net investment in
sales-type                    141,255          661           64,975
lease — noncurrent
Increase in inventories       (782,389)        (7,718)       (758,645)
Increase in prepaid expenses  (949,899)        (9,493)       (933,077)
Decrease in other current and 48,180           1,547         152,072
noncurrent assets
Increase (decrease) in        301,591          (15,391)      (1,512,769)
accounts payable
Decrease in income taxes      (1,320,716)      (8,075)       (793,648)
payable
Increase (decrease) in        276,090          (3,832)       (376,601)
deferred income-noncurrent
Increase (decrease) in
accrued expenses and         237,403          (5,362)       (527,057)
other current and noncurrent
liabilities
Net cash provided by          3,970,263        37,599        3,695,615
operating activities
INVESTING ACTIVITIES:                                      
Purchase of property and      (2,785,190)      (28,324)      (2,783,991)
equipment
Proceeds from sales of        375,005          1,252         123,086
property and equipment
Purchase of                   (19,606)         (345)         (33,902)
available-for-sale securities
Purchase of other investments (373,909)        (11,015)      (1,082,640)
Investment in an equity       (100,000)        --            --
method investee
Proceeds from sales of        --               2,232         219,362
available-for-sale securities
Proceeds from sales of other  89,117           41            4,000
investments
Payments of guarantee         (22,473)         (6,738)       (662,283)
deposits
Refund of guarantee deposits  12,397           72            7,112
Payments for refundable       (368)            --            --
insurance policies
Refund from insurance         --               163           16,026
policies
Acquisition of a newly
controlled company,           (229,058)        --            --
net of cash acquired
Other                         60               (94)          (9,250)
Net cash used in investing    (3,054,025)      (42,756)      (4,202,480)
activities
                                                                           
                                                                           
                              Six Months Ended Six Months Ended
                             September 30,    September 30, 2013
                              2012
                             Thousands of     Thousands of  Thousands of
                              JPY              U.S. Dollars  JPY
FINANCING ACTIVITIES:                                      
Proceeds from issuance of
short-term borrowings         21,000           2,035         200,000
with initial maturities over
three months
Repayments of short-term
borrowings with initial       (1,010,000)      (12,311)      (1,210,000)
maturities over three months
and long-term borrowings
Principal payments under      (1,812,654)      (20,068)      (1,972,457)
capital leases
Net increase in short-term
borrowings with               400,000          --            --
initial maturities less than
three months
Dividends paid                (354,697)        (4,124)       (405,368)
Proceeds from issuance of
common stock, net of issuance --               175,717       17,271,204
cost
Other                         --               (0)           (41)
Net cash provided by (used    (2,756,351)      141,249       13,883,338
in) financing activities

EFFECT OF EXCHANGE RATE
CHANGES ON                    (26,261)         1,488         146,285
CASH AND CASH EQUIVALENTS
                                                          
NET INCREASE (DECREASE) IN
CASH AND CASH                (1,866,374)      137,580       13,522,758
EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF                  13,536,824       124,722       12,258,872
THE PERIOD
CASH AND CASH EQUIVALENTS,
END OF                        11,670,450       262,302       25,781,630
THE PERIOD

ADDITIONAL CASH FLOW                                       
INFORMATION:
Interest paid                 145,876          1,351         132,774
Income taxes paid             2,288,440        15,604        1,533,720
                                                          
NONCASH INVESTING AND                                      
FINANCING ACTIVITIES:
Acquisition of assets by      3,118,126        18,955        1,863,053
entering into capital leases
Facilities purchase           804,789          9,041         888,669
liabilities
Asset retirement obligation   --               560           55,066
Acquisition of a company:                                  
Assets acquired               404,140          --            --
Liabilities assumed           104,321          --            --
Noncontrolling interests      119              --            --
Cash paid                     (299,700)        --            --
Cash acquired                70,642           --            --
Acquisition of a newly
controlled company,           (229,058)        --            --
net of cash acquired


(Note) The U.S. dollar amounts have been translated from yen, for
convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.


Going Concern Assumption (Unaudited)
Nothing to be reported.

Material Changes In Shareholders' Equity(Unaudited)
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, common stock and additional paid-in capital increased
by JPY8,662 million and JPY8,610 million, respectively, for the second
quarter of fiscal year ending March 31, 2014. The balances of common stock
and additional paid-in capital as of September 30, 2013 were JPY25,497
million and JPY 35,933 million, respectively.

Segment Information (Unaudited)
Business Segments:
Revenues:
                              Six Months Ended      Six Months Ended
                               September 30, 2012    September 30, 2013
                              Thousands of JPY      Thousands of JPY
Network service and systems    50,310,706            53,295,762
integration business
Customers                      50,026,996            53,038,855
Intersegment                   283,710               256,907
ATM operation business         1,082,005             1,358,104
Customers                      1,082,005             1,358,104
Intersegment                   --                    --
Elimination                    283,710               256,907
Consolidated total             51,109,001            54,396,959
                                                   
Segment profit or loss:                                                     
                              Six Months Ended      Six Months Ended
                               September 30, 2012    September 30, 2013
                              Thousands of JPY      Thousands of JPY
Network service and systems    3,260,156             2,829,032
integration business
ATM operation business         82,920                240,882
Elimination                    80,369                60,935
Consolidated operating income  3,262,707             3,008,979

Geographic information is not presented due to immateriality of revenue
attributable to international operations.

Subsequent Events (Unaudited)
Nothing to be reported.

2nd Quarter FY2013 Consolidated Financial Results (3 months)

The following tables are highlight data of 2nd Quarter FY2013 consolidated
financial results (unaudited, from July 1, 2013 to September 30, 2013).

Operating Results Summary                                           
                                2Q12         2Q13         YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues:                  26,268       27,956       6.4
Network Services                 16,167       16,825       4.1
Systems Integration (SI)         9,175        9,981        8.8
Equipment Sales                  311          437          40.3
ATM Operation Business           615          713          16.1
Cost of Revenues:                20,939       22,555       7.7
Network Services                 12,619       13,223       4.8
Systems Integration (SI)         7,526        8,415        11.8
Equipment Sales                  277          396          42.5
ATM Operation Business           517          521          0.8
SG&A Expenses and R&D            3,440        3,697        7.5
Operating Income                 1,889        1,704        (9.8)
Income before Income Tax Expense 1,803        1,917        6.3
Net Income attributable to IIJ   1,110        1,251        12.7

                                      

Network Services Revenues Breakdown                                        
                                       2Q12         2Q13         YoY %
                                                                  Change
                                       JPY millions JPY millions 
Internet Connectivity Service           3,951        4,167        5.5
(Corporate Use)
IP Service                              2,495        2,587        3.7
IIJ FiberAccess/F and IIJ DSL/F         804          792          (1.4)
IIJ Mobile Service                      592          731          23.5
Others                                  60           57           (4.9)
Internet Connectivity Service (Home     1,340        1,459        8.9
Use)
Under IIJ Brand                         303          525          73.4
hi-ho                                   882          759          (13.9)
OEM                                     155          175          12.9
WAN Services                            6,264        6,308        0.7
Outsourcing Services                    4,612        4,891        6.0
Network Services Revenues               16,167       16,825       4.1

Reconciliation of Non-GAAP Financial Measures

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                                                             
                                                2Q12         2Q13
                                                JPY millions JPY millions
Adjusted EBITDA                                  3,730        3,871
Depreciation and Amortization                    1,841        2,167
Operating Income                                 1,889        1,704
Other Income (Expense)                           (86)         213
Income Tax Expense                               736          706
Equity in Net Income of Equity Method Investees  50           62
Net income                                       1,117        1,273
Less: Net income attributable to noncontrolling  (7)          (22)
interests
Net Income attributable to IIJ                   1,110        1,251

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                                                                       
                                                2Q12         2Q13
                                                JPY millions JPY millions
CAPEX, including capital leases                  2,606        1,754
Acquisition of Assets by Entering into Capital   1,479        688
Leases
Purchase of Property and Equipment               1,127        1,065


Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(For the three months ended September 30, 2012 and September 30, 2013)

                                Three Months
                               Ended           Three Months Ended
                                September 30,   September 30, 2013
                                2012
                               Thousands of    Thousands of    Thousands of
                                JPY             U.S. Dollars    JPY
REVENUES:                                                     
Network services:                                             
Internet connectivity services  3,950,858       42,396          4,167,105
(corporate use)
Internet connectivity services  1,339,001       14,839          1,458,531
(home use)
WAN services                    6,264,795       64,183          6,308,549
Outsourcing services            4,612,416       49,761          4,891,009
Total                           16,167,070      171,179         16,825,194
Systems integration:                                          
Systems Construction            3,933,690       42,601          4,187,234
Systems Operation and           5,241,338       58,942          5,793,403
Maintenance
Total                           9,175,028       101,543         9,980,637
Equipment sales                 311,145         4,442           436,616
ATM operation business          614,495         7,258           713,411
Total revenues                  26,267,738      284,422         27,955,858
COST AND EXPENSES:                                            
Cost of network services        12,618,608      134,527         13,222,659
Cost of systems integration     7,525,533       85,619          8,415,537
Cost of equipment sales         278,206         4,034           396,474
Cost of ATM operation business  516,954         5,299           520,842
Total cost                      20,939,301      229,479         22,555,512
Sales and marketing             2,001,385       20,832          2,047,534
General and administrative      1,334,025       15,636          1,536,859
Research and development        104,343         1,144           112,446
Total cost and expenses         24,379,054      267,091         26,252,351
OPERATING INCOME                1,888,684       17,331          1,703,507
OTHER INCOME (EXPENSE):                                       
Dividend income                 12,228          88              8,649
Interest income                 6,630           71              6,955
Interest expense                (73,726)        (652)           (64,116)
Foreign exchange gains (losses) (29,579)        475             46,666
Net gain on sales of other      13,563          274             26,932
investments
Net gain on other investments   --              1,754           172,423
Losses on write-down of other   (17,825)        --              --
investments
Other—net                       3,043           163             16,060
Other income (expense) — net    (85,666)        2,173           213,569
INCOME FROM OPERATIONS BEFORE
INCOME
TAX EXPENSE AND EQUITY IN NET  1,803,018       19,504          1,917,076
INCOME
IN EQUITY METHOD INVESTEES
INCOME TAX EXPENSE             736,412         7,180           705,754
EQUITY IN NET INCOME OF EQUITY  50,201          625             61,404
METHOD INVESTEES
NET INCOME                      1,116,807       12,949          1,272,726
LESS: NET INCOME ATTRIBUTABLE
TO                              (6,358)         (221)           (21,665)
NONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE TO      1,110,449       12,728          1,251,061
INTERNET INITIATIVE JAPAN INC.

                                Three Months
                               Ended           Three Months Ended
                                September 30,   September 30, 2013
                                2012
NET INCOME PER SHARE                                          
BASIC WEIGHTED-AVERAGE NUMBER
OF                              40,536,800                     44,804,204
SHARES (shares)
DILUTED WEIGHTED-AVERAGE NUMBER 40,569,000                     44,856,748
OF SHARES (shares)
BASIC WEIGHTED-AVERAGE NUMBER
OF                              81,073,600                     89,608,408
ADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE NUMBER 81,138,000                     89,713,496
OF ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE      27.39           0.28            27.92
(JPY / U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE    27.37           0.28            27.89
(JPY / U.S. Dollars / JPY)
BASIC NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars 13.70           0.14            13.96
/ JPY)
DILUTED NET INCOME PER ADS
EQUIVALENT (JPY / U.S. Dollars 13.69           0.14            13.95
/ JPY)

(Note) The U.S. dollar amounts have been translated from yen, for convenience
only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.


Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(For the three months ended September 30, 2012 and September 30, 2013)

                                 Three Months
                                Ended         Three Months Ended
                                 September 30, September 30, 2013
                                 2012
                                Thousands of  Thousands of  Thousands of
                                 JPY           U.S. Dollars  JPY
OPERATING ACTIVITIES:                                      
Net income                       1,116,807     12,949        1,272,726
Adjustments to reconcile net
income to net cash                                         
provided by operating
activities:
Depreciation and amortization    1,841,047     22,054        2,167,716
Provision for retirement and
pension                          53,919        614           60,353
costs, less payments
Provision for (reversal of)
allowance for doubtful          145           (364)         (35,761)
accounts
Loss on disposal of property and 1,271         30            2,971
equipment
Net gain on sales of other       (13,563)      (274)         (26,932)
investments
Net gain on other investments    --            (1,754)       (172,423)
Impairment of other investments  17,825        --            --
Foreign exchange losses (gains), 2,373         (82)          (8,072)
net
Equity in net income of equity
method                           (50,201)      (625)         (61,404)
investees
Deferred income tax benefit      (27,279)      (1,004)       (98,657)
Others                           22,818        (106)         (10,471)
Changes in operating assets and
liabilities net of effects                                 
from acquisition of a company:
Increase in accounts receivable  (1,241,974)   (8,001)       (786,378)
Decrease in net investment in
sales-type                       98,205        687           67,556
lease―noncurrent
Increase in inventories          (702,255)     (5,627)       (553,097)
Decrease prepaid expenses        617,321       4,933         484,823
Decrease in other current and    343,478       355           34,858
noncurrent assets
Increase in accounts payable     175,983       4,568         448,979
Increase in income taxes payable 724,293       7,074         695,246
Increase in deferred income―     271,080       749           73,650
noncurrent
Decrease in accrued expenses,
other                            (705,353)     (14,125)      (1,388,312)
current and noncurrent
liabilities
Net cash provided by operating   2,545,940     22,051        2,167,371
activities
INVESTING ACTIVITIES:                                      
Purchase of property and         (1,126,849)   (10,840)      (1,065,478)
equipment
Proceeds from sales of property  210,799       544           53,482
and equipment
Purchase of available-for-sale   (3,503)       (224)         (21,963)
securities
Purchase of other investments    (59,599)      (10,778)      (1,059,363)
Proceeds from sales of           --            2,232         219,362
available-for-sale securities
Proceeds from sales of other     68,996        --            --
investments
Payments of guarantee deposits   (21,708)      (13)          (1,310)
Refund of guarantee deposits     2,646         22            2,192
Payments for refundable          (187)         --            --
insurance policies
Refund from insurance policies   --            163           16,026
Other                            6,773         (59)          (5,815)
Net cash used in investing       (922,632)     (18,953)      (1,862,867)
activities
                                                                           
                                 Three Months
                                Ended         Three Months Ended
                                 September 30, September 30, 2013
                                 2012
                                Thousands of  Thousands of  Thousands of
                                 JPY           U.S. Dollars  JPY
FINANCING ACTIVITIES:                                      
Proceeds from issuance of
short-term borrowings            21,000        --            --
with initial maturities over
three months
Repayments of short-term
borrowings with initial          (1,010,000)   (12,311)      (1,210,000)
maturities over three months
and long-term borrowings
Principal payments under capital (935,440)     (10,085)      (991,296)
leases
Net increase in short-term
borrowings with                  500,000       2,035         200,000
initial maturities less than
three months
Proceeds from issuance of common
stock,                           --            175,717       17,271,204
net of issuance cost
Net cash provided by (used in)   (1,424,440)   155,356       15,269,908
financing activities
                                                          
EFFECT OF EXCHANGE RATE CHANGES
ON                               1,490         (705)         (69,242)
CASH AND CASH EQUIVALENTS
                                                          
NET INCREASE IN CASH AND CASH    200,358       157,749       15,505,170
EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF                     11,470,092    104,553       10,276,460
THE PERIOD
CASH AND CASH EQUIVALENTS, END
OF                               11,670,450    262,302       25,781,630
THE PERIOD

(Note) The U.S. dollar amounts have been translated from yen, for
convenience only, at the rate of JPY 98.29 per 1U.S. dollar which was
the noon buying rate in New York City for cable transfers in foreign
currencies as of September 30, 2013.

Note: The following information is provided to disclose Internet Initiative
Japan Inc. ("IIJ") financial results (unaudited) for the first six months
ended September 30, 2013 in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the First Six Months Ended September 30,  
2013
[Under accounting principles generally accepted in the United States ("U.S.  
GAAP")]
                                      November 8, 2013
Company name: Internet Initiative      Exchange listed: First Section, Tokyo
Japan Inc.                             Stock Exchange
Stock code number: 3774                URL: http://www.iij.ad.jp/
Representative: Eijiro Katsu,          
President and Representative Director
Contact: Akihisa Watai, Managing       TEL: (03) 5259-6500
Director and CFO
Filing of quarterly report (Shihanki-houkokusho) to the regulatory           
organization in Japan: Scheduled on November 14, 2013
Payment of dividend: December 6, 2013  Supplemental material on quarterly
                                       results: Yes
Presentation on quarterly results: Yes
(for institutional investors and       
analysts)
                                      (Amounts of less than JPY one million
                                       are rounded)



1. Consolidated Financial Results for the                             
First Six Months Ended September 30, 2013
(April 1, 2013 to September 30, 2013)                                 
(1)
Consolidated                                          (% shown is
Results of                                               YoY change)
Operations
                                                                         
               Total        Operating      Income before Net Income
              Revenues     Income         Income        attributable
                                           Tax Expense   to IIJ
              JPY      %   JPY      %     JPY      %    JPY      %
               millions     millions       millions      millions
Six Months
Ended          54,397   6.4 3,009    (7.8) 3,348    5.4  2,205    9.9
September 30,
2013
Six Months
Ended          51,109   8.3 3,263    33.3  3,176    38.7 2,007    47.4
September 30,
2012

(Note1) Total comprehensive income attributable to IIJ

 Six Months Ended September 30, 2013: JPY2,656 million (up 33.0%
YoY)

 Six Months Ended September 30, 2012: JPY1,997 million (up 44.4%
YoY)

(Note2) Income before income tax expense represents income from operations
before income tax expense and equity in net income of equity method investees
in IIJ's consolidated financial statements.

                                                                           
                         Basic Net Income         Diluted Net Income
                        attributable             attributable
                         to IIJ per Share         to IIJ per Share
                        JPY                      JPY
Six Months Ended         51.66                    51.59
September 30, 2013
Six Months Ended         49.51                    49.48
September 30, 2012

(Note) IIJ conducted a 1:200 stock split on common stock with an effective
date of October 1, 2012. Accordingly, basic net income attributable to IIJ per
share and diluted net income attributable to IIJ per share have been
calculated as if the stock split were conducted on April 1, 2012, at the
beginning of the fiscal year ended March 31, 2013.

                                                                         
(2) Consolidated Financial Position                                       
              Total    Total    Total IIJ      Total IIJ Shareholders'
             Assets   Equity   Shareholders'  Equity
                                Equity         to Total Assets
             JPY      JPY      JPY millions   %
              millions millions
As of
September 30, 97,842   57,208   57,153         58.4
2013
As of March   82,111   37,634   37,607         45.8
31, 2013

                                                                    
2. Dividends                                                         
                 Dividends per Share
                 1Q-end   2Q-end     3Q-end   Year-end   Total
                 JPY      JPY        JPY      JPY        
Fiscal Year Ended --       1,750.00   --       10.00      1,760.00
March 31, 2013
Fiscal Year
Ending            --       11.00                        
March 31, 2014
Fiscal Year
Ending                              --       11.00      22.00
March 31, 2014
(forecast)
(Note1) Changes in the latest forecasts released: None                   
(Note2) IIJ conducted a 1:200 stock split on common stock with an
effective date of October 1, 2012. 2Q-end dividend (interim
dividend) for the fiscal year ended March 31, 2013 does not take the
stock split into consideration. The dividends for 2Q-end and the         
total dividend for the fiscal year ended March 31, 2013 would have
been JPY8.75 and JPY18.75 respectively if the stock split were
conducted on April 1, 2012, at the beginning of the fiscal year
ended March 31, 2013.



3. Target of Consolidated Financial Results for the Fiscal Year Ending                  
March 31, 2014
(April 1, 2013                                            (% shown is YoY
through March                                          change)           
31, 2014)
                                                                                       
                                   Income before               Basic Net
       Total         Operating     Income Tax    Net Income    Income
      Revenues      Income        Expense       attributable  attributable
                                   (Benefit)     to IIJ        to IIJ
                                                               per Share
      JPY      %    JPY      %    JPY      %    JPY      %    JPY
       millions      millions      millions      millions
Fiscal
Year
Ending 117,000  10.1 9,400    21.2 9,000    16.0 6,000    13.2 135.42
March
31,
2014
(Note1) Changes in the latest forecasts released: None                              
(Note2) IIJ issued 4,700,000 shares of common stock by way of public
offering on July 18, 2013. IIJ also issued 700,000 shares of common stock
by way of third-party allotment in connection with secondary offering of
shares by way of over-allotment on August 5, 2013. Basic Net Income                 
attributable to IIJ per Share in the above "3. Target of Consolidated
Financial Results for the Fiscal Year Ending March 31, 2014" was
recalculated to reflect the increases in the number of shares outstanding.

* Notes

(1) Changes in significant subsidiaries for the first six months ended
September 30, 2013

(Changes in significant subsidiaries for the first six months ended September
30, 2013 which resulted in changes in scope of consolidation): None

(2) Application of simplified or exceptional accounting: None

(3) Changes in significant accounting and reporting policies for the quarterly
consolidated financial statements

  1) Changes due to the revision of accounting standards: None

  2) Others: None

(4) Number of shares outstanding (shares of common stock)

  1) The number of shares outstanding (inclusive of treasury stock):

  As of September 30, 2013: 46,697,800 shares

  As of March 31, 2013: 41,295,600 shares

  2) The number of treasury stock:

  As of September 30, 2013: 758,813 shares

  As of March 31, 2013: 758,800 shares

  3) The weighted average number of shares outstanding:

  For the first six months ended September 30, 2013:42,683,242 shares

  For the first six months ended September 30, 2012:40,536,800 shares

(Note) IIJ conducted a 1:200 stock split on common stock with an effective
date of October 1, 2012. The number of shares outstanding (shares of common
stock) in the above have been calculated as if the stock split were conducted
on April 1, 2012, the beginning of the fiscal year ended March 31, 2013.

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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