Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/

2003 年 8 月 13 日
株式会社インターネットイニシアティブ
Tel. 03-5259-6500
Fax. 03-5259-6311
Email: ir@iij.ad.jp
本資料は日本の方々の便宜性のために作成した簡易版です。7 ページ目より正式決算発表資料（英文）が続きますので、そちらもあわせてご参照いただけますよう、お願い申し上げます。

2003 年度第 1 四半期（4-6 月）決算発表（抄訳）
本決算発表に関するカンファレンス・コールの模様を 2003 年 8 月 13 日 22:45 よりインター
ネット上（URL: www.vcall.com）で公開しております。
2003 年度第 1 四半期（4-6 月）決算発表 要約

2003 年度第 1 四半期
・ 2003 年度第 1 四半期の売上高は 8,344 百万円。前年同期比 15.3％減、前期比 36.0％減となった。売上高に占める比率が高まっているシステム･インテグレーション（
SI）
事業特有の季節変動に加え、3 月
末の株式市場低迷による企業の IT 投資減少に起因するSI サービスの受注減が原因。
・ 営業損失は 1,060 百万円で、SI の売上高低迷により前年同期比及び前四半期比で増大。
・ 償却前営業利益（Adjusted EBITDA）
は▲97 百万円と、前年同期 329 百万円, 前期 459 百万円から減少した。
・ 6 月 26 日払込にて主要取引先を割当先とした総額 13.7 億円の第三者割当増資を実施した。

業績見通し
・ 第 2 四半期では、接続サービスが堅調に推移する一方、アウトソーシング案件等のSI 事業の受注拡大によって売上高も回復し、営業損益はブレークイーブンに近づくと見込んでいる。
・ 通期では、前年度比 10％以上の売上高の成長と営業損益の黒字化を目指す。
概況
事業動向
顧客のネットワークのアウトソーシング需要に応えつつ収益性を高める戦略の実行により、IIJ の事業構造は変化し、SI をはじめとする利益率の高いソリューション事業が接続事業と並ぶもう一つの柱となってきている。IIJ グループは今後もネットワークインテグレーション及び基幹系システ
ムの受注に注力していく。
サービス動向
2003 年度第 1 四半期は引続きアウトソーシング事業が好調で大規模案件を順調に受注した。IIJ メール
ゲートウェイサービスはすでに10 万アカウントを獲得しており、本年度末までに 20 万アカウントの受注を見込む。また、IIJ ウェブゲートウェイサービスは数社から大規模案件を受注した。

IIJ 1Q03

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/（ご参考）統計値について
表 1.営業収益の内訳

(百万円)

1Q03

1Q02

前年
同期比

4Q02

前期比

3,321
767
4,089
987
520
5,596
2,408
341
8,344

3,523
822
4,346
865
409
5,620
3,329
900
9,849

-5.7%
-6.7%
-5.9%
14.1%
27.1%
-0.4%
-27.7%-62.2%-15.3%

3,341
765
4,106
931
381
5,419
4,905
2,712
13,036

-0.6%
0.3%
-0.4%
6.0%
36.3%
3.3%
-50.9%-87.4%-36.0%

インターネット接続及び付加価値サービス：
専用線接続サービス
ダイアルアップ接続サービス
インターネット接続サービス収入合計
付加価値サービス
その他
インターネット接続及び付加価値サービス収入合計
システムインテグレーション
機器販売
営業収益合計表 2. 専用線接続サービスの売上高内訳(百万円)

IP サービス＋インターネットデーターセンター接続サービス
その他
専用線接続サービス合計

1Q03

1Q02

前年
同期比

4Q02

前期比

2,534
787
3,321

2,574 -1.5%
949 -17.1%
3,523 -5.7%

2,518
823
3,341

0.6%
-4.4%
-0.6%

表 3. 契約数

1Q03
IP サービス

64kbps – 128kbps
192kbps – 768kbps
1Mbps – 2Mbps
3Mbps – 1.2Gbps

インターネットデータセンター接続サービス契約数1
その他 2
専用線接続サービス合計
IIJ4U (個人向けダイアルアップ接続サービス)
その他ダイアルアップ接続サービス
ダイアルアップ接続サービス合計

90
26
239
294
171
5,056
5,876
76,209515,363591,572

1Q02
108
33
263
183
122
3,269
3,978
86,297232,330
318,627

表 4. 契約帯域数の総和

4Q02
112
35
268
248
156
4,489
5,308
79,464450,320529,784(単位: Gbps)

専用線接続サービス
インターネットデータセンター接続サービス
契約帯域合計

1Q03
41.1
10.3
51.4

1Q02
12.2
2.2
14.4

4Q02
32.1
9.9
42.0

1 インターネットデータセンター接続サービスに、ホスティングサービスは含まれていない。
2 その他：IIJ FiberAccess/F、IIJ Ethernet Standard、IIJ DSL/F、IIJT1 スタンダード、IIJ エコノミー。

IIJ 1Q03

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/
表 5．付加価値サービスの売上高内訳(百万円)

インターネットデータセンターサービス
その他付加価値サービス
付加価値サービス合計

1Q03
337
650
987

1Q02
370
495
865

前年同期比

-8.8%
31.2%
14.1%

4Q02
341
590
931

表 6．営業費用

前期比

-1.1%
10.1%
6.0%
(百万円)

インターネット接続及び付加価値サービス原価システムインテグレーション原価
機器販売原価
売上原価合計
販売費
一般管理費
研究開発費
営業費用合計

1Q03

1Q02

前年
同期比

5,234
2,323
311
7,868
827
612
96
9,404

5,093
2,987
876
8,956
749
517
91
10,3132.8%-22.2%-64.5%-12.1%
10.4%
18.3%
5.9%
-8.8%

4Q02

前期比

5,033
4,248
2,638
11,919789
662
113
13,4834.0%-45.3%-88.2%-34.0%
4.8%-7.5%-14.8%-30.3%

表 7. バックボーンコスト
国際バックボーンコスト
国内バックボーンコスト

(百万円)

1Q03
261
1,057

1Q02
449
800

前年同期比

1Q03
-97
1,421
990

1Q02
329
1,015
820

前年同期比

-41.9%
32.1%

4Q02
315
1,075

前期比

4Q02
459
936
933

前期比

表 8. その他
Adjusted EBITDA（償却前営業利益）
設備投資 （キャピタルリースを含む）
減価償却費 3-17.2%-1.7%(百万円)-129.5%
40.0%
20.7%

-121.1%
51.8%
6.1%

注意事項：この資料には、1995 年米国民事証券訴訟改革法（
Private Securities Litigation Reform Act of 1995）の「セーフハーバー」
規定に定義する「将来性の見通しに関する記述（
forward-looking statements）」に該当する情報が記載されています。このプレゼンテーシ
ョン資料の記載のうち、過去または現在の事実に関するのも以外は、将来の見通しに関する記述に該当します。将来の見通しに関する記述は、現在入手可能な情報に基づくIIJ 経営陣の仮定および判断に基づくものであり、これには既知または未知のリスクおよび不確定性が内在しています。IIJ の実際の活動または業績は、今後、将来の見通しに関する記述に示されたところと大きく異なる可能性があります。投資家の皆様におかれましては、1934 年米国証券取引法（Securities Exchange Act of 1934）に基づく今後の報告書等において IIJ が行う開示をご参照ください。

3 減価償却費は転換社債発行費用の償却額を含む。

IIJ 1Q03

株式会社 インターネットイニシアティブ
四半期連結損益計算書（米国会計基準未監査）

Appendix 1

2003年
年6月期、
月期、2002年
年6月期、月期、2003年
年3月期
月期
月期、
月期、
JPY/千円単位、
千円単位、USD/千米ドル単位
千米ドル単位 (1)千円単位、前年同四半期比較
2003年6月期
USD (1)
営業収益：
インターネット接続及び付加価値サービス収入：
専用線接続サービス
ダイヤルアップ接続サービス
付加価値サービス
その他
インターネット接続及び付加価値サービス収入合計

JPY

対営業収益
%

JPY

2002年6月期
対営業収益%

対前年同四半期%

JPY

前四半期比較
2003年3月期
対営業収益 対前四半期%%

27,707
6,402
8,235
4,336
46,6803,321,229
767,418
987,198
519,7095,595,554

39.8%
9.2
11.8
6.2
67.0

3,523,334
822,268
865,161
408,925
5,619,688

35.8%
8.3
8.8
4.2
57.1

(5.7%)
(6.7)
14.1
27.1
(0.4)

3,341,255
764,958
931,399381,206
5,418,818

25.6%
5.9
7.2
2.9
41.6

(0.6%)
0.3
6.0
36.3
3.3

20,0882,841
69,6092,407,923
340,569
8,344,046

28.9
4.1
100.0

3,329,058
900,456
9,849,202

33.8
9.1
100.0

(27.7)(62.2)(15.3)

4,905,429
2,712,192
13,036,439

37.6
20.8
100.0

(50.9)(87.4)(36.0)

43,665
19,3832,594
65,642

5,234,158
2,323,392
310,946
7,868,496

62.7
27.9
3.7
94.3

5,092,515
2,987,373
876,012
8,955,900

51.7
30.3
8.9
90.9

2.8
(22.2)(64.5)(12.1)

5,033,266
4,247,690
2,638,334
11,919,290

38.6
32.6
20.2
91.4

4.0
(45.3)(88.2)(34.0)

6,899
5,106
802
78,449826,979
612,047
96,0989,403,620

9.9
7.3
1.2
112.7

749,361
517,316
90,780
10,313,357

7.6
5.3
0.9
104.7

10.4
18.3
5.9
(8.8)

789,234
661,502
112,845
13,482,871

6.0
5.1
0.9
103.4

4.8
(7.5)
(14.8)(30.3)

営業損失(8,840)(1,059,574)(12.7)(464,155)

(4.7)

128.3

(446,432)

(3.4)

137.3

その他の費用

(1,705)(204,398)(2.4)(520,836)(5.3)(60.8)(360,292)(2.8)(43.3)

税引前当期損失(10,545)(1,263,972)(15.1)(984,991)(10.0)

28.3(806,724)

(6.2)

56.7

法人税等、住民税及び事業税
少数株主損益持分法による投資損失(3,254)
1,683(10,986)(390,035)
201,701(1,316,854)

(4.7)
2.4
(15.8)

161,301
66,950(1,515,675)

1.6
0.7(15.4)(341.8)201.3(13.1)

97,256
21,342(1,253,875)

0.8
0.2
(9.6)

(501.0)
845.1
5.0

当期損失

(16,594)(1,989,090)(23.8%)(2,595,017)(26.3%)(23.3%)(2,136,513)(16.4%)

システムインテグレーション
機器販売
営業収益合計営業費用：
インターネット接続及び付加価値サービス原価システムインテグレーション原価
機器販売原価
売上原価合計
販売費
一般管理費
研究開発費
営業費用合計

1株あたり当期損失
米国預託証券１単位あたり当期損失
期中平均発行済株式総数
期中平均発行済米国預託証券総数(87,970)(43.98)22,61145,222,494

注記(1): 2003年6月期につきましては、米ドル換算レート119.87円=1米ドル(2003/6/30)にて参考表示しております。

(115,437)(57.72)
22,48044,960,000(95,041)(47.52)
22,48044,960,000(6.9%)

株式会社 インターネットイニシアティブ
四半期連結貸借対照表（米国会計基準未監査）

Appendix 2

2003年
年6月期、
月期、2002年
年6月期、月期、2003年
年3月期
月期
月期、
月期、
JPY/千円単位、
千円単位、USD/千米ドル単位
千米ドル単位 (1)千円単位、USD (1)

2003年6月期
JPY

2002年6月期
JPY
%

資産の部
流動資産：
現金及び現金同等物
売掛金
棚卸資産
前払費用
その他流動資産23,51750,254
2,903
7,057
4,642

2,819,007
6,023,935
347,971845,908
556,492

8.0%
17.0
1.0
2.4
1.6

6,014,693
6,872,763
272,821645,763
140,162

14.7%
16.7
0.7
1.6
0.3

3,588,352
10,253,096
417,666
564,501
932,873

9.2%
26.1
1.1
1.4
2.4

流動資産合計88,373

10,593,313

30.0

13,946,202

34.0

15,756,488

40.2

関連会社投資等
その他投資
有形固定資産等
拘束預金
敷金保証金
その他資産

30,777
33,10077,12041,712
17,3705,899

3,689,206
3,967,719
9,244,442
5,000,000
2,082,118
707,063

10.5
11.2
26.2
14.2
5.9
2.0

7,396,756
4,954,787
7,709,559
5,000,000
1,302,234
743,614

18.0
12.0
18.8
12.2
3.2
1.8

3,271,032
3,040,189
9,151,572
5,000,000
2,205,652
794,455

8.3
7.8
23.3
12.8
5.6
2.0

資産合計

294,351

35,283,861

100.0%

41,053,152

100.0%

39,219,388

100.0%

47,346
36,795
4,482
4,526
12,892
22,333

5,675,341
4,410,636
537,236542,538
1,545,452
2,677,038

16.1%
12.5
1.5
1.5
4.4
7.6

4,550,835
4,834,546
317,968
556,494
1,400,000
2,060,284

11.1%
11.8
0.8
1.3
3.4
5.0

4,823,599
8,406,170
389,495
551,985
1,943,735
2,716,386

12.3%
21.4
1.0
1.4
5.0
6.9

128,374

15,388,241

43.6

13,720,127

33.4

18,831,370

48.0

長期借入金
転換社債
長期リース債務退職給付引当金
その他固定負債

28,527125,135
28,429624
1,565

3,419,555
15,000,000
3,407,735
74,764
187,579

9.7
42.5
9.7
0.2
0.5

3,400,000
15,000,000
2,800,483
91,037
163,686

8.3
36.6
6.8
0.2
0.4

3,456,265
15,000,000
3,635,780
80,601
185,201

8.8
38.2
9.3
0.2
0.5

負債合計

312,654

37,477,874

106.2

35,175,333

85.7

41,189,217

105.0

少数株主持分

5,655

677,794

1.9

965,796

2.3

879,495

2.3

64,779148,086(246,278)
9,456
(1)

7,765,048
17,751,065(29,521,294)
1,133,467
(93)

22.0
50.3
(83.6)
3.2
0.0

7,082,336
17,068,353(20,803,486)
1,564,820
0

17.3
41.6
(50.7)
3.8
0.0

7,082,336
17,068,353(27,532,204)
532,191
0

18.1
43.5
(70.2)
1.3
0.0

資本合計

(23,958)(2,871,807)(8.1)

4,912,023

12.0(2,849,324)(7.3)

負債、少数株主持分及び資本合計

294,351

35,283,861

100.0%

41,053,152

100.0%

39,219,388

100.0%%

2003年3月期
JPY%

負債及び資本の部
流動負債：
短期借入金
買掛金及び未払金
未払費用
その他流動負債
1年以内に期限到来の長期借入金
短期リース債務
流動負債合計資本：
資本金 (2)
資本準備金 (2)欠損金
その他有価証券評価差額金等
自己株式

注記(1): 2003年6月期につきましては、米ドル換算レート119.87円=1米ドル(2003/6/30)にて参考表示しております。
注記(2): 2003年6月26日付け新規株式3,265株を発行、発行価額は1,365,423千円です。

株式会社 インターネットイニシアティブ

Appendix 3

四半期連結キャッシュフロー計算書（米国会計基準未監査）
2003年
年6月期、
月期、2002年
年6月期、月期、2003年
年3月期
月期
月期、
月期、
JPY/千円単位、
千円単位、USD/千米ドル単位
千米ドル単位 (1)千円単位、

2003年6月期
USD (1)
JPY

2002年6月期

2003年3月期

JPY

JPY

営業活動によるキャッシュフロー：当期損失(16,594)(1,989,090)(2,595,017)(2,136,513)

減価償却費等

8,261

990,190820,252

933,374

持分法による投資損失

10,986

1,316,854

1,515,675

1,253,875

少数株主損益(1,683)(201,701)(66,950)(21,342)

為替差損

27

3,245

134,820

149,262

投資有価証券評価損等

314

37,57278,819184,723

売掛金の減少（増加）額

35,2804,229,010

2,109,969(2,983,254)

買掛金及び未払金の増加（減少）額(30,625)(3,671,049)(1,996,362)

2,200,392

581

69,689347,588

392,051

法人税等調整額(3,301)(395,698)

152,840

91,033

その他

2,230

267,346(45,560)

426,737

営業活動によるキャッシュフロー

5,476

656,368

456,074

490,338

棚卸資産の減少（増加）額

投資活動によるキャッシュフロー：有形固定資産等の取得による支出(7,789)(933,646)(424,321)(163,592)---

66,940セールスリースバックによる収入
その他投資の売却による収入

289

34,672

8,553

関連会社への投資および貸付(14,349)(1,719,981)(56,250)-

その他投資の取得による支出(108)(12,971)---

拘束預金への預け入れ(5,000,000)-

123,632(36,155)(1,387,210)-

11(10,696)(7,606)(20,925)(2,508,283)(5,518,869)(1,477,805)

-

-

-

2,000,000

長期借入金の返済による支出(3,629)(434,994)-(1,200,000)

リース債務の元本返済による支出(5,822)(697,830)(566,505)(656,238)

短期借入金の純増減額

7,106

851,742730,603

312,854

普通株式の発行による収入

11,391

1,365,424

財務活動によるキャッシュフロー

9,046

1,084,342

164,098

456,616

現金及び現金同等物に係る換算差額(15)(1,772)(132,529)(151,410)

現金及び現金同等物の減少額(6,418)(769,345)(5,031,226)(682,261)

現金及び現金同等物の期首残高

29,935

3,588,352

11,045,919

4,270,613

現金及び現金同等物の期末残高

23,5172,819,007

6,014,693

3,588,352

敷金保証金の返還（支出）-13,6631,032

その他
投資活動によるキャッシュフロー
財務活動によるキャッシュフロー：長期借入金による収入-

注記(1): 2003年6月期につきましては、米ドル換算レート119.87円=1米ドル(2003/6/30)にて参考表示しております。

-

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/

For Immediate Release
For inquiries please contact:
Akari Sato / Hiroaki Tsuno
IIJ Investor/Media Relations Office
ir@iij.ad.jp or +81-3-5259-6500(Tel)

IIJ Announces First Quarter 2003 Results
IIJ Maintains 2003 Annual Revenue Growth Expectations of 10% as Systems Integration
Revenues Are Expected to Recover in 2Q03

Tokyo, August 13, 2003 / New York, August 12, 2003 - Internet Initiative Japan Inc. (Nasdaq: IIJI)(“IIJ”), one of Japan’s leading Internet access and comprehensive network solutions providers, today
announced its financial results for the 1st quarter of the fiscal year ending March 31, 2004 (“fiscal
2003”).

First Quarter 2003 Highlights 1

1st Quarter 2003:
・ Revenues totaled JPY 8,344 million ($ 69.6 million), a decrease of 15.3% compared to 1Q02 and adecrease of 36.0% from 4Q02. The results are due to a decrease in sales of System Integration (SI)business because of the decrease in new contracts in SI development caused by weakness in theJapanese stock market through the end of March.
・ Operating loss of JPY 1,060 million ($ 8.8 million) increased from JPY 464 million in 1Q02, and fromJPY 446 million in 4Q02.
・ Adjusted EBITDA2 was JPY -97 million ($ -0.8 million), a decrease compared to JPY 329 million in
1Q02 and JPY 459 million in 4Q02.
・ IIJ completed a private placement to third parties with a total amount of JPY 1.37 billion in June
2003.

Outlook:・ Break-even expected at operating level for 2Q03.

・ For full fiscal 2003, year-over-year revenues are expected to grow by more than 10%.

1

Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with U.S. GAAP.
They are unaudited, consolidated, and represent comparisons between the three-month period ended March 31, 2003, andthe equivalent three-month period ended June 30, 2002. For all 1Q03 results, 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 JPY119.87 = US$1., theapproximate exchange rate on June 30, 2003.
2

Please refer to the Reconciliation of Non-GAAP Financial Measures on page 6.

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Overview of 1st Quarter FY2003 Financial Results and Business Outlook 3
Financial Results and Business Outlook“Our strategy to achieve profitability has focused on higher margin services in response to significant
growth in demand for corporate customers’ network outsourcing. As a result, IIJ’s network solutions
business has become a significant and growing part of our business portfolio. Revenues from our
Systems Integration (SI) business, which are largely influenced by seasonal fluctuations in capitalspending, have increased substantially over the past few years as a percentage of total revenues.
Consequently, fluctuations in revenues from our network solutions business, including SI, have a more
dramatic impact on our total revenues on a sequential quarterly basis than ever before,” said Koichi
Suzuki, President and CEO of IIJ .
IIJ’s revenues in 1Q03 declined by 36.0% from 4Q02. “In addition to the seasonal decline in SI
revenues from the fourth quarter to the first, weakness in the Japanese stock market through the end of
March caused some of IIJ’s customers, especially the online trading companies, to significantly reduceinvestments in their network systems. This resulted in a delay in the receipt of orders for the SI
business with substantial negative impact on SI revenues for this quarter. However, the decline waspartially offset by winning various large-scale outsourcing contracts in the network solution businesssuch as IIJ Mail Gateway Service and IIJ Web Gateway Service. Additionally, we believe that a large
current backlog of contracts for network solution services and the improving business environment as aresult of the recent recovery of the Japanese stock market should generate a substantial increase inrevenues in 2Q03 in this sector. Our connectivity services continue to grow steadily, reflecting thedemand for increased bandwidth, which offsets lower ARPU. Based on all these factors, we believethat IIJ’s total revenues will return to their historical growth pattern and that we will reach break-even at
the operating level in 2Q03,” said Yasuhiro Nishi, CFO of IIJ.
Recent Trends in Major Services and Contracts
In the first quarter, IIJ’s network solution business witnessed increasing sales, including some largescale contracts. The IIJ group has been building revenues from its application gateway solutions,
including “IIJ Mail Gateway Service” (email virus check, email audit and email archive) and “IIJ Web
Gateway Service” (web access control and remote access to internal network), that capitalize on the
Company’s own data center facilities. The IIJ Mail Gateway service has already captured 100,000
accounts from 15 clients and we expect an additional 100,000 accounts by the end of fiscal 2003. IIJ
also won large-scale outsourcing contracts for the IIJ Web Gateway Service from a number ofJapanese blue-chip companies. We expect continued growth in corporate demand for internet security
systems in the future. As demand from corporations for outsourced network systems has been
increasing, the IIJ Group has focused on network integration and mission-critical system services tocapture this market and we fully expect that this strategy will allow us to achieve profitability.

1st Quarter FY2003 Financial Results
Revenues
Revenues in 1Q03 totaled JPY8,344 million, a decrease of 15.3% compared to 1Q02 and a decrease
3

This Overview and Business Outlook contains forward-looking statements and projections such as statements regarding
2Q03 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 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 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 thispractice at any time. IIJ intends to publish its next Overview and Business Outlook in its 2Q03 earnings release, presently
scheduled for November 12, 2003.

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IIJ 1Q03

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/of 36.0% compared to 4Q02.
Table 1. Revenues (JPY in millions)

Revenues

1Q03

Connectivity and value-added services:
Dedicated access services
Dial-up access services
Total Connectivity Services
Value-added services
Other
Total Connectivity and value-added services
Systems integration revenues
Equipment sales
Total revenues

YoY% change

1Q02

QoQ% change

4Q02

3,321
767
4,089
987
520
5,596
2,408
341

3,523
822
4,346
865
409
5,620
3,329
900

-5.7%
-6.7%
-5.9%
14.1%
27.1%
-0.4%
-27.7%-62.2%

3,341
765
4,106
931
381
5,419
4,905
2,712

-0.6%
0.3%
-0.4%
6.0%
36.3%
3.3%
-50.9%-87.4%

8,344

9,849

-15.3%

13,036-36.0%

Connectivity and value-added services revenues were JPY5,596 million in 1Q03, a decrease of
0.4% compared to 1Q02, but an increase of 3.3% compared to 4Q02.
Table 2. Connectivity Services (JPY in millions)

Connectivity Services

1Q03
Dedicated access services:
IP Service + DC (connectivity)
OthersTotal dedicated access services

1Q02

2,534
787
3,321

YoY
% change-1.5%-17.1%
-5.7%

2,574
949
3,523

4Q02
2,518
823
3,341

QoQ
% change
0.6%
-4.4%
-0.6%

Dedicated access services revenues were JPY3,321 million in 1Q03, a decrease of 5.7% compared to
1Q02 and a decrease of 0.6% compared to 4Q02. These decreases were mainly due to the decreasesof our conventional second-tier services, IIJ Economy Service and IIJ T1 Standard Service. However,steady revenue growth of IIJ FiberAccess/F(10-100Mbps) service and IIJ Data Center connectivity
services partially offset the decreases.
Table 3. Number of Contracts

IP Services

64kbps – 128kbps
192kbps – 768kbps
1Mbps – 2Mbps

3Mbps – 1.2Gbps
4
Number of Contracts of DC Connectivity Services
5
Other
Total Dedicated Access Services
IIJ4U (Dial-up access services for retail market)
Other Dial-Up Access Services
Total Dial-Up Access Services
4
5

1Q03

1Q02

4Q02

90
26
239
294
171
5,056
5,876
76,209515,363591,572

108
33
263
183
122
3,269
3,978
86,297232,330
318,627

112
35
268
248
156
4,489
5,308
79,464450,320529,784

Please refer to the Reconciliation of Non-GAAP Financial Measures on page 6.
Please refer to the Reconciliation of Non-GAAP Financial Measures on page 6.

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Dial-up access service revenues were JPY767 million in 1Q03, a decrease of 6.7% compared to 1Q02
but an increase of 0.3% compared to 4Q02. The increase in sequential comparison was due to theincrease of IIJ’s various OEM services, which include NTT’s regional L-mode service and othernetwork services through the CDN platform.
Table 4. Number of Contract Bandwidth (Unit: Gbps)

1Q03
41.1
10.3
51.4

Dedicated Access Services
DC Connectivity Services
Total Contract Bandwidth

1Q02
12.2
2.2
14.4

4Q02
32.1
9.9
42.0

Value-added services revenues were JPY987 million in 1Q03, an increase of 14.1% compared to 1Q02
and an increase of 6.0% compared to 4Q02. These increases were mainly due to the revenue growthof IIJ security-related services.
Table 5. Value-added Services (JPY in millions)

Value-Added Services

1Q03

1Q02

YoY
% change

4Q02

QoQ% change

Value-Added Service Revenues
Internet data center services
Other value-added services
Total Value-Added Service Revenues

337
650

370
495

-8.8%
31.2%

341
590

-1.1%
10.1%

987

865

14.1%

931

6.0%

Systems integration service s revenues decreased 27.7% to JPY2,408 million in 1Q03 compared to
1Q02 and 50.9% compared to 4Q02 due to a decrease in new contracts in SI development.
Equipment sales revenues were JPY341 million in 1Q03, a decrease of 62.2% compared to 1Q02
and a decrease of 87.4% compared to 4Q02.
Cost and expenses
Cost of total revenues was JPY7,868 million in 1Q03, a decrease of 12.1% compared to 1Q02, and adecrease of 34.0% compared to 4Q02.
Table 6. Costs and Expenses (JPY in millions)

Costs and expenses:
1Q03
Cost of Revenues:
Cost of connectivity and value-added
services
Cost of systems integration
Cost of equipment sales
Total of Cost of Revenues
Sales and marketing
General and administrative
Research and development
Total costs and expenses

Page 4 of 8

5,234
2,323
311
7,868
827
612
96
9,404

1Q02

5,093
2,987
876
8,956
749
517
91
10,313YoY% change

2.8%-22.2%-64.5%-12.1%
10.4%
18.3%
5.9%
-8.8%

4Q02

5,033
4,248
2,638
11,919789
662
113
13,483QoQ% change

4.0%-45.3%-88.2%-34.0%
4.8%-7.5%-14.8%-30.3%IIJ 1Q03

Internet Initiative Japan Inc.
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Backbone Costs
International backbone costs were JPY261 million, a decrease of 41.9% compared to 1Q02 and adecrease of 17.1% compared to 4Q02 through our continuous effort in reducing backbone costs.
The monthly unit backbone costs declined by approximately 54% compared to 1Q02 and by
approximately 17% compared to 4Q02.
Table 7. Backbone Costs (JPY in millions )Backbone Costs
1Q03
International Backbone Costs
Domestic Backbone Costs

261
1,057

1Q02

449
800

YoY
% Change-41.9%
32.1%

4Q02

315
1,075

QoQ
% Change-17.2%-1.7%

Domestic backbone costs was JPY1,057 million, an increase of 32.1% compared to 1Q02 but adecrease of 1.7% compared to 4Q02. The increases in year over year comparison was a result of anincrease in connection fees with NTT’s regional access networks (FLET’S), along with our broadband
strategy to strengthen its backbone network for our providing various broadband network services andsolutions nationwide.
Cost of SI Revenues was JPY2,323 million in 1Q03, a decrease of 22.2% compared to 1Q02 and adecrease of 45.3% compared to 4Q02. The gross margin ratio for SI deteriorated to 3.5% in 1Q03
compared to 10.3% in 1Q02 and 13.4% in 4Q02. The deterioration of the gross margin was caused
because the profits from SI were diminished due to the decline in the number of new SI development
contracts and the fixed costs of SI could not be offset by the profits.
Sales and Marketing Expenses were JPY827 million in 1Q03, an increase of 10.4% compared to
1Q02 and an increase of 4.8% compared to 4Q02. These increases were due to the increase inpersonnel expenses.
General and administrative expenses were JPY612 million in 1Q03, an increase of 18.3% comparedto 1Q02 but a decrease of 7.5% compared to 4Q02. The 4Q02 expenses included the cost of the moveto new headquarters.
Operating loss
Primarily as a result of the decline of SI profitability, the operating loss increased to JPY1,060 million in
1Q03 compared to a loss of JPY464 million in 1Q02 and a loss of JPY446 million in 4Q02.
Other expenses for 1Q03 were JPY204 million, compared to JPY521 million in 1Q02 and JPY360
million in 4Q02. These decreases were as a result of the decrease in foreign exchange loss andimpairment loss of equity security investments. IIJ recorded a foreign exchange loss of only JPY3
million in 1Q03 and impairment loss on non-marketable equity security investments of JPY38 million.
Income tax benefit (expense) for 1Q03 was a benefit JPY390 million, compared to an expense of
JPY161 million in 1Q02 and an expense of JPY97million in 4Q02. This is a result of an decrease in thevaluation allowance for deferred tax assets attributable primarily to the income tax effect of increasing
unrealized gains during the quarter on certain available-for-sale securities.
Equity in net loss of equity method investees amounted to JPY1,317 million in 1Q03, compared to
JPY1,516 million in 1Q02, and JPY1,254 million in 4Q02. This is mostly attributed to the equity loss in
Crosswave.
Net loss was JPY1,989 million in 1Q03, compared to JPY2,595 million in 1Q02 and JPY2,137 million
in 4Q02. Basic net loss per ADS equivalent was JPY -43.98 in 1Q03, compared to JPY -57.72 in 1Q02
and JPY -47.52 in 4Q02.

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Internet Initiative Japan Inc.
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Table 8. Other Financial Statistics (JPY in millions )Other Financial Statistics
6

Adjusted EBITDA
7
CAPEX, including capitalized leases
8
Depreciation and amortization

1Q03

-97
1,421
990

1Q02

YoY
% Change

329
1,015
820

4Q02

-129.5%
40.0%
20.7%

459
936
933

QoQ
% Change-121.1%
51.8%
6.1%

Reconciliation of Non-GAAP Financial Measures
The following table summarizes the reconciliation of adjusted EBITDA to net loss per the consolidated
statements of operations prepared and presented in accordance with U.S. generally accepted
accounting principles in Appendices 1:
Table 9. Adjusted EBITDA (JPY in millions)

1Q03
Adjusted EBITDA
9
Depreciation and amortization
Operating loss
Other expenses
Income tax benefit (expense)
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees
Net loss

1Q02

-97
-963
-1,060
-204
-390
202
-1,317-1,989

4Q02

329
-793
-464
-521
161
67
-1,516-2,595

459
-905
-446
-361
97
21
-1,254-2,137

The following table summarizes the reconciliation of capital expenditures to purchase of property andequipment per the consolidated statements of cash flows prepared and presented in accordance with
the U.S. generally accepted accounting principles in Appendices 3:
Table 10. CAPEX (JPY in millions)

1Q03
Capital expenditures
Acquisition of assets by entering into capital leases
Purchase of property and equipment

1,421
487
934

1Q02

1,015
591
424

4Q02

936
772
164

1st Quarter Business Review
Service Development
Outsourcing Solutions: In May 2003, IIJ launched “IIJ Web Gateway Service”, a new security service
that will be provided in cooperation with IIJ Technology Inc., our 64.1% owned subsidiary. The newservice meets a variety of enterprise needs by providing proxy-caching server operation andmanagement functions and URL filtering. Outsourcing these responsibilities to the IIJ Group enables
efficient Web access security administration without building a costly network and without much of the6

Please refer to the Reconciliation of Non-GAAP Financial Measures on this page.
Please refer to the Reconciliation of Non-GAAP Financial Measures on this page.
8
Depreciation and amortization includes amortization of issuance cost of convertible notes.
9
Depreciation and amortization excludes amortization of issuance cost of convertible notes that was presented as otherexpenses.
7

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Internet Initiative Japan Inc.
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cost and work that is involved in administering and operating such a network. The IIJ Web Gateway
service has captured 60,000 accounts in this quarter. The IIJ group expects the number of accounts todouble by the end of the fiscal 2003.
Network Management Solutions: In June 2003, IIJ launched the “IIJ SMF Service”, a network
management solution for business users that have a few to several thousand base stations. The newservice makes use of the network service operating system “SMF (SEIL Management Framework),” tostreamline and centralize the control of diverse and complex operations, from the setup andconstruction to the implementation, administration, and maintenance of corporate networks. The
service drastically reduces the labor-intensive work of implementation, configuration, and modificationof equipment and network functions. These advantages reduce initial network setup costs by 90% andlower operation and maintenance costs by nearly 50%. IIJ expects revenues from this service to growfurther.
IIJ has continued to develop new services that take advantage of IIJ’s engineering expertise in therouter area. In April 2003, IIJ developed “SEIL/Turbo,” a high-end enterprise-class router that is themost advanced unit to date in the next-generation, high-performance SEIL series of routers. The router
was added to the SEIL Rental Service lineup. In addition to the features available in the SEIL/neu
series, SEIL/Turbo has an embedded gigabit interface, dedicated high-speed VPN processing
hardware, robust management and other advanced administrative functions. The introduction of
SEIL/Turbo allows IIJ to construct entire networks using only the SEIL series.
Hosting Services: IIJ expanded the functionality of IIJ’s Download Site Service. The new functionality
makes it possible to provide Web server solutions with a bandwidth of 1Gbps while allowing 40,000
simultaneous sessions. At the same time, disk space is increased to 500MB. With this upgrade, theservice becomes a flexible resource for large-scale projects and allows IIJ to customize configurations
for each systems integration project.
Network Infrastructure Development
In 1Q03, IIJ increased the capacity of four of its domestic backbone network lines and also established
one new line. These upgrades facilitate faster and more-reliable transmission of data communications.
Finance
Capital Improvement Plan: IIJ completed a private placement to some of its business partners andraised a total amount of JPY 1.37 billion in June 2003. It issued 3,265 new shares of common stock at
a price of JPY 418,200 per share. Total number of issued common shares after the private placement
was 25,745.
Key Developments of the IIJ GroupVoIP Solution
April 2003- Net Care Inc., IIJ’s 52.5% subsidiary, launched a new IP (Internet Protocol) telephonysolution service for enterprises, which provides a comprehensive VoIP (Voice over IP) solution.
May 2003- IIJ Launched Internet Telephone Service which is provided to IIJ4U customers as a part ofits "FLET'S IP Telephone Option" service, and to IIJ mio customers as a part of its "IP Phone/F"
service.
May 2003- Crosswave Communications Inc., IIJ’s 37.9% affiliate, began developing IP telephoneservices dedicated to corporate users. As a first step, Crosswave provides "IP-Centrex", an audio
transmission service for corporate users leveraging VoIP technology as another option available tousers of the "Wide-area Ethernet Platform Service".

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Internet Initiative Japan Inc.
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June 2003- Asia Internet Holding Co., Ltd., (“AIH”), IIJ’s 26.7% affiliate, launched “A-Bone VoIP
Service”, an internet telephony service that leverages the A-Bone platform, an Internet backbone
network that covers the Asia-pacific region.
International Backbone
May 2003- AIH reached an agreement with Malaysia’s TMNet, and upgraded its connectivity to STM1x2 (310Mbps) from 45Mbps. AIH also upgraded its connectivity for the Philippines’ Globe Telecom to
45Mbps from 2Mbps and for the Korea’s Hanaro Telecom to 155Mbps from 2Mbps.

Teleconference/Webcast
On August 13 at 9:45 am (EST), IIJ will host a conference call to discuss the results and the Company’s
outlook. There will be a simultaneous webcast available at www.vcall.com. A replay will also be
available at the same URL.

Company Information
Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI) is Japan's leading Internet-accessand comprehensive network solutions provider. The company has built one of the largest Internet
backbone networks in Japan, and between Japan and the United States. IIJ and its group of companies
provide total network solutions that mainly cater to high-end corporate customers. Services range fromthe delivery of new generation network services over an optical-fiber infrastructure that is optimized fordata communications, to the construction of pan-Asian IP backbone networks. The company alsooffers high-quality systems integration and security services, internet access, hosting/housing, andcontent design.
Statements made in this press release regarding IIJ’s or management’s intentions, beliefs, expectations, orpredictions 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 forwardlooking statements, such as statements regarding 2Q03 total revenues and operating profitability, aresubject 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 otherfactors include: IIJ’s expectation that net losses will continue or may increase; IIJ’s ability to raise additional
capital to cover its accumulated 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 otherservices 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; andother 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.

Tables to follow

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INTERNET INITIATIVE JAPAN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)Appendix 1

For the Three Months Ended Jun 30, 2003, Jun 30, 2002 and Mar 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD) Except for Per Share and ADS Data) (1)Year-over-year Comparison
Jun 30, 2003
USD (1)
Revenues:
Connectivity and value-added services:
Dedicated access services
Dial-up access services
Value-added services
Other
Total connectivity and value-added services

JPY

% of
Total
Revenues

JPY

Jun 30, 2002
% of
Total
Revenues

YOY
Chg %

Sequential Comparison
Mar 31, 2003
% of
Total
QOQ
JPY
Revenues
Chg %27,707
6,402
8,235
4,336
46,6803,321,229
767,418
987,198
519,7095,595,554

39.8%
9.2
11.8
6.2
67.0

3,523,334
822,268
865,161
408,925
5,619,688

35.8%
8.3
8.8
4.2
57.1

(5.7%)
(6.7)
14.1
27.1
(0.4)

3,341,255
764,958
931,399381,206
5,418,818

25.6%
5.9
7.2
2.9
41.6

(0.6%)
0.3
6.0
36.3
3.3

20,0882,841
69,6092,407,923
340,569
8,344,046

28.9
4.1
100.0

3,329,058
900,456
9,849,202

33.8
9.1
100.0

(27.7)(62.2)(15.3)

4,905,429
2,712,192
13,036,439

37.6
20.8
100.0

(50.9)(87.4)(36.0)

Costs and expenses:
Cost of connectivity and value-added services
Cost of systems integration revenues
Cost of equipment sales
Total costs

43,665
19,3832,594
65,642

5,234,158
2,323,392
310,946
7,868,496

62.7
27.9
3.7
94.3

5,092,515
2,987,373
876,012
8,955,900

51.7
30.3
8.9
90.9

2.8
(22.2)(64.5)(12.1)

5,033,266
4,247,690
2,638,334
11,919,290

38.6
32.6
20.2
91.4

4.0
(45.3)(88.2)(34.0)

Sales and marketing
General and administrative
Research and development
Total costs and expenses

6,899
5,106
802
78,449826,979
612,047
96,0989,403,620

9.9
7.3
1.2
112.7

749,361
517,316
90,780
10,313,357

7.6
5.3
0.9
104.7

10.4
18.3
5.9
(8.8)

789,234
661,502
112,845
13,482,871

6.0
5.1
0.9
103.4

4.8
(7.5)
(14.8)(30.3)

Operating loss

(8,840)(1,059,574)(12.7)(464,155)

(4.7)

128.3

(446,432)

(3.4)

137.3

Other expenses(1,705)(204,398)(2.4)(520,836)(5.3)(60.8)(360,292)(2.8)(43.3)

Loss before income tax expense(benefit)(10,545)(1,263,972)(15.1)(984,991)(10.0)

28.3(806,724)

(6.2)

56.7

Income tax expense(benefit)
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees(3,254)
1,683(10,986)(390,035)
201,701(1,316,854)

(4.7)
2.4
(15.8)

161,301
66,950(1,515,675)

1.6
0.7(15.4)(341.8)201.3(13.1)

97,256
21,342(1,253,875)

0.8
0.2
(9.6)

(501.0)845.1
5.0

Net loss(16,594)(1,989,090)(23.8%)(2,595,017)(26.3%)(23.3%)(2,136,513)(16.4%)

Systems integration revenues
Equipment sales
Total revenues

Basic Net Loss Per Share
Basic Net Loss Per ADS Equivalent
Weighted Average Number of Shares
Weighted Average Number of ADS Equivalents(87,970)(43.98)22,61145,222,494(115,437)(57.72)
22,48044,960,000(95,041)(47.52)
22,48044,960,000

Note (1):The translation of Japanese yen amounts into US dollar amounts with respect to the three months ended Jun 30, 2003 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY 119.87 =$1, the approximate rate of exchange on Jun 30, 2003.

(6.9%)

INTERNET INITIATIVE JAPAN INC.
CONSOLIDATED BALANCE SHEETS(UNAUDITED)Appendix 2

As of Jun 30, 2003, Jun 30, 2002 and Mar 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)USD (1)ASSETS
Current Assets:
Cash
Accounts receivable, net
Inventories
Prepaid expenses
Other current assets

Jun 30, 2003
JPY%

Jun 30, 2002
JPY%

Mar 31, 2003
JPY%

23,51750,254
2,903
7,057
4,642

2,819,007
6,023,935
347,971845,908
556,492

8.0%
17.0
1.0
2.4
1.6

6,014,693
6,872,763
272,821645,763
140,162

14.7%
16.7
0.7
1.6
0.3

3,588,352
10,253,096
417,666
564,501
932,873

9.2%
26.1
1.1
1.4
2.4

88,373

10,593,313

30.0

13,946,202

34.0

15,756,488

40.2

30,777
33,10077,12041,712
17,3705,899

3,689,206
3,967,719
9,244,442
5,000,000
2,082,118
707,063

10.5
11.2
26.2
14.2
5.9
2.0

7,396,756
4,954,787
7,709,559
5,000,000
1,302,234
743,614

18.0
12.0
18.8
12.2
3.2
1.8

3,271,032
3,040,189
9,151,572
5,000,000
2,205,652
794,455

8.3
7.8
23.3
12.8
5.6
2.0

294,351

35,283,861

100.0%

41,053,152

100.0%

39,219,388

100.0%

Short-term borrowings
Accounts payable
Accrued expenses
Other current liabilities
Long-term borrowings-current portion
Capital lease obligations-current portion

47,346
36,795
4,482
4,526
12,892
22,333

5,675,341
4,410,636
537,236542,538
1,545,452
2,677,038

16.1%
12.5
1.5
1.5
4.4
7.6

4,550,835
4,834,546
317,968
556,494
1,400,000
2,060,284

11.1%
11.8
0.8
1.3
3.4
5.0

4,823,599
8,406,170
389,495
551,985
1,943,735
2,716,386

12.3%
21.4
1.0
1.4
5.0
6.9

Total current liabilities

128,374

15,388,241

43.6

13,720,127

33.4

18,831,370

48.0Long-term Borrowings
Convertible Notes
Capital Lease Obligations-Noncurrent
Accrued Retirement and Pension Costs
Other Noncurrent Liabilities

28,527125,135
28,429624
1,565

3,419,555
15,000,000
3,407,735
74,764
187,579

9.7
42.5
9.7
0.2
0.5

3,400,000
15,000,000
2,800,483
91,037
163,686

8.3
36.6
6.8
0.2
0.4

3,456,265
15,000,000
3,635,780
80,601
185,201

8.8
38.2
9.3
0.2
0.5

312,654

37,477,874

106.2

35,175,333

85.7

41,189,217

105.0

5,655

677,794

1.9

965,796

2.3

879,495

2.3

Shareholders' Equity:
Common stock(2)Additional paid-in capital (2)Accumulated deficit
Accumulated other comprehensive income
Treasury stock

64,779148,086(246,278)
9,456
(1)

7,765,048
17,751,065(29,521,294)
1,133,467
(93)

22.0
50.3
(83.6)
3.2
0.0

7,082,336
17,068,353(20,803,486)
1,564,820
0

17.3
41.6
(50.7)
3.8
0.0

7,082,336
17,068,353(27,532,204)
532,191
0

18.1
43.5
(70.2)
1.3
0.0

Total shareholders' equity(23,958)(2,871,807)(8.1)

4,912,023

12.0(2,849,324)(7.3)

Total liabilities and shareholders' equity

294,351

35,283,861

100.0%

41,053,152

100.0%

39,219,388

100.0%

Total current assets
Investments in and Advances to Equity Method Investees
Other Investments
Property and Equipment, net
Restricted Cash
Guarantee Deposits
Other Assets
Total assets
LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent Liabilities:

Total liabilities
Minority Interest

Note (1): The translation of Japanese yen amounts into US dollar amounts with respect to Jun 30, 2003 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY119.87 =$1, the approximate rate of exchange on Jun 30, 2003.
Note (2): New 3,265 shares have been issued on June 26, 2003, in the amount of JPY1,365,423.

INTERNET INITIATIVE JAPAN INC.

Appendix 3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)For the Three Months Ended June 30, 2003, June 30, 2002 and Mar 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)
Jun 30, 2003

Jun 30, 2002

Mar 31, 2003

JPY

JPY

JPY

(16,594)(1,989,090)(2,595,017)(2,136,513)

Depreciation and amortization

8,261

990,190820,252

933,374

Equity in net loss of equity method investees

10,986

1,316,854

1,515,675

1,253,875

Minority interests in net loss of consolidated subsidiaries(1,683)(201,701)(66,950)(21,342)

USD (1)
Operating Activities:
Net loss

Foreign exchange losses

27

3,245

134,820

149,262

Losses on other investments

314

37,57278,819184,723

Decrease (increase) in accounts receivable

35,2804,229,010

2,109,969(2,983,254)

Increase (decrease) in accounts payable(30,625)(3,671,049)(1,996,362)

2,200,392

Decrease in inventories

581

69,689347,588

392,051

Deferred income taxes(3,301)(395,698)

152,840

91,033

Other

2,230

267,346(45,560)

426,737

Net cash provided by operating activities

5,476

656,368

456,074

490,338

Investing Activities:
Purchase of property and equipment(7,789)(933,646)(424,321)(163,592)---

66,940

Proceeds from sale-leaseback
Proceeds from sales of other investment
Investments in and advances to equity method investees
Purchase of other investments

289

34,672

8,553(14,349)(1,719,981)(56,250)-(108)(12,971)---

Deposit to restricted cash

(5,000,000)-

123,632(36,155)(1,387,210)-

11(10,696)(7,606)(20,925)(2,508,283)(5,518,869)(1,477,805)

Proceeds from long-term borrowings

-

-

-

2,000,000

Repayments of long-term borrowings(3,629)(434,994)-(1,200,000)

Principal payments under capital leases(5,822)(697,830)(566,505)(656,238)

Net increase in short-term borrowings

7,106

851,742730,603

312,854

Proceeds from issuance of common stock

11,391

1,365,424

Net cash provided by financing activities

9,046

1,084,342

164,098

456,616(15)(1,772)(132,529)(151,410)

Net Decrease in Cash

(6,418)(769,345)(5,031,226)(682,261)

Cash, Beginning of Period

29,935

3,588,352

11,045,919

4,270,613

Cash, End of Period

23,5172,819,007

6,014,693

3,588,352

Refund (payment) of guarantee deposits-net-

13,663

1,032

Other
Net cash used in investing activities
Financing Activities:

Effect of Exchange Rate Changes on Cash--

Note (1): The translation of Japanese yen amounts into US dollar amounts with respect to the three months ended Jun 30, 2003 are included
solely for the convenience of readers outside Japan and have been made at the rate of JPY119.87 =$1, the approximate rate ofexchange on Jun 30, 2003.