2005 年 5 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
E-mail: 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。10 ページ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。

2004 年度第 4 四半期（1-3 月）および 2004 年度決算発表（抄訳）＜米国ナスダック・ナショナルマーケット上場以来の過去最高益を達成＞

本決算発表に関するマネジメント・メッセージを 2005 年 5 月 14 日より弊社ホームページ上（URL: http://www.iij.ad.jp/IR/）にて公開予定です。

2004 年度第 4 四半期決算
・ 営業収益（売上高）は、前年同期比 5.5%増、前四半期比 19.4%増の 12,254 百万円となりました。
・ 営業利益は、656 百万円と、前年同期比（87.5%増）、前四半期比（59.9%増）ともに大幅増益となりました。
・ 当期利益は、2,256 百万円と、前年同期の当期損失 236 百万円から黒字転換、前四半期比 242.0%増と大幅改善となりました。

2004 年度決算
・ 営業収益（売上高）は、前期比７.5%増の 41,703 百万円となりました。
・ 営業利益は、１,248 百万円と、前期の営業損失 1,450 百万円から黒字転換いたしました。
・ 当期利益は、2,906 百万円と、前期の当期損失 2,271 百万円から黒字転換いたしました。
・ 2004 年度第４四半期決算とあわせ、米国ナスダック・ナショナルマーケット上場以来の最高益を達成いたしました。

2005 年度の業績ターゲット
・ 営業収益（売上高）は 2004 年度実績比約 10%増、営業利益は 2004 年度実績比約 85%増、当期利益は2004 年度実績比約 25%増とし、上場以来の最高売上、最高益の更新をターゲットといたします。

経営の概況
2004 年度第４四半期および 2004 年度通期決算は、ともに、米国ナスダック・ナショナルマーケット上場以来の最高益を計上いたしました。企業または政府・官公庁において、IT 化の重要性が認識され IT 投資が拡大していること、イ
ンターネット技術が社内ネットワークや業務システムに更に浸透し、特に IIJ の主要市場である大企業において業務ト
ラフィックの増大・ネットワークの複雑化から一層のアウトソーシングニーズが顕在化していることを背景に、IIJ の持つ技術力、エンジニアリング能力、長年蓄積してきた運用ノウハウ等が評価された結果であると考えております。
2004 年度は、付加価値サービス、システムインテグレーションの運用といった収益性の高いアウトソーシング売上が大口案件の獲得を含め引続き好調に推移したことに加えて、システムインテグレーションの構築において、IIJ の技術
力をリソースとした内製比率の高いネットワーク設計・構築案件を多数獲得することで、売上増加、収益拡大を果たしました。また、インターネット接続サービスでは、企業の広帯域サービスへのシフト、多拠点接続ソリューションの展開に伴う新規契約の獲得等により 2004 年度第４四半期において増収に転じる等、減収傾向の収束を確認することができました。コスト面においても、バックボーンコストを主体とする固定的売上原価、販売管理費の抑制を行い、上記の売上増加と合せて継続的な利益増加基調を実現いたしました。

IIJ 4Q04 and Full FY2004

今後とも、インターネット接続の技術をベースに、ネットワーク設計・構築、セキュリティ・コンサルティングといったインテ
グレーションサービスやネットワーク運用等のアウトソーシングサービスをトータルに提供する「ネットワーク・ソリューション事業」を戦略的に推進することで、2004 年度に確立した構造的な収益体質をより一層強化し、売上、収益の拡大を図ってまいります。
2005 年度においては、米国ナスダック・ナショナルマーケット上場以来の最高売上、最高益の更新をターゲットといたします。

サービス別概況及び財務関連データ

インターネット接続サービスの契約数及び総帯域
専用線接続サービス合計
IP サービス（低帯域：64kbps-768kbps）*1
IP サービス（中帯域：1Mbps-100Mbps 未満）*1
IP サービス（高帯域：100Mbps 以上～）
IIJ T1 スタンダードおよび IIJ エコノミー*2
インターネットデータセンター接続サービス
IIJ FiberAccess/F および IIJ DSL/F（ブロードバンド対応型）
ダイアルアップ接続サービス合計
自社提供
OEM 提供*3
契約総帯域

4Q04
11,243
89
660
114
276
231

4Q03
7,226
93
565
80
504
196

3Q04
9,427
67
609
103
313
228

9,873

5,788

8,107

693,976
68,068625,908
121.2Gbps

695,867
708,51775,136
69,260620,731639,257
80.1Gbps 109.5Gbps*1 IPv6 サービスを含む*2 1Q04 では、「機能限定型」と表記していたもの（回線専有型、割当 IP アドレス数等に制限あり、64kbps、128kbps、1.5Mbps）*3 他サービス事業者向け OEM サービス

2004 年度第４四半期においても、引続き契約数、契約総帯域は順調に増加しました。
IP サービスでは、顧客企業が業務トラフィックの増大を背景に、より広帯域のサービスにシフトしていることから、
10Mbps、100Mbps のサービスを中心に契約数が増加しました。1Gbps 以上の IP サービスの契約数は合計で 24
社となりました。
また、ブロードバンド対応型の契約数は、インターネット VPN を用いた多拠点接続ソリューションの展開に伴う新規契約の獲得により大幅に増加しました。

IIJ 4Q04 and Full FY2004

インターネット接続及び付加価値サービスの営業収益、売上原価及び売上総利益率
インターネット接続サービス
専用線接続サービス
IP サービス*4
IIJ T1 スタンダードおよび IIJ エコノミー*5
IIJ FiberAccess/F および IIJ DSL/F（ブロードバンド対応型）
ダイアルアップ接続サービス
自社提供*6OEM 提供*7
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
売上高合計
インターネット接続及び付加価値サービス原価
うちバックボーンコスト
売上総利益率

4Q04
3,559
2,841
2,235
171

4Q03
3,858
3,100
2,423
331

前年同期比

435

（百万円）
前四半期比

(7.8%)(8.4%)(7.8%)(48.5%)

3Q04
3,508
2,781
2,186
195

346

25.8%

400

8.6%

718
472
247
1,322
979

758
522
236
1,104
537

(5.2%)(9.6%)
4.5%
19.8%
82.4%

727
478
249
1,276
882

(1.2%)(1.4%)(0.8 %)
3.6%
10.9%

5,860

5,499

6.6%

5,666

3.4%

5,018
831
14.4%

4,810
1,067
12.5%

4.3%
(22.1%)

4,874
858
14.0%

3.0%
(3.2%)

1.5%
2.2%
2.3%
(12.3%)*4 インターネットデータセンター接続サービスを含む（回線専有型、64kbps-1.2Gbps）*5 1Q04 では、「機能限定型」と表記していたもの（回線専有型、割当 IP アドレス数等に制限あり、64kbps、128kbps、1.5Mbps）*6 各種法人向けおよび個人向けサービス（IIJ4U、IIJmio）。B フレッツ、ADSL 対応オプションも含む*7 他サービス事業者向け OEM サービス

インターネット接続サービスの売上は、IP サービスにおける顧客企業の広帯域サービスへのシフト、多拠点接続
ソリューションの展開に伴うブロードバンド型サービスの契約増加等から、12 四半期振りに増収に転じました。
付加価値サービスの売上は、多拠点接続案件に伴う、SEIL、SMF 等のネットワーク・アウトソーシング系サービ
スが好調に推移したことから増収となりました。
その他の売上は、前四半期に引続き広域 LAN サービスや社内 LAN 関連サービスが売上に寄与し、増収となりました。
売上総利益率は、収益性の高い付加価値サービスの売上増加、インターネット接続サービスの増収転換に加え、バックボーンコストを主体とする固定的売上原価の抑制により引続き改善し、14.4%となりました。固定的売上原価については、今後も大きなコスト増大要因はなく、売上増加と共に安定的に推移するものと想定しております。

クロスセリング

4Q04
インターネット接続サービス・付加価値サービス
クロスセリング率*8
システムインテグレーション・インターネット接続サービス
クロスセリング率*9

88.2%
78.0%

*8 インターネット接続サービス売上高上位１，０００社の内、付加価値サービスを併用している顧客の割合*9 システム・インテグレーション売上高上位１００社の内、インターネット接続サービスを併用している顧客の割合

IIJ 4Q04 and Full FY2004

システムインテグレーションの営業収益、売上原価及び売上総利益率
システムインテグレーション収入合計
システムインテグレーション
システム運用アウトソーシングサービス
システムインテグレーション原価
売上総利益率

4Q04
5,352
2,786
2,566
4,030
24.7%

4Q03
4,001
2,573
1,428
3,054
23.7%

（百万円）

前年同期比

33.7%
8.3%
79.6%
32.0%

3Q04
3,970
1,672
2,298
3,031
23.7%

前四半期比

34.8%
66.7%
11.7%
33.0%

システムインテグレーションの売上は、年度末という季節要因から構築案件売上が好調であったことに加え、収益性の高い運用アウトソーシングサービスが大口案件の獲得を含め引続き順調に増加したことから、大幅増収となりました。
構築案件において、IIJ の技術力をリソースとした内製比率の高いネットワーク設計・構築案件を多数獲得したこと、安定した収益基盤である運用アウトソーシングサービスが引続き好調で大幅増収となったことから、売上総利
益率は引続き改善し、24.7%となりました。

機器販売の営業収益、売上原価及び売上総利益率
機器販売売上高機器販売原価
売上総利益率

4Q04
1,042
964
7.6%

（百万円）

4Q03
2,117
2,051
3.1%

前年同期比

(50.8%)(53.0%)

3Q04
625
581
7.0%

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*10

前四半期比

66.8%
65.7%

（百万円）

4Q04
1,692
724
1,061

4Q03
1,358
1,014
1,030

前年同期比

24.6%
(28.7%)
3.0%

3Q04
1,508
2,017
1,116

前四半期比

12.2%
(64.1%)(5.0%)*10 転換社債発行費用の償却額を含む。

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。この資料の記載のうち、過去または現在の事実に関するもの以外は、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。
本資料における 2004 年度第３四半期以前の決算数値については、IIJ の 2005 年 4 月 11 日付プレスリリースにて既報の決算修正を反映した数値としています。

IIJ 4Q04 and Full FY2004

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

2005年3月期、2004年3月期、2004年12月期
JPY/千円単位、 USD/千米ドル単位 (1)
前年同四半期比較
2005年3月期
2004年3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

前四半期比較
2004年12月期

対営業収益%

対前年同四半期

%

JPY

対営業収益
%

対前四半期
%

26,496
6,699
12,3289,130
54,6532,840,903
718,285
1,321,816
978,940
5,859,944

23.2%
5.8
10.8
8.0
47.8

3,100,452
757,947
1,103,558
536,590
5,498,547

26.7%
6.5
9.5
4.6
47.3

(8.4%)
(5.2)
19.8
82.4
6.6

2,780,955
726,798
1,275,958
882,4665,666,177

27.1%
7.1
12.4
8.6
55.2

2.2%
(1.2)
3.6
10.9
3.4

49,915
9,723
114,291

5,351,865
1,042,540
12,254,349

43.7
8.5
100.0

4,001,449
2,117,006
11,617,002

34.5
18.2
100.0

33.7
(50.8)
5.5

3,969,610
625,196
10,260,983

38.7
6.1
100.0

34.8
66.8
19.4

46,80637,5898,987
93,382

5,018,522
4,030,274
963,665
10,012,461

40.9
32.9
7.9
81.7

4,809,831
3,053,962
2,050,923
9,914,716

41.4
26.3
17.6
85.3

4.3
32.0
(53.0)
1.0

4,873,759
3,030,666
581,368
8,485,793

47.5
29.5
5.7
82.7

3.0
33.0
65.7
18.0

6,866
7,461
466
108,175

736,219
799,929
49,968
11,598,577

6.0
6.5
0.4
94.6

755,928
517,884
78,786
11,267,314

6.5
4.5
0.7
97.0

(2.6)
54.5
(36.6)
2.9

683,731
632,874
48,4069,850,804

6.6
6.2
0.5
96.0

7.7
26.4
3.2
17.7

営業利益

6,116

655,772

5.4

349,6883.0

87.5

410,1794.0

59.9

その他の収益 (費用)16,127

1,729,122

14.1(226,045)(1.9)(864.9)332,623

3.2

419.8

税引前当期利益

22,2432,384,894

19.5

123,6431.1

1,828.9

742,802

7.2

221.1

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益

278
(583)
(345)

29,839(62,468)(36,966)

0.3
(0.5)
(0.3)

13,293(157,295)(188,577)

0.1
(1.4)
(1.6)

124.5
(60.3)(80.4)

39,436(43,040)
(795)

0.4
(0.4)
0.0

(24.3)
45.1
4,549.8

当期利益 (損失）21,0372,255,621

18.4%(235,522)(2.0%)(1,057.7%)

659,5316.4%

242.0%

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
営業費用合計基本的及び希薄化後1株あたり当期利益 (損失）基本的及び希薄化後米国預託証券１単位あたり当期利益 (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

58,87529.44
38,312
76,623,702

注記(1): 2005年3月期につきましては、米ドル換算レート107.22円=1米ドル(2005/3/31)にて参考表示しております。

(6,147)(3.07)
38,312
76,623,702

17,215
8.61
38,312
76,623,702

株式会社 インターネットイニシアティブ
連結損益計算書（米国会計基準未監査）
2005年3月期通期、 2004年3月期通期
JPY/千円単位、 USD/千米ドル単位 (1)
前年比較
2005年3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

対営業収益
%

JPY

Appendix 2

2004年3月期

JPY

対営業収益
%

対前年通期
%

106,069
27,392
46,67729,560209,698

11,372,701
2,936,973
5,004,730
3,169,413
22,483,817

27.3%
7.0
12.0
7.6
53.9

12,862,132
3,088,498
4,296,228
2,117,794
22,364,652

33.2%
8.0
11.1
5.4
57.7

(11.6%)
(4.9)
16.5
49.7
0.5

147,863
31,383388,944

15,853,824
3,364,926
41,702,567

38.0
8.1
100.0

11,847,687
4,567,123
38,779,462

30.5
11.8
100.0

33.8
(26.3)
7.5

181,719
113,786
29,018324,523

19,483,890
12,200,137
3,111,369
34,795,396

46.7
29.2
7.5
83.4

20,047,438
9,851,726
4,346,243
34,245,407

51.7
25.4
11.2
88.3

(2.8)
23.8
(28.4)
1.6

26,064
24,865
1,856
377,3082,794,561
2,665,980
198,979
40,454,916

6.7
6.4
0.5
97.0

3,527,490
2,098,481
357,968
40,229,346

9.1
5.4
0.9
103.7

(20.8)
27.0(44.4)
0.6

営業利益 (損失）11,636

1,247,651

3.0(1,449,884)(3.7)(186.1)

その他の収益17,7291,900,857

4.5

982,2202.5

93.5

税引前当期利益 (損失）29,365

3,148,508

7.5(467,664)(1.2)(773.2)

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益
持分法投資損失
クロスウェイブに対する貸付金評価損931(1,018)99,870(109,161)

0.2
(0.2)

32,536
235,812

0.1
0.6

207.0
(146.3)(310)(33,208)(0.1)-(286,317)(1,719,981)

(0.8)
(4.4)

(88.4)-

当期利益 (損失）27,106(2,270,686)(5.9%)(228.0)

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
営業費用合計基本的及び希薄化後1株あたり当期利益 (損失）基本的及び希薄化後米国預託証券１単位あたり当期利益 (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

2,906,269
75,85837.93
38,312
76,623,702

-

7.0%

(71,606)(35.80)31,711
63,421,571

注記(1): 2005年3月期につきましては、米ドル換算レート107.22円=1米ドル(2005/3/31)にて参考表示しております。

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）
2005年3月期、2004年3月期、2004年12月期
JPY/千円単位、 USD/千米ドル単位 (1)2005年3月期

Appendix 3

2004年3月期

2004年12月期

USD (1)

JPY

%

JPY

%

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49,30569,086
1,307
5,642
1,009

5,286,477
7,407,439
140,096604,935
108,228

14.2%
20.0
0.4
1.6
0.3

12,284,239
8,994,156
438,435
557,703
325,422

28.7%
21.1
1.0
1.3
0.8

12,158,790
6,231,361
372,144
989,003
334,169

26.9%
13.8
0.8
2.2
0.7

流動資産合計126,349

13,547,175

36.5

22,599,955

52.9

20,085,467

44.4

関連会社投資等
その他投資
有形固定資産等
敷金保証金
その他資産

6,656
92,62090,677
19,126
10,743

713,6079,930,781
9,722,366
2,050,665
1,151,877

1.9
26.8
26.2
5.5
3.1

778,152
7,931,893
8,601,905
2,075,123
749,897

1.8
18.6
20.1
4.9
1.7

759,585
11,072,053
10,003,936
2,050,305
1,288,024

1.7
24.4
22.1
4.5
2.9

資産合計

346,171

37,116,471

100.0%

42,736,925

100.0%

45,259,370

100.0%

44,065
16,13045,334
5,047
7,625
25,5184,724,633
1,729,520
4,860,733
541,118
817,517
2,736,056

12.7%
4.7
13.1
1.4
2.2
7.4

6,564,093

15.4%

25,8812,774,974

7.5

7,187,976
454,366
483,925
1,548,246
11,832,000
2,387,754

16.8
1.1
1.1
3.6
27.7
5.6

4,825,844
722,800
3,566,158
665,821780,267
2,185,094
11,088,000
2,784,469

10.7%
1.6
7.9
1.5
1.7
4.8
24.5
6.1

169,600

18,184,551

49.0

30,458,360

71.3

26,618,453

58.8

長期借入金
長期リース債務退職給付引当金
その他固定負債

14,26940,4691,337
2,570

1,529,963
4,339,028
143,346
275,533

4.1
11.7
0.4
0.7

2,308,019
2,880,298
72,687
161,122

5.4
6.7
0.2
0.4

2,389,339
4,459,352
120,732
320,393

5.3
9.8
0.3
0.7

負債合計

228,245

24,472,421

65.9

35,880,486

84.0

33,908,269

74.9

少数株主持分

9,597

1,028,977

2.8

642,311

1.5

988,9642.2

128,384
220,459(321,153)
81,049(410)

13,765,372
23,637,628(34,434,052)
8,690,125(44,000)

37.1
63.7(92.8)
23.4(0.1)

13,765,372
23,637,628(37,340,321)
6,195,449(44,000)

32.2
55.3(87.4)
14.5(0.1)

13,765,372
23,637,628(36,689,673)
9,692,810(44,000)

30.4
52.2(81.0)
21.4
(0.1)

資本合計

108,329

11,615,073

31.3

6,214,128

14.5

10,362,13722.9

負債、少数株主持分及び資本合計

346,171

37,116,471

100.0%

42,736,925

100.0%

45,259,370

100.0%

負債及び資本の部
流動負債：
短期借入金
有価証券貸借取引に伴う債務買掛金及び未払金
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
転換社債
短期リース債務
流動負債合計

資本：
資本金
資本準備金
欠損金
その他有価証券評価差額金等
自己株式

注記(1): 2005年3月期につきましては、米ドル換算レート107.22円=1米ドル(2005/3/31)にて参考表示しております。

株式会社 インターネットイニシアティブ

Appendix 4

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）
2005年3月期、2004年3月期、2004年12月期
JPY/千円単位、USD/千米ドル単位 (1)2005年3月期
USD (1)

2004年3月期

2004年12月期

JPY

JPY

JPY

営業活動によるキャッシュフロー：
当期利益（損失）

21,0372,255,621(235,522)

659,531

減価償却費等

9,895

1,060,944

1,030,162

1,116,447

貸倒引当金繰入（戻入）額338

36,204

27,587(18,455)

持分法による投資損益

345

36,966

188,577795

少数株主損（益）583

62,468157,295

43,040

為替差損（差益）(81)(8,641)(13,682)

14,912

その他投資に係る損益(16,943)(1,816,676)

42,352(527,300)

売掛金の減少（増加）額(11,249)(1,206,074)(2,483,404)

582,873

買掛金及び未払金の増加（減少）額

11,245

1,205,665

2,392,795(985,459)

棚卸資産の減少（増加）額2,069

221,788(245,201)(109,964)

法人税等調整額(109)(11,656)

-

633

その他

6,570

704,443

395,710(146,465)

営業活動によるキャッシュフロー

23,7002,541,052

1,256,669

630,588(900)(96,542)(236,028)(105,946)
750,800

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
子会社株式の取得による支出(466)(50,000)

その他投資の売却による収入

18,7342,008,650

66,387

その他投資の取得による支出(22)(2,339)(2,138)(4,854)

敷金保証金の返還（差入）(31)(3,330)(576)

31,162(371,011)

営業譲受による支出
その他
投資活動によるキャッシュフロー

-

-

-

(89)

(9,495)(3,778)(1,029)17,226

1,846,944(176,133)

299,122

財務活動によるキャッシュフロー：長期借入金による調達--

400,000

1,250,000

長期借入金の返済(2,876)(308,414)(436,477)(58,179)

有価証券貸借取引による担保金預り収入

16,1301,729,520--

有価証券貸借取引による預かり担保金の返済(6,741)(722,800)-(94,000)(103,414)(11,088,000)--(7,025)(753,177)(692,467)(756,982)

転換社債の償還
リース債務元本の返済
短期借入金の純増減額(944)(101,211)(200,316)(906,360)

財務活動によるキャッシュフロー(104,870)(11,244,082)(929,260)(565,521)

現金及び現金同等物に係る換算差額(151)(16,227)(7,632)(7,564)

現金及び現金同等物の増加（減少）額(64,095)(6,872,313)

143,644356,625

現金及び現金同等物の期首残高

113,400

12,158,790

12,140,595

11,802,165

現金及び現金同等物の期末残高

49,3055,286,477

12,284,239

12,158,790

注記(1):2005年3月期につきましては、米ドル換算レート107.22円=1米ドル(2005/3/31)にて参考表示しております。

株式会社 インターネットイニシアティブ

Appendix 5

連結キャッシュフロー計算書（米国会計基準未監査）
2005年3月期、2004年3月期、2004年12月期
JPY/千円単位、USD/千米ドル単位 (1)2005年3月期
USD (1)

2004年3月期
JPY

JPY

営業活動によるキャッシュフロー：
当期利益（損失）

27,1062,906,269(2,270,686)

減価償却費等

39,107

4,193,093

4,008,324

貸倒引当金繰入（戻入）額231

24,781

450,505

持分法による投資損益

310

33,208286,317

クロスウェイブに対する貸付金評価損--1,719,981

少数株主損（益）1,018

109,161

為替差損（差益）(144)(15,466)

5,124

転換社債償還差益

48

5,195

(88,975)

その他投資に係る損益(22,751)(2,439,330)(1,412,858)

売掛金の減少額

14,994

1,607,692

783,387

買掛金及び未払金の減少額(21,523)(2,307,729)(1,132,209)

棚卸資産の減少（増加）額

2,674

286,751(30,813)

法人税等調整額(103)(11,023)

1,976(235,812)

その他

7,890

845,895(160,895)

営業活動によるキャッシュフロー

48,8575,238,497

1,923,366(5,382)(577,133)(1,657,302)(575)(61,680)--(1,719,981)

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
子会社株式の取得による支出
クロスウェイブへの貸付-

その他投資の売却による収入

27,756

2,976,017

2,170,584

その他投資の取得による支出(117)(12,566)(325,665)

敷金保証金の返還

216

23,167674,018

営業譲受による支出(3,499)(375,123)

その他
投資活動によるキャッシュフロー

-

12

1,321

5,883

18,411

1,974,003(852,463)

財務活動によるキャッシュフロー：長期借入金による調達

20,9852,250,000

400,000

長期借入金の返済(17,163)(1,840,246)(1,943,735)

有価証券貸借取引による担保金預り収入

23,7492,546,320-

有価証券貸借取引による預かり担保金の返済(7,618)(816,800)-

転換社債の買入(6,953)(745,488)-

転換社債の償還(103,413)(11,088,000)(3,047,460)

リース債務元本の返済(26,745)(2,867,624)(2,733,012)

短期借入金の純増減額(17,156)(1,839,461)

1,740,495

1,759

188,632

子会社による普通株式の発行による収入
普通株式の発行による収入

-

-

-

13,252,311

財務活動によるキャッシュフロー(132,555)(14,212,667)

7,668,599

現金及び現金同等物に係る換算差額

22

2,405

(43,615)

現金及び現金同等物の増加額(65,265)(6,997,762)

8,695,887

現金及び現金同等物の期首残高

114,570

12,284,239

3,588,352

現金及び現金同等物の期末残高

49,3055,286,477

12,284,239

注記(1):2005年3月期につきましては、米ドル換算レート107.22円=1米ドル(2005/3/31)にて参考表示しております。

For Immediate Release
Internet Initiative Japan Inc.
E-mail: ir@iij.ad.jp Tel: +81-3-5259-6500
URL: http://www.iij.ad.jp/

IIJ Announces Fourth Quarter and Full Fiscal Year Results
for the Year Ended March 31, 2005
- Company records highest annual and quarterly incomes since NASDAQ listing in 1999 Tokyo and New York, May 13, 2005 - 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 fourth quarter and the full fiscal year ended March 31, 2005 (“FY2004”).1

Highlights of Fourth Quarter FY2004 Results
・ Revenue totaled JPY 12,254 million ($114.3 million), an increase of 5.5% from JPY 11,617
million in 4Q03 and an increase of 19.4% from JPY 10,261 million in 3Q04.
・ Operating income was JPY 656 million ($6.1 million), an increase of 87.5% from JPY 350
million in 4Q03 and an increase of 59.9% from JPY 410 million in 3Q04.
・ Net income was JPY 2,256 million ($21.0 million), compared to a net loss of JPY 236 million
in 4Q03 and JPY 660 million of net income in 3Q04.
Highlights of Full FY2004 Results
・ Revenue totaled JPY 41.7 billion ($388.9 million), an increase of 7.5% from JPY 38.8 billion
in FY2003.
・ Operating income was JPY 1.2 billion ($11.6 million), compared to an operating loss of JPY
1.4 billion in FY2003.
・ Net income was JPY 2.9 billion ($27.1 million), compared to a loss of JPY 2.3 billion in
FY2003.
2
Outlook for FY2005
・ We expect revenue growth of approximately 10%, an increase in an operating income of
approximately 85% and an increase in a net income of approximately 25% for the full fiscal
year ending March 31, 2006 ("FY2005").
Overview of 4th Quarter and Full FY2004 Financial Results and Business Outlook2"We are pleased to announce that IIJ achieved the highest annual and quarterly operating and net
income since our NASDAQ listing,” said Koichi Suzuki, President and CEO of IIJ. "We are capitalizing on
three main changes in the corporate market and we believe the trends will continue to affect ourbusiness favorably. First, broadband expansion is spurring demand for operational outsourcing services
since customers are required to resolve security and other operational issues. Second, as usage of
networks become more integrated with its business systems, demand for upgrades and replacement of1

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. For all 4Q04 and Full FY2004 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 JPY 107.22 =US$1.00, the approximate exchange rate on March 31, 2005. Historical quarterly and annual figures have been restated toreflect the change in income tax expense (benefit) previously discussed by IIJ in its press release dated April 11, 2005.
2
This Overview and Business Outlook contains forward-looking statements and projections such as statements regarding
FY2005 revenues and operating and net 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 containedin 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 1Q05 earnings release, presently
scheduled for August 2005.

Page 1 of 7

IIJ 4Q and Full FY2004

legacy network systems is growing and the scale and scope of Systems Integration ("SI") projects suchas consulting, network and system design, project management, implementation and operation isincreasing. Lastly, an increase in Internet traffic among corporate customers is spurring demand forhigher speed contracts for high-end Internet connectivity services and advanced broadband services for
multi-site connectivity. In addition to leveraging our technological expertise to meet the needs of ourcustomers created by the trends, we continue to develop new technologies such as our SEIL
Management Framework ("SMF") and RFID technology in an effort to continually search for new
avenues of growth.""Our financial condition has improved substantially in FY2004," said Akihisa Watai, CFO of IIJ. "We
succeeded in expanding our outsourced operational services which have relatively higher-margins andrecurring monthly revenues, and we also showed significant progress in decreasing our backbone costs
while stringently managing our SG&A expenses. We believe that we have crossed the threshold andmoved into a harvesting period."

4th Quarter FY2004 Financial Results
Operating Result Summary

Total Revenues
Total Costs
SG&A Expenses and R&D
Operating Income
Net Income (Loss)
Revenues
Revenues in 4Q04 totaled JPY
12,254 million, an increase of
5.5% from JPY 11,617 million in
4Q03 and 19.4% from JPY 10,261
million in 3Q04.

4Q04

4Q03

12,254
10,012
1,586
656
2,256

11,617
9,915
1,353
350
(236)

(JPY in millions)YoY %change
5.5%
1.0%
17.3%
87.5%
(1,057.7%)

3Q04
10,261
8,486
1,365
410
660

Revenues

Total Re ve nue s
Conne ctivity & V AS
SI
Equipm e nt Sale sConnectivity and Value-added
Services ("VAS") revenues were JPY 5,860
million in 4Q04, an increase of 6.6% from JPY
5,499 million in 4Q03 and 3.4% from JPY 5,666
million in 3Q04.

Dedicated access service revenues were JPY
2,841 million in 4Q04, a decrease of 8.4%
compared to 4Q03 and an increase of 2.2%
compared to 3Q04. The decrease compared to
4Q03 was mainly due to shift from T1 Standard or
IIJ Economy to lower-priced broadband services.
Revenues increased from 3Q04, however, due toan increase in revenues from IP service andbroadband services.

4Q04

4Q03

12,254
5,860
5,352
1,042

11,617
5,499
4,001
2,117

QoQ %
change
19.4%
18.0%
16.2%
59.9%
242.0%(JPY in millions)YoY %change
5.5%
6.6%
33.7%
(50.8%)

3Q04
10,261
5,666
3,970
625

QoQ %
change
19.4%
3.4%
34.8%
66.8%

Quarterly Total Revenues
14,000(JPY in millions)

12,00010,000
8,000
6,000
4,000
2,000
0
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04
SI
Connectivity and VAS

Equipment Sales
Dial-up access service revenues were JPY 718
million in 4Q04, a decrease of 5.2% compared to 4Q03 and a decrease of 1.2% compared to 3Q04
mainly due to the decrease in revenues from IIJ4U.

VAS revenues were JPY 1,322 million in 4Q04, an increase of 19.8% compared to 4Q03 and anincrease of 3.6% compared to 3Q04. The increase compared to 4Q03 and 3Q04 is mainly due to anincrease in revenues from various types of packaged outsource services, such as managed security,

Page 2 of 7

IIJ 4Q and Full FY2004

hosting and network services.
Other revenues were JPY 979 million in 4Q04, an increase of 82.4% compared to 4Q03 and an increaseof 10.9% compared to 3Q04, mainly due to an increase in revenues from Wide-area Ethernet Services.
SI revenues increased 33.7% to JPY 5,352 million in 4Q04 from JPY 4,001 million in 4Q03 andincreased 34.8% from JPY 3,970 million in 3Q04. The increase from 4Q03 is mainly due to additional
revenues from the purchase of the security system business operations of Yamatane Co. Ltd. in October
2004, and the increase from 3Q04 is mainly due to the increase in systems integration contracts.
Equipment sales revenues were JPY 1,042 million in 4Q04, a decrease of 50.8% compared to 4Q03
and an increase of 66.8% compared to 3Q04.
Cost and expense
Cost of revenues was JPY 10,012
million in 4Q04, an increase of 1.0%
compared to 4Q03 and an increaseof 18.0% compared to 3Q04.

Cost of Revenues

Total Cos ts :Conne ctivity & V AS
SI
Equipm e nt Sale s

Cost of Connectivity and VAS
revenues was JPY 5,018 million, an
increase of 4.3% compared to 4Q03 and an increaseof 3.0% compared to 3Q04. The gross-margin ratio
for Connectivity and VAS in 4Q04 was 14.4%,
compared to 12.5% in 4Q03 and 14.0% in 3Q04
mainly due to a decrease in backbone costs.
Cost of SI revenues was JPY 4,030 million in 4Q04,
an increase of 32.0% compared to 4Q03 and anincrease of 33.0% compared to 3Q04. The grossmargin ratio for SI in 4Q04 was 24.7%, compared to
23.7% in 4Q03 and 23.7% in 3Q04. The
improvement in margin compared to 3Q04 was
mainly due to the increase in higher-margin systems
integration projects.

4Q04

4Q03

10,012
5,018
4,030
964

9,915
4,810
3,054
2,051

(JPY in millions)YoY %change
1.0%
4.3%
32.0%
(53.0%)

3Q04
8,486
4,874
3,031
581

QoQ %
change
18.0%
3.0%
33.0%
65.7%

Quarterly Cost and Gross Margin Ratio
30.0%

12,000(JPY in millions)

10,000

25.0%

8,000

20.0%

6,000

15.0%

4,000

10.0%

2,000

5.0%
0.0%

0
1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

Cost of Connectivity and VAS (Cost of SI Cost (Sales and marketing expenses were JPY 736
million in 4Q04, a decrease of 2.6% compared to
4Q03 and an increase of 7.7% compared to 3Q04.

3Q04

4Q04

Gross Margin Ratio)

Gross Margin Ratio)

Cost of Equipment Sales

General and administrative expenses were JPY 800 million in 4Q04, an increase of 54.5% compared
to 4Q03 and an increase of 26.4% compared to 3Q04. The increase is mainly due to an increase in write
down of software licenses and personnel expenses.
Operating income
Operating income was JPY 656 million in 4Q04,
compared to JPY 350 million in 4Q03 and JPY 410
million in 3Q04 mainly due to improved
gross-margins in Connectivity, VAS and SI.

Quarterly Operating Income (Loss)
1,500(JPY in millions)

1,000
500

Other income (expenses) in 4Q04 was JPY 1,729
million, compared to other expenses of JPY 226
million in 4Q03 and other income of JPY 333 million in
3Q04. The increase is mainly due to gain on the saleof available-for-sale securities which amounted to
JPY 1,890 million.
Income tax expense for 4Q04 was JPY 30 million,
compared to JPY 13 million in 4Q03 and JPY 39

Page 3 of 7

0(500)
(1,000)(1,500)
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04

IIJ 4Q and Full FY2004

Quarterly Net Income (Loss)million in 3Q04.

3,000

Equity in net loss of equity method investees
amounted to JPY 37 million in 4Q04, compared toa net loss of JPY 189 million in 4Q03 and JPY 1
million in 3Q04.
Net income (loss) was net income of JPY 2,256
million in 4Q04, compared to a net loss of JPY 236
million in 4Q03 and net income of JPY 660 million
in 3Q04. The increase was mainly due to theimprovement in operating income and gain onsale of available-for-sale securities.

(JPY in millions)

2,000
1,000
0
(1,000)(2,000)(3,000)(4,000)
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04

4th Quarter FY2004 Business Review
Analysis by Service
Connectivity and Value-added Services
Number of Contracts for Connectivity Services
4Q04
Dedicated Access Service Contracts
11,243
IP Service (Low Bandwidth: 64kbps-768kbps)389
IP Service (Medium Bandwidth: 1Mbps-99Mbps) 3
660
IP Service (High Bandwidth: 100Mbps-)
114
IIJ T1 Standard and IIJ Economy4276
IIJ Data Center Connectivity Service
231
IIJ FiberAccess/F and IIJ DSL/F
9,873(Broadband Services)
Dial-up Access Service Contracts
693,976
Dial-up Access Services, under IIJ Brand
68,068Dial-up Access Services, OEM5
625,908
Total Contracted Bandwidth
121.2Gbps

4Q03
7,226
93
565
80
504
196
5,788

3Q04
9,427
67
609
103
313
228
8,107

695,867
75,136
620,73180.1Gbps

708,517
69,260639,257
109.5Gbps

The total number of contracts for dedicated access services continued to show a steady increase in
4Q04. In IP Services, the number of contracts for our high-end Internet connectivity services, such as forcorporate headquarters and other critical usage, increased, especially for medium and high bandwidthconnectivity. The number of contacts over 1Gbps also increased to 24. Additionally, the number ofcontracts for broadband services continued to increase for multi-site connectivity with Internet VPN, as
we are exploring new markets and services that were previously provided by telecommunication
carriers.
Connectivity and VAS Revenue Breakdown and Cost
4Q04
Connectivity Service Revenues
Dedicated Access Service Revenues
IP Service 6
IIJ T1 Standard and IIJ Economy
IIJ FiberAccess/F and IIJ DSL/F(Broadband Services)

3,559
2,841
2,235
171
435

4Q03
3,858
3,100
2,423
331
346

YoY %
Change(7.8%)(8.4%)(7.8%)(48.5%)
25.8%(JPY in millions)

3Q04
3,508
2,781
2,186
195
400

QoQ %
change
1.5%
2.2%
2.3%
(12.3%)
8.6%

3

Including IPv6 Services.
Referred to as "Limited Functionality Services" in 1Q04 for the services with local access not shared, limited on several
functionality compared to IP service such as number of IP address allocated and fixed speed of 64kbps, 128kbps and 1.5Mbps.
5OEM stands for Original Equipment Manufacturer.
6
IP Service revenues includes revenues from Data Center Connectivity Service.
4

Page 4 of 7

IIJ 4Q and Full FY2004

Dial-up Access Service Revenues
Under IIJ Brand
OEM
VAS Revenues
Other Revenues
Total Connectivity and VAS Revenues
Cost of Connectivity and VAS
Backbone Cost (included in the costof Connectivity and VAS)
Connectivity and VAS Gross Margin Ratio

718
472
247
1,322
979
5,860
5,018
831

758
522
236
1,104
537
5,499
4,810
1,067

14.4%

12.5%

(5.2%)(9.6%)
4.5%
19.8%
82.4%
6.6%
4.3%
(22.1%)

727
478
249
1,276
882
5,666
4,874
858

(1.2%)(1.4%)(0.8%)
3.6%
10.9%
3.4%
3.0%
(3.2%)

14.0%

The speed requirements in the high-end connectivity in broadband expansion and additional revenues
from broadband services off-set the decline in revenues from IIJ T1 Standard and IIJ Economy in 4Q04.
VAS revenues increased reflecting our provision of managed services and data centers with our reliable
connectivity services to customers lacking skills or resources to handle security and other operational issues
which are emerging as a result of the broadband expansion among corporate customers.
Other revenues also increased steadily mainly due to an increase in revenue from Wide-area Ethernet
services.

Backbone costs declined continuously in 4Q04 by 22.1% compared to 4Q03 and by 3.2% compared to
3Q04, as a result of our continued efforts to improve cost efficiency.
The cross-selling ratio between Connectivity and VAS, representing the percentage of the largest 1,000
Connectivity service customers that use VAS was 88.2%.
Cross-selling Ratios
The cross-selling ratio between Connectivity and SI,
4Q04
representing the percentage of SI customers that use
Connectivity services among the largest 100 SI customers was
V AS Cros s -s e lling Ratio
88.2%
78.0%.
SI Cros s -s e lling Ratio
78.0%
Systems Integration
Systems Integration
Revenue Breakdown and Cost

Systems Integration Revenues
Systems Integration
Outsourced Operation
Cost of Systems Integration
Systems Integration Gross Margin Ratio

4Q04

4Q03

5,352
2,786
2,566
4,030
24.7%

4,001
2,573
1,428
3,054
23.7%

(JPY in millions)

3Q04 QoQ %YoY %changechange33.7% 3,970
34.8%
8.3% 1,672
66.7%
79.6% 2,298
11.7%
32.0% 3,031
33.0%
23.7%

Our SI projects are becoming bigger in scale by including the whole stream of consulting, design, project
management, implementation and operation. SI revenues in 4Q04 increased largely due to theseasonal increase in systems integration toward year end. In addition to the increase from 4Q03
reflected of additional revenues from the purchase of the security system business operations of
Yamatane Co. Ltd. ("Yamatane") for the comparison to 4Q03. An increase in outsourced operation
revenues is having the effect of stabilizing the fluctuation in revenues since these services are billed
monthly.
Equipment Sales
Equipment Sales Revenue and Cost
4Q04
Equipment Sales Revenues
Cost of Equipment Sales
Equipment Sales Gross Margin Ratio

Page 5 of 7

1,042
964
7.6%

(JPY in millions)

4Q03

YoY % 3Q04 QoQ %changechange2,117 (50.8%)
625
66.8%
2,051 (53.0%)
581
65.7%
3.1%
7.0%

IIJ 4Q and Full FY2004

Other Financial Statistics
Other Financial Statistics
4Q04
Adjusted EBITDA7
CAPEX, including capital leases8
Depreciation and amortization9

1,698
724
1,061

(JPY in millions)

4Q03

YoY % 3Q04 QoQ %changechange1,358
24.6% 1,508
12.2%
1,014 (28.7%) 2,017 (64.1%)
1,030
3.0% 1,116 (5.0%)

Key Service Developments
Toyota to use IIJ NetLightning Service:
In April 2005, IIJ announced that it was selected by Toyota Motor Corporation to provide IIJ NetLightning,
the Web access application acceleration service. IIJ NetLightning provides sub-second access fromoverseas to Supply Chain Management, Customer Relationship Management, and other Web
applications through U.S.-based Netli Inc's Applications Delivery Network. Even when accessing
servers in Japan from overseas, the service provides response times that are comparable to local
access, with no long-distance network delays.
Development of new SMF technologies and provision to third parties:
In 4Q04, IIJ continued to develop new SMF technologies. IIJ's SMF is a suite of management tools thatallow customers to easily and centrally control initialization, reconfiguration, and other operations
involving communications equipment at multiple sites. In February 2005, IIJ developed SEIL Engine, a
new router software that also interfaces with SMF. In March 2005, IIJ released SMF-LAN, which is SMF
technology that can be used on closed networks such as wide-area Ethernet. In 4Q04, IIJ also
developed partnerships with third parties to license its SEIL Engine. It will be included in the equipmentof Century Systems, Inc. and a new mobile router jointly developed by IIJ, ROOT, Inc., and Novatec
Corporation. The SMF-LAN system will be incorporated into KVH Co., Ltd.'s managed Ethernet service
to simplify the service installation process.
Continuous efforts against e-mail abuse:
In March 2005, IIJ announced that it participated in establishment of the Japan E-mail Anti-Abuse Group.
The Group is comprised of approximately thirty Internet Service Providers and telecommunication
carriers in Japan and focuses on examining and implementing technological countermeasures against
E-mail abuse. Additionally, IIJ announced that it will introduce sender authentication, a new technologythat blocks spam e-mail, for its internal use by the end of March 2005, and then install it in its mailservices.
Reconciliation of Non-GAAP Financial Measures
The following table summarizes the reconciliation of adjusted EBITDA to net income according to theconsolidated statements of operations that are prepared in accordance with accounting principles
generally accepted in the U.S. and presented in Appendix 1:
Adjusted EBITDA(JPY in millions)

Adjusted EBITDA
Depreciation and Amortization10
Operating Income
Other Income (Expenses)
Income Tax Expense
Minority Interests in Consolidated Subsidiaries

4Q03
3Q04
4Q04
1,358
1,508
1,698
(1,042) (1,008) (1,098)
350
410
656
(226)
333
1,729
13
39
30
(158)
(43)
(62)

7

Please refer to the Reconciliation of Non-GAAP Financial Measures below.
Please refer to the Reconciliation of Non-GAAP Financial Measures on the next page.
9
Depreciation and amortization includes amortization of issuance cost of convertible notes and intangible assets.
10
Depreciation and amortization excludes amortization of issuance cost of convertible notes that was included in otherexpenses.
8

Page 6 of 7

IIJ 4Q and Full FY2004

Equity in Net Loss of Equity Method Investees
Net Income (Loss)

(37)
2,256

(189)
(236)

(1)
660

The following table summarizes the reconciliation of capital expenditures to the purchase of property
and equipment according to the consolidated statements of cash flows that are prepared and presented
in accordance with accounting principles generally accepted in the U.S. in Appendix 4:
CAPEX
Capital Expenditures
Acquisition of Assets by Entering into
Capital Leases
Purchase of Property and Equipment(JPY in millions)

4Q03
3Q04
4Q04
1,014
2,017
724
778
1,911
627
97

236

106

Management Message/Webcast
On May 14, IIJ will present its management message and the Company's results and outlook by
webcast. For details, please access the following URL: http://www.iij.ad.jp/en/IR/

About Internet Initiative Japan Inc.
Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI) is one of Japan's leading
Internet-access and comprehensive network solutions providers. The company has built one of thelargest 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.
The company's services include high-quality systems integration and security services, Internet access,hosting/housing, and content design.

For inquiries, contact:
Taisuke ONO, Naoshi YONEYAMAIIJ Media & Investor Relations Division
Tel: +81-3-5259-6500 E-mail: ir@iij.ad.jp URL: http://www.iij.ad.jp/
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
forward-looking statements, such as statements regarding FY2005 revenues and operating and net
profitability, are subject to various risks, uncertainties and other factors that could cause IIJ’s actual results todiffer materially from those contained in any forward-looking statement. These risks, uncertainties and otherfactors include: IIJ’s ability to maintain and increase revenues from higher margin services such as system
integration and value-added services; the possibility that revenues from connectivity services may decline
substantially as a result of competition and other factors; the ability to compete in a rapidly evolving andcompetitive marketplace; the impact on IIJ's profits of fluctuations in costs such as backbone costs andsubcontractor costs; the impact on IIJ's profits of fluctuations in the price of available-for-sale securities; theimpact of technological changes in its industry; IIJ’s ability to raise additional capital to cover its indebtedness;the possibility that NTT, IIJ’s largest shareholder, may decide to exercise substantial influence over IIJ; andother risks referred to from time to time in IIJ’s filings on Form 20-F of its annual report and other filings with
the United States Securities and Exchange Commission.

Tables to follow

Page 7 of 7

IIJ 4Q and Full FY2004

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

For the Three Months Ended Mar 31, 2005, Mar 31, 2004 and Dec 31, 2004
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD) Except for Per Share and ADS Data)(1)Year-over-year Comparison
Sequential Comparison
Mar 31, 2005
Mar 31, 2004
Dec 31, 2004
% of
% of
% of
Total
Total
YOY
Total
QOQ
USD (1)
JPY
Revenues
JPY
Revenues
Chg %JPY
Revenues
Chg %Revenues:
Connectivity and value-added services:
Dedicated access services
Dial-up access services
Value-added services
Other
Total connectivity and value-added services

26,496
6,699
12,3289,130
54,6532,840,903
718,285
1,321,816
978,940
5,859,944

23.2%
5.8
10.8
8.0
47.8

3,100,452
757,947
1,103,558
536,590
5,498,547

26.7%
6.5
9.5
4.6
47.3

(8.4%)
(5.2)
19.8
82.4
6.6

2,780,955
726,798
1,275,958
882,4665,666,177

27.1%
7.1
12.4
8.6
55.2

2.2%
(1.2)
3.6
10.9
3.4

49,915
9,723
114,291

5,351,865
1,042,540
12,254,349

43.7
8.5
100.0

4,001,449
2,117,006
11,617,002

34.5
18.2
100.0

33.7
(50.8)
5.5

3,969,610
625,196
10,260,983

38.7
6.1
100.0

34.8
66.8
19.4

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

46,80637,5898,987
93,382

5,018,522
4,030,274
963,665
10,012,461

40.9
32.9
7.9
81.7

4,809,831
3,053,962
2,050,923
9,914,716

41.4
26.3
17.6
85.3

4.3
32.0
(53.0)
1.0

4,873,759
3,030,666
581,368
8,485,793

47.5
29.5
5.7
82.7

3.0
33.0
65.7
18.0

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

6,866
7,461
466
108,175

736,219
799,929
49,968
11,598,577

6.0
6.5
0.4
94.6

755,928
517,884
78,786
11,267,314

6.5
4.5
0.7
97.0

(2.6)
54.5
(36.6)
2.9

683,731
632,874
48,4069,850,804

6.6
6.2
0.5
96.0

7.7
26.4
3.2
17.7

Operating income

6,116

655,772

5.4

349,6883.0

87.5

410,179

4.0

59.9

Other income (expenses)

16,127

1,729,122

14.1(226,045)(1.9)(864.9)332,623

3.2

419.8

Income before income tax expense, minority interestsand equity in net loss of equity method investees

22,2432,384,894

19.5

123,6431.1

1,828.9

742,802

7.2

221.1

Income tax expense
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees

278
(583)
(345)

29,839(62,468)(36,966)

0.3
(0.5)
(0.3)

13,293(157,295)(188,577)

0.1
(1.4)
(1.6)

124.5
(60.3)(80.4)

39,436(43,040)
(795)

0.4
(0.4)
0.0

(24.3)
45.1
4,549.8

Net income (loss)

21,0372,255,621

18.4%(235,522)(2.0%)(1,057.7%)

659,5316.4%

242.0%

Systems integration revenues
Equipment sales
Total revenues

Basic And Diluted Net Income (Loss) Per Share
Basic And Diluted Net Income (Loss) Per ADS Equivalent
Weighted Average Number of Shares
Weighted Average Number of ADS Equivalents

58,87529.44
38,312
76,623,702(6,147)(3.07)
38,312
76,623,702

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to the three months ended Mar 31, 2005 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY 107.22 =$1, the approximate rate of exchange on Mar 31, 2005.

17,215
8.61
38,312
76,623,702

INTERNET INITIATIVE JAPAN INC.
Appendix 2
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the Years Ended Mar 31, 2005 and Mar 31, 2004
s of Japanese Yen (JPY) and U.S. Dollars (USD) Except for Per Share and ADS Data)(1)Year-over-year Comparison
Mar 31, 2005
Mar 31, 2004
% of
% of
Total
Total
YOY
USD (1)
JPY
Revenues
JPY
Revenues
Chg %Revenues:
Connectivity and value-added services:
Dedicated access services
Dial-up access services
Value-added services
Other
Total connectivity and value-added services

106,069
27,392
46,67729,560209,698

11,372,701
2,936,973
5,004,730
3,169,413
22,483,817

27.3%
7.0
12.0
7.6
53.9

12,862,132
3,088,498
4,296,228
2,117,794
22,364,652

33.2%
8.0
11.1
5.4
57.7

(11.6%)
(4.9)
16.5
49.7
0.5

147,863
31,383388,944

15,853,824
3,364,926
41,702,567

38.0
8.1
100.0

11,847,687
4,567,123
38,779,462

30.5
11.8
100.0

33.8
(26.3)
7.5

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

181,719
113,786
29,018324,523

19,483,890
12,200,137
3,111,369
34,795,396

46.7
29.2
7.5
83.4

20,047,438
9,851,726
4,346,243
34,245,407

51.7
25.4
11.2
88.3

(2.8)
23.8
(28.4)
1.6

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

26,064
24,865
1,856
377,3082,794,561
2,665,980
198,979
40,454,916

6.7
6.4
0.5
97.0

3,527,490
2,098,481
357,968
40,229,346

9.1
5.4
0.9
103.7

(20.8)
27.0(44.4)
0.6

Operating income (loss)

11,636

1,247,651

3.0(1,449,884)(3.7)(186.1)Other income, net

17,7291,900,857

4.5

982,220

2.5

93.5

Income (loss) before income tax expense, minority interestsand equity in net loss of equity method investees

29,365

3,148,508

7.5(467,664)(1.2)(773.2)

Income tax expense
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees:
Equity method net loss
Impairment loss on advances to Crosswave

931(1,018)99,870(109,161)

0.2
(0.2)

32,536
235,812

0.1
0.6

207.0
(146.3)(310)(33,208)

(0.1)

-

-

(286,317)(1,719,981)

(0.8)
(4.4)

(88.4)-Net income (loss)

27,106

7.0%(2,270,686)(5.9%)(228.0)

Systems integration revenues
Equipment sales
Total revenues

Basic And Diluted Net Income (Loss) Per Share
Basic And Diluted Net Income (Loss) Per ADS Equivalent
Weighted Average Number of Shares
Weighted Average Number of ADS Equivalents

2,906,269
75,85837.93
38,312
76,623,702(71,606)(35.80)31,711
63,421,571

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to the year ended Mar 31, 2005 are included soley for the convenienceof readers outside Japan and have been made at the rate of JPY107.22 =$1, the approximate rate of exchange on Mar 31,2005.

INTERNET INITIATIVE JAPAN INC.
CONSOLIDATED BALANCE SHEETS(UNAUDITED)Appendix 3

As of Mar 31, 2005, Mar 31, 2004 and Dec 31, 2004
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)Mar 31, 2005
Mar 31, 2004

Dec 31, 2004

USD (1)

JPY

%

JPY

%

JPY

%

49,30569,086
1,307
5,642
1,009

5,286,477
7,407,439
140,096604,935
108,228

14.2%
20.0
0.4
1.6
0.3

12,284,239
8,994,156
438,435
557,703
325,422

28.7%
21.1
1.0
1.3
0.8

12,158,790
6,231,361
372,144
989,003
334,169

26.9%
13.8
0.8
2.2
0.7

126,349

13,547,175

36.5

22,599,955

52.9

20,085,467

44.4

6,656
92,62090,677
19,126
10,743

713,6079,930,781
9,722,366
2,050,665
1,151,877

1.9
26.8
26.2
5.5
3.1

778,152
7,931,893
8,601,905
2,075,123
749,897

1.8
18.6
20.1
4.9
1.7

759,585
11,072,053
10,003,936
2,050,305
1,288,024

1.7
24.4
22.1
4.5
2.9

346,171

37,116,471

100.0%

42,736,925

100.0%

45,259,370

100.0%

Short-term borrowings
Payable under securities loan agreement
Accounts payable
Accrued expenses
Other current liabilities
Long-term borrowings-current portion
Convertible notes
Capital lease obligations-current portion

44,065
16,13045,334
5,047
7,625
25,5184,724,633
1,729,520
4,860,733
541,118
817,517
2,736,056

12.7%
4.7
13.1
1.4
2.2
7.4

6,564,093

15.4%

25,8812,774,974

7.5

7,187,976
454,366
483,925
1,548,246
11,832,000
2,387,754

16.8
1.1
1.1
3.6
27.7
5.6

4,825,844
722,800
3,566,158
665,821780,267
2,185,094
11,088,000
2,784,469

10.7%
1.6
7.9
1.5
1.7
4.8
24.5
6.1

Total current liabilities

169,600

18,184,551

49.0

30,458,360

71.3

26,618,453

58.8

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

14,26940,4691,337
2,570

1,529,963
4,339,028
143,346
275,533

4.1
11.7
0.4
0.7

2,308,019
2,880,298
72,687
161,122

5.4
6.7
0.2
0.4

2,389,339
4,459,352
120,732
320,393

5.3
9.8
0.3
0.7

228,245

24,472,421

65.9

35,880,486

84.0

33,908,269

74.9

9,597

1,028,977

2.8

642,311

1.5

988,964

2.2

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

128,384
220,459(321,153)
81,049(410)

13,765,372
23,637,628(34,434,052)
8,690,125(44,000)

37.1
63.7(92.8)
23.4(0.1)

13,765,372
23,637,628(37,340,321)
6,195,449(44,000)

32.2
55.3(87.4)
14.5(0.1)

13,765,372
23,637,628(36,689,673)
9,692,810(44,000)

30.4
52.2(81.0)
21.4(0.1)

Total shareholders' equity

108,329

11,615,073

31.3

6,214,128

14.5

10,362,137

22.9

Total liabilities and shareholders' equity

346,171

37,116,471

100.0%

42,736,925

100.0%

45,259,370

100.0%ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses
Other current assets
Total current assets
Investments in and Advances to Equity Method Investees
Other Investments
Property and Equipment, net
Guarantee Deposits
Other Assets
Total assets
LIABILITIES ANDSHAREHOLDERS' EQUITYCurrent Liabilities:

Total liabilities
Minority Interest

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to Mar 31, 2005 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY 107.22 =$1, the approximate rate of exchange on Mar 31, 2005.

INTERNET INITIATIVE JAPAN INC.

Appendix 4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS（UNAUDITED）
For the Three Months Ended Mar 31, 2005, Mar 31, 2004 and Dec 31, 2004
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)Mar 31, 2005
USD (1)JPY

Mar 31, 2004

Dec 31, 2004

JPY

JPY

Operating Activities:
Net income (loss)

21,0372,255,621(235,522)

659,531

Depreciation and amortization

9,895

1,060,944

1,030,162

1,116,447

338

36,204

27,587(18,455)

Provision for (reversal of) doubtful accounts
Equity in net loss of equity method investees

345

36,966

188,577

795

Minority interests in consolidated subsidiaries

583

62,468157,295

43,040Foreign exchange losses (gains)(81)(8,641)(13,682)

14,912Net losses (gains) on other investments(16,943)(1,816,676)

42,352(527,300)

Decrease (increase) in accounts receivable(11,249)(1,206,074)(2,483,404)

582,873

Increase (decrease) in accounts payable

11,245

1,205,665

2,392,795(985,459)

Decrease (increase) in inventories

2,069

221,788(245,201)(109,964)

Deferred income taxes(109)(11,656)

-

633

Other

6,570

704,443

395,710(146,465)

Net cash provided by operating activities

23,7002,541,052

1,256,669

630,588(900)(96,542)(236,028)(105,946)

Investing Activities:
Purchase of property and equipment
Purchase of subsidiary stock(466)(50,000)-(11,680)

18,7342,008,650

66,387

750,800

Purchase of other investments(22)(2,339)(2,138)(4,854)

Refund (payment) of guarantee deposits-net(31)(3,330)(576)

31,162(371,011)

Proceeds from sales of other investments

Acquision of business
Other
Net cash provided by (used in) investing activities

-

-

-

(89)

(9,495)(3,778)(1,029)17,226

1,846,944(176,133)

287,442

1,250,000

Financing Activities:
Proceeds from long-term borrowings--

400,000

Repayments of long-term borrowings(2,876)(308,414)(436,477)

Proceeds from securities loan agreement

16,1301,729,520--

Repayments of securities loan agreement(6,741)(722,800)-(94,000)(103,414)(11,088,000)--(7,025)(753,177)(692,467)(756,982)

Redemption of convertible notes
Principal payments under capital leases(58,179)

Net decrease in short-term borrowings(944)(101,211)(200,316)(906,360)

Net cash used in financing activities(104,870)(11,244,082)(929,260)(565,521)(151)(16,227)(7,632)(7,564)Net Increase (decrease) in Cash and Cash Equivalents(64,095)(6,872,313)

143,644344,945

Cash and Cash Equivalents, Beginning of Period

113,400

12,158,790

12,140,595

11,802,165

Cash and Cash Equivalents, End of Period

49,3055,286,477

12,284,239

12,147,110

Effect of Exchange Rate Changes on Cash

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to the three months ended Mar 31, 2005 are included
solely for the convenience of readers outside Japan and have been made at the rate of JPY107.22 =$1, the approximate rate ofexchange on Mar 31, 2005.

INTERNET INITIATIVE JAPAN INC.

Appendix 5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)For the Year Ended Marach 31, 2005, March 31, 2004
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)March 31, 2005
USD (1)March 31, 2004

JPY

JPY

Operating Activities:
Net income (loss)

27,1062,906,269(2,270,686)

Depreciation and amortization

39,107

4,193,093

4,008,324

Provision for doubtful accounts

231

24,781

450,505

Equity method net loss

310

33,208

Impairment loss on advance to Crosswave-

286,317-

1,719,981

Minority interests in consolidated subsidiaries

1,018

109,161

Foreign exchange (gains) losses(144)(15,466)

5,124

48

5,195

(88,975)

Net gains on other investments(22,751)(2,439,330)(1,412,858)

Decrease in accounts receivable

14,994

1,607,692

783,387

Decrease in accounts payable

Loss (gain) on retirement of convertible notes(235,812)(21,523)(2,307,729)(1,132,209)

Decrease (increase) in inventories

2,674

286,751(30,813)

Deferred income taxes(103)(11,023)

1,976

Other

7,890

845,895(160,895)

Net cash provided by operating activities

48,8575,238,497

1,923,366(5,382)(577,133)(1,657,302)(575)(61,680)--(1,719,981)

Investing Activities:
Purchase of property and equipment
Purchase of subsidiary stock
Advances to Crosswave
Proceeds from sales of other investments

27,756

2,976,017

2,170,584

Purchase of other investments(117)(12,566)(325,665)

Refund of guarantee deposits-net

216

23,167674,018(3,499)(375,123)

Acquisition of business
Other
Net cash provided by (used in) investing activities

-

12

1,321

5,883

18,411

1,974,003(852,463)

Financing Activities:
Proceeds from long-term borrowings

20,9852,250,000

400,000

Repayments of long-term borrowings(17,163)(1,840,246)(1,943,735)

Proceeds from securities loan agreement

23,7492,546,320-

Repayments of securities loan agreement(7,618)(816,800)-

Repurchase of convertible notes(6,953)(745,488)(3,047,460)

Redemption of convertible notes(103,413)(11,088,000)-

Principal payments under capital leases(26,745)(2,867,624)(2,733,012)

Net increase (decrease) in short-term borrowings(17,156)(1,839,461)

1,740,495

1,759

188,632

Proceeds from issuance of common stock of a subsidiary
Proceeds from issuance of common stock

-

-

-

13,252,311(132,555)(14,212,667)

7,668,599

22

2,405

(43,615)Net Increase (decrease) in Cash

(65,265)(6,997,762)

8,695,887

Cash, Beginning of Period

114,570

12,284,239

3,588,352

Cash, End of Period

49,3055,286,477

12,284,239

Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to the year ended Mar 31, 2005 are included
solely for the convenience of readers outside Japan and have been made at the rate of JPY107.22 =$1, the approximate rate ofexchange on Mar 31, 2005.