Internet Initiative Japan Inc.
http://www.iij.ad.jp/
2004 年 5 月 14 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
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。9 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。

2003 年度第 4 四半期（1-3 月）および 2003 年度決算発表（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 2004 年 5 月 14 日 22:00 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 4 四半期決算
・ 営業収益（売上高）は、前期比 20.6%増の 11,617 百万円（前年同期比は 10.9%減）。
・ 営業利益は 350 百万円で、前期の 236 百万円（株式会社クロスウェイブ コミュニケーションズ（クロスウェイブ）に対する更生債権 287 百万円のうちの戻り分 71 百万円を含む）から 48.3%の増加。システム・インテグレーション（SI）での利益率改善により、前年同期の▲446 百万円からも増加した。
・ 償却前営業利益（Adjusted EBITDA）は 1,358 百万円と、前期 1,218 百万円から 11.5%の増加。前年同期の459 百万円からも増加した。
・ 当期利益は 669 百万円で、前期 1,979 百万円（株式売却による特別利益 1,572 百万円を含む）からは減少、
前年同期の▲9,290 百万円からは大幅に改善した。

2003 年度決算
・ 営業収益（売上高）は、上半期の景気回復過程での企業の IT 投資の遅れが SI および機器販売の売上高に影響し、前年度比 11.9%減の 388 億円となった。
・ 営業損失は 14 億円で、前年度の 17 億円から改善した。インターネットセキュリティや VPN といった利益率の高
い SI および付加価値サービスに注力するとともにバックボーンコストの削減（516 百万円）に努め、第３四半期および第４四半期の２期連続で営業黒字を達成したものの、上半期の営業損失を埋めるには至らなかった。なお、
2003 年度通期での利益率は接続サービスを含むすべてのサービス分野で前年度より改善した。
・ 当期損失は 105 百万円で、クロスウェイブからの持分法損失が大きな影響を与えていた前年度の 16,477 百万円から大幅に改善した。また下期の営業黒字達成や株式売却、保有株式の含み益なども貢献した。

2004 年度見通し
・ 2003 年度下半期の営業利益での黒字達成によって、クロスウェイブの会社更生手続申請によるマイナスの影響は払拭され、今後の継続的な収益力強化の基盤が固まってきたと考えている。引き続き、利益率の高いサービスの開発、販売に注力し、2004 年度は年度ベースで営業利益、当期利益双方での黒字を目標とする。

IIJ 4Q and Full FY2003

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

（百万円）

4Q03

4Q02

3,100
758
3,858
1,104
537

3,341
765
4,106
931
381

(7.2%)(0.9%)(6.0%)
18.5%
40.8%

3,204
780
3,984
1,125
525

(3.2%)(2.8%)(3.1%)(1.9%)
2.2%

5,499

5,419

1.5%

5,633

(2.4%)

4,001
2,117
11,617

4,905
2,712
13,036(18.4%)(21.9%)(10.9%)

2,889
1,111
9,633

38.5%
90.6%
20.6%

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

前年同期比

3Q03

表 2. 専用線接続サービスの売上高の内訳

前期比

（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

4Q03

4Q02

2,423

2,518

677
3,100

823
3,341

3Q03

前期比

(3.8%)

2,485(2.5%)(17.7%)(7.2%)

719
3,204(5.8%)(3.2%)

前年同期比

表 3. 契約数
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

4Q03
73
20
218
427
196
6,292
7,226
67,105
628,762
695,867

4Q02
112
35
268
248
156
4,489
5,308
79,464450,320529,784

表 4. 契約帯域数の総和

契約帯域合計

2

76
22
226
381
188
5,991
6,884
69,688597,232
666,920（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

1

3Q03

4Q03
64.5
15.6
80.1

4Q02
32.1
9.9
42.0

3Q03
60.3
15.5
75.8

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。
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 4Q and Full FY2003

Internet Initiative Japan Inc.
http://www.iij.ad.jp/
表 5．付加価値サービスの売上高の内訳
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

（百万円）

4Q03
324
780
1,104

4Q02
341
590
931

3Q03
373
752
1,125

前年同期比

(5.2%)
32.2%
18.5%

表 6．営業費用の内訳(13.1%)
3.7%(1.9%)
（百万円）

4Q03
4,810
3,054
2,051
売上原価合計
9,915
756
518
78
営業費用合計 11,267

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
販売費
一般管理費
研究開発費

前期比

4Q02
5,033
4,248
2,638
11,919789
662
113
13,483

前年同期比(4.4%)(28.1%)(22.3%)(16.8%)(4.2%)(21.7%)(30.2%)(16.4%)

3Q03
4,877
2,198
1,050
8,125
699
486
87
9,397

表 7. バックボーンコストの内訳
国際バックボーンコスト
国内バックボーンコスト(1.4%)
38.9%
95.4%
22.0%
8.2%
6.5%
(9.4%)
19.9%
（百万円）

4Q03
165
902

4Q02
315
1,075

前年同期比

(47.7%)(16.1%)

3Q03
156
939

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

前期比

前期比

5.7%
(3.8%)
（百万円）

4Q03
1,358
1,014
1,030

4Q02
459
936
933

前年同期比

195.5%
8.4%
10.4%

3Q03
1,218
508
1,004

前期比

11.5%
99.6%
2.6%

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。

3

減価償却費は転換社債発行費用の償却額を含む。

IIJ 4Q and Full FY2003

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

2004年3月期、2003年3月期、2003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
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

2003年3月期
対営業収益%

対前年同四半期%

JPY

前四半期比較
2003年12月期
対営業収益 対前四半期%%

29,7607,275
10,593
5,151
52,7793,100,452
757,947
1,103,558
536,590
5,498,547

26.7%
6.5
9.5
4.6
47.3

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

25.6%
5.9
7.2
2.9
41.6

(7.2%)
(0.9)
18.5
40.8
1.5

3,204,046
779,544
1,124,596
525,106
5,633,292

33.3%
8.1
11.7
5.4
58.5

(3.2%)
(2.8)
(1.9)
2.2
(2.4)

38,40920,321
111,509

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

34.5
18.2
100.0

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

37.6
20.8
100.0

(18.4)(21.9)(10.9)

2,888,936
1,110,927
9,633,155

30.0
11.5
100.0

38.5
90.6
20.6

46,16929,314
19,686
95,1694,809,831
3,053,962
2,050,923
9,914,716

41.4
26.3
17.6
85.3

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

38.6
32.6
20.2
91.4

(4.4)
(28.1)(22.3)(16.8)

4,876,741
2,198,668
1,049,663
8,125,072

50.6
22.8
10.9
84.3

(1.4)
38.9
95.4
22.0

7,256
4,971
756
108,152

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

6.5
4.5
0.7
97.0

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

6.0
5.1
0.9
103.4

(4.2)
(21.7)(30.2)(16.4)

698,948486,332
86,966
9,397,318

7.3
5.1
0.9
97.6

8.2
6.5
(9.4)
19.9

営業利益（損失）

3,357

349,6883.0(446,432)(3.4)(178.3)

235,8372.4

48.3

その他の利益（費用）(2,170)(226,045)(1.9)(360,292)(2.8)(37.3)

1,569,957

16.3(114.4)

税引前当期利益（損失）1,187

123,6431.1(806,724)(6.2)(115.3)

1,805,794

18.7(93.2)

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利益（損失）：持分法による投資損失
クロスウェイブに対する投資等評価損(8,552)(1,510)(890,928)(157,295)

(7.7)
(1.4)

97,256
21,3420.8
0.2(1,016.1)(837.0)(280,406)(48,710)

(2.9)
(0.5)

217.7
222.9

(1,810)(188,577)(1.6)(1,253,875)(7,153,087)(9.6)(54.9)(85.0)
0.0(58,354)

(0.6)

223.2

当期利益（損失）

6,419

668,699

5.8%(9,289,600)(71.3%)(107.2%)

1,979,136

20.5%(66.2%)

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株あたり当期利益（損失）
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

17,4548.73
38,312
76,623,702

注記(1): 2004年3月期につきましては、米ドル換算レート104.18円=1米ドル(2004/3/31)にて参考表示しております。

(413,238)(206.62)
22,48044,960,000

51,65825.83
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）

Appendix 2

2004年3月期通期、2003年3月期通期
JPY/千円単位、USD/千米ドル単位 (1)
前年比較

2004年3月期通期
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

2003年3月期通期
対営業収益
%

JPY

対営業収益
%

対前年通期
%

123,461
29,646
41,23820,328214,673

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

13,814,977
3,155,137
3,602,847
1,725,736
22,298,697

31.4%
7.2
8.2
3.9
50.7

(6.9%)
(2.1)
19.2
22.7
0.3

113,723
43,839372,235

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

30.5
11.8
100.0

15,012,633
6,706,231
44,017,561

34.1
15.2
100.0

(21.1)(31.9)(11.9)

192,431
94,564
41,719328,71420,047,438
9,851,726
4,346,243
34,245,407

51.7
25.4
11.2
88.3

20,386,887
13,090,220
6,416,525
39,893,632

46.3
29.7
14.6
90.6

(1.7)
(24.7)(32.3)(14.2)

33,85920,143
3,436
386,1523,527,490
2,098,481
357,968
40,229,346

9.1
5.4
0.9
103.7

3,176,165
2,204,504
414,149
45,688,450

7.2
5.0
1.0
103.8

11.1
(4.8)
(13.6)(11.9)(13,917)(1,449,884)(3.7)(1,670,889)(3.8)(13.2)

その他の利益（費用）9,428

982,220

2.5(1,269,433)(2.9)(177.4)

税引前当期損失(4,489)(467,664)(1.2)(2,940,322)(6.7)(84.1)

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失：
持分法投資損失
クロスウェイブに対する投資等評価損(20,474)
2,264(2,133,011)
235,812(5.5)
0.6

911,365
153,2512.1
0.4(334.0)53.9(2,748)(16,510)(286,317)(1,719,981)

(0.8)
(4.4)

(5,625,299)(7,153,087)(12.8)(16.2)(94.9)(76.0)

当期損失(1,009)(105,139)(0.3%)(16,476,822)(37.4%)(99.4%)

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
営業損失

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(3,316)(1.66)
31,711
63,421,571

注記(1): 2004年3月期につきましては、米ドル換算レート104.18円=1米ドル(2004/3/31)にて参考表示しております。

(732,955)(366.48)
22,48044,960,000

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 3

2004年3月期、2003年3月期、2003年12月期
JPY/千円単位、USD/千米ドル単位 (1)USD (1)

2004年3月期
JPY

2003年3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117,914
86,333
4,208
5,353
3,124

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

28.7%
21.1
1.0
1.3
0.8

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

11.2%
32.0
1.3
1.7
2.9

12,140,595
6,640,226
196,252
875,338
391,766

31.5%
17.3
0.5
2.3
1.0

流動資産合計216,932

22,599,955

52.9

15,756,488

49.1

20,244,177

52.6

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

7,469
76,13682,56819,9197,198

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

1.8
18.6
20.1
4.9
1.7

1,116,020
3,040,189
9,151,572
2,205,652
794,455

3.5
9.5
28.5
6.9
2.5

1,024,126
5,821,912
8,448,327
2,076,387
849,954

2.7
15.1
22.0
5.4
2.2

資産合計

410,22242,736,925

100.0%

32,064,376

100.0%

38,464,883

100.0%

63,007
68,996
4,361
4,645
14,861
22,9206,564,093
7,187,976
454,366
483,925
1,548,246
2,387,754

15.4%
16.8
1.1
1.1
3.6
5.6

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

15.0%
26.2
1.2
1.7
6.1
8.5

6,764,410
4,611,586
513,996594,974
1,947,309
2,415,596

17.6%
12.0
1.3
1.5
5.1
6.3

178,790

18,626,360

43.6

18,831,370

58.7

16,847,871

43.8

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

22,154
113,573
27,647698
1,547

2,308,019
11,832,000
2,880,298
72,687
161,122

5.4
27.7
6.7
0.2
0.4

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

10.8
46.8
11.3
0.3
0.6

1,945,434
11,832,000
2,801,993
67,557
180,329

5.0
30.7
7.3
0.2
0.5

負債合計

344,40935,880,486

84.0

41,189,217

128.5

33,675,18487.5

少数株主持分

6,165

642,311

1.5

879,495

2.7

486,3881.3

132,131226,892(333,946)
34,993(422)

13,765,372
23,637,628(34,790,430)
3,645,558(44,000)

32.2
55.3(81.4)
8.5(0.1)

7,082,336
17,068,353(34,685,291)
530,26622.1
53.2(108.2)
1.7

13,765,372
23,637,628(35,459,129)
2,359,503
(63)

35.8
61.5
(92.2)
6.1
0.0

資本合計

59,6486,214,128

14.5(10,004,336)(31.2)

4,303,311

11.2

負債、少数株主持分及び資本合計

410,22242,736,925

100.0%

32,064,376

100.0%

38,464,883

100.0%%

2003年12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
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): 2004年3月期につきましては、米ドル換算レート104.18円=1米ドル(2004/3/31)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）
2004年3月期、2003年3月期、2003年12月期
JPY/千円単位、USD/千米ドル単位 (1)2004年3月期
USD (1)
JPY

2003年3月期

2003年12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）

6,419

668,699(9,289,600)

1,979,136

減価償却費等

9,888

1,030,162

933,374

1,004,236

265

27,58730,866(40,428)

1,253,875

58,354

貸倒引当金繰入（戻入）額
持分法による投資損失

1,810

クロスウェイブに対する投資等評価損188,577--

少数株主損（益）1,510

為替差損（差益）(131)(13,682)--

転換社債償還差益

7,153,087

157,295-(21,342)
149,262

48,71012,279-(88,975)

その他投資に係る損（益）407

42,352

184,723(1,532,033)

売掛金の減少（増加）額(23,838)(2,483,404)(2,983,254)

138,452

買掛金及び未払金の増加（減少）額

22,9682,392,795

2,200,392(70,261)

棚卸資産の減少（増加）額(2,354)(245,201)

392,051

72,267

法人税等調整額(8,680)(904,221)

91,486(286,208)

その他

3,798

395,710395,418(209,740)

営業活動によるキャッシュフロー

12,062

1,256,669

490,338

1,085,789

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(2,266)(236,028)(163,592)(339,621)--

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

637

66,387

その他投資の取得による支出(20)(2,138)-13,663

1,946,875(6,039)

敷金保証金の返還(差入)

(6)

(576)

(1,387,210)

727

その他

(36)

(3,778)(7,606)(225)(1,691)(176,133)(1,477,805)

1,601,717

長期借入金による調達

3,840

400,000

2,000,000

長期借入金の返済(4,190)(436,477)(1,200,000)(1,036,247)

-

-

-

(3,047,460)

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：転換社債の償還-

リース債務元本の返済(6,647)(692,467)(656,238)(671,339)

短期借入金の純増減額(1,923)(200,316)

312,8542,459,505

財務活動によるキャッシュフロー(8,920)(929,260)

456,616(2,295,541)

現金及び現金同等物に係る換算差額(72)(7,632)(151,410)(34,305)

現金及び現金同等物の増加（減少）額

1,379

143,644(682,261)

357,660

現金及び現金同等物の期首残高

116,535

12,140,595

4,270,613

11,782,935

現金及び現金同等物の期末残高

117,914

12,284,239

3,588,352

12,140,595

注記(1):2004年3月期につきましては、米ドル換算レート104.18円=1米ドル(2004/3/31)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）
2004年3月期通期、2003年3月期通期
JPY/千円単位、USD/千米ドル単位 (1)2003年3月期

2004年3月期
USD (1)
JPY

JPY

営業活動によるキャッシュフロー：
当期利益（損失）(1,009)(105,139)(16,476,822)

減価償却費等

38,475

4,008,324

3,580,212

貸倒引当金繰入額

4,324

450,505

84,339

持分法による投資損失

2,748

286,317

5,625,299

クロスウェイブに対する投資等評価損16,5101,719,981

7,153,087

少数株主損失(2,263)(235,812)(153,251)

49

5,124

277,856

為替差損
転換社債償還差益
その他投資に係る損（益）
売掛金の減少（増加）額
買掛金及び未払金の増加（減少）額
棚卸資産の減少（増加）額(854)(88,975)(13,562)(1,412,858)

277,162-

7,520

783,387(1,351,380)(10,868)(1,132,209)

1,245,431(296)(30,813)

198,597

法人税等調整額(20,768)(2,163,571)

885,784

その他(1,544)(160,895)

235,378

営業活動によるキャッシュフロー

18,462

1,923,366

1,581,692

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(15,908)(1,657,302)(1,315,390)

関連会社への投資および貸付(16,510)(1,719,981)--(5,056,250)

クロスウェイブのための預託金の預入およびクロスウェイブ新株予約権の取得-

その他投資の売却による収入

20,8352,170,584-

その他投資の取得による支出(3,126)(325,665)(51,671)

敷金保証金の返還(差入)6,470674,018(1,487,911)

56

5,883

33,301(8,183)(852,463)(7,877,921)

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：長期借入金による調達
長期借入金の返済

3,839

400,000

2,000,000(18,657)(1,943,735)(1,400,000)

転換社債の償還(29,252)(3,047,460)-

リース債務元本の返済(26,234)(2,733,012)(2,475,433)

短期借入金の純増減額

16,707

1,740,495

1,003,367

普通株式の発行による収入

127,206

13,252,311-

財務活動によるキャッシュフロー

73,6097,668,599(872,066)

現金及び現金同等物に係る換算差額(418)(43,615)(289,272)

現金及び現金同等物の増加（減少）額

83,4708,695,887(7,457,567)

現金及び現金同等物の期首残高

34,444

3,588,352

11,045,919

現金及び現金同等物の期末残高

117,914

12,284,239

3,588,352

注記(1):2004年3月期につきましては、米ドル換算レート104.18円=1米ドル(2004/3/31)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:
Taisuke Ono/Hiroaki Tsuno
IIJ Investor/Media Relations Office
ir@iij.ad.jp or +81-3-5259-6500(Tel)

IIJ Announces Fourth Quarter and Full Fiscal Year Results for theYear Ending March 31, 2004
- Gross-Margin Expansion Leads the Way Toward Profitability Tokyo, May 14, 2004 / New York, May 13, 2004 - Internet Initiative Japan Inc. (Nasdaq: IIJIE) (“IIJ”),
one of Japan’s leading Internet access and comprehensive network solutions providers, today
announced its financial results for the fourth quarter and full fiscal year ending March 31, 2004 (“FY2003”). 1

Highlights of fourth quarter FY2003 results:
・ Revenues totaled JPY 11,617 million ($ 111.5 million), an increase of 20.6% compared to 3Q03 anda decrease of 10.9% compared to 4Q02.
・ Operating income was JPY 350 million ($ 3.4 million), an increase of 48.3% from JPY 236 million in
3Q03 (which 3Q03 amount included the JPY 71 million of accounts receivable from Crosswave
Communications Inc. ("Crosswave") that became collectible after previously being written-off), anda turnaround from an operating loss of JPY 446 million in 4Q02. The increase compared to 3Q03
reflects the increased revenues from our high-margin Systems Integration ("SI") services. The
increase compared to 4Q02 reflects increased profitability of our SI services.
・ Adjusted EBITDA2 was JPY 1,358 million ($ 13.0 million), an increase of 11.5% from an adjusted
EBITDA of JPY 1,218 million in 3Q03 and JPY 459 million in 4Q02.
・ Net income was JPY 669 million ($ 6.4 million), a decrease from JPY 1,979 million in 3Q03 whichamount included a special gain of JPY 1,572 million that was generated by the sale of an equity
investment, and a substantial improvement from the net loss of JPY 9,290 million in 4Q02.

Highlights of full FY2003 results:
・ Revenues totaled JPY 39 billion ($ 372.2 million), a decrease of 11.9% from FY2002. The decrease
largely reflects the first half of FY2003 decline in SI service and equipment sales revenues, whichwere adversely affected by weak corporate investment in Japan in that period.
・ Operating loss of JPY 1.4 billion ($ 13.9 million), an improvement from an operating loss of JPY 1.7
billion in FY2002. Positive operating income in 3Q03 and 4Q03 were not sufficient to cover the firsthalf year's operating loss.
・ Net loss was JPY 105 million ($ 1.0 million), a significant improvement from JPY 16,477 million in
FY2002 when net loss was negatively impacted by losses associated with our investment in
Crosswave. Other factors affecting the improvement from FY2002 include positive operating
income for the second half of FY2003, a special gain from the sale of an equity investment andincome tax benefits associated with increased unrealized gains from certain available-for-sales
securities.
・ As a result of ongoing efforts to increase profitability throughout the Company, we expect yearly
operating and net income to turn positive in FY2004.

1

Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with U.S. GAAP.
All financial figures are unaudited and consolidated. For all 4Q03 and full FY2003 results, translations of Japanese yenamounts into US dollars are solely for the convenience of readers outside of Japan and have been made at the rate of JPY
104.18 = US$1.00, the approximate exchange rate on March 31, 2004.
2

Please refer to the Reconciliation of Non-GAAP Financial Measures on page 5.

Page 1 of 7

IIJ 4Q and Full FY2003

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/
Overview of Fourth Quarter and Full FY2003 Financial Results and Business Outlook3"I am pleased to report that IIJ returned to profitability in the second half of FY2003," said Koichi Suzuki,
President and CEO of IIJ. "Although the total revenue for FY2003 did not reach the level of FY2002 due
to weak corporate investment and slow economic recovery in the first half, we achieved positive
operating and net income in the second half largely as a result of our strategic focus on high margin SI
and Value Added Services ("VAS") such as Internet security services and virtual private networks("VPNs"). We believe that this strategy has successfully countered the negative impact of Crosswave'scommencement of corporate reorganization in the first half of FY2003 and that we are now firmly
positioned for sustained and profitable growth."
President Suzuki continued, "Japan's economy is recovering and corporate IT investment has
increased in the second half of FY2003. Broad economic growth, coupled with rapidly increasing
demand by our enterprise customers for valued added and network services, such as security andoperational outsourcing, provided good conditions for resumption in revenue growth. In thisenvironment, we will continue to develop new high margin services for Japan's increasingly
complicated, and critical, networked economy. By doing so, we hope to strengthen profitability and are
expecting yearly operating and net income to be positive in FY2004.""Gross-margins for all of our business lines increased from the fourth quarter of FY2002 due to anincreased emphasis on high margin products and services, as well as across-the-board cost reductions
and internal efficiency improvements," said Yasuhiro Nishi, CFO of IIJ. "Connectivity and VAS grossmargin expansion reflects our reduction of Internet backbone costs by JPY 516 million in FY2003 andincreased revenue from high margin VAS. SI service gross-margin increased due to our successful
efforts to secure profitable SI contracts, of which a substantial amount are network-related."
Revenues
Revenues in 4Q03 totaled JPY 11,617 million, a decrease of 10.9% from JPY 13,036 million in 4Q02
and an increase of 20.6% from JPY 9,633 million in 3Q03.
Table 1. Revenues (JPY in millions)

Revenues
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

4Q03

4Q02

3,100
758
3,858
1,104
537
5,499
4,001
2,117
11,617

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

3Q03(7.2%)(0.9%)(6.0%)
18.5%
40.8%
1.5%
(18.4%)(21.9%)(10.9%)

3,204
780
3,984
1,125
525
5,633
2,889
1,111
9,633

QoQ
% change(3.2%)(2.8%)(3.1%)(1.9%)
2.2%(2.4%)
38.5%
90.6%
20.6%

Connectivity and VAS revenues were JPY 5,499 million in 4Q03, an increase of 1.5% from JPY 5,419
million in 4Q02 and a decrease of 2.4% from JPY 5,633 million in 3Q03.
3This Overview and Business Outlook contains forward-looking statements and projections such as statements regarding
FY2004 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 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 this practice at any time.
IIJ intends to publish its next Overview and Business Outlook in its 1Q04 earnings release, presently scheduled for August
2004.

Page 2 of 7

IIJ 4Q and Full FY2003

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/
Table 2. Connectivity Services (JPY in millions)

Connectivity Services
Dedicated access services:
IP Service + DC (connectivity)
Others4
Total Dedicated Access Services

YoY% change

4Q02

4Q03

2,518
823
3,341

2,423
677
3,100

QoQ
% change

3Q03(3.8%)(17.7%)(7.2%)

2,485
719
3,204

(2.5%)(5.8%)(3.2%)

Dedicated access service revenues were JPY 3,100 million in 4Q03, a decrease of 7.2% compared to
4Q02 and a decrease of 3.2% compared to 3Q03. IP Service, including Data Center Connectivity
services, decreased by 3.8% in 4Q03 compared to 4Q02 and decreased by 2.5% compared to 3Q03,
mainly due to the cancellation of service by a regional electric power company's telecom service arm.
IIJ FiberAccess/F Service revenue, which is included in Others, substantially increased compared to
4Q02 and steadily increased compared to 3Q03, however, the increase did not offset the revenue
decreases in IIJ T1 Standard and IIJ Economy Service, which are also included in Others.
Table 3. Number of Contracts

IP Services

64kbps – 128kbps
192kbps – 768kbps
1Mbps – 2Mbps
3Mbps – 1.2Gbps
Number of Contracts of DC Connectivity Services
Other
Total Dedicated Access Services
IIJ4U (Dial-up access services for retail market)
Other Dial-Up Access Services
Total Dial-Up Access Services

4Q03

4Q02

3Q03

73
20
218
427
196
6,292
7,226
67,105
628,762
695,867

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

76
22
226
381
188
5,991
6,884
69,688597,232
666,920

4Q03
64.5
15.6
80.1

4Q02
32.1
9.9
42.0

3Q03
60.3
15.5
75.8

Table 4. Number of Contract Bandwidth (Unit: Gbps)

Dedicated Access Services
DC Connectivity Services
Total Contract Bandwidth

Dial-up access service revenues were JPY 758 million in 4Q03, a decrease of 0.9% compared to 4Q02
and a decrease of 2.8% compared to 3Q03. For dial-up services for individual customers, the decreasein IIJ4U service revenues was offset by the revenue growth of Original Equipment Manufacturer
services, including the CDN ("Contents Delivery Network") platform and NTT's regional L-mode service.
However, dial-up service revenues for corporate customers decreased due to an increase in theirdemand for lower-cost broadband services.
Table 5. Value-added Services (JPY in millions)

Value-Added Services

4Q03
Internet Data Center services
Other value-added services
Total Value-Added Service Revenues

4

4Q02

YoY
% change

3Q03

QoQ% change

324
780

341
590

(5.2%)
32.2%

373
752

(13.1%)
3.7%

1,104

931

18.5%

1,125

(1.9%)

Others are IIJ FiberAccess/F Service, IIJ Ether Standard, IIJ DSL/F Service, IIJ T1 Standard and IIJ Economy Service.

Page 3 of 7

IIJ 4Q and Full FY2003

Internet Initiative Japan Inc.
http://www.iij.ad.jp/en/
VAS revenues were JPY 1,104 million in 4Q03, an increase of 18.5% compared to 4Q02 but adecrease of 1.9% compared to 3Q03. Internet Data Center services decreased by 5.2% compared to
4Q02 and by 13.1% compared to 3Q03. The revenue decrease from 3Q03 was mainly due to theabsence in 4Q03 of "one-time" revenues associated with the construction of special facilities for large
customers.
Systems Integration services revenues decreased 18.4% to JPY 4,001 million in 4Q03 from JPY
4,905 million in 4Q02 and increased 38.5% from JPY 2,889 million in 3Q03.
Equipment sales revenues were JPY 2,117 million in 4Q03, a decrease of 21.9% compared to 4Q02
and an increase of 90.6% compared to 3Q03.
Cost and expenses
Cost of revenues was JPY 9,915 million in 4Q03, a decrease of 16.8% compared to 4Q02 and anincrease of 22.0% compared to 3Q03.
Table 6. Costs and Expenses (JPY in millions)YoY% change

Costs and expenses:

4Q03

4Q02

4,810
3,054
2,051
9,915
756
518
78
11,267

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

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(4.4%)(28.1%)(22.3%)(16.8%)(4.2%)(21.7%)(30.2%)(16.4%)

3Q03

4,877
2,198
1,050
8,125
699
486
87
9,397

QoQ
% change(1.4%)
38.9%
95.4%
22.0%
8.2%
6.5%
(9.4%)
19.9%

Cost of Connectivity and VAS was JPY 4,810 million, a decrease of 4.4% compared to 4Q02 and adecrease of 1.4% compared to 3Q03. The gross-margin ratio for Connectivity and VAS in 4Q03 was
12.5%, compared to 7.1% in 4Q02 and 13.4% in 3Q03. The improvement in gross-margin since 4Q02
was largely the result of our continuous efforts to reduce Internet backbone costs.
Table 7. Backbone Costs (JPY in millions)

Backbone Costs
4Q03
International Backbone Costs
Domestic Backbone Costs

165
902

4Q02

315
1,075

YoY
% Change(47.7%)(16.1%)

3Q03

156
939

QoQ
% Change

5.7%(3.8%)

International backbone costs were JPY 165 million, a decrease of 47.7% compared to 4Q02 and anincrease of 5.7% compared to 3Q03 as we benefited from our on-going efforts to optimize our network.
Domestic backbone costs were JPY 902 million, a decrease of 16.1% compared to 4Q02 and adecrease of 3.8% compared to 3Q03. These decreases reflect a decline in backbone prices, which
offset an increase in connection fees with NTT's regional access networks (FLET’S).
Cost of SI service revenues was JPY 3,054 million in 4Q03, a decrease of 28.1% compared to 4Q02
and an increase of 38.9% compared to 3Q03. The gross margin for SI was 23.7% in 4Q03 compared to13.4% in 4Q02 and 23.9% in 3Q03. The year-over-year improvement in gross-margin was the result of
the increased profitability of SI development contracts and higher consulting fees for network services.

Page 4 of 7

IIJ 4Q and Full FY2003

Internet Initiative Japan Inc.
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Sales and marketing expenses were JPY 756 million in 4Q03, a decrease of 4.2% compared to 4Q02
reflecting a reduction in advertising expenses. Sales and marketing expenses increased of 8.2%
compared to 3Q03 primarily as the result of inclusion in 3Q03 of JPY 71 million of income as a result of
the reversal of allowance for doubtful receivables from Crosswave.
General and administrative expenses were JPY 518 million in 4Q03, a decrease of 21.7% compared
to 4Q02 and an increase of 6.5% compared to 3Q03. The expense decrease from 4Q02 reflects theabsence in 4Q03 of costs associated with our move into a new office.
Operating income (loss)
Operating income was JPY 350 million in 4Q03, compared to an operating loss of JPY 446 million in
4Q02 and operating income of JPY 236 million in 3Q03. The improvement from 4Q02 is due to anincrease in SI service profitability. The improvement from 3Q03 is due to an increase in SI service
revenue.
Other expenses for 4Q03 was JPY 226 million, compared to Other Expenses of JPY 360 million in
4Q02 and Other Income of JPY 1,570 million in 3Q03. The income in 3Q03 included a special gain on
the sale of an equity investment, which amounted to JPY 1,572 million.
Income tax benefit (expense) for 4Q03 was a benefit of JPY 891 million, compared to an expense of
JPY 97 million in 4Q02 and a benefit of JPY 280 million in 3Q03. The increase compared to 4Q02 and3Q03 is due to a decrease in the valuation allowance for deferred tax assets, which decrease is
primarily attributable to the income tax effect of increased unrealized gains during the quarter on
certain available-for-sale securities.
Equity in net loss of equity method investees amounted to JPY 189 million in 4Q03, compared to
JPY 8,407 million in 4Q02, and JPY 58 million in 3Q03. The year-over-year improvement largely
reflects the absence of losses associated with our previous equity investment in Crosswave.
Net income was JPY 669 million in 4Q03, compared to a net loss of JPY 9,290 million in 4Q02 and net
income of JPY 1,979 million in 2Q03. The year-over-year improvement largely reflects the absence oflosses associated with our previous equity investment in Crosswave and an increase in revenue fromhigh margin business lines. The quarter-over-quarter improvement is the result of positive operating
income and the income tax effect of increases in unrealized gains during the quarter on certain
available-for-sale securities. Basic net income per ADS equivalent was JPY 8.73 in 4Q03, compared toa net loss of JPY 206.62 in 4Q02 and JPY 25.83 in 3Q03.
Table 8. Other Financial Statistics (JPY in millions)

Other Financial Statistics
Adjusted EBITDA5
CAPEX, including capitalized leases6
Depreciation and amortization7

4Q03
1,358
1,014
1,030

4Q02
459
936
933

YoY
% Change

195.5%
8.4%
10.4%

3Q03
1,218
508
1,004

QoQ
% Change

11.5%
99.6%
2.6%

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 and presented in accordance with U.S.
generally accepted accounting principles in Appendix 1:

5

Please refer to the Reconciliation of Non-GAAP Financial Measures below.
Please refer to the Reconciliation of Non-GAAP Financial Measures below.
7
Depreciation and amortization includes amortization of issuance cost of convertible notes.
6

Page 5 of 7

IIJ 4Q and Full FY2003

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

Table 9. Adjusted EBITDA (JPY in millions)

Adjusted EBITDA
Depreciation and amortization8
Operating income (loss)
Other income (expenses)
Income tax expense (benefit)
Minority interests in consolidated subsidiaries
Equity in net income (loss) of equity method investees
Net income (loss)

4Q03
1,358
(1,008)
350
(226)
(891)
(157)
(189)
669

4Q02
459
(905)
(446)
(361)
97
21
(8,407)(9,290)

3Q03
1,218
(982)
236
1,570
(280)
(49)
(58)
1,979

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 andpresented in accordance with U.S. generally accepted accounting principles in Appendix 4:
Table 10. CAPEX (JPY in millions)

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

4Q03
1,014
778
236

4Q02

3Q03
936
772
164

508
168
340

Fourth Quarter FY2003 Business Review
Key Service Developments
Enhancement of managed firewall services:
In April 2004, IIJ enhanced its two Internet security managed firewall services. "IIJ Security Light
Service", a low-cost service for small- and medium-sized enterprises ("SMEs"), has been enhanced toallow for increased broadband usage by SMEs in Japan. "IIJ Security Standard," a standard service forcorporate customers, has been enhanced to provide greater reliability.
Anti-virus and spam movements:
Since the start of FY2003, IIJ has increased its involvement with industry groups formed to combat
Internet viruses and spam. IIJ and IIJ America participated in founding the Messaging Anti Abuse
Working Group and attended the December 2003 kick-off meeting. This group, which is composed of
19 international telecommunications companies, ISPs, and related businesses, is aimed at developing
measures to combat spam e-mails and other unethical uses of the Internet. Additionally, on April 27,
2004, IIJ announced that it had joined the Japan Messaging User Group ("JMUG"), a working group
established in Japan to discuss ways of implementing countermeasures against spam, viruses, andother Internet messaging related issues.
Network Infrastructure Developments
In 4Q03, IIJ continued to develop its Internet backbone in order to maintain the network quality that itprovides to its customers. This quarter, IIJ installed one new circuit and upgraded one pre-existing
circuit for the international backbone. For the domestic backbone, IIJ installed one new circuit andupgraded two pre-existing circuits. IIJ considered cost effectiveness and overall profitability inundertaking these upgrades.

8

Depreciation and amortization excludes amortization of issuance cost of convertible notes that was presented as otherexpenses.

Page 6 of 7

IIJ 4Q and Full FY2003

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

Key Developments of the IIJ Group
Enhancement on security solutions:On April 26, 2004, IIJ announced that IIJ-Tech introduced Security Check-up Service. Security
Check-up Service evaluates the overall security level of corporate e-mail systems and provides adiagnostic analysis of potential emerging threats. The service is targeted to customers that do not
require a full instant diagnosis but require an initial glimpse and a thorough "check-up" of the security
level of a company, which will be provided within approximately two weeks.

Teleconference/Webcast
On May 14 at 9:00 am (ET), IIJ will host a conference call to discuss the Company's results and outlook.
There will be a simultaneous webcast available at www.vcall.com. A replay will also be available at thesame URL.

About Internet Initiative Japan Inc.
Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJIE) 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.
Services range from the delivery of new generation network services over an optical-fiber infrastructurethat is optimized for data communications, to the construction of pan-Asian IP backbone networks. The
company also offers high-quality systems integration and security services, Internet access,hosting/housing, and content 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 FY2004 operating and net profitability, are subject tovarious risks, uncertainties and other factors that could cause IIJ’s actual results to differ materially fromthose contained in any forward-looking statement. These risks, uncertainties and other factors 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 athigher bandwidths; IIJ’s ability to generate significant revenues from its other services such as systems
integration; the ability to compete in a rapidly evolving and competitive marketplace; the impact oftechnological changes in its industry; and other risks referred to from time to time in IIJ’s filings on Form 20-Fof 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 FY2003

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

For the Three Months Ended Mar 31, 2004, Mar 31, 2003 and Dec 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
Mar 31, 2004
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
RevenuesJPY

Mar 31, 2003
% of
Total
Revenues

YOY
Chg %

Sequential Comparison
Dec 31, 2003
% of
Total
QOQ
JPY
Revenues
Chg %29,7607,275
10,593
5,151
52,7793,100,452
757,947
1,103,558
536,590
5,498,547

26.7%
6.5
9.5
4.6
47.3

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

25.6%
5.9
7.2
2.9
41.6

(7.2%)
(0.9)
18.5
40.8
1.5

3,204,046
779,544
1,124,596
525,106
5,633,292

33.3%
8.1
11.7
5.4
58.5

(3.2%)
(2.8)
(1.9)
2.2
(2.4)

38,40920,321
111,509

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

34.5
18.2
100.0

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

37.6
20.8
100.0

(18.4)(21.9)(10.9)

2,888,936
1,110,927
9,633,155

30.0
11.5
100.0

38.5
90.6
20.6

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

46,16929,314
19,686
95,1694,809,831
3,053,962
2,050,923
9,914,716

41.4
26.3
17.6
85.3

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

38.6
32.6
20.2
91.4

(4.4)
(28.1)(22.3)(16.8)

4,876,741
2,198,668
1,049,663
8,125,072

50.6
22.8
10.9
84.3

(1.4)
38.9
95.4
22.0

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

7,256
4,971
756
108,152

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

6.5
4.5
0.7
97.0

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

6.0
5.1
0.9
103.4

(4.2)
(21.7)(30.2)(16.4)

698,948486,332
86,966
9,397,318

7.3
5.1
0.9
97.6

8.2
6.5
(9.4)
19.9

Operating income(loss)

3,357

349,6883.0(446,432)(3.4)(178.3)

235,837

2.4

48.3

Other income(expenses)(2,170)(226,045)(1.9)(360,292)(2.8)(37.3)

1,569,957

16.3(114.4)

Income(Loss) before income tax expense(benefit)

1,187

123,6431.1(806,724)(6.2)(115.3)

1,805,794

18.7(93.2)

Income tax expense(benefit)
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees:
Equity method net loss
Impairment loss on investment and deposits for Crosswave(8,552)(1,510)(890,928)(157,295)

(7.7)
(1.4)

97,256
21,3420.8
0.2(1,016.1)(837.0)(280,406)(48,710)

(2.9)
(0.5)

217.7
222.9

(1,810)(188,577)(1.6)(1,253,875)(7,153,087)(9.6)(54.9)(85.0)
0.0(58,354)

(0.6)

223.2

Net income(loss)

6,419

668,699

5.8%(9,289,600)(71.3%)(107.2%)

1,979,136

20.5%(66.2%)

Systems integration revenues
Equipment sales
Total revenues

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

17,4548.73
38,312
76,623,702(413,238)(206.62)
22,48044,960,000

Note (1):The translation of Japanese yen amounts into US dollar amounts with respect to the three months ended Mar 31, 2004 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY 104.18 =$1, the approximate rate of exchange on Mar 31, 2004.

51,65825.83
38,312
76,623,702

Appendix 2

INTERNET INITIATIVE JAPAN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)For the Years Ended Mar 31, 2004 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
Mar 31, 2004

Mar 31, 2003
% of

% of
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

Total
Revenues

JPY

Total
Revenues

YoY
Chg %

123,461
29,646
41,23820,328214,673

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

13,814,977
3,155,137
3,602,847
1,725,736
22,298,697

31.4%
7.2
8.2
3.9
50.7

(6.9%)
(2.1)
19.2
22.7
0.3

113,723
43,839372,235

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

30.5
11.8
100.0

15,012,633
6,706,231
44,017,561

34.1
15.2
100.0

(21.1)(31.9)(11.9)

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

192,431
94,564
41,719328,71420,047,438
9,851,726
4,346,243
34,245,407

51.7
25.4
11.2
88.3

20,386,887
13,090,220
6,416,525
39,893,632

46.3
29.7
14.6
90.6

(1.7)
(24.7)(32.3)(14.2)

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

33,85920,143
3,436
386,1523,527,490
2,098,481
357,968
40,229,346

9.1
5.4
0.9
103.7

3,176,165
2,204,504
414,149
45,688,450

7.2
5.0
1.0
103.8

11.1
(4.8)
(13.6)(11.9)(13,917)(1,449,884)(3.7)(1,670,889)(3.8)(13.2)

Other income(expenses)

9,428

982,220

2.5(1,269,433)(2.9)(177.4)

Loss before income tax expense(benefit)(4,489)(467,664)(1.2)(2,940,322)(6.7)(84.1)

Income tax expense(benefit)
Minority interests in consolidated subsidiaries
Equity in net loss of equity method investees:
Equity method net loss
Impairment loss on investment, advances and deposits for Crosswave(20,474)
2,264(2,133,011)
235,812(5.5)
0.6

911,365
153,2512.1
0.4(334.0)53.9(2,748)(16,510)(286,317)(1,719,981)

(0.8)
(4.4)

(5,625,299)(7,153,087)(12.8)(16.2)(94.9)(76.0)Net loss(1,009)(105,139)(0.3%)(16,476,822)(37.4%)(99.4%)

Systems integration revenues
Equipment sales
Total revenues

Operating loss

Basic Net Loss Per Share
Basic Net Loss Per ADS Equivalent
Weighted Average Number of Shares
Weighted Average Number of ADS Equivalents(3,316)(1.66)
31,711
63,421,571(732,955)(366.48)
22,48044,960,000

Note (1):The translations of Japanese yen amounts into US dollar amounts with respect to the year ended Mar 31, 2004 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY 104.18 =$1, the approximate rate of exchange on Mar 31, 2004.

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

As of Mar 31, 2004, Mar 31, 2003 and Dec 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)USD (1)ASSETS
Current Assets:
Cash and cash equivalent
Accounts receivable, net
Inventories
Prepaid expenses
Other current assets

Mar 31, 2004
JPY%

Mar 31, 2003
JPY%

Dec 31, 2003
JPY%

117,914
86,333
4,208
5,353
3,124

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

28.7%
21.1
1.0
1.3
0.8

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

11.2%
32.0
1.3
1.7
2.9

12,140,595
6,640,226
196,252
875,338
391,766

31.5%
17.3
0.5
2.3
1.0

216,932

22,599,955

52.9

15,756,488

49.1

20,244,177

52.6

7,469
76,13682,56819,9197,198

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

1.8
18.6
20.1
4.9
1.7

1,116,020
3,040,189
9,151,572
2,205,652
794,455

3.5
9.5
28.5
6.9
2.5

1,024,126
5,821,912
8,448,327
2,076,387
849,954

2.7
15.1
22.0
5.4
2.2

410,22242,736,925

100.0%

32,064,376

100.0%

38,464,883

100.0%

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

63,007
68,996
4,361
4,645
14,861
22,9206,564,093
7,187,976
454,366
483,925
1,548,246
2,387,754

15.4%
16.8
1.1
1.1
3.6
5.6

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

15.0%
26.2
1.2
1.7
6.1
8.5

6,764,410
4,611,586
513,996594,974
1,947,309
2,415,596

17.6%
12.0
1.3
1.5
5.1
6.3

Total current liabilities

178,790

18,626,360

43.6

18,831,370

58.7

16,847,871

43.8

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

22,154
113,573
27,647698
1,547

2,308,019
11,832,000
2,880,298
72,687
161,122

5.4
27.7
6.7
0.2
0.4

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

10.8
46.8
11.3
0.3
0.6

1,945,434
11,832,000
2,801,993
67,557
180,329

5.0
30.7
7.3
0.2
0.5

344,40935,880,486

84.0

41,189,217

128.5

33,675,184

87.5

6,165

642,311

1.5

879,495

2.7

486,3881.3

132,131226,892(333,946)
34,993(422)

13,765,372
23,637,628(34,790,430)
3,645,558(44,000)

32.2
55.3(81.4)
8.5(0.1)

7,082,336
17,068,353(34,685,291)
530,26622.1
53.2(108.2)
1.7

13,765,372
23,637,628(35,459,129)
2,359,503
(63)

35.8
61.5
(92.2)
6.1
0.0

Total shareholders' equity(capital deficiency)

59,6486,214,128

14.5(10,004,336)(31.2)

4,303,311

11.2

Total liabilities andshareholders' equity(capital deficiency)

410,22242,736,925

100.0%

32,064,376

100.0%

38,464,883

100.0%

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' EQUITY(CAPITAL DEFICIENCY)
Current Liabilities:

Total liabilities
Minority Interest
Shareholders' Equity(Capital Deficiency):
Common stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Treasury stock

Note (1): The translation of Japanese yen amounts into US dollar amounts with respect to Mar 31, 2004 are included solely for the convenience of readers outside Japanand have been made at the rate of JPY104.18 =$1, the approximate rate of exchange on Mar 31, 2004.

INTERNET INITIATIVE JAPAN INC.

Appendix 4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS（UNAUDITED）
For the Three Months Ended Mar 31, 2004, Mar 31, 2003 and Dec 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)Mar 31, 2004
USD (1)JPY

Mar 31, 2003

Dec 31, 2003

JPY

JPY

Operating Activities:
Net income (loss)

6,419

668,699(9,289,600)

1,979,136

Depreciation and amortization

9,888

1,030,162

933,374

1,004,236

Provision for doubtful accounts

265

27,58730,866(40,428)

1,253,875

58,354Equity method net loss

1,810

Impairment loss on investment in and deposits for Crosswave

188,577---

Minority interests in net income (loss) of consolidated subsidiaries

1,510

Foreign exchange losses (gains)(131)(13,682)---

Net losses (gains) on other investments

407

42,352

184,723(1,532,033)

Decrease (increase) in accounts receivable(23,838)(2,483,404)(2,983,254)

138,452

Increase (decrease) in accounts payable

22,9682,392,795

2,200,392(70,261)

Gain on retirement of convertible notes

157,295

7,153,087(21,342)
149,262

48,71012,279(88,975)

Decrease (increase) in inventories(2,354)(245,201)

392,051

72,267

Deferred income taxes(8,680)(904,221)

91,486(286,208)

Other

3,798

395,710395,418(209,740)

Net cash provided by operating activities

12,062

1,256,669

490,338

1,085,789

Investing Activities:
Purchase of property and equipment(2,266)(236,028)(163,592)(339,621)--

66,940-

Proceeds from sale-leaseback
Proceeds from sales of other investment

637

66,387Purchase of other investments(20)(2,138)13,663-

1,946,875(6,039)Refund (payment) of guarantee deposits-net

(6)

(576)

(1,387,210)

727

Other

(36)

(3,778)(7,606)(225)(1,691)(176,133)(1,477,805)

1,601,717

Proceeds from long-term borrowings

3,840

400,000

2,000,000

Repayments of long-term borrowings(4,190)(436,477)(1,200,000)(1,036,247)

-

-

-

(3,047,460)

Net cash provided by (used in) investing activities
Financing Activities:

Repurchase of convertible notes-

Principal payments under capital leases(6,647)(692,467)(656,238)(671,339)

Net increase (decrease) in short-term borrowings(1,923)(200,316)

312,8542,459,505

Net cash provided by (used in) financing activities(8,920)(929,260)

456,616(2,295,541)(72)(7,632)(151,410)(34,305)

1,379

143,644(682,261)

357,660

Cash, Beginning of Period

116,535

12,140,595

4,270,613

11,782,935

Cash, End of Period

117,914

12,284,239

3,588,352

12,140,595

Effect of Exchange Rate Changes on CashNet Increase (Decrease) in Cash

Note (1): The translations of Japanese yen amounts into US dollar amounts with respect to the three months ended Mar 31, 2004 are included
solely for the convenience of readers outside Japan and have been made at the rate of JPY104.18 =$1, the approximate rate ofexchange on Mar 31, 2004.

INTERNET INITIATIVE JAPAN INC.

Appendix 5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)For the Year Ended Marach 31, 2004, March 31, 2003
(Expressed in Thousands of Japanese Yen (JPY) and U.S. Dollars (USD)) (1)March 31, 2004
USD (1)March 31, 2003

JPY

JPY

Operating Activities:
Net loss(1,009)(105,139)(16,476,822)

Depreciation and amortization

38,475

4,008,324

3,580,212

Provision for doubtful accounts

4,324

450,505

84,339Equity method net loss

2,748

286,317

5,625,299

Impairment loss on investment, advance and deposits for Crosswave

16,5101,719,981

7,153,087

Minority interests in net loss of consolidated subsidiaries(2,263)(235,812)(153,251)

49

5,124

277,856

Foreign exchange losses
Gain on retirement of convertible notes(854)(88,975)

Losses (gains) on other investments-net(13,562)(1,412,858)

277,162-

Decrease (increase) in accounts receivable

7,520

783,387(1,351,380)

Increase (decrease) in accounts payable(10,868)(1,132,209)

1,245,431(296)(30,813)

198,597

Deferred income taxes(20,768)(2,163,571)

885,784

Other(1,544)(160,895)

235,378

Net cash provided by operating activities

18,462

1,923,366

1,581,692

Decrease (increase) in inventories

Investing Activities:
Purchase of property and equipment(15,908)(1,657,302)(1,315,390)

Advances to Crosswave(16,510)(1,719,981)--(5,056,250)

Deposit of restricted cash for and purchase of stock purchase right of Crosswave-

Proceeds from sales of other investment

20,8352,170,584-

Purchase of other investments(3,126)(325,665)(51,671)

Refund (payment) of guarantee deposits-net

6,470

674,018(1,487,911)

56

5,883

33,301(8,183)(852,463)(7,877,921)

Proceeds from long-term borrowings

3,839

400,000

2,000,000

Repayments of long-term borrowings(18,657)(1,943,735)(1,400,000)

Repurchase of convertible notes(29,252)(3,047,460)-

Principal payments under capital leases(26,234)(2,733,012)(2,475,433)
1,003,367

Other
Net cash used in investing activities
Financing Activities:

Net increase in short-term borrowings

16,707

1,740,495

Proceeds from issuance of common stock

127,206

13,252,311-

Net cash provided by (used in) financing activities

73,6097,668,599(872,066)(418)(43,615)(289,272)

Net Increase (decrease) in Cash

83,4708,695,887(7,457,567)

Cash, Beginning of Period

34,444

3,588,352

11,045,919

Cash, End of Period

117,914

12,284,239

3,588,352

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, 2004 are included
solely for the convenience of readers outside Japan and have been made at the rate of JPY104.18 =$1, the approximate rate ofexchange on Mar 31, 2004.