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Q1 Where can I find IIJ's results of operations?
Yearly and quarterly results of operations can be found in Consolidated Financial Results.
Q2 Why does IIJ prepare its financial statements under US GAAP?
IIJ is listed on the US NASDAQ Stock Market and its consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Non-consolidated financial statements are prepared in accordance with accepted Japanese accounting practices ("Japanese GAAP").
Q3 Please tell me the differences between Japanese GAAP and US GAAP.
There are differences such as,
Under Japanese law, a company is required to have retained earnings, without accumulated deficit, in order to be able to conduct certain types of capital-related transactions such as payments of dividends in general. For this reason, IIJ eliminated its accumulated deficit through the reduction of additional-paid in capital and common stock on our non-consolidated balance sheet under generally accepted accounting principles in Japan. On the contrary, under U.S. GAAP, to eliminate its accumulated deficit through the reduction of additional-paid in capital and common stock requires a more strict rule and for this, on IIJ's consolidated balance sheet under U.S. GAAP, accumulated deficit still remains.
For details, please refer to "Q13 I'd like to know about the cause of accumulated deficit on IIJ's consolidated balance sheet and its effects on payments of dividends."
Q4 I'd like to know about revenue recognition.
Network service revenues are billed and recognized monthly on a straight-line basis. Initial set up fees received in connection with network services are deferred and recognized over the estimated average period of the subscription for each service. Systems construction and equipment sales are recognized when equipment is delivered to and accepted by the customer. Monitoring, operating, and hardware and software maintenance services generally commence once our customers have accepted the system and their contract periods are generally one to five years. Our contracts include a stated annual fee for these services.
For further details, please refer to our Form 20-F.
Q5 Is there a certain cycle for quarterly revenue and operating income?
Corporate spending in Japan has the tendency to become the largest in the fourth quarter and the lowest in the first quarter as many Japanese companies have fiscal years ending March 31. Our systems integration revenues and operating income are most likely to be the largest in the fourth quarter as most of our customers has fiscal years ending March 31.
For details, please go to the following web site.
Q6 When is the next earning release scheduled?
IR schedule is frequently updated on the IR Calendar.
Q7 Where can I find the latest financial statements?
IR documents such as SEC filed materials can be found in IR Library.
Q8 What is your financial target for FY2016?
We target revenues of JPY159.0 billion, operating income of JPY7.3 billion, income before income tax expense of JPY7.3 billion and net income attributable to IIJ of JPY5.0 billion.
As for the fiscal year ending March 31, 2017 (“FY2016”), we expect enterprises’ ICT-related investment to steadily increase as the Japanese economy’s recovery to continue. Regarding consumer market in Japan, we expect “inexpensive SIM card services” to further penetrate. Based on these, we target our revenue to increase to JPY159 billion, in particular we target mobile and cloud revenue of JPY25.5 billion and JPY16.2 billion respectively. Along with the strong revenue growth, we expect our operating income to improve as well.
Q9 Please tell me about the risk factors for growth.
Our business is principally conducted in Japan and most of our revenues are from customers operating in Japan. If the Japanese economy deteriorates or does not improve, and it results in significantly lower levels of network-related investment, especially in network systems construction which may have significant influence on our corporate customers' investment, or if corporate customers respond to conditions by prioritizing low price over quality, it may become difficult to maintain our current level of revenues or achieve our expected revenues and profits. If we experience cancellation of large accounts, it may also become difficult to maintain our current level of revenues and margins or achieve our expected revenues and profits.
For details, please refer to Risk Factors.
Q10 Where should I look for property and equipment?
Property and equipment, net recorded on our balance sheet was JPY34.32 billion as of March 31, 2016. The values of our property and equipment includes such as data communications equipment under capital leases, office and other equipment and purchased software.
For details, please refer to FY2015 20-F PROPERTY AND EQUIPMENT [PDF 1,027KB].
Q11 Where should I look for goodwill and other intangible assets?
The components of intangible assets as of March 31, 2016 are mostly customer relationships and goodwill that were recorded related to mergers and acquisitions of consolidated subsidiaries.
As of March 31, 2016, the total balance of our intangible assets was JPY9.72 billion, of which customer relationships was JPY3.42 billion and goodwill was JPY6.27 billion.
For details, please refer to FY2015 20-F GOODWILL AND OTHER INTANGIBLE ASSETS [PDF 3.71MB].
Q12 Where should I look for borrowings?
As of March 31, 2016, the total balance of our short-term borrowings was JPY9.25 billion.
Q13 I'd like to know about the cause of accumulated deficit on IIJ's consolidated balance sheet and its effects on payments of dividends.
Approximately JPY556 million of accumulated deficit we recorded on our consolidated balance sheet as of March 31, 2015 was resolved as of March 31, 2016.
The accumulated deficit was caused by equity in net loss of equity method investees related to Crosswave Communications Inc. (CWC), a joint venture by Toyota Motor Corporation, Sony Corporation, and IIJ in 1998, and the loss related to the application of the Corporate Reorganization Act to CWC and its subsidiary companies.
As explained in "Q3 Please tell me about the differences between Japanese GAAP and US GAAP," the accumulated deficit on our non-consolidated balance sheet under generally accepted accounting principles in Japan has already been eliminated. For this reason, the accumulated deficit on our consolidated balance sheet has no effect on our payments of dividends.
For details about our dividends, please refer to Dividend.
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