FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934 For June 9, 2006 Commission File Number: 0-30204 ------- Internet Initiative Japan Inc. (Translation of registrant's name into English) Jinbocho Mitsui Bldg. 1-105 Kanda Jinbo-cho, Chiyoda-ku, Tokyo 101-0051, Japan (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F: Form 20-F [ X ] Form 40-F [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____ Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____ Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [ X ] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-____________ EXHIBIT INDEX Exhibit Date Description of Exhibit ------- ---- ---------------------- 1 2006/06/09 IIJ Discloses the Additional Items for the Notes to the Consolidated Financial Statements for the Fiscal Year Ended March 31, 2006 under Accounting Principles Generally Accepted in the United States SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Internet Initiative Japan Inc. Date: June 9, 2006 /s/ Koichi Suzuki ---------------------------------------------- Koichi Suzuki President, Chief Executive Officer and Representative Director EXHIBIT 1 --------- (English translation) June 9, 2006 Company name Internet Initiative Japan Inc. Representative Koichi Suzuki President and Representative Director (Stock code number: 3774 TSE Mothers) Contact Akihisa Watai, Director and CFO (TEL. 03-5259-6500) IIJ Discloses the Additional Items for the Notes to the Consolidated Financial ------------------------------------------------------------------------------ Statements for the Fiscal Year Ended March 31, 2006 under --------------------------------------------------------- Accounting Principles Generally Accepted in the United States ------------------------------------------------------------- IIJ discloses the additional items for the notes to the consolidated financial statements under accounting principles generally accepted in the Unites States ("U.S. GAAP") that were announced on May 10, 2006, in accordance with the disclosure rules defined by the Tokyo Stock Exchange. Items to be additionally disclosed: Income taxes Retirement and pension plans 1. INCOME TAXES (Unaudited) Net deferred income tax assets and liabilities reflected on the consolidated balance sheets as of March 31, 2005 and 2006 as follows: (Unit: Thousands of Yen) ---------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended March Fiscal Year Ended March 31, 2005 31, 2006 ---------------------------------------------------------------------------------------------------------------------- Current Assets - Other current assets 26,399 138,938 Noncurrent Assets - Other assets - 193,681 Noncurrent liabilities - Other noncurrent liablities (7,748) (83,127) ------------------------------------------------------- Total 18,651 249,492 ---------------------------------------------------------------------------------------------------------------------- The approximate effect of temporary differences and carryforwards giving rise to deferred tax balances at March 31, 2005 and 2006 was as follows: (Unit: Thousands of Yen) ---------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended March 31, 2005 Fiscal Year Ended March 31, 2006 ----------------------------------------------------------------------------------- Deferred Tax Deferred Tax Deferred Tax Deferred Tax Assets Liabilities Assets Liabilities ---------------------------------------------------------------------------------------------------------------------- Unrealized gains on - 3,580,494 - 2,686,560 available-for-sale securities Valuation of limited partnership investments for tax purpose - 35,014 - 81,020 Capitalized leases 74,621 - 84,345 - Accrued expenses 185,732 - 161,902 - Retirement and pension cost 58,885 - 89,705 - Stock issue cost 15,548 - 29,212 - Allowance for doubtful accounts 1,461,058 - 16,333 - Depreciation 25,699 - 25,070 - Net loss on other investment 92,080 - 127,115 - Operating loss carryforward 9,902,013 - 9,602,271 - Other 261,843 27,563 121,659 69,109 ---------------------------------------------------------------------------------------------------------------------- Total 12,077,479 3,643,071 10,257,612 2,836,689 ---------------------------------------------------------------------------------------------------------------------- Valuation allowance (8,415,757) - (7,171,431) - ---------------------------------------------------------------------------------------------------------------------- Total 3,661,722 3,643,071 3,086,181 2,836,689 ---------------------------------------------------------------------------------------------------------------------- As of March 31, 2005 and 2006, the valuation allowance for deferred tax assets has been provided at amounts which are not considered more likely than not to be realized. The net changes in the valuation allowance for deferred tax assets were a decrease of JPY 2,224,170 thousand and JPY 1,244,326 thousand for the fiscal years ended March 31, 2005 and 2006, respectively. A reconciliation between the amount of reported income taxes and the amount of income taxes computed using the normal statutory rate (approximately 41.0%) for each of the fiscal year ended March 31, 2005 and 2006 is as follows: (Unit: Thousands of Yen) ---------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended March Fiscal Year Ended March 31, 2005 31, 2006 ---------------------------------------------------------------------------------------------------------------------- Amount computed by using normal Japanese statutory tax rate 1,290,888 2,205,209 Increase (decrease) in taxes resulting from: Expenses not deductible for tax purpose 34,820 38,653 Reserve for tax contingencies - 197,753 Inhabitant tax-per capital 23,410 25,085 Realization of tax benefit of operating loss carryforwards (1,426,755) (439,256) Other change in valuation allowance 261,380 (1,933,379) Expiration of operating loss carryforwards - 149,750 Other--net (83,873) 13,545 ---------------------------------------------------------------------------------------------------------------------- Income tax expense as reported 99,870 257,360 ---------------------------------------------------------------------------------------------------------------------- 2. RETIREMENT AND PENSION PLANS (Unaudited) IIJ and certain subsidiaries have unfunded retirement benefit and noncontributory defined benefit pension plans which together cover substantially all of their employees who are not directors and also participate in a contributory multi-employer pension plan, the Japan Computer Information Service Employee's Pension Fund (the "Multi-Employer Plan"), covering substantially all of their employees. Approximately 70 percent of the employees' benefits from IIJ's severance indemnity plan was transferred in May 1997 to its newly established noncontributory defined benefits pension plan. The following information regarding net periodic pension cost and accrued pension cost also includes the 30 percent of severance benefits not transferred to the noncontributory plan. Under the severance and pension plans, all of IIJ's employees are entitled, upon voluntary retirement with 15 years or more service, or upon mandatory retirement at age 60, to a 10-year period of annuity payments (or lump-sum severance indemnities) based on the rate of pay at the time of retirement, length of service and certain other factors. IIJ's employees who do not meet these conditions are entitled to lump-sum severance indemnities. As stipulated by the Japanese Welfare Pension Insurance Law, the Multi-Employer Plan is composed of a substitutional portion of Japanese Pension Insurance and a multi-employers' portion of a contributory defined benefit pension plan. The benefits for the substitutional portion are based on a standard remuneration schedule under the Welfare Pension Insurance Law and the length of participation. The multi-employers' portion of the benefits is based on the employees' length of service. However, assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer, including IIJ. The net pension cost under the Multi-Employer Plan is recognized when contributions become due. Net periodic pension cost for the fiscal years ended March 31, 2005 and 2006 included the following components: (Unit: Thousands of Yen) ---------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2005 2006 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- Service cost 221,132 240,765 Interest cost 14,944 20,524 Expected return on plan assets (13,129) (16,736) Amortization of transition obligation 402 402 Recognized net actuarial loss 8,262 1,904 ---------------------------------------------------------------------------------------------------------------------- Net periodic pension cost 231,611 246,859 ---------------------------------------------------------------------------------------------------------------------- The funded status as of March 31, 2005 and 2006 is as follows: (Unit: Thousands of Yen) ---------------------------------------------------------------------------------------------------------------------- Fiscal Year Ended March 31, Fiscal Year Ended March 31, 2005 2006 ---------------------------------------------------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year 933,969 1,140,240 Service cost 221,132 240,765 Interest cost 14,944 20,524 Actuarial loss (gain) (558) (31,171) Benefit paid (29,247) (40,906) ---------------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year 1,140,240 1,329,452 ---------------------------------------------------------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year 656,443 796,946 Actual return on plan assets 17,844 68,185 Employer contribution 143,471 155,191 Benefits paid (20,812) (22,466) ---------------------------------------------------------------------------------------------------------------------- Fair value of plan assets at end of year 796,946 997,856 ---------------------------------------------------------------------------------------------------------------------- Funded status (343,294) (331,596) Unrecognized actuarial loss 195,530 111,009 Unrecognized transition obligation 4,418 4,016 ---------------------------------------------------------------------------------------------------------------------- Net amount recognized (143,346) (216,571) ---------------------------------------------------------------------------------------------------------------------- Accumulated benefit obligation 635,122 750,900 ---------------------------------------------------------------------------------------------------------------------- Amounts recognized in the consolidated balance sheets consist of accrued retirement and pension costs of JPY 143,346 thousand as of March 31, 2005, and prepaid pension costs of JPY 3,891 thousand and accrued retirement and pension costs of JPY 220,462 thousand as of March 31, 2006. The Company uses a March 31 measurement date for all its plans. Actuarial assumptions as of March 31: ---------------------------------------------------------------------------------------------------------------------- Benefit Obligations Net Periodic Costs ------------------------------------------------------ 2005 2006 2005 2006 ---------------------------------------------------------------------------------------------------------------------- Discount rate 1.8% 2.0% 1.6% 1.8% Expected long-term rate of return on plan assets 2.0 2.1 Rate of increase in compensation 3.4 3.4 3.25 3.4 ----------------------------------------------------------------------------------------------------------------------