None

SEC Number: 133653
File Number:________
ASIAN TERMINALS, INC.

(Companys Full Name)
A. Bonifacio Drive, Port Area, Manila

(Companys Address)
528-6000
(Telephone Number)
December 31
Calendar Year Ending
(Month & Day)
SEC Form 17-A

Form Type
___________N/A____________
Amendment Designation (if applicable)
December 31, 2006

Period Ended Date
____________N/A_______________
(Secondary License Type and File Number)
SECURITIES AND EXCHANGE COMMISSION

SEC Form 17-A
ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF THE CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended
December 31, 2006
2. SEC Identification Number
133653
3. BIR Tax Identification Code
033-000-132-413-V
4. Name of Issuer as Specified in its Charter
5. Province, Country or other jurisdiction of

Incorporation or organization
Manila, Philippines
6. Industry Classification Code (SEC use only)
___________________
7. Address of Principal Office
8. Registrants telephone number
A. Bonifacio Drive
Port Area, Manila 1018
(632) 528-6000
9. Former name, address and fiscal year, if

changed since last report
N/A
10. Securities registered pursuant to Section 8 and 12 of the Code or Sections 4 and 8 of the
RSA:
Title of Each Class

Common
Number of Shares of
Common Stock Outstanding or
Amount of Debt Outstanding
2,000,000,000 shares
11. Are any or all of registrants securities listed on a Stock Exchange?

Yes [ X ]
No [
If yes, disclose the name of such Stock Exchange and the class of securities listed therein:
Philippine Stock Exchange, Inc.; common shares
12. Check whether the issuer
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17
thereunder of Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26
and 141 of the Corporation Code of the Philippines during the preceding twelve (12)
months (or for such shorter period that the registrant was required to file such reports):
Yes [ X ]
No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ X ]
No [
13. State the aggregate market value of the voting stock held by non-affiliates of the registrant.
The aggregate market value shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of a specified date within sixty
(60) days prior to the date of filing. If a determination as to whether a particular person or
entity is an affiliate cannot be made without involving unreasonable effort and expense, the
aggregate market value of the common stock held by non-affiliates may be calculated on the
basis of assumptions reasonable under the circumstances, provided the assumptions are set
forth in this Form.
Number of non-affiliate shares as of March 31, 2007
Closing price per share as of March 30, 2007*
Market value as of March 31, 2007
* No trading on March 31, 2007 (Saturday)
1,346,281,225
Php4.25
Php5.722 B

Securities and Exchange Commission Form 17-A
PART I BUSINESS AND GENERAL INFORMATION

Item 1. Business
Corporate Background
Asian Terminals, Inc. (ATI), formerly known as Marina Port Services, Inc. (MPSI), was
incorporated on July 9, 1986 to provide general services with respect to the operation and
management of port terminals in the Philippines. In August 1990, a consortium of local and
foreign companies acquired all the issued and outstanding capital stock of ATI.
ATI undertook an Initial Public Offering (IPO) in January 1996. A total of 150,000,000
shares were offered to the public at P5.10 per share. The Company used the IPO proceeds for
the expansion and modernization of its operations at the South Harbor and the retirement of
short-term loans.
During the first quarter of 1999, the Company implemented a rights issue process that
brought in a fresh equity infusion of P1 billion into the Company.
On December 2, 2005, the Company signed an agreement for a fixed rate peso-denominated
loan with a term ranging from five (5) to seven (7) years in the amount of P1 billion arranged
by BDO Capital & Investment Corporation and SB Capital Investment Corporation. The
proceeds of the loan will be used for general corporate purposes, including capital
expenditures and refinancing of maturing obligations.
On January 3, 2007, the Company entered into a P500 million Revolving Credit Facility
Agreement with Security Bank Corporation in order to finance the Companys general
funding requirements.
South Harbor
The Philippine Ports Authority (PPA), through Board Resolution No. 1250 dated November
28, 1991, required the three (3) companies then operating at the South Harbor to integrate
where ATI shall be the surviving company. The three companies were (1) Marina Port
Services, Inc. (now ATI), which was involved in arrastre, cargo handling and cranage; (2)
Ocean Terminals Services, Inc. (OTSI), which provided stevedoring services; and (3) 7-R
Port Services, Inc. (7-R), which handled the storage service. For this integration to take place,
the contracts of OTSI and 7-R with the PPA were simultaneously assigned to MPSI.
ATI signed with PPA, with the conformity of the Office of the Government Corporate
Counsel (OGCC), on March 13, 1992 a Contract for Cargo Handling Services for a term of
fifteen (15) years or until March 13, 2007. The renewal of the cargo handling contract as well
as the integration of services at the port paved the way for the reorganization and upgrading
of the facilities at the South Harbor.
Page 1 of 33 (Annual Report)

To attain its long-term objectives, the Company signed in March 1998 a contract with the
PPA that effectively extends its existing Cargo Handling Contract at the South Harbor until
2013, renewable for another 25 years. The Contract allows review and revision of the South
Harbor Master Plan every two (2) years. Pursuant to the review clause, a joint review was
conducted by PPA and the Company, and the 2005 Revised South Harbor Master Plan was
approved on October 28, 2005.
On July 26, 2006, the Company applied for a 25-year extension/renewal of its Contract for
Cargo Handling Services. In its application, the Company offered to invest in projects
outlined in the 2005 South Harbor Master Plan, which are estimated at US$95.5 million for
the period 2009 to 2012. Additional investment of US$ 31.0 million will be made by the
Company if international cargo volume at the South Harbor reaches 1 million TEUs per
annum, within the period 2009 to 2012. Beyond 2012, the Company will continue to
rehabilitate the piers and replace equipment as required. The Company likewise proposed for
an increase in the amount of PPA fixed fee for international containerized cargo and to
maintain the amounts of the other current fees. The proposal for contract extension/renewal
was presented to the PPA Technical Working Group and the PPA Board of Directors, and
they are currently evaluating the same.
For storage operations, the Company pays an annual fixed fee of P55.0 million payable
quarterly and a variable fee of 30% of its annual gross storage revenue in excess of P273.0
million. For arrastre operations, the Company pays a quarterly fixed fee of US$1.15 million
plus a variable fee of 8% of its total gross income, or 20% of its total quarterly gross income,
whichever is higher. In 2002, the fee arrangement for General Cargo (Arrastre) was
suspended for a period of one year from June 1, 2002, and in lieu thereof, ATI to pay 20%
government share on its gross revenues collected from arrastre services for general cargoes.
This General Cargo Fee arrangement was subsequently extended until May 31, 2007. For
domestic terminal operations, the Company pays 10% of its total gross income derived from
its domestic cargo handling and passenger terminal operations.
The Office of the Transport Security (OTS) issued a Statement of Compliance of a Port
Facility (SoCPF) to the International Ship and Port Facility Security (ISPS) Code effective
June 27, 2004 to South Harbor. On December 22, 2004, the SoCPF was renewed and
extended until December 31, 2006. On December 8, 2006, the OTS further extended ATIs
compliance to the ISPS up to December 7, 2011 for the International Terminal and up to
December 21, 2011 for the Domestic Terminal.
Revenue Enhancement/Tariff Increases
To further enhance revenue collection of the Container Terminal Division of South Harbor,
the Division generates income from the following ancillary yields: standby charges, handling
of dangerous cargo, charging of overtime deliveries, weighing fees and lift on lift off charges.
On December 2004, the Company requested for a 25% upward adjustment in cargo-related
charges on international containerized cargo and on all international general cargo charges at
the South Harbor, Port of Manila. This is to minimize the impact of foreseen cost increases.
The PPA, by virtue of Board Committee Resolution No. 2005-945 approved the

implementation in two (2) tranches of the following increases in cargo handling rates at the
South Harbor: 12% (1st tranche) and 10% (2nd tranche) for cargo-related charges for
international containerized cargoes, and 12% (1st tranche) and 8% (2nd tranche) for arrastre,
stevedoring and miscellaneous charges for non-containerized cargoes.
Another tariff increase was approved as per PPA MC No. 36-2003 effective January 1, 2005.
An increase of 9% on stevedoring for containerized cargo only.
Services
The services offered by ATI at the South Harbor are as follows:
1. Container Terminal Handling - refers to the loading and unloading of containers to and
from ships.
2. Arrastre - refers to the receiving, handling, checking and delivery of containers, bulk,
break-bulk or stripped/stuffed cargo over piers or wharves, in transit sheds/warehouses
and open storage areas, and transfer of cargoes from/unto the tail of consignees
transportation unit.
3. Stevedoring - refers to all work performed on board a vessel, that is the process or act of
loading and unloading of cargo, stowing inside hatches, compartments, and on deck or
open cargo spaces on board vessels. Related services to stevedoring are the activities of
rigging ships gear, opening and closing of hatches, securing cargo stored on board by
lashing, shoring, trimming and shifting of cargoes on board or to/from the vessels.
4. Storage - refers to the storage of containers, bulk and break-bulk cargoes in all storage
areas at the South Harbor.
5. Cranage - refers to the use of quay cranes in the handling of containerized cargoes,
floating cranes in handling heavy lifts and handling cargo on gearless vessels.
6. Domestic cargo-handling and passenger terminal operations includes stevedoring,
arrastre, storage, and passenger terminal services.
7. International Container Freight Station (CFS) - refers to stripping and/or stuffing of
Less-than Container Load (LCL) cargo to/from a container. Related services include the
receiving of consolidated cargoes and the stripping and stuffing of Out-of-Gauge (OOG)
cargo to/from flat track and open-top containers.
8. Equipment Services refer to cargo handling by operations which require the services of
the following equipment: fork lift units with capacity ranging from 3 to 15 tons, 32 tire
low bed (multi-axle) with a load capacity of 60 tons, 40 footer and 20 footer flat bed
trailers, and heavy lift Floating Crane Barge with capacity of 70 tons.
The Company commenced operations of the domestic terminal at the South Harbor in
January 2003. The 2,878 square meter Eva Macapagal Super Terminal is the most modern
and largest inter-island passenger terminal in the Philippines. The Terminal can accommodate
five ships at any given time, while the terminal can seat about 1,700 passengers waiting for
their boarding.
On August 1, 2003, the Board of Investments (BOI) approved the application of ATI for
registration under the Omnibus Investments Code of 1987 (E.O. 226) as a new operator of a
domestic passenger terminal and container yard on a pioneer status. Among the incentives
under this registration is income tax holiday for six years from September 2003 or actual start

of commercial operations, whichever comes earlier, but in no case earlier than the date of
registration.
Bulk Grains Terminal
On July 30, 1992, the Company and PPA executed a memorandum of agreement for the
Companys right to develop and operate a bulk grain terminal in Mariveles, Bataan for a
period of 15 years renewable for another 15 years upon mutual agreement of both parties.
This is supplemented by a Permit to Operate (PTO) issued by the PPA. In May 1993, the
Company entered into a lease agreement with the local government of the Province of Bataan
covering the land it occupies in Mariveles, Bataan for a period of 20 years renewable for
another 20 years. The Mariveles Grain Terminal (MGT) started commercial operations on
July 1, 1996. In July 2002, the Company entered into another Contract of Lease with the
Province of Bataan covering additional four (4) hectares of property, thus bringing the total
area of land occupied by the Company to 14 hectares. The second Contract of Lease is
coterminous with the Contract of Lease covering the 10-hectare property.
On December 17, 1993, the Company and San Miguel Corporation (SMC), with the
conformity of the Provincial Government of the Province of Bataan, entered into a sublease
agreement covering two (2) hectares of the 10-hectare area originally leased by ATI. Such
area is being used by SMC for its integrated bulk handling terminal operations for malt. In
consideration for the use of the area, SMC pays monthly rentals based on the higher of actual
or guaranteed throughputs at graduated per metric ton rental rates.
The MGT has been certified compliant with the International Ship and Port Facility Security
(ISPS) Code effective June 28, 2004 by the Office of the Transport Security (OTS) to expire
on December 19, 2011.
Services
The MGT offers the following services:
1. Unloading. The terminal has four Marweight Siwertell unloaders. Two unloaders can
discharge wheat at the average rate of 10,000 metric tons (MT) per day. Moreover, two
unloaders can discharge at least 10,000 MT of Soya bean meal per day.
2. Conveying. From the vessels, cargoes are being transported to the silos or the warehouse
via conveyor belts and plastic bucket elevators. Distribution to the storage area is being
controlled from a central area by a Programmable Logic Control (PLC) linked-up to a
computer system.
3. Storage. Wheat is being stored in twenty (20) steel corrugated silos which have a total
storage capacity of 110,000 MT (or 5,500 MT per silo). The silos can also handle corn,
Soya bean and any other grain product. Soya bean meal is likewise being stored in a flat
covered warehouse, which is divided into seven (7) bays and has a total capacity of
70,000 MT.
4. Outloading. Cargo is being outloaded in bulk from their storage areas via conveyors to
two (2) loading points which will transfer the product to barges or small ships at a rate of
300 MT per hour (MTPH). The two (2) loaders provide the terminal a flexibility of dual

outloading of dissimilar products. The terminal outloading facility can cater to barges and
small vessels of up to 6,000 dead weight tons (DWT).
5. Weighing. Cargoes are weighed-in using a belt weighing system prior to storage in the
silo or warehouse. Batch weighing equipment is provided for bulk outloading of products
to barges or small vessels. Moreover, a weighbridge controls the bagged and bulk
movements of cargoes by land.
6. Bagging. The Terminal has six (6) bagging machines located inside the warehouse. Each
machine is capable of bagging at a rate of 40 MTPH.
7. Sampling. A laboratory is being operated by the Company to test the products principally
for moisture content.
Logistics Center
The Company embarked upon a logistics business in January 1997. It has lease agreements
covering a land in Laguna which is being used exclusively as an inland clearance depot
(ICD).
The ICD is envisioned to provide industries operating in the CALABARZON industrial
growth area with world-class third party logistics services through an integrated and
comprehensive cargo transport and handling service package. Among the services offered are
cargo and container transfers, storage, stripping, and lift-on-lift-off. The ICD is an integral
part of the total container logistics chain.
Major investments at the ICD, apart from the container yard development, included the
purchase of modern container and cargo handling equipment also in January 1997. Two (2)
units of rubber-tyred gantries were brought in during the first quarter of 2002 to replace
ageing transtainers and to increase container storage and handling capabilities.
The ICD services various shipping lines for its Empty Container Depot. CALABARZON
clients no longer have to pull empties from Manila for their exports. This ICD service
provides ease and savings to the CALABARZON shippers.
Customs Memorandum Order No. 11-97 designated the ICD as the extension of the Port of
Manila. This in effect makes the ICD a customs bonded container yard. Customs-uncleared
containers can be immediately transferred to ICD where the BOC Processing and Release of
Cargoes can be administered. This immediately provides the client with savings as expenses,
such as port storage, detention/demurrage penalties and chassis rentals, are minimized.
In October 2003, the Bureau of Customs issued Customs Memorandum Order 23-2003
expanding the scope of the ICD to include the Government Port of Batangas, amending CMO
11-97. The ICD now serves as port extension of both Manila and Batangas ports.
The ICD is also registered with the BOI as a new operator of port cargo handling facilities on
a preferred non-pioneer status under the Omnibus Investments Code of 1987 (E.O. 226).

ATI Batangas, Inc.

ATI Batangas, Inc. (ATIB), a 98.81%-owned subsidiary of ATI, is the sole cargo handling
contractor operating at the Government Port of Batangas. ATI provides management services
relating to operations, marketing, training and administration.
Following the expiration of the original ten-year Cargo Handling Contract in 2002, the
Philippine Ports Authority (PPA), on July 23, 2003, granted a two-year probationary cargo
handling contract to ATIB. On October 20, 2005, ATIB was granted the 10-year contract
extension for Phase 1 of the Port of Batangas, under which the operation and management of
the Batangas Passenger Terminal were integrated. The contract is effective until October 20,
2015.
ATIB handles foreign and domestic containers and a mix of break-bulk cargoes from
imported rice, steel products, and completely built vehicles. ATIB also services both
domestic and foreign container feeders.
The Port of Batangas is expected to become the alternate gateway to the Port of Manila,
serving the rapidly-growing CALABARZON growth area. It is envisioned to become an
international port that is competitive to other ports in the region.
ATIB also operates the Batangas Passenger Terminal used for passengers and RO-RO cargo
service bound for Calapan, Puerto Galera, San Jose, Abra de Ilog, all in Mindoro Island, and
to the other neighboring island provinces of Romblon and Palawan. Because of its strategic
location, the Port of Batangas handles about 2.5 million embarking passengers a year. The
Passenger Terminal features twenty-four hour (24-hr) service, complete with first class
amenities such as: air-conditioned passenger waiting area, TV sets, drinking fountains, public
address system, public telephone booths, clean restrooms, ticketing offices with friendly and
well-trained customer service personnel. The facility also provides a clinic with qualified
medical personnel to administer first aid treatment and attend to emergency cases.
On September 30, 2005, PPA issued a Permit to Operate authorizing the Company to provide
and render cargo handling services at the Port of Batangas, Phase II, Batangas City up to
October 1, 2006. The PPA issued a Hold-Over Authority pending the conduct of the required
bidding and awarding of the operations and management of the Port of Batangas, Phase II to
the winning bidder.
The Port of Batangas was certified to ISO 14001:2004 standards on November 2005 and
recertified to ISO 9001 on January 2005. It was likewise initially certified compliant with the
International Ship and Port Facility Security (ISPS) Code effective July 1, 2004 by the Office
of the Transport Security (OTS). ATIB has since been re-certified compliant effective until
December 18, 2011.

Batangas Supply Base

ATI operates and manages the Batangas Supply Base within the Port of Batangas under a
contract with Shell Philippines Exploration B.V. (SPEX). The Supply Base provides logistics
support to the Malampaya Gas-to-Power-Project which includes cargo-handling, crane and
equipment hire, brokerage, transport, labor, vessel agency and waste management. Through a
lease with the PPA, the Main Passenger Terminal Building and its adjacent area has been
converted to a warehouse and lay down area to store drilling equipment, insurance and
emergency spares and replacement parts which are transported to and from the off-shore gas
platform through supply vessels calling the port.
The contract with SPEX has been extended to 2008, the life of the Malampaya Gas field is
approximately 20 years.
The Batangas Supply Base was certified to ISO 1400:2004 standards on November 2005,
OHSAS 18001 on October 2003, and re-certified to ISO 9001 on January 2005.
South Cotabato Integrated Port Services, Inc.
ATI owns 35.71% of the issued and outstanding capital stock of South Cotabato Integrated
Port Services, Inc. (SCIPSI).
SCIPSI is the existing cargo handling operator at the Makar Wharf in the Port of General
Santos, General Santos City. It caters to the needs of local businesses (which are engaged
mainly in agriculture, fisheries, livestock and poultry) as well as importers and exporters.
SCIPSI is ISO 14001, OHSAS 18001 and ISO 9001 certified since 2003. Likewise, the Port
Facility of General Santos was initially certified compliant with the International Ship and
Port Facility Security (ISPS) Code effective June 27, 2004 by the Office of the Transport
Security (OTS). The current ISPS certificate which was renewed on December 29, 2006 is
valid until December 31, 2011.
Makar Wharf is three (3) kilometers from the business center of General Santos City at the
northwest of Sarangani Bay. It is approximately twelve (12) kilometers from the airport and
has two (2) main roads leading to it. The Port is enclosed in a cove and is well-protected from
typhoons and the monsoon rains, making it ideal for agriculture. The terminal is well-paved
and clean, with an adequate drainage system and nine (9) light masts. Security is well
maintained with a 3-meter cyclone wire fence on the northeast and concrete hollow block
wall at the northwest, all with sufficient perimeter lighting. Two (2) main entrances at
opposite ends segregate passengers and light vehicles from cargo trucks and the 2x50-ton
truck scales.

Breakdown of Consolidated Revenues

Based on accounting records, the following is the breakdown of consolidated revenues
(in 000 PHP) by service type for the year ended December 31, 2006:
Service
Amount
% to Total
Stevedoring
1,530,122
37%
Arrastre
1,450,007
35%
Terminal handling
403,211
10%
Logistics
137,306
3%
660,511
4,181,156
16%
100%
Special/Others Services
TOTAL
Competition
ATI manages the South Harbor at the Port of Manila. Its major competitor on the container
business is International Container Terminal Services, Inc. (ICTSI), which operates the
Manila International Container Terminal; and on the non-containerized business, Harbour
Centre, which operates a private commercial port at the northern end of the Manila North
Harbor.
ATI competes on the basis of its strong capitalization, high productivity, excellent equipment
availability, highly skilled and trained workforce, and efficient service.
At the Port of Batangas, ATIB competes with two private commercial ports --- Philippine
National Oil Corporation Energy Base (PNOC-EB) and Bauan International Port Inc. (BIPI) -- along the bay for its share of break-bulk cargo and one port for its share of completely built
units (CBU). The Port of Batangas continues to be Luzon's jump off point to the country's
western seaboard's network of roro terminals connecting all the way to the southern most
island of the country. This provides the terminal the capability to capture and develop its
existing client base.
Employees
ATI has a total manpower complement of 1,914 as of March 31, 2007. Of these, 1,593 are in
Operations, 176 are in Maintenance and 145 are in Management and Administration. The
Company does not anticipate any significant change in its manpower complement within the
ensuing twelve months.
About 79 % of the existing manpower is covered by collective bargaining agreements as
follows:

TYPE OF WORKER
UNION
FROM
TO
Equipment operators and

dockworkers
Associated Workers Union (AWU)
12/01/03
11/30/08
Stevedores
Katipunan ng mga Mangagawa sa Daungan
12/01/03
11/30/08
Field Supervisors
Associated Skilled and Technical Employees

Union
08/16/06
08/16/11
Checkers
South Harbor Independent Port Checkers Union 09/07/06
09/07/11
Stevedores and
dockworkers
Batangas Pier Stevedores and Labor Union

(ATIB, formerly Aries Arrastre Services, Inc.)
11/06/07
11/06/02
There were no labor strikes for the past three years.

Costs and Effects of Compliance with Environmental Laws
The Company is compliant with environmental laws and regulations. No penalty related to
environmental compliance has been imposed upon the Company by any government agency.
In 2006 ATI incurred approximately P1.325 million for various permits and other
environment related projects such as Work Environment Measurement Testing,
Archeological Impact Assessment, Vehicle Smoke Emission Testing, Potable Water Testing
and Acquisition of Emergency Spill Kits, Ambient Air, Effluent Water and Noise Level
Monitoring.
Business Risks
The Company regularly undertakes a Business Risk Profile review where risks are identified
by priority based on a systematic assessment of probability and impact. Each control
strategies were identified and action points established with the designated accountable
persons. Results and developments are monitored during the reviews.
There are no major risks identified which would create catastrophic impact on the Company
other than major natural calamities like destructive earthquake and typhoons. Adequate
insurance coverage with business interruption clauses, structural testing and improvement of
facilities and equipment, business continuity plans and emergency response procedures are in
place to meet such contingencies. Terrorist acts are likewise identified as a risk. In order to
address this risk, additional security measures were implemented by the Company, such as
baggage screening machines and, in coordination with various local law enforcement
agencies, the deployment of uniformed and plainclothes personnel for deterrence. ATI is an
ISPS (International Ship and Port Facility Security Code) compliant facility which was
granted by the Office for Transportation Security a five year certification valid up to 2011.

Item 2. Properties
ATI is the exclusive cargo handling operator of PPA at the South Harbor, Port of Manila.
Infrastructure projects and improvements undertaken by ATI at the South Harbor are in line with
its investment commitment under the revised South Harbor Master Plan approved by the PPA on
October 26, 2005.
ATI operates a bulk grain facility in Mariveles, Bataan called the Mariveles Grain Terminal
(MGT) and an inland container depot in Laguna. ATIs subsidiary, ATI Batangas, Inc. (ATIB)
renewed its contract with the PPA for cargo handling and operation and management of a
passenger terminal at the Port of Batangas for 10 years starting October 20, 2005. ATIB operates
and manages Phase II by virtue of a hold-over authority pending the conduct of a bidding by the
PPA and the awarding thereof to the successful bidder.
As discussed in Note 25 of the Consolidated Audited Financial Statements, the Company has
outstanding leases and subleases covering land and buildings in Metro Manila, Mariveles, Bataan,
Calamba, Laguna and Sta. Clara, Batangas. Rental expenses on these properties in 2006 totaled
P77.0 million. The current lease agreements have various expiration dates with the longest term
expiring in April 2021. The leases are renewable upon mutual agreement with the lessor. There is
no intention to purchase any of the real property currently being leased.
Item 3. Legal Proceedings (as of March 31, 2007)

1. Enrique C. Araneta and Manila Floating Silo Corporation vs. Asian Terminals, Inc. (PED
Case No. 96-2029)
This is an action for the Revocation for the Corporate Franchise and/or License to Sell
Securities to the public with prayer for the issuance of a Cease and Desist Order and/or
Preliminary Injunction filed by the petitioners before the Prosecution and Enforcement
Department of the SEC sometime in January, 1996.
Petitioners Enrique Araneta (Araneta) and Manila Floating Silo Corporation
(MAFSICOR) alleged that ATI concealed a material matter in its application for the
Registration of its Securities when it did not disclose the existence of Civil Case No. 9468845, entitled Harbor Facilities and ARC C.A. vs. Enrique Araneta.
ATI responded by asserting that the said case is not a material matter since any judgment that
may be rendered therein will not affect ATIs right to render stevedoring services at the South
Harbor.
The case has been submitted for resolution. It is expected that this case will be dismissed. It
appears that petitioner Araneta is no longer interested in pursuing the case. A final dismissal
order is being awaited. No further developments as of date.

2. MAFSICOR Case
On August 5, 1993, ATI filed a petition for injunction and declaratory relief against the
Manila Floating Silo Corporation (MAFSICOR) and the PPA in connection with the
contract signed between MAFSICOR and PPA dated April 2, 1992. ATI argued that the
MAFSICOR contract allowing it to operate a floating grains terminal at the South Harbor
encroached on the Companys right as the exclusive provider of stevedoring services at the
South Harbor.
On August 6, 1993, the Regional Trial Court of Manila (RTC-Manila) issued a temporary
restraining order. However, on August 25, 1993, the RTC-Manila issued an order denying
ATIs application for the issuance of a writ of preliminary injunction. A motion for
reconsideration was likewise denied.
On June 8, 1994, however, the August 25, 1993 order of the RTC-Manila was nullified by the
Court of Appeals, thus upholding the position of ATI. The Court of Appeals also made
permanent the writ of preliminary injunction it had issued on October 13, 1993.
Thereafter, MAFSICOR and PPA filed a Petition for Review with the Supreme Court to
review the decision of the Court of Appeals.
On February 5, 1996, the Supreme Court promulgated a Decision granting the petition for
review and setting aside the injunction order issued by the Court of Appeals. It likewise
ordered the Regional Trial Court to conduct a trial on the merits. To-date all records of the
case have already been remanded to the lower court. The case has been set for hearing before
the lower court to resolve a motion filed by MAFSICOR.
PART II OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuers Common Equity and Related Stockholder Matters
1. The Companys common equity is traded at the Philippine Stock Exchange.
Stock Price
2005
First Quarter (Jan. Mar)
Second Quarter (Apr. June)
Third Quarter (July Sept.)
Fourth Quarter (Oct. Dec.)
2006
First Quarter (Jan. Mar.)
Second Quarter (Apr. June)
Third Quarter (July Sept.)
Fourth Quarter (Oct. Dec.)
High
2.06
1.90
1.80
1.90
Low
1.40
1.48
1.46
1.76
2.55
3.15
3.05
4.30
1.72
2.38
2.5
3.55

2007
First Quarter (Jan. Mar.)
4.21
4.14
As of the last practicable trading date 30 March 2007, ATI shares were traded at its highest
for the price of Php4.25, lowest for Php4.25 and closed at Php4.25.
2. The number of stockholders as of March 31, 2007 was 1,067. There were 2,000,000,000
common shares outstanding as of March 31, 2007.
Top 20 Stockholders as of March 31, 2007
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Stockholder
P & O Australia Ltd.
ATI Holdings, Inc.
Pecard Group Holdings
Philippine Seaport, Inc.
Daven Holdings, Inc.
PCD Nominee Corp. (Non-Filipino)
SG Holdings, Inc.
Kayak Holdings, Inc.
PCD Nominee Corp. (Filipino)
Morray Holdings, Inc.
Harbourside Holding Corp.
Aberlour Holding Company, Inc.
Agatha Builders Corp.
Eusebio H. Tanco
Southern Textile Mills, Inc.
Nancy Saw
Aboitiz, Luis Miguel Osmea
ATR-KIM Eng Capital Partners Inc.
Carolina T. Young
Union Properties, Inc.
TOTAL
No. of Shares Held

346,466,600
291,371,230
198,203,968
196,911,524
155,906,071
138,532,055
130,000,000
112,000,000
102,878,173
100,000,000
80,000,000
71,517,463
20,761,899
15,257,663
4,446,336
3,926,000
2,765,000
1,322,000
1,200,000
1,030,000
1,974,495,982
% to Total
17.32%
14.57%
9.91%
9.85%
7.80%
6.93%
6.50%
5.60%
5.14%
5.00%
4.00%
3.58%
1.04%
0.76%
0.22%
0.20%
0.14%
0.07%
0.06%
0.05%
98.74
3. The cash dividends paid out by the Company during the two most recent fiscal years were
for P0.16 per share given to the shareholders of record as of 27 May 2005 and P0.20 per
share given to stockholders of record as of 26 May 2006.
Under the Companys By-laws, dividends shall be declared only from unrestricted
earnings, and shall be payable at such time and in such manner and in such amounts as the
Board of Directors shall determine. No dividends shall be declared which would impair the
capital of the Company.
4. Recent Sale of Unregistered or Exempt Securities, including Recent Issuance of Securities
Constituting an Exempt Transaction (within 3 years)

On December 2, 2005, the Company issued five year fixed rate promissory notes (Tranche
A Notes) and seven year fixed rate promissory notes (Tranche B Notes) for Php450 Million
and Php550 Million, respectively1.
BDO Capital & Investment Corporation and SB Capital Investment were the underwriters
of this transaction. A Notice of Exempt Transaction was filed on December 27, 2005 by the
Company based on Section 10.1 (k) and (l) of the Securities Regulation Code.
On May 24, 2006, Security Bank Corporation submitted documents to the SEC in
compliance with SEC Form 10.1, item 4 on Notice of Application for Confirmation Exempt
Transaction in connection with the Fixed Rate Private Placement of the Notes of the
Company and issued a certification as to the outstanding note holders2.
Item 6. Managements Discussion and Analysis

Years ended December 31, 2006 and 2005
Results of Operations
Asian Terminals, Inc. achieved improvement in consolidated net income by 17.9% to P782.6
million in 2006 from P663.6 million in 2005. With the strengthening of the Philippine Peso vs.
the US Dollar, improvement in results was tempered by higher foreign exchange loss in 2006 of
P56.6 million against P19.9 million in 2005 and by its impact on certain revenue rates.
The purchasers were the following:

1. Banco de Oro Universal Bank
2.
Robinsons Savings Bank Corp.
3.
Security Bank Corporation
4.
Security Bank Corporation-Trust Division as Investment Manager for Account no. 2040
5.
Security Bank Corporation-Trust Division as Investment Manager for Account no.1078
6. Security Bank Corporation-Trust Division as Trustee for Various Accounts
The following are the outstanding noteholders:
1.
Banco de Oro Universal Bank
2.
Robinsons Savings Bank Corp.
3.
Security Bank Corporation
4.
Security Bank Corporation-Trust Division as Trustee for Various Accounts
5.
Security Bank Corporation-Trust Division as Investment Manager for Account no. 2040
6.
Security Bank Corporation-Trust Division as Investment Manager for Account no.1078
7.
Apostol, Carlos D. &/or Corazon S. Apostol
8.
Sumulong, Maria B. or Vicente Sumulong
9.
Valencia, Helen Mariano or Wilfredo Ordonez Valancia
10. Layog, Richmond O. or Edmond Wong
11. Lim, Tony Tan and Andrea Tan
12. Corpus Christi School
13. Parian, Dominador
14. Agabin, Alice and or Philip Agabin
15. Tejares, Lourdes Israel or Eliezer C. Tejares
16. Sales, Anita or Tan Tiong Yek
17. Balonan, Evelyn O. and/or Edificio Ong

Earnings per share rose to P0.39 in 2006 from P0.33 in 2005. Performance in 2006 reflected
growth in revenues and reduction in costs and expenses.
Consolidated revenues were up by 2.4% to P4,181.2 million in 2006 from P4,081.6 million in
2005. Revenues from port operations rose by 9.3% to P3,590.0 million in 2006 from P3,284.7
million in 2005. Whereas, revenues from non-ports operations, were down by 25.8%, mainly due
to volume and exchange rate factors.
In port operations, revenues from South Harbor international container operations were up by
14.3% on account of 11.3% growth in volume, enhancement in ancillary services and increase in
tariff rates. Revenues from South Harbor domestic terminal operations decreased by 7.9%, even
with increase in tariff rates, as cargo volumes were down by 12.5% and number of passengers
were down by 15.4% due to reduction in clients vessel fleet and aggressive promotions from
airlines. In South Harbor international non-containerized operations, while volume declined by
44.6%, revenues were down by only 5.6% as a result of favorable commodity mix and higher
tariff rates.
In 2006, consolidated costs and expenses declined by 2.6% to P2,683.6 million in 2006 from
P2,755.1 million in 2005. With the decrease in volumes in non-ports operations, reductions in its
costs and expenses were realized. General transport expenses declined by 50.3% to P37.8 million
in 2006 from P76.0 million in 2005. Moreover, consolidated costs and expenses-others were
down by 14.5% to P572.1 million in 2006 from P669.4 million in 2005 significantly from lower
processing expenses in non-ports operations, which consisted of brokerage, arrastre and wharfage
fees, storage and other handling fees. The appreciation of the Philippine Peso and the decrease in
premiums resulted to decrease in consolidated insurance and bonds by 15.0% to P84.9 million in
2006 from P100.0 million in 2005
Even with increases in compensation rates and in certain benefits, consolidated labor costs of
P760.1 million in 2006 almost leveled with the P754.1 million in 2005. This was brought about
by improved efficiencies and changes in organization.
Consolidated depreciation and
amortization were up by 4.9% to P525.8m in 2006 from P501.2 million in 2005 as a result of
continuing improvement of port facilities and equipment. Consolidated taxes and licenses rose by
28.9% to P158.7 million in 2006 from P123.2 million in 2005 due to higher real property tax
from additions in property and equipment and to higher local business taxes from growth in
revenues. The rise in fuel prices increased consolidated equipment running by 2.3% to P424.5
million in 2006 from P414.9 million in 2005. Due to increased equipment requirements relative
to certain commodities handled, rentals grew by 2.9% to P116.6 million in 2006 from P113.3
million in 2005.
Consolidated finance costs dropped by 3.8% to P464.8 million in 2006 from P483.4 million in
2005 as a result of reduction in interest-bearing loans. Consolidated finance income increased by
90.8% to P86.1 million in 2006 from P45.1 million in 2005 due to higher funds available for
investment in 2006. Net gain on derivative instruments of P39.8 million was posted in 2006,
29.0% higher than the P30.8 million registered in 2005 while other expenses-net increased to
P24.2 million in 2006 compared with only P0.01 million in 2005 mainly on account of the strong
Philippine Peso.

Consolidated income before tax in 2006 of P1,134.4 million was 23.4% higher than 2005 of
P919.0 million. Consequently, consolidated provision for income tax rose by 37.8% to P351.9
million in 2006 from P255.4 million in 2005. In addition to effects from improved operating
results, the increase also reflected the full year impact of the increase in income tax rate.
Financial Condition
Consolidated total assets decreased by 4.0% to P9,041.4 million in 2006 from P9,414.6 million in
2005. Consolidated current assets declined by 5.1% to P2,258.4 million in 2006 from P2,378.6
million in 2005. Consolidated cash and cash equivalents were slightly down by 2.2% to P1.709.2
million in 2006 from P1,748.1 million in 2005. With further improvement in collections,
consolidated trade and other receivables dropped by 24.5% to P330.0 million in 2006 from
P437.3 million in 2005. Consolidated spare parts and supplies went up by 28.8% to P119.9
million in 2006 from P93.1 million in 2005 in support of the program to improve equipment
availability and reliability. Consolidated prepayments slightly went down to P99.4 million in
2006 from P100.1 million in 2005 due to timing of insurance payment.
Consolidated non-current assets decreased by 3.6% to P6,783.0 million in 2006 from P7,036.0
million in 2005. Carrying amount of consolidated property and equipment was down by 3.8% to
P6,501.0 million in 2006 from P6,757.8 million in 2005. Total investments in port facilities and
equipment in 2006 amounted to P283.6 million. The additions to property and equipment at the
South Harbor were in accordance with the revised South Harbor Master Plan. Consolidated
deferred tax assets-net rose by 44.7% to P165.9 million in 2006 from P114.7 million in 2005 due
to movements in underlying transactions related to capitalized borrowing cost, pension and
unrealized foreign exchange loss, among others. Increase in investment in an associate by 13.4%
to P29.1 million in 2006 from P25.7 million in 2005 came from equity in earnings in 2006, net of
cash dividend received. Consolidated other financial assets dropped by 6.5% to P30.2 million in
2006 from P32.3 million in 2005 due to decline in market values of available for sale
investments. Other noncurrent assets went down by 46.2% from P105.6 million in 2005 to P56.8
million in 2006 due to the closing of pension asset recognized in 2005 as a result of the update in
actuarial valuation and to the amortization of prepaid leases.
In 2006, consolidated total liabilities went down by 13.2% from P5,038.8 million in 2005 to
P4,373.1 million in 2006 mainly due to payments of interest-bearing loans. Consolidated
noncurrent liabilities, declined by 22.2% to P2,937.1 million in 2006 from P3,772.9 million in
2005. Payments of interest bearing loans in 2006 included the following:
Syndicated FFRN - tranche 2 of P200.0 million
Bilateral loan - tranche 1 of P200.0 million
Bilateral loan tranche 2 of P375 million
Consolidated total current liabilities increased by 13.4% to P1,436.0 million in 2006 from
P1,265.8 million in 2005. Consolidated trade and other payables rose by 16.3% to P763.2 million
in 2006 from P656.0 million in 2005 mainly due to timing of payments, mostly covered by agreed
payment schedules. Taxes payable decreased by 14.4% from P64.9 million in 2005 to P55.6
million in 2006 due to higher tax payments during 2006.
Ratio of consolidated total liabilities to consolidated total equity was 0.94 to 1.00 in 2006.

Cash Flows
Net cash provided by operating activities rose by 18.9% to P1,369.5 million in 2006 from
P1,152.2 million in 2005 largely due to higher operating income, improvement in collections and
higher trade and other payables. .
Net cash used in investing activities was down by 57.9% due mainly to the significant
contribution to retirement fund in 2005 of P254.6 million partly offset by higher capital
expenditures during 2006.
Net cash used in financing activities were significantly up at P1,175.5 million in 2006 compared
to P236.9 million in 2005. There was no new borrowing in 2006 while there was P1 billion
borrowing in 2005. Cash dividends paid were P400.0 million in 2006 and P320 million in 2005.
Changes in Accounting Policies
The Company has adopted the following amendments to PFRS and Philippine Interpretation
during the year. The principal effects of the changes are discussed below.
PAS 19, Employee Benefits
Amendment for Actuarial Gains and Losses, Group Plans and Disclosures. As of January 1,
2006, the Company adopted the amendments to PAS 19. As a result, additional disclosures are
made providing information about trends in assets and liabilities in the defined benefit plans and
the assumptions underlying the components of the defined benefit cost. This change resulted in
additional disclosures being included for the years ended December 31, 2006 and 2005. The
Company also adopted the new option offered to recognize actuarial gains and losses outside of
the statement of income. As a result, the Company presented actuarial gains and losses in a
statement of changes in equity titled consolidated statement of recognized income and expense.
PAS 21, The Effects of Changes in Foreign Exchange Rates
Amendment for Net Investment in a Foreign Operation. This amendment states that all exchange
differences arising from a monetary item that forms part of the Companys net investment in a
foreign operation are recognized in a separate component of equity in the consolidated financial
statements regardless of the currency in which the monetary item is denominated. As the
Company does not have investment in a foreign operation, this change has no impact on the
Companys consolidated financial statements.
PAS 39, Financial Instruments: Recognition and Measurement
Amendment for Financial Guarantee Contracts. This amended the scope of PAS 39 to require
financial guarantee contracts that are not considered to be insurance contracts to be recognized
initially at fair value and to be measured at the higher of the amount determined in accordance
with PAS 37, Provisions, Contingent Liabilities and Contingent Asset and the amount initially
recognized less, when appropriate, cumulative amortization recognized in accordance with PAS
18, Revenue. This amendment did not have an effect on the consolidated financial statements.
Amendment for Cash Flow Hedge Accounting of Forecast Intragroup Transactions . This
amended PAS 39 to permit the foreign currency risk of a highly probable intragroup forecast

transactions to qualify as hedged item in a cash flow hedge, provided that the transaction is
denominated in a currency other than the functional currency of the entity entering into that
transaction and that the foreign currency risk will affect the consolidated statement of income. As
the Company currently has no such transactions, the amendment did not have an effect on the
consolidated financial statements.
Amendment for the Fair Value Option. This amended PAS 39 to restrict the use of the option to
designate any financial asset or any financial liability to be measured at fair value through the
statement of income. This amendment has no significant impact on the consolidated financial
statements.
Philippine Interpretation IFRIC 4, Determining Whether an Arrangement contains a Lease
The Company adopted IFRIC Interpretation 4 as of January 1, 2006, which provides guidance in
determining whether arrangements contain a lease to which lease accounting must be applied.
This interpretation has no impact on the Companys consolidated financial statements as of
December 31, 2006.
Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives
This Interpretation becomes effective for financial years beginning on or after June 1, 2006. It
establishes that the date to assess the existence of an embedded derivative is the date an entity
first becomes a party to the contract, with reassessment only if there is a change to the contract
that significantly modifies the cash flows. This interpretation has no impact on the Companys
consolidated financial statements as of December 31, 2006.
Other information:
The Companys businesses are affected by the local and global trade environment. Factors that
could cause actual results of the Company to differ materially include, but are not limited to:
material adverse change in the Philippine economic and industry conditions;
natural events (earthquake and other major calamities); and
material changes in foreign exchange rates.
There was no known trend, event or uncertainty that had or may have a material impact on
liquidity and on revenues or income from continuing operations. There was no known event
that may cause a material change in the relationships between costs and revenues.
There was no significant element of income or loss that did not arise from the Companys
continuing operations.
There was no seasonal factor that had a material effect on the financial condition and results
of operations.
There was no event that will trigger direct or contingent financial obligation that is material to
the Company, including any default or acceleration of an obligation.
Except for the commitments and contingencies mentioned in Note 25 on Commitments and
Contingencies of the Audited Consolidated Financial Statements, the Company has no
knowledge of any material off-balance sheet transactions, arrangements, obligations, and
other relationships of the Company with unconsolidated entities or other persons created
during the reporting period.

Key Performance Indicators (KPI)

KPIs discussed below were based on consolidated amounts as portions pertaining to the
Companys only subsidiary, ATI Batangas, Inc. (ATIB), were not material. As of end 2006:
ATIBs total assets were only 2.5% of the Consolidated Total Assets
ATIBs income before other income and expense was only 3.1% of consolidated income
before other income and expense*.
Consolidated KPI
Return on Capital
Employed
Return on Equity
attributable to
equity holders of
the parent
Manner of Calculation
Percentage of income before
other income and expenses
over average of operating
assets
2006
2005
22.4%
17.7%
Discussion
Increase from higher
income before other
income and expenses
during the period.
Increase from higher net
income during the period.
17.3%
15.4%
Debt to equity ratio
Percentage of net income over

equity attributable to equity
holders of the parent
Ratio of total liabilities over
0.94:1.00
1.15:1.00
Days Sales in
Receivables (DSR)
Gross trade receivables over

revenues multiplied by number
of days
20 days
29 days
Lost Time Injury
Number of loss time from

injuries per standard manhours
2.18
4.48
Improved due to lower

debt.
Improvement resulting
from the Companys
account management
initiatives.
Improved as a result of
extensive safety campaign
and strict implementation
of policies on health, safety
and environment
*Note: Income before other income and expense is defined as income before net financing costs, net gains
on derivative instruments and others.
Summary of Selected Financial Data (in millions)

Description
Revenues
Net income
Total assets
Total liabilities
Year ended
December 31, 2006
P 4,181.2
782.6
9,041.4
4,373.1
Year ended
December 31, 2005
P 4,081.6
663.6
9,414.6
5,038.8
Years ended December 31, 2005 and 2004

Results of Operations
In 2005, the Company posted strong growth with Consolidated Net Income of P663.6 million, up
by 78.9% from P370.9 million in 2004. Earnings per share rose by P0.15 to P0.33 in 2005 from

P0.18 in 2004. Performance in 2005 reflected results of growth in revenues and of improvement
in cost management.
Consolidated revenues posted a 14.1% increase from P3,577.2 million in 2004 to P4,081.6
million in 2005. Revenues from port operations rose by 15.8% from P2,835.7 million in 2004 to
P3,284.7 million in 2005 mainly due to higher contributions from the South Harbor (SH)
international container and domestic terminal operations. Volumes in SH domestic terminal
significantly rose by 20.5% for containerized cargoes and by 50.7% for number of passengers
which resulted to the 24.0% jump in its revenues. Revenues from SH international container
operations increased by 17.8% on account of favorable container mix, enhancement in ancillary
services and increase in tariff rates. Due to increasing competition, volumes of SH noncontainerized cargoes decreased by 31.7%. Revenues from non-ports business contributed to the
improvement in results by its 7.5% growth due mainly to higher volumes.
As volume and operational level increased, consolidated costs and expenses also rose but by only
3.0% from P2,674.4 million in 2004 to P2,755.1 million in 2005. The increase came from
equipment running which went up by 8.0% from P384.1 million in 2004 to P414.9 million in
2005 due to increases in fuel and utility costs (price and consumption factors). Also, taxes and
licenses rose by 16.3% from P105.9 million in 2004 to P123.2 million in 2005 as a result of
increase in local taxes due to higher revenues and in real property tax due to increase in rates and
to fixed asset additions. Reflecting increases in revenues and with the increasing focus on safety
and environment, consolidated other expenses went up by 23.1% from P543.8 million in 2004 to
P669.4 million in 2005.
Due to further enhancement in the structure of the non-ports business, consolidated rental went
down by 17.3% to P113.3 million in 2005 from P137.1 million and general transport by 20.3% to
P76.0 million in 2005 from P95.3 million in 2004. Also, with the changes in estimated useful
lives of certain port equipment in 2004, consolidated depreciation and amortization dropped by
5.1% from P528.0 million in 2004 to P501.2 million in 2005. Moreover, reflecting benefits from
further organizational rightsizing and improvement in scheduling, consolidated labor costs
dropped by 2.5% from P773.5 million in 2004 to P754.1 million in 2005. Consolidated insurance
declined by 4.2% from P104.3 million in 2004 to P100.0 million in 2005 due to decrease in
premiums and appreciation of the Philippine peso.
Consolidated finance income rose by 81.6% to P45.1 million in 2005 from P24.8 million in 2004
while consolidated finance costs increased by 12.2% from P430.8 million to P483.4 million in
2005. Increase in consolidated finance costs was due to new borrowings and higher interest rates.
With the adoption of PAS 39 effective January 1, 2005, the Company posted a net gain on
derivative instruments of P30.8 million. Other income of P40.0 million in 2004 was reduced to
P9.0K other expense in 2005 mainly due to a net foreign exchange loss from appreciation of the
Philippine peso.
With the foregoing, consolidated income before tax in 2005 was 71.1% higher than 2004.
Consolidated provision for income tax rose by 53.8% from P166.1 million in 2004 to P255.4
million in 2005 with effect from existing income tax holiday incentive for domestic terminal
operations.

Financial Condition
Consolidated total assets rose by 2.1% from P9,217.6 million in 2004 to P9,414.6 million in
2005. The increase mostly came from increase in consolidated current assets by 19.5% from
P1,990.9 million in 2004 to P2,378.6 million in 2005. Consolidated cash and cash equivalents
grew by 40.5% from P1,244.2 million in 2004 to P1,748.1 million in 2005, mainly from proceeds
of the P1 billion fixed rate notes availed in December 2005. Reflecting improvement in
collections, consolidated trade and other receivables dropped by 15.9% from P519.6 million in
2004 to P437.3 million in 2005. Consolidated spare parts and supplies declined by 10.8% from
P104.3 million in 2004 to P93.1 million in 2005 related to increased usage and level of
operations. Due to increase in utilization of input taxes, consolidated prepayments went down by
18.5% from P122.8 million in 2004 to P100.1 million in 2005.
In 2005, investments in port facilities and equipment in 2005 totaled P223.8 million. These
investments included, among others, several cargo handling equipment, rehabilitation of piers and
container yard and domestic terminal civil works.
Net consolidated deferred tax assets accounted for the biggest jump in noncurrent assets with a
175.5% increase from P41.6 million in 2004 to P114.6 million in 2005 followed by other
noncurrent assets which increased by 153.3% from P41.7 million in 2004 to P105.6 million in
2005. These were mainly due to the adoption of PAS 19 (Employee Benefits) and PAS 39
(Derivative Instruments). Investment in an associate declined by 8.8% from P28.2 million in
2004 to P25.7 million in 2005 due to cash dividends received. Other financial assets decreased
by 43.6% from P57.3 million in 2004 to P32.3 million in 2005 due to adjustments in compliance
with PAS 39. Items classified under other financial assets in 2004 were accounted for under the
previous accounting standards. Beginning January 1, 2005, these items were classified and
accounted for in accordance with PAS 32 and PAS 39.
In 2005, consolidated total liabilities slightly went up by 1.0% from P4,987.6 million in 2004 to
P5,038.8 million in 2005 mainly on account of higher taxes and financial liabilities composed of
long term debt and derivative liabilities. Consolidated long-term debt, net of debt issue costs,
rose by 1.8% from P3.997.2 million in 2004 to P4,068.1 million in 2005. Following are the
significant movements in consolidated long-term debt in 2005:
Additions:
Fixed Rate Note facility in the amount of P1.0B drawn on December 19, 2005.
Payments:
- Full payment of ANZ medium term loan P77.2M
- Full payment of 3-Year Floating Rate Note Tranche 1 P620.0M
- Amortization payments on HSBC term loan 1 P200.0M
-
Consolidated trade and accounts payable decreased by 27.6% from P905.5 million in 2004 to
P656.0 million in 2005 due to updates in payments of trade accounts and other expenses. Taxes
payable increased by 84.8% from P35.1 million in 2004 to P64.9 million in 2005 due to increase
in income taxes and value added taxes payable.

The Company continued to maintain a conservative financial policy with ratio of consolidated
total liabilities to consolidated total stockholders equity of 1.15 to 1.00 in 2005. Cash dividends
paid on June 21, 2005 was P320 million.
Cash Flows
Due to robust performance, net cash provided by operating activities rose by 24.3% to P1,152.2
million in 2005 from P927.2 million year before. Improvement in collections also provided
increased funds from operating activities.
Net cash used in investing activities was down by 14.2% due to lower additions to property and
equipment in 2005, mitigated by increased contribution to retirement fund by P208.6 million
from payment in full of past service liability on the fund.
On cash flows from/to financing activities, movements in 2005 were significantly due to
movements in long-term debt. In addition, cash dividends paid during the year amounted to
P320.0 million.
The Companys adoption of Philippine Financial Reporting Standards (PFRSs) resulted in certain
changes to the Companys comparative presentation and disclosures. The principal effects of the
adoption of PFRSs are discussed below.
PFRS 3, Business Combinations, and PAS 36, Impairment of Assets. The adoption
of PFRS 3 and PAS 36 has resulted in the Company ceasing annual goodwill
amortization and commencing testing for impairment at the cash-generating unit level
annually (unless an event occurs during the year which requires the goodwill to be tested
more frequently).
PAS 16, Property, Plant and Equipment. There were no significant adjustments that
resulted from the Companys review of significant components of property and
equipment. The Company reclassified stand-by spare parts from Spare parts and
supplies account to Property and equipment account.
PAS 19, Employee Benefits. The adoption resulted in determining the present value
of defined benefit obligations and the fair value of plan assets with sufficient regularity
that the amounts recognized in the consolidated financial statements do not differ
materially from the amounts that would be determined at the balance sheet date. The
adoption of PAS 19 has been accounted for retrospectively and the comparative
consolidated financial statements have been restated. PAS 19 requires the use of
actuarial techniques to make a reliable estimate of the amount of benefit that employees
have earned in return for their service, discounting that benefit using the projected unit
credit method; determining the fair value of any plan assets; and determining the total
amount of actuarial gains and losses.
PAS 21, The Effects of Changes in Foreign Exchange Rates. Prior to adoption of
PAS 21, the Companys practice has been to capitalize foreign exchange adjustments
arising from foreign currency denominated obligations incurred to finance the
construction of its port facilities and equipment. Under PAS 21, foreign exchange
adjustments incurred during the construction period that are regarded as adjustments to
borrowing costs qualify for capitalization as part of the property and equipment cost.

PAS 32, Financial Instruments: Disclosure and Presentation. PAS 32 covers the
disclosure and presentation of all financial instruments. The standard requires more
comprehensive disclosures about a companys financial instruments. New disclosure
requirements include terms and conditions of financial instruments used by the entity,
types of risks associated with both recognized and unrecognized financial instruments
(market risk, foreign exchange risk, price risk, credit risk, liquidity risk and cash flow
risk), fair value information of both recognized and unrecognized financial assets and
financial liabilities, and the entitys financial risk management policies and objectives.
The standard also requires financial instruments to be classified as debt or equity in
accordance with their substance and not their legal form.
PAS 39, Financial Instruments: Recognition and Measurement. PAS 39 establishes the
accounting and reporting standards for the recognition and measurement of the entitys
financial assets and financial liabilities. PAS 39 requires financial instruments not
classified as at fair value through profit or loss to be recognized initially at fair value,
including related transaction costs. Subsequent to initial recognition, an entity should
measure financial assets at their fair values, except for loans and receivables and held-tomaturity investments, which are measured at amortized cost using the effective interest
rate method. Financial liabilities are subsequently measured at amortized cost, except for
liabilities classified under fair value through profit and loss and derivatives, which are
subsequently measured at fair value.
PAS 39 also requires that every derivative instrument (including certain derivatives
embedded in host financial and non-financial contracts) should be recorded in the balance
sheet as either an asset or liability measured at its fair value. PAS 39 requires that
changes in the derivatives fair value be recognized currently in the statement of income
unless specific hedges allow a derivatives gains and losses to offset related results on the
hedged item in the statement of income, or deferred in equity as Cumulative translation
adjustment. PAS 39 requires that an entity must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting treatment.
Derivatives that are not designated and do not qualify as hedges are accounted for at fair
value through profit or loss.
The Company has adopted the hedge accounting treatment of PAS 39 for certain
derivative instruments.
There are no material differences between the consolidated statement of cash flows prepared
under PFRS and the consolidated statement of cash flows under previous GAAP. Adoption
of these standards also resulted in additional disclosures being included for the years ended
December 31, 2005 and 2004, as applicable.
The Company has adopted the following other PFRSs. Comparative presentation and
disclosures have been amended as required by the standards.
PAS 1, Presentation of Financial Statements;
PAS 2, Inventories;
PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors;
PAS 10, Events after the Balance Sheet Date;
PAS 24, Related Party Disclosures;

PAS 27, Consolidated and Separate Financial Statements;

PAS 28, Investments in Associates; and
PAS 33, Earnings per Share.
Other information:
The Companys businesses are affected by the local and global trade environment.
Factors that could cause actual results of the Company to differ materially include, but are not
limited to:
material adverse change in the Philippine economic and industry conditions;
natural events (earthquake, typhoons and other disruptions); and
material changes in foreign exchange rates.
There was no significant element of income or loss that did not arise from the Companys
continuing operations.
There was no seasonal factor that had a material effect on the financial condition and results
of operations.
There was no event that will trigger direct or contingent financial obligation that is material to
the Company, including any default or acceleration of an obligation.
Except for the commitments and contingencies mentioned in Note 25of the Audited
Consolidated Financial Statements, the Company has no knowledge of any material offbalance sheet transactions, arrangements, obligations), and other relationships of the
Company with unconsolidated entities or other persons created during the reporting period.
Key Performance Indicators (KPI)
KPIs discussed below were based on consolidated amounts as portions pertaining to the
Companys only subsidiary, ATI Batangas, Inc. (ATIB), were not material. As of end 2005:
ATIBs total assets were only 1.6% of the Consolidated Total Assets
ATIBs income before other income and expense was only 2.5% of consolidated income
before other income and expense*.
-Consolidated KPI
Return on Capital
Employed
Return on Equity
attributable to
equity holders of
the parent
Manner of Calculation
Percentage of income before
other income and expenses
over running average of
operating assets
2005
2004
17.7%
11.3%
15.4%
8.9%
Debt to equity ratio
Percentage of net income over

Ratio of total liabilities over
1.15:1.00
1.18:1.00
Days Sales in
Receivables (DSR)
Gross trade receivables over

revenues multiplied by number
of days
29 days
38 days
Lost Time Injury
No. of loss time from injuries

per standard manhours
4.48
6.37
Discussion
Increase from higher
income before other
income and expenses
during the period.
Increase from higher net
income during the period.
Improved due to higher
equity.
Improvement resulting
from the Companys
account management
initiatives.
Improved as a result of
extensive safety campaign
and strict implementation
of policies on health, safety
and environment

*Note: Income before other income and expense is defined as income before net financing costs, net gains
on derivative instruments and others.
Summary of Selected Financial Data (in millions)

Description
Revenues
Net income
Total assets
Total liabilities
Year ended
December 31, 2005
P 4,081.6
663.6
9,414.6
5,038.8
Year ended
December 31, 2004
P 3,577.2
370.9
9,217.6
4,987.6
Information on Independent Accountant External Audit Fees

The appointment of SyCip, Gorres, Velayo & Co. (SGV) as the independent auditor of Asian
Terminals, Inc. for 2006 was approved by the shareholders during the annual meeting held last
April 27, 2006.
In compliance with Securities Regulation Code Rule 68, Ms. Bennette A. Daplas-Bachoco has
been the SGV Partner-in Charge for less than five years. Ms. Bachocos appointment started in
2004.
The aggregate fees for audit services and other services rendered by SGV were as follows:
2006 (P000)
5,100
5,100
Audit Fees
Tax Fees
All Other Fees
Total
2005 (P000)
5,100
175
1,400
6,675
Audit Fees are for professional services rendered in connection with the audit of our annual
financial statements and services provided by the independent auditors in connection with
statutory and regulatory filings or engagements.
Tax Fees are for tax consultancy services rendered by the principal independent auditors.
All Other Fees consist primarily of consultancy services related to adoption of Philippine
Financial Reporting Standards.
Audit Committee Pre-Approval Policy
The Companys Audit Committee is required to pre-approve all audit and non-audit services
rendered by and approve the engagement fees and other compensation to be paid to the
independent accountant. When deciding whether to approve these items, our audit committee
takes into account whether the provision of any non-audit service is compatible with the

independence standards under the guidelines of the SEC. To assist in this undertaking, the Audit
Committee actively engages in a dialogue with the external auditors with respect to any disclosed
relationships or services that may impact their objectivity and independence and, if appropriate,
recommends that the Board take appropriate action to ensure their independence.
Item 7. Financial Statements

The audited financial statements and supplementary schedules to the financial statements are
hereto attached as Exhibit 3.
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial

Disclosure
There was no change in or disagreement with External Accountants on accounting and financial
disclosure.
PART III CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer (As of March 31, 2007)
Name
Bryan T. Smith
Eusebio H. Tanco
Suhail Al Banna
Ramon R. Atayde
Lawrence Ho
Plaridel C. Garcia
Nilo B. Pea
Roberto V. Garcia
Cesar B. Bautista
Remy T. Tigulo
Ma. Luisa E. Nograles
Rodolfo G. Corvite, Jr.
Age
61
57
49
66
39
69
70
60
69
67
47
47
Roberto Gifuni
Dallas Hampton
43
48
Sean L. Perez
41
Position
Chairman
Director / President
Director / EVP-Technical
Director
Director
Director
Director
Director
Director
Director
Vice President and Chief Financial Officer
Corporate Secretary and Vice-President for
Administration & Legal
Vice President for Engineering
Vice President for South Harbor Container
Terminal and General Stevedoring
Vice President for Domestic Terminal
Operations and Off-sites

A brief background on the Companys Board of Directors and Executive Officers is as

follows:
Bryan T. Smith, JP RFD, 61, Australian, is the Chairman of the ATI Board. He is the
Vice President and Managing Director of Dubai Ports World (DPW) South East Asia and
Russia. Prior to this, he was the Regional Director of P&O Asian Operating
Headquarters Manila from 2005 to 2006. He was the Executive Director of P&O Ports
Pty Ltd from 1999 to 2005. In 1999, before being Executive Director, he was the General
Manager of P&O Ports, Pty. Ltd, in Sydney, Australia. He qualified as a Master Mariner Foreign Going at UTS (University of Technology Sydney, Australia) and later graduated
from the Senior Management Program Graduate School of Management, Macquarie
University, Sydney, Australia. Captain Smith is currently Chairman and Director of many
Port related companies in South East Asia and Russia. He has been a member of the ATI
Board since December 5, 2005.
Eusebio H. Tanco Ph.D. (h.c.)3, 57, Filipino, is a Director and the President of the
Company. He is also the Executive Committee Chairman of the STI, Inc., Chairman of
DLS-STI College and Medical Center and founding President of Global Resource for
Outsourced Workers. He is likewise the President of Philippines First Insurance Co.,
Mactan Electric Company and a member the Board of Bank of Commerce and United
Coconut Chemicals, Inc. He obtained his M.S.C. in Economics from the London School
of Economics and Political Science. He has been a member of the Board since 1993. He
was also the Companys President from 1995 to 2001.
Suhail Al Banna4, 49, UAE National, is a Director and the Executive Vice President
Technical of the Company. He was the Senior Vice President of Dubai Ports World from
2005 to February 2007. From 2002 until 2005, he was the Chief Technology Officer of
Ports, Customs & Free Zone Corp, Dubai World. From 1988-2002, he was the IT
Manager of Emarat Emirates General Petroleum Corporation. He was the Business
Analyst at Emarat from 1984-1988. He obtained his Bachelors degree in Computer
Science in San Diego State University in 1983 and attended the Kellog and Harvard
Business Schools.
Nilo B. Pea, 70, Filipino, is a Director of the Company. He is Senior Partner of the law
firm Quasha Ancheta Pea & Nolasco and is a director, trustee or officer of various
corporations and entities, which include Sun Life of Canada Prosperity Balanced Fund,
Inc. (since 1999), Sun Life of Canada Prosperity Philippine Equity Fund, Inc. (since
2005), QBE Insurance (Phils), Inc. (since 1998), Marsh Philippines, Inc. (since 1998),
Standard Chartered Bank Employees Retirement Fund (since 1992), St. Lukes Medical
Center, Inc. (since 1996), St. Lukes Bonifacio Global City MAB Corp. (since 2005) and
St. Lukes College of Medicine (since 2004). He was a Member of the Committee on
Bar Examinations (Mercantile Law) in 1997 and 2006. He obtained his Bachelor of
Mr. Tanco was elected President on January 12, 2007, effective February 6, 2007, replacing Mr. Jeremy J. L. Rickcord.
4
Mr. Al Banna was elected director on January 12, 2007, effective February 6, 2007, replacing Mr. Jeremy J. L. Rickcord. He
assumed the position of EVP Technical on February 13, 2007.

Laws degree from the University of the Philippines. He has been a member of the Board
since 1995.
Remy T. Tigulo, 67, Filipino, is a Director of the Company. He is also the President of
SB Capital Investment Corporation and the Chairman of SB Equities, Inc., Security Land
Corporation, SB International Services, Philippine Seaport, Inc. and Chemitron
Enterprises. He was formerly the Deputy Chief of Staff for Controllership of the Armed
Forces of the Philippines, and the Executive Vice President/Chief Operating Officer of
the Retirement and Separation Benefits System of the AFP. Aside from obtaining a
Bachelor of Science degree from the Philippine Military Academy, he obtained a Masters
Degree in Business Administration from De La Salle University. He has also taken up
advanced studies in the University of Asia and the Pacific and in Harvard Graduate
School of Business. He has extensive training in investment and portfolio management,
financial management and controllership from leading Philippine and international
financial institutions. He has been a member of the Board since 2001.
Ramon R. Atayde, 66, Filipino, is a Director of the Company. From September 1995 up
to May 1997, he was the Companys Vice-President for Corporate Planning and Business
Development. He also served as Director and Consultant for Marina Port Services, Inc.
and as President and Director for Ocean Terminals Services, Inc. and 7R Port Services,
Inc. He was also a Director and Vice-President of First Philippine Holdings Corp. He
pursued post-graduate studies at the Asian Institute of Management. He obtained a
Bachelor of Science degree in Chemical Engineering from De La Salle University in
1962. He has been with the Company since 1990. He has been a member of the Board
since 1999.
Lawrence Ho5, 39, Australian, is a Director of the Company. He is the Finance Director
of P & O Ports Ltd (now Dubai Ports World) since August 2006. He was P & O Ports
Ltd.s General Manager for Commercial (January 2006- August 2006), Finance,
Administration & IT Manager (April 2000 December 2005) [Secondment: Qingdao
Qianwan Container Terminal], Finance & Administration Manager, NSW (May 1997
March 2000), Finance & Administration Manager (April 1994 April 1997)
[Secondment: Shekou Container Terminal], and Finance Manager (November 1991March 1994) [Secondment: Tianjin Xingang Sinor Terminal]. Mr. Ho obtained his
Master's Degree in Business Administration and Post Graduate Certificate in
Management from Macquarie Graduate School of Management, Sydney, Australia. He
has a Certificate in Operations Management from Global Maritime and Transportation
School, US Merchant Marine Academy, Long Island, New York. Mr. Ho is a Certified
Practising Accountant who obtained his Bachelors Degree in Economics (Accounting)
from University of Sydney.
Roberto V. Garcia, 60, Filipino, is a Director of the Company. He is also the Chairman
and Chief Executive Officer of Tong Yang Corporation and Robert Famous Recipes, Inc.
since January 2004. From May 1997 until December 2003, he was the President of
Oriental and Motolite Corporation. He was also the President of Ramcar Incorporated
from May 1987 to December 2003. Before becoming President of Ramcar, he rose from
5
Mr. Ho was elected director on October 5, 2006 replacing Mr. Colin Childs.

the ranks beginning as Assistant to the President in 1970 to Marketing Manager in 1973
to Vice President for Marketing and Sales in 1974 and as Executive Vice President in
1979. He holds a Masters Degree in Business Management from the Asian Institute of
Management and obtained his Liberal Arts and Commerce degree from the De La Salle
University Manila. He has been a Director of the Company since 2006.
Cesar B. Bautista, 69, Filipino, is an independent Director of the Company. He was the
former Ambassador of the Philippines to the United Kingdom, Ireland and Iceland for the
period 1998 to 2003. He was formerly the Secretary of Trade and Industry during the
presidency of His Excellency Fidel V. Ramos. Prior to that, he was Chairman and CEO
of Unilever Philippines Inc. He now co-chairs the Presidential Task Force for Globally
Competitive Service Industries and the National Competitive Council; chairs the English
Speaking Union (Phil chapter); sits in the Board of the Institute of Corporate Directors,
European IT Services Foundation, Institute of Solidarity for Asia, Foundation for Global
Concerns, Foundation for IT in Education; is an independent Director in a number of
companies such as the Pilipinas Shell, ABS-CBN, BAYANTEL; PhilRatings Services;
Philam Insurance, Asian Terminal Inc, Pacific Activated Carbon Corp. St. James
Ventures Inc, and, is an advisory Director of Unilever (Phils.). He has been a Director of
the Company since 2006. He is currently the Chairman of the Companys Audit
Committee and a member of the Companys Compensation Committee, Executive
Committee and Nomination Committee.
Plaridel C. Garcia, 69, Filipino, is an independent director of the Company. He was
formerly Vice-Commander at the Philippine Navy before his retirement in December
1993 and Assistant Secretary for Plans & Programs of the Department of National
Defense (January to May 1998). He has considerable experience in logistics, finance,
planning and programming as well as extensive defense industry tours in the USA, UK
and various countries in Europe and Asia. He obtained his Bachelor of Science Degree
from the Philippine Military Academy and has attended the Masters in Public
Administration and Doctor of Public Administration programs of the University of the
Philippines. He likewise obtained a Master in Management degree from the Naval Post
Graduate School in Monterey, California, USA. He has been a member of the Board
since 2003.
Ma. Luisa E. Nograles, 47, Filipino, is the Vice-President and Chief Financial Officer of
the Company. She was formerly the Assistant Vice-President for Accounting of Belle
Corporation and the Vice-President Corporate Controller of Pepsi Cola Products Phils.,
Inc.. She graduated Magna Cum Laude at the University of the East with a degree
of Bachelor of Science in Business Administration, Major in Accounting. She is a
Certified Public Accountant. She has been with the Company since 2000.
Rodolfo G. Corvite, Jr., 47, Filipino, is the Vice-President for Administration and Legal
and Corporate Secretary. He has held various positions in the Company handling Legal,
Human Resources, Industrial Relations and Risk Management. He was a Law Partner of
Diaz, Corvite and Associates. He is a member of the Integrated Bar of the Philippines. He
obtained his Bachelor of Laws from the Ateneo de Manila University. He has been with
the Company since 1989.

Sean James L. Perez, 41, Filipino, is the Vice President for Domestic Terminal
Operations and Off-sites. Prior to this, he was the Companys Vice-President for
Domestic/Marketing and Commercial Services (September 2003 February 2007), VicePresident and Terminal Manager for Container Division (2002-2003), Vice-President for
Operations for South Harbor (2001-2002), Vice-President for General Stevedoring and
Marketing for South Harbor (2000-2001). Before joining the Company, he was the
General Manager of Jardine Davies Transport Services (1992 -1996). He obtained his
degree in Bachelor of Arts, Major in Economics from the University of Santo Tomas. He
has been with the Company since 1996.
Roberto Gifuni, 43, Argentine, is the Vice-President for Engineering. Prior to joining the
Company, he was the Engineering Manager of Port Newark Container Terminal (Port
Newark, New Jersey, USA) from 2001 to 2002 and of Cagliari International Container
Terminal (Cagliari, Sardinia, Italy) for the year 2000. He was Project
Engineer/Maintenance Planner Manager/Mechanical Manager of Terminales Rio de la
Plata SA (Buenos Aires, Argentina) from 1993-1999. He has been with the Company
since 2003.
Dallas C. Hampton, 48, Australian, is the Vice President for South Harbor Container
Terminal and General Stevedoring Division. Prior to joining the Company, he was
engaged as consultant for the Companys General Stevedoring Division. He was the
Transport Manager of P&O Ports West Swanson Terminal in Melbourne, Australia
from December 2002 - 2003. He was the Operations Manager of the P&O Ports Appleton
Terminal and Station Pier in Melbourne, Australia from 2000-2002. In 1996 - 2000 he
was the Terminal Manager of Northern Shipping & Stevedoring in Townsville,
Australia. He has been with the Company since August 2004.
There has been no family relationship among the directors, executive officers, and the persons
nominated to become directors or executive officers up to the fourth civil degree of consanguinity
or affinity.
All employees are expected to make reasonable contribution to the success of the business of the
Company.
The Company has no knowledge of events occurring during the past five years that are material to
an evaluation of the ability or integrity of the above-named directors or officers.
Pending Legal Proceedings
The Company has no knowledge that the current members of its Board of Directors or its
executive officers have been involved during the last five years up to the present in any legal case
affecting/involving themselves and/or their properties before any court of law or administrative
body in the Philippines or elsewhere, which are material to an evaluation of the ability or integrity
of any of the said directors or executive officers. Also, the said persons have not been convicted
by final judgment during the last five years up to the present of any offense punishable by the
laws of the Philippines or of the laws of any other country.

Item 10. Executive Compensation

1. Information as to the aggregate compensation paid or accrued during the last two (2)
calendar years and to be paid in the ensuing calendar year to the Companys CEO and
four (4) other most highly compensated executive officers and all other officers/directors
are as follows:
Chief Executive Officer and four most highly compensated executive officers:
2007*
2006**
2005***
SALARY
P35.92 M (Est.)
P36.55M
P34.82M
BONUS
P6.43M (Est)
P7.25M
P4.48M
TOTAL
P42.35M
P43.8M
P39.3M
Suhail Al Banna (EVP-Technical), Dallas Hampton (VP for South Harbor Container Terminal and
General Stevedoring Division), Roberto Gifuni (VP for Engineering), Eusebio H. Tanco (President),
Ma. Luisa Nograles (VP and Chief Financial Officer)
** Jeremy Rickcord (President/CEO), Dallas Hampton (VP for South Harbor Container Terminal and
General Stevedoring), Roberto Gifuni (VP for Engineering), Ma. Luisa Nograles (VP and Chief
Financial Officer), Rodolfo G. Corvite, Jr. (VP for Administration and Legal)
*** Jeremy Rickcord (President/CEO), Dallas Hampton (VP for South Harbor Container Terminal and
General Stevedoring), Roberto Gifuni (VP for Engineering), Ma. Luisa Nograles (VP and Chief
Financial Officer), Rodolfo G. Corvite, Jr. (VP for Administration and Legal)
All officers and directors as a group unnamed:

2007
2006
2005
SALARY
P59.99M (Est.)
P55.57M
P54.73M
BONUS
P9.19M (Est)
P9.04M
P6.21M
TOTAL
P69.18M (Est)
P64.61M
P60.94
2. The Directors do not receive compensation for services provided as a director other than
reasonable per diems for attendance at meetings of the Board. This is in accordance with
Article IV, Section 14 of the Companys By-Laws which states that (E)xcept for
reasonable per diems, directors, as such shall be entitled to receive only such
compensation as may be granted to them by the vote of the stockholders representing at
least two-thirds (2/3) of the outstanding capital stock at a regular or a special meeting of
the stockholders. In no case the total yearly compensation of the directors, as such,
exceed ten percent (10%) of the net income before income tax of the Corporation during
the preceding year.
The Board of Directors specified the duties and responsibilities of the elected Company
officers. Other officers, whose duties and responsibilities are set by the Management, are
considered regular employees of the Company.

Item 11. Security Ownership of Certain Beneficial Owners and Management (as of 31
March 2007)
1. Security Ownership of Certain Record and Beneficial Owners
The Company knows of no one who owns in excess of 5% of its common stock except as set
forth in the following table:
Title of
Class
Common
Common
Common
Common
Common
Common
Common
Common
Common
Name and Address of

Record Owner and
relationship with Issuer
P&O Australia Ltd.

160 Sussex Street
Sydney NSW
Australia
ATI Holdings, Inc.
6th Floor Don Pablo
Building, 114 Amorsolo St.,
Legaspi Village, Makati City
Pecard Group Holdings, Inc.
6/F Don Pablo Bldg.
114 Amorsolo Street Legaspi
Village, Makati City
Philippine Seaport, Inc.
6776 Ayala Avenue
Makati City
Daven Holdings, Inc.
18/F SBC Building
6776 Ayala Ave.
Makati City
PCD Nominee Corp. (NonFilipino)
G/F MKSE Bldg.
6767 Ayala Ave., Makati
City
SG Holdings, Inc.
18/F SBC Bldg.
6776 Ayala Ave.
Makati City
Kayak Holdings, Inc.
18/F SBC Building
Ayala Ave., Makati City
PCD Nominee Corp.
(Filipino)
G/F MKSE Bldg.
6767 Ayala Ave., Makati
City
Name of
Beneficial Owner
& Relationship
with Record
Owner
P&O Australia
Ltd.
Citizenship
Australian
Amount of
Record
Ownership
346,466,600
% of
Class
17.32%
ATI Holdings, Inc.
Australian
291,371,230
14.57%
Pecard Group
Holdings, Inc.
Filipino
198,203,968
9.91%
Philippine Seaport,
Inc.
Filipino
196,911,524
9.85%
Daven Holdings,
Inc.
Filipino
155,906,071
7.80%
(Beneficial
Owners unknown
to Issuer)
Non-Filipino
138,532,055
6.93%
SG Holdings, Inc.
Filipino
130,000,000
6.50%
Kayak Holdings,
Inc.
Filipino
112,000,000
5.60%
(Beneficial
Owners unknown
to Issuer)
Filipino
102,878,173
5.14%

2. Security Ownership of Management

Title of Class
Common
-do-do-do-do-do-do-do-do-do-do-do-
Name of Beneficial/Record
Owner
Eusebio H. Tanco
Ramon R. Atayde
Rodolfo G. Corvite, Jr.
Nilo B. Pea
Bryan T. Smith
Suhail Al Banna
Remy T. Tigulo
Plaridel C. Garcia
Roberto V. Garcia
Ma. Luisa E. Nograles
Lawrence Ho
Cesar B. Bautista
TOTAL
Amount and Nature

of Beneficial
Ownership
15,257,663/direct
133,633/direct
222,398/direct
100,000/direct
1/direct
1/direct
1/direct
1/direct
1/direct
1/direct
1/direct
1/direct
15,713,702
Citizenship
% of Class
Filipino
Filipino
Filipino
Filipino
Australian
UAE National
Filipino
Filipino
Filipino
Filipino
Australian
Filipino
.76 %
.01 %
.01 %
.01 %
.00 %
.00 %
.00 %
.00 %
.00 %
.00 %
.00 %
.00 %
.79 %
There was no change in control of the registrant during the year. There is no voting trust or
similar agreement with respect to any portion of the outstanding shares, nor any agreement which
may result in a change in control of the Company.
The Board of Directors generally has the power to vote on behalf of their respective corporate
stockholders. A proxy is usually designated to cast the vote for the stockholder.
Item 12. Certain Relationships and Related Transactions

The Company has a management agreement with P & O Management Services, Phils., Inc.
(POMS) for a period of five years or until August 31, 2010. Forty percent (40%) of the
outstanding capital stock of POMS is owned by P&O Australia Ltd. (POAL). As of March 31,
2007, POAL owns 17.32% of the total outstanding capital stock of ATI. In addition, POAL owns
100% of ATI Holdings, Inc. which owns 14.57% (as of March 31, 2007) of the outstanding
capital stock of ATI6.
Item 13. Corporate Governance

The Company has substantially complied with the provisions of its Manual on Corporate
Governance. As required by the Commission, a Certification of Compliance with the Manual was
submitted in January 2006.
Refer to Note 21 of the Audited Consolidated Financial Statements.

The Company commits to the principles and best practices of governance to attain its goals and
objectives. To ensure good governance, a system has been established that monitors and
evaluates the performance of the Company and its Management. The Companys Manual on
Corporate Governance contains the specific principles which institutionalize good corporate
governance in the organization.
The Company has not deviated from its Manual since the time of the self-rating process
previously conducted and reported to the Securities and Exchange Commission on July 31, 2003.
Continuous monitoring is being done by the Compliance Officer, Audit Committee, President and
Chief Financial Officer to ensure compliance.
Item 14. Exhibits and Reports on SEC Form 17-C

(a) Exhibits
Exhibit 1*
Exhibit 2
Exhibit 3
*
Quarterly Report (SEC Form 17-Q)

As of 30 September 2006
Subsidiary of the Company
Financial Statements and Schedules
Please refer to the 30 September 2006 Quarterly Report (SEC From 17-Q) submitted to
the Securities and Exchange Commission.
(b) Reports on SEC Form 17-C

Date Reported
Item(s) Reported
August 1, 2006
October 6, 2006
December 20, 2006
Resignation of Mr. Colin J. Childs (Director)

Election of Mr. Lawrence Ho (Director)
Certification of Attendance of Directors during
Board Meetings for the Year 2006
Exhibit 2
SUBSIDIARY OF THE COMPANY

ATI Batangas, Inc.
Exhibit 3
CONSOLIDATED FINANCIAL STATEMENTS AND

SUPPLEMENTARY SCHEDULES
COVER SHEET
1 3 3 6 5 3
SEC Registration Number
A S I A N
T E RM I N A L S ,
I N C .
A N D
S U B S I D I
A R Y
A .
B o n i f a c i o
D r i v e ,
P o r t
A r e a ,
M a
n i l a
(Business Address: No. Street City/Town/Province)
Ma. Luisa Nograles
528-6000
(Contact Person)
(Company Telephone Number)
1 2
3 1
A A C F S
Month
Day
(Form Type)
Month
(Fiscal Year)
Day
(Annual Meeting)
(Secondary License Type, If Applicable)
Dept. Requiring this Doc.
Amended Articles Number/Section

Total Amount of Borrowings
Total No. of Stockholders
Domestic
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
*SGVMC209702*
SGV & CO
SyCip Gorres Velayo & Co.

6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891-0307

Fax:
(632) 819-0872
www.sgv.com.ph
BOA/PRC Reg. No. 0001
SEC Accreditation No. 0012-FR-1
INDEPENDENT AUDITORS REPORT
The Stockholders and the Board of Directors

Asian Terminals, Inc.
A. Bonifacio Drive
Port Area, Manila
We have audited the accompanying consolidated financial statements of Asian Terminals, Inc. and
Subsidiary, which comprise the consolidated balance sheets as at December 31, 2006 and 2005, and
the consolidated statements of income, consolidated statements of recognized income and expense and
consolidated statements of cash flows for each of the three years in the period ended December 31,
2006, and a summary of significant accounting policies and other explanatory notes.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with Philippine Financial Reporting Standards. This responsibility includes: designing,
implementing and maintaining internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error; selecting
and applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with Philippine Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
SGV & Co is a member practice of Ernst & Young Global
*SGVMC209702*
ASIAN TERMINALS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
December 31
2005
2006
(In Thousands)
ASSETS
Current Assets
Cash and cash equivalents (Notes 7 and 27)
Trade and other receivables - net (Notes 8 and 27)
Spare parts and supplies - at net realizable value
Prepayments (Notes 9 and 12)
Total Current Assets
Noncurrent Assets
Investment in an associate - at equity (Note 10)
Property and equipment - net (Note 11)
Other financial assets (Notes 12 and 27)
Deferred tax assets - net (Note 13)
Other noncurrent assets (Notes 12 and 14)
Total Noncurrent Assets
TOTAL ASSETS
P
=1,709,188
329,984
119,886
99,351
2,258,409
=1,748,128
P
437,252
93,081
100,143
2,378,604
29,114
6,500,963
30,176
165,910
56,803
6,782,966
25,671
6,757,771
32,288
114,650
105,628
7,036,008
P
=9,041,375
=9,414,612
P
LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables (Notes 15, 21 and 27)
Provisions for claims (Note 16)
Taxes payable
Interest-bearing loans and other financial liabilities
(Notes 17 and 27)
Total Current Liabilities
P
=763,213
56,437
55,552
=656,006
P
50,992
64,862
560,820
1,436,022
493,985
1,265,845
Noncurrent Liabilities
(Notes 17 and 27)
2,937,100
3,772,912
2,000,000
264,300
2,518,743
(115,500)
4,667,543
2,000,000
264,300
2,136,402
(26,232)
4,374,470
710
4,668,253
1,385
4,375,855
P
=9,041,375
=9,414,612
P
Equity Attributable to Equity Holders of the Parent (Note 18)

Capital stock
Additional paid-in capital
Retained earnings
Other reserves
Minority Interests (Note 18)
Total Equity
TOTAL LIABILITIES AND EQUITY
See accompanying Notes to Consolidated Financial Statements.
*SGVMC209702*

CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31

2005
2004
2006
(In Thousands, Except Per Share Data)
REVENUES
P
=4,181,156
=4,081,625
P
=3,577,213
P
COSTS AND EXPENSES (Note 19)
(2,683,613)
(2,755,127)
(2,674,356)
(464,824)
86,106
39,751
(24,154)
(483,413)
45,121
30,818
(9)
(430,756)
24,845
40,030
919,015
536,976
233,745
21,650
255,395
162,221
3,860
166,081
P
=782,571
=663,620
P
=370,895
P
P
=782,341
230
P
=782,571
=663,497
P
123
=663,620
P
=370,837
P
58
=370,895
P
P
=0.39
=0.33
P
=0.18
P
OTHER INCOME AND EXPENSES

Finance cost (Note 20)
Finance income (Note 20)
Net gains on derivative instruments
Others - net (Note 20)
INCOME BEFORE INCOME TAX
PROVISION FOR (BENEFIT FROM) INCOME
TAX (Note 13)
Current
Deferred
NET INCOME
Attributable To:
Equity holders of the parent
Minority interests
Basic/Diluted Earnings Per Share Attributable

to Equity Holders of the Parent (Note 23)
1,134,422
354,985
(3,134)
351,851
*SGVMC209702*

CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME
AND EXPENSE
2006

2005
2004
(In Thousands)
Actuarial gains (losses) (Note 22)

Fair value loss on cash flow hedges (Note 27)
Decline in fair market value of available-for-sale
investments
Tax on items taken directly to equity (Note 13)
Net income (loss) recognized directly in equity
Net income for the year
Total recognized income and expense for the year
Attributable to:
Equity holders of the parent
Minority interests
(P
=92,366)
(39,317)
(P
=96,921)
(36,071)
=92,649
P
(5,820)
48,126
(89,377)
782,571
P
=693,194
43,768
(89,224)
663,620
=574,396
P
(29,648)
63,001
370,895
=433,896
P
P
=693,073
121
P
=693,194
=574,275
P
121
=574,396
P
=433,827
P
69
=433,896
P
*SGVMC209702*

CONSOLIDATED STATEMENTS OF CASH FLOWS

2005
2004
2006
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax
Adjustments for:
Depreciation and amortization (Notes 11 and 19)
Net unrealized foreign exchange loss (gain)
Write-down of spare parts and supplies to net
realizable value
Loss (gain) on disposal of property and equipment
Amortization of noncurrent prepaid rental
Equity in net earnings of an associate (Note10)
Impairment (reversal of) provision on receivables
Operating income before working capital changes
Decrease (increase) in:
Trade and other receivables
Spare parts and supplies
Prepayments
Increase (decrease) in:
Trade and other payables
Provisions for claims
Taxes payable
Net cash generated from operations
Finance cost paid
Income tax paid
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (Note 11)
Finance income received
Proceeds from disposal of property and equipment
Dividends received
Decrease in deposits
Acquisition of minority interests (Note 3)
Contribution to retirement fund (Note 22)
Decrease in available-for-sale investments
Decrease in other investments - at cost
Net cash used in investing activities
P
=1,134,422
=919,015
P
=536,976
P
525,848
464,824
(86,106)
46,781
(39,751)
501,218
483,413
(45,121)
(30,818)
528,007
430,756
(24,845)
(3,581)
11,233
(7,969)
7,599
(6,121)
2,688
2,053,448
10,678
641
(2,869)
(151)
1,836,006
10,533
1,803
(5,629)
18,364
1,492,384
116,325
(38,038)
710
54,795
554
22,688
(9,183)
(4,785)
98,314
64,531
5,445
(17,380)
2,185,041
(468,638)
(346,915)
1,369,488
(124,257)
22,419
18,314
1,830,519
(456,028)
(222,301)
1,152,190
(129,102)
727
3,863
1,452,218
(386,399)
(138,635)
927,184
(283,644)
85,129
22,573
2,678
810
(678)
(173,132)
(223,781)
44,211
12,563
5,357
483
(254,631)
4,436
(411,362)
(538,349)
22,099
6,054
5,357
71,292
(46,026)
244
(479,329)
(Forward)
*SGVMC209702*
-2Years Ended December 31

2005
2004
2006
(In Thousands)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from:
Long-term debt
Loans payable
Payments of:
Long-term debt
Cash dividends
Cash dividends to minority interests
Debt issue costs
Interest cap fees
Loans payable
Obligations under finance lease
Net cash provided by (used in) financing activities
NET INCREASE IN CASH
AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
P
=
(775,000)
(400,000)
(473)
(1,175,473)
20,883
(59,823)
=1,000,000
P
=1,500,000
P
380,000
(897,175)
(320,000)
(308)
(11,094)
(8,286)
(236,863)
(477,175)
(320,000)
(630,000)
(81,596)
371,229
503,965
819,084
3,581
CASH AND CASH EQUIVALENTS

AT BEGINNING OF YEAR
1,748,128
1,244,163
421,498

AT END OF YEAR (Note 7)
P
=1,709,188
=1,748,128
P
=1,244,163
P
*SGVMC209702*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate Information
Asian Terminals, Inc. (ATI or the Parent Company) and ATI Batangas, Inc. (ATIB), its
subsidiary, (collectively referred to as the Company) are incorporated in the Philippines and
registered with the Philippine Securities and Exchange Commission (SEC). The Company
operates and manages the South Harbor Port of Manila and the Port of Batangas in Batangas City.
Its Non-Port business consists of a logistics business in Calamba, Laguna and a bulk grain
terminal in Mariveles, Bataan. The registered office address of the Parent Company is
A. Bonifacio Drive, Port Area, Manila.
P & O Management Services Phils., Inc. (POMS) manages ATI by virtue of a management
agreement with ATI (see Note 21). Forty percent of the outstanding capital stock of POMS is
owned by P&O Australia, Ltd. (POAL). POAL directly owns 17.32% of the total outstanding
capital stock of ATI. In addition, POAL owns 100% of ATI Holdings, Inc., which owns 14.57%
of the outstanding capital stock of ATI.
The accompanying consolidated financial statements were authorized for issuance by the Board of
Directors (BOD) on March 2, 2007.
2. Operating Contracts
Following are the Companys operating contracts:
a. South Harbor, Port of Manila
Exclusive right to manage, operate and develop South Harbor for a period of 15 years from
1992. Right was extended for another 6 years, or until 2013 renewable for another 25 years
upon expiration under terms to be mutually agreed upon with the Philippine Ports Authority
(PPA).
b. Mariveles Grain Terminal (MGT)
Right to develop and operate a bulk grain terminal in Mariveles, Bataan for a period of
20 years until 2013, renewable for another 20 years upon mutual agreement of PPA and ATI.
Accordingly, a lease agreement with the province of Bataan covering the land occupied by the
bulk grain terminal for a similar period was contracted.
c. Port of Batangas
The exclusive right to manage and render arrastre, stevedoring, storage and related cargo
handling services at the Port of Batangas by ATIB for Phase I was renewed on October 20,
2005 for a period of 10 years until 2015, renewable for another 10 years upon mutual
agreement of PPA and ATIB. The contract with the PPA includes cargo handling and
operation and management of a passenger terminal.
*SGVMC209702*
-2On October 2, 2006, the one-year permit granted by PPA to ATIB to manage Phase II of the
Port of Batangas expired. The PPA is in the process of preparing the terms of reference for
bidding of Phase II.
d. Domestic Terminal
Right to manage and operate a domestic terminal at the South Harbor until 2013.
In April 2002, the Company entered into a memorandum of agreement (MoA) with Aboitiz
Transport Systems (ATS, formerly William, Gothong & Aboitiz, Inc.). Under the terms of the
MoA, the Company renders stevedoring, arrastre, storage, container freight station, passenger
terminal and other related terminal services in favor of ATS. In return, ATS pays domestic
tariff for the services in accordance with the terms of the MoA. Also, ATS warrants 85% of
its daily passenger and cargo volumes and any such volumes controlled by ATS (whether
directly or indirectly) passing through the Port of Manila will go to the Companys facility in
the South Harbor. The contract is effective for a period of five years until January 2008 and
renewable for another five years under such terms and conditions as may be agreed upon by
the parties in writing. If the total term of the MoA is less than ten years, then ATS shall pay
the penalty equivalent to unamortized reimbursement of capital expenditures and related costs
incurred by the Company in the development of the domestic terminal at the South Harbor.
3. Basis of Preparation
The consolidated financial statements have been prepared on a historical cost basis, except for
derivative financial instruments and available-for-sale investments that have been measured at fair
value.
The consolidated financial statements are presented in Philippine pesos (P
= or PHP), the
Companys functional and presentation currency. All values are rounded to the nearest thousand
pesos, unless otherwise indicated.
Statement of Compliance
The consolidated financial statements of the Company have been prepared in compliance with
Philippine Financial Reporting Standards (PFRS).
Basis of Consolidation
The consolidated financial statements comprise the financial statements of ATI and ATIB as of
December 31 of each year. ATIB is a 98.82% owned subsidiary in 2006, ownership of which
increased from 98.46% in 2005. The financial statements of ATIB are prepared for the same
financial reporting year as ATI, using consistent accounting policies.
All intra-group balances, transactions, income and expenses and profits and losses resulting from
intra-group transactions that are recognized in assets, if any, are eliminated in full.
ATIB is fully consolidated from the date of acquisition, being the date on which ATI obtained
control, and continues to be consolidated until the date that such control ceases.
*SGVMC209702*
-3Minority interests represent the portion of profit and loss and net assets in ATIB not held by ATI
and are presented separately in the consolidated statement of income and within equity in the
consolidated balance sheet, separately from parent shareholders equity. Acquisitions of minority
interests are accounted for using the parent entity extension method, whereby, the difference
between the consideration and the book value of the share of the net assets acquired is recognized
as goodwill.
4. Summary of Significant Accounting Policies

The accounting policies adopted are consistent with those of the previous financial year except as
follows:
Amendments to PFRSs and Philippine Interpretations Effective in 2006
during the year:
Philippine Accounting Standard (PAS) 19, Amendments - Employee Benefits;

PAS 21, Amendment - The Effects of Changes in Foreign Exchange Rates;
PAS 39, Amendments - Financial Instruments: Recognition and Measurement and
Philippine Interpretation IFRIC 4, Determining whether an Arrangement contains a Lease.
Philippine Interpretation Early Adopted

The Company has early adopted Philippine Interpretation IFRIC 9, Reassessment of Embedded
Derivatives.
The principal effects of these changes, if any, are as follows:

2006, the Company adopted the amendments to PAS 19. As a result, additional disclosures
are made providing information about trends in assets and liabilities in the defined benefit
plans and the assumptions underlying the components of the defined benefit cost. This change
resulted in additional disclosures being included for the years ended December 31, 2006 and
2005. The Company also adopted the new option offered to recognize actuarial gains and
losses outside of the statement of income. As a result, the Company presented actuarial gains
and losses in the consolidated statement of recognized income and expense.
*SGVMC209702*
-4

Amendment for Net Investment in a Foreign Operation. This amendment states that all
exchange differences arising from a monetary item that forms part of the Companys net
investment in a foreign operation are recognized in a separate component of equity in the
consolidated financial statements regardless of the currency in which the monetary item is
denominated. As the Company does not have investment in a foreign operation, this change
has no impact on the Companys consolidated financial statements.

with PAS 37, Provisions, Contingent Liabilities and Contingent Assets and the amount
initially recognized less, when appropriate, cumulative amortization recognized in accordance
with PAS 18, Revenue. This amendment did not have an effect on the consolidated
financial statements.
Amendment for Cash Flow Hedge Accounting of Forecast Intragroup Transactions. This
transaction and that the foreign currency risk will affect the consolidated statement of income.
As the Company currently has no such transactions, the amendment did not have an effect on
the consolidated financial statements.
Amendment for the Fair Value Option. This amended PAS 39 to restrict the use of the option
to designate any financial asset or any financial liability to be measured at fair value through
profit or loss. This amendment has no significant impact on the consolidated financial
statements.

The Company adopted IFRIC Interpretation 4 as of January 1, 2006, which provides guidance
in determining whether arrangements contain a lease to which lease accounting must be
applied. This interpretation has no significant impact on the Companys consolidated
financial statements as of December 31, 2006.

that significantly modifies the cash flows. This interpretation has no impact on the
Companys consolidated financial statements as of December 31, 2006.
*SGVMC209702*
-5Future Changes in Accounting Policies

The Company did not early adopt the following PFRS and Philippine Interpretations that have
been approved, but are not yet effective:
PFRS 7, Financial Instruments - Disclosures, and the complementary amendment to PAS 1,

Presentation of Financial Statements - Capital Disclosures (effective for annual periods
beginning on or after January 1, 2007)
PFRS 7 introduces new disclosures to improve the information about financial instruments. It
requires the disclosure of qualitative information about exposure to risks arising from financial
instruments, including specified minimum disclosures about credit risk, liquidity risk and
market risk, including sensitivity analysis to market risk. It replaces disclosure requirements
in PAS 32, Financial Instruments - Disclosure and Presentation. It is applicable to all
entities that report under PFRS. The amendment to PAS 1 introduces disclosures about the
level of an entitys capital and how it manages capital. The Company will apply PFRS 7 and
the amendment to PAS 1 in 2007.
PFRS 8, Operating Segments (effective for annual periods beginning on or after January 1,
2009)
This PFRS adopts a management approach to reporting segment information. PFRS 8 will
replace PAS 14, Segment Reporting, and is required to be adopted only by entities whose
debt or equity instruments are publicly traded, or are in the process of filing with the SEC for
purposes of issuing any class of instruments in a public market. The Company will apply
PFRS 8 in 2009.
Philippine Interpretation IFRIC 7, Applying the Restatement Approach under PAS 29,
Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning
on or after March 1, 2006)
This interpretation provides guidance on how to apply the requirements of PAS 29 in a
reporting period in which an entity identifies the existence of hyperinflation in the economy of
its functional currency, when that economy was not hyperinflationary in the prior period, and
the entity therefore restates its financial statements in accordance with PAS 29. The Company
does not expect this interpretation to have a significant impact on the consolidated financial
statements.
Philippine Interpretation IFRIC 8, Scope of PFRS 2 (effective for annual periods beginning
on or after May 1, 2006)
This interpretation requires PFRS 2 to be applied to any arrangement where equity instruments
are issued for consideration which appears to be less than fair value. The Company does not
expect this interpretation to have a significant impact on the consolidated financial statements.
*SGVMC209702*
-6
Philippine Interpretation IFRIC 10, Interim Financial Reporting and Impairment (effective
for annual periods beginning on or after November 1, 2006)
This interpretation prohibits the reversal of impairment losses on goodwill and available-forsale equity investments recognized in the interim financial reports even if impairment is no
longer present at the annual balance sheet date. The Company does not expect this
interpretation to have a significant impact on the consolidated financial statements.
Philippine Interpretation IFRIC 11, IFRS 2 - Group and Treasury Share Transactions
(effective for annual periods beginning on or after March 1, 2007)
This interpretation requires arrangements whereby an employee is granted rights to an entitys
equity instruments to be accounted for as an equity-settled scheme by the entity even if the
entity chooses or is required to buy those equity instruments (e.g., treasury shares) from
another party, or the shareholder(s) of the entity provide the equity instruments needed. It also
provides guidance on how subsidiaries, in their separate financial statements, account for such
schemes when their employees receive rights to the equity instruments of the parent. The
Company does not expect this interpretation to have a significant impact on the consolidated
Philippine Interpretation IFRIC 12, Service Concession Arrangements, (effective for annual
periods beginning on or after January 1, 2008)
This interpretation covers contractual arrangements arising from private entities providing
public services. The Company will evaluate its operating contracts with the PPA to determine
the applicability of this interpretation in 2008.
Cash and Cash Equivalents

Cash and cash equivalents in the consolidated balance sheet comprise cash in banks and on hand
and short-term investments with an original maturity of three months or less.
Spare Parts and Supplies
Spare parts and supplies are stated at the lower of cost or net realizable value (current replacement
cost). Cost is determined using the weighted average method.
Investment in an Associate
The Parent Companys 35.7% investment in its associate, South Cotabato Integrated Port Services,
Inc. (SCIPSI), is accounted for under the equity method. An associate is an entity in which the
Parent Company has significant influence but is neither a subsidiary nor a joint venture of the
Parent Company.
Under the equity method, the investment in the associate is carried in the consolidated balance
sheet at cost plus post-acquisition changes in the Companys share in net assets of the associate.
Goodwill relating to an associate is included in the carrying amount of the investment and is not
amortized. After application of the equity method, the Company determines whether it is
necessary to recognize any additional impairment loss with respect to the Companys net
investment in the associate. The consolidated statement of income reflects the share in the results
of operations of the associate. When there has been a change recognized directly in the equity of
the associate, the Company recognizes its share of any changes and discloses this, when
applicable, in the consolidated statement of recognized income and expense.
*SGVMC209702*
-7The reporting dates of the associate and the Parent Company are identical and the associates
accounting policies conform to those used by the Parent Company for like transactions and events
in similar circumstances.
Property and Equipment
Property and equipment are stated at cost excluding the costs of day-to-day servicing, less
accumulated depreciation, amortization and any impairment in value. Such cost includes the cost
of replacing part of such property and equipment when that cost is incurred if the recognition
criteria are met. Depreciation and amortization are computed using the straight-line method, net
of residual values, over the estimated useful lives of the assets, as follows:
Port facilities and equipment
Bulk grain terminal
Leasehold improvements
Furniture, fixtures and equipment
Transportation and other equipment
2 to 25 years or life of the operating contract,

whichever is shorter
2 to 40 years or term of the lease,
5 years
4 to 5 years
The residual values, useful lives and depreciation method are reviewed periodically and adjusted if
appropriate, at each financial year, to ensure that the period and method of depreciation and
amortization are consistent with the expected pattern of economic benefits from items of property
and equipment.
The carrying values of property and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable.
Port facilities and equipment includes spare parts that the Company expects to use for more than
one period. These are not depreciated until put into operational use however, these are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of
the spare parts may not be recoverable.
Construction in-progress represents properties under construction and is stated at cost. This
includes cost of construction, equipment and other direct costs. Construction in-progress is not
depreciated until such time that the relevant assets are substantially completed and put into
operational use.
An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in the consolidated statement of income in the year the asset is derecognized.
The Company assesses at each reporting date whether there is an indication that an item of
property and equipment may be impaired or previously recognized impairment losses may no
longer exist or may have decreased. If any such indication exists, the Company makes an estimate
of the assets recoverable amount. An assets recoverable amount is the higher of an assets or
cash-generating units fair value less costs to sell and its value in use and is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of
*SGVMC209702*
-8those from other assets or groups of assets. Where the carrying amount of an item of property and
equipment exceeds its recoverable amount, such asset is considered impaired and is written down
to its recoverable amount. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Impairment losses of
continuing operations, if any, are recognized in the consolidated statement of income in those
expense categories consistent with the function of the impaired asset.
A previously recognized impairment loss is reversed only if there has been a change in the
estimates used to determine the assets recoverable amount since the last impairment loss was
recognized. If that is the case, the carrying amount of the asset is increased to its recoverable
amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognized for the asset in prior
years. Such reversal is recognized in profit or loss. After such a reversal, the depreciation charge
is adjusted in future periods to allocate the assets revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the
cost of the business combination over the Companys interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment,
annually or more frequently if events or changes in circumstances indicate that the carrying value
may be impaired.
Impairment is determined by assessing the recoverable amount of the investment to which the
goodwill relates. Where the recoverable amount is less than the carrying amount of the
investment, an impairment loss is recognized. Where part of the operation within the investment
is disposed of, the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative values of the operation disposed
of and the portion of the cash-generating unit retained.
Pension
The Company has funded, defined benefit pension plans, administered by a common retirement
trustee, covering their permanent employees. The cost of providing benefits under the defined
benefit plans is determined separately for each plan using the projected unit credit actuarial
valuation method.
All actuarial gains and losses in the period in which they occur are recognized outside profit or
loss in the consolidated statement of recognized income and expense.
The past service cost is recognized as an expense on a straight-line basis over the average period
until the benefits become vested. If the benefits are already vested immediately following the
introduction of, or changes to, a pension plan, past service cost is recognized immediately.
*SGVMC209702*
-9The defined benefit asset or liability comprises the present value of the defined benefit obligation
less past service cost not yet recognized and less the fair value of plan assets out of which the
obligations are to be settled directly. The value of any asset is restricted to the sum of any past
service cost not yet recognized and the present value of any economic benefits available in the
form of refunds from the plan or reductions in the future contributions to the plan.
Financial Instruments
Financial Assets and Liabilities
Accounting Policies Effective January 1, 2005. Financial assets and liabilities are recognized
initially at fair value. Transaction costs are included in the initial measurement of all financial
assets and liabilities, except for financial instruments measured at fair value through profit or loss
(FVPL).
The fair value of investments that are actively traded in organized financial markets is determined
by reference to quoted market bid prices at the close of business on the balance sheet date. For
investments where there is no active market, fair value is determined using appropriate valuation
techniques.
The Company recognizes a financial asset or liability in the consolidated balance sheet when it
becomes a party to the contractual provisions of the instrument. A financial liability (or a part of a
financial liability) is derecognized when the obligation is extinguished. In the case of a regular
way purchase or sale of financial assets, recognition and derecognition, as applicable, is done
using settlement date accounting.
Financial instruments are classified as liability or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or
a component that is a financial liability, are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity net of any
related income tax benefits. Financial instruments are offset when there is a legally enforceable
right to offset and intention to settle either on a net basis or to realize the asset and settle the
liability simultaneously.
Financial assets are classified into the following categories: financial asset at FVPL, loans and
receivables, held-to-maturity (HTM) investments, and available-for-sale (AFS) investments. The
Company determines the classification at initial recognition and, where allowed and appropriate,
re-evaluates this designation at every reporting date.
a. Financial Asset at FVPL
A financial asset is classified in this category if acquired principally for the purpose of selling
or repurchasing in the near term or upon initial recognition, it is designated by the
management as FVPL. Financial assets at FVPL are designated by management on initial
recognition when the following criteria are met:
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on
them on a different basis; or
*SGVMC209702*
- 10
The assets are part of a group of financial assets, which are managed and their
performance evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy, or
The financial instrument contains an embedded derivative, unless the embedded derivative
does not significantly modify the cash flows or it is clear, with little or no analysis, that it
would not be separately recorded.
Derivatives are also categorized as held at FVPL, except those derivatives designated and
considered as effective hedging instruments.
Financial assets at FVPL are recorded in the balance sheet at fair value and are classified as
current assets. Changes in fair value of such assets are accounted for in the consolidated
statement of income. Interest earned and dividend income are recorded in the consolidated
statement of income.
Classified as financial assets at FVPL are the Parent Companys embedded derivatives
(see Note 27).
b. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
and are not quoted in an active market. Such assets are carried at cost or amortized cost in the
consolidated balance sheet. Amortization is determined using the effective interest method
and is included in the interest income in the consolidated statement of income. The losses
arising from impairment of such financial assets are recognized in the consolidated statement
of income.
Classified as loans and receivables are the Companys trade and other receivables
(see Note 8).
c. HTM Investments
HTM investments are quoted non-derivative financial assets with fixed or determinable
payments and fixed maturities for which the Companys management has the positive
intention and ability to hold to maturity. After initial measurement, these investments are
subsequently measured at amortized cost using the effective interest rate method, less
impairment in value. Gains and losses are recognized in income when the HTM investments
are derecognized and impaired, as well as through the amortization process.
The Company has no HTM investments as of December 31, 2006 and December 31, 2005.
d. AFS Investments
AFS investments are those which are designated as such or do not qualify to be classified or
designated as FVPL, HTM or loans and receivables.
After initial measurement, AFS investments are subsequently measured at fair value. The
effective yield component of AFS debt securities, as well as the impact of any restatement on
foreign currency-denominated AFS debt securities, is reported in earnings. The unrealized
*SGVMC209702*
- 11 gains and losses arising from the fair valuation of AFS investments are excluded net of tax
from reported earnings and are reported under other reserves in the equity section of the
consolidated balance sheet, until the investment is derecognized or until the investment is
determined to be impaired at which time the cumulative gain or loss previously reported in
equity is included in the consolidated statement of income.
Where the Company holds more than one investment in the same security these are deemed to
be disposed of on a first-in first-out basis. Interest and dividend earned and losses arising
from impairment of such investments are recognized in the consolidated statement of income.
Classified as AFS investments are the Companys investments in ordinary shares
(see Note 12).
e. Derivative Financial Instruments
The Company uses interest rate cap options and interest rate swaps to manage its interest rate
exposures on floating rate peso debt. In addition, the Company has identified and bifurcated
embedded foreign currency derivatives from certain non-financial contracts.
Derivative financial instruments are recognized and measured in the consolidated balance
sheet at fair values. The resulting gain or loss will depend on whether the derivative is
designated as a hedge of an identified risk and qualifies for hedge accounting treatment. The
objective of hedge accounting is to match the impact of the hedged item and the hedging
instrument in the consolidated statement of income. In applying hedge accounting, an entity
must comply with such requirements as the designation of the derivative to an identified risk
exposure, preparation of adequate hedge documentation, assessment and measurement of
hedge effectiveness testing, and in the case of a cash flow hedge, establishing the probability
of occurrence of the forecasted transaction.
Upon inception of the hedge, the Company documents the relationship between the hedging
instrument and the hedged item, its risk management objective and strategy for undertaking
various hedge transactions, the details of the hedging instrument and the hedged item, and the
hedge effectiveness assessment methodology (both at hedge inception and on an ongoing
basis). Effectiveness on the hedge is periodically measured, with any ineffectiveness being
reported immediately in the consolidated statement of income.
Derivative financial instruments can be designated either as a: (a) hedge of the fair value of a
recognized fixed rate asset, liability or unrecognized firm commitment (fair value hedge); or
(b) hedge of the cash flow variability of recognized floating rate asset and liability or
forecasted transaction (cash flow hedge).
Cash Flow Hedges. A cash flow hedge is a hedge of the exposure to variability in future cash
flows related to a recognized asset, liability or a forecasted transaction. Changes in the fair value
of a hedging instrument that qualifies as a highly effective cash flow hedge are recognized in
Other reserves account, which is a component of equity. Any hedge ineffectiveness is
immediately recognized in the consolidated statement of income.
*SGVMC209702*
- 12 Where the forecasted transaction results in the recognition of an asset or liability, the gains and
losses previously included in other reserves are included in the initial measurement of the asset or
liability. Otherwise, amounts recorded in equity are transferred to the consolidated statement of
income in the same period in which the forecasted transaction affects the consolidated statement of
income.
Hedge accounting is discontinued prospectively when the hedge ceases to be highly effective.
When hedge accounting is discontinued, the cumulative gain or loss on the hedging instrument
that has been reported in other reserves is retained in equity until the hedged transaction impacts
earnings. When the forecasted transaction is no longer expected to occur, any net cumulative gain
or loss previously reported in other reserves is recognized immediately in the consolidated
Fair Value Hedges. Fair value hedges are hedges of the Companys exposure to changes in the
fair value of a recognized asset or liability or an unrecognized firm commitment that could affect
profit or loss. For fair value hedges, the carrying amount of the hedged item is adjusted for gains
and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains
and losses from both are taken to profit or loss.
For fair value hedges relating to items carried at amortized cost, the adjustment to carrying value
is amortized through profit or loss over the remaining term to maturity. Any adjustment to the
carrying amount of a hedged financial instrument for which the effective interest rate method is
used is amortized to profit or loss.
The Company discontinues fair value hedge accounting if the hedging instrument expires or is
sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the
Company revokes the designation.
Derivative Instruments Not Accounted for as Hedges. For derivatives that are not designated or do
not qualify as hedges, changes in the fair values of such transactions are recognized in the
consolidated statement of income.
Derecognition of financial assets and liabilities
Financial Assets. A financial asset (or, where applicable a part of a financial asset or part of a
group of financial assets) is derecognized where:
the rights to receive cash flows from the asset have expired; or
the Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a pass-through
arrangement; or
the Company has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained the risk and rewards of the asset but has transferred the control of the asset.
*SGVMC209702*
- 13 Where the Company has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, and has neither transferred nor retained substantially all the risks
and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of
the Companys continuing involvement in the asset.
Financial Liabilities. A financial liability is derecognized when the obligation under the liability
is discharged or cancelled or expires. Where an existing financial liability is replaced by another
from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying
amounts is recognized in profit or loss.
Impairment of Financial Assets
The Company assesses at each balance sheet date whether a financial asset or group of financial
assets is impaired.
Assets Carried at Amortized Cost. If there is objective evidence that an impairment loss on loans
and receivables carried at amortized cost has been incurred, the amount of the loss is measured as
the difference between the assets carrying amount and the present value of estimated future cash
flows discounted at the financial assets original effective interest rate. The carrying amount of
the asset shall be reduced either directly or through use of an allowance account. The amount of
the loss shall be recognized in the consolidated statement of income.
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial assets with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in
a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in the consolidated statement of income, to the extent that the carrying value of the
asset does not exceed its amortized cost at the reversal date.
Assets Carried at Cost. If there is objective evidence that an impairment loss on an unquoted
equity instrument that is not carried at fair value because its fair value cannot be reliably
measured, or on a derivative asset that is linked to and must be settled by delivery of such an
unquoted equity instrument has been incurred, the amount of the loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset.
*SGVMC209702*
- 14 Available-for-Sale Financial Assets. If an available-for-sale asset is impaired, an amount

comprising the difference between its cost (net of any principal payment and amortization) and its
current fair value, less any impairment loss previously recognized in the consolidated statement of
income, is transferred from equity to the consolidated statement of income. Reversals in respect
of equity instruments classified as available-for-sale are not recognized in the consolidated
statement of income. Impairment losses on debt instruments are reversed through the consolidated
statement of income, if the increase in fair value of the instrument can be objectively related to an
event occurring after the impairment loss was recognized in profit or loss.
Interest-bearing Loans and Borrowings
All loans and borrowings are initially recognized at the fair value of the consideration received
less directly attributable transaction costs (referred to herein as debt issue costs). Debt issue
costs are amortized over the life of the debt instrument using the effective interest rate method.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the effective interest rate method.
Gains and losses are recognized in the consolidated statement of income when the liabilities are
derecognized as well as through the amortization process.
Operating Leases
These are leases where lessor retains substantially all the risks and benefits of ownership of the
assets. Lease payments are recognized as an expense in the consolidated statement of income on a
straight-line basis over the lease term.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Company expects some or all of a provision to be reimbursed, the
reimbursement is recognized as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the consolidated statement of
income net of any reimbursement. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as a borrowing cost.
Revenue
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received, excluding sales taxes or duty. The following are specific recognition
policies of the Company:
Revenues from cargo handling operations are recognized when services are rendered.
Passenger terminal fees are recognized upon sale of terminal tickets.
Finance income is recognized on a time proportion basis that reflects the effective yield on the
investment.
*SGVMC209702*
- 15 Borrowing Costs
Borrowing costs are generally expensed as incurred. Borrowing costs are capitalized if they are
directly attributable to the acquisition or construction of a qualifying asset. Capitalization of
borrowing costs commences when the activities to prepare the asset are in progress and
expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the
assets are substantially ready for their intended use and it is probable that they will result in future
economic benefits to the Company. If the carrying amount of the asset exceeds its recoverable
amount, an impairment loss is recognized.
Foreign Currency Transaction
The consolidated financial statements are presented in PHP, which is the Companys functional
and presentation currency. Transactions in foreign currencies are initially recorded in the
functional currency rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency rate of exchange
ruling at the balance sheet date. All differences are taken to the consolidated statement of income.
Income Taxes
Current Tax. Current tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered, from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted at the balance
sheet date.
Deferred Tax. Deferred income tax is provided, using the balance sheet liability method, on all
temporary differences at the balance sheet date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, including
asset revaluations. Deferred income tax assets are recognized for all deductible temporary
differences to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences can be utilized. Deferred income tax, however, is not recognized
when it arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
Deferred income tax liabilities are not provided on non-taxable temporary differences associated
with investments in domestic subsidiary and associate.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rate that is applicable to the year
when the asset is realized or the liability is settled.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable
right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
*SGVMC209702*
- 16 Segment Reporting
The Companys operating businesses are organized and managed separately according to the
nature of the services provided, with each segment representing a strategic business unit that
serves different markets. Financial information on business segments is presented in Note 6.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements. They are
disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote. Contingent assets are not recognized in the consolidated financial statements but
disclosed when an inflow of economic benefits is probable.
Subsequent Events
Post-year-end events that provide additional information about the Companys financial position
at the balance sheet date (adjusting events) are reflected in the consolidated financial statements.
Post-year-end events that are not adjusting events are disclosed in the notes to the consolidated
financial statements when material.
Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net income for the year by the weighted average number
of common shares outstanding during the year after giving retroactive effect to any stock
dividends declared during the year.
The Company does not have potential common share nor other instruments that may entitle the
holder to common shares. Hence, diluted EPS is the same as basic EPS.
5. Significant Accounting Judgments and Estimates

Judgments
In the process of applying the accounting policies, management has made judgments, apart from
those involving estimations, which has the most significant effect on the amounts recognized in
the consolidated financial statements.
Fair Value of Financial Instruments. Where the fair values of financial assets and financial
liabilities recorded on the consolidated balance sheet cannot be derived from active markets, they
are determined using a variety of valuation techniques that include the use of mathematical
models. The input to these models is taken from observable markets where possible, but where
this is not feasible, a degree of judgment is required in establishing fair values. The judgments
include considerations of liquidity and model inputs such as correlation and volatility for longer
dated financial instruments.
The carrying values of financial assets measured at fair value amounted to P
=2.8 million and
=4.6 million as of December 31, 2006 and 2005, respectively (see Notes 12 and 27).
P
The carrying values of financial liabilities measured at fair value amounted to P
=197.9 million and
P
*SGVMC209702*
- 17 Operating Lease. The Company has various operating lease agreements as a lessee. The
Company determined that significant risks and rewards of ownership of the leased properties are
retained with the lessor.
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the
balance sheet date that may cause an adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below.
Estimated Useful Lives of Property and Equipment. The Company reviews annually the estimated
useful lives of property and equipment based on expected asset utilization, market demands and
future technological developments consistent with the Companys pursuit of constant
modernization of the equipment fleet to ensure the availability, reliability and cost-efficiency of
the equipment. It is possible that the factors mentioned change in the future, which could cause a
change in estimated useful lives. A reduction in the estimated useful lives could cause a
significant increase in depreciation and amortization of property and equipment. The carrying
amounts of property and equipment are =
P6.5 billion and =
P6.8 billion as of December 31, 2006 and
2005, respectively (see Note 11).
Asset Impairment. The Company assesses impairment on property and equipment and investment
in an associate whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. The factors that the Company considers important which could
trigger an impairment review include the following:
significant underperformance related to the expected or projected operating results;

significant changes in the manner of use of the assets; and
significant negative industry or economic trends.
The Company determined that there are no impairment indicators related to its property and
equipment and investment in an associate. The carrying amounts of investment in associate are
=29.1 million and =
P
P25.7 million as of December 31, 2006 and 2005, respectively. There were no
accumulated impairment losses as of December 31, 2006 and 2005 (see Notes 10 and 11).
Impairment of Receivables. The Company maintains allowance for doubtful accounts based on
the result of the individual and collective assessment under PAS 39. Under the individual
assessment, the Company is required to obtain the present value of estimated cash flows using the
receivables original effective interest rate. Impairment loss is determined as the difference
between the receivables carrying balance and the computed present value. The collective
assessment would require the Company to group its receivables based on the credit risk
characteristics (industry, customer type, customer location, past-due status and terms) of the
customers. Impairment loss is then determined based on historical loss experience of the
receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not exist currently. The methodology and assumptions used for the
individual and collective assessments are based on managements judgment and estimate.
Therefore, the amount and timing of recorded expense for any period would differ depending on
the judgments and estimates made for the year. The carrying amounts of trade and other
receivables are P
=330.0 million and P
=437.3 million as of December 31, 2006 and 2005,
*SGVMC209702*
- 18 respectively. The allowance for doubtful accounts amounted to P

=27.0 million and P
=36.2 million
as of December 31, 2006 and 2005, respectively (see Note 8).
Spare Parts and Supplies Valuation. The Company writes down spare parts and supplies for
estimated obsolescence or non-moving items equal to the difference between the cost and the
estimated net realizable value based on assumptions about future use and technology that would
affect replacement cost of spare parts and supplies. The carrying amounts of spare parts and
supplies are =
P119.9 million and =
P93.1 million as of December 31, 2006 and 2005, respectively.
The net realizable values of spare parts and supplies are lower than cost by =
P37.3 million and
=26.1 million as of December 31, 2006 and 2005, respectively.
P
Deferred Tax Assets. Management uses judgment in reviewing the carrying amount of deferred
tax assets. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of
such deferred tax assets to be utilized. The carrying amounts of deferred tax assets are
P
=241.5 million as of December 31, 2006 and 2005, respectively (see Note 13).
Provision for Claims. The Company records provisions for claims for property, equipment and
cargo damage and for pending civil and labor cases when it is determined that an unfavorable
outcome is probable and the amount of the claim can be reasonably estimated. The determination
of the amount of reserves required, if any, is based on an analysis of each individual issue, often
with the assistance of outside legal counsel. The carrying amounts of provision for claims are
=56.4 million and =
P
P51.0 million as of December 31, 2006 and 2005, respectively (see Note 16).
Pension Cost. The determination of the obligation and cost for pension benefits is dependent on
the selection of certain assumptions used by the Company and its actuary in calculating such
amounts. Those assumptions are described in Note 22 and included among others, discount rate,
expected rate of return on plan assets and salary increase rate. While it is believed that the
Companys assumptions are reasonable and appropriate, significant differences in actual
experience or significant changes in assumptions may materially affect the Companys pension
obligations. Net benefit liability recognized by ATI and ATIB as of December 31, 2006 amounted
to =
P67.5 million, net benefit liability recognized by ATIB as of December 31, 2005 amounted to
=3.2 million and net benefit asset recognized by ATI as of December 31, 2005 amounted to
P
=43.4 million (see Note 22).
P
Impairment of Goodwill. The Company determines whether goodwill is impaired at least on an
annual basis. This requires an estimation of the value in use of ATIB, the cash-generating unit to
which the goodwill is allocated. Estimating the value in use requires the Company to make an
estimate of the expected future cash flows from the cash-generating unit and also to choose a
suitable discount rate in order to calculate the present value of those cash flows. In the case of
goodwill included in the carrying amount of investment in SCIPSI, recoverable amount is based
on fair value less costs to sell. The carrying amounts of goodwill are P
=42.1 million and
=41.7 million as of December 31, 2006 and 2005, respectively. The amount of goodwill included
P
in the carrying amount of investment in SCIPSI is =
P10.2 million as of December 31, 2006 and
2005 (see Notes 10 and 14).
*SGVMC209702*
- 19 -
6. Segment Information
For management reporting purposes, the Company is organized into two major lines of business:
(1) Ports and (2) Non-Port. The lines of business are the basis on which the Company reports its
primary segment information. The Ports segment provides services related to the handling of
containers to and from vessels, loading and unloading of cargoes, storage and operations of
passenger shipping terminal. The Non-Port segment provides services such as planning,
implementing and controlling the efficient, cost-effective and just in time flow and storage of raw
materials, in-process inventories, finished goods and related information from point of origin to
point of consumption. There are no intersegment revenues in 2006, 2005 and 2004.
Information with regard to the Companys significant business segments is shown below.
Revenue
Property and equipment net
Total assets
Total liabilities
Capital expenditures
Depreciation and
amortization
Noncash expenses other
than depreciation and
amortization
Total
Ports
2004
Non-Port
Total
=796,944
P
=4,081,625
P
=2,835,732
P
=741,481
P
=3,577,213
P
5,109,355
6,808,361
4,554,770
211,893
1,648,416
2,606,251
483,987
11,888
6,757,771
9,414,612
5,038,757
223,781
5,323,078
6,854,022
4,583,460
536,621
1,734,809
2,363,558
404,166
1,728
7,057,887
9,217,580
4,987,626
538,349
533,447
404,361
96,857
501,218
395,646
132,361
528,007
13,921
6,517
4,010
10,527
10,297
18,600
28,897
Ports
2006
Non-Port
Total
Ports
= 3,589,955
P
= 591,201
P
= 4,181,156
P
=3,284,681
P
4,907,989
6,365,280
3,917,634
269,325
1,592,974
2,676,095
455,488
14,319
6,500,963
9,041,375
4,373,122
283,644
451,618
81,829
9,881
4,040
2005
Non-Port
(In Thousands)
The Company operates principally in one geographical location, which is, Philippines.
The carrying amounts of investment in SCIPSI of =
P29.1 million and P
=25.7 million as of
December 31, 2006 and 2005, respectively, and related equity in net earnings of P
=6.1 million and
=2.9 million in 2006 and 2005, respectively, are included in the Ports segment.
P
7. Cash and Cash Equivalents

2005
2006
(In Thousands)
Cash on hand and in banks

Short-term investments
P
=128,739
1,580,449
P
=1,709,188
=58,212
P
1,689,916
=1,748,128
P
Cash in banks earns interest at floating rates based on daily bank deposit rates. Short-term
investments are made for varying periods of between one and thirty days depending on the cash
requirements of the Company, and earn interest at the respective short-term deposit rates.
*SGVMC209702*
- 20 -
8. Trade and Other Receivables

2005
2006
(In Thousands)
Trade receivables
Advances to officers and employees
Amounts due from related parties
Receivable from retirement fund
Other receivables
Allowance for doubtful accounts
P
=304,096
14,055
6,509
4,847
27,481
356,988
(27,004)
P
=329,984
=405,375
P
16,207
7,330
2,469
42,112
473,493
(36,241)
=437,252
P
Trade receivables are noninterest-bearing and are short-term in nature.

Amounts due from related parties consist of advances to P&O Ports Asia Operating Headquarters,
and advances to SCIPSI.
In 2006, trade receivables written off against allowance for doubtful accounts amounted to
=11.9 million.
P
For other information on related party transactions, refer to Note 21.
9. Prepayments
2005
2006
(In Thousands)
Advances to contractor
Prepaid:
Taxes
Rental (see Note 12)
Insurance
Others
P
=47,783
=
P
26,582
16,111
1,059
7,816
P
=99,351
21,517
16,484
57,188
4,954
=100,143
P
10. Investment in an Associate

The Company has a 35.7% interest in SCIPSI, which is engaged in arrastre, stevedoring and other
related cargo handling services, except porterage, in the Makar Wharf, General Santos City,
Philippines.
*SGVMC209702*
- 21 SCIPSI is not listed in any public exchange. The following table illustrates summarized financial
information of the Companys investment in SCIPSI:
2005
2006
(In Thousands)
Share in the associates net assets:

Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net assets
P
=19,624
8,082
(6,147)
(2,720)
P
=18,839
=16,092
P
9,394
(5,101)
(4,564)
=15,821
P
Share in the associates revenue and profit:

Revenue
Profit
P
=41,610
6,121
=35,617
P
2,869
Carrying amount of the investment
P
=29,114
=25,671
P
11. Property and Equipment

Port Facilities
and
Equipment
Cost:
Balance at beginning
of year
Additions
Disposals
Reclassifications
Retirements
Balance at end of year
Accumulated
depreciation
and amortization:
of year
Additions
Disposals
Retirements
Net book value
Leasehold
Bulk Grain
Terminal Improvements
Furniture, Transportation
Fixtures and
and Other
Equipment
Equipment
Construction
In-progress
2006
2005
=3,449,300
P
71,788
(159,103)
76,972
(37,195)
3,401,762
=2,069,826
P
6,565
(13,145)
354
(7,090)
2,056,510
=3,628,115
P
4,707
49,041
(49,111)
3,632,752
=441,101
P
12,518
(1,237)
3,368
(517)
455,233
=113,561
P
7,174
(8,462)
2,966
(820)
114,419
P41,710
=
180,892
(132,701)
89,901
= 9,743,613
P
283,644
(181,947)
(94,733)
9,750,577
=9,551,580
P
223,781
(31,748)
9,743,613
1,308,864
293,275
(149,098)
(37,195)
1,415,846
=1,985,916
P
550,405
64,115
(10,793)
(7,090)
596,637
=1,459,873
P
690,965
115,782
(49,111)
757,636
=2,875,116
P
364,161
41,313
(1,237)
(517)
403,720
=51,513
P
71,447
11,363
(6,215)
(820)
75,775
=38,644
P
=89,901
P
2,985,842
525,848
(167,343)
(94,733)
3,249,614
= 6,500,963
P
2,493,693
501,218
(9,069)
2,985,842
=6,757,771
P
The Company capitalized borrowing costs of P

=2.2 million in 2006 and P
=1.2 million in 2005. The
unamortized capitalized borrowing costs as of December 31, 2006 and 2005 amounted to
P
=281.9 million, respectively. The capitalization rates used to determine the
amount of borrowing costs eligible for capitalization are 11.27% in 2006 and 11.08% in 2005.
*SGVMC209702*
- 22 -
12. Other Financial Assets

2005
2006
(In Thousands)
Deposits
Available-for-sale investments
Interest rate cap (see Note 27)
P
=27,425
2,751
P
=30,176
=27,674
P
4,136
478
=32,288
P
Deposits mainly represent payments related to property leases and utilities. This account includes
noninterest-bearing rental deposits that were discounted using effective interest rates of 13.26%
and 15.61% and carried at amortized cost of P
=4.2 million and P
=3.6 million as of December 31,
2006 and 2005, respectively. The difference between the original amount of noninterest-bearing
rental deposits and their present values at Day 1 qualified for recognition as prepaid rental. This
prepaid rental (included in current and noncurrent prepayment) amounted to P
=16.0 million and
=17.3 million as of December 31, 2006 and 2005, respectively. The current portion of such
P
prepaid rental amounted to =
P1.3 million as of December 31, 2006 and 2005.
Available-for-sale investments consist of investments in ordinary shares, and therefore have no
fixed maturity date or coupon rate.
13. Income Tax

The components of deferred tax assets and liabilities are as follows:
2005
2006
(In Thousands)
Deferred tax assets:

Pension
Derivative instruments
Accrued operating lease
Provision for claims and others
Unrealized foreign exchange loss
Excess of cost over net realizable value of spare
parts and supplies
Impairment losses on receivables
Unrealized mark-to-market loss on
available-for-sale investments
Less deferred tax liabilities:
Capitalized borrowing costs and custom duties
Debt issue costs
Pension
Net deferred tax assets
P
=105,876
70,227
23,744
19,187
16,372
=106,305
P
72,312
24,179
18,821
13,067
9,122
9,135
10,790
2,037
259,632
241,542
88,828
4,894
93,722
P
=165,910
104,414
7,297
15,181
126,892
=114,650
P
*SGVMC209702*
- 23 Deferred income tax related to items charged or credited directly to equity are as follows:
2006
2005
2004
(In Thousands)
Actuarial losses
Changes in fair value of interest rate swap
Changes in fair value of available-for-sale
investments
Income tax benefit reported in equity
(P
=32,328)
(13,761)
(P
=31,143)
(12,625)
=29,648
P
(2,037)
(P
=48,126)
(P
=43,768)
=29,648
P
A reconciliation between the statutory tax rates and the effective tax rates on income before
income tax follows:
Statutory income tax rates
Changes in income tax rates resulting from:
Income subjected to final tax at
a lower rate
Income tax holiday (ITH) incentives
availed
Nondeductible expenses and others
Losses of Board of Investments (BOI)
registered activities under ITH
Effect of change in income tax rate
Effective income tax rates
2006
35.00%
2005
32.50%
2004
32.00%
(2.51)
(2.20)
(2.68)
(2.27)
0.80
(3.01)
(0.30)
(1.30)
0.99
.0
.0
31.02%
.0
0.80
27.79%
1.92
.0
30.93%
The income tax rate was increased from 32% to 35% effective November 1, 2005 with the
enactment of Republic Act No. 9337, which amended certain provisions of the Tax Code.
14. Other Noncurrent Assets

2005
2006
(In Thousands)
Goodwill
Prepayment (see Note 12)
Pension asset (see Note 22)
P
=42,060
14,743
P
=56,803
=41,705
P
20,547
43,376
=105,628
P
In testing impairment of goodwill, the recoverable amount of ATIB is the value in use, which has
been determined by calculating the present value of cash flow projections covering the remaining
period of the term of ATIBs long-term contract with the PPA. The discount rate applied to cash
flow projections is 9.69% in 2006 and 10.67% in 2005.
*SGVMC209702*
- 24 -
15. Trade and Other Payables

2005
2006
(In Thousands)
Trade
Accrued expenses:
Personnel costs
Rental
Finance costs
Others
Due to government agencies
Pension liability (see Note 22)
Shippers and brokers deposits
Others
P
=57,757
=86,742
P
99,757
98,840
39,913
161,543
165,681
67,452
35,253
37,017
P
=763,213
68,612
97,508
55,774
113,311
137,437
3,249
33,652
59,721
=656,006
P
Following are the terms and conditions of the above financial liabilities:
Trade payables are noninterest-bearing and are normally settled on 30 to 60-day terms. Other
payables are noninterest-bearing and are normally settled within twelve months.
Accrued finance cost is normally settled quarterly and semi-annually throughout the financial
year.
Other financial liabilities are non-interest bearing and are normally settled on 30 to 90-day
terms.
16. Provisions for Claims

2005
2006
(In Thousands)
Balance at beginning of year

Provisions
Payments
P
=50,992
14,627
(9,182)
P
=56,437
=49,872
P
40,500
(39,380)
=50,992
P
Provisions relate to property, equipment and cargo damage and other claims, which were
recognized in connection with services rendered during the past year. It is expected that most of
these provisions will be settled within the next financial year or on demand.
*SGVMC209702*
- 25 -
17. Interest-bearing Loans and Other Financial Liabilities

This account consists of long-term debts and derivative liabilities.
Long-term Debts
2005
2006
(In Thousands)
Current
Bilateral Loan:
Tranche 1
Tranche 2
Syndicated fixed and floating rate notes (FFRN):
Tranche 1
Tranche 2
Unamortized debt issue costs
Noncurrent
Bilateral Loan:
Tranche 1
Tranche 2
Syndicated FFRN:
Tranche 1
Tranche 2
Tranche 3
Syndicated fixed rate notes (FRN)
P
=200,000
50,000
=200,000
P
83,333
300,000
550,000
(6,511)
P
=543,489
200,000
483,333
(8,653)
=474,680
P
P
=
75,000
400,000
300,000
1,000,000
1,000,000
2,775,000
(18,454)
P
=2,756,546
=200,000
P
416,667
700,000
300,000
1,000,000
1,000,000
3,616,667
(23,247)
=3,593,420
P
The maturities of long-term debts at nominal values as of December 31, 2006 follow:
Amount
(In Thousands)
2007
2008
2009
2010
2011 and beyond
550,000
350,000
725,000
450,000
1,250,000
=3,325,000
P
*SGVMC209702*
- 26 The other significant terms of the foregoing long-term debts are summarized below:
Syndicated FFRN - Tranches 1 to 3 are payable lump sum at various maturities. Prior to the
maturity dates, the Company may redeem, in whole but not a part of, any of the relevant
outstanding 3-year and 5-year floating rate notes, and 5-year and 10-year fixed notes starting at the
end of the 2nd, 3rd, and 7th year, respectively.
The amount payable to the noteholders in respect of such early redemption shall be the amount
calculated by the Facility Agent as the present value of the remaining cash flows of the notes
discounted at the yield of the comparable benchmark tenor as shown on the MART 1 page of
Bloomberg on the second business day preceding the early redemption date, provided, however,
that the early redemption amount shall not exceed 105% nor be less than 100% of the principal
amount of the notes being earlier redeemed; provided further, that in all instances of early
redemption, the Company shall pay the noteholders accrued interest on the principal amount of the
notes earlier redeemed.
Bilateral Loans - Tranches 1 and 2 are payable in equal semi-annual payments.
Syndicated FRN is payable lump sum at various maturities. Starting from the Interest Payment
Date falling at the end of the third year from the Issue Date in respect of the 5-year fixed rate
notes; and starting from the Interest Payment Date falling at the end of the fourth year from the
Issue Date in respect of the 7-year fixed rate notes, the Issuer may, but is not required to, redeem
in whole and not a part of any of the outstanding 5-year or 7-year fixed rate notes plus
accumulated interest and on any Interest Payment Date falling thereafter. Interest rates per annum
on long-term debt ranged from 7.52% to 14.74% in 2006 and 8.00% to 14.74% in 2005.
All of the Companys long-term debts are unsecured loans.
Some of the foregoing loan agreements require, among others, maintenance of debt to equity ratio
not to exceed 2.5 to 1 and prior consent of the creditor on the declaration of cash dividends in
excess of 50% of the Parent Companys retained earnings; merger or consolidation; mortgage or
disposal of all or substantially all of its assets; prepayment on any long-term loans unless a
proportionate prepayment of other long-term loans is made and extension of credit or investments
and granting of advances, except those necessary in the ordinary course of business. The
Company has complied with all of the provisions of the loan agreements as of December 31, 2006
and 2005.
Derivative Liabilities
2005
2006
(In Thousands)
Current - Foreign currency option (see Note 27)

Noncurrent:
Embedded foreign currency option (see Note 27)
Interest rate swap (see Note 27)
P
=17,331
=19,305
P
105,166
75,388
180,554
P
=197,885
143,421
36,071
179,492
=198,797
P
*SGVMC209702*
- 27 -
18. Other Changes in Equity

Retained Earnings
Appropriated
for Port
Development Unappropriated
(In Thousands)
Minority
Interests
Common Stock
Additional
Paid-in Capital
Balance at January 1, 2006

Cash dividends - =
P0.20 a share for ATI
Actuarial losses
Purchase of ATIB shares
Balance at December 31, 2006
= 2,000,000
P
= 2,000,000
P
= 264,300
P
= 264,300
P
= 500,000
P
= 500,000
P
= 1,636,402
P
(400,000)
782,341
= 2,018,743
P
= 1,385
P
(473)
230
(109)
(323)
= 710
P

Cash dividends - =
Actuarial losses
=2,000,000
P
=2,000,000
P
=264,300
P
=264,300
P
=500,000
P
=500,000
P
=1,292,905
P
(320,000)
663,497
=1,636,402
P
=1,572
P
(308)
123
(2)
=1,385
P

Cash dividends - =
Actuarial gains
=2,000,000
P
=2,000,000
P
=264,300
P
=264,300
P
=500,000
P
=500,000
P
=1,350,255
P
(320,000)
370,837
=1,401,092
P
=1,503
P
58
11
=1,572
P
Common Stock - P
=1 Par Value
The Company has authorized and issued capital stock of 4,000,000,000 common shares and
2,000,000,000 common shares, respectively, as of December 31, 2006 and 2005.
Retained Earnings
The balance of the Companys retained earnings includes the subsidiary and an associates
undistributed net earnings of =
P140.8 million as of December 31, 2006 and
2005, respectively, which are available for distribution only upon declaration of dividends by such
subsidiary and associate to the Parent Company. Cash dividends were distributed yearly since
2000.
Other Reserves
2006
2005
2004
(In Thousands)

Net income (loss) recognized directly
in equity
Amount attributable to minority interests
(P
=26,232)
=62,990
P
(89,377)
109
(P
=115,500)
(89,224)
2
(P
=26,232)
=
P
63,001
(11)
=62,990
P
*SGVMC209702*
- 28 -
19. Costs and Expenses

2005
2006
2004
(In Thousands)
Labor costs
Depreciation and amortization
Equipment running
Taxes and licenses
Insurance
General transport
Entertainment, amusement and recreation
Others
P
=760,056
525,848
424,467
158,685
116,641
84,921
37,785
3,136
572,074
P
=2,683,613
=754,146
P
501,218
414,934
123,154
113,312
99,956
75,999
3,051
669,357
=2,755,127
P
=773,465
P
528,007
384,095
105,859
137,072
104,328
95,344
2,420
543,766
=2,674,356
P
Labor costs include salaries, benefits and pension expense (see Note 22).
Port related expenses account for 83% in 2006, 77% in 2005 and 73% in 2004 of the total
operating expenses.
Spare parts and supplies used and included under equipment running amounted to =
P120.8 million,
P
=94.1 million in 2006, 2005 and 2004, respectively.
20. Other Income and Expenses

Finance cost is broken down as follows:
2006
2005
2004
(In Thousands)
Interest on bank loans

Amortization of debt issue cost
Interest component of pension expense
(see Note 22)
P
=452,777
6,935
=456,178
P
9,776
=406,170
P
5,112
P
=464,824
17,459
=483,413
P
24,586
=430,756
P
2005
2004
Finance income is broken down as follows:

2006
(In Thousands)
Interest on cash in banks and short-term

investments
Accretion of rental deposits
P
=83,832
2,274
P
=86,106
=45,121
P
=45,121
P
=24,845
P
=24,845
P
*SGVMC209702*
- 29 Others - net consisted of the following:

2005
2006
2004
(In Thousands)
Foreign exchange gain (loss) - net

Equity in net earnings of an associate
(see Note 10)
Lease and other income - net
(P
=56,607)
(P
=19,870)
=5,216
P
6,121
26,332
(P
=24,154)
2,869
16,992
(P
=9)
5,629
29,185
=40,030
P
21. Related Party Transactions

The Parent Company has a management agreement with POMS for a period of five years until
August 31, 2010. The terms of the agreement provide for the payment of a monthly management
fee equivalent to 5% of ATIs net income before income tax of the immediately preceding month.
Management fees (included under other cost and expenses in the consolidated statement of
income) incurred for the years ended December 31, 2006, 2005 and 2004 amounted to
=50.3 million, P
P
=41.6 million and P
=22.0 million, respectively. Accrued management fees (included
under Trade and other payables account in the consolidated balance sheet) amounted to
=4.8 million and =
P
Following are the details of compensation of key management personnel of the Company:
2005
2006
2004
(In Thousands)
Short-term employee benefits

Post-employment pension benefits
Total compensation incurred
=74,098
P
2,741
=76,839
P
P
=78,570
3,018
P
=81,558
=65,099
P
5,941
=71,040
P
22. Pensions
The following tables summarize the components of net pension expense recognized in the
consolidated statement of income and the funded status and amounts recognized in the
consolidated balance sheet for the respective plans.
Net Pension Expense
2006
ATI
2005
2004
2006
ATIB
2005
2004
(In Thousands)
Current service cost

Interest cost
Expected return on plan assets
Net pension expense
P
=11,169
23,275
(18,987)
P
=15,457
P8,887
=
22,134
(5,531)
=25,490
P
P16,377
=
33,043
(9,019)
=40,401
P
P
=642
1,693
(869)
P
=1,466
=528
P
1,671
(815)
=1,384
P
=774
P
1,883
(1,321)
=1,336
P
Actual return on plan assets
P
=82,249
=18,214
P
=23,876
P
P
=2,163
=665
P
(P
=4,030)
*SGVMC209702*
- 30 Current service cost is included in Cost and expenses account in the consolidated statement of
income. Interest cost net of expected return on plan assets is included in Finance cost account in
the consolidated statement of income.
Net Benefit Asset (Liability) as of December 31
ATI
2005
2006
2004
2006
ATIB
2005
2004
(In Thousands)
Present value of pension

obligation
Fair value of plan assets
Net Benefit asset (liability)
(P
= 349,541)
299,230
(P
= 50,311)
(P
=193,957)
237,333
=43,376
P
(P
=158,096)
69,132
(P
=88,964)
(P
= 31,873)
14,732
(P
= 17,141)
(P
=14,108)
10,859
(P
=3,249)
(P
=11,939)
10,194
(P
=1,745)
Changes in the Present Value of Pension Obligation

ATI
2005
2006
2004
2006
ATIB
2005
2004
(In Thousands)

obligation at beginning
of year
Interest cost
Benefits paid
Actuarial loss (gain)
obligation at end of year
P
=193,957
23,275
11,169
(20,352)
141,492
=158,096
P
22,134
8,887
(104,644)
109,484
=275,355
P
33,043
16,377
(89,950)
(76,729)
P
=14,108
1,693
642
15,430
=11,939
P
1,671
528
(30)
=15,695
P
1,883
774
(6,413)
P
=349,541
=193,957
P
=158,096
P
P
=31,873
=14,108
P
=11,939
P
2004
2006
ATIB
2005
2004
Changes in the Fair Value of Plan Assets

2006
ATI
2005
(In Thousands)
Fair value of plan assets at

beginning of year
Contributions
Benefits paid
Actuarial gain (loss)
at end of year
P
=237,333
18,987
(20,352)
63,262
=69,132
P
5,531
254,631
(104,644)
12,683
=90,186
P
9,019
45,019
(89,950)
14,858
P
=10,859
869
1,710
1,294
=10,194
P
815
(150)
=13,217
P
1,321
1,007
(5,351)
P
=299,230
=237,333
P
=69,132
P
P
=14,732
=10,859
P
=10,194
P
The plan assets include investments in ATIs common share with total fair value of nil,
=7.4 million and =
P
P6.2 million as of December 31, 2006, 2005 and 2004, respectively.
The Company expects to contribute P
=51.5 million to its defined benefit pension plans in 2007.
*SGVMC209702*
- 31 The major categories of plan assets as a percentage of the fair value of total plan assets are as
follows:
Equities
Bonds
Others
2006
90.5%
9.5%
ATI
2005
3.4%
85.3%
11.3%
2004
9.7%
87.5%
2.8%
ATIB
2005
83.5%
16.5%
2006
86.4%
13.6%
2004
63.2%
36.8%
The overall expected rate of return on assets is determined based on the market prices prevailing
on that date, applicable to the period over which the obligation is to be settled.
The cumulative amount of actuarial losses (gains) recognized in the consolidated statement
of recognized income and expense is =
P96.6 million, =
P4.3 million and (P
=92.6) million as of
December 31, 2006, 2005 and 2004, respectively.
The principal assumptions used in determining pension benefit obligations for both of the
Companys plans are shown below:
Discount rate at end of year

Expected rate of return on
plan assets at end of year
Salary increase rate
2006
7.7%
ATI
2005
12.0%
2004
14.0%
2006
8.1%
ATIB
2005
12.0%
2004
14.0%
12.0%
8.0%
8.0%
7.0%
8.0%
7.0%
12.0%
8.0%
8.0%
7.0%
8.0%
7.0%
Experience adjustments in 2006 on plan liabilities amounted to a gain of =

P5.8 million and a loss of
=0.5 million for ATI and ATIB, respectively.
P
23. Earnings Per Share (EPS) Attributable to Equity Holders of the Parent
Basic EPS is computed as follows:
(a) Net income attributable to equity holders
of the parent (in thousands)
(b) Weighted average number of common
shares outstanding
Basic EPS attributable to equity holders of the
parent (a/b)
2006
2005
2004
P
=782,341
=663,497
P
=370,837
P
2,000,000,000 2,000,000,000 2,000,000,000

P
=0.39
=0.33
P
=0.18
P
The Company does not have potential common share nor other instruments that may entitle the
holder to common shares. Hence, diluted EPS is the same as basic EPS.
*SGVMC209702*
- 32 -
24. Registrations with the BOI

The Parent Company has the following registrations with the BOI under the Omnibus Investments
Code of 1987 (Executive Order No. 226):
ITH Incentives Availed
2005
2004
2006
(In Thousands)
Domestic Terminal in
South Harbor, as a new
passenger terminal
ITH for six years up to

August 2009
Bulk grain terminal in

Mariveles, Bataan as a new
operator of port cargo
handling facilities on a
preferred pioneer status
Total
ITH for six years up to

April 2002 for the original
registration and for six years
up to November 2004 for the
expanded activity
P
=20,863
=27,680
P
=
P
P
=20,863
=27,680
P
7,007
=7,007
P
25. Commitments and Contingencies

a. On October 26, 2005, in consideration of the cargo traffic at the South Harbor and the
intervening events which prevented the Company from faithfully implementing its original
commitment under the 1999 Master Plan for South Harbor, the PPA approved the revised
South Harbor Master Plan where the Company committed to invest US$50.6 million from
2005 to 2008 or an aggregate of US$129.0 million from 1998 to 2008, for the rehabilitation,
development and expansion of the South Harbor facilities and purchase of equipment.
b. The Parent Company entered into several lease and sublease agreements covering its buildings
and land where its bulk grain terminal is located. The future minimum rentals payable under
operating leases as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

After one year but not more than five years
After more than five years
P
=42,243
188,743
73,465
P
=304,451
P43,247
=
193,008
132,321
=368,576
P
*SGVMC209702*
- 33 c. The Parent Company has a 25-year lease agreement until April 2021 covering the land in
Calamba, Laguna to be used exclusively as an Inland Container Depot. The future minimum
rentals payable under operating leases as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

P
=9,072
40,759
134,088
P
=183,919
P9,072
=
39,249
144,670
=192,991
P
d. The Parent Company is authorized by the PPA to render cargo handling services at the South
Harbor until May 2013. For storage operations, the Company shall pay an annual fixed fee of
=55.0 million payable quarterly and a variable fee of 30% of its annual gross storage revenue
P
in excess of P
=273.0 million. For arrastre operations, the Company shall pay a quarterly fixed
fee of US$1.15 million plus a variable fee of 8% of its total gross income, or 20% of its total
quarterly gross income, whichever is higher. For general cargo operations, the Company shall
pay 20% of its total gross income collected from arrastre services for general cargoes. The
General Cargo Fee arrangement is effective until May 31, 2007. For domestic terminal
operations, the Company shall pay 10% of its total gross income derived from its domestic
cargo handling and passenger terminal operations. The PPA fees in 2006, 2005 and 2004
amounted to =
P808.5 million, =
P640.2million, respectively. The future
minimum payments as of December 31 are as follows:
Storage Operations
2005
2006
(In Thousands)
Within one year

P
=55,000
220,000
77,917
P
=352,917
P55,000
=
220,000
132,917
=407,917
P
2006
2005
Arrastre Operations
(In Thousands)
Within one year

$4,600
18,400
6,517
$29,517
$4,600
18,400
11,117
$34,117
*SGVMC209702*
- 34 e. The Parent Company leases its office space from the PPA. The future minimum rentals
payable under operating lease as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

f.
P
=3,680
18,790
8,536
P
=31,006
P3,346
=
17,082
13,924
=34,352
P
ATIB is authorized by the PPA to render arrastre, stevedoring, storage and related cargo
handling services at the Port of Batangas until October 2015. For domestic cargo operations,
ATIB shall pay 10% of its domestic cargo revenues. For foreign cargo operations, ATIB shall
pay 20% of its foreign cargo revenues. For passenger terminal operations, ATIB shall pay a
fixed monthly fee of =
P0.4 million.
g. As of December 31, 2006, the Company has no undrawn committed borrowing facilities,
finance leases or guarantees issued to third parties.
h. The Company has contingent liabilities for lawsuits and various other matters occurring in the
ordinary course of business. On the basis of information furnished by its legal counsel,
management believes that none of these contingencies will materially affect the Companys
financial position and results of operations.
26. Financial Risk Management Objectives and Policies

The Companys principal financial instruments, other than derivatives, comprise of loans from
banks and other financial institutions and cash and short-term investments. The main purpose of
these financial instruments is to raise financing for the Companys capital expenditures and
operations. The Company has various other financial assets and liabilities such as trade and other
receivables and trade and other payables, which arise directly from its operations. Other financial
instruments include deposits, available-for-sale investments and derivative instruments.
The Company enters into interest rate derivatives (i.e. cap and swap) to manage its interest rate
exposure relating to its floating-rate debt.
The main risks arising from the Companys financial instruments are interest rate risk, liquidity
risk, foreign currency risk and credit risk. The BOD reviews and agrees on policies for managing
each of these risks. The Companys accounting policies in relation to derivatives are set out in
Note 4.
Interest Rate Risk
The Companys exposure to the risk for changes in market interest rates relates primarily to the
Companys long-term debt obligations with floating interest rates.
The Companys policy is to manage its interest cost using a mix of fixed and variable rate debts.
To manage this mix, the Company enters into interest rate cap and swap derivatives, in which the
Company agrees to exchange, at specified intervals, the difference between fixed and variable rate
*SGVMC209702*
- 35 interest amounts calculated by reference to an agreed-upon notional principal amount. These

swaps and caps are designated to hedge underlying debt obligations.
The following table sets out the carrying amount, by maturity, of the Companys financial
instruments that are exposed to interest rate risk:
Fixed rate:
Syndicated FFRN:
Tranche 1 (b) (d)
Tranche 2 (b)
Tranche 3 (b) (d)
Syndicated FRN (b) (c)
Floating rate:
Bilateral Loan:
Tranche 1 (a)
Tranche 2 (a)
Syndicated FFRN:
Tranche 2 (a)
Tranche 3 (a)
Within 1
Year
1-2 Years
2-3 Years
3-4 Years
4-5 Years
More than
5 Years
Total
=300,000
P
300,000
=
P
200,000
200,000
P
=
100,000
100,000
P
=
450,000
450,000
P
=
=400,000
P
300,000
550,000
1,250,000
P700,000
=
200,000
400,000
1,000,000
2,300,000
200,000
50,000
50,000
25,000
200,000
125,000
250,000
=550,000
P
100,000
150,000
=350,000
P
600,000
625,000
=725,000
P
=450,000
P
100,000
600,000
1,025,000
= P
P
=1,250,000 =
P3,325,000
Premium
and
Issuance
Costs
Carrying
Value
Fair
Value
(P
=3,625) P
=696,375
(752)
199,248
(3,911)
396,089
(9,835)
990,165
(18,123) 2,281,877
P871,751
=
216,131
584,794
1,201,192
2,873,868
(352)
(1,428)
199,648
123,572
199,648
123,572
(369)
99,631
99,631
(4,693)
595,307
595,307
(6,842) 1,018,158 1,018,158
(P
=24,965) P
=3,300,035 =
P3,892,026
Interest rates:
(a) - Applicable 3-month MART 1 plus spread
(b) - Applicable 5-year MART 1 plus spread
(c) - Applicable 7-year MART 1 plus spread
(d) - Applicable 10-year MART 1 plus spread
Interest on financial instruments classified as floating rate is re-priced at least quarterly. Interest
on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The
other financial instruments of the Company that are not included in the above tables are
noninterest-bearing and are therefore not subject to interest rate risk.
Foreign Currency Risk
The Company has foreign currency exposures arising from US dollar (USD)-denominated lease
payments and from purchases by operating units in currencies other than PHP.
The Companys foreign currency-denominated accounts as of December 31, 2006 are as follows:
Amounts
(In Thousands)
Assets:
Cash and cash equivalents
Liabilities:
Net foreign currency-denominated assets
Peso equivalent
US$15,946
630
16,576
376
US$16,200
=794,529
P
*SGVMC209702*
- 36 Credit Risk
The Company trades only with recognized, creditworthy third parties. It is the Companys policy
that all customers who wish to trade on credit terms are subject to credit verification procedures.
In addition, receivable balances are monitored on an ongoing basis with the result that the
Companys exposure to bad debts is not significant. A regular/annual review and evaluation of
accounts is being executed, to assess the credit standing of customers. In addition, a portion of
revenues is on cash basis.
With respect to credit risk arising from the other financial assets of the Company, which comprise
cash and cash equivalents, deposits, available-for-sale investments and certain derivative
instruments, the Companys exposure to credit risk arises from default of the counterparty, with a
maximum exposure equal to the carrying amount of these instruments.
Since the Company trades only with recognized third parties, there is no requirement for collateral.
There are no significant concentrations of credit risk within the Company.
Liquidity Risk
The Companys objective is to maintain a balance between continuity of funding and flexibility
through the use of bank loans.
27. Financial Instruments

The table below presents a comparison by category of carrying amounts and estimated fair values
of all the Companys financial instruments as of December 31, 2006 and 2005.
2006
Carrying
Values Fair Values
2005
Carrying
Values
Fair Values
(In Thousands)
Financial assets:
Cash and cash equivalents (see Note 7)
Trade and other receivables (see Note 8)
Deposits (see Note 12)
Available-for-sale investments (see Note 12)
Interest rate cap
Financial liabilities:
Trade and other payables (see Note 15)
Interest-bearing loans and borrowings
(see Note 17):
Floating rate
Fixed rate
Derivative liabilities (see Note 17)
= 1,709,188
P
329,984
27,425
2,751
= 1,709,188
P
329,984
33,862
2,751
=1,748,128
P
437,252
27,674
4,136
478
=1,748,128
P
437,252
30,206
4,136
478
763,213
763,213
656,006
656,006
1,018,158
2,281,877
197,885
1,018,158
2,873,868
197,885
1,441,087
2,627,013
198,797
1,441,087
2,958,125
198,797
*SGVMC209702*
- 37 Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value.
Nonderivative Financial Instruments

The fair values of cash and cash equivalents, trade and other receivables and trade and other
payables are approximately equal to their carrying amounts due to the short-term nature of
these transactions.
The fair value of fixed rate interest bearing loans is based on the discounted value of future
cash flows using the applicable rates for similar types of loans. The discount rates used range
from 6.42% to 10.09%.
For variable rate loans that re-price every three months, the carrying value approximates the
fair value because of recent and regular re-pricing based on current market rates.
Quoted market prices have been used to determine the fair values of listed available-for-sale
investments. The fair values of unlisted available-for-sale investments are based on cost since
the fair values are not readily determinable.
For noninterest-bearing deposits, the fair value is estimated as the present value of all future
cash flows discounted using the prevailing market rate of interest for a similar instrument.
The discount rates used are 6.05% and 7.13%.
Derivative Instruments
The fair values of the interest rate cap and the interest rate swap were based on counterparty
valuation.
The embedded currency options in a lease contract were valued using Garman-Kohlhagen
option pricing model valuation that take into account such factors as the risk free USD and
PHP interest rates and a historical volatility rate.
Derivatives Accounted for as Cash Flow Hedges
Interest Rate Swap

The Company entered into interest rate swap to hedge the variability of cash flows in the
interest rate payments on its long-term variable rate loan with aggregate notional amount of
=500.0 million maturing in 2009. Changes in the cash flows of the interest rate swap are
P
exactly offset to changes in cash flows attributable to fluctuations in the 3-month MART1
interest rates on the variable loan. The Company pays fixed interest amount of 11.22% per
annum and receives interest equivalent to the prevailing 3-month MART1 rate as of payment
date. As of December 31, 2006, the outstanding balance of the interest rate swap is
=500 million.
P
*SGVMC209702*
- 38 The derivative liability arising from recognition of fair value changes as of December 31,
2006 and 2005 amounted to =
P75.4 million and =
P36.1 million, respectively. The unrealized fair
value after tax included under Other reserves account in the equity section of the
consolidated balance sheet amounted to =
P49.0 million and =
P23.4 million as of December 31,
2006 and 2005, respectively.
Interest Rate Cap

The Company also entered into interest rate cap to protect the cash flows on the designated
loan from adverse extreme market interest rate changes with aggregate notional amount of
=500 million maturing in 2007. Changes in the intrinsic value of the option are expected to be
P
perfectly effective in offsetting the changes in cash flows attributable to fluctuations in the
3-month MART1 interest rates above 10%. As of December 31, 2006, the outstanding
balance of the interest rate cap is P
=200 million.
The cap will mature on November 7, 2007. The Company assesses and measures hedge
effectiveness based on the actual and the hypothetical caps intrinsic values.
The derivative asset arising from recognition of fair value amounted to nil and =
P0.5 million as
of December 31, 2006 and 2005, respectively. No fair value changes relating to the cap are
deferred in equity.
Hedge Effectiveness Results

As of December 31, 2006 and 2005, the effective mark-to-market value changes on the
Companys cash flow hedges that were deferred in equity amounted to =
P49.0 million and
=23.4 million, respectively, net of tax. Total ineffectiveness recognized immediately in the
P
consolidated statement of income for the year ended 2006 and 2005 amounted to P
=0.5 million and
=7.8 million, respectively.
P
The distinction of the results of hedge accounting into Effective or Ineffective represents
designations based on PAS 39 and are not necessarily reflective of the economic effectiveness of
the instruments.
The movement of cash flow hedge derivative included in other reserves are as follows:
2005
2006
(In Thousands)
Balance at the beginning of year

Net changes in fair value of derivative
(P
=23,446)
(25,556)
(P
=49,002)
P
=
(23,446)
(P
=23,446)
*SGVMC209702*
- 39 Derivatives Not Accounted for as Hedges
Embedded Currency Derivatives

The Company has entered into an agreement with Provincial Government of Province of
Bataan leasing a 10-hectare portion of land to establish a land-based bulk grain and cargo
terminal. Future lease payments are indexed to USD:PHP exchange rate changes, in which
additional payments will be made if the prevailing exchange rate breaches a specified base
exchange rate, which is the spot rate prevailing on contract date. The total lease fee per
contract (before taking into account adjustments resulting from changes in the foreign
exchange rates) amounted to =
P302.5 million.
The derivative liability reported for these embedded foreign currency options as of
December 31, 2006 and 2005 amounted to P
Fair Value Changes on Derivatives

The net movements in fair value changes of all derivative instruments are as follows:
2005
2006
(In Thousands)

Net changes in fair value of derivatives:
Designated as accounting hedges
Not designated as accounting hedges
Less fair value of settled instruments
Balance at end of year (see Notes 12 and 17)
P
=198,319
=201,352
P
39,795
(22,687)
215,427
17,542
P
=197,885
35,593
(19,444)
217,501
19,182
=198,319
P
*SGVMC209702*
COVER SHEET
1 3 3 6 5 3
A S I A N
T E RM I N A L S ,
I N C .
A .
B O n i f a c i o
D r i v e ,
P o r t
A r e a ,
M a
n i l a
Ma. Luisa Nograles
528-6000
(Contact Person)
1 2
3 1
Month
Day
A A P C F S
(Form Type)
Month
(Fiscal Year)
Day
(Annual Meeting)

Domestic
Foreign
File Number
LCU
Document ID
Cashier
STAMPS
*SGVMC209703*
SGV & CO

6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891-0307

Fax:
(632) 819-0872
www.sgv.com.ph

Asian Terminals, Inc.
A. Bonifacio Drive
Port Area, Manila
We have audited the accompanying financial statements of Asian Terminals, Inc., which comprise the
parent company balance sheets as at December 31, 2006 and 2005, and the parent company statements
of income, parent company statements of recognized income and expense and parent company
statements of cash flows for the years then ended, and a summary of significant accounting policies
and other explanatory notes.
the circumstances.
our audit opinion.
*SGVMC209703*

PARENT COMPANY BALANCE SHEETS
December 31
2005
2006
(In Thousands)
ASSETS
Current Assets
Spare parts and supplies - at net realizable value
Prepayments (Notes 8 and 20)
Noncurrent Assets
Investments in a subsidiary and an associate - at cost (Note 9)
Other financial assets (Notes 11 and 25)
Deferred tax assets - net (Note 12)
Other noncurrent assets (Notes 13 and 21)
TOTAL ASSETS
P
=1,680,425
297,839
119,760
92,513
2,190,537
=1,735,710
P
413,519
92,978
93,436
2,335,643
159,985
6,404,511
28,857
156,600
14,743
6,764,696
159,307
6,653,431
31,021
111,126
63,923
7,018,808
P
=8,955,233
=9,354,451
P

Current Liabilities
Trade and other payables (Notes 14, 20, 21 and 25)
Provisions for claims (Note 15)
Taxes payable
(Notes 16 and 25)
P
=733,603
55,838
51,532
=661,130
P
50,992
62,923
560,820
1,401,793
493,985
1,269,030
Noncurrent Liabilities
(Notes 16 and 25)
2,937,100
3,772,912
Equity (Note 17)

Capital stock
Retained earnings
Other reserves
Total Equity
2,000,000
264,300
2,459,064
(107,024)
4,616,340
2,000,000
264,300
2,075,044
(26,835)
4,312,509
TOTAL LIABILITIES AND EQUITY
P
=8,955,233
=9,354,451
P
See accompanying Notes to Parent Company Financial Statements.
*SGVMC209703*

PARENT COMPANY STATEMENTS OF INCOME

2005
2006
(In Thousands)
REVENUES
P
=3,980,483
=3,890,113
P
COSTS AND EXPENSES (Notes 18, 20, 21 and 23)
(2,532,744)
(2,599,937)
(463,990)
86,626
39,751
16,243
(482,529)
47,040
30,818
25,199
OTHER INCOME AND EXPENSES

Finance cost (Notes 19 and 21)
Finance income (Note 19 and 20)
Others - net (Notes 19 and 20)
PROVISION FOR (BENEFIT FROM) INCOME TAX
(Notes 12 and 22)
Current
Deferred
NET INCOME
1,126,369
344,644
(2,295)
342,349
P
=784,020
910,704
229,811
21,842
251,653
=659,051
P
*SGVMC209703*

PARENT COMPANY STATEMENTS
OF RECOGNIZED INCOME AND EXPENSE

2005
2006
(In Thousands)
Actuarial losses (Note 21)

Fair value loss on cash flow hedges (Note 25)
Decline in fair market value of available-for-sale investments
Tax on items taken directly to equity (Note 12)
Net loss recognized directly in equity
(P
=78,230)
(39,318)
(5,820)
43,179
(80,189)
784,020
(P
=96,801)
(36,071)
43,758
(89,114)
659,051
P
=703,831
=569,937
P
*SGVMC209703*

PARENT COMPANY STATEMENTS OF CASH FLOWS

2005
2006
(In Thousands)

Adjustments for:
Net unrealized foreign exchange loss
Dividend income from a subsidiary and an associate
(Note 19)
Write-down of spare parts and supplies to net realizable
value
Loss (gain) on disposal of property and equipment
Amortization of noncurrent prepaid rental
Impairment (reversal of) provision on receivables
Spare parts and supplies
Prepayments
Provisions for claims
Taxes payable
Finance cost paid
Income tax paid
Additions to:
Property and equipment (Note 10)
Investment in a subsidiary
Dividends received
Proceeds from disposal of property and equipment
Decrease in deposits
Contribution to retirement fund (Note 21)
Decrease in available-for-sale investments
P
=1,126,369
=910,704
P
513,567
463,990
(86,626)
46,781
487,548
482,529
(47,040)
(42,205)
(39,751)
(25,048)
(30,818)
11,233
(7,969)
7,599
86
1,993,074
10,678
641
(1,208)
1,787,986
127,316
(38,015)
842
62,318
391
23,976
44,755
4,846
(18,056)
2,114,762
(468,628)
(337,979)
1,308,155
(117,934)
22,419
18,770
1,797,926
(456,000)
(220,024)
1,121,902
(279,250)
(678)
85,672
42,205
22,572
862
(128,617)
(218,060)
46,121
25,048
12,563
438
(254,631)
4,436
(384,085)
(Forward)
*SGVMC209703*
-2Years Ended December 31

2005
2006
(In Thousands)

Proceeds from long-term debt
Payments of:
Long-term debt
Cash dividends
Debt issue costs
Interest cap fees
Net cash used in financing activities
NET INCREASE IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
P
=
(775,000)
(400,000)
(1,175,000)
4,538
(59,823)
=1,000,000
P
(897,175)
(320,000)
(11,094)
(8,286)
(236,555)
501,262
1,735,710
1,234,448
P
=1,680,425
=1,735,710
P
*SGVMC209703*

NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
Asian Terminals, Inc. (ATI or the Company) is incorporated in the Philippines and registered
with the Philippine Securities and Exchange Commission (SEC). The Company operates and
manages South Harbor Port of Manila, a logistics business in Calamba, Laguna and a bulk grain
terminal in Mariveles, Bataan. The registered office address of the Company is A. Bonifacio
Drive, Port Area, Manila.
P & O Management Services Phils., Inc. (POMS) manages ATI by virtue of a management
agreement with ATI (see Note 20). Forty percent of the outstanding capital stock of POMS is
owned by P&O Australia, Ltd. (POAL). POAL directly owns 17.32% of the total outstanding
capital stock of ATI. In addition, POAL owns 100% of ATI Holdings, Inc., which owns 14.57%
of the outstanding capital stock of ATI.
The accompanying parent company financial statements were authorized for issuance by the
Board of Directors (BOD) on March 2, 2007.
Following are the Companys operating contracts:
a. South Harbor, Port of Manila
Exclusive right to manage, operate and develop South Harbor for a period of 15 years from
1992. Right was extended for another 6 years, or until 2013 renewable for another 25 years
upon expiration under terms to be mutually agreed upon with the Philippine Ports Authority
(PPA).
b. Mariveles Grain Terminal (MGT)
Right to develop and operate a bulk grain terminal in Mariveles, Bataan for a period of 20
years until 2013, renewable for another 20 years upon mutual agreement of PPA and ATI.
Accordingly, a lease agreement with the province of Bataan covering the land occupied by the
bulk grain terminal for a similar period was contracted.
c. Domestic Terminal
Right to manage and operate a domestic terminal at the South Harbor until 2013.
In April 2002, the Company entered into a memorandum of agreement (MoA) with Aboitiz
Transport Systems (ATS, formerly William, Gothong & Aboitiz, Inc.). Under the terms of the
MoA, the Company renders stevedoring, arrastre, storage, container freight station, passenger
terminal and other related terminal services in favor of ATS. In return, ATS pays domestic
tariff for the services in accordance with the terms of the MoA. Also, ATS warrants 85% of
its daily passenger and cargo volumes and any such volumes controlled by ATS (whether
directly or indirectly) passing through the Port of Manila will go to the Companys facility in
*SGVMC209703*
-2the South Harbor. The contract is effective for a period of five years until January 2008 and
renewable for another five years under such terms and conditions as may be agreed upon by
the parties in writing. If the total term of the MoA is less than ten years, then ATS shall pay
the penalty equivalent to unamortized reimbursement of capital expenditures and related costs
incurred by the Company in the development of the domestic terminal at the South Harbor.
3. Basis of Preparation and Statement of Compliance

The parent company financial statements have been prepared on a historical cost basis, except for
derivative financial instruments and available-for-sale investments that have been measured at fair
value.
The parent company financial statements are presented in Philippine peso (P
= or PHP), the
Companys functional and presentation currency. All values are rounded to the nearest thousand
pesos, unless otherwise indicated.
The Company also prepares and issues consolidated financial statements for the same period as the
parent company financial statements prepared and presented in compliance with Philippine
Financial Reporting Standards (PFRS). The parent company financial statements are prepared for
submission to the SEC and the Bureau of Internal Revenue.

follows:
Amendments to PFRS and Philippine Interpretations Effective in 2006
during the year:
Philippine Accounting Standard (PAS) 19, Amendment - Employee Benefits;

PAS 21, Amendment - The Effects of Changes in Foreign Exchange Rates;
PAS 39, Amendments - Financial Instruments: Recognition and Measurement; and
Philippine Interpretation IFRIC 4, Determining whether an Arrangement contains a Lease.

Derivatives.
The principal effects of these changes, if any, are as follows:

2006, the Company adopted the amendments to PAS 19. As a result, additional disclosures
are made providing information about trends in assets and liabilities in the defined benefit
*SGVMC209703*
-3plans and the assumptions underlying the components of the defined benefit cost. This change
resulted in additional disclosures being included for the years ended December 31, 2006 and
2005. The Company also adopted the new option offered to recognize actuarial gains and
losses outside of the parent company statement of income. As a result, the Company
presented actuarial gains and losses in the parent company statement of recognized income
and expense.

Amendment for Net Investment in a Foreign Operation. This amendment states that all
exchange differences arising from a monetary item that forms part of the Companys net
investment in a foreign operation are recognized in a separate component of equity in the
parent company financial statements regardless of the currency in which the monetary item is
denominated. As the Company does not have investment in a foreign operation, this change
has no impact on the Companys parent company financial statements.

with PAS 37, Provisions, Contingent Liabilities and Contingent Assets and the amount
initially recognized less, when appropriate, cumulative amortization recognized in accordance
with PAS 18, Revenue. This amendment did not have an effect on the parent company
Amendment for Cash Flow Hedge Accounting of Forecast Intragroup Transactions. This
transaction and that the foreign currency risk will affect the parent company statement of
income. As the Company currently has no such transactions, the amendment did not have an
effect on the parent company financial statements.
Amendment for the Fair Value Option. This amended PAS 39 to restrict the use of the option
to designate any financial asset or any financial liability to be measured at fair value through
profit or loss. This amendment has no significant impact on the parent company financial
statements.

applied. This interpretation has no significant impact on the Companys parent company
financial statements as of December 31, 2006.
*SGVMC209703*
-4

that significantly modifies the cash flows. This interpretation has no impact on the
Companys parent company financial statements as of December 31, 2006.
Future Changes in Accounting Policies

been approved, but are not yet effective:

2009)
purposes of issuing any class of instruments in a public market. This standard is not required
to be adopted in the parent company financial statements.
does not expect this interpretation to have a significant impact on the parent company
*SGVMC209703*
-5
expect this interpretation to have a significant impact on the parent company financial
statements.
This interpretation prohibits the reversal of impairment losses on goodwill and available-forsale equity investments recognized in the interim financial reports even if impairment is no
longer present at the annual balance sheet date. The Company does not expect this
interpretation to have a significant impact on the parent company financial statements.
Company does not expect this interpretation to have a significant impact on the parent
company financial statements.
public services. The Company will evaluate its operating contracts with the PPA to determine

Cash and cash equivalents in the parent company balance sheet comprise cash in banks and on
hand and short-term investments with an original maturity of three months or less.
Spare Parts and Supplies
Spare parts and supplies are stated at the lower of cost or net realizable value (current replacement
cost). Cost is determined using the weighted average method.
Investments in a Subsidiary and an Associate
The Companys investments in a subsidiary and an associate are accounted for under the cost
method. A subsidiary is an entity in which the Company has control. An associate is an entity in
which the Company has significant influence and which is neither a subsidiary nor a joint venture
of the Company. The investments in a subsidiary and an associate are carried in the parent
company balance sheet at cost less provision for impairment losses, if any.
*SGVMC209703*
-6The Company has investments in the following as of December 31, 2006:

Percentage of Ownership
2005
2006
Subsidiary ATI Batangas, Inc. (ATIB)
Associate South Cotabato Integrated Port Services, Inc. (SCIPSI)
98.82
98.46
35.70
35.70
Both ATIB and SCIPSI are incorporated in the Philippines.

of replacing part of such property and equipment when incurred if the recognition criteria are met.
Depreciation and amortization are computed using the straight-line method, net of residual values,
over the estimated useful lives of the assets, as follows:
Port facilities and equipment
Bulk grain terminal

2 to 40 years or term of the lease,
5 years
4 to 5 years
The residual values, useful lives and depreciation method are reviewed periodically and adjusted if
and equipment.
Port facilities and equipment account includes spare parts that the Company expects to use for
more than one year. These are not depreciated until put into operational use however, these are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the spare parts may not be recoverable.
Construction in-progress represents properties under construction and is stated at cost. This
includes cost of construction, equipment and other direct costs. Construction in-progress is not
depreciated until such time that the relevant assets are substantially completed and put into
operational use.
*SGVMC209703*
-7An item of property and equipment is derecognized upon disposal or when no future economic
the asset) is included in the parent company statement of income in the year the asset is
derecognized.
those from other assets or groups of assets. Where the carrying amount of an item of property and
continuing operations, if any, are recognized in the parent company statement of income in those
expense categories consistent with the function of the impaired asset.
Pension
The Company has a funded, defined benefit pension plan, administered by a retirement trustee,
covering its permanent employees. The cost of providing benefits under the defined benefit plan
is determined using the projected unit credit actuarial valuation method.
loss in the parent company statement of recognized income and expense.
The defined benefit asset or liability comprises the present value of the defined benefit obligation
*SGVMC209703*
-8Financial Instruments
Financial assets and liabilities are recognized initially at fair value. Transaction costs are included
in the initial measurement of all financial assets and liabilities, except for financial instruments
measured at fair value through profit or loss (FVPL).
techniques.
The Company recognizes a financial asset or liability in the parent company balance sheet when it
becomes a party to the contractual provisions of the instrument. A financial liability (or a part of a
financial liability) is derecognized when the obligation is extinguished. In the case of a regular
way purchase or sale of financial assets, recognition and derecognition, as applicable, is done
using settlement date accounting.
Financial assets are classified into the following categories: financial asset at FVPL, loans and
a. Financial Asset at FVPL
A financial asset is classified in this category if acquired principally for the purpose of selling
or repurchasing in the near term or upon initial recognition, it is designated by the
management as FVPL. Financial assets at FVPL are designated by management on initial
recognition when the following criteria are met:
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognizing gains or losses on
them on a different basis; or
The assets are part of a group of financial assets, which are managed and their
performance evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy, or
The financial instrument contains an embedded derivative, unless the embedded derivative
does not significantly modify the cash flows or it is clear, with little or no analysis, that it
would not be separately recorded.
*SGVMC209703*
-9Derivatives are also categorized as held at FVPL, except those derivatives designated and
considered as effective hedging instruments.
Financial assets at FVPL are recorded in the parent company balance sheet at fair value.
Changes in fair value of such assets are accounted for in the parent company statement of
income. Interest earned and dividend income are recorded in the parent company statement of
income.
Classified as financial instruments at FVPL are the Companys embedded derivatives
(see Note 25).
b. Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
and are not quoted in an active market. Such assets are carried at cost or amortized cost in the
parent company balance sheet. Amortization is determined using the effective interest rate
method and is included in the interest income in the parent company statement of income.
The losses arising from impairment of such financial assets are recognized in the parent
company statement of income.
Classified as loans and receivables are the Companys trade and other receivables
(see Note 7).
c. HTM Investments
HTM investments are quoted non-derivative financial assets with fixed or determinable
payments and fixed maturities for which the Companys management has the positive
intention and ability to hold to maturity. After initial measurement, these investments are
subsequently measured at amortized cost using the effective interest rate method, less
impairment in value. Gains and losses are recognized in income when the HTM investments
are derecognized and impaired, as well as through the amortization process.
The Company has no HTM investments as of December 31, 2006 and December 31, 2005.
d. AFS Investments
AFS investments are those which are designated as such or do not qualify to be classified or
designated as FVPL, HTM or loans and receivables.
After initial measurement, AFS investments are subsequently measured at fair value. The
effective yield component of AFS debt securities, as well as the impact of any restatement on
foreign currency-denominated AFS debt securities, is reported in earnings. The unrealized
gains and losses arising from the fair valuation of AFS investments are excluded net of tax
from reported earnings and are reported under other reserves in the equity section of the parent
company balance sheet, until the investment is derecognized or until the investment is
determined to be impaired at which time the cumulative gain or loss previously reported in
equity is included in the parent company statement of income.
*SGVMC209703*
- 10 Where the Company holds more than one investment in the same security these are deemed to
be disposed of on a first-in first-out basis. Interest and dividend earned and losses arising
from impairment of such investments are recognized in the parent company statement of
income.
Classified as AFS investments are the Companys investments in ordinary shares
(see Note 11).
e. Derivative Financial Instruments
The Company uses interest rate cap options and interest rate swaps to manage its interest rate
exposures on floating rate peso debt. In addition, the Company has identified and bifurcated
embedded foreign currency derivatives from certain non-financial contracts.
Derivative financial instruments are recognized and measured in the parent company balance
sheet at fair values. The resulting gain or loss will depend on whether the derivative is
designated as a hedge of an identified risk and qualifies for hedge accounting treatment. The
objective of hedge accounting is to match the impact of the hedged item and the hedging
instrument in the parent company statement of income. In applying hedge accounting, an
entity must comply with such requirements as the designation of the derivative to an identified
risk exposure, preparation of adequate hedge documentation, assessment and measurement of
hedge effectiveness testing, and in the case of a cash flow hedge, establishing the probability
of occurrence of the forecasted transaction.
Upon inception of the hedge, the Company documents the relationship between the hedging
instrument and the hedged item, its risk management objective and strategy for undertaking
various hedge transactions, the details of the hedging instrument and the hedged item, and the
hedge effectiveness assessment methodology (both at hedge inception and on an ongoing
basis). Effectiveness on the hedge is periodically measured, with any ineffectiveness being
reported immediately in the parent company statement of income.
Derivative financial instruments can be designated either as a: (a) hedge of the fair value of a
recognized fixed rate asset, liability or unrecognized firm commitment (fair value hedge); or
(b) hedge of the cash flow variability of recognized floating rate asset and liability or
forecasted transaction (cash flow hedge).
Cash Flow Hedges. A cash flow hedge is a hedge of the exposure to variability in future cash
flows related to a recognized asset, liability or a forecasted transaction. Changes in the fair value
of a hedging instrument that qualifies as a highly effective cash flow hedge are recognized in
Other reserves account, which is a component of equity. Any hedge ineffectiveness is
immediately recognized in the parent company statement of income.
Where the forecasted transaction results in the recognition of an asset or liability, the gains and
losses previously included in other reserves are included in the initial measurement of the asset or
liability. Otherwise, amounts recorded in equity are transferred to the parent company statement
of income in the same period in which the forecasted transaction affects the parent company
*SGVMC209703*
- 11 Hedge accounting is discontinued prospectively when the hedge ceases to be highly effective.
When hedge accounting is discontinued, the cumulative gain or loss on the hedging instrument
that has been reported in other reserves is retained in equity until the hedged transaction impacts
earnings. When the forecasted transaction is no longer expected to occur, any net cumulative gain
or loss previously reported in other reserves is recognized immediately in the parent company
Fair Value Hedges. Fair value hedges are hedges of the Companys exposure to changes in the
fair value of a recognized asset or liability or an unrecognized firm commitment that could affect
profit or loss. For fair value hedges, the carrying amount of the hedged item is adjusted for gains
and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains
and losses from both are taken to profit or loss.
For fair value hedges relating to items carried at amortized cost, the adjustment to carrying value
is amortized through profit or loss over the remaining term to maturity. Any adjustment to the
carrying amount of a hedged financial instrument for which the effective interest rate method is
used is amortized to profit or loss.
The Company discontinues fair value hedge accounting if the hedging instrument expires or is
sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the
Company revokes the designation.
Derivative Instruments Not Accounted for as Hedges. For derivatives that are not designated or do
not qualify as hedges, changes in the fair values of such transactions are recognized in the parent
company statement of income.
Derecognition of Financial Assets and Liabilities
arrangement; or
Where the Company has transferred its rights to receive cash flows from an asset or has entered
*SGVMC209703*
- 12 Financial Liabilities. A financial liability is derecognized when the obligation under the liability
assets is impaired.
the loss shall be recognized in the parent company statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
recognized in the parent company statement of income, to the extent that the carrying value of the
asset does not exceed its amortized cost at the reversal date.
Assets Carried at Cost. If there is objective evidence that an impairment loss on an unquoted
equity instrument that is not carried at fair value because its fair value cannot be reliably
measured, or on a derivative asset that is linked to and must be settled by delivery of such an
unquoted equity instrument has been incurred, the amount of the loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset.
AFS Financial Assets. If an AFS asset is impaired, an amount comprising the difference between
its cost (net of any principal payment and amortization) and its current fair value, less any
impairment loss previously recognized in the parent company statement of income, is transferred
from equity to the parent company statement of income. Reversals in respect of equity
instruments classified as AFS are not recognized in the parent company statement of income.
Impairment losses on debt instruments are reversed through the parent company statement of
income, if the increase in fair value of the instrument can be objectively related to an event
occurring after the impairment loss was recognized in profit or loss.
*SGVMC209703*
- 13 Interest-bearing Loans and Borrowings

All loans and borrowings are initially recognized at the fair value of the consideration received
less directly attributable transaction costs (referred to herein as debt issue costs). Debt issue
costs are amortized over the life of the debt instrument using the effective interest rate method.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortized cost using the effective interest rate method.
Gains and losses are recognized in the parent company statement of income when the liabilities
are derecognized as well as through the amortization process.
Operating Leases
assets. Lease payments are recognized as an expense in the parent company statement of income
on a straight-line basis over the lease term.
Provisions
certain. The expense relating to any provision is presented in the parent company statement of
income net of any reimbursement. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as a borrowing cost.
Revenue
Company and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received, excluding sales taxes or duty. The following are specific recognition
policies of the Company:
Revenues from cargo handling operations are recognized when services are rendered.
Passenger terminal fees are recognized upon sale of terminal tickets.
Finance income is recognized on a time proportion basis that reflects the effective yield on the
investment.
Dividend income is recognized when the Companys right to receive payment is established.
Borrowing Costs
*SGVMC209703*
- 14 economic benefits to the Company. If the carrying amount of the asset exceeds its recoverable
Foreign Currency Transaction
The parent company financial statements are presented in PHP, which is the Companys
functional and presentation currency. Transactions in foreign currencies are initially recorded in
the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency rate of exchange
ruling at the balance sheet date. All differences are taken to the parent company statement of
income.
Income Taxes
amount expected to be recovered, from or paid to the taxation authority. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted at the balance
sheet date.
Deferred income tax liabilities are recognized for all taxable temporary differences, including
asset revaluations. Deferred income tax assets are recognized for all deductible temporary
differences to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences can be utilized. Deferred income tax, however, is not recognized
when it arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
Deferred income tax liabilities are not provided on non-taxable temporary differences associated
with investments in domestic subsidiary and associate.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax assets to be utilized.
Deferred income tax assets and liabilities are measured at the tax rate that is applicable to the year
when the asset is realized or the liability is settled.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable
right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
Contingencies
Contingent liabilities are not recognized in the parent company financial statements. They are
disclosed unless the possibility of an outflow of resources embodying economic benefits is
remote. Contingent assets are not recognized in the parent company financial statements but
disclosed when an inflow of economic benefits is probable.
*SGVMC209703*
- 15 Subsequent Events
Post-year-end events that provide additional information about the Companys financial position
at the balance sheet date (adjusting events) are reflected in the parent company financial
statements. Post-year-end events that are not adjusting events are disclosed in the notes to the
parent company financial statements when material.

Judgments
the parent company financial statements.
Fair Value of Financial Instruments. Where the fair values of financial assets and financial
liabilities recorded on the parent company balance sheet cannot be derived from active markets,
they are determined using a variety of valuation techniques that include the use of mathematical
models. The input to these models is taken from observable markets where possible, but where
this is not feasible, a degree of judgment is required in establishing fair values. The judgments
include considerations of liquidity and model inputs such as correlation and volatility for longer
dated financial instruments.
The carrying values of financial assets measured at fair value amounted to P
=2.8 million and
P
The carrying values of financial liabilities measured at fair value amounted to P
=197.9 million and
P
Operating Lease. The Company has various operating lease agreements as a lessee. The
Estimates
future technological developments consistent with the Companys pursuit of constant
modernization of the equipment fleet to ensure the availability, reliability and cost-efficiency of
the equipment. It is possible that the factors mentioned change in the future, which could cause a
change in estimated useful lives. A reduction in the estimated useful lives could cause a
significant increase in depreciation and amortization of property and equipment. The carrying
amounts of property and equipment are P
=6.4 billion and P
=6.7 billion as of December 31, 2006 and
2005, respectively (see Note 10).
*SGVMC209703*
- 16 Asset Impairment. The Company assesses impairment on property and equipment and
investments in a subsidiary and an associate whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. The factors that the Company
considers important which could trigger an impairment review include the following:

equipment and investments in a subsidiary and an associate. The carrying amounts of investments
in a subsidiary and an associate are P
=159.3 million as of December 31, 2006
and 2005, repectively. There were no accumulated impairment losses as of December 31, 2006
and 2005 (see Notes 9 and 10).
Impairment of Receivables. The Company maintains allowance for doubtful accounts based on
the result of the individual and collective assessment under PAS 39. Under the individual
assessment, the Company is required to obtain the present value of estimated cash flows using the
receivables original effective interest rate. Impairment loss is determined as the difference
between the receivables carrying balance and the computed present value. The collective
assessment would require the Company to group its receivables based on the credit risk
characteristics (industry, customer type, customer location, past-due status and terms) of the
customers. Impairment loss is then determined based on historical loss experience of the
receivables grouped per credit risk profile. Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not exist currently. The methodology and assumptions used for the
individual and collective assessments are based on managements judgment and estimate.
Therefore, the amount and timing of recorded expense for any period would differ depending on
the judgments and estimates made for the year. The carrying amounts of trade and other
receivables are P
respectively (see Note 7).
Spare Parts and Supplies Valuation. The Company writes down spare parts and supplies for
estimated obsolescence or non-moving items equal to the difference between the cost and the
estimated net realizable value based on assumptions about future use and technology that would
affect replacement cost of spare parts and supplies. The carrying amounts of spare parts and
supplies are P
The net realizable values of spare parts and supplies are lower than cost by P
=37.3 million and
P
Deferred Tax Assets. Management uses judgment in reviewing the carrying amount of deferred
such deferred tax assets to be utilized. The carrying amounts of deferred tax assets are P
=250.3
million and P
*SGVMC209703*
- 17 Provision for Claims. The Company records provisions for claims for property, equipment and
cargo damage and pending civil and labor cases when it is determined that an unfavorable
with the assistance of outside legal counsel. The carrying amounts of provision for claims are
=55.8 million and P
P
Pension Cost. The determination of the obligation and cost for pension benefits is dependent on
the selection of certain assumptions used by the Company and its actuary in calculating such
amounts. Those assumptions are shown in Note 21 and include among others, discount rate,
expected rate of return on plan assets and salary increase rate. While it is believed that the
Companys assumptions are reasonable and appropriate, significant differences in actual
experience or significant changes in assumptions may materially affect the Companys pension
obligations. Net benefit liability recognized by the Company as of December 31, 2006 amounted
to P
=50.3 million and net benefit asset recognized by the Company as of December 31, 2005
amounted to P
=43.4 million (see Note 21).
2005
2006
(In Thousands)

Short-term investments
=49,337
P
1,686,373
=1,735,710
P
P
=118,887
1,561,538
P
=1,680,425
Cash in banks earns interest at floating rates based on daily bank deposit rates. Short-term
investments are made for varying periods of between one and thirty days depending on the cash
requirements of the Company, and earn interest at the respective short-term deposit rates.

2005
2006
(In Thousands)
Trade receivables
Amounts due from related parties
Other receivables
P
=273,820
13,630
6,509
4,847
22,370
321,176
(23,337)
P
=297,839
=383,083
P
15,877
7,330
2,469
38,718
447,477
(33,958)
=413,519
P
*SGVMC209703*
- 18 Trade receivables are noninterest-bearing and are short-term in nature.

Amounts due from related parties consist of advances to P&O Ports Asia Operating Headquarters,
and advances to SCIPSI.
In 2006, trade receivables written off against allowance for doubtful accounts amounted to
=10.7 million.
P
For other information on related party transactions, refer to Note 20.
8. Prepayments
2005
2006
(In Thousands)
Advances to a contractor
Prepaid:
Taxes
Insurance
Others
P
=47,783
=
P
25,275
12,998
1,032
5,425
P
=92,513
21,058
13,372
55,976
3,030
=93,436
P
2006
2005
9. Investments in a Subsidiary and an Associate
(In Thousands)
Subsidiary - ATIB
Associate - SCIPSI
P
=148,763
11,222
P
=159,985
=148,085
P
11,222
=159,307
P
ATIBs exclusive right to manage and render arrastre, stevedoring, storage and related cargo
handling services at the Port of Batangas for Phase I was renewed on October 20, 2005 for a
period of 10 years until 2015, renewable for another 10 years upon mutual agreement of PPA and
ATIB. Such contract with the PPA includes cargo handling and operation and management of a
passenger terminal.
On October 2, 2006, the one-year permit granted by PPA to ATIB to manage Phase II of the Port
of Batangas expired. The PPA is in the process of preparing the terms of reference for bidding of
Phase II.
*SGVMC209703*
- 19 -

Port Facilities
and Equipment
Cost:
Additions
Disposals
Reclassifications
Retirements
Accumulated depreciation and
amortization:
Additions
Disposals
Retirements
Net book value
Bulk Grain
Terminal
Leasehold
Improvements
Furniture,
Transportation
Fixtures and
and Other
Equipment
Equipment
(In Thousands)
Construction
In-progress
December 31,
2006
December 31,
2005
=3,327,624
P
71,504
(159,104)
76,973
(37,195)
3,279,802
=2,069,826
P
6,564
(13,144)
354
(7,090)
2,056,510
=3,620,649
P
4,708
49,041
(49,111)
3,625,287
=431,473
P
10,690
(1,236)
3,368
(517)
443,778
=106,413
P
4,892
(8,462)
2,966
(820)
104,989
P41,710
=
180,892
(132,702)
89,900
P
=9,597,695
279,250
(181,946)
(94,733)
9,600,266
=9,411,383
P
218,060
(31,748)
9,597,695
1,283,738
282,614
(149,098)
(37,195)
1,380,059
=1,899,743
P
550,405
64,115
(10,793)
(7,090)
596,637
=1,459,873
P
687,956
115,597
(49,111)
754,442
=2,870,845
P
356,787
40,256
(1,236)
(517)
395,290
=48,488
P
65,378
10,985
(6,216)
(820)
69,327
=35,662
P
=89,900
P
2,944,264
513,567
(167,343)
(94,733)
3,195,755
P
=6,404,511
2,465,785
487,548
(9,069)
2,944,264
=6,653,431
P
The Company capitalized borrowing costs of P

=1.2 million in 2005. The
unamortized capitalized borrowing costs as of December 31, 2006 and 2005 amounted to
P
=281.9 million, respectively. The capitalization rates used to determine the
amount of borrowing costs eligible for capitalization is 11.27% in 2006 and 11.08% in 2005.
*SGVMC209703*
- 20 -
11. Other Financial Assets

2005
2006
(In Thousands)
Deposits
AFS investments
Interest rate cap
P
=26,106
2,751
P
=28,857
=26,407
P
4,136
478
=31,021
P
Deposits mainly represent payments related to property leases and utilities. This account includes
noninterest-bearing rental deposits that were discounted using effective interest rates of 13.26%
and 15.61% and carried at amortized cost of P
=4.2 million and P
=3.6 million as of December 31,
2006 and 2005, respectively. The difference between the original amount of noninterest-bearing
rental deposits and their present values at Day 1 qualified for recognition as prepaid rental. This
prepaid rental (included in current and noncurrent prepayment) amounted to P
=16.0 million and
=17.3 million as of December 31, 2006 and 2005, respectively. The current portion of such
P
prepaid rental amounted to P
=1.3 million as of December 31, 2006 and 2005.
AFS investments consist of investments in ordinary shares, and therefore have no fixed maturity
date or coupon rate.
12. Income Tax
The components of deferred tax assets and liabilities are as follows:
2005
2006
(In Thousands)
Deferred tax assets:

Pension
Derivative instruments
Accrued operating lease
Provisions for claims and others
Unrealized foreign exchange loss
Excess of cost over net realizable value of spare
parts and supplies
Impairment losses on receivables
Unrealized marked-to-market loss on AFS
investments
Less deferred tax liabilities:
Capitalized borrowing costs and custom duties
Debt issue costs
Net deferred tax assets
P
=97,730
70,227
23,744
18,977
16,372
=87,729
P
72,312
24,179
19,162
13,067
8,168
9,135
10,320
2,037
250,322
222,837
88,828
4,894
93,722
P
=156,600
104,414
7,297
111,711
=111,126
P
*SGVMC209703*
- 21 Deferred income tax related to items charged or credited directly to equity are as follows:
2005
2006
(In Thousands)
Actuarial loss
Changes in fair value of interest rate swap
Changes in fair value of AFS investments
Income tax benefit reported in equity
(P
=27,381)
(13,761)
(2,037)
(P
=43,179)
(P
=31,133)
(12,625)
(P
=43,758)
income tax follows:
Income tax holiday (ITH) incentives availed
Interest income subjected to final tax at
a lower rate
Dividend income from a subsidiary and
an associate
Nondeductible expenses and others
Effect of change in income tax rate
2006
35.00%
2005
32.50%
(1.85)
(3.04)
(2.59)
(1.55)
(1.31)
1.14
.0
30.39%
(0.89)
(0.19)
0.80
27.63%
The income tax rate was increased from 32% to 35% effective November 1, 2005, with the
13. Other Noncurrent Assets

2005
2006
(In Thousands)
Prepayment (see Note 11)

Pension asset (see Note 21)
P
=14,743
P
=14,743
=20,547
P
43,376
=63,923
P
*SGVMC209703*
- 22 -

2005
2006
(In Thousands)
Trade
Accrued expenses:
Rental
Personnel costs
Finance costs
Others
Pension liability (see Note 21)
Shippers and brokers deposits
Others
P
=57,087
=85,751
P
93,528
93,198
39,913
136,940
163,781
50,311
35,253
63,592
P
=733,603
94,003
62,510
55,774
93,233
133,329
32,850
103,680
=661,130
P
Following are the terms and conditions of the above financial liabilities:
Accrued finance cost is normally settled quarterly and semi-annually throughout the financial
year.
Other financial liabilities are noninterest-bearing and are normally settled on 30 to 90-day
terms.
15. Provisions for Claims

2005
2006
(In Thousands)

Provisions
Payments
P
=50,992
13,928
(9,082)
P
=55,838
=49,872
P
40,500
(39,380)
=50,992
P
Provisions relate to property, equipment and cargo damage and other claims, which were
recognized in connection with services rendered during the past year. It is expected that most of
these provisions will be settled within the next financial year or on demand.
*SGVMC209703*
- 23 -
16. Interest-bearing Loans and Other Financial Liabilities

This account consists of long-term debt and derivative liabilities.
Long-term Debts
2005
2006
(In Thousands)
Current:
Bilateral loan:
Tranche 1
Tranche 2
Syndicated fixed and floating rate notes (FFRN):
Tranche 1
Tranche 2
Noncurrent:
Bilateral loan:
Tranche 1
Tranche 2
Syndicated FFRN:
Tranche 1
Tranche 2
Tranche 3
Syndicated fixed rate notes (FRN)
P
=200,000
50,000
=200,000
P
83,333
300,000
550,000
(6,511)
P
=543,489
200,000
483,333
(8,653)
=474,680
P
P
=
75,000
400,000
300,000
1,000,000
1,000,000
2,775,000
(18,454)
P
=2,756,546
=200,000
P
416,667
700,000
300,000
1,000,000
1,000,000
3,616,667
(23,247)
=3,593,420
P
The maturities of long-term debt at nominal values as of December 31, 2006 follow:
Amount
(In Thousands)
2007
2008
2009
2010
2011 and beyond
=550,000
P
350,000
725,000
450,000
1,250,000
=3,325,000
P
*SGVMC209703*
- 24 The other significant terms of the foregoing long-term debts are summarized below:
Syndicated FFRN - Tranches 1 to 3 are payable lump sum at various maturities. Prior to the
maturity dates, the Company may redeem, in whole but not a part of, any of the relevant
outstanding 3-year and 5-year floating rate notes, and 5-year and 10-year fixed notes starting at the
end of the 2nd, 3rd, and 7th year, respectively.
The amount payable to the noteholders in respect of such early redemption shall be the amount
calculated by the Facility Agent as the present value of the remaining cash flows of the notes
discounted at the yield of the comparable benchmark tenor as shown on the MART 1 page of
Bloomberg on the second business day preceding the early redemption date, provided, however,
that the early redemption amount shall not exceed 105% nor be less than 100% of the principal
amount of the notes being earlier redeemed; provided further, that in all instances of early
redemption, the Company shall pay the noteholders accrued interest on the principal amount of the
notes earlier redeemed.
Bilateral Loans - Tranches 1 and 2 are payable in equal semi-annual payments.
Syndicated FRN is payable lump sum at various maturities. Starting from the Interest Payment
Date falling at the end of the third year from the Issue Date in respect of the 5-year fixed rate
notes; and starting from the Interest Payment Date falling at the end of the fourth year from the
Issue Date in respect of the 7-year fixed rate notes, the Issuer may, but is not required to, redeem
in whole and not a part of any of the outstanding 5-year or 7-year fixed rate notes plus
accumulated interest and on any Interest Payment Date falling thereafter. Interest rates per annum
on long-term debt ranged from 7.52% to 14.74% in 2006 and 8.00% to 14.74% in 2005.
All of the Companys long-term debts are unsecured loans.
Some of the foregoing loan agreements require, among others, maintenance of debt to equity ratio
not to exceed 2.5 to 1 and prior consent of the creditor on the declaration of cash dividends in
excess of 50% of the Companys retained earnings; merger or consolidation; mortgage or disposal
of all or substantially all of its assets; prepayment on any long-term loans unless a proportionate
prepayment of other long-term loans is made and extension of credit or investments and granting
of advances, except those necessary in the ordinary course of business. The Company has
complied with all of the provisions of the loan agreements as of December 31, 2006 and 2005.
Derivative Liabilities
2005
2006
(In Thousands)
Current Foreign currency option (see Note 25)

Noncurrent:
Embedded foreign currency option (see Note 25)
Interest rate swap (see Note 25)
P
=17,331
=19,305
P
105,166
75,388
180,554
P
=197,885
143,421
36,071
179,492
=198,797
P
*SGVMC209703*
- 25 -

Retained Earnings
Appropriated
for Port
Common Stock
Additional
Paid-in Capital

Cash dividends - P
=0.20 a share
P
=2,000,000
P
=2,000,000
P
=264,300
P
=264,300
P
=500,000
P
=500,000
P
=1,575,044
(400,000)
784,020
P
=1,959,064

Cash dividends - P
=0.16 a share
=2,000,000
P
=2,000,000
P
=264,300
P
=264,300
P
=500,000
P
=500,000
P
=1,235,993
P
(320,000)
659,051
=1,575,044
P
(In Thousands)
Capital Stock - P
=1 Par Value
The Company has authorized and issued capital stock of 4,000,000,000 common shares and
2,000,000,000 common shares, respectively, as of December 31, 2006 and 2005.
Other Reserves
2005
2006
(In Thousands)

(P
=26,835)
(80,189)
(P
=107,024)
P62,279
=
(89,114)
(P
=26,835)
18. Costs and Expenses

2005
2006
(In Thousands)
Labor costs (see Note 21)

Depreciation and amortization
Equipment running
Taxes and licenses
Insurance
General transport
Others
P
=720,326
513,567
408,762
151,344
83,356
82,536
35,844
2,954
534,055
P
=2,532,744
=713,830
P
487,548
394,705
117,453
88,713
97,163
73,453
2,646
624,426
=2,599,937
P
Labor costs include salaries, benefits and pension expense (see Note 21).
Spare parts and supplies used included under equipment running amounted to P
=119.5 million and
=107.8 million in 2006 and 2005, respectively.
P
*SGVMC209703*
- 26 -
19. Other Income and Expenses

Finance cost is broken down as follows:
2005
2006
(In Thousands)
Interest on bank loans

Amortization of debt issue costs
Interest component of pension expense
(see Note 21)
P
=452,767
6,935
=456,150
P
9,776
4,288
P
=463,990
16,603
=482,529
P
2006
2005
Finance income is broken down as follows:

(In Thousands)
Interest on cash in banks and short-term investments

Accretion of rental deposits
=47,040
P
=47,040
P
P
=84,352
2,274
P
=86,626
Others - net consisted of the following:

2005
2006
(In Thousands)
Foreign exchange loss - net

Dividend income from a subsidiary and an associate
Lease and other income - net
(P
=56,196)
42,205
30,234
P
=16,243
(P
=19,822)
25,048
19,973
=25,199
P

a. The Company has a management agreement with POMS for a period of five years until
August 31, 2010. The terms of the agreement provide for the payment of a monthly
management fee equivalent to 5% of ATIs consolidated net income before income tax of the
immediately preceding month. Management fees (included under costs and expenses in the
parent company statement of income) incurred for the years ended December 31, 2006 and
2005 amounted to P
=50.3 million and P
=41.6 million, respectively. Accrued management fees
(included under Trade and other payables account in the parent company balance sheet)
amounted to P
=4.8 million and =
b. The Company has a management agreement with ATIB for a period of five years until
September 1, 2007. The terms of the agreement provide for a monthly management fee
calculated using a pre-agreed rate applied to ATIBs income before income tax. Management
fees earned for the years ended December 31, 2006 and 2005 amounted to P
=3.9 million and
P
*SGVMC209703*
- 27 c. The Company granted interest-bearing advances to ATIB mainly to finance the latters
acquisition of new port equipment and current operations. Interest earned amounted to
P
=2.2 million in 2005. The outstanding receivable as of
December 31, 2006 and 2005 amounted to nil and P
d. The Company collects certain receivables in behalf of ATIB. As of December 31, 2006 and
2005, collections for remittance to ATIB amounted to P
=30.1 million and P
=68.3 million,
respectively.
The net payable to ATIB amounting to P
=30.1 million and P
and 2005, respectively, is included under the Trade and other payables account in the parent
company balance sheet.
Following are the details of compensation of key management personnel of the Company:
2005
2006
(In Thousands)
Short-term employee benefits

Post-employment pension benefits
Total compensation incurred
=74,098
P
2,741
=76,839
P
P
=78,570
3,018
P
=81,588
21. Pension
The following tables summarize the components of net pension expense recognized in the parent
company statement of income and the funded status and amounts recognized in the parent
company balance sheet.
Net Pension Expense
2005
2006
(In Thousands)

Interest cost
Net pension expense
P
=11,169
23,275
(18,987)
P
=15,457
P8,887
=
22,134
(5,531)
=25,490
P
P
=82,249
=18,214
P
Current service cost is included in Costs and expenses account in the parent company statement
of income. Interest cost net of expected return on plan assets is included in Finance cost account
in the parent company statement of income.
*SGVMC209703*
- 28 Net Benefit Asset (Liability) as of December 31

2005
2006
(In Thousands)
Present value of pension obligation

Benefit asset (liability)
(P
=349,541)
299,230
(P
=50,311)
(P
=193,957)
237,333
=43,376
P
Changes in the Present Value of Pension Obligation

2005
2006
(In Thousands)
Present value of pension obligation at beginning

of year
Interest cost
Benefits paid
Actuarial loss
Present value of pension obligation at end of year
P
=193,957
23,275
11,169
(20,352)
141,492
P
=349,541
=158,096
P
22,134
8,887
(104,644)
109,484
=193,957
P

2005
2006
(In Thousands)
Fair value of plan assets at beginning of year

Contributions
Benefits paid
Actuarial gain
Fair value of plan assets at end of year
P
=237,333
18,987
(20,352)
63,262
P
=299,230
=69,132
P
5,531
254,631
(104,644)
12,683
=237,333
P
The plan assets include investments in ATIs common share with total fair value of nil, and
P
The Company expects to contribute P
=50.3 million to its defined benefits plan in 2007.
The major categories of plan assets as a percentage of the fair value of total plan assets are as
follows:
Bonds
Equities
Others
2006
90.5%
9.5%
2005
85.3%
3.4%
11.3%
*SGVMC209703*
- 29 The cumulative amount of actuarial losses recognized in the parent company statement of
recognized income and expense is P
=83.4 million and P
=5.2 million as of December 31, 2006 and
2005, respectively.
The principal assumptions used in determining pension benefit obligations of the Companys plans
are shown below:
Expected rate of return on plan assets at end of year
2005
12.0%
8.0%
7.0%
2006
7.7%
12.0%
8.0%
Experience adjustments in 2006 on plan liabilities amounted to a gain of P

=5.8 million.
22. Registration with the Board of Investments (BOI)
The Companys Domestic Terminal in South Harbor is registered with the BOI as a new passenger
terminal under the Omnibus Investments Code of 1987 (Executive Order No. 226). Under such
registration, the Companys registered activity is entitled to income tax holiday (ITH) until
August 2009. ITH incentives availed in 2006 and 2005 amounted to P
=20.9 million and
P

a. On October 26, 2005, in consideration of the cargo traffic at the South Harbor and the
intervening events which prevented the Company from faithfully implementing its original
commitment under the 1999 Master Plan for South Harbor, the PPA approved the revised
South Harbor Master Plan where the Company committed to invest US$50.6 million from
2005 to 2008 or an aggregate of US$129.0 million from 1998 to 2008, for the rehabilitation,
development and expansion of the South Harbor facilities and purchase of equipment.
b. The Company entered into several lease and sublease agreements covering its buildings and
land where its bulk grain terminal is located. The future minimum rentals payable under
operating leases as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

P
=42,243
188,743
73,465
P
=304,451
P43,247
=
193,008
132,321
=368,576
P
*SGVMC209703*
- 30 c. The Company has a 25-year lease agreement until April 2021 covering the land in Calamba,
Laguna to be used exclusively as an Inland Container Depot. The future minimum rentals
payable under operating leases as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

P9,072
=
39,249
144,670
=192,991
P
P
=9,072
40,759
134,088
P
=183,919
d. The Company is authorized by the PPA to render cargo handling services at the South Harbor
until May 2013. For storage operations, the Company shall pay an annual fixed fee of
=55.0 million payable quarterly and a variable fee of 30% of its annual gross storage revenue
P
in excess of P
=273.0 million. For arrastre operations, the Company shall pay a quarterly fixed
fee of US$1.15 million plus a variable fee of 8% of its total gross income, or 20% of its total
quarterly gross income, whichever is higher. For general cargo operations, the Company shall
pay 20% of its total gross income collected from arrastre services for general cargoes. The
General Cargo Fee arrangement is effective until May 31, 2007. For domestic terminal
operations, the Company shall pay 10% of its total gross income derived from its domestic
cargo handling and passenger terminal operations. The PPA fees in 2006 and 2005 amounted
to P
=724.5 million, respectively. The future minimum payments as of
December 31 are as follows:
Storage Operations
2005
2006
(In Thousands)
Within one year

P55,000
=
220,000
132,917
=407,917
P
P
=55,000
220,000
77,917
P
=352,917
Arrastre Operations
2005
2006
(In Thousands)
Within one year

$4,600
18,400
6,517
$29,517
$4,600
18,400
11,117
$34,117
*SGVMC209703*
- 31 e. The Company leases its office space from the PPA. The future minimum rentals payable
under operating lease as of December 31 are as follows:
2005
2006
(In Thousands)
Within one year

f.
P
=3,680
18,790
8,536
P
=31,006
P3,346
=
17,082
13,924
=34,352
P
As of December 31, 2006, the Company has no undrawn committed borrowing facilities,
g. The Company has contingent liabilities for lawsuits and various other matters occurring in the
24. Financial Risk Management Objectives and Policies

The Companys principal financial instruments, other than derivatives, comprise of loans from
banks and other financial institutions and cash and short-term investments. The main purpose of
these financial instruments is to raise financing for the Companys capital expenditures and
operations. The Company has various other financial assets and liabilities such as trade and other
receivables and trade and other payables, which arise directly from its operations. Other financial
instruments include deposits, AFS investments and derivative instruments.
The Company enters into interest rate derivatives (i.e. cap and swap) to manage its interest rate
exposure relating to its floating-rate debt.
The main risks arising from the Companys financial instruments are interest rate risk, liquidity
risk, foreign currency risk and credit risk. The BOD reviews and agrees on policies for managing
each of these risks. The Companys accounting policies in relation to derivatives are set out in
Note 4.
Interest Rate Risk
The Companys exposure to the risk for changes in market interest rates relates primarily to the
Companys long-term debt obligations with floating interest rates.
The Companys policy is to manage its interest cost using a mix of fixed and variable rate debts.
To manage this mix, the Company enters into interest rate cap and swap derivatives, in which the
Company agrees to exchange, at specified intervals, the difference between fixed and variable rate
interest amounts calculated by reference to an agreed-upon notional principal amount. These
swaps and caps are designated to hedge underlying debt obligations.
*SGVMC209703*
- 32 The following table sets out the carrying amount, by maturity, of the Companys financial
instruments that are exposed to interest rate risk:
Fixed rate:
Syndicated FFRN:
Tranche 1 (b) (d)
Tranche 2 (b)
Tranche 3 (b) (d)
Syndicated FRN (b) (c)
Floating rate:
Bilateral Loan:
Tranche 1 (a)
Tranche 2 (a)
Syndicated FFRN:
Tranche 2 (a)
Tranche 3 (a)
Within 1
Year
1-2 Years
2-3 Years
3-4 Years
4-5 Years
More than
5 Years
Total
=300,000
P
300,000
=
P
200,000
200,000
=
P
100,000
100,000
=
P
450,000
450,000
=
P
=400,000
P
300,000
550,000
1,250,000
=700,000
P
200,000
400,000
1,000,000
2,300,000
200,000
50,000
50,000
25,000
200,000
125,000
250,000
=550,000
P
100,000
150,000
=350,000
P
600,000
625,000
=725,000
P
=450,000
P
100,000
600,000
1,025,000
= P
P
=1,250,000 =
P3,325,000
Premium
and
Issuance
Costs
Carrying
Value
Fair
Value
(P
=3,625) P
=696,375
(752)
199,248
(3,911)
396,089
(9,835)
990,165
(18,123) 2,281,877
=871,751
P
216,131
584,794
1,201,192
2,873,868
(352)
(1,428)
199,648
123,572
199,648
123,572
99,631
99,631
(369)
595,307
595,307
(4,693)
(6,842) 1,018,158 1,018,158
(P
=24,965) P
=3,300,035 =
P3,892,026
Interest rates:
(a) - Applicable 3-month MART 1 plus spread
(b) - Applicable 5-year MART 1 plus spread
(c) - Applicable 7-year MART 1 plus spread
(d) - Applicable 10-year MART 1 plus spread
Interest on financial instruments classified as floating rate is re-priced at least quarterly. Interest
on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The
other financial instruments of the Company that are not included in the above tables are
noninterest-bearing and are therefore not subject to interest rate risk.
Foreign Currency Risk
The Company has foreign currency exposures arising from US dollar (USD)-denominated lease
payments and from purchases by operating units in currencies other than PHP.
The Companys foreign currency-denominated accounts as of December 31, 2006 are as follows:
Amounts
(In Thousands)
Assets:
Liabilities:
Net foreign currency-denominated assets
Peso equivalent
US$15,946
630
16,576
376
US$16,200
=794,529
P
*SGVMC209703*
- 33 Credit Risk
The Company trades only with recognized, creditworthy third parties. It is the Companys policy
that all customers who wish to trade on credit terms are subject to credit verification procedures.
In addition, receivable balances are monitored on an ongoing basis with the result that the
Companys exposure to bad debts is not significant. A regular/annual review and evaluation of
accounts is being executed, to assess the credit standing of customers. In addition, a portion of
revenues is on cash basis.
With respect to credit risk arising from the other financial assets of the Company, which comprise
cash and cash equivalents, deposits, AFS investments and certain derivative instruments, the
Companys exposure to credit risk arises from default of the counterparty, with a maximum
exposure equal to the carrying amount of these instruments.
Since the Company trades only with recognized third parties, there is no requirement for collateral.
There are no significant concentrations of credit risk within the Company.
Liquidity Risk
The Companys objective is to maintain a balance between continuity of funding and flexibility
through the use of bank loans.

The table below presents a comparison by category of carrying amounts and estimated fair values
of all the Companys financial instruments as of December 31, 2006 and 2005.
2005
2006
Carrying
Values
Fair
Values
Carrying
Values
Fair
Values
(In Thousands)
Financial assets:
Cash and cash equivalents (see Note 6)
Trade and other receivables (see Note 7)
Deposits (see Note 11)
AFS investments (see Note 11)
Interest rate cap (see Note 11)
Financial liabilities:
Trade and other payables (see Note 14)
Interest-bearing loans and borrowings
(see Note 16):
Floating rate
Fixed rate
Derivative liabilities (see Note 16)
P
=1,680,425
297,839
26,106
2,751
P
=1,680,425
297,839
32,542
2,751
=1,735,710
P
413,519
26,407
4,136
478
=1,735,710
P
413,519
28,939
4,136
478
733,603
733,603
661,130
661,130
1,018,158
2,281,877
197,885
1,018,158
2,873,868
197,885
1,441,087
2,627,013
198,797
1,441,087
2,958,125
198,797
*SGVMC209703*
- 34 Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value.
Nonderivative Financial Instruments

The fair values of cash and cash equivalents, trade and other receivables and trade and other
payables are approximately equal to their carrying amounts due to the short-term nature of
these transactions.
The fair value of fixed rate interest bearing loans is based on the discounted value of future
cash flows using the applicable rates for similar types of loans. The discount rates used range
from 6.42% to 10.09%.
For variable rate loans that re-price every three months, the carrying value approximates the
fair value because of recent and regular re-pricing based on current market rates.
Quoted market prices have been used to determine the fair values of listed AFS investments.
The fair values of unlisted AFS investments are based on cost since the fair values are not
readily determinable.
For noninterest-bearing deposits, the fair value is estimated as the present value of all future
cash flows discounted using the prevailing market rate of interest for a similar instrument.
The discount rates used are 6.05% and 7.13%.
Derivative Instruments
The fair values of the interest rate cap and the interest rate swap were based on counterparty
valuation.
The embedded currency options in a lease contract were valued using Garman-Kohlhagen
option pricing model valuation that take into account such factors as the risk free USD and
PHP interest rates and a historical volatility rate.
Derivatives Accounted for as Cash Flow Hedges
Interest Rate Swap

The Company entered into interest rate swap to hedge the variability of cash flows in the
interest rate payments on its long-term variable rate loan with aggregate notional amount of
=500.0 million maturing in 2009. Changes in the cash flows of the interest rate swap are
P
exactly offset to changes in cash flows attributable to fluctuations in the 3-month MART1
interest rates on the variable loan. The Company pays fixed interest amount of 11.22% per
annum and receives interest equivalent to the prevailing 3-month MART1 rate as of payment
date. As of December 31, 2006, the outstanding balance of the interest rate swap is
=500 million.
P
*SGVMC209703*
- 35 The derivative liability arising from recognition of fair value changes as of December 31, 2006
and 2005 amounted to P
=75.4 million and P
=36.1 million, respectively. The unrealized fair
value after tax included under Other reserves account in the equity section of the parent
company balance sheet amounted to P
=49.0 million and P
and 2005, respectively.
Interest Rate Cap

The Company also entered into interest rate cap to protect the cash flows on the designated
loan from adverse extreme market interest rate changes with aggregate notional amount of
=500 million maturing in 2007. Changes in the intrinsic value of the option are expected to be
P
perfectly effective in offsetting the changes in cash flows attributable to fluctuations in the
3-month MART1 interest rates above 10%. As of December 31, 2006, the outstanding
balance of the interest rate cap is P
=200 million.
The cap will mature on November 7, 2007. The Company assesses and measures hedge
effectiveness based on the actual and the hypothetical caps intrinsic values.
The derivative asset arising from recognition of fair value amounted to nil and P
=0.5 million as
of December 31, 2006 and 2005, respectively. No fair value changes relating to the cap are
deferred in equity.
Hedge Effectiveness Results

As of December 31, 2006 and 2005, the effective marked-to-market value changes on the
Companys cash flow hedges that were deferred in equity amounted to P
=49.0 million and
=23.4 million, respectively, net of tax. Total ineffectiveness recognized immediately in the parent
P
company statement of income for the year ended 2006 and 2005 amounted to P
=0.5 million and
P
The distinction of the results of hedge accounting into Effective or Ineffective represents
designations based on PAS 39 and are not necessarily reflective of the economic effectiveness of
the instruments.
The movement of cash flow hedge derivative included in other reserves are as follows:
2005
2006
(In Thousands)

Net changes in fair value of derivative
(P
=23,446)
(25,556)
(P
=49,002)
P
=
(23,446)
(P
=23,446)
Derivatives Not Accounted for as Hedges
Embedded Currency Derivatives

The Company has entered into an agreement with Provincial Government of Province of
Bataan leasing a 10-hectare portion of land to establish a land-based bulk grain and cargo
terminal. Future lease payments are indexed to USD:PHP exchange rate changes, in which
additional payments will be made if the prevailing exchange rate breaches a specified base
*SGVMC209703*
- 36 exchange rate, which is the spot rate prevailing on contract date. The total lease fee per
contract (before taking into account adjustments resulting from changes in the foreign
exchange rates) amounted to P
=302.5 million.
The derivative liability reported for these embedded foreign currency options as of
December 31, 2006 and 2005 amounted to P
Fair Value Changes on Derivatives
The net movements in fair value changes of all derivative instruments are as follows:
2005
2006
(In Thousands)

Net changes in fair value of derivatives:
Designated as accounting hedges
Not designated as accounting hedges
Less fair value of settled instruments
Balance at end of year (see Notes 11 and 16)
P
=198,319
=201,352
P
39,795
(22,687)
215,427
17,542
P
=197,885
35,593
(19,444)
217,501
19,182
=198,319
P
*SGVMC209703*
COVER SHEET
5 6 2 5 5
A T I
o f
B A T A N G A S ,
A s i a n
I N C .
( A
T e r m i n a l s ,
S u b s i d i a r y
I n c . )
P o r t
o f
a n g a s
B a t a n g a s ,
S t a .
C l a r a ,
B a t
C i t y
1 2
3 1
Month
Day
Daisy Agito
(043) 723-8252
(Contact Person)
A A F S
(Form Type)
Month
(Fiscal Year)
Day
(Annual Meeting)

Domestic
Foreign
File Number
LCU
Document ID
Cashier
STAMPS
*SGVMC209701*
SGV & CO

6760 Ayala Avenue
1226 Makati City
Philippines
Phone: (632) 891-0307

Fax:
(632) 819-0872
www.sgv.com.ph

ATI Batangas, Inc.
Port of Batangas, Sta. Clara
Batangas City
We have audited the accompanying financial statements of ATI Batangas, Inc., which comprise the
balance sheets as at December 31, 2006 and 2005, and the statements of income, statements of
recognized income and expense and statements of cash flows for the years then ended, and a summary
of significant accounting policies and other explanatory notes.
the circumstances.
our audit opinion.
*SGVMC209701*
ATI BATANGAS, INC.

(A Subsidiary of Asian Terminals, Inc.)
BALANCE SHEETS
2006
December 31
2005
Current Assets
Due from parent company (Notes 14 and 16)
Prepayments and supplies (Note 8)
P
=28,763,486
31,569,703
31,340,715
8,277,260
99,951,164
=12,417,468
P
23,158,292
46,518,762
7,885,022
89,979,544
Noncurrent Assets
Deferred tax assets (Note 13)
Deposits
96,452,124
9,863,701
1,319,631
107,635,456
104,339,923
4,212,689
1,267,000
109,819,612
P
=207,586,620
=199,799,156
P
P
=59,035,813
599,776
5,544,604
65,180,193
=41,132,639
P
3,347,305
44,479,944
20,000,000
12,800
20,000,000
12,800
90,000,000
40,969,468
(8,575,841)
142,406,427
90,000,000
44,693,627
612,785
155,319,212
ASSETS

Current Liabilities
Trade and other payables (Notes 10, 15 and 16)
Provision for claims
Taxes payable
Equity (Note 11)
Capital stock - P
=100 par value
Authorized and issued - 200,000 shares
Retained earnings:
Appropriated for port development
Unappropriated
Total Equity
P
=207,586,620
=199,799,156
P
See accompanying Notes to Financial Statements.
*SGVMC209701*
ATI BATANGAS, INC.

STATEMENTS OF INCOME

2005
2006
REVENUES
P
=199,232,213
=191,364,629
P
EXPENSES (Notes 12, 14 and 15)
(151,619,740)
(157,651,461)
(1,843,743)
(3,077,253)
FINANCE COST (Note 15)

FINANCE INCOME
OTHERS
PROVISION FOR (BENEFIT FROM) INCOME TAX
(Notes 13 and 18)
Current
Deferred
NET INCOME
489,456
275,242
(411,088)
(47,506)
45,847,098
10,274,547
(703,290)
9,571,257
P
=36,275,841
30,863,651
4,227,178
(787,896)
3,439,282
=27,424,369
P
*SGVMC209701*
ATI BATANGAS, INC.

STATEMENTS OF RECOGNIZED INCOME AND EXPENSE

2005
2006
Actuarial loss (Note 15)
Tax on item taken directly to equity (Note 11)
(P
=14,136,348)
(P
=119,879)
4,947,722
10,079
(9,188,626)
(109,800)
36,275,841
27,424,369
P
=27,087,215
=27,314,569
P

*SGVMC209701*
ATI BATANGAS, INC.

STATEMENTS OF CASH FLOWS

2005
2006
Adjustments for:
Finance cost
Provisions for:
Doubtful accounts (Note 12)
Claims
Finance income
Due from parent company
Prepayments and supplies
Taxes payable
Finance cost paid
Income tax paid
P
=45,847,098
=30,863,651
P
12,208,227
1,843,743
13,669,918
3,077,253
2,601,621
599,776
(489,456)
62,611,009
1,056,940
(275,242)
48,392,520
(10,989,629)
36,993,099
(392,238)
(6,531,383)
(16,684,577)
(2,200,616)
2,942,614
(947,489)
90,217,366
(1,019,531)
(7,129,759)
82,068,076
5,205,889
1,490,340
29,672,173
(2,221,356)
(3,261,394)
24,189,423

Additions to property and equipment (Note 9)
Decrease (increase) in deposits
(4,320,428)
466,053
(52,631)
(3,907,006)
(5,721,066)
284,223
45,000
(5,391,843)

Dividends paid
Increase (decrease) in due to parent company
Net cash used in financing activities
(40,000,000)
(21,815,052)
(61,815,052)
(20,000,000)
3,905,665
(16,094,335)
NET INCREASE IN CASH AND CASH EQUIVALENTS
16,346,018
2,703,245
CASH AND CASH EQUIVALENTS AT BEGINNING

OF YEAR
12,417,468
9,714,223
P
=28,763,486
=12,417,468
P
CASH AND CASH EQUIVALENTS AT END OF YEAR

*SGVMC209701*
ATI BATANGAS, INC.

NOTES TO FINANCIAL STATEMENTS
ATI Batangas, Inc. (the Company) is incorporated in the Philippines and registered with the
Philippine Securities and Exchange Commission (SEC). The Company is 98.82% owned by
Asian Terminals, Inc. (ATI or the parent company). Its operations consist of arrastre,
stevedoring, storage and related cargo handling services, and maintenance of a passenger terminal.
The registered office address of the Company is Port of Batangas, Sta. Clara, Batangas City.
The accompanying financial statements were authorized for issuance by the Board of Directors on
March 22, 2007.
The Company has the exclusive right to manage and render arrastre, stevedoring, storage and
related cargo handling services at the Port of Batangas for Phase 1 for a period of ten years until
2015, renewable for another ten years upon mutual agreement of the Philippine Ports Authority
(PPA) and the Company. The contract with the PPA includes cargo handling and operation and
management of a passenger terminal.
On October 2, 2006, the one-year permit granted by PPA to manage Phase II of the Port of
Batangas expired. The PPA is in the process of preparing the terms of reference for bidding of
Phase II.
3. Basis of Preparation and Statement of Compliance

The financial statements have been prepared on a historical cost basis and are presented in
Philippine peso, the Companys functional and presentation currency. All values are rounded to
the nearest peso, unless otherwise indicated.
The financial statements of the Company have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
*SGVMC209701*
-2-

follows:
Amendments to PFRSs and Philippine Interpretations Effective in 2006
The Company has adopted the following amendment to PFRS and Philippine Interpretation during
the year:
Philippine Accounting Standard (PAS) 19, Amendment - Employee Benefits

Amendment for Actuarial Gains and Losses, Group Plans and Disclosures.
As of January 1, 2006, the Company adopted the amendments to PAS 19. As a result of the
adoption, additional disclosures are made providing information about trends in assets and
liabilities in the defined benefit plan and the assumptions underlying the components of the
defined benefit cost. This change resulted in additional disclosures being included for the
years ended December 31, 2006 and 2005. The Company also adopted the new option offered
to recognize actuarial gains and losses outside of the statement of income. As a result, the
Company presented actuarial gain and loss in the statement of recognized income and
expense.

applied. This interpretation has no impact on the Companys financial statements.
The Company has adopted the following other amendments to PFRS during the year. Adoption of
these amendments has no impact on the Companys financial statements.
PAS 21, Amendment - The Effects of Changes in Foreign Exchange Rates

PAS 39, Amendments - Financial Instruments: Recognition and Measurement

Derivatives. The adoption of this interpretation has no impact on the Companys financial
statements.
*SGVMC209701*
-3Future Changes in Accounting Policies

been approved, but are not yet effective in 2006:

2009)
purposes of issuing any class of instruments in a public market. This standard is not relevant
to the Companys financial statements.
does not expect this interpretation to have a significant impact on the Companys financial
statements.
expect this interpretation to have a significant impact on the Companys financial statements.
*SGVMC209701*
-4
This interpretation prohibits the reversal of impairment losses on goodwill and
available-for-sale equity investments recognized in the interim financial reports even if
impairment is no longer present at the annual balance sheet date. The Company does not
expect this interpretation to have a significant impact on the Companys financial statements.
Company does not expect this interpretation to have a significant impact on the Companys
public services. The Company will evaluate its operating contract with the PPA to determine

Cash and cash equivalents in the balance sheet comprise cash in banks and on hand and short-term
investments with an original maturity of three months or less.
Supplies
Supplies (included under Prepayments and supplies account in the balance sheet) are stated at
the lower of cost or net realizable value (current replacement cost). Cost is determined using the
weighted average method.
of replacing part of such property and equipment when that cost is incurred if the recognition
criteria are met. Depreciation and amortization are computed using the straight-line method, net
of residual values, over the estimated useful lives of the assets, as follows:
Port facility and equipment
2 to 12 years or life of the operating

contract, whichever is shorter
5 years or term of the lease,
2 to 5 years
2 to 5 years
*SGVMC209701*
-5The residual values, useful lives and depreciation method are reviewed periodically and adjusted if
and equipment.
An item of property and equipment is derecognized upon disposal or when no future economic
the asset) is included in the statement of income in the year the asset is derecognized.
those from other assets or groups of assets. Where the carrying amount of an item of property and
continuing operations, if any, are recognized in the statement of income in those expense
categories consistent with the function of the impaired asset.
Pension
The Company has a funded, defined benefit pension plan, administered by a retirement trustee,
covering its permanent employees. The cost of providing benefits under the defined benefit plan
is determined using the projected unit credit actuarial valuation method.
loss in the statement of recognized income and expense.
*SGVMC209701*
-6The defined benefit asset or liability comprises the present value of the defined benefit obligation
Financial Instruments
Financial assets and liabilities are recognized initially at fair value. Transaction costs are included
in the initial measurement of all financial assets and liabilities, except for financial instruments
measured at fair value through profit or loss (FVPL).
techniques.
The Company recognizes a financial asset or liability in the balance sheet when it becomes a party
to the contractual provisions of the instrument. A financial liability (or a part of a financial
liability) is derecognized when the obligation is extinguished. In the case of a regular way
purchase or sale of financial assets, recognition and derecognition, as applicable, is done using
settlement date accounting.
Financial assets are classified into the following categories: financial assets at FVPL, loans and
The Company has no financial assets at FVPL, HTM investments and AFS investments as of
December 31, 2006 and December 31, 2005. The Companys trade and other receivables and due
from parent company are classified as loans and receivables.
Loans and receivables are non-derivative financial assets with fixed or determinable payments and
are not quoted in an active market. Such assets are carried at cost or amortized cost in the balance
sheet. Amortization is determined using the effective interest rate method and is included in the
interest income in the Companys statement of income. The losses arising from impairment of
such financial assets are recognized in the statement of income.
*SGVMC209701*
-7Derecognition of Financial Assets and Liabilities

arrangement; or
Where the Company has transferred its rights to receive cash flows from an asset or has entered
Financial Liabilities. A financial liability is derecognized when the obligation under the liability
assets is impaired.
the loss shall be recognized in the statement of income.
*SGVMC209701*
-8If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
recognized in the statement of income, to the extent that the carrying value of the asset does not
exceed its amortized cost at the reversal date.
Provisions
certain. The expense relating to any provision is presented in the statement of income net of any
reimbursement. If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognized
as finance cost.
Revenue
Company and the revenue can be reliably measured. The following specific recognition policies
are adopted by the Company:
Revenues from Cargo Handling Operations. Revenues are recognized when services are rendered.
Passenger Terminal Fees. Revenues are recognized upon sale of terminal tickets.
Finance Income. Finance income is recognized on a time proportion basis that reflects the
effective yield on the investment.
Operating Leases
assets. Lease payments are recognized as expense in the statement of income on a straight-line
basis over the lease term.
Borrowing Costs
economic benefits to the Company. If the carrying amount of the asset exceeds its recoverable
Foreign Currency Transactions
Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency rate of exchange ruling at the balance sheet date. All
differences are taken to the statement of income.
*SGVMC209701*
-9Income Taxes
amount expected to be recovered from or paid to the tax authority. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted at the balance sheet
date.
Deferred tax liabilities are recognized for all taxable temporary differences, including asset
revaluations. Deferred tax assets are recognized for all deductible temporary differences to the
extent that it is probable that taxable profit will be available against which the deductible
temporary differences can be utilized. Deferred income tax, however, is not recognized when it
arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rate that is expected to apply to the year
when the asset is realized or the liability is settled, based on tax rates that has been enacted or
substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to
offset current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.
Income tax relating to items recognized directly in equity is recognized in equity and not in the
Contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed in the
notes to the financial statements unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in the financial statements but
disclosed in the notes to financial statements when an inflow of economic benefits is probable.
Subsequent Events
Post year-end events that provide additional information about the Companys position at the
balance sheet date (adjusting events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to the financial statements when
material.
*SGVMC209701*
- 10 -

Judgments
the financial statements.
Operating Lease. The Company has various operating lease agreements as a lessee. The
Estimates
Impairment of Receivables. The Company maintains an allowance for doubtful accounts at a level
that management considers adequate to provide for potential uncollectibility of receivables. A
review of the factors that affect the collectibility of the accounts including age and status of the
receivables, is made by management on a continuing basis to identify accounts to be provided
with allowance. The allowance is established by charges to income in the form of impairment
provision of receivables. The carrying amounts of trade and other receivables are P
=31.6 million
and P
future technological developments consistent with Companys pursuit of constant modernization
of the equipment fleet to ensure the availability, reliability and cost-efficiency of the equipment. It
is possible that the factors mentioned may change in the future which could cause a change in
estimated useful lives. A reduction in the estimated useful lives could cause a significant increase
in depreciation and amortization of property and equipment. The carrying amounts of property
and equipment are P
=96.5 million and P
respectively (see Note 9).
Asset Impairment. The Company assesses impairment on property and equipment whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be
recoverable. The factors that the Company considers important which could trigger an impairment
review include the following:

equipment. There were no accumulated impairment losses recognized as of December 31, 2006
and 2005.
*SGVMC209701*
- 11 Deferred Tax Assets. Management uses judgment in reviewing the carrying amount of deferred
such deferred tax assets to be utilized. Deferred tax assets amounted to P
=9.9 million and
P
Provision for Claims. The Company records provisions for claims for property, equipment and
cargo damage and for pending civil and labor cases when it is determined that an unfavorable
with the assistance of outside legal counsel. The carrying amounts of provision for claims is
=0.6 million and nil as of December 31, 2006 and 2005, respectively.
P
Pension Cost. The determination of the obligation and cost for pension benefit is dependent on
the selection of certain assumptions used by the Companys actuary in calculating such amounts.
Those assumptions were described in Note 15 and included among others, discount rate, expected
rate of return on plan assets and salary increase rate. While it is believed that the Companys
assumptions are reasonable and appropriate, significant differences in actual experience or
significant changes in assumptions may materially affect the Companys pension obligation. Net
benefit liability recognized by the Company as of December 31, 2006 and 2005, amounted to
=17.1 million and P
P
=3.2 million, respectively (see Note 15).

Short-term deposits
2006
P
=9,852,203
18,911,283
P
=28,763,486
2005
=8,875,358
P
3,542,110
=12,417,468
P
Cash in banks earns interest at the applicable bank deposit rates. Short-term deposits are made for
varying periods of between one day and three months depending on the cash requirements of the
Company, and earn interest at the applicable short-term deposit rates.

Trade receivables
Others
2006
P
=30,276,783
3,582,912
424,516
951,951
35,236,162
(3,666,459)
P
=31,569,703
2005
=22,291,632
P
2,681,008
330,095
138,733
25,441,468
(2,283,176)
=23,158,292
P
Trade receivables are noninterest-bearing and are short-term in nature.
*SGVMC209701*
- 12 Receivable from retirement fund represents employee retirement benefits advanced by the
Company.
8. Prepayments and Supplies

Prepaid:
Rental
Taxes
Insurance
Others
Supplies
2006
2005
P
=3,112,485
2,621,367
27,276
2,390,573
125,559
P
=8,277,260
=3,112,485
P
1,532,464
1,211,876
1,925,000
103,197
=7,885,022
P

Port Facility
Leasehold
and Equipment Improvements
Cost:
of year
P125,497,350
=
Additions
210,669
Retirements

125,708,019
Accumulated depreciation
and amortization:
of year
25,121,769
Additions
10,588,203
Retirements

35,709,972
=89,998,047
P
Furniture, Transportation
Fixtures and
and Other
Equipment
Equipment
2005
2006
=3,695,614
P
3,695,614
=9,628,819
P
1,828,131
11,456,950
=7,097,086
P
2,281,628
9,378,714
P
=145,918,869
4,320,428
150,239,297
=140,535,680
P
5,721,066
(337,877)
145,918,869
3,009,231
185,210
3,194,441
=501,173
P
7,380,082
1,055,228
8,435,310
=3,021,640
P
6,067,864
379,586
6,447,450
=2,931,264
P
41,578,946
12,208,227
53,787,173
P
=96,452,124
28,246,905
13,669,918
(337,877)
41,578,946
=104,339,923
P

Trade
Accrued expenses:
Personnel costs (see Note 15)
Rental
Others
Others
2006
P
=1,469,634
2005
=1,792,155
P
20,153,655
127,920
26,883,879
3,487,933
6,912,792
P
=59,035,813
6,388,219
3,504,596
19,336,169
4,255,662
5,855,838
=41,132,639
P
*SGVMC209701*
- 13 -

Retained Earnings

Cash dividends - =
P200 a share
Common Stock
P
=20,000,000
P
=20,000,000
Additional
Paid-in Capital
P
=12,800
P
=12,800

=20,000,000
P
=20,000,000
P
=12,800
P
=12,800
P
Appropriated
for Port
P
=90,000,000
P
=44,693,627
(40,000,000)
36,275,841
P
=90,000,000
P
=40,969,468
=90,000,000
P
=90,000,000
P
=17,269,258
P
27,424,369
=44,693,627
P
Actuarial Gain (Loss)

2006
P
=612,785
(9,188,626)
(P
=8,575,841)
2005
P722,585
=
(109,800)
=612,785
P
12. Expenses
Labor cost (see Note 15)
Rent (see Note 14)
Equipment running
Depreciation and amortization (see Note 9)
Taxes and licenses
Provision for doubtful accounts
Insurance
General transport
Others (see Note 14)
2006
P
=38,629,428
31,113,001
15,436,462
12,208,227
5,993,321
2,601,621
2,384,732
1,941,460
181,915
41,129,573
P
=151,619,740
2005
=38,083,898
P
24,599,593
17,913,681
13,669,918
5,701,452
1,056,940
2,792,646
2,546,072
404,813
50,882,448
=157,651,461
P
*SGVMC209701*
- 14 -
13. Income Tax

The components of the Companys deferred tax assets follow:
Pension
Unamortized past service costs
Accrued lease
Provision for claims
2006
P
=5,999,494
2,147,105
954,033
553,147
209,922
P
=9,863,701
2005
=1,136,989
P
2,605,817
469,883
=4,212,689
P
Deferred income tax related to items charged (or credited) directly to equity amounted to
(P
=4,617,761) and P
=329,961, as of December 31, 2006 and 2005, respectively.
income tax follows:
Income from support logistic activities
subjected to final tax (see Note 18)
Finance income subjected to final tax and others
Change in income tax rate
2006
35.00%
2005
32.50%
(14.24)
0.12
.
20.88%
(19.79)
(0.29)
(1.28)
11.14%
The income tax rate was increased from 32% to 35% effective November 1, 2005 with the

The Company had the following transactions with its parent company:
a. The Company pays an annual management fee to its parent company calculated using a
pre-agreed rate applied to the Companys net income before income tax, in accordance with
the management agreement (Agreement). The Agreement is for a period of five years until
September 1, 2007, renewable for another five years. Management fees incurred for the years
ended December 31, 2006 and 2005 amounted to P
=3.9 million and P
The Company has no unpaid management fee as of December 31, 2006 and 2005.
Since the Company is being managed by ATI in accordance with its Agreement, any
compensation to key management personnel is paid in the form of management fee to ATI.
*SGVMC209701*
- 15 b. The Company rents cargo handling equipment from its parent company on an annual basis.
Total rent expense amounted to P
=1.9 million and P
=1.5 million in 2006 and 2005, respectively.
The Company has no unpaid rent as of December 31, 2006 and 2005.
c. The Company availed of interest-bearing advances from the parent company to finance the
acquisition of a new port equipment in 2003, and to use as working capital in 2004 and 2005.
The outstanding liability balance as of December 31, 2006 and 2005 amounted to nil and
P
d. The Company has a noninterest-bearing advances to the parent company amounting to
=31.3 million and P
P
The net receivable from the parent company amounting to P
=31.3 million and P
=46.5 million as of
December 31, 2006 and 2005, respectively, is presented as Due from parent company account in
the balance sheet.
There is no information with respect to compensation and benefits to be disclosed in accordance
with PAS 24 since the Company is being managed by ATI.
15. Pension
The following tables summarize the components of net pension expense recognized in the
statement of income and the funded status and amounts recognized in the balance sheet:
Net Pension Expense
Interest cost
Net pension expense
2006
P
=642,396
1,692,986
(868,774)
P
=1,466,608
2005
=528,095
P
1,671,421
(815,524)
=1,383,992
P
P
=2,162,765
=665,625
P
Current service cost is included in Expenses. Interest cost net of expected return on plan assets
is included in Finance cost account in the statement of income.
Net Benefit Liability as of December 31
Present value of pension obligation
Net benefit liability
2006
(P
=31,873,940)
14,732,527
(P
=17,141,413)
2005
(P
=14,108,219)
10,859,679
(P
=3,248,540)
Net benefit liability is included in accrued personnel costs under the Trade and other payables
account in the balance sheet.
*SGVMC209701*
- 16 Changes in the Present Value of Pension Obligation

2005
2006
Present value of pension obligation at beginning
of year
Interest cost
Actuarial loss (gain)
Present value of pension obligation at end of year
P
=14,108,219
1,692,986
642,396
15,430,339
P
=31,873,940
=11,938,723
P
1,671,421
528,095
(30,020)
=14,108,219
P
2006
P
=10,859,679
868,774
1,710,083
1,293,991
P
=14,732,527
2005
=10,194,054
P
815,524
(149,899)
=10,859,679
P

Fair value of plan assets at beginning of year
Contributions
Fair value of plan assets at end of year
The major categories of plan assets as a percentage of the fair value of total plan assets are as
follows:
Bonds
Others
2006
86.4%
13.6%
2005
83.5%
16.5%
The cumulative amount of actuarial loss (gain) recognized in the statement of recognized income
and expense is P
=13.2 million and (P
=0.9) million as of December 31, 2006 and 2005, respectively.
The principal assumptions used in determining pension benefit obligations for the Companys plan
are shown below:
Expected rate of return on plan assets at end of year
2006
8.1%
12.0%
8.0%
2005
12.0%
8.0%
7.0%
Loss on experience adjustments in 2006 on plan liabilities amounted to P

=0.5 million.
*SGVMC209701*
- 17 -

Following is a comparison by category of the carrying amounts and fair values of all the
Companys financial instruments that are carried in the balance sheet as of December 31, 2006 and
2005.
2005
2006
Financial assets:
Due from parent company
Financial liability Trade and other payables
Fair Value
Carrying
Amount
Fair Value
P
=28,763,486
31,569,703
31,340,715
P
=91,673,904
P
=28,763,486
31,569,703
31,340,715
P
=91,673,904
=12,417,468
P
23,158,292
46,518,762
=82,094,522
P
=12,417,468
P
23,158,292
46,518,762
=82,094,522
P
P
=58,979,717
P
=58,979,717
=41,132,639
P
=41,132,639
P
Carrying
Amount
The fair values of cash and cash equivalents, trade and other receivables, due from parent
company and trade and other payables are approximately equal to their carrying amounts due to
the short-term nature of these transactions.

a. The Company is authorized by the PPA to render arrastre, stevedoring, storage and related
cargo handling services at the Port of Batangas until October 2015. For domestic cargo
operations, the Company shall pay 10% of its domestic cargo revenues. For foreign cargo
operations, the Company shall pay 20% of its foreign cargo revenues. For passenger terminal
operations, the Company shall pay a fixed monthly fee of P
=0.4 million with 5% annual
escalation.
b. As of December 31, 2006, the Company has no undrawn committed borrowing facilities,
c. The Company has contingent liabilities for lawsuits and various other matters occurring in the
18. Other Matter

The Company provides services to support logistics activities of Shell Philippines Exploration
B.V. Under Presidential Decree No. 1354, any subcontractor, whether domestic or foreign,
entering into a contract with a service contractor engaged in petroleum operations in the
Philippines, shall be subject to a final tax of 8% of its gross income derived from such contract,
such tax to be in lieu of all taxes, whether national or local.
*SGVMC209701*
Reproduced with permission of the copyright owner. Further reproduction prohibited without
permission.

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SEC Number: 133653

ASIAN TERMINALS, INC.

A. Bonifacio Drive, Port Area, Manila

SEC Form 17-A

December 31, 2006

SECURITIES AND EXCHANGE COMMISSION

December 31, 2006

2. SEC Identification Number

3. BIR Tax Identification Code

4. Name of Issuer as Specified in its Charter

ASIAN TERMINALS, INC.

5. Province, Country or other jurisdiction of

6. Industry Classification Code (SEC use only)

7. Address of Principal Office

8. Registrants telephone number

9. Former name, address and fiscal year, if

Title of Each Class

11. Are any or all of registrants securities listed on a Stock Exchange?

ASIAN TERMINALS, INC.

PART I BUSINESS AND GENERAL INFORMATION

Page 1 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 2 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 3 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 4 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 5 of 33 (Annual Report)

ASIAN TERMINALS, INC.

ATI Batangas, Inc.

Page 6 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Batangas Supply Base

Page 7 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Breakdown of Consolidated Revenues

Page 8 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Equipment operators and

Associated Workers Union (AWU)

Katipunan ng mga Mangagawa sa Daungan

Associated Skilled and Technical Employees

South Harbor Independent Port Checkers Union 09/07/06

Batangas Pier Stevedores and Labor Union

There were no labor strikes for the past three years.

Page 9 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Item 3. Legal Proceedings (as of March 31, 2007)

Page 10 of 33 (Annual Report)

ASIAN TERMINALS, INC.

PART II OPERATIONAL AND FINANCIAL INFORMATION

Page 11 of 33 (Annual Report)

ASIAN TERMINALS, INC.

No. of Shares Held

Page 12 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Item 6. Managements Discussion and Analysis

The purchasers were the following:

Page 13 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 14 of 33 (Annual Report)

ASIAN TERMINALS, INC.

Page 15 of 33 (Annual Report)