TNM STYROPOR INDUSTRIES INC.

STATEMENT OF MANAGEMENTS RESPONSIBILITY FOR FINANCIAL

STATEMENTS

The management of TNM STYROPOR INDUSTRIES, INC. is responsible for

all information and representations contained in the financial statements for
the years ended December 31, 200B. The financial statements have been
prepared in conformity with generally accepted accounting principles of PFRS
and reflect amounts that are based on the best estimates and informed
judgment of management with an appropriate considerations to materiality.
In this regard, management maintains a system of accounting and reporting
which provides for the necessary internal controls to ensure that transactions
are properly authorized and recorded; assets are safeguarded against
unauthorized use of disposition and liabilities are recognized. The
management likewise discloses to the companys audit committee and to its
external auditor: (i) all significant deficiencies in the design or operation of
internal controls that could adversely affect its ability to record, process, and
report financial date; (ii) material weaknesses in the internal controls; and
(iii) any fraud involves management or other employees who exercise
significant roles in the internal controls.
The Board of Directors reviews the financial statements before such
statements are approved and submitted to the stockholders of the company.
MLG & Associates, the independent auditors and appointed by the
stockholders, have examined the financial statements of the company in
accordance with generally accepted auditing standards in the Philippines and
has expressed its opinion on the fairness or presentation upon completion of
such examination, in its report to the Board of Directors and Stockholders.
THADDEO GARCIA
PRESIDENT/CHAIRMAN OF THE BOARD OF DIRECTORS
MIKAEL SALVACION
TREASURER
EVELYN SALDIVAR
CHIEF ACCOUNTANT

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

December 31, 200B

To MLG & Associates

We are providing this letter in connection with your audit(s) of

the financial statements of TNM STYROPOR INDUSTRIES, INC as of
December 31, 200B for the purpose of expressing an opinion as to whether
the financial statements present fairly, in all material respects, the financial
position, results of operations, and cash flows of TNM STYROPOR
INDUSTRIES,
INC
in
conformity
with
generally
accepted accounting principles. We confirm that we are responsible for the
fair presentation in the financial statements of financial position, results of
operations, and cash flows in conformity with generally accepted accounting
principles.
Certain representations in this letter are described as being limited to
matters that are material. Items are considered material, regardless of size,
if they involve an omission or misstatement of accounting information that,
in the light of surrounding circumstances, makes it probable that the
judgment of a reasonable person relying on the information would be
changed or influenced by the omission or misstatement.
We confirm, to the best of our knowledge and belief, as of December 31,
200B, the following representations made to you during your audit(s).
1. The financial statements referred to above are fairly presented in
conformity with generally accepted accounting principles.
2. We have made available to you all
a. Financial records and related data.
b. Minutes of the meetings of stockholders, directors, and committees of
directors, or summaries of actions of recent meetings for which minutes have
not yet been prepared.
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

3. There have been no communications from regulatory agencies concerning
noncompliance with or deficiencies in financial reporting practices.
4. There are no material transactions that have not been properly recorded in
the accounting records underlying the financial statements.
5. There has been no
a. Fraud involving management or employees who have significant roles in
internal control.
b. Fraud involving others that could have a material effect on the financial
statements.

6. The company has no plans or intentions that may materially affect the
carrying value or classification of assets and liabilities.
7. The following have been properly recorded or disclosed in the financial
statements:
a. Related-party transactions, including sales, purchases, loans, transfers,
leasing arrangements, and guarantees, and amounts receivable from or
payable to related parties.
b. Guarantees, whether written or oral, under which the company is
contingently liable.
c. Significant estimates and material concentrations known to management
that are required to be disclosed in accordance with the AICPAs Statement of
Position 94-6, Disclosure of Significant Risks and Uncertainties.
8. There are no
a. Violations or possible violations of laws or regulations whose effects should
be considered for disclosure in the financial statements or as a basis for
recording a loss contingency.
b. Unasserted claims or assessments that our lawyer has advised us are
probable of assertion and must be disclosed in accordance with Financial
Accounting Standards Board (FASB) Statement No. 5, Accounting for
Contingencies.
c. Other liabilities or gain or loss contingencies that are required to be
accrued or disclosed by FASB Statement No. 5.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

9. The company has satisfactory title to all owned assets, and there are no
liens or encumbrances on such assets nor has any asset been pledged as
collateral.
10. The company has complied with all aspects of contractual agreements
that would have a material effect on the financial statements in the event of
noncompliance.
To the best of our knowledge and belief, no events have occurred subsequent
to the balance-sheet date and through the date of this letter that would
require adjustment to or disclosure in the aforementioned financial
statements.
THADDEO GARCIA
PRESIDENT/CHAIRMAN OF THE BOARD OF DIRECTORS
MIKAEL SALVACION
TREASURER
EVELYN SALDIVAR
CHIEF ACCOUNTANT

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

3

TNM STYROPOR INDUSTRIES, INC.

Comparative Balance Sheet
For the year ended, December 31, 200A-200B

ASSETS
Schedule
Current Assets
Cash
Trade and Other Receivables
Inventories
Prepaid Expenses
Investment in Marketable Securities
Other Current Assets
Total Current Assets
Noncurrent Assets
Property, Plant & Equipment
Patents
Total Noncurrent Assets

1
2
3
4
5

TOTAL ASSETS

200B

200A

79,532.00
259,837.00
340,694.00
3,850.00
48,125.00
732,038.00

56,722.00
155,746.00
341,540.00
2,900.00
47,625.00
8,900.00
613,433.00

1,333,841.17
6,750.00
1,340,591.17

1,142,462.00
8,250.00
1,150,712.00

2,072,629.17

1,764,145.00

LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities
Trade & Other Payables
Current Portion of Mortgage Payable
Income Tax Payable
Total current Liabilities

Noncurrent Liabilities
Noncurrent Portion of Mortgage Payable
Stockholder's Equity
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

396,063.06
24,000.00
177,086.93
597,149.99

196,333.00
24,000.00
23,159.00
243,492.00

148,000.00

172,000.00

1,327,479.18

1,348,653.00

2,072,629.17

1,764,145.00

TNM STYROPOR INDUSTRIES INC.

TNM STYROPOR INDUSTRIES, INC.

Comparative Income Statement
For the year ended, December 31, 200A-200B

Schedule
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Selling
Administrative
Total Operating Expenses
Operating Income
Other Income
Total Income
Interest Expense
Net Income Before Tax
Income Tax
Net Income After Tax

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

200B

200A

2,532,235.09
1,320,801.67
1,211,433.42

1,836,652.00
981,079.00
855,573.00

233,346.00
437,796.48
671,142.48
540,290.94
143,778.00
684,068.94
15,762.50
668,306.44
200,491.93
467,814.51

144,178.00
190,396.00
334,574.00
520,999.00
1,500.00
522,499.00
3,545.00
518,954.00
23,159.00
495,795.00

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
0

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
1

TNM STYROPOR INDUSTRIES INC.

TNM STYROPOR INDUSTRIES, INC.
Statement of Comparative Cash flows
For the year ended, December 31, 200A-200B

Cash Flow from Operating Activities

Cash Inflow
Collection from Customers
Collection of Notes Receivable
Total
Cash Outflow
Payment for Purchase of Raw Materials
Payment of Sales Salaries
Payment of Salesman Commission
Payment of Salesman's Travelling Expense & Allowances
Payment of Advertising
Payment of Sales Taxes & Licences
Payment of Miscellaneous Selling Expense
Payment of Entertainment & Representation
Payment of Telephone, Telegram, Cablegram & Post.
Payment of Office Salaries
Payment of Transportation & Travelling Expense
Payment of Licences & Taxes
Payment of Repairs & Maintenance - Building
Payment of Office Supplies
Payment of Professional Fees
Payment of Automobile Expense
Payment of Dues, Periodicals & Subscriptions
Payment of Miscellaneous Office Expenses
Payment of Donations
Payment of Research and Development
Payment of Indirect Labor
Payment of Indirect Materials
Payment of Power, light & water
Payment of Repairs & Maintenance - Machinery & Equipment
Payment of Repairs & Maintenance - Delivery Equipment
Payment of Gas, oils & Fires
Advances
Payment of Notes Receivable - Officers & Employees
Payment of SSS
Payment of Philhealth
Payment of Pagibig
Payment of Tax Withheld
Payment of Insurance
Payment of Income Tax
Payment of Output Tax
Payment of Miscellaneous Factory Expense
Payment of Direct Labor
Total
Net Cash Flow from Operating Activities
Cash Flow from Investing Activities
Collection from Notes Payable - Trade
Payment for Interest on Notes and Mortgage
Payment of Mortgage
Payment for fixed assets
Net Cash Flow from Investing Activities
Cash Flow from Financing Activities
Dividends paid
Issuance of Share Capital
Net Cash Flow from Financing Activities
Beginning Cash Balance
Cash Balance

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

Schedule

200B

1
2

2,488,027.09
5,000.00
2,493,027.09

589,318.00
43,953.00
42,618.00
13,750.00
11,753.00
98,694.00
2,523.00
8,608.00
6,193.00
109,230.00
17,935.00
6,735.00
3,235.00
19,056.00
15,600.00
5,838.00
2,927.00
10,745.00
3,050.00
100,000.00
86,300.00
50,254.40
13,970.00
8,240.00
4,925.00
17,550.00
66,448.51
8,000.00
70,793.00
12,075.00
10,800.00
16,857.38
12,300.00
219,405.00
12,262.80
8,367.00
348,598.00
2,078,907.09
414,120.00

200A
1,771,869.00
1,771,869.00
469,821.60
30,719.00
12,985.00
9,268.00
8,150.00
69,085.00
2,188.00
5,126.00
4,071.00
101,037.00
9,130.00
2,013.00
1,910.00
12,633.00
13,150.00
5,921.00
2,832.00
4,513.00
2,050.00
62,136.00
47,670.00
9,779.00
5,661.00
1,875.00
11,790.00
15,854.00
2,900.00
507,080.40
6,298.00
277,501.00
1,715,147.00
56,722.00

12,550.00
15,810.00
24,000.00
314,050.00
(341,310.00)
100,000.00
50,000.00
(50,000.00)
56,722.00
79,532.00

56,722.00

1
2

TNM STYROPOR INDUSTRIES INC.

Notes to Financial Statements

December 31, 200B
1. Corporate Information
TNM Styropor Industries Inc was incorporated under the laws of the
Philippine on August 30, 1989. Its original authorized capital stock was five
hundred thousand peso divided into five thousand shares common stocks
with par value of Php 100.00. Its raw materials consisted mainly of high
expandable polystyrene, styrocell, recycle resin and plastic sheet.
Sales were mostly to commercial and industrial companies in Manila
and provinces, for all insulation and packaging requirements like inspection
molding, vacuum forming, packaging for delicate or fragile items, piping
insulation, insulation boards, fish boxes, hamburger packs, lunch packs and
food trays.
The corporation increased its authorized capital stock from the original
five hundred thousand pesos to one million on December 2004 to finance an
expansion program. In addition, a mortgaged loan of two hundred thousand
pesos was obtained from the allied bank on October 2004. The corporations
offices and plants were located at 1074 EDSA, Cubao, Quezon city with
telephone numbers 981-890 and 987-766 both connecting all departments.

2. Basis of Preparation
The financial statements have been prepared on a historical cost basis,
except for derivative financial instruments, investments held for trading and
available for sale financial assets which have been measured at fair value.
The financial statements are presented in Philippine peso, which is the
Companys functional and presentation currency under Philippine Financial
Reporting Standards (PFRS). All values are rounded to the nearest peso
except when otherwise stated.
Statement of Compliance
The accompanying financial statements have been prepared in
compliance with PFRS. PFRS include statements named PFRS and Philippine
Accounting Standards (PAS), including interpretations, issued by Financial
Reporting Standards Council.

3. Significant Accounting Policies

3.1 Cash and Cash Equivalents
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
3

TNM STYROPOR INDUSTRIES INC.

Cash includes cash on hands and in banks. The account is recorded at
face value. Cash equivalents are short term, highly liquid investments that
are readily convertible to known amount of cash with original maturities of
three months or less and that are subject to an insignificant risk of changes
in value.
3.2 Financial Assets and Liabilities
Date of Recognition - The Company recognizes a financial asset or a
financial liability in the consolidated balance sheets when it becomes a party
to the
contractual provisions of the instrument. In the case of a regular
way purchase or sale of financial assets, recognition and derecognition, as
applicable, is done
using settlement date accounting.
Initial recognition of Financial Instruments - Financial instruments
are recognized initially at fair value, which is the fair value of the
consideration given (in case of an asset) or received (in case of a liability).
The fair value of the consideration given or received is determined by
reference to the transaction price or other market prices. If such market
prices are not reliably determinable, the fair value of the consideration is
estimated as the sum of all future cash payments or receipts, discounted
using the prevailing market rate of interest for similar instruments with
similar maturities. The initial measurement of financial instruments, except
for those designated at fair value through profit and loss (FVPL), includes
transaction cost.
Subsequent to initial recognition, the Company classifies its
financial assets and liabilities in the following categories: held-to-maturity
(HTM) financial assets, available-for-sale (AFS) investments, FVPL financial
assets, and loans and receivables. The classification depends on the
purpose for which the investments are acquired and whether they are quoted
in an active market. Management determines the classification of its
financial assets at initial recognition and, where allowed and appropriate, reevaluates such designation at every reporting date.
Determination of Fair Value - The fair value for financial instruments
traded in active markets at the balance sheet date is based on their quoted
market price or dealer price quotation (bid price for long positions and ask
price for short
positions), without any deduction for transaction costs.
When current bid and asking prices are not available, the price of the most
recent transaction provides evidence of the current fair value as long as
there has not been a significant change in economic circumstances since the
time of the transaction.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
4

TNM STYROPOR INDUSTRIES INC.

For all other financial instruments not listed in an active market, the
fair value is determined by using appropriate valuation techniques. Valuation
techniques includes net present value techniques, comparison to similar
instruments for which market observable prices exist, options pricing models,
and other relevant valuation models.
Where the transaction price in a non-active market is different from
the fair value of the other observable current market transactions in the
same instrument or based on a valuation technique whose variables include
only data from
observable market, the Company recognizes the difference
between the
transaction price and fair value in the consolidated
statements of income unless it qualifies for recognition as some other type of
asset. In cases where use is made of data which is not observable, the
difference between the transaction price and model value is only recognized
in the consolidated statements of income when the inputs become
observable or when the instrument is derecognized. For each transaction, the
Company determines the appropriate method of recognizing the profit
amount.
Financial Assets
Financial Assets at FVPL - Financial assets at FVPL include financial
assets held for trading and financial assets designated upon initial
recognition as at FVPL.
Financial assets are classified as held for trading if they are acquired
for the purpose of selling in the near term. Gain or losses on investments
held for trading are recognized in the consolidated statements of income.
Financial assets may be designated by management at initial
recognition as at FVPL, when any of the following criteria is met:
a. the designation eliminates or significantly reduces the inconsistent
treatment that would otherwise arise from measuring the assets or
recognizing gains or losses on a different basis; or
b. the assets are part of a group of financial assets, financial liabilities
or both which are managed and their performance are evaluated on a fair
value basis, in accordance with a documented risk management or
investment strategy; or
c. 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.
Financial Liabilities
Financial Liability at FVPL - Financial liabilities are classified in this category if
these result from trading activities or derivative transactions that are
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
5

TNM STYROPOR INDUSTRIES INC.

not accounted for as accounting hedges, or when the Company elects to
designate a
financial liability under this category.
Other Financial Liabilities - This category pertains to financial liabilities that
are not held for trading or not designated as at FVPL upon the inception of
the liability. These include liabilities arising from operations or borrowings.
The financial liabilities are recognized initially at fair value and are
subsequently carried at amortized cost, taking into account the impact of
applying the effective interest method of amortization (or accretion) for any
related premium, discount and any directly attributable transaction costs.
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 similar financial assets) is derecognized
when the rights to receive cash flows from the asset have expired; 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 substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows
from an asset 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.
When 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 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 loss is measured as the difference between the
assets carrying amount and the present value of estimated future cash flows
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
6

TNM STYROPOR INDUSTRIES INC.

(excluding future credit losses) discounted at the financial assets original
effective interest rate (i.e., the effective interest rate computed at initial
recognition). The carrying amount of the asset shall be reduced either
directly or through use of an allowance account. The amount of loss shall be
recognized in the consolidated statements 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 statements 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 of an impairment
loss on an unquoted equity instrument that is not carried at fair value
because its fair value cannot be reliably measured, or of a derivative asset
that is linked to and must be settled by delivery of such an unquoted equity
instrument, 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.
Classification of Financial Instruments between Debt and Equity
A financial instrument is classified as debt if it provides for a
contractual obligation to:
a. deliver cash or another financial assets to another entity; or
b. exchange financial assets or financial liabilities with another entity under
conditions that are potentially unfavourable to the Company; or satisfy the
obligation other than by the exchange of a fixed amount of cash or another
financial asset for a fixed number of own equity shares.
If the Company does not have an unconditional right to avoid
delivering cash or another financial asset to settle its contractual obligation,
the obligation meets the definition of a financial liability.
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
7

TNM STYROPOR INDUSTRIES INC.

Offsetting Financial Instruments
Financial assets and financial liabilities are offset and the net amount is
reported in the balance sheets if, and only if, there is a currently enforceable
legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the asset and settle the liability
simultaneously. This is not generally the case with master netting
agreements, and the related assets and liabilities are presented gross in the
balance sheets.
Inventories
Finished goods, goods in process and materials and supplies are valued
at the lower of cost and net realizable value. Costs incurred in bringing each
inventory to its present location and conditions are accounted for as
follows:
Finished goods and goods in process
Materials and supplies cost includes direct materials and labor and a
proportion of manufacturing overhead costs based on normal operating
capacity but excluding borrowing costs; costs are determined using the
moving-average method; at cost using the moving-average method
Net realizable value of finished goods and goods in process is the
estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale.
Net realizable value of materials and supplies is the current
replacement cost.
Property, Plant and Equipment
Property, plant and equipment, except land, are stated at cost less
accumulated depreciation and amortization and any impairment in value.
Land is stated at cost less any impairment in value.
The initial cost of property, plant and equipment comprises of its
purchase price, including import duties, taxes and any directly attributable
costs in bringing the
asset to its working condition and location for its
intended use. Cost also includes
any related asset retirement obligation
and interest incurred during the construction period on funds borrowed to
finance the construction of the projects. Expenditures incurred after the asset
has been put into operation, such as repairs, maintenance and overhaul
costs, are normally recognized as expense in the period the costs are
incurred. In situations where it can be clearly demonstrated that the
expenditures have improved the condition of the asset beyond the originally
assessed standard of performance, the expenditures are capitalized as an
additional cost of property, plant and equipment.
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
8

TNM STYROPOR INDUSTRIES INC.

Construction in progress represents structures under construction and
is stated at cost. This includes the costs of construction, property and
equipment and other direct costs. Borrowing costs that are directly
attributable to the
construction of plant and equipment are capitalized
during the construction
period. Construction in progress is not
depreciated until such time that the relevant assets are ready for use.
Depreciation and amortization are computed using the straight-line
method over the following estimated useful lives of the assets:
The remaining useful lives, residual values and depreciation and
amortization method are reviewed periodically to ensure that such periods
and method of depreciation and amortization are consistent with the
expected pattern of
economic benefits from the items of property, plant
and equipment.
Fully depreciated assets are retained in the accounts until they are no
longer in use and no further depreciation and amortization is credited or
charged to current operations. When each major inspection is performed, its
cost is recognized in the carrying amount of the property, plant and
equipment as a replacement if the recognition criteria are satisfied.
An item of property, plant 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 statements of income in the year
the asset is derecognized.
Investment Properties
Investment properties represent land, land improvements, buildings
and building improvements held to earn rentals and/or for capital
appreciation. Buildings are
measured
at
cost
less
accumulated
depreciation and any impairment in value.
The carrying amount includes
the cost of replacing part of an existing investment property at the time the
cost is incurred, if the recognition criteria are met, and excludes the costs of
day-to-day servicing of an investment property. Land is stated at cost less
any impairment in value.
Depreciation on buildings is computed using the straight-line method
over 5 to 50 years.
An investment property is derecognized when it has been disposed of
or when it is permanently withdrawn from use and no future economic
benefit is expected from its disposal.
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

1
9

TNM STYROPOR INDUSTRIES INC.

Transfers are made to investment properties when, and only when,
there is a change in use, commencement of an operating lease to another
party or ending of construction or development. Transfers are made from
investment property when, and only when, there is a change in use,
evidenced by commencement of the Companys occupation or
commencement of development with a view to sale.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a business
combination is its fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at are appropriate and reasonable,
significant changes in these assumptions may materially affect the
assessment of recoverable values and any
resulting impairment loss
could have a material adverse impact on the results of
operations.
Retirement Cost and Other Retirement Benefits.
The determination of the Companys obligation and cost of retirement
benefits is dependent on the selection of certain assumptions used by
actuaries in calculating such amounts. Those assumptions are described to
the consolidated financial statements and include discount rate, expected
return on plan assets and salary increase rate. In accordance with PFRS,
actual results that differ from
the assumptions are accumulated and
amortized over future periods and therefore, generally affect the recognized
expense and recorded obligation in such future periods.
Asset Retirement Obligation - Determining asset retirement obligation
requires estimation of the cost of dismantling property and equipment and
other costs of restoring the leased properties to their original condition.
Contingencies
The Company currently has various tax assessments and legal claims. The
Companys estimate of the probable costs for the assessments and claims
and assessment of the resolution of these claims have been developed in
consultation with in
house as well as outside counsel handling the
prosecution and defense of these cases and is based on an analysis of
potential results. The Company currently does not believe that these tax
assessments and legal claims will have a material adverse effect on the
consolidated financial position and results of operations. It is possible,
however, that future results of operations could be materially affected by
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
0

TNM STYROPOR INDUSTRIES INC.

changes in the estimates or in the effectiveness of strategies relating to
these proceedings.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
1

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
2

TNM STYROPOR INDUSTRIES INC.

SCHEDULES
Balance Sheet Schedules

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
3

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
4

TNM STYROPOR INDUSTRIES INC.

Income Statement Schedules

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
5

TNM STYROPOR INDUSTRIES INC.

Cash Flow Schedules

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
6

TNM STYROPOR INDUSTRIES INC.

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
7

TNM STYROPOR INDUSTRIES INC.

STATEMENT OF MANAGEMENTS RESPONSIBILITY

FOR ANNUAL INCOME TAX RETURN

The management of TNM STYROPOR INDUSTRIES, INC. (the Company)

is responsible for all information and representations contained in the Annual
Income Tax Return for the year ended December 31, 200B. Management is
likewise responsible for all information and representations contained in the
financial statements accompanying the (Annual Income Tax Return or Annual
Information Return) covering the same reporting period. Furthermore, the
Management is responsible for all information and representations contained
in all the other tax returns filed for the reporting period, including, but not
limited, to the value added tax and/or percentage tax returns, withholding
tax returns, documentary stamp tax returns, and any and all other tax
returns.
In this regard, the Management affirms that the attached audited financial
statements for the year ended, December 31, 200B and the accompanying
Annual Income Tax Return are in accordance with the books and records of
TNM STYROPOR INDUSTRIES, INC. complete and correct in all material
respects. Management likewise affirms that:
a the Annual Income Tax Return has been prepared in accordance with
the provisions of the National Internal Revenue Code, as amended, and
pertinent tax regulations and other issuances of the Department of
Finance and the Bureau of Internal Revenue;
b any disparity of figures in the submitted reports arising from the
preparation of financial statements pursuant to financial accounting
standards and the preparation of the income tax return pursuant to tax
accounting rules has been reported as reconciling items and
maintained in the companys books and records in accordance with the
requirements of Revenue Regulations No. 8-2007 and other relevant
issuances;
c the management of TNM STYROPOR INDUSTRIES, INC. has filed all
applicable tax returns, reports and statements required to be filed
under Philippine tax laws for the reporting period, and all taxes and
other impositions shown thereon to be due and payable have been
paid for the reporting period, except those contested in good faith.
1074 EDSA, CUBAO, QUEZON CITY
TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
8

TNM STYROPOR INDUSTRIES INC.

Signed under oath by:

THADDEO GARCIA
PRESIDENT/CHAIRMAN OF THE BOARD OF DIRECTORS

MIKAEL SALVACION
TREASURER

EVELYN SALDIVAR
CHIEF ACCOUNTANT

1074 EDSA, CUBAO, QUEZON CITY

TEL. NOS.: (02) 981-8902/ (02) 987-7665

2
9