##### Table of Contents



As filed with the Securities and
    Exchange Commission on June 25, 2010
     UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the transition period from
    
    to   Commission file number
    1-13368
 POSCO
 (Exact name of Registrant as
    specified in its charter)
  POSCO

The Republic of Korea(Translation of Registrants name into English)

(Jurisdiction of incorporation or organization)  POSCO Center, 892 Daechi-4-dong,
    Gangnam-gu
    Seoul, Korea
    135-777 (Address of principal
    executive offices)
 Choi, Dong-Min
    POSCO Center, 892 Daechi-4-dong, Gangnam-gu,
    Seoul, Korea
    135-777
    Telephone: +82-2-3457-0975;
    E-mail:
    dmchoi@posco.com; Facsimile: +82-2-3457-1982 (Name, telephone,
    e-mail
    and/or facsimile number and address of company contact
    person)
 Securities registered or to be
    registered pursuant to Section 12(b) of the Act.
  Title of Each Class

Name of Each Exchange on Which RegisteredAmerican Depositary Shares, each representing
    one-fourth of one share of common stock

New York Stock Exchange, Inc.Common Stock, par value Won 5,000 per share *

New York Stock Exchange, Inc. *  Securities registered or to be
    registered pursuant to Section 12(g) of the Act.NoneSecurities for which there is a reporting obligation
    pursuant to Section 15(d) of the Act.None
 As of December 31, 2009,
    there were 77,032,878 shares of common stock, par value Won
    5,000 per share, outstanding
 (not including
    10,153,957 shares of common stock held by the company as
    treasury shares)
  Yes þ     No o
  Yes o     No þ
  Yes þ     No o
  Regulation S-T Yes o     No o
  Rule 12b-2
  Large accelerated
    filer þ     Accelerated
    filer o     Non-accelerated
    filer o
  U.S. GAAP  o     IFRS  o     Other  þ
  Item 17  o     Item 18  þ
  Rule 12b-2 Yes  o     No  þ
    *
    
    Not for trading, but only in
    connection with the registration of the American Depositary
    Shares.




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##### Table of Contents



TABLE OF
    CONTENTS
   
 GLOSSARY


1PART IITEM 1.


IDENTITY OF DIRECTORS, SENIOR MANAGERS AND
    ADVISORS


2Item 1.A. Directors and Senior
    Management


2Item 1.B. Advisers


2Item 1.C. Auditors


2ITEM 2.


OFFER STATISTICS AND EXPECTED TIMETABLE


2Item 2.A. Offer Statistics


2Item 2.B. Method and Expected
    Timetable


2ITEM 3.


KEY INFORMATION


2Item 3.A. Selected Financial Data


2Item 3.B. Capitalization and
    Indebtedness


4Item 3.C. Reasons for Offer and Use of
    Proceeds


4Item 3.D. Risk Factors


4ITEM 4.


INFORMATION ON THE COMPANY


15Item 4.A. History and Development of
    the Company


15Item 4.B. Business Overview


16Item 4.C. Organizational Structure


31Item 4.D. Property, Plants and
    Equipment


31ITEM 4A.


UNRESOLVED STAFF COMMENTS


34ITEM 5.


OPERATING AND FINANCIAL REVIEW AND PROSPECTS


34Item 5.A. Operating Results


34Item 5.B. Liquidity and Capital
    Resources


48Item 5.C. Research and Development,
    Patents and Licenses, Etc.


53Item 5.D. Trend Information


53Item 5.E. Off-balance Sheet
    Arrangements


53Item 5.F. Tabular Disclosure of
    Contractual Obligations


54Item 5.G. Safe Harbor


54ITEM 6.


DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


54Item 6.A. Directors and Senior
    Management


54Item 6.B. Compensation


57Item 6.C. Board Practices


57Item 6.D. Employees


59Item 6.E. Share Ownership


59ITEM 7.


MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


61Item 7.A. Major Shareholders


61Item 7.B. Related Party Transactions


62Item 7.C. Interests of Experts and
    Counsel


62ITEM 8.


FINANCIAL INFORMATION


62Item 8A. Consolidated Statements and
    Other Financial Information


62Item 8B. Significant Changes


63 i




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##### Table of Contents



ITEM 9.


THE OFFER AND LISTING


63Item 9.A. Offer and Listing Details


63Item 9.B. Plan of Distribution


65Item 9.C. Markets


65Item 9.D. Selling Shareholders


71Item 9.E. Dilution


71Item 9.F. Expenses of the Issuer


71ITEM 10.


ADDITIONAL INFORMATION


71Item 10.A. Share Capital


71Item 10.B. Memorandum and Articles of
    Association


71Item 10.C. Material Contracts


76Item 10.D. Exchange Controls


76Item 10.E. Taxation


80Item 10.F. Dividends and Paying
    Agents


85Item 10.G. Statements by Experts


86Item 10.H. Documents on Display


86Item 10.I. Subsidiary Information


86ITEM 11.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


86ITEM 12.


DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


88Item 12.A. Debt Securities


88Item 12.B. Warrants and Rights


88Item 12.C. Other Securities


88Item 12.D. American Depositary
    Shares


88PART IIITEM 13.


DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


90ITEM 14.


MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


90ITEM 15.


CONTROLS AND PROCEDURES


90ITEM 16.


[RESERVED]


91ITEM 16A.


AUDIT COMMITTEE FINANCIAL EXPERT


91ITEM 16B.


CODE OF ETHICS


91ITEM 16C.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


91ITEM 16D.


EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


92ITEM 16E.


PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


92ITEM 16F.


CHANGE IN REGISTRANTS CERTIFYING
    ACCOUNTANT


92ITEM 16G.


CORPORATE GOVERNANCE


92PART IIIITEM 17.


FINANCIAL STATEMENTS


94ITEM 18.


FINANCIAL STATEMENTS


94ITEM 19.


EXHIBITS


95EX-1.1EX-8.1EX-12.1EX-12.2EX-13.1   ii




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GLOSSARY  ADR

American Depositary Receipt evidencing ADSs.ADR depositary

The Bank of New York Mellon.ADS

American Depositary Share representing one-fourth of one share
    of Common Stock.Australian Dollar or A$

The currency of the Commonwealth of Australia.Commercial Code

Commercial Code of the Republic of Korea.common stock

Common stock, par value Won 5,000 per share, of POSCO.deposit agreement

Deposit Agreement, dated as of September 26, 1994, among POSCO,
    the ADR Depositary and all holders and beneficial owners from
    time to time of ADRs issued thereunder, as amended by amendment
    no. 1 thereto dated June 25, 1997.Dollars, $ or US$

The currency of the United States of America.FSCMA

Financial Investment Services and Capital Markets Act of the
    Republic of Korea.Government

The government of the Republic of Korea.IFRS

International Financial Reporting Standards.Yen or JPY

The currency of Japan.Korea

The Republic of Korea.Korean GAAP

Generally accepted accounting principles in the Republic of
    Korea.Gwangyang Works

Gwangyang Steel Works.We

POSCO and its consolidated subsidiaries.Pohang Works

Pohang Steel Works.Securities Act

The United States Securities Act of 1933, as amended.Securities Exchange Act

The United States Securities Exchange Act of 1934, as amended.SEC

The United States Securities and Exchange Commission.tons

Metric tons (1,000 kilograms), equal to 2,204.6 pounds.U.S. GAAP

Generally accepted accounting principles in the United States of
    America.Won or W

The currency of the Republic of Korea.    1




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PART I  Item 1.
    Identity
    of Directors, Senior Managers and Advisors  Item 1.A.
    Directors
    and Senior Management  Not applicable
  Item 1.B.
    Advisers  Not applicable
  Item 1.C.
    Auditors  Not applicable
  Item 2.
    Offer
    Statistics and Expected Timetable  Not applicable
  Item 2.A.
    Offer
    Statistics  Not applicable
  Item 2.B.
    Method
    and Expected Timetable  Not applicable
  Item 3.
    Key
    Information  Item 3.A.
    Selected
    Financial Data   2




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##### Table of Contents



INCOME STATEMENT
    DATA
  For the Year Ended December 31,2005


2006


2007


2008


2009


2009
    (10)(In billions of Won and millions of dollars, except per share
    data)Korean GAAP:Sales (1)

W
26,302


W
25,842


W
31,608


W
41,743


W
36,855


US$
31,565Cost of goods sold
    (2)


18,767



19,897



24,903



32,562



31,037



26,582Selling and administrative expenses


1,451



1,556



1,785



2,006



1,949



1,670Operating income


6,083



4,389



4,920



7,174



3,868



3,313Interest expense


149



183



240



345



532



456Foreign currency transaction and translation gains (losses), net


159



99



(19
)


(940
)


366



313Donations


153



155



197



143



129



110Income tax expenses


1,474



922



1,274



1,734



536



459Net income


4,007



3,353



3,678



4,350



3,242



2,777Net income attributable to controlling interest


4,022



3,314



3,559



4,379



3,218



2,756Net income attributable to non-controlling interest


(15
)


39



119



(29
)


24



(21
)Basic and diluted earnings per share of common stock
    (3)


50,790



42,115



46,854



58,002



41,982



35,956Dividends per share of common stock


8,000



8,000



10,000



10,000



8,000



6,852U.S. GAAP(4):Operating income

W
5,671


W
4,259


W
4,967


W
7,129


W
3,712


US$
3,179Net income


4,097



3,432



3,677



4,084



3,609



3,091Net income attributable to controlling interest


4,102



3,408



3,565



4,106



3,567



3,055Net income (loss) attributable to non-controlling interest


(5
)


24



112



(22
)


42



36Basic and diluted earnings per share of common stock


51,789



43,304



46,938



54,387



46,534



40   BALANCE SHEET
    DATA
  As of December 31,2005


2006


2007


2008


2009


2009
    (10)(In billions of Won and millions of dollars, except per share
    data)Korean GAAP:Working capital
    (5)

W
5,759


W
7,155


W
7,769


W
11,188


W
11,359


US$
9,729Property, plant and equipment, net
    (6)


12,272



14,643



15,582



18,069



21,840



18,705Total assets
    (6)


27,507



31,149



36,275



46,961



50,312



43,090Long-term debt
    (7)(8)(9)


1,131



2,726



3,306



6,896



8,230



7,049Capital stock


482



482



482



482



482



413Total shareholders equity
    (6)


19,874



22,402



25,118



28,344



31,664



27,119U.S. GAAP(4):Property, plant and equipment, net

W
12,420


W
14,860


W
15,836


W
18,328


W
22,195


US$
19,009Total assets


27,525



31,208



36,349



47,208



51,074



43,742Total equity


19,881



22,447



25,171



28,419



32,057



27,455     (1)
    
    Includes sales by our consolidated
    sales subsidiaries of steel products purchased by such
    subsidiaries from third parties, including trading companies to
    which we sell steel products.(2)
    
    Includes purchases of steel
    products by our consolidated subsidiaries from third parties,
    including trading companies to which we sell steel products.(3)
    
    See Note 26 of Notes to
    Consolidated Financial Statements for method of calculation.(4)
    
    A description of the significant
    differences between Korean GAAP and U.S. GAAP as well as the
    reconciliation to U.S. GAAP are provided in detail in
    Note 31 of Notes to Consolidated Financial Statements.(5)
    
    Working capital means
    current assets minus current liabilities.(6)
    
    Reflects revaluations of assets
    permitted under Korean law.(7)
    
    Net of current portion and discount
    on debentures issued. 3




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(8)
    
    For information regarding swap
    transactions entered into by us, see Item 5.
    Operating and Financial Review and Prospects 
    Item 5.A. Operating Results  Exchange Rate
    Fluctuations and Note 23 of Notes to Consolidated
    Financial Statements.(9)
    
    Monetary assets and liabilities
    denominated in foreign currencies are translated into Won at the
    basic rates in effect at the balance sheet date and resulting
    translation gains and losses are recognized in current
    operations. See Notes 2 and 28 of Notes to Consolidated
    Financial Statements.(10)
    
    Translated into U.S. Dollars at the
    rate of Won 1,167.6 to US$1.00, the market average exchange
    rate, announced by Seoul Money Brokerage Services, Ltd., on
    December 31, 2009. This translation should not be construed
    as a representation that the Won amounts represent, have been,
    or could be converted to U.S. Dollars at that rate or any other
    rate.  EXCHANGE RATE
    INFORMATION
    At EndPeriod

of Period


Average
    Rate (1)


High


Low(Per US$1.00)2005


1,013.8



1,024.2



1,060.3



998.22006


929.6



956.1



1,031.0



918.02007


938.2



929.2



950.0



902.22008


1,257.5



1,102.6



1,509.0



934.52009


1,167.6



1,276.4



1,573.6



1,152.82010 (through June 24)


1,188.2



1,152.3



1,261.5



1,104.0January


1,156.5



1,138.8



1,167.6



1,119.8February


1,158.4



1,157.1



1,172.6



1,142.7March


1,130.8



1,137.6



1,160.2



1,129.5April


1,115.5



1,117.1



1,132.5



1,104.0May


1,200.2



1,163.1



1,255.1



1,108.5June (through June 24)


1,188.2



1,215.2



1,261.5



1,176.7       (1)
    
    The average rate for each year is
    calculated as the average of the market average exchange rates
    on the last business day of each month during the relevant year
    (or portion thereof). The average rate for a month is calculated
    as the average of the market average exchange rates on each
    business day during the relevant month (or portion thereof).  Item 3.B.
    Capitalization
    and Indebtedness  Not applicable
  Item 3.C.
    Reasons
    for Offer and Use of Proceeds  Not applicable
  Item 3.D.
    Risk
    Factors    The global
    economic downturn in recent years has reduced worldwide demand
    for steel products and adversely affected our profitability.
    While the rate of deterioration of the global economy slowed in
    the second half of 2009 and into 2010, with some signs of
    stabilization and improvement, there can be no assurance that
    such recovery will continue.
   4




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Korea is our
    most important market, and our current business and future
    growth could be materially and adversely affected if economic
    conditions in Korea deteriorate.
        
    continuing difficulties in the housing and financial sectors in
    the United States and elsewhere and increased sovereign default
    risks in select countries and the resulting adverse effects on
    the global financial markets;
    declines in consumer confidence and a slowdown in consumer
    spending;
    adverse changes or volatility in foreign currency reserve
    levels, commodity prices (including oil prices), exchange rates
    (including fluctuation of the Dollar or Japanese Yen exchange
    rates or revaluation of the Chinese renminbi), interest rates or
    stock markets; 5




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
    continuing adverse conditions in the economies of countries that
    are important export markets for Korea, such as the United
    States, Japan and China, or in emerging market economies in Asia
    or elsewhere;
    increasing delinquencies and credit defaults by retail and
    small- and medium-sized enterprise borrowers;
    the continued emergence of the Chinese economy, to the extent
    its benefits (such as increased exports to China) are outweighed
    by its costs (such as competition in export markets or for
    foreign investment and the relocation of the manufacturing base
    from Korea to China);
    the economic impact of any pending or future free trade
    agreements;
    social and labor unrest;
    substantial decreases in the market prices of Korean real estate;
    a decrease in tax revenues and a substantial increase in the
    Governments expenditures for fiscal stimulus measures,
    unemployment compensation and other economic and social programs
    that, together, would lead to an increased Government budget
    deficit;
    financial problems or lack of progress in the restructuring of
    Korean conglomerates, other large troubled companies, their
    suppliers or the financial sector;
    loss of investor confidence arising from corporate accounting
    irregularities and corporate governance issues at certain Korean
    conglomerates;
    geo-political uncertainty and risk of further attacks by
    terrorist groups around the world;
    the occurrence of severe health epidemics in Korea and other
    parts of the world;
    deterioration in economic or diplomatic relations between Korea
    and its trading partners or allies, including deterioration
    resulting from trade disputes or disagreements in foreign policy;
    political uncertainty or increasing strife among or within
    political parties in Korea;
    hostilities involving oil producing countries in the Middle East
    and any material disruption in the supply of oil or increase in
    the price of oil; and
    an increase in the level of tensions or an outbreak of
    hostilities between North Korea and Korea or the United States.  We rely on
    export sales for a significant portion of our total sales.
    Adverse economic and financial developments in Asia in the
    future may have an adverse effect on demand for our products in
    Asia and increase our foreign exchange risks.
   6




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Depreciation
    of the value of the Won against the Dollar and other major
    foreign currencies may have a material adverse effect on the
    results of our operations and on the price of the
    ADSs.
    
    an increase in the amount of Won required for us to make
    interest and principal payments on our foreign
    currency-denominated debt, which accounted for approximately
    56.1% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2009;
    an increase in Won terms in the costs of raw materials and
    equipment that we purchase from overseas sources and a
    substantial portion of our freight costs, which are denominated
    primarily in Dollars; and
    foreign exchange translation losses on liabilities, which lower
    our earnings for accounting purposes.      We are
    dependent on imported raw materials, and significant increases
    in market prices of essential raw materials could adversely
    affect our margins and profits.
     7




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Excess
    capacity and oversupply in the global steel industry may
    adversely affect our profitability.
      
    reduce export prices in Dollar terms of our principal products,
    which in turn may reduce our sales prices in Korea;
    increase competition in the Korean market as foreign producers
    seek to export steel products to Korea as other markets
    experience a slowdown;
    negatively affect demand for our products abroad and our ability
    to expand export sales; and
    affect our ability to increase steel production in general.    Disruptions in
    global credit and financial markets and the resulting
    governmental actions around the world could have a material
    adverse impact on our ability to meet our funding needs, and
    could cause the market value of our securities to
    decline.
     8




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Consolidation
    and new market entrants in the global steel industry may
    increase competition.
    Competition
    from steel substitute materials may reduce demand for steel
    products.
    Expansion of
    our production operations abroad is important to our long-term
    success, and our limited experience in the operation of our
    business outside Korea increases the risk that our international
    expansion efforts will not be successful.
     9




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##### Table of Contents




    challenges caused by distance, language and cultural differences;
    higher costs associated with doing business internationally;
    legal and regulatory restrictions, including foreign exchange
    controls that might prevent us from repatriating cash earned in
    countries outside Korea;
    longer payment cycles in some countries;
    credit risk and higher levels of payment fraud;
    currency exchange risks;
    potentially adverse tax consequences;
    political and economic instability; and
    seasonal reductions in business activity during the summer
    months in some countries.  We may from
    time to time engage in acquisitions for which we may be required
    to seek additional sources of capital.
    Several of our
    products have been and may become subject to anti-dumping or
    countervailing proceedings, which may have an adverse effect on
    our export sales.
    Cyclical
    fluctuations based on macroeconomic factors may adversely affect
    POSCO E&Cs business and performance.
   10




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Many of POSCO
    E&Cs domestic and overseas construction projects are
    on a fixed-price basis, which could result in losses for us in
    the event that unforeseen additional expenses arise with respect
    to the project.
      
    unanticipated variations in labor and equipment productivity
    over the term of a contract;
    unanticipated increases in labor, raw material, parts and
    components, subcontracting and overhead costs, including as a
    result of bad weather;
    delivery delays and corrective measures for poor
    workmanship; and
    errors in estimates and bidding.    POSCO
    E&Cs domestic residential property business is highly
    dependent on the real estate market in Korea.
   11




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We may not be
    able to successfully execute our diversification
    strategy.
        We are subject
    to environmental regulations, and our operations could expose us
    to substantial liabilities.
    Failure to
    protect our intellectual property rights could impair our
    competitiveness and harm our business and future
    prospects.
   12




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We rely on
    trade secrets and other unpatented proprietary know-how to
    maintain our competitive position, and unauthorized disclosure
    of our trade secrets or other unpatented proprietary know-how
    could negatively affect our business.
    Escalations in
    tension with North Korea could have an adverse effect on us and
    the market value of our securities.
      surface-to-air
 13




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If you
    surrender your ADRs to withdraw shares of our common stock, you
    may not be allowed to deposit the shares again to obtain
    ADRs.
    You may not be
    able to exercise preemptive rights for additional shares of
    common stock and may suffer dilution of your equity interest in
    us.
    
    a registration statement filed by us under the Securities Act is
    in effect with respect to those shares; or 14




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
    the offering and sale of those shares is exempt from or is not
    subject to the registration requirements of the Securities Act.    U.S. investors
    may have difficulty enforcing civil liabilities against us and
    our directors and senior management.
  non-U.S. experts
  This annual
    report contains forward-looking statements that are
    subject to various risks and uncertainties.
    Item 4.
    Information
    on the Company  Item 4.A.
    History
    and Development of the Company   15




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(822) 3457-0975.
  Item 4.B.
    Business
    Overview  The
    Company
      Business
    Strategy
      Continue to
    Seek Growth Opportunities in the Steel Sector
   16




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Maintain
    Technology Leadership
    Pursue
    Cost-Cutting through Operational and Process
    Innovations
    Secure
    Procurement of Raw Materials through Strategic
    Investments
   17




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Selectively
    Seek Opportunities in Growth Industries
          Major
    Products
    
    hot rolled products;
    plates;
    wire rods;
    cold rolled products;
    silicon steel sheets; and
    stainless steel products.    18




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For the Year Ended December 31,2005


2006


2007


2008


2009Billions of





Billions of





Billions of





Billions of





Billions ofSteel Products

Won


%


Won


%


Won


%


Won


%


Won


%Hot rolled products


5,877



25.0



4,650



20.8



4,495



16.1



6,950



19.4



5,907



18.8Plates


2,253



9.6



2,380



10.7



2,847



10.2



4,710



13.2



4,336



13.8Wire rods


1,528



6.5



1,243



5.6



1,458



5.2



2,236



6.2



2,078



6.6Cold rolled products


7,527



32.0



6,765



30.3



8,672



31.1



11,751



32.8



10,151



32.3Silicon steel sheets


688



2.9



681



3.0



1,105



4.0



1,613



4.5



1,522



4.8Stainless steel products


4,543



19.3



5,751



25.8



8,268



29.7



7,271



20.3



6,160



19.6Others


1,132



4.7



859



3.8



1,003



3.7



1,305



3.6



1,313



4.2Total


23,547



100.0



22,329



100.0



27,848



100.0



35,836



100.0



31,467



100.0   For the Year Ended December 31,2005


2006


2007


2008


2009Thousands





Thousands





Thousands





Thousands





ThousandsSteel Products

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%Hot rolled products


10,330



33.2



9,604



31.0



8,221



25.6



8,684



25.9



8,009



25.8Plates


3,193



10.3



3,615



11.7



3,926



12.2



4,853



14.5



4,555



14.7Wire rods


2,366



7.6



2,153



6.9



2,222



6.9



2,524



7.5



2,414



7.8Cold rolled products


10,468



33.6



10,864



35.1



12,146



37.8



12,736



38.0



11,249



36.2Silicon steel sheets


737



2.4



686



2.2



934



2.9



1,049



3.1



915



2.9Stainless steel products


1,919



6.2



2,260



7.3



2,694



8.4



2,060



6.1



2,280



7.3Others


2,100



6.7



1,802



5.8



1,967



6.2



1,616



4.8



1,632



5.3Total


31,115



100.0



30,984



100.0



32,110



100.0



33,522



100.0



31,054



100.0     Hot Rolled
    Products
       19




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##### Table of Contents



Plates
        Wire
    Rods
        Cold Rolled
    Products
        Silicon Steel
    Sheets
     20




---



##### Table of Contents



Stainless
    Steel Products
        Others
    Markets
    Domestic
    Market
      For the Year Ended December 31,2005


2006


2007


2008


2009Thousands





Thousands





Thousands





Thousands





ThousandsSource

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%POSCOs sales


22,880



48.5



20,991



42.3



21,256



38.6



22,912



39.1



19,447



42.8Other Korean steel companies sales


15,957



33.9



18,052



36.4



21,224



38.5



20,658



35.3



16,931



37.3Imports
    (1)


8,287



17.6



10,591



21.3



12,628



22.9



15,002



25.6



9,033



19.9Total domestic sales
    (1)


47,124



100.0



49,634



100.0



55,108



100.0



58,572



100.0



45,411



100.0     (1)
    
    Source: 2009 Official Statistics,
    Korea Iron & Steel Association.   21




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##### Table of Contents



Exports
    For the Year Ended December 31,2005


2006


2007


2008


2009Thousands





Thousands





Thousands





Thousands





ThousandsRegion

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%China


2,640



32.1



2,524



25.3



3,186



29.4



2,551



24.0



3,928



33.8Japan


1,843



22.4



1,959



19.6



2,137



19.7



1,953



18.4



1,264



10.9Asia (other than China and Japan)


1,636



19.9



1,895



19.0



2,112



19.5



2,332



22.0



2,449



21.1North America


761



9.2



963



9.6



756



7.0



760



7.2



742



6.4Europe


34



0.4



318



3.2



546



5.0



510



4.8



463



4.0Others


1,320



16.0



2,335



23.3



2,117



19.4



2,504



23.6



2,761



23.8Total


8,234



100.0



9,994



100.0



10,854



100.0



10,610



100.0



11,608



100.0   22




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##### Table of Contents



For the Year Ended December 31,2005


2006


2007


2008


2009Thousands





Thousands





Thousands





Thousands





ThousandsSteel Products

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%Hot rolled products


1,960



23.8



2,477



24.8



1,531



14.1



2,018



19.0



2,776



23.9Plates


229



2.8



228



2.3



231



2.1



206



1.9



401



3.5Wire rods


333



4.1



498



5.0



502



4.6



605



5.7



731



6.3Cold rolled products


4,142



50.3



4,774



47.8



6,186



57.0



5,775



54.4



5,359



46.2Silicon steel sheets


262



3.2



369



3.7



511



4.7



576



5.4



577



5.0Stainless steel products


1,032



12.5



1,245



12.4



1,695



15.6



1,203



11.3



1,494



12.9Others


276



3.3



403



4.0



198



1.9



227



2.3



270



2.3Total


8,234



100.0



9,994



100.0



10,854



100.0



10,610



100.0



11,608



100.0     For the Year Ended December 31,Geographical Location of Customers

2007


2008


2009(In billions of Won)Korea

W
19,970


W
26,887


W
22,529China


4,504



4,876



5,049Asia (other than China and Japan)


2,042



3,139



2,899Japan


1,742



2,044



1,387North America


732



801



752Other


2,618



3,996



4,239Total


31,608



41,743



36,855       For the Year Ended December 31,2005

2006

2007

2008

2009Apparent crude steel use (million metric tons)


1,113



1,178



1,250



1,197



1,121Percentage of annual increase (decrease)


2.0
%


5.8
%


6.1
%


(4.2
)%


(6.3
)          23




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##### Table of Contents



50-50
  Anti-Dumping
    and Countervailing Proceedings
           24




---



##### Table of Contents



Pricing
    Policy
      Raw
    Materials
  Steel
    Production
       25




---



##### Table of Contents



Stainless
    Steel Production
      Transportation
    The Steelmaking
    Process
   26




---



##### Table of Contents



Steel 
    Basic Oxygen Steelmaking Method
        Stainless
    Steel  Electric Arc Furnace Method
    Competition
  Domestic
    Market
        Export
    Markets
   27




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##### Table of Contents



Subsidiaries and
    Global Joint Ventures
  Steel
    Production
               28




---



##### Table of Contents



Steel
    Trading
   29




---



##### Table of Contents



Engineering
    and Construction
    
    its strong and stable customer base; and
    its cutting-edge technological expertise obtained from
    construction of advanced integrated steel plants, as well as
    participation in numerous modernization and rationalization
    projects at our Pohang Works and Gwangyang Works.    Energy
         30




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##### Table of Contents



Others
        Insurance
    Item 4.C.
    Organizational
    Structure    Jurisdiction of

Percentage ofName

Incorporation

OwnershipPOSCO Engineering & Construction Co., Ltd.


Korea



89.5
%POSCO Power Corporation


Korea



100.0
%Zhangjiagang Pohang Stainless Steel Co., Ltd.


China



82.5
%POSCO Specialty Steel Co., Ltd.


Korea



100.0
%POSCO Steel Service & Sale Co., Ltd.


Korea



95.3
%POSCO ICT Co., Ltd.


Korea



61.9
%   Item 4.D.
    Property,
    Plants and Equipment   31




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##### Table of Contents



Pohang
    Works
        For the Year Ended December 31,2005

2006

2007

2008

2009Crude steel and stainless steel production capacity (million
    tons per year)


13.30



13.30



14.30



15.00



15.00Actual crude steel and stainless steel output (million tons)


13.36



12.60



13.66



14.94



14.34Capacity utilization rate (%)
    (1)


100.4



94.7



95.5



99.6



95.6     (1)
    
    Calculated by dividing actual crude
    steel and stainless steel output by the actual crude steel and
    stainless steel production capacity for the relevant period as
    determined by us.  Gwangyang
    Works
       32




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##### Table of Contents



For the Year Ended December 31,2005

2006

2007

2008

2009Crude steel production capacity (million tons per year)


16.70



16.70



16.70



18.00



18.00Actual crude steel output (million tons)


17.19



17.45



17.41



18.20



15.19Capacity utilization rate (%)
    (1)


102.9



104.5



104.2



101.1



84.4     (1)
    
    Calculated by dividing actual crude
    steel output by the actual crude steel production capacity for
    the relevant period as determined by us.  The
    Environment
         33




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##### Table of Contents



Item 4A.
    Unresolved
    Staff Comments    Item 5.
    Operating
    and Financial Review and Prospects  Item 5.A.
    Operating
    Results    Overview
      
    our sales volume, unit prices and product mix;
    costs and production efficiency;
    exchange rate fluctuations; and
    transition to International Financial Reporting Standards
    starting in 2011.    Sales Volume,
    Prices and Product Mix
    
    the demand for our products in the Korean market and our
    capacity to meet that demand;
    our ability to compete for sales in the export market;
    price levels; and
    our ability to improve our product mix. 34




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##### Table of Contents



35




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##### Table of Contents



For the Year Ended December 31,Products

2007


2008


2009(In thousands of Won per ton)Hot rolled products

W
546.8


W
800.3


W
737.5Plates


725.2



970.5



951.9Wire rods


656.2



885.9



860.8Cold rolled products


714.0



922.7



902.4Silicon steel sheets


1,183.1



1,537.7



1,663.4Stainless steel products


3,069.0



3,529.6



2,701.8Others


509.9



807.5



804.5Average
    (1)

W
867.3


W
1,069.0


W
1,013.3     (1)
    
    Average prices are
    based on the weighted average, by sales volume, of our sales for
    the listed products. See Item 4. Information on the
    Company  Item 4.B. Business Overview 
    Major Products.  Costs and
    Production Efficiency
    For the Year Ended December 31,2007

2008

2009(Percentage of net sales)Cost of goods sold


78.8
%


78.0
%


84.2
%Selling and administrative expenses
    (1)


5.6



4.8



5.3Total operating expenses


84.4



82.8



89.5Gross margin


21.2



22.0



15.8Operating margin


15.6



17.2



10.5     (1)
    
    See Note 24 of Notes to
    Consolidated Financial Statements.    
    pursuing cost reduction through enhancing product designs,
    improving productivity and reducing transportation costs;
    focusing on marketing activities to increase our domestic market
    share and export sales; and
    establishing a special sales committee to more effectively
    respond to changes in market trends and preparing responses to
    various scenarios of future sales.   36




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##### Table of Contents



For the Year Ended December 31,2007

2008

2009Crude steel and stainless steel production capacity (million
    tons per
    year) (1)


32.8



34.6



34.6Actual crude steel and stainless steel output (million tons)


32.8



34.7



31.7Capacity utilization rate (%)


99.9



100.3



91.6Steel product sales (million tons)
    (2)


32.1



33.5



31.1     (1)
    
    Includes production capacity of
    POSCO Specialty Steel Co., Ltd. and Zhangjiagang Pohang
    Stainless Steel Co., Ltd.(2)
    
    Includes sales by our consolidated
    sales subsidiaries of steel products purchased by them from
    third parties, including trading companies to which we sell
    steel products. These sales amounted to
    approximately 1.0 million tons in 2007,
    0.9 million tons in 2008 and 0.5 million tons in 2009.  Exchange Rate
    Fluctuations
    
    an increase in the amount of Won required for us to make
    interest and principal payments on our foreign
    currency-denominated debt, which accounted for approximately
    50.5% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2009;
    an increase in Won terms in the costs of raw materials and
    equipment that we purchase from overseas sources and a
    substantial portion of our freight costs, which are denominated
    in Dollars; and
    foreign exchange translation losses on liabilities, which lower
    our earnings for accounting purposes.     37




---



##### Table of Contents



Transition to
    International Financial Reporting Standards Starting in
    2011
    Inflation
    Critical
    Accounting Estimates
    Allowance for
    Doubtful Accounts
         38




---



##### Table of Contents



Valuation of
    Investment Securities and Derivatives
      held-to-maturity available-for-sale
       39




---



##### Table of Contents



Long-lived
    Assets
     40




---



##### Table of Contents



Inventories
  materials-in-transit
    Deferred
    Income Tax Assets
      Operating
    Results
  2009 Compared
    to 2008
     41




---



##### Table of Contents



42




---



##### Table of Contents



Segment
    Results  Steel
     43




---



##### Table of Contents



Segment
    Results  Engineering and Construction
      Segment
    Results  Trading
      Segment
    Results  Others
      2008 Compared
    to 2007
   44




---



##### Table of Contents



45




---



##### Table of Contents




    We recorded a substantial increase in net loss on foreign
    currency translation to Won 811 billion in 2008 from
    Won 46 billion in 2007, as well as net loss on foreign
    currency transaction of Won 129 billion in 2008 compared to
    net gain on foreign currency transaction of Won 28 billion
    in 2007, primarily due to greater depreciation of the
    Won against the Dollar in 2008 compared to 2007.
    We recognized a 947% increase in loss on impairment of
    investments to Won 121 billion in 2008 from Won
    12 billion in 2007, primarily due to an impairment loss
    resulting from a decrease in the fair value of our July 2008
    investment in Macarthur Coal Limited.
    Our interest expense increased by 43.7% to Won 345 billion
    in 2008 from Won 240 billion in 2007 primarily due to
    increases in our outstanding long-term debt and short-term
    borrowings.    Segment
    Results  Steel
   46




---



##### Table of Contents



Segment
    Results  Engineering and Construction
      Segment
    Results  Trading
      Segment
    Results  Others
     47




---



##### Table of Contents



Item 5.B.
    Liquidity
    and Capital Resources    For the Year Ended December 31,2007

2008

2009(In billions of Won)Net cash provided by operating activities

W
5,553


W
3,687


W
8,633Net cash used in investing activities


3,737



5,803



9,717Net cash provided by (used in) financing activities


(1,001
)


3,117



862Cash and cash equivalents at beginning of period


936



1,293



2,491Cash and cash equivalents at end of period


1,293



2,491



2,199Net increase in cash and cash equivalents


356



1,198



(292
)   Capital
    Requirements
    available-for-sale
         48




---



##### Table of Contents



Payments Due by PeriodLess Than


1 to 3


4 to 5


AfterContractual Obligations

Total


1 Year


Years


Years


5 Years(In billions of Won)Long-term debt obligations (a)


9,087



787



3,695



3,850



755Interest payments on long-term debt (b)


1,021



365



470



186



Capital lease obligations (c)


24



7



10



3



4Operating lease obligations (d)


11



6



4



1



0Purchase obligations (e)


34,918



6,138



10,720



8,613



9,447Accrued severance benefits (f)


921



49



130



142



600Total


45,982



7,352



15,029



12,795



10,806     (a)
    
    Includes the current portion and
    premium on bond redemption but excludes amortization of discount
    on debentures and issuance costs.(b)
    
    As of December 31, 2009, a
    portion of our long-term debt carried variable interest rates.
    We used the interest rate in effect as of December 31, 2009
    in calculating the interest payments on long-term debt for the
    periods indicated.(c)
    
    We entered into a capital lease
    contract with Ilshin Shipping Co., Ltd. for a vessel for
    transporting plates and other products.(d)
    
    We, including certain subsidiaries,
    acquired certain tools and equipment under operating lease
    agreements with Macquarie Capital Korea Co., Ltd. and others.(e)
    
    Our purchase obligations include
    long-term contracts to purchase iron ore, coal, liquefied
    natural gas and other raw materials. These contracts generally
    have terms of three to ten years and provide for periodic price
    adjustments to then-market prices. As of December 31, 2009,
    364 million tons of iron ore and 59 million tons of
    coal remained to be purchased under long-term contracts. In
    addition, on July 1, 2005, we entered into an agreement
    with Tangguh Liquefied Natural Gas (LNG) Consortium
    in Indonesia to purchase 550 thousand tons of LNG annually for
    20 years. Purchase price under the agreement with Tangguh
    LNG Consortium is variable based on the monthly standard oil
    price (as represented by the Japan Customs-cleared Crude Price),
    subject to a ceiling. We used the market price in effect as of
    December 31, 2009 in calculating the iron ore, coal and
    liquefied natural gas purchase obligations described above for
    the periods indicated.  (f)
    
    Represents, as of December 31,
    2009, the expected amount of severance benefits that we will be
    required to pay under applicable Korean law to all of our
    employees when they reach their normal retirement age. The
    amounts were determined based on the employees current
    salary rates and the number of service years that will be
    accumulated upon their retirement. These amounts do not include
    amounts that may be paid to employees who cease to work at the
    company before their normal retirement age.  Capital
    Resources
       49




---



##### Table of Contents




    setting inventory targets for each product type and segment;
    monitoring sales activities through our newly-established
    special sales committee;
    focusing on reducing inventories older than
    30 days; and
    setting up a system to report inventories older than
    30 days to a responsible sales manager.    
    increasing management oversight on the accounts receivable
    turnover ratio;
    strengthening efforts to collect from delinquent customers and
    maintaining adequate level of collateral; and
    converting to cash settlement for customers with high risk of
    insolvency.     50




---



##### Table of Contents



Liquidity
          As of December 31,2007

2008

2009(In billions of Won)Cash and cash equivalents, net of government grants

W
1,293


W
2,490


W
2,197Short-term financial instruments


1,743



1,827



5,820Trading securities


1,287



1,238



506Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount


4,036



5,894



5,145Inventories, net


4,902



8,662



5,153  51




---



##### Table of Contents



As of December 31,2007

2008

2009(In billions of Won)Trade accounts and notes payable

W
2,247


W
3,070


W
2,735Short-term borrowings


1,572



3,254



3,226Income tax payable


931



2,083



394Current portion of long-term debt, net of discount on debentures
    issued


483



770



787   Capital
    Expenditures and Capacity Expansion
      EstimatedRemaining Cost ofCompletionExpected

Total Cost

as of December 31,Project

Completion Date

of Project

2009(In billions of Won)Pohang Works:Construction of a new steelmaking plant

June 2010

1,397

411Renovation of no. 4 furnace

December 2010

441

81Installation of grained coal re-rolling drum

April 2010

160

111Gwangyang Works:Construction of no. 5 sintering plant and no. 5 coke
    plant

December 2011

1,987

1,504Construction of a new steel plate plant

July 2010

1,791

355Pohang and Gwangyang Works:Raw materials treatment facility upgrades

March 2016

916

683   U.S.
    GAAP Reconciliation
     52




---



##### Table of Contents



Recent Accounting
    Pronouncements in U.S. GAAP
      Item 5.C.
    Research
    and Development, Patents and Licenses, Etc.          Item 5.D.
    Trend
    Information    Item 5.E.
    Off-balance
    Sheet Arrangements   53




---



##### Table of Contents



Item 5.F.
    Tabular
    Disclosure of Contractual Obligations    Item 5.G.
    Safe
    Harbor    Item 6.
    Directors,
    Senior Management and Employees  Item 6.A.
    Directors
    and Senior Management  Board of
    Directors
    sub-committees:
  
    the Director Candidate Recommendation Committee;
    the Evaluation and Compensation Committee;
    the Finance and Operation Committee;
    the Executive Management Committee;
    the Audit Committee; and
    the Related Party Transactions Committee.     54




---



##### Table of Contents



Inside
    Directors
    Years

Years



ExpirationResponsibilities and

as

with



of Term ofName

Position

Division

Director

POSCO

Age

OfficeChung, Joon-Yang

Chief Executive Officer and Representative Director




6



35



62



February 2012Choi, Jong-Tae

President and Representative Director

Chief Financial and Planning Officer


2



36



60



February 2011Park, Han-Yong

Senior Executive Vice President

Chief Staff Officer


0



31



59



February 2012Oh, Chang-Kwan

Senior Executive Vice President

Head of Stainless Steel Business Division


0



32



57



February 2012Kim, Jin-Il

Senior Executive Vice President

Head of Carbon Steel Business Division


0



35



57



February 2012     Outside
    Directors
    Yearsas



Expiration ofName

Position

Principal Occupation

Director

Age

Term of OfficeAhn, Charles

Presiding
    Director of
    the Board of
    Directors

Chairman of the Board, AhnLab, Inc.


5



48



February 2011Sun, Wook

Director

Former CEO, Nongshim Co., Ltd.


5



65



February 2011Park, Sang-Yong

Director

Professor, Yonsei University


2



59



February 2011Yoo, Jang-Hee

Director

President, East Asian Economic Association


1



69



February 2012Han, Joon-Ho

Director

CEO and Vice Chairman, Samchully Co., Ltd.


1



64



February 2012Lee, Young-Sun

Director

President, Hallym University


1



62



February 2012Kim, Byung-Ki

Director

Former President and Research Fellow, Samsung Economic Research
    Institute


1



60



February 2012Lee, Chang-Hee

Director

Professor, Seoul National University


1



50



February 2012     Senior
    Management
    YearswithName

Position

Responsibility and Division

POSCO

AgeKwon, Young-Tae

Senior Executive Vice President

Raw Materials Procurement Dept.

35

60 55




---



##### Table of Contents



YearswithName

Position

Responsibility and Division

POSCO

AgeKim, Sang-Young

Senior Executive Vice President

Corporate Communication Dept.

23

58Cho, Noi-Ha

Executive Vice President

Chief Technology Officer

32

57Yoon, Yong-Won

Executive Vice President

Head of Growth and Investment Division

32

58Park, Ki-Hong

Executive Vice President

Corporate Strategy Dept., Green Development Project Dept., Chief
    Risk Management Officer

4

52Choo, Wung-Yong

Executive Vice President

General Superintendent (Technical Research Laboratories)

27

57Yoo, Kwang-Jae

Executive Vice President

Stainless Steel Business Division

32

58Kim, Joon-Sik

Executive Vice President

General Superintendent (Gwangyang Works)

29

56Jang, Young-Ik

Executive Vice President

Stainless Steel Raw Materials Procurement Dept.

31

56Cho, Bong-Rae

Executive Vice President

General Superintendent (Pohang Works)

30

57Shin, Jung-Suk

Executive Vice President

Chief Marketing Officer

31

57Baek, Sung-Kwan

Senior Vice President

Steel Business Dept. II

29

54Lee, Kyung-Hoon

Senior Vice President

Environment and Energy Dept.

31

56Jang, Sung-Hwan

Senior Vice President

Deputy General Superintendent (Administration, Pohang Works)

29

55Lee, Hoo-Geun

Senior Vice President

FINEX Research and Development Project Dept. (Pohang Works)

27

52Woo, Jong-Soo

Senior Vice President

European Union Office

30

54Kang, Chang-Gyun

Senior Vice President

Corporate Synergy Dept.

30

54Lee, Jung-Sik

Senior Vice President

Technology Strategy Dept.

30

55Suh, Young-Sea

Senior Vice President

Stainless Steel Marketing Dept.

26

54Park, Myung-Kil

Senior Vice President

Procurement Service Center, Corporate Collaboration and
    Prosperity Dept.

24

51Lee, Young-Hoon

Senior Vice President

Finance Dept.

24

50Hwang, Eun-Yeon

Senior Vice President

Marketing Strategy Dept.

23

51Kim, Yeung-Gyu

Senior Vice President

Human Resources and Innovation Dept.

27

55Park, Kui-Chan

Senior Vice President

Dept. of External Affairs, Global Research and Development
    Center Project Dept.

3

53Park, Sung-Ho

Senior Vice President

Deputy General Superintendent (Technical Research Laboratories)

27

53Shin, Young-Kwan

Senior Vice President

Cold Rolled Products Marketing Dept.

25

52Oh, In-Hwan

Senior Vice President

Automotive Flat Products Marketing Dept.

28

51Yeon, Kyu-Sung

Senior Vice President

Deputy General Superintendent (Maintenance, Pohang Works)

25

51Lee, Kyoung-Mok

Senior Vice President

Deputy General Superintendent (Iron and Steel Making, Pohang
    Works)

28

54Jeon, Woo-Sig

Senior Vice President

Strategic Business Dept.

24

50Kim, Young-Hun

Senior Vice President

Corporate Future Creation Academy

28

52Choi, Jeong-Woo

Senior Vice President

Corporate Audit Dept.

25

53Cho, Sang-Ho

Senior Vice President

Magnesium Business Dept.

27

54Lee, Myung-Chul

Senior Vice President

Energy Business Dept.

22

51An, Tong-Il

Senior Vice President

Deputy General Superintendent (Maintenance, Gwangyang Works)

23

51Yae, Jae-Hen

Senior Vice President

Labor and Outside Services Dept.

25

54Choi, Kyu-Seok

Senior Vice President

Information Planning Dept.

24

52Min, Kyung-Zoon

Senior Vice President

Deputy General Superintendent (Hot and Cold Rolling, Gwangyang
    Works)

26

52Kim, Won-Ki

Senior Vice President

POSCO-South Asia Co., Ltd.

28

53 56




---



##### Table of Contents



YearswithName

Position

Responsibility and Division

POSCO

AgeNam, Sik

Senior Vice President

POSCO-Vietnam Co., Ltd.

27

53Ko, Suk-Bum

Senior Vice President

Deputy General Superintendent (Administration, Gwangyang Works)

25

52Kim, Hag-Dong

Senior Vice President

Deputy General Superintendent (Iron and Steel Making, Gwangyang
    Works)

25

51Kim, Sun-Won

Senior Vice President

Order Processing and Technical Service Dept.

27

52Son, Gi-Jin

Senior Vice President

Corporate Contribution Dept.

27

50Kim, Dong-Chul

Senior Vice President

Steel Business Dept. I

24

54Kim, Jhi-Yong

Senior Vice President

Advanced Materials Business Dept.

17

48Jeon, Cheol

Senior Vice President

Stainless Steel Production and Technology

27

53Kim, Yong-Min

Senior Vice President

Zhangjiagang Pohang Stainless Steel Co., Ltd.

27

52Lee, Young-Ki

Senior Vice President

Deputy General Superintendent (Hot and Cold Rolling, Pohang
    Works)

24

50Yu, Seong

Senior Vice President

POSCO-Japan Co., Ltd.

24

53Shin, Jae-Chul

Senior Vice President

Hot Rolled Products Marketing Dept.

24

49Kim, Se-Hyun

Senior Vice President

Productivity Research Center

0

50Oh, In-Kyung

Senior Vice President

Global Leadership Center

0

49   Item 6.B.
    Compensation  Compensation of
    Directors and Officers
      Item 6.C.
    Board
    Practices  Director
    Candidate Recommendation Committee
  Han-Yong.
  Evaluation and
    Compensation Committee
  Young-Sun
 57




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##### Table of Contents



Finance and
    Operation Committee
    Executive
    Management Committee
    Audit
    Committee
      
    engaging independent auditors;
    approving independent audit fees;
    approving audit and non-audit services;
    reviewing annual financial statements;
    reviewing audit results and reports, including management
    comments and recommendations;
    reviewing our system of controls and policies, including those
    covering conflicts of interest and business ethics; and
    examining improprieties or suspected improprieties.    Related Party
    Transactions Committee
  Sang-Yong
 58




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##### Table of Contents



Item 6.D.
    Employees          Item 6.E.
    Share
    Ownership  Common
    Stock
    Shareholders

Number of Common Shares OwnedYoon, Yong-Won


1,978Choi, Jong-Tae


1,573Chung, Joon-Yang


1,400Kim, Hag-Dong


805Cho, Noi-Ha


600Yoo, Kwang-Jae


502Kwon, Young-Tae


500Oh, Chang-Kwan


400Woo, Jong-Soo


391Kim, Young-Hun


361Min, Kyung-Zoon


330Lee, Kyoung-Mok


322 59




---



##### Table of Contents



Shareholders

Number of Common Shares OwnedOh, In-Hwan


320Yae, Jae-Hen


320Son, Gi-Jin


320Kim, Dong-Chul


320Jeon, Cheol


320Lee, Kyung-Hoon


319Lee, Hoo-Geun


298Lee, Jung-Sik


296Park, Sung-Ho


296Kim, Sang-Young


293Cho, Sang Ho


281Chang, Song-Hwan


260Kim, Yong-Min


251Kim, Sun-Won


243Shin, Jae-Chul


243Jang, Young-Ik


242Nam, Sik


241Suh, Young-Sea


236Kim, Joon-Sik


232Lee, Young-Ki


219Baek, Sung-Kwan


207Shin, Jung-Suk


205Kim, Won-Ki


192Yu, Seong


168Kim, Jhi-Yong


143Kim, Jin-Il


140Hwang, Eun-Yeon


119Choo, Wung-Yong


104Cho, Bong-Rae


104Choi, Jeong-Woo


100Yeon, Kyu-Sung


95Ko, Suk-Bum


95Lee, Young-Hoon


78Shin, Young-Kwan


67Kim, Yeung-Gyu


50Park, Kui-Chan


36Park, Han-Yong


12Total


16,303   Stock
    Options
   60




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##### Table of Contents



Exercise Period

Exercise

Granted

Exercised

ExercisableDirectors

Grant Date

From

To

Price

Options

Options

OptionsChung, Joon-Yang


April 27, 2002



4/28/2004



4/27/2009



136,400



9,316



9,316



0July 23, 2004



7/24/2006



7/23/2011



151,700



4,900



4,900



0Choi, Jong-Tae


July 23, 2001



7/24/2003



7/23/2008



98,900



9,037



9,037



0April 26, 2003



4/27/2005



4/26/2010



102,900



1,921



1,921



0Oh, Chang-Kwan


April 27, 2002



4/28/2004



4/27/2009



136,400



9,316



9,316



0Kim, Jin-Il


April 26, 2003



4/27/2005



4/26/2010



102,900



9,604



9,604



0Ahn, Charles


April 28, 2005



4/29/2007



4/28/2012



194,900



2,000



0



2,000Sun, Wook


April 28, 2005



4/29/2007



4/28/2012



194,900



2,000



0



2,000   Exercise Period

Exercise

Granted

Exercised

ExercisableExecutive Officers

Grant Date

From

To

Price

Options

Options

OptionsKwon, Young-Tae

September 18,
    2002


9/19/2004



9/18/2009



116,100



9,316



9,316



0Kim, Sang-Young

July 23, 2004


7/24/2006



7/23/2011



151,700



9,800



0



9,800Cho, Noi-Ha

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



0



10,000Yoon, Yong-Won

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



10,000



0Yoo, Kwang-Jae

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



10,000



0   Item 7.
    Major
    Shareholders and Related Party Transactions  Item 7.A.
    Major
    Shareholders    Number ofSharesShareholders

Owned


PercentageNational Pension
    Service (1)


4,733,593



5.43Nippon Steel
    Corporation (2)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


2,817,800



3.23SK Telecom


2,481,310



2.85Pohang University of Science and Technology


2,000,000



2.29Directors and executive officers as a group


14,489



0.02Public(3)


60,590,974



69.50POSCO (held in the form of treasury stock)


7,792,072



8.94POSCO (held through treasury stock fund)


2,361,885



2.71Total issued shares of common stock


87,186,835



100.00
%     (1)
    
    National Pension Service sold
    shares to decrease its number of shareholding from 4,733,593
    (5.43%) as of December 31, 2009 to 4,427,612 (5.08%) as of
    January 26, 2010.(2)
    
    Held in the form of ADRs.(3)
    
    Includes ADRs.   61




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##### Table of Contents



Item 7.B.
    Related
    Party Transactions      Item 7.C.
    Interests
    of Experts and Counsel  Not applicable
  Item 8.
    Financial
    Information  Item 8.A.
    Consolidated
    Statements and Other Financial Information    Legal
    Proceedings
        DIVIDENDS
   62




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##### Table of Contents



Annual Dividend per



Average TotalCommon Stock to

Interim Dividend per

Dividend perYear

Public

Common Stock

Common Stock(In Won)2004


6,500



1,500



8,0002005


6,000



2,000



8,0002006


6,000



2,000



8,0002007


7,500



2,500



10,0002008


7,500



2,500



10,0002009


6,500



1,500



8,000       Item 8.B.
    Significant
    Changes    Item 9.
    The
    Offer and Listing  Item 9.A.
    Offer
    and Listing Details  Market Price
    Information
  Notes
  Not applicable
 63




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##### Table of Contents



Common
    Stock
    Price

Average DailyHigh

Low

Trading Volume(In Won)

(Number ofShares)2005First Quarter


225,500



176,500



285,371Second Quarter


203,000



174,500



297,524Third Quarter


240,500



182,000



281,567Fourth Quarter


236,500



199,500



327,6392006First Quarter


251,500



196,500



420,095Second Quarter


287,000



217,500



380,671Third Quarter


254,000



225,500



270,661Fourth Quarter


318,500



239,000



244,7572007First Quarter


395,000



286,500



296,883Second Quarter


481,000



366,000



246,291Third Quarter


673,000



443,500



298,177Fourth Quarter


765,000



557,000



331,2862008First Quarter


575,000



437,000



334,157Second Quarter


594,000



450,000



382,083Third Quarter


544,000



410,000



389,984Fourth Quarter


436,500



242,000



600,1412009First Quarter


430,000



303,000



389,081Second Quarter


435,000



369,000



390,866Third Quarter


519,000



420,000



324,403Fourth Quarter


619,000



472,500



293,7242010First Quarter


625,000



516,000



255,173January


625,000



536,000



270,987February


558,000



516,000



229,990March


565,000



528,000



262,546Second Quarter (through June 24)


560,000



434,500



346,944April


560,000



499,000



348,418May


488,000



434,500



383,223June (through June 24)


507,000



447,000



304,488   ADSs
   64




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##### Table of Contents



Price

Average DailyHigh

Low

Trading Volume(In US$)

(Number of ADSs)2005First Quarter


54.85



41.22



866,811Second Quarter


49.70



43.75



790,208Third Quarter


57.08



44.12



606,928Fourth Quarter


56.01



47.85



671,0242006First Quarter


63.80



48.97



812,089Second Quarter


74.41



56.07



922,906Third Quarter


66.88



58.59



760,752Fourth Quarter


84.88



63.00



748,7892007First Quarter


106.88



76.49



770,003Second Quarter


129.60



99.34



712,996Third Quarter


184.54



124.50



809,315Fourth Quarter


195.89



147.17



721,1602008First Quarter


147.74



108.41



418,434Second Quarter


147.05



112.80



249,329Third Quarter


133.73



88.35



294,629Fourth Quarter


89.00



47.14



355,6042009First Quarter


79.11



47.14



212,268Second Quarter


89.00



69.23



168,527Third Quarter


108.08



80.73



491,455Fourth Quarter


131.47



100.00



458,7752010First Quarter


140.10



108.23



429,700January


140.10



112.95



515,886February


120.30



108.23



386,190March


124.96



115.16



394,445Second Quarter (through June 24)


124.83



88.78



563,909April


124.83



112.16



415,490May


110.35



88.78



696,461June (through June 24)


105.14



89.32



589,786   Item 9.B.
    Plan
    of Distribution  Not applicable
  Item 9.C.
    Markets  The Korean
    Securities Market
   65




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##### Table of Contents



66




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##### Table of Contents



Period AverageDividend

PriceYield
    (1)(2)

EarningsYear

Opening

High

Low

Closing

(Percent)

Ratio
    (2)(3)1985


139.53



163.37



131.40



163.37



5.3



5.21986


161.40



279.67



153.85



272.61



4.3



7.61987


264.82



525.11



264.82



525.11



2.6



10.91988


532.04



922.56



527.89



907.20



2.4



11.21989


919.61



1,007.77



844.75



909.72



2.0



13.91990


908.59



928.82



566.27



696.11



2.2



12.81991


679.75



763.10



586.51



610.92



2.6



11.21992


624.23



691.48



459.07



678.44



2.2



10.91993


697.41



874.10



605.93



866.18



1.6



12.71994


879.32



1,138.75



855.37



1,027.37



1.2



16.21995


1,027.45



1,016.77



847.09



882.94



1.2



16.41996


882.29



986.84



651.22



651.22



1.3



17.81997


647.67



792.29



350.68



376.31



1.5



17.01998


374.41



579.86



280.00



562.46



1.9



10.81999


565.10



1,028.07



498.42



1,028.07



1.1



13.52000


1,028.33



1,059.04



500.60



504.62



1.6



18.62001


503.31



704.50



468.76



693.70



2.0



14.22002


698.00



937.61



584.04



627.55



1.4



17.82003


633.03



822.16



515.24



810.71



2.2



10.92004


821.26



936.06



719.59



895.92



2.1



15.82005


896.00



1,379.37



870.84



1,379.37



1.7



11.02006


1,383.32



1,464.70



1,203.86



1,434.46



1.7



11.42007


1,438.89



2,015.48



1,345.08



1,897.13



1.4



16.82008


1,891.45



1,888.88



938.75



1,124.47



2.6



8.92009


1,132.87



1,718.88



1,018.81



1,682.77



1.2



23.72010 (through June 24)


1,681.71



1,752.20



1,552.79



1,739.87



1.3



15.4     Source:
  (1)
    
    Dividend yields are based on daily
    figures. Before 1983, dividend yields were calculated at the end
    of each month. Dividend yields after January 3, 1984
    include cash dividends only.(2)
    
    Starting in April 2000, dividend
    yield and price earnings ratio are calculated based on KOSPI
    200, an index of 200 equity securities listed on the KRX KOSPI
    Market. Starting in April 2000, KOSPI 200 excludes classified
    companies, companies which did not submit annual reports to the
    KRX KOSPI Market, and companies which received qualified opinion
    from external auditors.(3)
    
    The price earnings ratio is based
    on figures for companies that record a profit in the preceding
    year.   67




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##### Table of Contents



Rounded DownPrevious Days Closing Price (Won)

to (Won)Less than 5,000


55,000 to less than 10,000


1010,000 to less than 50,000


5050,000 to less than 100,000


100100,000 to less than 500,000


500500,000 or more


1,000      68




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##### Table of Contents



Market Capitalization on the Last Day of EachPeriodNumber of





Average Daily Trading Volume, ValueListed

(Billions of

(Millions of

Thousands

(Millions of

(ThousandsYear

Companies

Won)

US$) (1)

of Shares

Won)

of US$)
    (1)1985


342


W
6,570


US$
7,381



18,925


W
12,315


US$
13,8341986


355



11,994



13,924



31,755



32,870



38,1591987


389



26,172



33,033



20,353



70,185



88,5831988


502



64,544



94,348



10,367



198,364



289,9631989


626



95,477



140,490



11,757



280,967



414,4301990


669



79,020



110,301



10,866



183,692



256,4111991


686



73,118



96,107



14,022



214,263



281,6291992


688



84,712



107,448



24,028



308,246



390,9771993


693



112,665



139,420



35,130



574,048



710,3671994


699



151,217



191,730



36,862



776,257



984,2231995


721



141,151



182,201



26,130



487,762



629,6131996


760



117,370



139,031



26,571



486,834



576,6801997


776



70,989



50,162



41,525



555,759



392,7071998


748



137,799



114,091



97,716



660,429



546,8031999


725



349,504



305,137



278,551



3,481,620



3,039,6552000


704



188,042



149,275



306,163



2,602,211



2,065,7392001


689



255,850



192,934



473,241



1,997,420



1,506,2372002


683



258,681



215,496



857,245



3,041,598



2,533,8152003


684



355,363



296,679



542,010



2,216,636



1,850,5892004


683



412,588



395,275



372,895



2,232,109



2,138,4452005


702



655,075



646,158



467,629



3,157,662



3,114,6792006


731



704,588



757,948



279,096



3,435,180



3,695,3312007


745



951,900



1,016,770



363,741



5,539,653



5,917,1682008


763



576,888



458,758



352,599



3,211,039



2,553,5102009


770



887,935



762,503



485,657



5,595,552



4,976,8592010 (through June 24)


770



931,743



840,923



423,010



5,684,746



5,130,637     Source:
  (1)
    
    Converted at the Concentration Base
    Rate of The Bank of Korea or the Market Average Exchange Rate,
    as the case may be, at the end of the periods indicated.   69




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##### Table of Contents



Protection of
    Customers Interest in Case of Insolvency of Investment
    Brokers or Investment Dealers
            Clearance and
    Settlement
   70




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##### Table of Contents



Item 9.D.
    Selling
    Shareholders  Not applicable
  Item 9.E.
    Dilution  Not applicable
  Item 9.F.
    Expenses
    of the Issuer  Not applicable
  Item 10.
    Additional
    Information  Item 10.A.
    Share
    Capital    Item 10.B.
    Memorandum
    and Articles of Association    Dividends
     71




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##### Table of Contents



Distribution of
    Free Shares
    Preemptive Rights
    and Issuance of Additional Shares
      
    offered publicly or to underwriters for underwriting pursuant to
    the FSCMA;
    issued to members of our employee stock ownership association
    pursuant to the FSCMA;
    represented by depositary receipts pursuant to the FSCMA;
    issued in a general public offering pursuant to a board
    resolution in accordance with the FSCMA, the amount of which is
    no more than 10% of the outstanding Shares;
    issued to our creditors pursuant to a debt-equity swap; 72




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##### Table of Contents




    issued to domestic or foreign corporations pursuant to a joint
    venture agreement, strategic coalition or technology inducement
    agreement when deemed necessary for management purposes; or
    issued to domestic or foreign financial institutions when
    necessary for raising funds in emergency cases.      General Meeting
    of Shareholders
    
    as necessary;
    at the request of holders of an aggregate of 3% or more of our
    outstanding Shares;
    at the request of shareholders holding an aggregate of 1.5% or
    more of our outstanding Shares for at least six months; or
    at the request of our audit committee.    The Seoul Shinmun The Maeil
    Shinmun The Kwangju Ilbo
    Voting
    Rights
   73




---



##### Table of Contents




    amending our articles of incorporation;
    removing a director;
    effecting any dissolution, merger or consolidation of us;
    transferring the whole or any significant part of our business;
    effecting our acquisition of all of the business of any other
    company;
    issuing any new Shares at a price lower than their par value;
    approving matters required to be approved at a general meeting
    of shareholders, which have material effects on our assets, as
    determined by the Board of Directors; or
    reducing capital.        Rights of
    Dissenting Shareholders
   74




---



##### Table of Contents



20-day
  Register of
    Shareholders and Record Dates
    and/or
  Annual
    Report
      Transfer of
    Shares
     75




---



##### Table of Contents



36-3,
  Acquisition of
    Shares by Us
      Liquidation
    Rights
    Item 10.C.
    Material
    Contracts    Item 10.D.
    Exchange
    Controls  Shares and
    ADSs
      
    if the Government deems it necessary on account of war, armed
    conflict, natural disaster or grave and sudden and significant
    changes in domestic or foreign economic circumstances or similar
    events or circumstances, the Ministry of Strategy and Finance
    may temporarily suspend performance under any or all foreign
    exchange transactions, in whole or in part, to which the Foreign
    Exchange Transaction Laws apply (including suspension of payment
    and receipt of foreign exchange) or impose an obligation to
    deposit, safe-keep or sell any means of payment to The Bank of
    Korea or certain other governmental agencies or financial
    institutions; and
    if the Government concludes that the international balance of
    payments and international financial markets are experiencing or
    are likely to experience significant disruption or that 76




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##### Table of Contents



the movement of capital between Korea and other countries is
    likely to adversely affect the Won, exchange rates or other
    macroeconomic policies, the Ministry of Strategy and Finance may
    take action to require any person who intends to effect a
    capital transaction to obtain permission or to require any
    person who effects a capital transaction to deposit a portion of
    the means of payment acquired in such transactions with The Bank
    of Korea or certain other governmental agencies or financial
    institutions.  Government Review
    of Issuance of ADSs
      Reporting
    Requirements for Holders of Substantial Interests
       77




---



##### Table of Contents



Restrictions
    Applicable to ADSs
        Restrictions
    Applicable to Shares
    
    odd-lot trading of shares;
    acquisition of shares (Converted Shares) by exercise
    of warrant, conversion right under convertible bonds or
    withdrawal right under depositary receipts issued outside of
    Korea by a Korean company;
    acquisition of shares as a result of inheritance, donation,
    bequest or exercise of shareholders rights, including
    preemptive rights or rights to participate in free distributions
    and receive dividends;
    over-the-counter
    transactions between foreigners of a class of shares for which
    the ceiling on aggregate acquisition by foreigners, as explained
    below, has been reached or exceeded with certain exceptions;
    shares acquired by direct investment as defined in the Foreign
    Investment Promotion Law;
    disposal of shares pursuant to the exercise of appraisal rights
    of dissenting shareholders;
    disposal of shares in connection with a tender offer;
    acquisition of shares by a foreign depositary in connection with
    the issuance of depositary receipts; 78




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##### Table of Contents




    acquisition and disposal of shares through overseas stock
    exchange market if such shares are simultaneously listed on the
    KRX KOSPI Market or the KRX KOSDAQ Market and such overseas
    stock exchange; and
    arms length transactions between foreigners, if all of
    such foreigners belong to an investment group managed by the
    same person.  over-the-counter
  provided, however,
   79




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##### Table of Contents



Item 10.E.
    Taxation  Form 20-F,
 80




---



##### Table of Contents



Korean
    Taxation
    
    a resident of Korea;
    a corporation with registered office or main office located in
    Korea or actual management of which takes place in Korea; or
    engaged in a trade or business in Korea through a permanent
    establishment or a fixed base to which the relevant income is
    attributable or with which the relevant income is effectively
    connected.  Shares or
    ADSs
  Dividends on the
    Shares of Common Stock or ADSs
      Taxation of
    Capital Gains
         81




---



##### Table of Contents



Tax
    Treaties
  Korea-United Korea-United Korea-United
    Inheritance Tax
    and Gift Tax
   82




---



##### Table of Contents



Securities
    Transaction Tax
        United States
    Taxation
    
    a dealer in securities or currencies;
    a trader in securities that elects to use a
    mark-to-market
    method of accounting for your securities holdings;
    a bank;
    a life insurance company;
    a tax-exempt organization;
    a person that holds shares of common stock or ADSs that are a
    hedge or that are hedged against interest rate or currency risks;
    a person that holds shares of common stock or ADSs as part of a
    straddle or conversion transaction for tax purposes; 83




---



##### Table of Contents




    a person whose functional currency for tax purposes is not the
    U.S. dollar; or
    a person that owns or is deemed to own 10% or more of any class
    of our stock.        
    a citizen or resident of the United States;
    a U.S. domestic corporation; or
    subject to U.S. federal income tax on a net income basis
    with respect to income from the share of common stock or ADS.  Shares of
    Common Stock and ADSs
    Dividends
     84




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##### Table of Contents



Sales and Other
    Dispositions
    Foreign Tax
    Credit Considerations
  16-day
      U.S.
    Information Reporting and Backup Withholding Rules
  U.S.-related non-U.S. status U.S.-related
  Item 10.F.
    Dividends
    and Paying Agents   85




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##### Table of Contents



Item 10.G.
    Statements
    by Experts  Not applicable
  Item 10.H.
    Documents
    on Display  Form 20-F, 1-800-SEC-0330. http://www.sec.gov.
  Item 10.I.
    Subsidiary
    Information  Not applicable
  Item 11.
    Quantitative
    and Qualitative Disclosures about Market Risk    Exchange Rate
    Risk
     86




---



##### Table of Contents



Interest Rate
    Risk
    and/or
  MaturitiesDecember 31, 2009


December 31, 2008Fair





Fair2010


2011


2012


2013


2014


Thereafter


Total


Value


Total


Value(In billions of Won except rates)Local currency:Fixed rate


1,165



1,276



706



517



575



326



4,565



4,631



2,904



2,909Average weighted
    rate (1)


3.71
%


5.43
%


5.38
%


6.41
%


5.36
%


5.79
%


5.11
%






5.64
%


Variable rate


8



71



8



9



9



49



153



145



833



643Average weighted
    rate (1)


5.60
%


3.08
%


2.52
%


2.52
%


2.52
%


2.52
%


2.94
%






4.98
%


Sub-total


1,172



1,347



713



526



585



375



4,719



4,775



3,738



3,552Foreign currency, principally Dollars and Yen:Fixed rate


2,735



333



265



987



822



374



5,517



5,536



5,649



5,443Average weighted
    rate (1)


2.56
%


3.31
%


4.86
%


2.39
%


8.71
%


5.69
%


3.81
%






3.17
%


Variable rate


105



1,037







929







6



2,077



2,069



1,609



14Average weighted
    rate (1)


0.72
%


2.10
%






0.86
%






2.25
%


1.48
%






2.31
%


Sub-total


2,840



1,370



265



1,917



822



380



7,594



7,605



7,258



5,457Total


4,013



2,717



978



2,443



1,407



755



12,313



12,380



10,996



9,010     (1)
    
    Weighted average rates of the
    portfolio at the period end.  Commodity Price
    Risk
     87




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##### Table of Contents



Equity Price
    Risk
    Item 12.
    Description
    of Securities Other than Equity Securities  Not applicable
  Item 12.A.
    Debt
    Securities  Not applicable
  Item 12.B.
    Warrants
    and Rights  Not applicable
  Item 12.C.
    Other
    Securities  Not applicable
  Item 12.D.
    American
    Depositary Shares  Fees and
    Charges
    Services

FeesIssuance of ADSs upon deposit of shares

Up to $0.05 per ADS issuedDelivery of deposited shares against surrender of ADSs

Up to $0.05 per ADS surrenderedDistribution delivery of ADSs pursuant to sale or exercise of
    rights

Up to $0.05 per ADS heldDistributions of dividends

Up to $0.02 per ADS heldDistribution of securities other than ADSs

A fee equivalent to the fee that would be payable if securities
    distributed had been shares and such shares had been deposited
    for issuance of ADSs.Other corporate action involving distributions to shareholders

1. As necessary for taxes and other governmental charges that the depositary or the custodian have to pay on any ADS or share underlying an ADS (for example, stock transfer taxes, stamp duty or withholding taxes). 2. As necessary for any charges incurred by the depositary or its agents for servicing the deposited securities.     
    fees for the transfer and registration of shares charged by the
    registrar and transfer agent for the shares in Korea
    (i.e., upon deposit and withdrawal of shares);
    expenses incurred for converting foreign currency into
    U.S. dollars; 88




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##### Table of Contents




    expenses for cable, telex and fax transmissions and for delivery
    of securities;
    taxes and duties upon the transfer of securities (i.e.,
    when shares are deposited or withdrawn from deposit); and
    fees and expenses incurred in connection with the delivery or
    servicing of shares on deposit.          Fees and Payments
    from the Depositary to Us
    Reimbursement of NYSE listing fees:

$
69,479.67Reimbursement of London Stock Exchange listing fees:

$
24,445.49Reimbursement of Tokyo Stock Exchange fees:

$
46,587.99Reimbursement of proxy process expenses (printing, postage and
    distribution):

$
84,522.78Contributions toward our investor relations efforts:

$
165,078.78    89




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##### Table of Contents



PART II  Item 13.
    Defaults,
    Dividend Arrearages and Delinquencies  Not applicable
  Item 14.
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds  Not applicable
  Item 15.
    Controls
    and Procedures  a.
    Disclosure
    Controls and Procedures  Rules 13a-15(e) 15d-15(e)
  b.
    Managements
    Annual Report on Internal Control over Financial
    Reporting         90




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##### Table of Contents



c.
    Attestation
    Report of the Independent Registered Public Accounting
    Firm  Form 20-F.
  d.
    Changes in
    Internal Control Over Financial Reporting    Item 16.
    [Reserved]  Item 16A.
    Audit
    Committee Financial Expert    Item 16B.
    Code
    of Ethics  Form 20-F www.posco.com.
  Item 16C.
    Principal
    Accountant Fees and Services  Audit and
    Non-Audit Fees
    For the Year Ended December 31,2008


2009(In millions of Won)Audit fees

W
2,539



3,122Audit-related fees






Tax fees


254



674Other fees


200



51Total fees

W
2,993



3,847    91




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##### Table of Contents



Audit Committee
    Pre-Approval Policies and Procedures
  case-by-case
  Item 16D.
    Exemptions
    from the Listing Standards for Audit Committees  Not applicable
  Item 16E.
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers    Total Number of


Maximum NumberTotal Number of


Average Price


Shares Purchased


of Shares that MayShares


Paid Per Share (In


as Part of Publicly


Yet Be PurchasedPeriod

Purchased


Won)


Announced Plans


Under the PlansJanuary 1 to January 31














February 1 to February 29














March 1 to March 31














April 1 to April 30














May 1 to May 31














June 1 to June 30














July 1 to July 31














August 1 to August 31














September 1 to September 30














October 1 to October 31














November 1 to November 30














December 1 to December 31














Total














   Item 16F.
    Change
    in Registrants Certifying Accountant  Not applicable
  Item 16G.
    Corporate
    Governance   92




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##### Table of Contents



NYSE Corporate Governance Standards

POSCOs Corporate Governance PracticeDirector IndependenceIndependent directors must comprise a majority of the board

Our articles of incorporation provide that our board of
    directors must comprise no less than a majority of Outside
    Directors. Our Outside Directors must meet the criteria for
    outside directorship set forth under the Korean Securities and
    Exchange Act.The majority of our board of directors is independent (as
    defined in accordance with the New York Stock Exchanges
    standards), and 8 out of 13 directors are Outside
    Directors. Under our articles of incorporation, we may have up
    to five Inside Directors and eight Outside Directors.Nomination/Corporate Governance CommitteeListed companies must have a nomination/corporate governance
    committee composed entirely of independent directors

We have not established a separate nomination corporate
    governance committee. However, we maintain a Director Candidate
    Recommendation Committee composed of three Outside Directors and
    one Inside Director.Compensation CommitteeListed companies must have a compensation committee composed
    entirely of independent directors

We maintain an Evaluation and Compensation Committee composed of
    four Outside Directors.Executive SessionListed companies must hold meetings solely attended by
    non-management directors to more effectively check and balance
    management directors

Our Outside Directors hold meetings solely attended by Outside
    Directors in accordance with operation guidelines of our board
    of directors.Audit CommitteeListed companies must have an audit committee that is composed
    of minimum of three directors and satisfy the requirements of
    Rule 10A-3
    under the Exchange Act

We maintain an Audit Committee comprised of three Outside
    Directors who meet the applicable independence criteria set
    forth under Rule 10A-3 under the Exchange Act.Shareholder Approval of Equity Compensation PlanListed companies must allow their shareholders to exercise their
    voting rights with respect to any material revision to the
    companys equity compensation plan

We currently have an Employee Stock Ownership Program. We
    previously provided a stock options program for officers and
    directors, as another equity compensation plan. However, during
    our annual shareholders meeting in February 2006, our
    shareholders resolved to terminate the stock option program and
    amended our articles of incorporation to delete the provision
    allowing grant of stock options to officers and directors.
    Consequently, since February 24, 2006, we have not granted stock
    options to officers and directors. Matters related to the
    Employee Stock Ownership Program are not subject to
    shareholders approval under Korean law.Corporate Governance GuidelinesListed companies must adopt and disclose corporate governance
    guidelines

We have adopted a Corporate Governance Charter setting forth our
    practices with respect to relevant corporate governance matters.
    Our Corporate Governance Charter is in compliance with Korean
    law but does not meet all requirements established by the New
    York Stock Exchange for U.S. companies listed on the exchange. A
    copy of our Corporate Governance Charter is available on our
    website at www.posco.com.Code of Business Conduct and EthicsListed companies must adopt and disclose a code of business
    conduct and ethics for directors, officers and employees, and
    promptly disclose any waivers of the code for directors or
    executive officers

We have adopted a Code of Conduct for all directors, officers
    and employees. A copy of our Code of Conduct is available on our
    website at www.posco.com.  93




---



##### 



PART III  Item 17.
    Financial
    Statements  Not applicable
  Item 18.
    Financial
    Statements   
 PageReport of Independent Registered Public
    Accounting Firm, KPMG Samjong Accounting Corp., on Consolidated
    Financial Statements


F-1Report of Independent Registered Public
    Accounting Firm, KPMG Samjong Accounting Corp., on Internal
    Control over Financial Reporting


F-2Report of Independent Registered Public Accounting Firm, Samil
    PricewaterhouseCoopers, on Consolidated Financial Statements


F-3Consolidated Statements of Financial Position as
    of December 31, 2008 and 2009


F-4Consolidated Statements of Income for the Years
    Ended December 31, 2007, 2008 and 2009


F-6Consolidated Statements of Changes in Equity for
    the Years Ended December 31, 2007, 2008 and 2009


F-7Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2008 and 2009


F-11Notes to Consolidated Financial Statements


F-13   94




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##### Table of Contents



Item 19.
    Exhibits  1
.1



Articles of Incorporation of POSCO (English translation)2
.1



Form of Common Stock Certificate (including English translation)
    (incorporated by reference to Exhibit 4.3 to the
    Registrants Registration Statement
    No. 33-81554)*2
.2



Form of Deposit Agreement (including Form of American Depositary
    Receipts) (incorporated by reference to the Registrants
    Registration Statement (File
    No. 33-84318)
    on
    Form F-6)*2
.3



Letter from ADR Depositary to the Registrant relating to the
    Pre-release of American Depositary Receipts (incorporated by
    reference to the Registrants Registration Statement (File
    No. 33-84318)
    on
    Form F-6)*8
.1



List of consolidated subsidiaries12
.1



Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200212
.2



Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200213
.1



Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002     *
    
    Filed previously 95




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm                      
 F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    On Internal Control Over Financial Reporting  The Board of Directors and
    Shareholders
 POSCO:
              /s/ KPMG Samjong Accounting Corp.
  Seoul, Korea
 June 23, 2010
  
 F-2




---



##### Table of Contents



(SAMIL LOGO)

(PRICEWATERHOUSECOOPERS LOGO)   Report of
    Independent Registered Public Accounting Firm
  
      
 
   LS Yongsan Tower, 191, Hangangno
    2-ga, Yongsan-gu, Seoul
    140-702,
    Korea (Yongsan P.O Box 266,
    140-600)
    www.samil.com
  Samil PricewaterhouseCoopers is the
    Korean network firm of PricewaterhouseCoopers International
    Limited (PwCIL). PricewaterhouseCoopers and
    PwC refer to the network of member firms of PwCIL.
    Each member firm is a separate legal entity and does not act as
    an agent of PwCIL or any other member firm.
 F-3




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated
    Statements of Financial Position
 As of December 31,
    2009 and 2008
   (note 2)2009


2008


2009(In millions of Korean Won and thousands of US dollar)AssetsCash and cash equivalents, net of government grants (note 3)

W
2,196,731



2,490,264


$
1,881,407Short-term financial instruments (note 3)


5,820,447



1,827,450



4,984,966Trading securities (note 4)


505,811



1,238,261



433,206Current portion of investment securities, net (note 7)


56,463



51,501



48,358Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (note 5)


5,145,022



5,894,093



4,406,495Other accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (note 5)


447,693



538,510



383,430Advance payments


588,354



1,033,513



503,900Inventories (notes 6 and 30)


5,152,839



8,661,721



4,413,188Deferred income tax assets (note 25)


404,401



109,578



346,353Other current assets, net of allowance for doubtful accounts
    (note 11)


316,389



352,742



270,975Total current assets


20,634,150



22,197,633



17,672,278Property, plant and equipment (notes 8 and 30)


47,506,269



42,230,169



40,687,110Less accumulated depreciation


(25,666,484
)


(24,161,070
)


(21,982,258
)Property, plant and equipment, net


21,839,785



18,069,099



18,704,852Investment securities, net (note 7)


6,211,966



5,177,482



5,320,287Intangible assets, net (notes 9 and 30)


629,969



723,767



539,542Long-term trade accounts and notes receivable, net of allowance
    for doubtful accounts and present value discount (note 5)


15,685



23,264



13,434Long-term loans receivable, net of allowance for doubtful
    accounts and present value discount (note 5)


103,607



80,287



88,735Deferred income tax assets (note 25)


294,441



317,023



252,176Guarantee deposits


51,269



65,540



43,910Long-term financial instruments (note 3)


18,634



16,462



15,959Other long-term assets, net of allowance for doubtful accounts
    and present value discount (note 11)


512,242



290,725



438,712Total non-current assets


29,677,598



24,763,649



25,417,607Total assets

W
50,311,748



46,961,282


$
43,089,885   See accompanying notes to consolidated financial
    statements.
 F-4




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##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Financial Position
 As of December 31, 2009
    and 2008
   (note 2)2009


2008


2009(In millions of Korean Won and thousands of US dollar)LiabilitiesTrade accounts and notes payable

W
2,734,900



3,070,436


$
2,342,326Short-term borrowings (note 12)


3,225,801



3,254,355



2,762,762Current portion of long-term debts, net of discount on
    debentures issued (note 12)


786,887



770,142



673,936Accrued expenses


344,274



237,917



294,856Other accounts and notes payable


642,446



579,853



550,228Withholdings


200,894



126,538



172,057Income tax payable


393,719



2,083,472



337,204Advances received


811,644



597,514



695,139Deferred income tax liabilities (note 25)


71







62Other current liabilities (note 15)


134,182



289,165



114,922Total current liabilities


9,274,818



11,009,392



7,943,492Long-term debts, net of current portion and discount on
    debentures issued (note 13)


8,229,781



6,895,862



7,048,459Accrued severance benefits, net (note 14)


300,421



383,718



257,298Deferred income tax liabilities (note 25)


531,927



70,363



455,573Other long-term liabilities (note 15)


310,487



257,742



265,919Total non-current liabilities


9,372,616



7,607,685



8,027,249Total liabilities


18,647,434



18,617,077



15,970,741Parent shareholders equityCapital stock (notes 1 and 17)


482,403



482,403



413,158Capital surplus (note 18)


4,446,032



4,319,083



3,807,838Capital adjustments, net (note 21)


(2,410,668
)


(2,509,081
)


(2,064,635
)Accumulated other comprehensive income (loss)


455,471



(21,986
)


390,091Retained earnings (note 19)


27,935,726



25,393,246



23,925,76730,908,964



27,663,665



26,472,219Non controlling interest


755,350



680,540



646,925Total shareholders equity


31,664,314



28,344,205



27,119,144Total liabilities and shareholders equity

W
50,311,748



46,961,282


$
43,089,885   See accompanying notes to consolidated financial
    statements.
 F-5




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Income
 For the years ended
    December 31, 2009, 2008 and 2007
   (note 2)2009


2008


2007


2009(In millions of Korean Won and thousands of US dollarexcept per share information)Sales (note 30)

W
36,855,001



41,742,636



31,607,741


$
31,564,749Cost of goods sold (note 30)


31,037,425



32,562,339



24,902,663



26,582,241Gross profit


5,817,576



9,180,297



6,705,078



4,982,508Selling and administrative expenses (notes 24 and 30)


1,949,414



2,006,368



1,785,217



1,669,591Operating income


3,868,162



7,173,929



4,919,861



3,312,917Non-operating income (note 30)Interest and dividend income


351,553



362,309



234,841



301,090Gain on foreign currency transactions


814,758



1,078,243



158,346



697,806Gain on foreign currency translation


541,007



122,287



19,179



463,350Gain on valuation of trading securities


5,811



16,535



16,039



4,977Gain on disposal of trading securities


21,298



55,056



57,236



18,241Gain on disposal of property, plant and equipment


82,000



14,392



15,182



70,230Gain on valuation of derivatives


51,101



346,932



12,741



43,766Gain on derivative transactions


77,879



41,575



17,689



66,699Equity in earnings of equity method accounted investees


75,250



32,931



71,563



64,448Gain on recovery of allowance for doubtful accounts


7,736



19,116



41,124



6,625Reversal of stock compensation expense






55,155







Gain on disposal of other long-term assets


234,314



48,141



26,442



200,680Others


99,686



177,204



148,125



85,3782,362,393



2,369,876



818,507



2,023,290Non-operating expenses (note 30)Interest expense


532,090



344,686



239,913



455,713Other bad debt expense


11,253



23,269



16,335



9,638Loss on disposal of trading securities


1,164



1,243



37



997Loss on valuation of trading securities


21



3,870



440



18Loss on foreign currency transactions


884,347



1,207,257



130,679



757,406Loss on foreign currency translation


105,219



933,086



65,432



90,116Loss on derivative transactions


67,697



103,739



6,312



57,979Loss on valuation of derivatives


94,346



288,655



3,617



80,803Donations


128,925



142,570



197,366



110,418Loss on impairment of investments


285,961



120,840



11,542



244,913Loss on disposal of property, plant and equipment


54,992



53,823



43,544



47,098Loss on impairment of intangible assets


50,493



45,890







43,245Equity in losses of equity method accounted investees


82,130



56,795



28,929



70,341Others


192,642



122,443



95,291



164,9932,491,280



3,448,166



839,437



2,133,677Net income before income tax expense and net income (loss) of
    consolidated subsidiaries before acquisition


3,739,275



6,095,639



4,898,931



3,202,530Income tax expense (note 25 and 30)


(535,996
)


(1,733,983
)


(1,274,226
)


(459,058
)Net income (loss) of consolidated subsidiaries before
    acquisition (note 30)


(39,032
)


11,552



(53,259
)


(33,429
)Net income

W
3,242,311



4,350,104



3,677,964


$
2,776,901Net income attributable to controlling interest

W
3,218,425



4,378,751



3,558,660


$
2,756,444Net income (loss) attributable to non controlling interest
    (note 30)

W
23,886



(28,647
)


119,304


$
20,457Basic and diluted earnings per share (note 26)
    (in Korean Won and US Dollar)

W
41,982



58,002



46,854


$
36   See accompanying notes to consolidated financial
    statements.
 F-6




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##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Changes in Equity
 For the years ended
    December 31, 2009, 2008 and 2007
   Accumulated OtherCapital


Capital


Capital


Comprehensive (Loss)


Retained


Non ControllingStock


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean Won)Balance as of January 1, 2007

W
482,403



4,035,273



(1,678,229
)


209,754



18,863,333



489,208



22,401,742Net income


















3,558,660



119,304



3,677,964Effect of changes in scope of consolidation






37















62,024



62,061Effect of changes in percentage of ownership of investees






(5,500
)


















(5,500
)Dividends


















(655,099
)






(655,099
)Changes in treasury stock






175,231



(1,045,274
)














(870,043
)Gain on valuation of
    available-for-sale
    securities, net














498,711











498,711Changes in capital adjustments of equity method accounted
    investees














(7,455
)










(7,455
)Foreign currency translation adjustments














87,957











87,957Loss on valuation of derivatives














(4,034
)










(4,034
)Effect of changes in percentage of non controlling interest






















16,380



16,380Others






(28,449
)


(3,644
)






408



(53,259
)


(84,944
)Balance as of December 31, 2007

W
482,403



4,176,592



(2,727,147
)


784,933



21,767,302



633,657



25,117,740   See accompanying notes to consolidated financial
    statements.
 F-7




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Changes in Equity
 For the years ended
    December 31, 2009, 2008 and 2007
   Accumulated OtherCapital


Capital


Capital


Comprehensive (Loss)


Retained


Non ControllingStock


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean Won)Balance as of January 1, 2008

W
482,403



4,176,592



(2,727,147
)


784,933



21,767,302



633,657



25,117,740Net income


















4,378,751



(28,647
)


4,350,104Effect of changes in scope of consolidation






















31,518



31,518Effect of changes in percentage of ownership of investees






20,194



















20,194Dividends


















(755,037
)






(755,037
)Changes in treasury stock






121,938



213,951















335,889Unrealized loss on available-for-sale securities, net














(1,276,043
)










(1,276,043
)Changes in capital adjustments of equity method accounted
    investees














37,575











37,575Foreign currency translation adjustments














438,314











438,314Loss on valuation of derivatives














(6,765
)










(6,765
)Effect of changes in percentage of non controlling interest






















39,726



39,726Others






359



4,115







2,230



4,286



10,990Balance as of December 31, 2008

W
482,403



4,319,083



(2,509,081
)


(21,986
)


25,393,246



680,540



28,344,205   See accompanying notes to consolidated financial
    statements.
 F-8




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Changes in Equity
 For the years ended
    December 31, 2009, 2008 and 2007
   Accumulated OtherCapital


Capital


Capital


Comprehensive (Loss)


Retained


Non ControllingStock


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean Won)Balance as of January 1, 2009

W
482,403



4,319,083



(2,509,081
)


(21,986
)


25,393,246



680,540



28,344,205Net income


















3,218,425



23,886



3,242,311Effect of changes in scope of consolidation






















25,437



25,437Effect of changes in percentage of ownership of investees






9,607



















9,607Dividends


















(689,129
)






(689,129
)Changes in treasury stock






117,291



98,751















216,042Unrealized gain on available-for-sale securities, net














583,012











583,012Changes in capital adjustments of equity method accounted
    investees














10,002











10,002Foreign currency translation adjustments














(126,357
)










(126,357
)Loss on valuation of derivatives














10,800











10,800Effect of changes in percentage of non controlling interest






















30,704



30,704Others






51



(338
)






13,184



(5,217
)


7,680Balance as of December 31, 2009

W
482,403



4,446,032



(2,410,668
)


455,471



27,935,726



755,350



31,664,314   See accompanying notes to consolidated financial
    statements.
 F-9




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of
    Changes in Equity
 For the years ended
    December 31, 2009, 2008 and 2007
   Capital


Capital


Capital


Accumulated Other


Retained


Non ControllingStock


Surplus


Adjustments


Comprehensive (Loss)


Earnings


Interest


Total(In thousands of US dollar)Balance as of January 1, 2009

$
413,158



3,699,112



(2,148,922
)


(18,830
)


21,748,241



582,854



24,275,613Net income


















2,756,444



20,457



2,776,901Effect of changes in scope of consolidation






















21,786



21,786Effect of changes in percentage of ownership of investees






8,228



















8,228Dividends


















(590,210
)






(590,210
)Changes in treasury stock






100,454



84,576















185,030Unrealized gain on available-for-sale securities, net














499,324











499,324Changes in capital adjustments of equity method accounted
    investees














8,566











8,566Foreign currency translation adjustments














(108,219
)










(108,219
)Loss on valuation of derivatives














9,250











9,250Effect of changes in percentage of non controlling interest






















26,297



26,297Others






44



(289
)






11,292



(4,469
)


6,578Balance as of December 31, 2009

$
413,158



3,807,838



(2,064,635
)


390,091



23,925,767



646,925



27,119,144   See accompanying notes to consolidated financial
    statements.
 F-10




---



##### Table of Contents





POSCO and
    Subsidiaries
 Consolidated Statements of
    Cash Flows
 For the years Ended
    December 31, 2009, 2008 and 2007
   (note 2)2009


2008


2007


2009(In millions of Korean Won and thousands of US dollar)Cash flows from operating activitiesNet income

W
3,242,311



4,350,104



3,677,964


$
2,776,901Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation and amortization


2,552,777



2,379,291



2,126,729



2,186,346Accrual of severance benefits


79,186



314,156



211,758



67,819Provision for doubtful accounts, net


45,537



28,186



37,237



39,002Loss (gain) on derivatives transaction, net


(10,182
)


62,165



(11,377
)


(8,720
)Loss (gain) on foreign currency translation, net


(462,724
)


750,464



49,334



(396,303
)Loss on impairment of investments


285,961



120,840



11,542



244,913Loss (gain) on disposal of property, plant and equipment, net


(27,008
)


39,431



28,362



(23,132
)Loss on impairment of intangible assets, net


50,493



45,890







43,245Gain on disposal of trading securities, net


(20,134
)


(53,813
)


(57,199
)


(17,245
)Gain on valuation of trading securities, net


(5,790
)


(12,665
)


(15,599
)


(4,959
)Gain on valuation of derivatives, net


43,245



(58,277
)


(9,124
)


37,037Equity in earnings (losses) of equity method accounted
    investees, net


6,880



23,864



(42,634
)


5,892Other employee benefits


6,822



71,070



66,827



5,843Net income (loss) of consolidated subsidiaries before acquisition


(39,032
)


11,552



(53,259
)


(33,429
)Stock compensation expense, net


36,100



(55,155
)


123,881



30,919Others


(62,605
)


64,615



61,738



(53,619
)2,479,526



3,731,614



2,528,216



2,123,609Changes in operating assets and liabilitiesDecrease (increase) in trade accounts and notes receivable


713,418



(1,538,854
)


(613,548
)


611,012Decrease (increase) in inventories


3,344,506



(3,393,710
)


(461,226
)


2,864,428Decrease (increase) in other accounts and notes receivable


97,462



(222,706
)


67,929



83,472Increase in accrued income


(5,092
)


(11,914
)


(15,218
)


(4,361
)Decrease (increase) in advance payments


426,459



(586,601
)


(70,847
)


365,244Decrease (increase) in prepaid expenses


32,837



(11,468
)


(23,658
)


28,123Increase (decrease) in trade accounts and notes payable


(296,400
)


609,200



561,078



(253,854
)Increase in other accounts and notes payable


55,564



7,829



164,460



47,588Increase (decrease) in advances received


247,127



215,491



(16,884
)


211,654Increase (decrease) in accrued expenses


110,736



94,716



(108,184
)


94,841Increase (decrease) in income tax payable


(1,677,482
)


1,146,204



162,806



(1,436,693
)Deferred income tax, net


(23,475
)


(432,528
)


(20,127
)


(20,105
)Payment of severance benefits


(144,007
)


(125,374
)


(64,975
)


(123,336
)Increase in group severance insurance deposits


(19,913
)


(141,807
)


(147,366
)


(17,054
)Increase (decrease) in other current liabilities


(107,223
)


28,816



(13,055
)


(91,831
)Others


156,500



(31,997
)


(54,105
)


134,0362,911,017



(4,394,703
)


(652,920
)


2,493,164Net cash provided by operating activities


8,632,854



3,687,015



5,553,260



7,393,674   See accompanying notes to consolidated financial
    statements.
 F-11




---



##### Table of Contents



POSCO and
    Subsidiaries
 Consolidated Statements of Cash
    Flows
 For the years Ended
    December 31, 2009, 2008 and 2007
   (note 2)2009


2008


2007


2009(In millions of Korean Won and thousands of US dollar)Cash flows from investing activitiesAcquisition of trading securities

W
(2,061,180
)


(7,058,161
)


(8,173,811
)

$
(1,731,055
)Acquisition of short-term financial instruments


(11,946,832
)


(5,098,326
)


(2,678,616
)


(10,231,956
)Acquisition of available-for-sale securities


(553,486
)


(1,357,622
)


(1,179,114
)


(474,038
)Acquisition of property, plant and equipment


(6,406,503
)


(4,093,313
)


(2,892,247
)


(5,486,899
)Acquisition of intangible assets


(101,202
)


(131,107
)


(81,946
)


(86,675
)Acquisition of other long-term assets


(95,821
)


(122,700
)


(160,098
)


(82,067
)Short-term loans provided


(94,042
)


(79,876
)


(50,687
)


(80,543
)Long-term loans provided


(32,239
)


(285,654
)


(24,235
)


(27,612
)Payment for business acquisition, net of cash acquired


(80,380
)


(279,031
)


(1,335
)


(68,842
)Disposal of trading securities


2,823,359



7,008,770



9,064,842



2,383,829Disposal of short-term financial instruments


7,934,977



5,045,613



1,705,169



6,795,972Disposal of available-for-sale securities


201,395



26,752



9,412



172,486Disposal of long-term financial instruments


1,824



279,610



34,555



1,562Disposal of interest in subsidiaries


244,785











209,648Disposal of property, plant and equipment


378,978



53,773



34,958



324,578Collection on short-term loans


29,655



191,251



108,221



25,398Others


39,783



97,252



21,220



34,075Net cash used in investing activities


(9,716,929
)


(5,802,769
)


(4,263,712
)


(8,322,139
)Cash flows from financing activitiesProceeds from short-term borrowings


5,828,483



10,233,819



6,811,282



4,991,849Proceeds from long-term debt


2,695,932



3,454,625



1,054,138



2,308,952Proceeds from other long-term liabilities


96,279



49,851



37,060



82,459Disposal of treasury stock


249,124



364,753



406,991



213,365Repayment of current portion of long-term debt


(763,504
)


(491,635
)


(278,699
)


(653,908
)Repayment of short-term borrowings


(5,836,058
)


(9,042,662
)


(6,599,799
)


(4,998,337
)Repayment of long-term debt


(585,629
)


(369,348
)


(248,087
)


(501,567
)Payment of cash dividends


(689,129
)


(755,037
)


(655,099
)


(590,210
)Acquisition of treasury stock






(36,832
)


(1,291,362
)


Repayment of other long-term liabilities


(60,651
)


(38,145
)


(94,072
)


(51,945
)Others


(72,749
)


(252,807
)


(143,209
)


(62,307
)Net cash used in financing activities


862,098



3,116,582



(1,000,856
)


738,351Effect of exchange rate changes on cash and cash equivalents


(40,865
)


141,536



30,901



(34,999
)Net increase in cash and cash equivalents from changes in
    consolidated subsidiaries


(28,699
)


55,519



36,815



(24,580
)Net increase in cash and cash equivalents


(291,541
)


1,197,883



356,407



(249,693
)Cash and cash equivalentsCash and cash equivalent at beginning of the year


2,490,711



1,292,828



936,421



2,133,189Cash and cash equivalent at end of the year (note 3)

W
2,199,170



2,490,711



1,292,828


$
1,883,496   Supplemental cash
    flow information for the years ended December 31 is as
    follows:
  2009

2008

2007

2009(In millions of Korean Won and thousands of US Dollar)Cash paid for interest

W
487,472



319,224



229,113


$
417,499Cash paid for income taxes


2,266,055



1,028,588



1,107,888



1,940,780   See accompanying notes to consolidated financial
    statements.
 F-12




---



##### Table of Contents





POSCO and
    Subsidiaries Notes to
    Consolidated Financial StatementsDecember 31, 2009 and 2008
    1.
    Consolidated
    Companies    The Controlling
    Company
      Percentage ofNumber of Shares


Ownership (%)National Pension Service


4,733,593



5.43Nippon Steel Corporation
    (*1)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


2,817,800



3.23SK Telecom Co., Ltd.


2,481,310



2.85Shinhan Financial Group Co., Ltd.
    (*2)


2,297,551



2.64Others


70,461,869



80.8187,186,835



100.00     (*1)
    
    Nippon Steel Corporation has
    American Depository Receipts (ADRs), each of which represents
    0.25 share of POSCOs common share and has par value
    of W5,000 per share.(*2)
    
    Includes number of shares held by
    its subsidiaries.   F-13




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Consolidated
    Subsidiaries
    Number of











Percentage of


Percentage ofOutstanding


Number of Shares


Ownership


Ownership ofSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationDomesticPOSCO E & C Co., Ltd.

Engineering and construction


30,473,000



27,281,080







27,281,080



89.53




PohangPosteel Co.,Ltd.

Steel sales and service


18,000,000



17,155,000







17,155,000



95.31




SeoulPOSCON Co., Ltd.

Electronic control devices manufacturing


3,519,740



3,098,610







3,098,610



88.04




PohangPOSCO Coated & Color Steel Co., Ltd.

Coated steel manufacturing


6,000,000



3,412,000







3,412,000



56.87




PohangPOSCO Plant Engineering Co., Ltd. (formerly, POSCO
    Machinery & Engineering Co., Ltd.)

Steel work maintenance and machinery installation


1,700,000



1,700,000







1,700,000



100.00




PohangPOSCO ICT Co., Ltd. (formerly, POSDATA Co., Ltd.)

Computer hardware and software distribution


81,551,600



50,440,720







50,440,720



61.85




SungnamPOSCO Research Institute

Economic research and consulting


3,800,000



3,800,000







3,800,000



100.00




SeoulSeung Kwang Co., Ltd.

Athletic facilities operation


3,945,000



2,737,000



1,208,000



3,945,000



100.00


POSCO E & C
    (30.62)

SuncheonPOSCO Architecs Consultants Co., Ltd.

Architecture and consulting


300,000



300,000







300,000



100.00




SeoulPOSCO Specialty Steel Co., Ltd.

Specialty steel manufacturing


26,000,000



26,000,000







26,000,000



100.00




ChangwonPOSCO Machinery Co., Ltd.

Steel work maintenance and machinery installation


1,000,000



1,000,000







1,000,000



100.00




GwangyangPOSTECH Venture Capital Corp.

Investment in venture companies


6,000,000



5,700,000







5,700,000



95.00




PohangPOSCO Refractories & Environment Co., Ltd. (POSREC)

Manufacturing and sellings


5,907,000



3,544,200







3,544,200



60.00




PohangPOSCO Terminal Co., Ltd.

Transporting and warehousing


5,000,000



2,550,000







2,550,000



51.00




GwangyangMetapolis Co., Ltd.

Construction


10,560,000



4,229,280







4,229,280



40.05


POSCO E & C
    (40.05)

SeoulPOSMATE Co.,
    Ltd.(*1)

Facilities management


714,286



214,286







214,286



30.00




SeoulSamjung Packing & Aluminum Co., Ltd.

Packing materials manufacturing


3,000,000



270,000



831,756



1,101,756



36.73


Posmate Co., Ltd. (27.73)

PohangPOSCO Power Corp.

Generation of Electricity


40,000,000



40,000,000







40,000,000



100.00




SeoulPostech 2006 Energy
    Fund(*1)

Investment in new technology


570







126



126



22.11


POSTECH
    Venture Capital
    Corp (10.53)
    POSCO
    Power (11.58)

SeoulPOSCORE Co., Ltd.

Components manufacturing and sales


3,907,151







1,992,647



1,992,647



51.00


Posteel (51.00)

CheonanPHP Co., Ltd.

Rental houses construction and management


400,000







400,000



400,000



100.00


POSCO E & C (100.00)

Incheon  F-14




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Number of











Percentage of


Percentage ofOutstanding


Number of Shares


Ownership


Ownership ofSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationPNR Co., Ltd.

Steel by-products processing and sales


7,810,980



5,467,686







5,467,686



70.00




PohangMegaasset Co., Ltd.

Real estate rental and sales


2,000,000







2,000,000



2,000,000



100.00


POSCO E&C 
    (100.00)

CheonanDaewoo Engineering Company

Construction and engneering service


5,000,000







4,612,947



4,612,947



92.26


POSCO E&C 
    (92.26)

SungnamUniversal Studio Resort Development Co., Ltd.

Resort development


1,482,000







462,000



462,000



31.17


POSCO E&C 
    (24.42) 
    POSCO ICT (6.75)

HwaseongPoHang Fuel Cell Co.
      Ltd. (*2)

Generation of electricity


800,000







800,000



800,000



100.00


POSCO E&C 
    (25.00) 
    POSCON (25.00) 
    POSCO Power 
    (50.00)

PohangPOSCO-AST Co.,
    Ltd. (*2)

    (formerly, Taihan ST Co., Ltd.)

Production of diverse stainless steel


4,000,000



3,400,000







3,400,000



85.00




AnsanDaiMyung TMS Co., Ltd.
    (*2)

Cold- rolling of stainless steel, nickel alloy


250,080







250,080



250,080



100.00


POSCO-AST
    (100.00)

SiheungPOS-HiMetal Co.,
    Ltd. (*2)

Ferromanganese manufacturing


2,000,000



1,300,000







1,300,000



65.00




GwangyangPOSCO
    E&E (*2)

Generation of electricity


3,480,000



3,480,000







3,480,000



100.00




SeoulForeignPOSCO America Corporation (POSAM)

Steel trading


369,614



367,572



2,042



369,614



100.00


POSCAN 
    (0.55)

USAPOSCO Australia Pty. Ltd. (POSA)

Steel sellings and mine development


761,775



761,775







761,775



100.00




AustraliaPOSCO Canada Ltd. (POSCAN)

Coal trading


1,099,885







1,099,885



1,099,885



100.00


Posteel 
    (100.00)

CanadaPOSCAN Elkview Coal Ltd.

Mine development


304,061







304,061



304,061



100.00


POSCAN 
    (100.00)

CanadaPOSCO Asia
    Co., Ltd. (POA)

Steel intermediate
    trading


9,360,000



9,360,000







9,360,000



100.00




ChinaVSC POSCO Steel  Corporation
    (VPS) (*3)

Steel manufacturing


















50.00


Posteel(5.00) 
    POSCO Specialty Steel 
    (10.00)

VietnamDalian POSCO  CFM Coated Steel Co., Ltd.
    (*3)

Coated steel manufacturing


















85.00


Posteel (15.00) POSCO-China 
    (40.00)

ChinaPOSCO-CTPC Co.,
    Ltd. (*3)

Steel service center


















94.00


Posteel 
    (84.00)

ChinaPOSCO-JKPC Co., Ltd.

Steel service center


9,800







9,310



9,310



95.00


POSCO-Japan 
    (95.00)

JapanIBC
    Corporation (*3)

Real estate rental


















60.00




VietnamPOSLILAMA Steel Structure Co.,
    Ltd. (*3)

Steel structure fabrication and sales


















70.00


POSCO E&C 
    (60.00) 
    Posteel
    (10.00)

VietnamZhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)
    (*3)

Stainless steel manufacturing


















82.48


POSCO-China 
    (23.88)

ChinaGuangdong Pohang Coated Steel Co.,
    Ltd. (*3)

Coated steel manufacturing


















97.09


POSCO-China 
    (10.04)

ChinaPOSCO (Thailand) Co., Ltd.

Steel service center


14,857,921



12,721,734



2,136,187



14,857,921



100.00


Posteel 
    (14.38)

Thailand  F-15




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Number of











Percentage of


Percentage ofOutstanding


Number of Shares


Ownership


Ownership ofSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationMyanmar-POSCO Steel Co., Ltd.

Specialty steel manufacturing and sales


19,200



13,440







13,440



70.00




MyanmarZhangjiagang POSHA Steel Port Co., Ltd.
    (*3)

Stainless steel manufacturing


















90.00


POSCO E&C 
    (25.00) 
    ZPSS (65.00)

ChinaPOSCO-JOPC Co., Ltd.

Steel processing and sellings


4,900







2,785



2,785



56.84


POSCO-Japan 
    (56.84)

JapanPOSCO Investment Co., Ltd.

Finance


5,000,000



5,000,000







5,000,000



100.00




ChinaPOSCO-MKPC SDN. BHD.

Steel service center


56,550,200



25,269,900



14,315,238



39,585,138



70.00


Posteel (25.31)

MalaysiaQingdao Pohang Stainless Steel Co.,
    Ltd. (*3)

Stainless steel manufacturing


















100.00


ZPSS (20.00)
    POSCO-China 
    (10.00)

ChinaPOSCO (Suzhou) Automotive Processing Center Co., Ltd.
    (*3)

Steel service center


















100.00


POSCO-China (10.00)

ChinaPOSEC-Hawaii Inc.

Construction and sales


18,400







18,400



18,400



100.00


POSCO E&C
    (100.00)

USAPOS-Qingdao Coil Center Co.,
    Ltd. (*3)

Steel service center


















100.00


Posteel 
    (100.00)

ChinaPOS-Ore Pty. Ltd.

Iron ore mining and trading


17,500,001







17,500,001



17,500,001



100.00


POSA 
    (100.00)

AustraliaPOSCO-China Holding Corp.
    (*3)

Holding company


















100.00




ChinaPOSCO-Japan Co., Ltd.

Steel trading


90,438



90,438







90,438



100.00




JapanPOSCO E&C (Zhangjiagang) Engineering & Consulting
    Co.,
    Ltd. (*3)

Facilities manufacturing


















100.00


POSCO E&C
    (100.00)

ChinaPOS-CD Pty. Ltd.

Coal trading


12,550,000







12,550,000



12,550,000



100.00


POSA
    (100.00)

AustraliaPOS-GC Pty. Ltd.

Coal trading


11,050,000







11,050,000



11,050,000



100.00


POSA
    (100.00)

AustraliaPOSCO-India Private Ltd.

Coal trading


450,000,000



450,000,000







450,000,000



100.00




IndiaPOS-India Pune Steel Processing Centre Pvt. Ltd.

Steel service center


115,062,471



74,787,138







74,787,138



65.00




IndiaPOSCO-JNPC Co., Ltd.

Steel service center


99,000







89,100



89,100



90.00


POSCO-Japan (90.00)

JapanPOSCO-Foshan Steel Processing Center Co.,
    Ltd. (*3)

Steel service center


















100.00


POA (24.20)
    POSCO-China
    (36.20)

ChinaPOSCO E&C (Beijing) Co.,
    Ltd. (*3)

Construction and engineering


















100.00


POSCO E&C
    (100.00)

ChinaPOS-MPC S.A. de
    C.V. (*3)

Steel service center


















61.00


POSAM
    (61.00)

MexicoZhangjigang Pohang Port Co.,
    Ltd. (*3)

Raw material and steel depot service


















100.00


ZPSS (75.11) 
    POSCO-China 
    (24.89)

ChinaPOSCO-Vietnam Co.,
    Ltd. (*3)

Cold-rolled steel manufacturing and sales


















85.00




VietnamPOSCO-Mexico Co., Ltd.

Cold-rolled steel manufacturing and sales


1,541,191,740



1,304,955,672



236,236,068



1,541,191,740



100.00


POSCAN 
    (15.33)

MexicoPOSCO- India Delhi Steel Processing Centre Pvt. Ltd.

Steel service center


55,673,970



42,532,980







42,532,980



76.40




India  F-16




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Number of











Percentage of


Percentage ofOutstanding


Number of Shares


Ownership


Ownership ofSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationPOS-NP Pty. Ltd.

Coal trading


35,000,000







35,000,000



35,000,000



100.00


POSA

Australia(100.00)POSCO-Vietnam Processing Center Co., Ltd.
    (*3)

Steel service center


















86.86




VietnamPOSCO (Chongqing) Automotive Processing Center Co., Ltd.
    (*3)

Steel service center


















100.00


POSCO-China 
    (10.00)

ChinaSuzhou pos-core Technology Co.,
    Ltd. (*3)

Components manufacturing and sales


















100.00


Posteel(15.15)
    POA(15.15) POSCORE
    (69.70)

ChinaPOSCO-JYPC Co., Ltd.

Steel service center


99,000







81,550



81,550



82.37


POSCO-Japan 
    (82.37)

JapanPOSCO-Malaysia SDN. BHD.

Steel service center


27,000,000



16,200,000







16,200,000



60.00




MalaysiaPOS-Minerals  Corporation

Mine development and operation


100







100



100



100.00


POSCAN 
    (85.00)
    Samjung P&A 
    (15.00)

USAPOSCO (Wuhu) Automotive Processing Center Co., Ltd.
    (*3)

Steel service center


















100.00


POSCO-China 
    (31.43)

China&TV Communications
    (*2)

IPTV broadcasting & optional service


1,000,847







582,000



582,000



58.15


POSCO ICT 
    (58.15)

USAPOSCO-Phillippine Manila Processing Center Inc.
    (*2,3)

Steel service center


















100.00


Posteel
    (100.00)

PhilippinesPOSCO VST Co., Ltd.
    (*2,3)

Stainless cold steel manufacturing


















90.00




Vietnam     (*1)
    
    These subsidiaries are included in
    the consolidated financial statements as the controlling company
    has control over them in consideration of board of directors and
    others.(*2)
    
    These subsidiaries are newly
    included in the consolidation.(*3)
    
    No shares have been issued in
    accordance with the local laws and regulations. F-17




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       Summary of Financial InformationNet IncomeSubsidiaries

Total Assets

Total Liabilities

Net Assets

Sales

(Loss)(In millions of Korean
    Won) (*)DomesticPOSCO E & C Co., Ltd.


4,431,218



2,559,531



1,871,687



6,675,711



304,908Posteel Co., Ltd.


744,723



268,921



475,802



1,626,916



(13,912
)POSCON Co., Ltd.


375,418



189,700



185,718



524,583



23,690POSCO Coated Steel Co., Ltd.


460,084



209,865



250,219



703,476



(19,244
)POSCO Plant Engineering Co., Ltd.
    (formerly, POSCO Machinery & 
    Engineering Co., Ltd.)


106,193



52,846



53,347



303,650



(3,432
)POSCO ICT Co.,Ltd. 
    (formerly, POSDATA Co., Ltd.)


280,747



229,075



51,672



378,320



(71,203
)POSCO Research Institute


26,309



2,698



23,611



19,662



239Seung Kwang Co., Ltd.


77,629



34,604



43,025



15,642



3,080POSCO Architecs Consultants Co., Ltd.


57,089



14,886



42,203



77,879



4,749POSCO Specialty Steel Co., Ltd.


972,260



342,882



629,378



1,271,037



64,994POSCO Machinery Co., Ltd.


35,860



13,860



22,000



127,980



(5,803
)POSTECH Venture Capital Corp.


36,342



783



35,559



1,309



121POSCO Refractories & Environment Co., Ltd. (POSREC)


257,455



74,373



183,082



574,401



33,089POSCO Terminal Co., Ltd.


53,181



6,373



46,808



54,593



9,156Metapolis Co., Ltd.


482,199



364,155



118,044



254,205



14,158POSMATE Co., Ltd.


59,804



17,096



42,708



82,199



6,265Samjung Packing & Aluminum Co., Ltd.


165,141



96,525



68,616



303,350



3,933POSCO Power Corp.


1,716,277



1,101,263



615,014



508,641



59,346Postech 2006 Energy Fund


27,011



97



26,914



527



(2,475
)POSCORE Co., Ltd.


98,122



45,017



53,105



186,705



11,030PHP Co., Ltd.


614,085



619,863



(5,778
)






(7,020
)PNR Co., Ltd.


169,890



133,000



36,890



358



(2,650
)Megaasset Co., Ltd.


144,307



140,298



4,009



12,611



(4,075
)Daewoo Engineering Company


275,259



154,713



120,546



614,117



37,796Universal Studio Resort 
    Development Co., Ltd.


11,445







11,445







(3,302
)PoHang Fuel Cell Co. Ltd.


14,161



10,131



4,030



3,766



(217
)POSCO-AST Co., Ltd.


207,082



112,059



95,023



215,860



4,350DaiMyung TMS Co., Ltd.


27,877



45,218



(17,341
)


28,375



(3,648
)  F-18




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Summary of Financial InformationNet IncomeSubsidiaries

Total Assets

Total Liabilities

Net Assets

Sales

(Loss)(In millions of Korean
    Won) (*)POS-HiMetal Co., Ltd.


9,445



419



9,026







(974
)POSCO E&E


17,303







17,303







(97
)ForeignPOSCO America Corporation (POSAM)


268,510



119,900



148,610



235,859



(21,852
)POSCO Australia Pty. Ltd. (POSA)


618,989



288,428



330,561



90,233



48,423POSCO Canada Ltd. (POSCAN)


264,137



32,947



231,190



72,999



7,563POSCAN Elkview Coal Ltd.


54,064



660



53,404



11,301



6,770POSCO Asia Co., Ltd. (POA)


185,217



153,494



31,723



1,370,147



2,786VSC POSCO Steel Corporation (VSC)


47,178



26,690



20,488



176,415



5,071Dalian POSCO  CFM Coated Steel Co., Ltd.


50,919



45,868



5,051



21,042



(9,185
)POSCO-CTPC Co., Ltd.


62,981



48,372



14,609



146,527



755POSCO-JKPC Co., Ltd.


86,759



73,894



12,865



52,573



(450
)IBC Corporation


95,810



58,024



37,786



30,914



16,320POSLILAMA Steel Structure Co., Ltd.


41,562



61,706



(20,144
)


29,703



(3,280
)Zhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)


1,330,457



756,569



573,888



1,843,902



(18,282
)Guangdong Pohang Coated Steel Co., Ltd.


99,195



58,006



41,189



146,556



5,961POSCO (Thailand) Co., Ltd.


120,628



88,664



31,964



161,197



(5,046
)Myanmar-POSCO Steel Co., Ltd.


18,088



10,001



8,087



25,728



3,384Zhangjiagang POSHA Steel Port Co., Ltd. (ZPSP)


14,884



4,938



9,946



1,627



(82
)POSCO-JOPC Co., Ltd.


51,753



49,088



2,665



35,832



(3,922
)POSCO Investment Co., Ltd.


484,194



395,898



88,296



16,385



2,533POSCO-MKPC SDN. BHD.


96,157



55,365



40,792



106,443



470Qingdao Pohang Stainless Steel Co., Ltd.


247,181



138,111



109,070



397,802



(15,585
)POSCO (Suzhou) Automotive Processing Center Co., Ltd.


163,487



102,085



61,402



298,586



10,354POSEC-Hawaii Inc.


12,383



670



11,713



32,644



(1,287
)POS-Qingdao Coil Center Co., Ltd.


48,470



34,875



13,595



142,277



118POS-Ore Pty. Ltd.


66,611



7,197



59,414



72,294



32,514POSCO-China Holding Corp.


276,502



45,501



231,001



130,691



(3,424
)POSCO-Japan Co., Ltd.


616,423



519,210



97,213



887,165



1,749POSCO E&C (Zhangjiagang) Engineering & Consulting
    Co., Ltd.


2,124



12



2,112



96



32  F-19




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Summary of Financial InformationNet IncomeSubsidiaries

Total Assets


Total Liabilities


Net Assets


Sales


(Loss)(In millions of Korean
    Won) (*)POS-CD Pty. Ltd.


53,195



47,895



5,300



6,080



(4,025
)POS-GC Pty. Ltd.


27,106



4,665



22,441



16,625



3,261POSCO-India Private Ltd.


113,568



708



112,860







POS-India Pune Steel Processing Centre Pvt. Ltd.


136,494



101,552



34,942



115,912



2,389POSCO-JNPC Co., Ltd.


126,800



116,226



10,574



132,763



(1,249
)POSCO-Foshan Steel Processing Center Co., Ltd.


95,182



61,085



34,097



459,522



3,049POSCO E&C (Beijing) Co., Ltd.


50,662



31,132



19,530



96,149



(1,263
)POS-MPC S.A. de C.V.


146,599



120,752



25,847



139,555



833Zhangjigang Pohang Port Co., Ltd.


29,245



14,480



14,765



4,685



299POSCO-Vietnam Co., Ltd.


712,055



498,221



213,834



87,865



(31,992
)POSCO-Mexico Co., Ltd.


372,578



268,949



103,629



82,870



(17,683
)POSCO- India Delhi Steel Processing Centre Pvt. Ltd.


64,718



53,185



11,533



79,976



3,770POS-NP Pty. Ltd.


51,848



17,131



34,717



34,112



3,408POSCO-Vietnam Processing Center Co., Ltd.


38,255



22,986



15,269



47,746



(21
)POSCO (Chongqing) Automotive Processing Center Co, Ltd.


69,869



59,554



10,315



81,921



1,203Suzhou pos-core Technology Co., Ltd.


38,756



16,633



22,123



47,368



(2,481
)POSCO-JYPC Co., Ltd.


55,359



51,563



3,796



39,633



(5,674
)POSCO-Malaysia SDN. BHD.


62,546



89,667



(27,121
)


77,678



(2,152
)POS-Minerals Corporation


117,165



11



117,154







(243
)POSCO (Wuhu) Automotive Processing Center Co., Ltd.


58,354



39,495



18,859



88,006



1,863&TV Communications


6,102



501



5,601



472



(7,943
)POSCO-Phillippine Manila
    Processing Center Inc.


25,138



17,152



7,986



20,298



31POSCO VST Co., Ltd.


105,542



64,476



41,066



87,926



(9,640
)      (*)
    
    Total assets, total liabilities and
    net assets of the Companys foreign subsidiaries are
    translated at the exchange rate at the end of the reporting
    period, and sales and net income (loss) are translated at the
    average exchange rate of the reporting period. F-20




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Equity-Method
    Investees
    Number of











Percentage of


Percentage ofPrimary

Outstanding


Number of Shares


Ownership


Ownership ofInvestees

Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationDomesticeNtoB Corporation

E-business


3,200,000



560,000



350,000



910,000



28.44


POSCO E&C (3.75) 
    and Others

SeoulMIDAS Information Technology Co., Ltd.

Engineering


3,402,000







866,190



866,190



25.46


POSCO E&C (25.46)

SeoulSongdo New City Development Inc.

Real estate


4,456,000







1,332,344



1,332,344



29.90


POSCO E&C (29.90)

SeoulGail International Korea Ltd.

Real estate


285,304







85,306



85,306



29.90


POSCO E&C (29.90)

SeoulSNNC Co., Ltd.
    (*1)

Material manufacturing


37,000,000



18,130,000







18,130,000



49.00




GwangyangChungju Enterprise City

Construction


8,000,000







2,008,000



2,008,000



25.10


POSCO E&C (22.00)

ChungjuPOADATA (3.10)Taegisan Wind Power Corporation
    (*1)

Wind power plant construction and management


5,000,000







2,500,000



2,500,000



50.00


POSCO E&C (50.00)

HoengseongKOREASOLARPARK Co., Ltd.
    (*1)

Solar power plant construction and management


2,400,000







900,000



900,000



37.50


POSCO E&C (7.50) Postech 2006 Energy Fund (30.00)

YoungamCheongna IBT Co.,
    Ltd. (*2)

Multiplex development


6,200,000







388,740



388,740



6.27


POSCO E&C (6.27)

IncheonGarolim Tidal Power Plant Co.,Ltd.
    (*1)

Generation of electricity


7,230,000







2,322,999



2,322,999



32.13


POSCO E&C (32.13)

SeosanPSIB Co.,Ltd
    (*1)

Non-resident building lease


200,000







98,000



98,000



49.00


POSCO E&C (49.00)

SeoulForeignKOBRASCO
    (*1)

Facilities lease


4,021,438,370



2,010,719,185







2,010,719,185



50.00




BrazilUSS  POSCO Industries (UPI)
    (*1,3)

Steel processing


















50.00


POSAM (50.00)

USAPoschrome (Proprietary) Limited

Material manufacturing


86,700



21,675







21,675



25.00




Republic of 
    South AfricaPOS-Hyundai Steel Manufacturing India Private Limited

Steel processing


23,455,600



2,345,558



4,573,842



6,919,400



29.50


Posteel (19.50)

IndiaPOSVINA Co., Ltd.
    (*1,3)

Steel manufacturing


















50.00




VietnamPT POSMI Steel Indonesia (POSMI)
    (*1)

Steel service center


12,600



1,193



3,579



4,772



37.87


Posteel (28.40)

IndonesiaPOSCO Bioventures
    L.P. (*3,4)

Investment in companies in the bio-tech industry


















100.00


POSAM(100.00)

USACAML Resources Pty.
    Ltd. (*1)

Material processing


9,715







3,239



3,239



33.34


POSA(33.34)

AustraliaNickel Mining Company SAS
    (*1)

Material processing


6,601,426



3,234,698







3,234,698



49.00




New CaledoniaLiaoning Rongyuan Posco Refractories Co.,
    Ltd. (*1,3)

Manufacturing and sellings


















35.00


POSREC (35.00)

China   F-21




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Number of











Percentage of


Percentage ofPrimary

Outstanding


Number of Shares


Ownership


Ownership ofInvestees

Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

LocationPOSK (PingHu) Steel Processing Center Co.,
    Ltd. (*3)

Steel processing


















20.00




ChinaHubei Huaerliang POSCO Silicon Science & Technology
    Co.,
    Ltd. (*3)

Material processing


















30.00


POSCO-China 
    (30.00)

ChinaPOSCO Poland Wroclaw Steel Processing Center Co., Ltd.

Steel processing


100,000



30,000







30,000



30.00




PolandAh khanh New City
    Development (*1,3)

Construction


















50.00


POSCO E&C (50.00)

VietnamHenan Tsingpu Ferro Alloy Co.,
    Ltd. (*1,3)

Material processing


















49.00


Zhangjiagang STS 
    (49.00)

ChinaUnited Spiral Pipe, LLC.
    (USP) (*1,3)

Steel pipe manufacturing and sales


















35.00


POSAM 
    (35.00)

USAZhongyue POSCO (Qinhuangdau) Tinplate Industrial Co.,
    Ltd. (*1,3)

Specialty steel manufacturing


















34.00


POSCO-China (10.00)

ChinaBX Steel POSCO Cold Rolled sheet Co.,
    Ltd. (*3)

Steel manufacturing


















25.00




ChinaPOSS-SLPC
    s.r.o. (*3)

Steel processing


















30.00




SlovakiaEureka Moly LLC.
    (*3)

Material processing


















20.00


POS-Mineral (20.00)

USAPOS UTEK
    Development (*3)

Construction


















25.00


POSCO E&C (25.00)

RussiaPOSCO SAMSUNG Suzhou Steel Processing Center Co.,
    Ltd. (*3)

Steel processing


















30.00




ChinaPOSCO SeAH Steel Wire (Nantong)
    Co.,Ltd. (*3)

Steel processing


















25.00


POSCO-China 
    (25.00)

ChinaPOS-JK LLC.

Steel processing


10,300







2,574



2,574



24.99


POSCO E&C (4.9)
    Posteel (20.08)

UAE     (*1)
    
    Although the Company owns over 30%
    equity interest in these investees, the Company is not their
    largest shareholder, excluding them from consolidation.(*2)
    
    This investment is accounted for
    using equity method although the controlling companys
    percentage of ownership is below 20%, because it has 40% of
    voting rights of the investee and therefore is able to exercise
    significant influence on the investee.(*3)
    
    No shares have been issued in
    accordance with the local laws and regulations.(*4)
    
    Subsidiaries are not included in
    the consolidated financial statements as the controlling company
    has no control over these subsidiaries, although it is holding
    100% of companys interest. F-22




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Subsidiaries or
    Investees Excluded from the Consolidated Financial
    Statements
  Location

Investees

Country

ReasonDomestic

Dakos Co. Ltd.

Korea

Small companyPOSBRO Co., Ltd.

Korea

Small companyPOSWITH Co., Ltd.

Korea

Small companyPOSFINE

Korea

Small companyPOMIC

Korea

Small companyPohang SFC Co., Ltd.

Korea

Small companyHJ photovoltaics, Inc.

Korea

Small companyDaewoo national car Gwangju selling Co., Ltd.

Korea

Small companyMapo high broad parking

Korea

Small companyBASYS INDUSTRY CO., LTD.

Korea

Small companyPajoo & Viro

Korea

Small companyUitrans Co. Ltd.

Korea

Small companyUniversal Studios Resort Asset Management Coporation

Korea

Small companyPOSTECH BD Newundertaking fund

Korea

Small companyAROMA POSTECH RENEWABLE ENERGY, CO., LTD.

Korea

Non-majority controlSuwon Green Environment.Co., Ltd.

Korea

Non-majority controlAsiaUnion Co.,Ltd.

Korea

Non-majority controlInnovalley Co., Ltd.

Korea

Non-majority controlBusan-Gimhae Light Rail Transit Co., Ltd.

Korea

Non-majority controlApplied Science Corp.

Korea

Non-majority controlSENTECH KOREA CORP.

Korea

Non-majority controlIncheon-Gimpo Highway

Korea

Non-majority controlGreen Jangryang Co., Ltd.

Korea

Non-majority controlGreen Cheonan Co., Ltd.

Korea

Non-majority controlGreen Tongyeong Co., Ltd.

Korea

Non-majority controlForeign

DWEMEX,S.A.DE C.V.

Mexico

Small companyPOS MPC Servicios de C.V.

Mexico

Small companyPOSCO E&C SMART

Mexico

Small companyPOSCO MEXICO HUMAN TECH

Mexico

Small companyPOSCO MEXICO Logistics S.A. DE C.V. (POSCO-MESDC)

Mexico

Small companyPOSCO Engineering and Construction Venezuela C.A

Venezuela

Small companyPOSCO-Vietnam Hanoi Processing Centre LLC.

Vietnam

Small company(POSCO-VNPC)Europe Steel Distribution Center (POS-ESDC,

Slovenia

Small companyLogistics, Trading and Investment d.o.o)POSCO South East Asia Pte. Ltd.

Singapore

Small companyPOSCO Gulf Logistics LLC.

UAE

Small companyVectus Limited

UK

Small companyEUROTALY S.A.

Uruguay

Small companyPOSCO E&C India Private Ltd.

India

Small companyPOSCO India Chennai Steel Processing Centre Pvt. Ltd.
    (POSCO-ICPC)

India

Small companyPOSCO Maharashtra Steel Private Limited

India

Small companyPOSCO CORE India PVT. LTD.

India

Small companyDalian Poscon Dongbang Automatic Co., Ltd.

China

Small companySan Pu Trading Co., Ltd.

China

Small company F-23




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Location

Investees

Country

ReasonZhangjiagang BLZ Pohang International Trading Co., Ltd.

China

Small companyZhangjiagang Pohang Refactories Co., Ltd.

China

Small companyQingdao Posco Steel Processing Co., Ltd.

China

Small companyPOSDATA-CHINA

China

Small companyPOSCO (Liaoning) Automotive Processing Center Co., Ltd.
    (POSCO-CLPC)

China

Small companyDAEWOO TECH THAILAND

Thailand

Small companyPOSCO-TNPC Celik Sanayi ve Ticaret A.S. (POSCO-TNPC)

Turkey

Small companyPOSA Cayman GP

Australia

Small companyPT. MRI (PT. Motta Resources Indonesia)

Indonesia

Small companyYingkou Posrec Refractories Co., Ltd.

China

Non-majority controlMiller Pohang Coal Company Pty Ltd. (MPCC)

Australia

Non-majority controlPT.POSNESIA

Indonesia

Under liquidation     Changes in Scope
    of Consolidation in 2009
  Investees

Location

ReasonPOSCOAST Co., Ltd.

Ansan

The Companys ownership exceeded 50% through additional
    increase in paid in capital in 2009.DaiMyung TMS Co., Ltd.

Siheung

The Company newly acquired more than 50% of interest related to
    this investment in 2009.POS-HiMetal Co., Ltd.

Gwangyang

The Company made investments to establish.POSCO E&E

Seoul

The Company made investments to establish.Pohang Fuel Cell Co., Ltd.

Pohang

The Company made investments to establish.&TV Communications Inc.

USA

Total assets exceeded W10,000 million as of
    December 31, 2008.POSCO Phillippine Manila Processing Center Inc.

Philippines

Total assets exceeded W10,000 million as of
    December 31, 2008.POSCO VST CO., LTD.

Vietnam

The Company newly acquired more than 50% of interest related to
    this investment in 2009.   W W W W
  Subsidiaries
    Excluded from the Consolidated Financial Statements in
    2009
  Investees

Location

ReasonShanghai Real Estate Development Co., Ltd.


China


Disposal of 100%
    shares  F-24




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    The Effect from
    Adjustment of Accounting Policy in Consolidated
    Subsidiaries
    2009Net Assets Value

Adjustment

Net Assets ValueInvestees

before Adjustment

Amount

after Adjustment(In millions of Korean Won)Posteel Co., Ltd.

W
475,802


W
(576
)

W
475,226POSCON Co., Ltd.


185,718



2,333



188,051POSCO Coated Steel Co., Ltd.


250,219



(48,974
)


201,245POSCO ICT Co., Ltd. (formerly, POSDATA Co., Ltd.)


51,672



(32,970
)


18,702POSCO Refractories & Environment Co., Ltd. (POSREC)


183,082



5,098



188,180Samjung Packing & Aluminum Co., Ltd.


68,616



4,598



73,214POSCO Power Corp.


615,014



(19,147
)


595,867PHP Co., Ltd.


(5,778
)


(27,081
)


(32,859
)POSCO Asia Co., Ltd.


31,723



(1,453
)


30,270Zhangjiagang Pohang Stainless Steel Co., Ltd.


573,888



(76,220
)


497,668POSCO Investment Co., Ltd.


88,296



(4,601
)


83,695Qingdao Pohang Stainless Steel Co., Ltd.


109,070



(12,441
)


96,629POSCO-Japan Co., Ltd.


97,213



(4,099
)


93,114POS-Qingdao Coil Center Co., Ltd.


13,595



(59
)


13,536POSCO-Vietnam Co., Ltd.


213,834



(9,440
)


204,394POSCO-Mexico Co., Ltd.


103,629



(16,172
)


87,457   2008Net Assets Value

Adjustment

Net Assets ValueInvestees

before Adjustment

Amount

after Adjustment(In millions of Korean Won)Posteel Co., Ltd.


451,564



(601
)


450,963POSCON Co., Ltd.


159,835



1,329



161,164POSCO Coated Steel Co., Ltd.


216,853



(4,107
)


212,746POSCO Refractories & Environment Co., Ltd. (POSREC)


154,729



5,544



160,273Samjung Packing & Aluminum Co., Ltd.


56,808



3,775



60,583POSCO Power Corp.


552,569



(7,910
)


544,659POSCO Asia Co., Ltd.


31,420



(352
)


31,068Zhangjiagang Pohang Stainless Steel Co., Ltd.


635,615



(71,419
)


564,196POSCO Investment Co., Ltd.


92,599



(3,915
)


88,684Qingdao Pohang Stainless Steel Co., Ltd.


132,733



(21,682
)


111,051POSCO-Japan Co., Ltd.


107,306



(1,097
)


106,209POS-Qingdao Coil Center Co., Ltd.


14,515



(34
)


14,481POSCO E&C (Beijing) Co., Ltd.


22,244



(275
)


21,969  F-25




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    2.
    Summary of
    significant accounting policies and basis of presenting
    financial statements      Basis of
    consolidated financial statements presentation
    Cash and Cash
    Equivalents
    Revenue
    recognition
       F-26




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Allowance for
    doubtful accounts
      Inventories
  materials-in-transit
  Investments in
    Securities
  held-to-maturity, available-for-sale
  held-to-maturity held-to-maturity available-for-sale
  held-to-maturity available-for-sale
  Available-for-sale
  available-for-sale Held-to-maturity
 F-27




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Available-for-sale Held-to-maturity
  Equity method
    investments
          Property, Plant
    and Equipment
   F-28




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Estimated Useful LivesBuildings and structures

5-60 yearsMachinery and equipment

3-25 yearsVehicles

3-10 yearsTools

4-10 yearsFurniture and fixtures

3-10 yearsCapital lease asset
    (*)

3-18 years     (*)
    
    Capital lease asset is depreciated
    over the shorter of the lease term or the estimated useful lives
    of the asset.        Leases
    Intangible
    assets
    Estimated Useful LivesGoodwill

5-20 yearsNegative goodwill

5-10 yearsIntellectual property rights

5-10 yearsResearch and development cost
    (*1)

3-10 yearsPort facilities usage rights
    (*2)

1-75 yearsLong-term electricity supply contract
    rights (*3)

9-15 yearsOther intangible assets

2-25 years  F-29




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      (*1)
    
    The costs incurred in relation to
    the development of new products and new technologies, including
    the development cost of internally used software and related
    costs, are recognized as development costs only if it is
    probable that future economic benefits that are attributable to
    the asset will flow into the entity and the cost of the asset
    can be measured reliably. The useful life of development costs
    is based on its estimated useful life, not to exceed
    20 years from the date when the asset is available for use.(*2)
    
    As of December 31, 2009, port
    facilities usage rights are related to the quay and inventory
    yard donated by POSCO in April 1987 to the local bureaus of the
    Maritime Affairs and Fisheries in Gwangyang, Pohang, Pyeongtaek
    and Masan.(*3)
    
    The Company recognized the
    electricity supply contract initially at fair value as an
    identifiable intangible asset when the Company acquired POSCO
    Power Corp. The electricity supply contract which was related to
    existing agreement of supplying electric power to Korea Electric
    Power Corporation met the criteria of recognizing identifiable
    intangible assets at acquisition date.    Discounts on
    debentures
    Accrued severance
    benefits
    Restructuring of
    receivables
    Foreign currency
    transactions and translation
   F-30




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Derivative
    financial instruments
        Provisions and
    contingent liabilities
    1)
    An entity has a present obligation (legal or constructive) as a
    result of a past event;2)
    It is probable that an outflow of resources embodying economic
    benefits will be required to settle the obligation; and3)
    A reliable estimate can be made of the amount of the obligation    Treasury
    stock
    Sale of
    receivables
   F-31




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Income tax and
    deferred income tax
          Use of
    estimates
    Elimination of
    the investments of investing company and the stockholders
    equity of the investees
    Elimination of
    inter-company transactions
    (a)
    Calculation of unrealized gains and losses  Unrealized gains or losses to be eliminated with respect to
    Companys inventory, fixed assets and intangible assets are
    computed based upon average gross profit ratio of the concerned
    transaction. When the actual gross profit ratio is deemed
    materially different F-32




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    from the average gross profit ratio, the actual gross profit
    ratio of the concerned transaction is used.  (b)
    Elimination of unrealized gains and losses  Unrealized gains or losses arising from downstream intercompany
    transactions are fully eliminated and it is attributed to the
    Companys investment. Unrealized gains or losses arising
    from upstream transactions are fully eliminated and it is
    attributed to the Companys investment proportionately to
    the equity interest of the company and non controlling interest.  Translation of
    Foreign Subsidiarys Financial Statements
    Reclassification
    US Dollar
    Convenience Translation
  W
 F-33




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    3.
    Cash and Cash
    Equivalents, and Financial Instruments    Annual Interest Rate (%)

2009


2008(In millions of Korean Won)Cash and cash equivalentsCash on hand and bank deposits

0.00
    ~
    3.00

W
165,307



74,657Checking accounts

0.00
    ~
    2.00


7,427



3,160Corporate bank deposits

0.00
    ~
    6.20


417,390



459,023Time deposits

0.36
    ~
    5.00


529,564



598,000Time deposits in foreign currency and others

0.00
    ~
    3.00


382,904



517,561Maintained by overseas affiliates

0.00
    ~
    12.00


696,578



838,3092,199,170



2,490,710Less: Government grants




(2,439
)


(446
)W
2,196,731



2,490,264Short-term financial instrumentsTime deposits

1.60
    ~
    5.00

W
2,962,298



1,049,535Specified money in trust




71,193



80,455Certificates of deposit

1.60
    ~
    7.20


2,405,500



529,000Commercial papers








20,000Others

0.10
    ~
    5.30


342,643



93,351Maintained by overseas affiliates

0.01
    ~
    10.49


38,813



55,109W
5,820,447



1,827,450Long-term financial instrumentsInstallment accounts

0.00
    ~
    10.00

W
18,522



16,355Guarantee deposits for opening accounts

0.00
    ~
    1.00


112



107W
18,634



16,462   W W W W W W
  4.
    Trading
    Securities    2009


2008Acquisition Cost


Fair Value


Book Value


Book Value(In millions of Korean Won)Beneficiary certificates and others

W
500,000



505,811



505,811



1,238,261  F-34




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    5.
    Accounts and
    Notes Receivable, and Others    2009


2008(In millions of Korean Won)Trade accounts and notes receivable

W
5,344,442



6,158,066Less: Allowance for doubtful accounts


(199,318
)


(263,802
)Less: Present value discount


(102
)


(171
)W
5,145,022



5,894,093Other accounts and notes receivable

W
470,701



555,902Less: Allowance for doubtful accounts


(23,008
)


(17,153
)Less: Present value discount






(239
)W
447,693



538,510Long-term trade accounts and notes receivable

W
23,142



29,623Less: Allowance for doubtful accounts


(6,250
)


(4,528
)Less: Present value discount


(1,207
)


(1,831
)W
15,685



23,264Long-term loans receivable

W
125,029



97,793Less: Allowance for doubtful accounts


(21,395
)


(17,448
)Less: Present value discount


(27
)


(58
)W
103,607



80,287     Present Value







Discount RateFace Value


Discount


Book Value


Maturity

(%)(In millions of Korean Won)Long-term loans receivable Riviera C.C


372



27



345


2011

3.7W
372



27



345Long-term trade accounts and notes receivableBNG Steel Co., Ltd.
    (*)

W
4,680



72



4,608


2010

8.6DK Dongsin Co., Ltd.
    (*)


6,609



208



6,401


2011

4.7Others


21,968



1308



20,660


2011~2016

4.7-6.5W
33,257



1,588



31,669     (*)
    
    Discount at present value incurred
    from restructured receivables under work-out plans is presented
    as allowance for doubtful accounts. F-35




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       AdditionsBalance at

Charged to

Change in



Balance atBeginning of

Costs and

Scope of



the End ofDescription

Period

Expenses

Consolidation

Deductions (*)

Period(In millions of Korean Won)Year ended December 31, 2009:Reserves deducted in the statement of financial position from
    the assets to which the apply:
    Allowance for doubtful accounts

W
340,325


W
45,538


W
2,808


W
103,776


W
284,895Year ended December 31, 2008:Reserves deducted in the statement of financial position from
    the assets to which the apply:
    Allowance for doubtful accounts


341,766



28,186



1,072



30,699



340,325Year ended December 31, 2007:Reserves deducted in the statement of financial position from
    the assets to which the apply:
    Allowance for doubtful accounts


385,755



37,237







81,226



341,766     (*)
    
    Deduction for allowance for
    doubtful accounts includes amount written off as uncollectible
    and others.  6.
    Inventories    2009


2008(In millions of Korean Won)Finished goods

W
8 77,850



2,003,646By-products


28,756



41,841Semi-finished goods


1,585,425



2,389,245Raw materials


1,124,060



2,077,569Fuel and materials


566,344



563,136Materials-in-transit


1,036,108



1,698,042Others


11,186



8,2515,229,729



8,781,730Less: Provision for valuation loss


(76,890
)


(120,009
)W
5,152,839



8,661,721   W W
 F-36




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    7.
    Investment
    Securities    2009


2008(In millions of Korean Won)Available-for-sale
    securities

W
5,292,591



4,257,625Held-to-maturity
    securities


91,792



87,321Equity-method investments


827,583



832,536W
6,211,966



5,177,482   Available-for-Sale
    Securities
  (a) Available-for-sale
  2009


2008(In millions of Korean Won)Current portion of
    available-for-sale
    securities
    Investments in bonds

W
35,746



30,888Available-for-sale
    securitiesMarketable equity securities


3,973,531



2,917,595Non-marketable equity securities


1,174,866



1,306,739Investments in bonds


120,048



8,467Equity investments


24,146



24,8245,292,591



4,257,625W
5,328,337



4,288,513  F-37




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      2009


2008Number of


Percentage of


Acquisition


Fair


Book


BookCompany

Shares


Ownership


Cost


Value


Value (*1)


Value(In millions of Korean Won)SK Telecom Co., Ltd.
    (*1)


4,372,096



5.41


W
1,222,528


W
743,845


W
743,845


W
891,835Hana Financial Group Inc.


4,663,776



2.20



29,998



153,438



153,438



90,943Hyundai Heavy Industries  Co., Ltd.


1,477,000



1.94



343,505



256,260



256,260



294,661Hanil Iron & Steel Co., Ltd.


206,798



10.14



2,413



2,575



2,575



1,596HI Steel Co., Ltd.


135,357



9.95



1,609



1,895



1,895



1,766Munbae Steel Co., Ltd.


1,849,380



9.02



3,588



5,419



5,419



3,921Dong Yang Steel Pipe Co., Ltd.


1,564,250



2.06



3,911



1,877



1,877



1,400Korea Line Corp.






















14,347Shinhan Financial Group Inc.


4,369,881



0.92



228,778



188,779



188,779



113,326SeAH Steel Corp.


610,103



10.17



18,792



22,055



22,055



23,490Union Steel Co., Ltd.


1,005,000



9.80



40,212



22,110



22,110



14,472Hanjin Shipping Co., Ltd.


57,226



0.08



2,354



1,185



1,185



1,236Hanjin Shipping Holdings Co., Ltd.


11,033



0.08



298



151



151



KB Financial Group Inc.


13,115,837



3.39



574,524



783,015



783,015



282,402LG Powercom Corporation
    (*2)


6,300,000



4.70



246,000



36,793



36,793



39,000DC Chemical Co., Ltd.


3,404







149



744



744



749Korea Semiconductor System Co., Ltd.


328,857



6.13



617



671



671



401Aromasoft Corp Co., Ltd.


150,000



2.21



143



603



603



877i-Components Co., Ltd


39,500



0.82



119



277



277



290Nippon Steel Corporation
    (*1)


238,352,000



3.50



719,622



1,128,734



1,128,734



963,486Thainox Stainless Public Company Limited


1,200,000,000



15.00



42,301



67,658



67,658



40,299Macarthur Coal Limited
    (*3)


21,215,700



8.34



420,805



249,431



249,431



55,927Murchison Metals Ltd.


50,567,000



12.25



27,146



132,139



132,139



27,737Cockatoo Coal Ltd.


73,595,835



19.99



31,352



33,389



33,389



21,129Sandfire Resources NL


19,033,666



18.20



6,897



73,598



73,598



1,292Jupiter Mines Limited


48,000,000



13.00



8,159



9,531



9,531



Silicon Motion Technology Corp.


136,925



0.42



3,052



545



545



394FuelCell Energy, INC.


10,786,418



12.80



57,156



47,354



47,354



18,651Others










14,049



9,460



9,460



11,968W
4,050,077


W
3,973,531


W
3,973,531


W
2,917,595     (*1)
    
    Certain portions of those
    investments have been pledged as collateral. (note 10)(*2)
    
    In October 2009, LG
    Powercom & LG Telecom announced their decision to
    exchange shares in 2010. By December 31, 2009, the Company
    recorded an impairment loss because the estimated recoverable
    amount of the investment in LG Powercom is less than the
    carrying value.(*3)
    
    In 2008, the Company recognized
    excess of the acquisition cost of MacArthur Coal Limited over
    the fair value at the acquisition date amounting to
    W96,785 million as impairment losses. F-38




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       2009


2008Number of


Percentage of


Acquisition


Book


BookCompany

Shares


Ownership (%)


Cost


Value


Value(In millions of Korean Won)Busan Gimhae Light Rail Transit
    Co., Ltd.
    (*1,2)


9,160,000



25.00


W
45,800


W
76,294


W
45,800Seoul Metro Line 9 Corporation


4,090,985



12.25



20,455



30,444



20,455Sinbundang Railroad Co., Ltd.
    (*1)


2,061,000



5.00



10,305



17,500



11,114U-Space Co., Ltd.


2,800,000



10.00



14,000



14,000



14,000Dream Hub Project Financial
    Investment Co., Ltd.


2,400,000



1.20



12,000



12,000



12,000Enk Co., Ltd.


500,000



9.70



10,000



10,000



10,000POSCO-AST Co., Ltd.
    (*3)(formerly, Taihan ST Co., Ltd.)


















13,930Airport Railroad Co., Ltd.


















179,026Nacional Minerios S.A.
    (formerly, Big Jump Energy
    Participacoes S.A)
    (*1)


30,784,625



6.48



668,636



535,357



667,824The Siam United Steel
    (*1)


11,071,000



12.30



34,658



65,135



58,367POSCO Maharashtra Steel Private Limited
    (*4)


1,138,500



100.00



63,872



63,872



Elkview mine
    (*5)






2.50



32,723



32,723



30,692POSCO-Turkey Nilufer Processing Center Co., Ltd.
    (*4,5)






100.00



19,983



19,983



POSCO (Liaoning) Automotive Processing Center Co., Ltd.
    (*4,5)






90.00



16,952



16,952



POSCO India Chennai Steel Processing Centre Pvt. Ltd.
    (*4,5)






100.00



14,925



14,925



Pallinghurst Kalahari (Mauritius) Limited


175,715



7.58



12,558



12,558



Others










249,691



253,123



243,531W
1,226,558


W
1,174,866


W
1,306,739     (*1)
    
    The fair values of those
    investments were based on the valuation report of a public
    rating services company. Other non-marketable investments are
    recorded at cost since fair value is not readily determinable.  (*2)
    
    This investment was not accounted
    for using the equity method even though the Company owns equity
    interest of more than 20% since it is established pursuant to
    Private Finance Law related to social infrastructure capital and
    the Company does not have ability to exercise significant
    influence on the investee.(*3)
    
    This investment was reclassified to
    consolidated subsidiaries from
    available-for-sale
    securities since its total assets were greater than
    W10 billion as of December 31, 2008
    through additional increase in paid in capital.(*4)
    
    Those investments were not
    accounted for using the equity method as either they are under
    liquidation proceedings as of December 31, 2009 or their
    total assets were less than W10 billion as
    of December 31, 2008.(*5)
    
    No shares have been issued in
    accordance with the local laws or regulations. F-39




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     (d) Available-for-sale
  2009


2008Beginning


Increase


Ending


Beginning


Increase


EndingCompany

Balance


(Decrease)


Balance


Balance


(Decrease)


Balance(In millions of Korean Won)SK Telecom Co., Ltd.

W
(247,137
)

W
(126,237
)

W
(373,374
)

W
(98,383
)

W
(148,754
)

W
(247,137
)Hana Financial Group Inc.


47,537



48,746



96,283



148,666



(101,129
)


47,537Hyundai Heavy Industries Co., Ltd.


(38,098
)


(29,954
)


(68,052
)


224,798



(262,896
)


(38,098
)Hanil Iron & Steel Co., Ltd.


(809
)


763



(46
)


2,464



(3,273
)


(809
)HI Steel Co., Ltd.


123



100



223



595



(472
)


123Munbae Steel Co., Ltd.


90



1,168



1,258



3,365



(3,275
)


90Dong Yang Steel Pipe Co., Ltd.


(1,958
)


372



(1,586
)


(782
)


(1,176
)


(1,958
)Korea Line Corp.


4,898



(4,898
)






20,155



(15,257
)


4,898Shinhan Financial Group Inc.


(82,790
)


51,591



(31,199
)


(11,114
)


(71,676
)


(82,790
)SeAH Steel Corp.


3,664



(1,119
)


2,545



5,246



(1,582
)


3,664Union Steel Co., Ltd.


(20,077
)


5,958



(14,119
)


(12,031
)


(8,046
)


(20,077
)Hanjin Shipping Co., Ltd.


(1,105
)


69



(1,036
)






(1,105
)


(1,105
)Hanjin Shipping Holdings Co., Ltd.






10



10











KB Financial Group Inc.


(13,843
)


176,467



162,624







(13,843
)


(13,843
)LG Powercom Corporation


(161,460
)


161,460







(92,314
)


(69,146
)


(161,460
)Nippon Steel Corporation


190,214



128,893



319,107



474,780



(284,566
)


190,214Thainox Stainless Public Company Limited


(1,562
)


21,341



19,779



2,858



(4,420
)


(1,562
)Macarthur Coal Limited


(209,113
)


150,934



(58,179
)






(209,113
)


(209,113
)The Siam United Steel


18,493



5,278



23,771







18,493



18,493Nacional Minerios S.A.
    (formerly, Big Jump Energy Participacoes S.A)






(103,957
)


(103,957
)










Others


17,374



96,027



113,401



112,181



(94,807
)


17,374W
(495,559
)

W
583,012


W
87,453


W
780,484


W
(1,276,043
)

W
(495,559
)     2009


2008Book


BookMaturity

Acquisition Cost


Value


Value(In millions of Korean Won)Government bonds

Less than 1 year

W
568


W
568


W
4941-5 years


4,936



4,414



97Corporate debt securities

Less than 1 year


35,112



35,178



30,3941-5 years


116,333



115,634



8,370156,949



155,794



39,355Less: Current portion




(35,680
)


(35,746
)


(30,888
)W
121,269


W
120,048


W
8,467  F-40




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      2009


2008Book


BookAcquisition Cost


Value


Value(In millions of Korean Won)Constractor financial fund

W
15,029


W
17,876


W
17,676Others


5,974



6,270



7,148W
21,003


W
24,146


W
24,824   available-for-sale
  2009


2008Gross


Gross








Gross


GrossAmortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost
    (*)


Gains


Losses


Value


Cost
    (*)


Gains


Losses


Value(In millions of Korean Won)Debt Securities:Government and municipal bonds

W
5,504


W



W
522


W
4,982


W
591


W



W



W
591Other bonds


151,445







633



150,812



38,764











38,764156,949







1,155



155,794



39,355











39,355Equity Securities:Marketable Equity Securities


3,744,085



948,334



(718,888
)


3,973,531



3,611,012



322,218



(1,015,635
)


2,917,595Non-marketable Equity Securities


1,179,887



137,002



(142,023
)


1,174,866



1,239,895



108,445



(41,600
)


1,306,739Investment in capital


21,003



3,143







24,146



20,567



4,257







24,8244,944,975



1,088,479



(860,911
)


5,172,543



4,871,474



434,920



(1,057,235
)


4,249,158W
5,101,924


W
1,088,479


W
(859,756
)

W
5,328,337


W
4,910,829


W
434,920


W
(1,057,235
)

W
4,288,513     (*)
    
    Acquisition cost less impairment
    loss  available-for-sale W W W W W
 F-41




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     Held-To-Maturity
    Securities
  (a) Held-to-maturity
  2009


2008Acquisition


Book


BookMaturity

Cost


Value


Value(In millions of Korean Won)Current portion of
    held-to-maturity
    securities Government bonds

Less than 1 year

W
20,717


W
20,717


W
20,613Held-to-maturity
    securities1-5 years


101,031



91,792



86,756Government bonds
    (*)

5-10 years










565101,031



91,792



87,321W
121,748


W
112,509


W
107,934     (*)
    
    Certain portion of the government
    bonds has been pledged as collateral for the consolidated
    subsidiaries. (note 10) F-42




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     Equity-Method
    Investments
    2009


2008Number of


Percentage of


Acquisition


Net Asset


Book


BookInvestees
    (*1)

Shares


Ownership (%)


Cost


Value


Value


Value(In millions of Korean Won)SNNC Co.,
    Ltd. (*2)


18,130,000



49.00


W
90,650


W
107,768


W
93,263


W
59,020Garolim Tidal Power Plant Co.,
    Ltd. (*2)


2,322,999



32.13



11,615



11,041



11,041



Taegisan Wind Power
    Corporation (*2)


2,500,000



50.00



12,500



9,038



10,955



5,273Midas IT Co., Ltd.


866,190



25.46



433



8,328



8,304



6,926Gale International Korea Inc.


85,306



29.90



427



7,966



7,917



6,983eNtoB Corporation


910,000



28.44



5,550



7,827



7,696



7,519Chungju Enterprise City


2,008,000



25.10



10,040



5,377



5,383



7,686Chungla International Business Town Co.,
    Ltd. (*3)


388,740



6.27



3,910



2,146



2,159



3,354PSIB Co., Ltd.
    (*2,4)


98,000



49.00



490



(91
)






Songdo Cosmopolitan City Development
    Inc. (*4)


1,332,344



29.90



6,674



(70,615
)






Nickel Mining Company
    SAS (*2)


3,234,698



49.00



157,585



220,735



190,149



220,553Eureka Moly
    LLC. (*5)






20.00



121,209



32,822



113,105



121,209KOBRASCO (*2)


2,010,719,185



50.00



32,950



98,944



98,943



57,656BX STEEL POSCO Cold 
    Rolled Sheet Co.,
    Ltd. (*5)






25.00



61,961



56,763



63,667



90,776USS-POSCO Industries
    (UPI) (*2,5)






50.00



254,649



52,433



45,961



51,330POSCO Bio Ventures
    L.P. (*5,6)






100.00



47,874



30,439



30,439



39,584CAML Resources Pty.
    Ltd. (*2)


3,239



33.34



40,388



28,250



30,237



31,959United Spiral Pipe, LLC.
    (USP) (*2,5)






35.00



29,354



23,997



23,984



32,260Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co.,
    Ltd. (*2,5)






34.00



9,517



17,847



15,592



16,944Poschrome (Proprietary) Limited


21,675



25.00



4,859



13,768



13,481



5,004An Khanh New City Development Joint-Ventured Company
    Ltd. (*2,5)






50.00



20,429



12,644



12,643



21,184Hubei Huaerliang POSCO Silicon Science & Technology
    Co.,
    Ltd. (*5)






30.00



3,236



9,734



9,899



10,552Henan Tsingpu Ferro Alloy Co.,
    Ltd. (*2,5)






49.00



8,846



4,664



4,664



5,084POS-JK
    LLC. (*4)


2,574



24.99



1,990



(293
)






Others










26,984



30,575



28,101



31,680W
964,120


W
722,107


W
827,583


W
832,536     (*1)
    
    Due to the difference in the
    closing schedule of December 31, 2009, the equity method of
    accounting is applied based on the most recent available
    financial information, which has not been audited or reviewed.(*2)
    
    Although the Company owns over 30%
    equity interest in these subsidiaries, the Company is not their
    largest shareholder, excluding them from consolidation.(*3)
    
    This investment was reclassified to
    equity-method investments since the Company has ability to
    exercise a significant influence on this investment through
    additional increase in paid in capital. F-43




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     (*4)
    
    The equity method of accounting has
    been suspended for investment in Songdo New City Development
    Inc., PSIB Co., Ltd. and POS-JK LLC. as the Companys net
    investments have been reduced to zero. Unrecorded changes in
    equity interests in these investments in 2009 amounted to
    W4,627 million and the accumulated
    unrecorded changes in equity interest prior to 2009 amounted to
    W71,114 million.(*5)
    
    No shares have been issued in
    accordance with the local laws or regulations.(*6)
    
    POSCO Bioventures L.P. was not
    included in the consolidated financial statements as it is not
    controlled by the controlling company even though the Company
    holds 100% of equity interest.    Dec. 31


Equity Method


Other


Dec. 31


Equity Method


Other


Dec. 312007


Profits


Increase


2008


Profits


Increase


2009Investees

Balance


(Losses)


(Decrease)
    (*)


Balance


(Losses)


(Decrease)
    (*)


Balance(In millions of Korean Won)SNNC Co., Ltd.

W
87,762


W
(28,742
)

W



W
59,020


W
34,244


W
(1
)

W
93,263Garolim Tidal Power Plant Co., Ltd.


















(208
)


11,249



11,041Taegisan Wind Power Corporation






2,413



2,860



5,273



(3,722
)


9,404



10,955Midas IT Co., Ltd.


5,321



1,788



(183
)


6,926



1,229



149



8,304Gale International Korea Inc.


11,385



3,308



(7,710
)


6,983



5,038



(4,104
)


7,917eNtoB Corporation


6,149



748



622



7,519



418



(241
)


7,696Chungju Enterprise City


9,576



(1,847
)


(43
)


7,686



(2,303
)






5,383Chungla International Business Town Co., Ltd.






(539
)


3,893



3,354



(1,212
)


17



2,159Nickel Mining Company SAS


200,622



(35,918
)


55,849



220,553



(3,634
)


(26,770
)


190,149Eureka Moly LLC










121,209



121,209



(305
)


(7,799
)


113,105KOBRASCO


41,143



35,385



(18,872
)


57,656



25,611



15,676



98,943BX STEEL POSCO Cold Rolled Sheet Co., Ltd.


66,782



3,261



20,733



90,776



(23,086
)


(4,023
)


63,667USS-POSCO Industries(UPI)


59,771



308



(8,749
)


51,330



(18,530
)


13,161



45,961POSCO Bio Ventures L.P.


35,190



(8,288
)


12,682



39,584



(5,037
)


(4,108
)


30,439CAML Resources Pty. Ltd.


28,155



3,617



187



31,959



(6,561
)


4,839



30,237United Spiral Pipe, LLC. (USP)






(1,393
)


33,653



32,260



(5,523
)


(2,753
)


23,984Zhongyue POSCO(Qinhuangdau) Tinplate Industrial Co., Ltd.


10,043



2,361



4,540



16,944



(159
)


(1,193
)


15,592Poschrome (Proprietary) Limited


5,165



3,288



(3,449
)


5,004



6,237



2,240



13,481An Khanh New City Development Joint-Ventured Company Ltd.


10,893



(2,697
)


12,988



21,184



(6,509
)


(2,032
)


12,643Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.


4,385



4,000



2,167



10,552



122



(775
)


9,899Henan Tsingpu Ferro Alloy Co., Ltd.


8,470



(5,043
)


1,657



5,084



(40
)


(380
)


4,664POS-JK


















(1,931
)


1,931



Others


13,800



126



17,754



31,680



(1,019
)


(2,560
)


28,101W
604,612


W
(23,864
)

W
251,788


W
832,536


W
(6,880
)

W
1,927


W
827,583     (*)
    
    Other increase or decrease
    represents the changes in investment securities due to
    acquisitions (disposals), dividends received, changes in capital
    adjustments arising from translations of financial statements of
    foreign investees and others. F-44




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       Dec. 31








Dec. 31








Dec. 312007


Increase





2008


Increase





2009Investee

Balance


(Decrease)


Amortization


Balance


(Decrease)


Amortization


Balance(In millions of Korean Won)SNNC Co., Ltd.

W
188


W



W
(42
)

W
146


W



W
(42
)

W
104eNtoB Corporation


590



244



(138
)


696







(183
)


513BX STEEL POSCO Cold Rolled Sheet Co., Ltd.


12,249







(2,672
)


9,577







(2,673
)


6,904CAML Resources Pty. Ltd.


13,515







(5,764
)


7,751







(5,764
)


1,987POS-JK


















1,015



(1,015
)


Others


34



1,733



(629
)


1,138



667



(956
)


849W
26,576


W
1,977


W
(9,245
)

W
19,308


W
1,682


W
(10,633
)

W
10,357     2009


2008Property, Plant and








Property, Plant andEquipment,








Equipment,and Intangible








and IntangibleInvestee

Inventories


Assets


Total


Inventories


Assets


Total(In millions of Korean Won)SNNC Co., Ltd.

W
(11,686
)

W
1,195


W
(10,491
)

W
3,094


W
(5,938
)

W
(2,844
)eNtoB Corporation


368



4



372



123



10



133Midas IT Co.,Ltd.






(8
)


(8
)






(2
)


(2
)Nickel Mining Company SAS


4,935







4,935



(10,508
)






(10,508
)KOBRASCO


14,090







14,090



(12,450
)






(12,450
)USS-POSCO Industries


2,368







2,368



(6,268
)






(6,268
)United Spiral Pipe, LLC.


(14
)






(14
)










Zhongyue POSCO(Qinhuangdau) Tinplate Industrial Co., Ltd.


(210
)






(210
)


(168
)






(168
)Poscrome (Proprietary) Limited


9,279







9,279



(7,674
)






(7,674
)Henan Tsingpu Ferro Alloy Co., Ltd.


(154
)






(154
)


27







27Others


(1,047
)


3



(1,044
)


(703
)


(65
)


(768
)W
17,929


W
1,194


W
19,123


W
(34,527
)

W
(5,995
)

W
(40,522
)  F-45




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Net IncomeInvestee

Total Assets


Total Liabilities


Sales


(Loss)(In millions of Korean Won)SNNC Co., Ltd.

W
505,055


W
285,120


W
368,349


W
85,686Garolim Tidal Power Plant Co., Ltd.


34,850



486







(706
)Taegisan Wind Power Corporation


86,572



68,496



7,918



(6,304
)Midas IT Co., Ltd.


53,801



21,091



34,089



5,077Gale International Korea Inc.


45,797



19,156



39,735



17,087eNtoB Corporation


72,238



44,716



567,871



1,213Chungju Enterprise City


141,210



119,786







(8,575
)Chungla International Business Town Co., Ltd.


327,997



293,771







(19,485
)PSIB Co., Ltd.


299,718



299,903







(995
)Songdo Cosmopolitan City Development Inc.


2,312,822



2,548,993



939,184



101,256Nickel Mining Company SAS


552,707



102,228



106,005



(14,604
)Eureka Moly LLC.


168,767



4,659







(1,523
)KOBRASCO


273,311



75,424



42,415



25,746BX STEEL POSCO Cold Rolled Sheet Co., Ltd.


1,018,978



791,925



1,135,803



(47,575
)USS-POSCO Industries


443,184



338,318



809,752



(41,795
)POSCO Bio Ventures L.P.


30,439











(5,037
)CAML Resources Pty. Ltd.


137,046



52,313



146,220



(1,886
)United Spiral Pipe, LLC.


168,096



99,532







(16,749
)Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.


122,646



70,155



130,245



6,259Poschrome (Proprietary) Limited


64,564



9,494



48,411



3,026An Khanh New City Development Joint-Ventured
    Company Ltd.


175,362



150,075







(6,937
)Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.


56,046



23,600



41,582



405Henan Tsingpu Ferro Alloy Co., Ltd.


27,855



18,336



9,280



155POS-JK LLC.


16,915



18,089



3,188



(5,124
)Others


341,044



241,149



433,161



3,857  F-46




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    8.
    Property, Plant
    and Equipment    2009


2008(In millions of Korean Won)Buildings and structures

W
8,511,720



7,629,084Machinery and equipment


31,538,967



28,854,834Vehicles


228,082



205,973Tools


419,818



467,142Furniture and fixtures


314,052



302,801Capital lease assets


31,830



11,90041,044,469



37,471,734Less: Accumulated depreciation


(25,664,723
)


(24,156,260
)Less: Accumulated impairment loss


(156
)


(2,810
)Less: Government grants


(1,605
)


(2,000
)15,377,985



13,310,664Land


2,142,621



1,861,451Construction-in-progress


4,319,179



2,896,984W
21,839,785



18,069,099   W W
  W W
  W W
 F-47




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Elimination ofBeginning














Intercompany


EndingBalance


Acquisition (*1)


Disposal


Depreciation (*2)


Others (*3)


Transactions


Balance(In millions of Korean Won)Land

W
1,861,451


W
153,118


W
(26,083
)

W



W
160,305


W
(6,170
)

W
2,142,621Buildings


2,855,902



876,087



(43,536
)


(245,517
)


155,786



(169,204
)


3,429,518Structures


1,590,231



196,500



(10,773
)


(150,340
)


99,480



(76,988
)


1,648,110Machinery and equipment


8,635,599



3,332,801



(165,204
)


(2,005,954
)


813,289



(539,183
)


10,071,348Vehicles


33,923



56,976



(23,383
)


(17,294
)


1,323



(480
)


51,065Tools


94,396



38,580



(2,180
)


(33,519
)


(28,490
)


(432
)


68,355Furniture and fixtures


90,034



36,342



(2,305
)


(37,445
)


3,682



(4,284
)


86,024Financial Lease assets


10,579



3,410



(10
)


(6,840
)


16,426







23,565Construction-in-progress


2,896,984



5,587,395



(32,049
)






(3,788,448
)


(344,703
)


4,319,179W
18,069,099


W
10,281,209


W
(305,523
)

W
(2,496,909
)

W
(2,566,647
)

W
(1,141,444
)

W
21,839,785     (*1)
    
    Includes asset transferred from
    construction-in-progress.(*2)
    
    Includes depreciation expense of
    idle property.(*3)
    
    Includes foreign currency
    translation adjustments, asset transfers and adjustments
    resulting from the effect of changes in the scope of
    consolidation, etc.  Elimination ofBeginning














Intercompany


EndingBalance


Acquisition


Disposal


Depreciation


Others


Transactions


Balance(In millions of Korean Won)Land

W
1,509,189


W
119,753


W
(26,404
)

W



W
260,018


W
(1,105
)

W
1,861,451Buildings


2,623,024



231,885



(11,123
)


(216,416
)


405,973



(177,441
)


2,855,902Structures


1,546,816



152,673



(5,687
)


(130,600
)


104,876



(77,847
)


1,590,231Machinery and equipment


8,526,549



1,479,351



(29,270
)


(1,795,165
)


978,965



(524,831
)


8,635,599Vehicles


36,946



10,928



(2,064
)


(15,040
)


4,038



(885
)


33,923Tools


75,383



54,086



(548
)


(43,896
)


10,306



(935
)


94,396Furniture and fixtures


69,152



48,066



(733
)


(34,838
)


13,859



(5,472
)


90,034Financial Lease assets


10,829



403







(687
)


34







10,579Construction-in-progress


1,183,877



4,014,374



(33,483
)






(2,018,206
)


(249,578
)


2,896,984W
15,581,765


W
6,111,519


W
(109,312
)

W
(2,236,642
)

W
(240,137
)

W
(1,038,094
)

W
18,069,099   Ro-Ro
  MinimumLeasePayments(In millions ofKorean Won)Less 1 year

W
6,8131
    ~
    5 years


11,566Over 5 years


5,508W
23,887  F-48




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    9.
    Intangible
    Assets    2009


2008(In millions of Korean Won)Goodwill

W
272,092



270,842Negative goodwill


(10,352
)


(575
)Intellectual property rights


51,994



18,266Research and development costs, net of government grants


48,496



82,221Port facilities usage rights


99,552



116,078Long-term electricity supply contract rights


48,483



55,170Others


119,704



181,765W
629,969



723,767     For the Year Ended December 31, 2009Elimination ofBeginning








Recovery





Intercompany


EndingBalance


Acquisition


Disposal


(Amortization)


Others (*1)


Transactions


Balance(In millions of Korean Won)Goodwill

W
270,842


W
39,527


W



W
(38,353
)

W
76


W



W
272,092Negative goodwill


(575
)


(11,468
)






1,766



(75
)






(10,352
)Intellectual property rights


18,266



40,917



(2,420
)


(5,340
)


571







51,994Research and development costs, net of government
    grants (*2)


82,221



37,013



(8,535
)


(14,302
)


(47,689
)


(212
)


48,496Port facilities usage rights


116,078



1,680







(18,090
)






(116
)


99,552Long-term electricity supply contract rights


55,170











(6,687
)










48,483Others (*3)


181,765



29,113



(1,518
)


(70,661
)


(14,436
)


(4,559
)


119,704W
723,767


W
136,782


W
(12,473
)

W
(151,667
)

W
(61,553
)

W
(4,887
)

W
629,969     (*1)
    
    Includes transfer of an asset,
    adjustments arising from foreign currency translations and
    changes in consolidation scope, and others.(*2)
    
    The Company recognized impairment
    loss on development cost amounting to
    W50,493 million including
    W45,378 million of impairment loss
    recognized by POSCO ICT Co., Ltd. (formerly, POSDATA Co., Ltd.)
    as it is assumed that the future economic benefits will not flow
    into the Company.(*3)
    
    The Company has recorded expenses
    related to the ERP system and production innovation as other
    intangible assets.  F-49




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    For the Year Ended December 31, 2008Elimination ofBeginning








Recovery





Intercompany


EndingBalance


Acquisition


Disposal


(Amortization)


Others


Transactions


Balance(In millions of Korean Won)Goodwill

W
75,556


W
230,489


W



W
(33,327
)

W
(1,876
)

W



W
270,842Negative goodwill


(1,243
)










406



262







(575
)Intellectual property rights


1,811



2,625



(360
)


(1,237
)


15,427







18,266Research and development costs, net of government grants


91,965



40,066



(2,037
)


(18,071
)


(29,214
)


(488
)


82,221Port facilities usage rights


130,234



7,562







(21,604
)


362



(476
)


116,078Long-term electricity supply contract rights


61,857











(6,687
)










55,170Others


210,599



72,532



(8,795
)


(66,896
)


(22,700
)


(2,975
)


181,765W
570,779


W
353,274


W
(11,192
)

W
(147,416
)

W
(37,739
)

W
(3,939
)

W
723,767     2009


2008(In millions of Korean Won)Cost of goods sold

W
72,028



75,826Selling and administrative expenses


79,639



71,590W
151,667



147,416     RemainingDescription

2009


2008


Useful Life(In millions of Korean Won)Excess investment amount over fair
    value in POSCO Power Corp.

W
26,471


W
47,682



1 yearsGoodwill

Excess investment amount over fair
    value in Daewoo Engineering Company


198,580



209,461



18 yearsExcess investment amount over fair
    value in POSCO VST Co., Ltd.


36,955







5 years   W W W W W W
 F-50




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       Period

Amount(In millions ofKorean Won)2010

W
61,2342011


44,8632012


34,3202013


23,3482014


16,721W
180,486   10.
    Pledged
    Assets    Beneficiaries

2009


2008(In millions of Korean Won)Land

Mizuho Bank and others

W
220,732



225,628Buildings and structures (note 8)

Korea Development Bank and others


105,465



172,159Machinery and equipment (note 8)

Kookmin Bank and others


387,828



431,626Short-term financial instruments (note 3)

Korea Development Bank and others


2,000



3,000Trade accounts and notes receivable (note 5)

Mizuho Bank and others


53,898



84,557Available-for-sale
    securities (*1)

    (note 7)

Exchangeable bond holder and others


1,233,523



2,033,862Held-to-maturity
    securities (*2)

    (note 7)

Gyeongsangbuk-do provincial office


31,675



31,553Equity investments (note 7)

Related creditors


15,793



7,196W
2,050,914



2,989,581     (*1)
    
    As of December 31, 2009,
    2,030,526 shares, equivalent to 18,274,731 American
    depository receipts (ADRs) of SK Telecom Co., Ltd.
    have been pledged as collateral for the exchangeable bonds
    issued (note 13) and 156,472,000 shares of Nippon
    Steel Corporation have been pledged as collateral for the 1st
    samurai bonds issued.(*2)
    
    As of December 31, 2009,
    government bonds and bonds issued by Seoul Metropolitan Rapid
    Transit Corp, amounting to W29,749 million
    and W1,926 million, respectively, were
    provided as collateral to the Gyeongsangbuk-do Provincial Office
    as guarantee for environmental remediation of POSCO No. 4
    disposal site.    2009


2008Foreign


Won


Foreign


WonFinancial Institution

Currency


Equivalent


Currency


Equivalent(In millions of Korean Won)Korea Development Bank


EUR  3,964,242


W
6,637



EUR 4,600,591


W
8,171   W
 F-51




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    11.
    Other
    Assets    2009


2008(In millions of Korean Won)Other current assetsShort-term loans receivable

W
163,932



95,918Accrued income


64,370



58,003Prepaid expenses


45,140



82,891Others


76,233



150,016349,675



386,828Less: Allowance for doubtful accounts


(33,286
)


(34,086
)W
316,389



352,742Other long-term assetsOther investment assets

W
513,878



294,033Less: Allowance for doubtful accounts


(1,636
)


(3,308
)Less: Present value discount






W
512,242



290,725   12.
    Short-Term
    Borrowings and Current Portion of Long-Term Debts    Annual InterestFinancial Institutions

Rate (%)


2009


2008(In millions of Korean Won)Won currency borrowingsThe Export-Import Bank of Korea and others


2.61
    ~
    9.80



KRW



733,867


W
733,867



509,129



509,129Foreign currency borrowingsBank of America


0.50
    ~
    1.80



USD



87,641,601



104,833



125,196,920



157,435CNY



14,629,409







Shinhan Bank and others


0.71
    ~
    17.00



USD



1,192,237,238



2,387,101



1,039,133,496



2,587,791JPY



40,030,261,210







40,950,068,039CNY



1,876,379,123







2,890,648,137MYR



171,400,734







203,334,260VND



252,735,770,675







393,895,525,000AUD



50,000,000







60,000,000THB



1,170,000,000







507,400,000MMK



1,184,424,000







1,346,619,061NTD



40,000,000







INR











250,000,0002,491,934







2,745,226W
3,225,801







3,254,355  F-52




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Annual InterestFinancial Institutions

Rate (%)

2009


2008(In millions of Korean Won)DebenturesDomestic and foreign debentures

5.26
    ~
    6.55


KRW



212,000


W
317,084



332,102



332,102USD



90,000,000







Less: Discount on debentures issued












(219
)






(205
)316,865







331,897Won currency borrowingsNational Agricutural Cooperative Federation and others

1.00
    ~
    7.36


KRW



226,622



226,622



9,475



9,475Foreign currency borrowingsThe Export-Import Bank of Korea and others

0.55
    ~
    13.2


USD



138,000,000



242,335



309,624,451



427,640JPY



10,401,835,976







2,267,000,000VND



2,443,430,595







MYR



9,680,526







CNY











29,000,000468,957







437,115Loans from foreign financial institutionsNATIXIS

2.00


EUR



636,350



1,065



636,350



1,130W
786,887







770,142  F-53




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    13.
    Long-Term
    Debts    Annual InterestIssue date


Maturity


Rate (%)

2009


2008(In millions of Korean Won)Domestic Debentures


10/21/2004 ~
    11/24/2009



08/18/2009 ~
    08/27/2019


4.02~6.80


KRW



3,372,050


W
3,882,688



2,584,102



3,137,102USD



340,000,000







340,000,000JPY



9,000,000,000







9,000,000,0009th Samurai Bonds(Public)


06/28/2006



06/28/2013


2.05


JPY



50,000,000,000



631,410



50,000,000,000



696,9451st Samurai Bonds(Private)


12/29/2008



12/29/2011


Tibor +1.6


JPY



50,000,000,000



631,410



50,000,000,000



696,9451th FRN


11/11/2008



11/11/2011


Tibor +2.6


JPY



20,000,000,000



252,564



20,000,000,000



278,7781st Euro Bonds


08/10/2006



08/10/2016


5.88


USD



300,000,000



350,280



300,000,000



377,250Exchangeable Bonds (*)


08/19/2008



08/19/2013





JPY



52,795,000,000



666,706



52,795,000,000



735,904Global Bonds


03/26/2009



03/26/2014


8.75


USD



700,000,000



817,320







7,232,378







5,922,924Add: Premium on bond redemption




















10,067







11,112Less: Current portion




















(317,084
)






(332,102
)Less: Discount on debentures issued




















(70,449
)






(74,990
)W
6,854,912







5,526,944    (*)
    
    The Company issued exchangeable
    bonds, which is exchangeable with 18,274,731 SK Telecom Co.,
    Ltd. ADRs, on August 19, 2008. Details of exchangeable
    bonds are as follows:  Issuance date:

August 19, 2008Maturity date:

August 19, 2013Rate:

Interest rate of zero percentFace value:

JPY 52,795,000,000Issuance price:

JPY 52,424,229,136Premium on bond redemption

JPY 797,204,500 (redeemed on put date or maturity date)Exchangeable price:

JPY 2,999.11/ADRFair value of an exchangeable right at issuance:

JPY 2,867,605,334Fair value of an exchangeable right as of December 31,2009:

JPY 168,944,000Exercise period of exchangeable right:

Commencing ten business days following the issuance date until
    ten business days prior to maturity dateExercise date of put by bondholders:

August 19, 2011  F-54




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Annual Interest RateFinancial Institutions

(%)

2009


2008(In millions of Korean Won)Won currency borrowingsThe Korea Resources Corporation

Representative Borrowing
    Rate (*1)

    - 2.25

KRW


55,114


W
55,114



49,308



49,308Woori Bank

Representative Borrowing
    Rate (*1)

    - 1.25

KRW


20,405



20,405







The Korea Development Bank and

1.00
    ~
    7.36

KRW


537,418



537,418



595,037



595,037Less: Current portion










(226,622
)






(9,475
)386,315







634,870Foreign currency
    borrowings (*2)The Korea Development Bank and others

Representative Borrowing
    Rate (*1)

    - 2.25

CNY


1,307,960,156



1,225,317



29,000,000



1,154,647JPY


18,409,435,976







12,099,500,000MYR


149,680,526







140,000,000USD


622,927,180







745,808,410VND


2,443,430,595







Less: Current portion










(242,335
)






(427,640
)Loans from foreign financial institutions










982,982







727,007NATIXIS

2.00

EUR


3,964,241



6,637



4,600,591



8,171Less: Current portion










(1,065
)






(1,130
)5,572







7,041W
1,374,869







1,368,918     (*1)
    
    The average yield of
    3-year
    government bond is utilized for the annual interest rate
    calculation. The average yield of
    3-year
    government bond is rounded off to the nearest 0.25%.(*2)
    
    Foreign currency borrowings include
    long-term borrowing amounting to
    W5,578 million, the repayment of which
    depends on the result of the oil exploration in the Aral Sea in
    Uzbekistan with Korea National Oil Corporation
    (KNOC). (note 16)    Foreign


Loans fromCurrency


Foreign FinancialPeriod

Debentures
    (*)


Borrowings


Borrowings


Institutions


Total(In millions of Korean Won)2010

W
317,084


W
226,622


W
242,335


W
1,065


W
787,1062011


2,196,964



186,836



332,230



1,065



2,717,0952012


640,050



73,361



263,892



1,065



978,3682013


2,060,747



26,047



354,689



1,065



2,442,548Thereafter


2,027,600



100,071



32,171



2,377



2,162,219W
7,242,445


W
612,937


W
1,225,317


W
6,637


W
9,087,336    (*)
    
    The amount includes a premium on
    bond redemption. F-55




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     14.
    Accrued Severance
    Benefits    2009


2008(In millions of Korean Won)Estimated severance benefits at the beginning of period

W
1,176,070



986,956Provision for severance benefits


79,186



314,156Payment


(144,007
)


(125,374
)Others (*)


1,714



332Estimated severance benefits at the end of period

W
1,112,963



1,176,070Transfer to National Pension Fund


(1,751
)


(1,959
)Deposit for severance benefits trust


(810,791
)


(790,393
)Net balance at the end of period

W
300,421



383,718     (*)
    
    Includes foreign currency
    adjustments, changes in consolidation scope and others.    Period

Amount(In millions of Korean Won)2010

W
48,7032011


60,3862012


69,7032013


70,1602014~2019


671,826W
920,778    F-56




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    15.
    Other
    Liabilities    2009


2008(In millions of Korean Won)Other current liabilitiesUnearned revenue

W
2,355



2,292Derivatives liabilities


35,678



225,137Others


96,149



61,736W
134,182



289,165Other long-term liabilitiesReserve for allowance

W
40,718



35,558Derivatives liabilities


8,831



52,896Liability related to stock appreciation rights


54,272



38,147Deposit received


152,386



70,274Others


54,280



60,867W
310,487



257,742  F-57




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    16.
    Commitments and
    Contingencies    Grantors

Entity Being Guaranteed

Financial Institution

Amount


Won Equivalent(In millions of Korean Won)POSCO

POSCO Investment Co., Ltd.

HSBC


CNY



630,000,000


W
107,767MYR



280,000,000



95,427USD



346,000,000



403,990POSCO-Vietnam Co,. Ltd.

The Export-Import Bank of Korea and others


JPY



4,806,750,000



60,701USD



230,000,000



268,548BX STEEL POSCO Cold Rolled Sheet Co., Ltd.

Bank of China and others


CNY
    USD



359,180,000
    13,800,000



61,441
    16,113POSCO E&C Co., Ltd.

Taegisan Wind Power Corporation

Korea Development Bank


KRW



7,500



7,500IBC Corporation

The Export-Import Bank of Korea


USD



20,000,000



23,352POSLILAMA Steel Structure Co., Ltd.

The Export-Import Bank of Korea and others


USD



47,522,000



55,487Posteel Co., Ltd.

POSCO Canada Ltd.

Hana Bank


USD



12,484,500



14,577POSCO ICT Co., Ltd.

Chungju Enterprise City

Nong Hyup Bank


KRW



2,530



2,530POSCO Investment Co., Ltd.

POSCO-MPC S.A. de.C.V.

BOTM


USD



50,600,000



59,081POSCO-Malaysia SDN. BHD.

HSBC and others


USD



81,751,820



95,453POSCO-Mexico Co,. Ltd.

HSBC


USD



130,000,000



151,788POSCO Poland Wroclaw Steel Processing Center Co., Ltd.

HSBC


EUR



8,600,000



14,399Qingdao Pohang Stainless Steel Co., Ltd.

Standard Chartered


USD



42,000,000



49,039Zhangjiagang Pohang Stainless Steel Co., Ltd.

Bank of China and others


CNY



630,000,000



107,768USD



280,000,000



326,928Zhongyue POSCO (Qinhuangdao)

Bank of China and others


CNY



5,100,000



872Tinplate Industrial Co., Ltd.POSCO-Japan Co., Ltd.

POSCO ICT Co.,Ltd.

Mizuho Bank


JPY



100,000,000



1,263POSCO-JKPC Co., Ltd.

Mizuho Bank and others


JPY



2,990,000,000



37,758POSCO-JNPC Co., Ltd.

Mizuho Bank and others


JPY



3,300,000,000



41,673POSCO-JOPC Co., Ltd.

Mizuho Bank and others


JPY



2,827,500,000



35,706POSCO-JYPC Co., Ltd.

Mizuho Bank and others


JPY



2,506,250,000



31,649POSCO E&C (Zhangjiagang) Engineering & Consulting
    Co., Ltd.

POSCO E&C(Beijing) Co., Ltd.

Korea Exchange Bank


CNY



8,000,000



1,368POSCOAST Co., Ltd.

DaiMyung TMS Co., Ltd.

Korea Development Bank


JPY



285,685,976



3,608KRW



27,500



27,500W
2,103,286   W
 F-58




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Entity Being



AmountGrantors

Guaranteed

Financial Institution

Guaranteed


Won Equivalent(In millions of Korean Won)POSCO

Zeus (Cayman) Ltd.

Related creditors


JPY



52,795,000,000


W
666,706POSCO E&C Co., Ltd.

The first district of Minrak, Busan

Kookmin Bank


KRW



38,680



38,680Association of the first district of Mokdong,

Woori Bank


KRW



5,060



5,060Posteel Co., Ltd.

GIPI

Qatar National Bank and others


USD



12,000,000



14,011Asia Speciality Steel Co., Ltd.

The Yamaguchi Bank and others


JPY



2,700,000,000



34,096POSCON Co., Ltd.

Dalian Poscon Dongbang Automatic Co., Ltd.

STX Construction(dalian) Co,. Ltd. and others


KRW



1,725



1,725POSCO ICT Co., Ltd.

Innovalley

Industrial Bank of Korea and others


KRW



115,336



115,336POSCO Plant Engineering Co., Ltd.

Changhwan Dep. Co., Ltd.

Hana Bank


KRW



6,300



6,300Jaesan Energy Co., Ltd.

Hana Bank


KRW



6,693



6,693Halla Precision Eng. Co.,Ltd.

Shinhan Bank


KRW



5,275



5,275Samjung Packing & Aluminum Co., Ltd.

Pyungsan Si Co., Ltd.

Seoul Guarantee Insurance Company


KRW



571



571Daewoo Engineering Company

Sen Structural Engineers Co., Ltd.

Youngdong Construction Co,. Ltd. and others


KRW



142



142Kocen Co., Ltd.

Korea Power Engineering Co., Inc. and others


KRW



7,270



7,270Hyundai ENG Co., Ltd.

Samsung C&T Corporation and others


KRW



75,960



75,960DAEWOO TECH THAILAND

Korea Exchange Bank


THB



178,124,800



6,238W
984,063   W
 F-59




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    W
  Period

Amount(In millions of Korean Won)2010

W
6,0702011


3,1202012


1,4842013


3022014


297Thereafter


1W
11,274     Company

Plaintiff

Amount


Description(In millions of Korean Won)POSCO

Songdo Construction Co.,Ltd. and others Korea Development


13,054


13 lawsuits including claim for operation damages due to loss of
    the sands at beachPOSCO E&C Co., Ltd.

Financing Corporation and others


35,539


44 lawsuits including claim for surety obligations of Korea
    Development Financing CorporationPosteel Co., Ltd.

Samjin Line Co.,Ltd.


1,155


2 lawsuits including claims for damages related import and
    export businessPOSCON Co., Ltd.

Hyosung FMC


280


Litigation on subcontract service feesPOSCO ICT Co., Ltd.

Military Mutual Aid Association and others


1,191


2 lawsuits for receivablesPOS-AC Co., Ltd.

Sungjee Construction Co.,Ltd. and others


186


Litigation on consulting fee payables related the construction
    contractDaewoo Engineering Company

Korea Environment Corporation and others Beijing lantian jianzhu


1,592


5 lawsuits on claims for damagesPOSCO E&C (Beijing) Co., Ltd.

gongcheng youxiangongsi and others


850


2 lawsuits including claims of payables related the construction
    contract        F-60




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       W
    W W
  W W W
  W W W
  W W
  W W
 F-61




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     W W
  W W
  W W
  W W W
  W
  W
  W
         F-62




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
             17.
    Capital
    Stock  W
    W W
    18.
    Capital
    Surplus    2009


2008(In millions of Korean Won)Additional paid-in capital

W
463,825



463,825Revaluation surplus


3,224,770



3,224,770Others


757,437



630,488W
4,446,032



4,319,083  F-63




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    19.
    Retained
    Earnings    2009


2008(In millions of Korean Won)AppropriatedLegal reserve

W
241,202



241,202Appropriated retained earnings for business rationalization


918,300



918,300Reserve under Korean Tax Law


720,000



1,071,667Voluntary reserve


22,768,724



18,739,89524,648,226



20,971,064Unappropriated


3,287,500



4,422,182W
27,935,726



25,393,246   20.
    Dividends    Interim
    Dividends
  2009

2008

2007Dividend Ratio

Dividend

Dividend Ratio

Dividend

Dividend Ratio

Dividend(%)

Amount

(%)

Amount

(%)

Amount(In millions of Korean Won)Common shares


30


W
114,855



50


W
188,485



50



189,541   Year-end Cash
    Dividends
  2009


2008


2007Dividend Ratio


Dividend


Dividend Ratio


Dividend


Dividend Ratio


Dividend(%)


Amount


(%)


Amount


(%)


Amount(In millions of Korean Won)Common shares


130


W
500,714



150


W
574,274



150



566,552     2009

2008

2007Dividend

Dividend

Dividend

Dividend

Dividend

DividendPayout

Yield

Payout

Yield

Payout

YieldRatio (%)

Ratio (%)

Ratio (%)

Ratio (%)

Ratio (%)

Ratio (%)Common shares


19.13



1.29



17.42



2.63



21.25



1.74  F-64




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    21.
    Capital
    Adjustments    2009


2008(In millions of Korean Won)Treasury stock

W
(2,403,263
)


(2,502,014
)Others


(7,405
)


(7,067
)W
(2,410,668
)


(2,509,081
)     2009


2008Book


BookNumber of shares


value


value(In millions of Korean Won)Treasury stock


7,792,072


W
1,662,068



1,760,819Specified money in trust


2,361,885



741,195



741,19510,153,957


W
2,403,263



2,502,014   W W
  22.
    Stock
    Appreciation Rights    1st

    Grant

2nd

    Grant

3rd

    Grant

4th

    Grant

5th

    Grant

6th

    Grant

TotalBefore the modifications (*)Number of shares

498,000 shares

60,000 shares

22,000 shares

141,500 shares

218,600 shares

90,000 shares

1,030,100 sharesExercise price

W98,400 per share

W135,800 per share

W115,600 per share

W102,900 per share

W151,700 per share

W194,900 per shareAfter the modifications (*)Grant date

July 23, 2001

April 27, 2002

September 18, 2002

April 26, 2003

July 23, 2004

April 28, 2005Exercise price

W98,900 per share

W136,400 per share

W116,100 per share

W102,900 per share

W151,700 per share

W194,900 per shareNumber of shares granted

453,576 shares

55,896 shares

20,495 shares

135,897 shares

214,228 shares

90,000 shares

970,092 sharesNumber of shares cancelled

19,409 shares











19,409 sharesNumber of shares exercised

434,167 shares

55,896 shares

20,495 shares

134,106 shares

115,064 shares

62,000 shares

821,728 sharesNumber of shares outstanding







1,791 shares

99,164 shares

28,000 shares

128,955 sharesExercise period

July 24, 2003

April 28, 2004

Sept. 19, 2004

April 27, 2005

July 24, 2006

April 29, 2007 July 23, 2008

 April 27, 2009

 Sept. 18 2009

 April 26, 2010

 July 23, 2011

 April 28, 2012    (*)
    
    The Company modified the number of
    shares granted under the stock appreciation rights and the
    exercise price, as presented above
    (1st,

    2nd,

    3rd,

    4th and

    5th), in

    accordance with the resolutions of the Board of Directors on
    April 26, 2003, October 17, 2003 and October 22,
    2004. F-65




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      1st

    Grant


2nd

    Grant


3rd

    Grant


4th

    Grant


5th

    Grant


6th

    Grant


Total(In millions of Korean Won)Prior periods

W
59,945


W
10,801


W
4,843


W
29,770


W
54,680


W
25,486


W
185,525Current period






(21
)


1,228



2,126



26,559



6,208



36,100W
59,945


W
10,780


W
6,071


W
31,896


W
81,239


W
31,694


W
221,625   W W
    2009


2008


2007Weighted-





Weighted-





Weighted-Number of


Average


Number of


Average


Number of


AverageStock


Exercise


Stock


Exercise


Stock


ExerciseStock Appreciation Rights

Appreciation


Price per


Appreciation


Price per


Appreciation


Price perOutstanding

Rights


Share


Rights


Share


Rights


Share(In Korean Won)Beginning of year


198,481


W
150,770



279,472


W
145,170



460,335


W
145,238Granted






















Excercised


(69,526
)


117,169



(80,991
)


115,715



(180,863
)


145,344Canceled






















Forfeited






















Stock appreciation rights outstanding, end of year


128,955



160,402



198,481



150,770



279,472



145,170Excercisable at the year end


128,955


W
160,402



198,481


W
150,770



279,472


W
145,170Weighted-average fair value at grant date





W
143,779






W
140,206






W
116,176     Appreciation Rights OutstandingWeighted-Average


Weighted-AverageRemaining


Exercise PriceExercise Prices

Shares


Contractual Life


per Share(In Korean Won)102,900


1,791



0.32 years



102,900151,700


99,164



1.56 years



151,700194,900


28,000



2.33 years



194,900128,955



1.71 years


W
160,402   23.
    Derivative
    Financial Instruments   F-66




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Valuation Gain/Loss


Transaction Gain/LossType of

Purpose of

Financial

Income Statement


Comprehensive Income


Income StatementCompany

Transaction

Transaction

Institutions

2009


2008


2009


2008


2009


2008(In millions of Korean Won)POSCO

Currency forward

Trading

Woori Bank and others

W



W



W



W



W
14,177


W
830Embedded derivative (*)

Exchangeable Bonds

Related creditors


7,065



17,985















POSCO E&C Co., Ltd.

Currency forward

Fair value hedge

HSBC and others


10,659



(124,870
)










12,527



(53,070
)Interest Swap

Cash flow hedge

Calyon Bank and others


(28,045
)


72,182







(4,634
)


(4,322
)


1,718Valuation of Fixed contract

Fair market value hedge




(34,328
)


177,940















Posteel Co., Ltd.

Currency forward

Trading

SC Korea First Bank


23















(41
)


2,659Pohang Coated

Currency forward

Trading

Shinhan BankSteel Co., Ltd.

Currency Option

Trading

SC Korea First






















(3,325
)Bank and others


5,145



(138,472
)










(6,935
)


(19,228
)Currency Swap

Trading

SC Korea First Bank






10,451















9,570and othersNon-derivatives

Cash flow hedge

Citi Bank


















2,150



POSCO Plant

Currency forward

Trading

Korea ExchangeEngineering





Bank and others






(2,482
)










(1,270
)


(3,606
)Posco Specialty Steel Co., Ltd.

Currency forward

Trading

SC Korea First Bank


6



(2
)










211



Currency Swap

Cash flow hedge

SC Korea First Bank






















9,186Samjung Packing & Aluminum Co., Ltd.

Currency future

Trading

Woori Bank and others






215











969



POSCO Power Corp.

Currency forward

Trading

Nong Hyup Bank and others


5,251



















(1,365
)Currency Swap

Cash flow hedge

Calyon Bank and others


(18,670
)


51,800







(6,166
)






Daewoo engineering Company

Currency forward

Trading

Citi Bank


354



(5,886
)










(7,284
)


(5,385
)POSCO Austrailia Pty. Ltd.

Derivatives

Trading

MML


9,295



(584
)














POS-MPC S.A. de C.V.

Currency future

Fair value hedge

Standard Chartered






















(149
)W
(43,245
)

W
58,277


W



W
(10,800
)

W
10,182


W
(62,165
)    (*)
    
    The Company applied derivative
    accounting as exchangeable right to investors related to
    exchangeable bond issued in August 19, 2008 meets certain
    criteria of embedded derivatives. Fair values of exchangeable
    right are W2,133 million (JPY168,994,000)
    and W9,199 million (JPY659,937,500) as of
    December 31, 2009 and 2008, respectively. This exchangeable
    right is included in other long-term liabilities. (note 15) F-67




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    24.
    Selling and
    Administrative Expenses    2009


2008


2007(In millions of Korean Won)Transportation and storage

W
648,345


W
781,425


W
619,499Salaries


280,529



256,959



218,206Welfare


142,429



159,732



123,584Depreciation and amortization


123,525



106,271



87,257Fees and charges


158,158



124,123



97,100Advertising


94,696



98,780



103,979Research and development expenses


84,382



94,571



52,846Severance benefits


27,482



52,433



44,779Sales commissions


80,159



83,057



54,955Travel


24,827



30,537



25,870Rent


30,929



24,204



19,389Repairs


20,439



13,135



12,693Training


18,104



24,397



20,094Office supplies


8,378



8,482



9,053Provision for doubtful accounts


42,020



24,033



62,026Meetings


11,012



11,612



10,240Taxes and public dues


24,500



29,595



29,519Vehicle expenses


5,627



4,626



3,947Membership fees


8,417



8,312



8,593Sales promotions


8,186



7,638



5,651Entertainment


11,393



12,542



10,561Others


95,877



49,904



165,376W
1,949,414


W
2,006,368


W
1,785,217   25.
    Income
    Taxes    2009


2008


2007(In millions of Korean Won)Current income taxes

W
576,303


W
2,181,238


W
1,341,252Deferred income taxes


475,187



(712,233
)


294,418Carryforward income tax


(309,942
)


(9,976
)


2,714Items charged directly to shareholders equity


(229,701
)


303,060



(304,580
)Tax effect due to consolidation entries


24,149



(28,106
)


(59,578
)W
535,996


W
1,733,983


W
1,274,226  F-68




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      2009


2008


2007(In millions of Korean Won)Net income before income tax expense

W
3,739,275


W
6,095,639


W
4,898,931Income tax expense computed at statutory


904,905



1,676,301



1,347,206Adjustments:Tax credit


(370,958
)


(167,962
)


(159,816
)Effect of changes in tax rate


14,074



74,493



Tax refunds
    (*1)


(140,442
)






Others, net
    (*2)


128,417



151,151



86,836Income tax expense

W
535,996


W
1,733,983


W
1,274,226Effective rate (%)


14.3



28.4



26.0    (*1)
    
    Refunds of additional tax payments
    made in 2005 in accordance with a decision of Tax Tribunal that
    was finalized in 2009.(*2)
    
    Consists of deferred tax assets,
    which have not been recognized as realization is not considered
    probable, of W49,995 million and foreign
    tax rate differential of W12,896 million
    for the year ended December 31, 2009 and deferred tax
    assets, which have not been recognized, as realization is not
    considered probable, of W119,632 million
    for the year ended December 31, 2008. F-69




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Temporary Differences


Deferred Income TaxDec. 31, 2008


Inc. (dec.)


Dec. 31, 2009


Dec. 31, 2008


Inc. (dec.)


Dec. 31, 2009(In millions of Korean Won)Deductible (taxable) temporary differences:Reserve for special repairs

W
(281,825
)

W
107,835


W
(173,990
)

W
(62,422
)

W
22,922


W
(39,500
)Allowance for doubtful accounts


292,571



(124,231
)


168,340



63,786



(24,261
)


39,525Reserve for technology developments


(9,464
)


(826,236
)


(835,700
)


(2,150
)


(182,109
)


(184,259
)Dividend income from related companies


431,497



59,545



491,042



94,929



13,100



108,029Depreciation expense


(274,668
)


(90,165
)


(364,833
)


(60,194
)


(23,064
)


(83,258
)Valuation of equity method investments


(1,376,045
)


(430,446
)


(1,806,491
)


(210,804
)


(96,584
)


(307,388
)Prepaid expenses


69,227



4,769



73,996



16,289



1,593



17,882Impairment loss on property, plant and equipment


126,027



(5,160
)


120,867



42,667



(31,358
)


11,309Gain/Loss on foreign currency


634,028



(395,179
)


238,849



140,283



(88,776
)


51,507Accrued severance benefits


175,238



40,704



215,942



39,376



9,244



48,620Group severance insurance deposits


(114,741
)


(74,998
)


(189,739
)


(25,921
)


(17,039
)


(42,960
)Provision for construction losses


36,243



22,037



58,280



8,112



5,992



14,104Provision for construction warranty


26,595



6,575



33,170



5,852



1,612



7,464Appropriated retained earnings for technological development


(2,000
)


1,000



(1,000
)


(462
)


220



(242
)Accrued income


68



(3,895
)


(3,827
)


15



(665
)


(650
)Accrued on valuation of Inventories


12,121



22,391



34,512



2,944



5,255



8,199Others


275,369



367,309



642,678



32,248



114,418



146,666W
20,241


W
(1,318,145
)

W
(1,297,904
)

W
84,548


W
(289,500
)

W
(204,952
)Current and deferred income taxes recognized directly to equity:Capital adjustment arising from equity method investments

W
(721,748
)

W
(7,579
)

W
(729,327
)

W
(159,500
)

W
(1,013
)

W
(160,513
)Gain on valuation of
    available-for-sale
    securities


(340,226
)


(680,246
)


(1,020,472
)


(74,222
)


(164,351
)


(238,573
)Loss on valuation of
    available-for-sale
    securities


962,542



(80,000
)


882,542



212,140



(17,124
)


195,016Others


14,618



(14,618
)






3,199



(3,199
)


W
(84,814
)

W
(782,443
)

W
(867,257
)

W
(18,383
)

W
(185,687
)

W
(204,070
)Deferred tax from tax credit and others:Tax credit













W
16,471


W
272,079


W
288,550Deficit carryforwards














7,813



37,863



45,676W
24,284


W
309,942


W
334,226Tax effect on elimination of intercompany profit














265,789



(24,149
)


241,640W
356,238


W
(189,394
)

W
166,844   F-70




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Temporary Differences


Deferred Income TaxDec. 31, 2007


Inc. (dec.)


Dec. 31, 2008


Dec. 31, 2007


Inc. (dec.)


Dec. 31, 2008(In millions of Korean Won)Deductible (taxable) temporary differences:Reserve for special repairs

W
(301,751
)

W
19,926


W
(281,825
)

W
(82,982
)

W
20,560


W
(62,422
)Allowance for doubtful accounts


292,763



(192
)


292,571



80,532



(16,746
)


63,786Reserve for technology developments


(1,101,734
)


1,092,270



(9,464
)


(302,976
)


300,826



(2,150
)Dividend income from related companies


366,233



65,264



431,497



100,714



(5,785
)


94,929Depreciation expense


(147,993
)


(126,675
)


(274,668
)


(40,115
)


(20,079
)


(60,194
)Valuation of equity method investments


(1,296,880
)


(79,165
)


(1,376,045
)


(274,370
)


63,566



(210,804
)Prepaid expenses


34,431



34,796



69,227



9,467



6,822



16,289Impairment loss on property, plant and equipment


420,085



(294,058
)


126,027



121,483



(78,816
)


42,667Gain/Loss on foreign currency






634,028



634,028







140,283



140,283Accrued severance benefits


161,926



13,312



175,238



44,574



(5,198
)


39,376Group severance insurance deposits


(44,275
)


(70,466
)


(114,741
)


(12,175
)


(13,746
)


(25,921
)Provision for construction losses


21,227



15,016



36,243



5,836



2,276



8,112Provision for construction warranty


21,065



5,530



26,595



5,794



58



5,852Appropriated Retained Earnings for Technological Development


(2,833
)


833



(2,000
)


(780
)


318



(462
)Accrued income


(8,328
)


8,396



68



(2,313
)


2,328



15Accrued on valuation of Inventories


695



11,426



12,121



190



2,754



2,944Others


293,860



(18,491
)


275,369



73,419



(41,171
)


32,248W
(1,291,509
)

W
1,311,750


W
20,241


W
(273,702
)

W
358,250


W
84,548Current and deferred income taxes recognized directly to equity:Capital adjustment arising from equity method investments

W
(272,948
)

W
(448,800
)

W
(721,748
)

W
(75,060
)

W
(84,440
)

W
(159,500
)Gain on valuation of
    available-for-sale
    securities


(1,315,772
)


975,546



(340,226
)


(364,373
)


290,151



(74,222
)Loss on valuation of
    available-for-sale
    securities


239,451



723,091



962,542



65,891



146,249



212,140Others


4,276



10,342



14,618



1,176



2,023



3,199W
(1,344,993
)

W
1,260,179


W
(84,814
)

W
(372,366
)

W
353,983


W
(18,383
)Deferred tax from tax credit and others:













W
19,949


W
(3,478
)

W
16,471Tax credit














2,526



5,287



7,813Deficit carryforwards














(8,167
)


8,167



W
14,308


W
9,976


W
24,284Tax effect on elimination of intercompany profit














237,683



28,106



265,789W
(394,077
)

W
750,315


W
356,238  F-71




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    26.
    Earnings Per
    Share    2009


2008


2007(In millions of Korean Won,except per share information)Net income attributable to controlling interest

W
3,218,425


W
4,378,751


W
3,558,660Weighted-average number of common shares outstanding
    (*)


76,661,240



75,493,523



75,952,869Basic and diluted earnings per share

W
41,982


W
58,002


W
46,854    (*)
    
    Basic and diluted earnings per
    share is computed by dividing net income attributable to the
    shareholders of POSCOs common stock, by the
    weighted-average number of common shares outstanding for the
    years ended December 31, 2009, 2008 and 2007 :  2009


2008


2007Total number of common shares issued


87,186,835



87,186,835



87,186,835Weighted-average number of treasury shares


(10,525,595
)


(11,693,312
)


(11,233,966
)Weighted-average number of common shares outstanding


76,661,240



75,493,523



75,952,869   27.
    Comprehensive
    Income    2009


2008


2007(In millions of Korean Won)Net income

W
3,242,311


W
4,350,104


W
3,677,964Other comprehensive incomeGain (loss) on valuation of
    available-for-sale
    securities, net


776,060



(1,714,939
)


690,805Less: tax effect


(181,471
)


427,512



(192,094
)Changes in capital adjustments arising from equity method
    accounted investments


34,077



48,139



27,243Less: tax effect


(22,983
)


(11,903
)


(34,698
)Foreign currency translation adjustments


(165,124
)


576,489



99,408Less: tax effect


21,961



(75,291
)


(11,451
)Gain on valuation of derivative instruments


14,541



(9,175
)


(5,365
)Less: tax effect


(3,199
)


1,868



1,331473,862



(757,300
)


575,179Comprehensive income

W
3,716,173


W
3,592,804


W
4,253,143Controlling interest

W
3,695,881


W
3,571,832


W
4,118,011Non controlling interest

W
20,292


W
20,972


W
135,132  F-72




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    28.
    Assets and
    Liabilities Denominated in Foreign Currencies    2009


2008Won







WonForeign Currency
    (*2)


Equivalent


Foreign Currency
    (*2)


Equivalent(In millions of Korean Won, other currencies in thousands)AssetsCash and cash equivalents and financial instruments

USD


362,217


W
422,925


USD


129,977


W
163,447JPY


502



6


JPY


574,721



8,011EUR


882



1,477


EUR


2,313



4,109Foreign
     subsidiaries


723,876



845,198


Foreign
     subsidiaries


728,786



916,448Trade accounts and

USD


448,193



523,310


USD


370,388



465,763notes receivable

JPY


5,552,183



70,114


JPY


6,855,809



95,562EUR


38,941



65,198


EUR


14,802



26,292Foreign
     subsidiaries


1,075,209



1,255,413


Foreign
     subsidiaries


807,654



1,015,625Other accounts and

USD


14,023



16,373


USD


5,740



7,218notes receivable

JPY


8,879



112


JPY


8,879



124Foreign
     subsidiaries


82,694



96,552


Foreign
     subsidiaries


101,680



127,863Short-term and long-term loans receivable

USD


849



991


USD






Foreign
     subsidiaries


481,875



562,637


Foreign
     subsidiaries


331,900



417,365Long-term trade accounts and notes receivable

Foreign
     subsidiaries


71



82


Foreign
     subsidiaries


71



89Investment
    securities (*1)

Foreign
     subsidiaries


405,168



473,075


Foreign
     subsidiaries


96,983



121,956Guarantee deposits

USD


361



422


USD


553



695EUR


135



226


EUR


129



229Foreign
     subsidiaries


6,526



7,619


Foreign
     subsidiaries


7,355



9,249W
4,341,730








W
3,380,045    (*1)
    
    Presented at face value.(*2)
    
    Currencies other than US dollars,
    Japanese yen, and Euros are converted into US dollars. The
    amounts of foreign subsidiaries are converted into US dollars.  F-73




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    2009


2008Won







WonForeign Currency
    (*2)


Equivalent


Foreign Currency
    (*2)


Equivalent(In millions of Korean Won, other currencies in thousands)LiabilitiesTrade accounts and notes payable

USD


357,303


W
417,187


USD


432,531


W
543,907JPY


1,972,372



24,908


JPY


5,308,193



73,990EUR


40,581



67,944


EUR


3,455



6,136Foreign
     subsidiaries


883,962



1,032,114


Foreign
     subsidiaries


439,043



552,097Other accounts and notes payable

USD


45,841



53,524


USD


37,652



47,347JPY


420,914



5,315


JPY


2,861,507



39,886EUR


3,396



5,686


EUR


9,256



16,441Foreign
     subsidiaries


44,249



51,666


Foreign
     subsidiaries


76,183



95,800Accrued expenses

USD


1,479



1,727


USD


1,573



1,977JPY


137,450



1,736


JPY


2,322



32Foreign
     subsidiaries


29,795



34,789


Foreign
     subsidiaries


26,472



33,289Short-term borrowings

USD


435,784



508,821


USD


304,956



383,482Foreign
     subsidiaries


1,984,096



2,316,630


Foreign
     subsidiaries


1,926,753



2,422,892Withholdings

USD


39,148



45,709


USD


19,349



24,331JPY


372,553



4,705


JPY


161,870



2,256EUR


11,827



19,802


EUR


5,179



9,199Foreign
     subsidiaries


1,614



1,885


Foreign
     subsidiaries


3,688



4,638Debentures (*1)

USD


1,340,000



1,564,584


USD


640,000



804,800JPY


182,592,205



2,305,811


JPY


182,592,205



2,545,134Foreign
     subsidiaries









Foreign
     subsidiaries


15,776



19,838Loans from foreign

USD


64,550



75,369


USD


36,134



45,439financial institutions

JPY


285,686



3,608


JPY


192,000



2,676Foreign
     subsidiaries


1,103,630



1,288,598


Foreign
     subsidiaries


923,439



1,161,224Foreign currency loans

EUR


3,964



6,637


EUR


4,601



8,172W
9,838,755








W
8,844,983     (*1)
    
    Presented at face value.(*2)
    
    Currencies other than US dollars,
    Japanese yen, and Euros are converted into US dollars. The
    amounts of foreign subsidiaries are converted into US dollars. F-74




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    29.
    Related Party
    Transactions    Domestic (30)
    
    POSCO E&C Co., Ltd., Posteel
    Co., Ltd., POSCON Co., Ltd., POSCO Coated & Color
    Steel Co., Ltd., POSCO Plant Engineering Co.,Ltd., POSCO ICT
    Co., Ltd., POSCO Research Institute, Seung Kwang Co., Ltd.,
    POSCO Architects & Consultants Co., Ltd., POSCO
    Specialty Steel Co., Ltd., POSCO Machinery Co., Ltd., POSTECH
    Venture Capital Corp, POSTECH 2006 Energy Fund, POSCO
    Refractories & Environment Co., Ltd. (POSREC), POSCO
    Terminal Co., Ltd., POSMATE Co., Ltd., Samjung
    Packing & Aluminum Co., Ltd., POSCO Power Corp., PHP
    Co., Ltd., PNR Co., Ltd., Megaasset Co., Ltd., Daewoo
    engineering Company, Metapolis Co., Ltd., POSCORE Co., Ltd.,
    PoHang Fuel Cell Co., Ltd., POSCO-AST Co., Ltd., DaiMyung TMS
    Co., Ltd., POS-HiMetal Co., Ltd., POSCO E&E, Universal
    Studio Resort Development Co., Ltd.Foreign (50)
    
    POSCO America Corporation, POSCO
    Australia Pty. Ltd., POSCO Canada Limited, POSCAN Elkview Coal
    Ltd., POSCO Asia Co., Ltd., VSC POSCO Steel Corp., Dalian
    POSCO-CFM Coated Steel Co., Ltd., POSCO-CTPC Co., Ltd.,
    POSCO-JKPC Co., Ltd., International Business Center Corporation,
    POSLILAMA E&C Co., Ltd., Zhangjiagang Pohang Stainless
    Steel Co., Ltd., Guangdong Pohang Coated Steel Co., Ltd.,
    POSCO(Thailand) Co.,Ltd., Myanmar POSCO Steel Co., Ltd.,
    Zhangjiagang Posha Steel Port Co., Ltd., POSCO-JOPC Co., Ltd.,
    POSCO Investment Co., Ltd., POSCO-MKPC SDN BHD., Qingdao Pohang
    Stainless Steel Co., Ltd., POSCO (Suzhou) Automotive Processing
    Center Co.,Ltd., POSEC-Hawaii Inc., POS-Qingdao Coil Center Co.,
    Ltd.,POS-ORE Pty. Ltd., POSCO-China
    Holding Corp., POSCO-Japan Co., Ltd., POSCO E&C
    (Zhangjiagang) Engineering & Consulting Co., Ltd.,
    POS-CD Pty. Ltd., POS-GC Pty. Ltd., POSCO-India Private. Ltd.,
    POS-India Pune Steel Processing Centre Pvt. Ltd., POSCO-JNPC
    Co., Ltd., POSCO-Foshan Steel Processing Centre Pvt. Ltd., POSCO
    E&C (Beijing) Co., Ltd., POSCO-MPC S.A. de C.V.,
    Zhanjiagang Pohang Port Co., Ltd., POSCO-Vietnam Co., Ltd.,
    POSCO Mexico Co., Ltd., POSCO-India Delhi Steel Processing
    Centre Pvt. Ltd., POSCO (Chongqing) Automotive Processing Center
    Co., Ltd., POS-NP Pty. Ltd., POSCO Vietnam Processing Center
    Co., Ltd., Suzhou pos-core Technology Co., Ltd., POSCO-JYPC Co.,
    Ltd., POSCO-Malaysia SDN. BHD., POS-Minerals Corporation, POSCO
    (Wuhu) Automotive Processing Center Co., Ltd., &TV
    Communications, POSCO-Phillippine Manila Processing Center INC.,
    POSCO VST Co., Ltd. F-75




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Sales and Others
    (*1)


Purchases and Others
    (*1)2009


2008


2007


2009


2008


2007(In millions of Korean Won)POSCO E&C Co., Ltd.

W
4,605


W
13,626


W
20,000


W
2,546,163


W
1,121,335


W
984,030Posteel Co., Ltd.


1,167,877



1,455,354



1,072,032



158,260



244,908



220,459POSCON Co., Ltd.


106



105



120



278,407



229,119



244,365POSCO Coated Steel Co., Ltd.


494,938



609,377



436,206



1,490



1,916



1,327POSCO Plant Engineering Co.,Ltd. (formerly, POSCO
    Machinery & Engineering Co., Ltd.)


1,509



4,309



157



200,772



158,275



152,844POSCO ICT Co.,Ltd. (formerly, POSDATA Co., Ltd.)


1,015



1,685



4,516



190,127



187,186



173,660POSCO Machinery Co., Ltd.


8,843



15,302



3,480



79,801



79,549



114,378POSCO Refractories &  Environment Co., Ltd. (POSREC)


87,121



57,189



250



475,269



350,153



213,753Samjung Packing & Aluminum Co., Ltd.


18,945



25,115



16,985



203,179



268,044



233,125POSCORE Co., Ltd.


130,964



131,497



39,002



39



176



POSCOAST Co., Ltd. (formerly, Taihan ST Co., Ltd.).


83,245











20,938







POSCO America Corporation (POSAM)


169,274



168,663



130,150







93



686POSCO Canada Ltd. (POSCAN)






40



40



84,192



289,015



71,120POSCO Asia Co., Ltd. (POA)


1,093,589



951,867



600,059



76,004



215,318



121,098POSCO (Thiland) Co., Ltd.


70,129



91,077



47,248



5







Qingdao Pohang Stainless Steel Co., Ltd.


185,002



93,232



82,581











POSCO  Japan Co., Ltd.


690,289



1,191,222



831,711



84,112



23,233



50,939POS-India Pune Steel Processing Centre Pvt. Ltd.


110,901



66,931



53,981











9POSCO Vietnam Co., Ltd.


117,296



1,026















Others


867,508



347,681



80,231



123,096



125,627



168,596W
5,303,156


W
5,225,298


W
3,418,749


W
4,521,854


W
3,293,947


W
2,750,389   F-76




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Receivables
    (*2)


Payables
    (*2)2009


2008


2009


2008(In millions of Korean Won)POSCO E&C Co., Ltd.

W
142,813


W
396,743


W
536,857


W
249,792Posteel Co., Ltd.


114,697



220,360



3,494



21,651POSCON Co., Ltd.


30,071



62,895



65,126



62,943POSCO Coated Steel Co., Ltd.


109,616



48,785



199



71POSCO Plant Engineering Co.,Ltd. (formerly, POSCO
    Machinery & Engineering Co., Ltd.)


2,959



18,770



44,669



26,054POSCO ICT Co.,Ltd. (formerly, POSDATA Co., Ltd.)


10,387



1,103



46,060



27,322POSCO Machinery Co., Ltd.


1,724



5,032



15,315



16,401POSCO Refractories & Environment Co., Ltd. (POSREC)


6,879



19,064



68,529



57,788Samjung Packing & Aluminum Co., Ltd.


1,472



2,578



24,942



23,678POSCORE Co., Ltd.


11,678



20,330



24



POSCOAST Co., Ltd. (formerly, Taihan ST Co., Ltd.).


17,492







7,572



POSCO America Corporation (POSAM)


6,163



2,818







POSCO Canada Ltd. (POSCAN)






20







POSCO Asia Co., Ltd. (POA)


40,548



27,224



1,170



2,978POSCO (Thiland) Co., Ltd.


19,835



32,415







Qingdao Pohang Stainless Steel Co., Ltd.


24,205



12,904







POSCO  Japan Co., Ltd.


25,637



21,040



8,949



1,104POS-India Pune Steel Processing Centre Pvt. Ltd.


12,356



3,831







POSCO Vietnam Co., Ltd.


95,518



1,024







Others


43,597



29,520



19,237



21,728W
717,647


W
926,456


W
842,143


W
511,510     Sales and Others
    (*1)


Purchases and Others
    (*1)2009


2008


2007


2009


2008


2007(In millions of Korean Won)eNtoB Corporation

W



W



W



W
225,439


W
288,604


W
216,920KOBRASCO






4,115







2,857



63,968



72,514Poschrome (Proprietary) Limited






98



35



53,711



91,467



41,735POSVINA Co., Ltd.


5,973



12,550



5,056











USS  POSCO Industries (UPI)


241,921



428,092



245,814



58







Guangdong Xingpu Steel Center Co., Ltd.






10,011



3,094











SNNC Co., Ltd.


1,437



2,245



343



368,742



33,867



Others






1







161







W
249,331


W
457,112


W
254,342


W
650,968


W
477,906


W
331,169  F-77




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Receivables
    (*2)


Payables
    (*2)2009


2008


2009


2008(In millions of Korean Won)eNtoB Corporation

W



W



W
6,561


W
6,016KOBRASCO






4,115







Poschrome (Proprietary) Limited


176











POSVINA










33,962



USS  POSCO Industries (UPI)


39,052











Guangdong Xingpu Steel Conter Co., Ltd.






1,825







SNNC Co., Ltd.


1,974



19



26,963



1,926Others










78



W
41,202


W
5,959


W
67,564


W
7,942    (*1)
    
    Sales and others include sales,
    non-operating income and others; purchases and others include
    purchases, acquisition of property, plant and equipment,
    overhead expenses and others.(*2)
    
    Receivables include trade accounts
    and notes receivable, other accounts receivable and others;
    payables include trade accounts payable, other accounts payable
    and others. F-78




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       Sales and


Purchase andOthers (*1)


Others (*1)


Receivables (*2)


Payables (*2)(In millions of Korean Won)SubsidiariesPOSCO

W
5,303,156


W
4,521,854


W
717,647


W
842,143POSCO E&C Co., Ltd.


3,634,705



332,882



762,020



278,340Posteel Co., Ltd.


365,946



1,312,127



57,227



126,282POSCON Co., Ltd.


342,839



9,537



96,467



41,300POSCO Coated Steel Co., Ltd.


84,296



504,020



5,979



111,075POSCO Plant Engineering Co.,Ltd. (formerly, POSCO
    Machinery & Engineering Co., Ltd.)


226,438



7,296



51,990



9,233POSCO ICT Co.,Ltd. (formerly, POSDATA Co., Ltd.)


245,956



5,963



60,041



12,196POSCO Machinery Co., Ltd.


93,257



12,082



16,050



2,494Mtapolis Co.,Ltd.






153,390







24,763Samjung Packing & Aluminum Co., Ltd.


205,443



19,356



24,942



1,625POSCO Power Corporation


25,609



566,365



37,654



141,486PHP Co.,Ltd.






237,909



618



12,549POSCORE Co., Ltd.


5,178



134,986







9,197POSCO America Corporation (POSAM)


11,154



187,075



1,950



10,919POSCO Canada Ltd. (POSCAN)


84,192



90







61POSCO Asia Co., Ltd. (POA)


534,184



1,138,943



94,705



41,055POSCO-CTPC Co., Ltd.


46



153,909







37,351Zhangjiagang Pohang Stainless Steel Co., Ltd.


380,268



27,011



62,434



1,625POSCO Thailand Bangkok Processing Center Co., Ltd.


5



107,936



27



39,413POSCO Investment Co., Ltd.


1,885







241,371



Qingdao Pohang Stainless Steel Co., Ltd.


169,883



330,015



23,452



64,432POSCO (Suzhou) Automotive Processing Center Co., Ltd.


1,532



261,279



34



44,801POS-Qingdao Coil Center Co., Ltd.






136,989



45,631



POSCO  Japan Co., Ltd.


226,753



722,445



105,527



28,323POS-India Pune Steel Processing Centre Pvt Ltd.


983



114,210



63



POSCO-JNPC Co., Ltd.


8,939



103,412







24,515POSCO-Foshan Steel Processing Center Pvt. Ltd.


76



459,444



842



82,278POSCO-MPC S.A. de C.V.


544



109,537







1,305POSCO-Vietnam Co.,Ltd.


25,068



196,210







93POSCO-Mexico Co., Ltd.


6,501



133,972



3,600



108,666Others


1,005,836



990,428



243,594



556,3452009

W
12,990,672


W
12,990,672


W
2,653,865


W
2,653,8652008


11,440,682



11,440,682



2,458,650



2,458,6502007


8,153,327



8,153,327



1,125,494



1,125,494    (*1)
    Sales and others include sales, non-operating income and others;
    purchases and others include purchases, acquisition of property,
    plant and equipment, overhead expenses and others.(*2)
    Receivables include trade accounts and notes receivable, other
    accounts receivable and others; payables include trade accounts
    payable, other accounts payable and others. F-79




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       2009


2008(In millions of Korean Won)Salaries

W
43,608



46,142Severance benefits


15,216



11,481Management achievement awards and others


34,455



37,347Total

W
93,279



94,970   W W
  30.
    Segment and
    Geographic Information     F-80




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean Won)SalesTotal sales

W
34,503,317



7,760,374



4,120,088



3,420,139



(12,948,917
)

W
36,855,001Inter-company sales


(6,090,338
)


(3,852,222
)


(1,137,776
)


(1,868,581
)


12,948,917



Net sales

W
28,412,979



3,908,152



2,982,312



1,551,558






W
36,855,001Operating income

W
3,217,117



345,647



32,795



268,027



4,576


W
3,868,162Inventories

W
4,208,446



718,815



156,083



157,836



(88,341
)

W
5,152,839Investments (non-current)


10,319,818



888,745



594,174



1,241,058



(6,572,796
)


6,470,999Equity method investments


5,712,306



496,807



536,999



546,857



(6,465,386
)


827,583Property, plant and equipment


19,694,065



1,143,885



220,729



2,087,110



(1,306,004
)


21,839,785Intangible
    assets (*1)


198,763



20,042



1,646



101,972



307,546



629,969Goodwill


46,968



198,580







26,544







272,092Total Assets

W
46,249,396



6,080,744



1,808,745



5,539,673



(9,366,810
)

W
50,311,748Depreciation and
    amortization (*2)

W
2,368,575



25,363



5,564



205,800



(52,220
)

W
2,553,082Capital expenditure


4,802,933



207,588



1,435



830,126



564,421



6,406,503Stock compensation expenses


36,100



















36,100     Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean Won)SalesTotal sales

W
38,448,113



5,528,105



5,656,959



3,749,459



(11,640,000
)

W
41,742,636Inter-company sales


(6,547,017
)


(1,855,696
)


(1,392,356
)


(1,844,931
)


11,640,000



Net sales

W
31,901,096



3,672,409



4,264,603



1,904,528






W
41,742,636Operating income

W
6,628,789



283,973



49,117



488,078



(276,028
)

W
7,173,929Inventories

W
7,569,508



847,481



323,164



219,574



(298,006
)

W
8,661,721Investments (non-current)


8,722,560



1,067,694



603,289



1,027,891



(6,143,269
)


5,278,165Equity method investments


5,094,239



659,363



537,533



688,493



(6,147,092
)


832,536Property, plant and equipment


17,393,603



614,477



231,164



1,637,042



(1,807,187
)


18,069,099Intangible assets
    (*1)


223,177



21,825



957



157,206



320,602



723,767Goodwill


13,698



209,461







47,683







270,842Total Assets

W
42,884,329



6,324,810



1,976,797



4,916,085



(9,140,739
)

W
46,961,282Depreciation and amortization
    (*2)

W
2,171,387



17,710



5,660



150,177



35,124


W
2,380,058Capital expenditure


3,922,096



289,775



88,405



320,417



(527,380
)


4,093,313Stock compensation expenses






















  F-81




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean Won)SalesTotal sales

W
29,184,546



3,801,882



4,018,003



2,715,242



(8,111,932
)

W
31,607,741Inter-company sales


(4,757,641
)


(1,092,309
)


(874,520
)


(1,387,462
)


8,111,932



Net sales

W
24,426,905



2,709,573



3,143,483



1,327,780






W
31,607,741Operating income

W
4,534,201



284,632



31,068



187,613



(117,652
)

W
4,919,862Inventories

W
4,258,206



454,338



126,182



145,708



(82,418
)

W
4,902,016Investments (non-current)


8,205,751



565,983



333,688



775,105



(4,641,501
)


5,239,026Equity method investments


4,344,174



229,022



286,404



382,443



(4,637,431
)


604,612Property, plant and equipment


15,110,911



142,157



198,856



1,341,015



(1,211,174
)


15,581,765Intangible assets
    (*1)


246,932



25,152



897



166,992



130,806



570,779Goodwill














75,556







75,556Total Assets

W
34,634,495



3,246,818



1,195,492



3,530,588



(6,332,630
)

W
36,274,763Depreciation and amortization
    (*2)

W
1,940,677



16,527



5,591



140,059



24,578


W
2,127,432Capital expenditure


2,787,662



79,961



919



241,643



(217,938
)


2,892,247Stock compensation expenses


123,881



















123,881    (*1)
    Includes goodwill.(*2)
    Includes depreciation expense of idle property.    2009


2008


2007(In millions of Korean Won)Total of segment results

W
3,863,586



7,449,957



5,037,514Consolidation adjustment
    (*1)


4,576



(276,028
)


(117,652
)Non-operating expense, net
    (*2)


(128,887
)


(1,078,290
)


(20,931
)Net income before income tax expenses

W
3,739,275



6,095,639



4,898,931    (*1)
    Consolidated adjustments consist primarily of the elimination of
    intersegment transactions.(*2)
    See the Consolidated Statements of Income for details of
    non-operating income and expense items. F-82




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       Sales
    (*1)


Property, Plant and Equipment2009


2008


2007


2009


2008(In millions of Korean Won)Customer LocationKorea

W
22,528,633



26,886,852



19,969,637


W
19,384,333



15,487,750Japan


1,387,095



2,043,819



1,741,972



266,515



252,277China


5,049,354



4,875,784



4,503,900



1,030,625



1,350,731Asia/Pacific, excluding Japan and China


2,898,798



3,138,884



2,041,587



687,234



665,155North America


751,983



800,817



732,002



18,984



19,703Others


4,239,138



3,996,480



2,618,644



452,094



293,483W
36,855,001



41,742,636



31,607,742


W
21,839,785



18,069,099    (*1)
    Represents revenues, net of consolidation adjustments, incurred
    based on customers locations instead of the Company and
    subsidiaries locations.    Non-Financial Institution


Financial Institution2009


2008


2009


2008(In millions of Korean Won)AssetsCurrent assets

W
20,233,636



21,819,672


W
400,514



377,961Non-Current assets


29,535,124



24,588,267



142,474



175,382Investment assets


6,332,198



5,106,522



138,801



171,643Property, plant and equipment


21,839,775



18,069,079



10



20Intangible assets


629,918



723,724



51



43Other non-current assets


733,233



688,942



3,612



3,676Total Assets


49,768,760



46,407,939



542,988



553,343LiabilitiesCurrent liabilities


8,878,677



10,609,425



396,141



399,967Non-Current liabilities


9,371,979



7,607,183



637



502Total Liabilities

W
18,250,656



18,216,608


W
396,778



400,469  F-83




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Non-financial Institution


Financial Institution2009


2008


2009


2008(In millions of Korean Won)Sales

W
36,836,780



41,727,093


W
18,221



15,543Cost of goods sold


31,032,184



32,555,721



5,241



6,618Selling and administrative expenses


1,944,829



1,999,701



4,585



6,667Operating income


3,859,767



7,171,671



8,395



2,258Non-operating income


2,361,475



2,368,851



918



1,025Non-operating expenses


2,481,060



3,441,729



10,220



6,437Net income before income tax expense


3,740,182



6,098,793



(907
)


(3,154
)Income tax expense


536,068



1,734,095



(72
)


(112
)Net income of Subsidiaries before purchasing


(39,032
)


11,552







Net income

W
3,243,146



4,353,146


W
(835
)


(3,042
)Controlling interest

W
3,219,260



4,381,793


W
(835
)


(3,042
)Non controlling interest

W
23,886



(28,647
)

W




   31.
    Significant
    Differences between Korean GAAP and U.S. GAAP  Reconciliation to
    U.S. Generally Accepted Accounting Principles
     F-84




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
     (a) Reconciliation
    of Net Income from Korean GAAP to U.S. GAAP
  AdjustmentsBefore Deferred


Deferred Income


Net AdjustmentsIncome Tax


Tax Effect


to Net Income(In millions of Korean Won, except share information)For the year ended December 31, 2009Net income attributable to controlling interest under Korean GAAP









W
3,218,425Net income attributable to non controlling interest under Korean
    GAAP










23,886Net income under Korean GAAP










3,242,311Adjustments:Fixed asset revaluation

W
10,361


W
(2,280
)

W
8,081Capitalized costs


131,843



(29,005
)


102,838Investment securities


210,762



(46,368
)


164,394Goodwill


56,433



(12,414
)


44,019Derivatives


90,846



(22,446
)


68,400Others, net


576



(128
)


448W
500,821


W
(112,641
)

W
388,180Tax effects resulting from intercompany transactions










(21,680
)W
366,500Net income in accordance with U.S. GAAP









W
3,608,811Net income attributable to non controlling interest in
    accordance with U.S. GAAP










41,462Net income attributable to controlling interest in accordance
    with U.S. GAAP










3,567,349Basic and diluted earnings per share in accordance with U.S. GAAP









W
46,534Weighted-average shares outstanding










76,661,240   F-85




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    AdjustmentsBefore Deferred


Deferred Income


Net AdjustmentsIncome Tax


Tax Effect


to Net Income(In millions of Korean Won, except share information)For the year ended December 31, 2008Net income attributable to controlling interest under Korean GAAP









W
4,378,751Net income attributable to non controlling interest under Korean
    GAAP










(28,647
)Net income under Korean GAAP










4,350,104Adjustments:Fixed asset revaluation

W
12,046


W
(2,650
)

W
9,396Capitalized costs


29,517



(6,494
)


23,023Investment securities


(444,834
)


97,863



(346,971
)Goodwill


41,248



(9,074
)


32,174Derivatives


(72,981
)


21,517



(51,466
)Others, net


(17,310
)


(1,652
)


(18,962
)W
(452,314
)

W
99,510


W
(352,806
)Effects of changes in tax rates










13,216Tax effects resulting from intercompany transactions










73,300W
(266,290
)Net income in accordance with U.S. GAAP









W
4,083,814Net loss attributable to non controlling interest in accordance
    with U.S. GAAP










(22,076
)Net income attributable to controlling interest in accordance
    with U.S. GAAP










4,105,890Basic and diluted earnings per share in accordance with U.S. GAAP









W
54,387Weighted-average shares outstanding










75,493,523   F-86




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    AdjustmentsBefore Deferred


Deferred Income


Net AdjustmentsIncome Tax


Tax Effect


to Net Income(In millions of Korean Won, except share information)For the year ended December 31, 2007Net income attributable to controlling interest under Korean GAAP









W
3,558,660Net income attributable to non controlling interest under Korean
    GAAP










119,304Net income under Korean GAAP










3,677,964Adjustments:Fixed asset revaluation

W
12,489


W
(3,434
)

W
9,055Capitalized costs


17,859



(4,911
)


12,948Investment securities


537



(148
)


389Goodwill


29,160



(8,019
)


21,141Derivatives


(71,011
)


19,528



(51,483
)Others, net


9,311



(2,561
)


6,750W
(1,655
)

W
455


W
(1,200
)Net income in accordance with U.S. GAAP









W
3,676,764Net income attributable to non controlling interest in
    accordance with U.S. GAAP










111,717Net income attributable to controlling interest in accordance
    with U.S. GAAP










3,565,047Basic and diluted earnings per share in accordance with U.S. GAAP









W
46,938Weighted-average shares outstanding










75,952,869  F-87




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (b) Reconciliation
    of Total Equity from Korean GAAP to U.S. GAAP
  Adjustments


DeferredBefore Deferred


Income Tax


Net AdjustmentsIncome Tax Effect


Effect


to Equity(In millions of Korean Won)As of December 31, 2009Controlling interest









W
30,908,964Non controlling interest










755,350Total equity under Korean GAAP










31,664,314Adjustments:Fixed asset revaluation

W
(122,940
)

W
7,798


W
(115,142
)Capitalized costs


479,526



(105,496
)


374,030Investment securities


6,449



(1,419
)


5,030Goodwill


161,037



(35,428
)


125,609Derivatives


(53,147
)


11,692



(41,455
)Others, net


(9,496
)


2,090



(7,406
)Tax effects resulting from intercompany transactions






51,620



51,620W
461,429


W
(69,143
)

W
392,286Total equity in accordance with U.S. GAAP









W
32,056,600Non controlling interest in accordance with U.S. GAAP










747,460Shareholders equity attributable to controlling interest
    in accordance with U.S. GAAP










31,309,140   F-88




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    Adjustments


DeferredBefore Deferred


Income Tax


Net AdjustmentsIncome Tax Effect


Effect


to Equity(In millions of Korean Won)As of December 31, 2008Controlling interest









W
27,663,665Non controlling interest










680,540Total equity under Korean GAAP










28,344,205Adjustments:Fixed asset revaluation

W
(133,301
)

W
10,077


W
(123,224
)Capitalized costs


347,683



(76,490
)


271,193Investment securities


(142,071
)


31,256



(110,815
)Goodwill


104,604



(23,013
)


81,591Derivatives


(143,993
)


34,138



(109,855
)Others, net


(10,072
)


2,216



(7,856
)Tax effects resulting from intercompany transactions






73,300



73,300W
22,850


W
51,484


W
74,334Total equity in accordance with U.S. GAAP









W
28,418,539Non controlling interest in accordance with U.S. GAAP










659,176Shareholders equity attributable to controlling interest
    in accordance with U.S. GAAP










27,759,363   (c)
    Fixed Asset
    Revaluation    (d)
    Capitalized
    Costs  W W W
   F-89




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
        2009


2008


2007(In millions of Korean Won)Capitalized interest

W
184,955



96,980



104,014Depreciation of capitalized interest


(98,328
)


(90,113
)


(73,888
)Net income impact

W
86,627



6,867



30,126       2009


2008


2007(In millions of Korean Won)Net income impact

W
45,351



21,809



(13,315
)   (e)
    Guarantees  W W W W
 F-90




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (f)
    Stock
    Appreciation Rights      W
    2009Dividend yield range


1.29 ~ 1.89%Expected volatility range


30 ~ 50.5%Risk-free interest rate range


2.82 ~ 3.69%Expected lives (in years)


0.25 ~ 1.82    F-91




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
       2009


2008


2007(In millions of Korean Won)Net income impact

W
1,969



(13,056
)


10,759   W W W
  (g)
    Investment
    Securities    (i)
    Recognition of an
    impairment loss    available-for-sale
  other-than-temporary.
  other-than-temporary W available-for-sale available-for-sales W W
 F-92




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    W other-than-temporary W W
  other-than-temporary W available-for-sale W W W other-than-temporary W W
  W other-than-temporary
  (ii)
    Recognition of
    gain on disposal of available for sale investments  W
    2009


2008


2007(In millions of Korean Won)Impairment loss

W
207,000



(445,225
)


Recognition of gains on disposal


3,762



391



537Net income impact

W
210,762



(444,834
)


537  F-93




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (iii)
    Classification of
    and accounting for certain non-marketable equity
    securities  available-for-sale available-for-sale
  W
  available-for-sale
  Available-for-Sale
    Securities and Other Investments Securities:
  2009


2008(In millions of Korean Won)Available-for-Sale
    Securities under Korean GAAPMarketable Securities

W
3,973,531



2,917,595Non-marketable Securities


1,354,806



1,370,918W
5,328,337



4,288,513Available-for-Sale
    Securities and Other Investment Securities under U.S. GAAPAvailable-for-Sale
    Securities

W
3,973,531



2,917,595Other Investment Securities


1,354,806



1,370,918Accumulated impairment loss added (deducted) under U.S. GAAP


6,449



(142,071
)1,361,255



1,228,847W
5,334,786



4,146,442     Less than 12 Months


12 Months or More


TotalUnrealized





Unrealized





UnrealizedLosses


Fair Value


Losses


Fair Value


Losses


Fair Value(In millions of Korean Won)Available for Sale Securities:Equity securities

W
97,946


W
398,314


W
101,587


W
311,707


W
199,533


W
710,021  F-94




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (h)
    Goodwill      W W W W W W W W
  (i)
    Embedded
    Derivative    Prior to
    2008
       F-95




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    2008 and
    thereafter
    [2007-2]
    (j)
    Change in Hedge
    Accounting  [2008-2] W W
  (k)
    Deferred Income
    Taxes    W W W W
    (l)
    Accounting for
    Uncertainty in Income Taxes  740-10,
 F-96




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    740-10
  740-10
      (m)
    Capitalized
    Repairs   F-97




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (n)
    Income Taxes and
    Deferred Income Taxes in accordance with U.S. GAAP    2009


2008


2007(In millions of Korean Won)Net income before income tax expense:POSCO and domestic subsidiaries

W
4,236,360



5,496,976



4,777,705Foreign subsidiaries


48,777



131,135



191,300W
4,285,137



5,628,111



4,969,005Current:POSCO and domestic subsidiaries

W
540,138



2,035,904



1,308,986Foreign subsidiaries


36,165



145,334



32,266576,303



2,181,238



1,341,252Deferred:POSCO and domestic subsidiaries


96,182



(635,043
)


(51,028
)Foreign subsidiaries


3,841



(1,898
)


2,017100,023



(636,941
)


(49,011
)Income tax expense

W
676,326



1,544,297



1,292,241  F-98




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      2009


2008(In millions of Korean Won)Deferred tax assets:Fixed asset revaluation

W
7,798



10,077Impairment loss on property, plant and equipment


40,464



72,052Investment securities


272,833



243,731Allowance for doubtful accounts


40,966



63,905Allowance for severance benefits


5,660



13,455Derivatives


11,692



34,138Gain/Loss on foreign currency translation


51,823



141,181Tax credit carryforwards


303,144



18,994Tax loss carryforwards


141,269



78,161Others


47,192



11,916Total gross deferred tax assets


922,841



687,610Less: Valuation allowance


(154,375
)


(104,380
)Net deferred tax assets

W
768,466



583,230Deferred tax liabilities:Equity in earnings of equity method investments and subsidiaries

W
395,300



298,388Reserve for special repairs


39,500



62,422Reserve for technology developments


184,501



2,612Capitalized repairs


5



128Accrued income


650



Capitalized costs


105,496



76,490Investment securities


238,573



74,222Total gross deferred tax liabilities

W
964,025



514,262Net deferred tax assets (liabilities)

W
(195,559
)


68,968     2009

2008(In millions of Korean Won)Current deferred tax assets

W
334,385



65,515Non-current deferred tax assets


208,014



288,654Non-current deferred tax liabilities


737,958



285,201   W W
   F-99




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      W W W W W W W W W W W W W
  (o)
    Comprehensive
    Income    2009


2008


2007(In millions of Korean Won)Net income in accordance with U.S. GAAP

W
3,608,811



4,083,814



3,676,764Other comprehensive income, net of tax:Foreign currency translation adjustments


(143,163
)


501,199



98,939Change in fair value of derivative instruments


11,342



(7,308
)


(4,034
)Unrealized gains (losses) on investments


562,544



(931,373
)


505,629Reclassification adjustment for losses (gains) included in income


(5,408
)


4



(658
)Comprehensive income, in accordance with U.S. GAAP

W
4,034,126



3,646,336



4,276,640Less: Non controlling interest


(33,765
)


(74,558
)


(120,179
)Comprehensive income attributable to controlling interest as
    adjusted in accordance with U.S. GAAP


4,000,361



3,571,778



4,156,461  F-100




---



##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
      Change in Fair


Unrealized GainsForeign Currency


Value of a


(Losses) on


Accumulated OtherTranslation


Derivative


Investment


ComprehensiveAdjustments


Instrument


Securities


Income(In millions of Korean Won)Balance, December 31, 2006

W
(69,416
)

W



W
680,019


W
610,603Foreign currency translation adjustments, net of tax
    W(37,528) million


98,939











98,939Change in fair value of a derivative instrument, net of tax
    W1,530 million






(4,034
)






(4,034
)Unrealized gains on investments, net of tax
    W(191,790) million










505,629



505,629Less: Reclassification adjustment for net realized losses
    included in income, net of tax W249 million










(658
)


(658
)Current period change


98,939



(4,034
)


504,971



599,876Balance, December 31, 2007

W
29,523


W
(4,034
)

W
1,184,990


W
1,210,479Foreign currency translation adjustments, net of tax
    W(190,110) million


501,199











501,199Change in fair value of a derivative instrument, net of tax
    W2,772 million






(7,308
)






(7,308
)Unrealized loss on investments, net of tax
    W353,279 million










(931,373
)


(931,373
)Add: Reclassification adjustment for net realized losses
    included in income, net of tax W(1) million










4



4Current period change


501,199



(7,308
)


(931,369
)


(437,478
)Balance, December 31, 2008

W
530,722


W
(11,342
)

W
253,621


W
773,001Foreign currency translation adjustments, net of tax
    W48,425 million


(143,163
)










(143,163
)Change in fair value of a derivative instrument, net of tax
    W(4,302) million






11,342







11,342Unrealized gains on investments, net of tax
    W(213,509) million










562,544



562,544Less: Reclassification adjustment for net realized losses
    included in income, net of tax
    W2,051 million










(5,408
)


(5,408
)Current period change


(143,163
)


11,342



557,136



425,315Balance, December 31, 2009

W
387,559


W



W
810,757


W
1,198,316  F-101




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (p) Fair
    Value of Financial Instruments
    (i)
    Cash and cash
    equivalents, short-term financial instruments, trading
    securities, trade accounts and notes receivable, loans
    receivable, trade accounts and notes payable, and short-term
    borrowings    (ii) Investment
    securities
    (iii) Derivative
    financial instruments
    (iv) Long-term
    loans and trade accounts and notes receivable
    (v) Long-term
    debts
      2009


2008Carrying Amount


Fair Value


Carrying Amount


Fair Value(In millions of Korean Won)Cash and cash equivalents

W
2,196,731


W
2,196,731



2,490,264



2,490,264Short-term financial instruments


5,820,447



5,820,447



1,827,450



1,827,450Trading securities


505,811



505,811



1,238,261



1,238,261Trade accounts and notes receivable and others


5,874,364



5,874,364



6,626,560



6,626,560Investments securities, including current portionMarketable securities


3,973,531



3,973,531



2,917,595



2,917,595Not practicable


2,301,347







2,165,702



Short-term borrowings


3,225,801



3,225,801



3,254,355



3,254,355Long-term debts, including current portion


9,016,668



9,144,532



7,666,004



7,535,074  F-102




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (q) Fair
    Value of Assets and Liabilities
    
    Level 1  Quoted prices in active exchange
    markets involving identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs for the asset or
    liability, either directly or indirectly, and management
    assessments and inputs using a binomial lattice model as the
    valuation technique.    Level 1


Level 2


Level 3


Total(In millions of Korean Won)AssetsTrading securities

W
505,811


W



W



W
505,811Investments Securities


3,973,531











3,973,531Derivatives






86,494







86,494LiabilitiesDerivatives






43,711







43,711   (r) Classification
    Differences in the Consolidated Statements of Income
  W W W
  (s) Consolidated
    Statement of Cash Flows
     F-103




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    W W W
  Components of
    Others Financing Activities
    2009


2008


2007(In millions of Korean Won)Dividends paid to minority shareholders

W
(16,915
)


(21,936
)


(13,765
)Issuance of new shares by subsidiaries


58,593



71,448



1,996Additional acquisition of interest of subsidiaries (*)


(117,458
)


(302,319
)


(142,778
)Proceeds from disposal of interest of subsidiaries










11,338Government grants received


3,031







Total

W
(72,749
)


(252,807
)


(143,209
)    (*)
    Additional acquisition of non controlling interests in a
    subsidiary is classified as investing activities under U.S.
    GAAP, while it is required to be classified as financing
    activities under Korean GAAP.  (t) Significant
    Risks and Uncertainties
      (u) Additional
    Segment Information and Enterprise-Wide Information
     F-104




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##### Table of Contents



POSCO and
    SubsidiariesNotes to Consolidated Financial
    Statements
    December 31, 2009 and 2008
    (v) Recently
    adopted U.S. GAAP
     F-105




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##### Table of Contents



SIGNATURES
  Form 20-F
  
 (Registrant)
  
  Title:
    Chief Executive Officer and




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##### Table of Contents



Exhibit Index
  1
.1



Articles of incorporation of POSCO (English translation)2
.1



Form of Common Stock Certificate (including English translation)
    (incorporated by reference to Exhibit 4.3 to the
    Registrants Registration Statement
    No. 33-81554)*2
.2



Form of Deposit Agreement (including Form of American Depositary
    Receipts) (incorporated by reference to the Registrants
    Registration Statement (File
    No. 33-84318)
    on
    Form F-6)*2
.3



Letter from ADR Depositary to the Registrant relating to the
    Pre-release of American Depositary Receipts (incorporated by
    reference to the Registrants Registration Statement (File
    No. 33-84318)
    on
    Form F-6)*8
.1



List of consolidated subsidiaries12
.1



Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200212
.2



Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200213
.1



Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002     *
    
    Filed previously