##### Table of Contents





As filed with the Securities and Exchange Commission on
    June 24, 2008
     UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2007ORo

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)
  Lee, Hyeong-Soo
 POSCO Center, 892 Daechi-4-dong,
    Gangnam-gu,
 Seoul, Korea 135-777
 Telephone: +82-2-3457-1189;
    E-mail: sunrise77@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.
 None
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the
    Act.
 None
  As of December 31, 2007, there
    were 75,540,201 shares of common stock, par value Won 5,000
    per share, outstanding
 (not including
    11,646,634 shares of common stock held by the company as
    treasury shares)
  Yes þ  No o
  Yes o  No þ
  Yes þ  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 I


2ITEM 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


5Item 3.C.  Reasons for Offer and Use of
    Proceeds


5Item 3.D.  Risk Factors


5ITEM 4.

INFORMATION ON THE COMPANY


12Item 4.A.  History and Development of the
    Company


12Item 4.B.  Business Overview


12Item 4.C.  Organizational Structure


26Item 4.D.  Property, Plants and Equipment


27ITEM 4A.

UNRESOLVED STAFF COMMENTS


28ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


29Item 5.A.  Operating Results


29Item 5.B.  Liquidity and Capital Resources


38Item 5.C.  Research and Development, Patents and
    Licenses, Etc.


43Item 5.D.  Trend Information


43Item 5.E.  Off-balance Sheet Arrangements


44Item 5.F.  Tabular Disclosure of Contractual
    Obligations


44Item 5.G.  Safe Harbor


44ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


44Item 6.A.  Directors and Senior Management


44Item 6.B.  Compensation


47Item 6.C.  Board Practices


47Item 6.D.  Employees


50Item 6.E.  Share Ownership


51ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


53Item 7.A.  Major Shareholders


53Item 7.B.  Related Party Transactions


53Item 7.C.  Interests of Experts and Counsel


53ITEM 8.

FINANCIAL INFORMATION


53Item 8.A.  Consolidated Statements and Other
    Financial Information


53Item 8.B.  Significant Changes


54ITEM 9.

THE OFFER AND LISTING


54Item 9.A.  Offer and Listing Details


54Item 9.B.  Plan of Distribution


57 i




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##### Table of Contents



Item 9.C.  Markets


57Item 9.D.  Selling Shareholders


62Item 9.E.  Dilution


62Item 9.F.  Expenses of the Issuer


62ITEM 10.

ADDITIONAL INFORMATION


62Item 10.A.  Share Capital


62Item 10.B.  Memorandum and Articles of
    Association


62Item 10.C.  Material Contracts


66Item 10.D.  Exchange Controls


67Item 10.E. Taxation


70Item 10.F.  Dividends and Paying Agents


74Item 10.G.  Statements by Experts


75Item 10.H.  Documents on Display


75Item 10.I.  Subsidiary Information


75ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


75ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


76Item 12.A.  Debt Securities


77Item 12.B.  Warrants and Rights


77Item 12.C.  Other Securities


77Item 12.D.  American Depositary Shares


77PART II


77ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


77ITEM 14.

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


77ITEM 15.

CONTROLS AND PROCEDURES


77ITEM 16.

[RESERVED]


78ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


78ITEM 16B.

CODE OF ETHICS


78ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


79ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


79ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


80PART III


81ITEM 17.

FINANCIAL STATEMENTS


81ITEM 18.

FINANCIAL STATEMENTS


81ITEM 19.

EXHIBITS


82EX-7.1 COMPUTATION OF RATIO EARNINGS TO FIXED CHARGESEX-8.1 LIST OF CONSOLIDATED SUBSIDIARIESEX-12.1 CertifEX-8.1 CERTIFICATION PURSUANT TO SECTION 302EX-12.2 CERTIFICATION PURSUANT TO SECTION 302EX-13.1 CERTIFICATION PURSUANT TO SECTION 906EX-15.1 CONSENT OF SAMIL PRICEWATERCOOPERS   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.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.Government

The government of the Republic of Korea.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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##### Table of Contents



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 31,2003


2004


2005


2006


2007


2007(11)(In billions of won and millions of dollars, except per share
    data)Korean GAAP:Sales(1)

W
17,789


W
23,973


W
26,302


W
25,842


W
31,608


US$
33,776Cost of goods sold(2)


13,451



17,361



18,767



19,897



24,903



26,611Selling and administrative expenses


1,075



1,293



1,451



1,556



1,785



1,908Operating income


3,263



5,319



6,083



4,389



4,920



5,257Interest expense


250



192



149



183



240



256Foreign currency transaction and translation gains (losses), net


(105
)


179



159



99



(19
)


(20
)Donations(3)


103



170



153



155



197



211Income tax expenses


730



1,502



1,474



922



1,274



1,362Net income


2,017



3,841



4,007



3,353



3,678



3,930Net income attributable to controlling interest


1,996



3,814



4,022



3,314



3,559



3,803Net income attributable to minority interest


21



27



(15
)


39



119



127Basic and diluted earnings per share of common stock(4)


24,496



47,185



50,790



42,115



46,854



50Dividends per share of common stock


6,000



8,000



8,000



8,000



10,000



10.69U.S. GAAP(5):Operating income

W
3,235


W
5,299


W
5,671


W
4,259


W
4,967


US$
5,308Net income


1,997



3,460



4,102



3,408



3,565



3,810Basic and diluted earnings per share of common stock


24,508



42,806



51,789



43,304



46,938



50.16   BALANCE
    SHEET DATA
  As of December 31,2003


2004


2005


2006


2007


2007(11)(In billions of won and millions of dollars, except per share
    data)Korean GAAP:Working capital(6)

W
3,450


W
5,493


W
5,759


W
7,155


W
7,769


US$
8,302Property, plant andequipment, net(7)


9,846



10,440



12,272



14,643



15,582



16,651Total assets(7)


20,769



24,129



27,507



31,149



36,275



38,763Long-term debt(8)(9)(10)


2,952



2,051



1,131



2,726



3,306



3,533Total shareholders Equity(7)


13,250



16,386



19,874



22,402



25,118



26,841U.S. GAAP(5):Property, plant and equipment, net

W
9,880


W
10,541


W
12,420


W
14,860


W
15,836


US$
16,922Total assets


20,838



24,279



27,525



31,208



36,349



38,843Total shareholders Equity


13,018



16,208



19,498



21,972



24,561



26,246     (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




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(3)
    
    Includes donations to educational foundations supporting basic
    science and technology research. See Item 5.
    Operating and Financial Review and Prospects 
    Item 5.C. Research and Development, Patents and Licenses,
    Etc. and Note 24 of Notes to Consolidated Financial
    Statements.(4)
    
    See Note 26 of Notes to Consolidated Financial Statements
    for method of calculation.(5)
    
    A description of the material differences between Korean GAAP
    and U.S. GAAP as well as the reconciliation to U.S. GAAP are
    discussed in detail in Note 35 of Notes to Consolidated
    Financial Statements.(6)
    
    Working capital means current assets minus current
    liabilities.(7)
    
    Reflects revaluations of assets permitted under Korean law.(8)
    
    Net of current portion and discount on debentures issued.(9)
    
    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 22 of Notes to Consolidated Financial Statements.(10)
    
    Monetary assets and liabilities denominated in foreign
    currencies are translated into Korean 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.(11)
    
    Translated into U.S. Dollars at the rate of Won 935.80 to
    US$1.00, the noon buying rate of the Federal Reserve Bank of New
    York for Won in effect on December 31, 2007. This
    translation should not be construed as a representation that the
    Korean Won amounts represent, have been, or could be converted
    to U.S. Dollars at that rate or any other rate.  EXCHANGE
    RATE INFORMATION
    At End


AveragePeriod

of Period


Rate(1)


High


Low(Per US$1.00)2003


1,192.0



1,183.0



1,262.0



1,146.02004


1,035.1



1,139.3



1,195.1



1,035.12005


1,010.0



1,023.2



1,059.8



997.02006


930.0



954.3



1002.9



913.72007


935.8



929.0



950.2



903.22008 (through June 23)


1,036.8



990.9



1,047.0



935.2January


943.4



942.1



953.2



935.2February


942.8



943.9



948.2



937.2March


988.6



981.7



1,021.5



947.1April


1,005.0



986.9



1,005.0



973.5May


1,028.5



1,034.1



1,047.0



1,004.0June (through June 23)


1,036.8



1,029.0



1,044.0



1,016.8       (1)
    
    The average rate for each full year is calculated as the average
    of the noon buying rates on the last business day of each month
    during the relevant year. The average rate for a full month is
    calculated as the average of the noon buying rates on each
    business day during the relevant month (or portion thereof).   4




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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    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.
        
    a slowdown in consumer spending and the overall economy;
    adverse changes or volatility in foreign currency reserve
    levels, commodity prices, exchange rates, interest rates or
    stock markets;
    adverse developments 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;
    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, including the Free Trade Agreement recently
    negotiated with the United States;
    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 unemployment compensation and
    other social programs that, together, would lead to an increased
    government budget deficit;
    financial problems or lack of progress in 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 of certain Korean
    conglomerates;
    geo-political uncertainty and risk of further attacks by
    terrorist groups around the world; 5




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
    the recurrence of severe acute respiratory syndrome or an
    outbreak of avian flu in Asia 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 tension 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.
    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
    45.2% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2007;
    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.     6




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We are
    dependent on imported raw materials, and significant increases
    in market prices of essential raw materials could adversely
    affect our margins and profits.
      We
    expect global steel production capacity to continue to expand in
    the near future, and over-capacity in the global steel industry
    may return.
    Consolidation
    in the global steel industry may increase
    competition.
    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.
   7




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
    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.  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
    the business and performance of our engineering and construction
    segment.
   8




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Many
    of our engineering and construction segment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.    The
    domestic residential property business of our engineering and
    construction segment is highly dependent on the real estate
    market in Korea, which is substantially affected by the
    Governments real estate policies.
      We may
    not be able to successfully execute our diversification
    strategy.
   9




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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.
    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.
   10




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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
    the offering and sale of those shares is exempt from or is not
    subject to the registration requirements of the Securities Act. 11




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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    (822) 3457-0114.
  Item 4.B.
    Business
    Overview  The
    Company
   12




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Business
    Strategy
      Continue
    to Seek Growth Opportunities in the Steel Sector
    Maintain
    Technology Leadership
   13




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Pursue
    Cost-Cutting through Operational and Process
    Innovations
    Secure
    Procurement of Raw Materials through Strategic
    Investments
    Selectively
    Seek Opportunities in Growth Industries
    Major
    Products
    
    hot rolled products;
    plates;
    wire rods;
    cold rolled products;
    silicon steel sheets; and
    stainless steel products. 14




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For the Year Ended December 31,2003


2004


2005


2006


2007Billions





Billions





Billions





Billions





BillionsSteel Products

of Won


%


of Won


%


of Won


%


of Won


%


of Won


%Hot rolled products


4,185



26.1



5,449



25.1



5,877



25.0



4,650



20.8



4,495



16.1Plates


1,320



8.2



1,987



9.1



2,253



9.6



2,380



10.7



2,847



10.2Wire rods


1,064



6.6



1,351



6.2



1,528



6.5



1,243



5.6



1,458



5.2Cold rolled products


5,208



32.4



6,564



30.2



7,527



32.0



6,765



30.3



8,672



31.1Silicon steel sheets


431



2.7



531



2.4



688



2.9



681



3.0



1,105



4.0Stainless steel products


3,172



19.7



4,920



22.6



4,543



19.3



5,751



25.8



8,268



29.7Others


687



4.3



952



4.4



1,132



4.7



859



3.8



1,003



3.7Total


16,067



100.0



21,753



100.0



23,547



100.0



22,329



100.0



27,848



100.0   For the Year Ended December 31,2003


2004


2005


2006


2007Thousands





Thousands





Thousands





Thousands





ThousandsSteel Products

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%Hot rolled products


11,514



37.6



10,966



34.5



10,330



33.2



9,604



31.0



8,221



25.6Plates


3,047



9.9



3,385



10.6



3,193



10.3



3,615



11.7



3,926



12.2Wire rods


2,777



9.1



2,503



7.9



2,366



7.6



2,153



6.9



2,222



6.9Cold rolled products


9,770



31.9



10,242



32.2



10,468



33.6



10,864



35.1



12,146



37.8Silicon steel sheets


671



2.2



705



2.2



737



2.4



686



2.2



934



2.9Stainless steel products


1,778



5.8



2,069



6.5



1,919



6.2



2,260



7.3



2,694



8.4Others


1,100



3.5



1,926



6.1



2,100



6.7



1,802



5.8



1,967



6.2Total


30,657



100.0



31,796



100.0



31,115



100.0



30,984



100.0



32,110



100.0     Hot
    Rolled Products
       15




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Plates
        Wire
    Rods
        Cold
    Rolled Products
        Silicon
    Steel Sheets
       16




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##### Table of Contents



Stainless
    Steel Products
        Others
    Markets
    Domestic
    Market
      For the Year Ended December 31,2003


2004


2005


2006


2007Thousands





Thousands





Thousands





Thousands





ThousandsSource

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%POSCOs sales


21,121



46.6



23,599



50.0



22,880



48.5



20,991



42.3



21,256



38.6Other Korean steel companies sales


17,838



39.3



15,969



33.9



15,957



33.9



18,052



36.4



21,224



38.5Imports(1)


6,411



14.1



7,595



16.1



8,287



17.6



10,591



21.3



12,628



22.9Total domestic sales(1)


45,370



100.0



47,163



100.0



47,124



100.0



49,634



100.0



55,108



100.0     (1)
    
    Source: 2007 Official Statistics, Korea Iron & Steel
    Association.     17




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##### Table of Contents



Exports
    For the Year Ended December 31,2003


2004


2005


2006


2007Thousands





Thousands





Thousands





Thousands





ThousandsRegion

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%China


3,510



36.8



3,138



38.3



2,640



32.1



2,524



25.3



3,186



29.4Japan


1,719



18.0



1,661



20.3



1,843



22.4



1,959



19.6



2,137



19.7Asia (other than China and Japan)


2,259



23.7



1,502



18.3



1,636



19.9



1,895



19.0



2,112



19.5North America


715



7.5



737



9.0



761



9.2



963



9.6



756



7.0Europe


236



2.5



116



1.4



34



0.4



318



3.2



546



5.0Others


1,096



11.5



1,043



12.7



1,320



16.0



2,335



23.3



2,117



19.4Total


9,535



100.0



8,198



100.0



8,234



100.0



9,994



100.0



10,854



100.0   18




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##### Table of Contents



For the Year Ended December 31,2003


2004


2005


2006


2007Thousands





Thousands





Thousands





Thousands





ThousandsSteel Products

of Tons


%


of Tons


%


of Tons


%


of Tons


%


of Tons


%Hot rolled products


2,464



25.8



2,049



25.0



1,960



23.8



2,477



24.8



1,531



14.1Plates


363



3.8



295



3.6



229



2.8



228



2.3



231



2.1Wire rods


598



6.3



252



3.1



333



4.1



498



5.0



502



4.6Cold rolled products


4,649



48.8



4,139



50.5



4,142



50.3



4,774



47.8



6,186



57.0Silicon steel sheets


223



2.3



245



3.0



262



3.2



369



3.7



511



4.7Stainless steel products


795



8.3



1,019



12.4



1,032



12.5



1,245



12.4



1,695



15.6Others


443



4.7



199



2.4



276



3.3



403



4.0



198



1.9Total


9,535



100.0



8,198



100.0



8,234



100.0



9,994



100.0



10,854



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

2005


2006


2007(In billions of won)Korea

W
18,566


W
17,250


W
19,970China


3,118



3,070



4,504Asia (other than China and Japan)


1,502



1,486



2,042Japan


1,372



1,312



1,742North America


550



610



732Other


1,194



2,114



2,618Total


26,302



25,842



31,608       For the Year Ended December 31,2003


2004


2005


2006


2007Apparent crude steel use (million metric tons)


984



1,091



1,113



1,178



1,250Percentage of annual increase (decrease)


7.3
%


10.9
%


2.0
%


5.8
%


6.1
%          19




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##### Table of Contents



50-50
          Pricing
    Policy
     20




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##### Table of Contents



Raw
    Materials
  Steel
    Production
            Stainless
    Steel Production
   21




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##### Table of Contents



Transportation
    The
    Steelmaking Process
    Steel 
    Basic Oxygen Steelmaking Method
        Stainless
    Steel  Electric Arc Furnace Method
   22




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##### Table of Contents



Competition
  Domestic
    Market
        Export
    Markets
      Subsidiaries
    and Global Joint Ventures
  Steel
    Production
         23




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##### Table of Contents



24




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##### Table of Contents



Steel
    Trading
    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
     25




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##### Table of Contents



Information
    and Technology
    Others
      Insurance
    Item 4.C.
    Organizational
    Structure    Jurisdiction of


Percentage ofName

Incorporation


OwnershipPOSCO Engineering & Construction Co., Ltd.


Korea



90.9
%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
%POSDATA Co., Ltd.


Korea



61.9
%  26




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##### Table of Contents



Item 4.D.
    Property,
    Plants and Equipment    Pohang
    Works
        For the Year Ended December 31,2003


2004


2005


2006


2007Crude steel and stainless steel production capacity (million
    tons per year)


12.67



13.30



13.30



13.30



14.30Actual crude steel and stainless steel output (million tons)


12.67



13.45



13.36



12.60



13.66Capacity utilization rate (%)(1)


100.0



101.1



100.4



94.7



95.5     (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
       27




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##### Table of Contents



For the Year Ended December 31,2003


2004


2005


2006


2007Crude steel production capacity (million tons per year)


16.23



16.70



16.70



16.70



16.70Actual crude steel output (million tons)


16.23



16.76



17.19



17.45



17.41Capacity utilization rate (%)(1)


100.0



100.4



102.9



104.5



104.2     (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
          Item 4A.
    Unresolved
    Staff Comments   28




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##### Table of Contents



Item 5.
    Operating
    and Financial Review and Prospects  Item 5.A.
    Operating
    Results    Overview
  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.           29




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##### Table of Contents



For the Year Ended December 31,Products

2005


2006


2007(In thousands of won per ton)Hot rolled products

W
568.9


W
484.2


W
546.8Plates


705.4



658.4



725.2Wire rods


645.9



577.2



656.0Cold rolled products


719.0



622.7



714.0Silicon steel sheets


934.0



991.8



1,182.9Stainless steel products


2,366.9



2,544.3



3,069.0Others


538.6



476.6



509.5Average(1)

W
756.8


W
720.6


W
867.3     (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 31,2005


2006


2007(Percentage of net sales)Cost of goods sold


71.4
%


77.0
%


78.8
%Selling and administrative expenses(1)


5.5



6.0



5.6Total operating expenses


76.9



83.0



84.4Gross margin


28.6



23.0



21.2Operating margin


23.1



17.0



15.6     (1)
    
    See Note 23 of Notes to Consolidated Financial Statements.   30




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##### Table of Contents



For the Year Ended December 31,2005


2006


2007Crude steel and stainless steel production capacity (million
    tons per year)(1)


30.9



31.2



32.8Actual crude steel and stainless steel output (million tons)


31.4



31.2



32.8Capacity utilization rate (%)


101.6



99.9



99.9Steel product sales (million tons)(2)


31.12



30.98



32.11Man-hours
    per ton of crude steel produced(3)


1.16



1.06



0.91     (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 1.4 million tons in 2003, 1.0 million
    tons in 2004, 1.0 million tons in 2005, 0.8 million
    tons in 2006 and 1.0 million tons in 2007.(3)
    
    Does not include in the calculation employees of our
    subsidiaries or subcontractors.  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
    45.2% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2007;
    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.     31




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##### Table of Contents



Impairment
    Loss on the No. 2 Mini-mill at Gwangyang
    Works
  construction-in-progress
  Reportable
    Operating Segments
    Inflation
    Critical
    Accounting Estimates
    Allowance
    for Doubtful Accounts
    Valuation
    of Investment Securities and Derivatives
   32




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##### Table of Contents



Impairment
    of Long-lived Assets
    and/or
 33




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##### Table of Contents



Operating
    Results
  2007
    Compared to 2006
             34




---



##### Table of Contents



Segment
    Results  Steel
      Segment
    Results  Engineering and Construction
     35




---



##### Table of Contents



Segment
    Results  Trading
      2006
    Compared to 2005
           36




---



##### Table of Contents



Segment
    Results  Steel
     37




---



##### Table of Contents



Segment
    Results  Engineering and Construction
      Segment
    Results  Trading
      Item 5.B.
    Liquidity
    and Capital Resources    For the Year Ended December 31,2005


2006


2007(In billions of won)Net cash provided by operating activities

W
5,472


W
3,926


W
5,553Net cash used in investing activities


3,444



3,363



4,264Net cash used in financing activities


1,887



269



1,001Cash and cash equivalents at beginning of period


482



654



936Cash and cash equivalents at end of period


654



936



1,293Net increase in cash and cash equivalents


172



283



356   Capital
    Requirements
       38




---



##### Table of Contents



Payments Due by PeriodLess Than








AfterContractual Obligations

Total


1 Year


1 to 3 Years


4 to 5 Years


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


3,802.6



484.0



2,018.0



568.6



732.0Capital lease obligations


















Operating lease obligations


20.0



7.0



9.1



2.0



1.9Purchase obligations



(a)



(a)



(a)



(a)



(a)Other long-term liabilities



(b)



(b)



(b)



(b)



(b)Total


3,822.6



491.0



2,027.1



570.6



733.9     (a)
    
    Our purchase obligations include long-term contracts to purchase
    iron ore, coal, nickel, chrome, stainless steel scrap and
    liquefied natural gas. These contracts generally have terms of
    three to ten years and provide for periodic price adjustments to
    then-market prices. As of December 31, 2007,
    414 million tons of iron ore and 83 million tons of
    coal remained to be purchased under long-term contracts.(b)
    
    See Note 14 of Notes to Consolidated Financial Statements
    for our accrued severance benefits. Other long-term liabilities
    do not have maturity or due dates. Accordingly, payment due
    information of other long-term liabilities has not been
    presented in the above table.    Capital
    Resources
       39




---



##### Table of Contents



Liquidity
          As of December 31,2005


2006


2007(In billions of won)Cash and cash equivalents, net of government grants

W
654


W
936


W
1,293Short-term financial instruments


760



867



1,743Trading securities


2,611



2,001



1,287Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount


3,045



3,492



4,036Inventories, net


3,793



4,018



4,902       As of December 31,2005


2006


2007(In billions of won)Trade accounts and notes payable

W
1,146


W
1,507


W
2,247Short-term borrowings


860



1,239



1,572Income tax payable


1,367



701



931Current portion of long-term debt, net of discount on debentures
    issued


1,057



404



483  40




---



##### Table of Contents



Capital
    Expenditures and Capacity Expansion
      EstimatedRemainingCost ofCompletionExpected


Total


as ofCompletion


Cost of


December 31,Project

Date


Project


2007(In billions of won)Pohang Works:Installation of stainless steel continuous tandem rolling mill


May 2009



297



261Capacity expansion of silicon steel production facility


August 2009



282



255Installation of no. 2 thick heavy plate production facility


January 2008



115



2Installation of electrolytic galvanizing line


December 2008



99



85Installation of a bloom caster for the no. 1 continuous
    casting line


February 2008



89



8Expansion of plate production facility


December 2008



86



62Rationalization of billet mill.


March 2008



61



11Gwangyang Works:Capacity expansion of no. 2 pickling and tandem cold
    rolling mill


April 2009



226



219   Significant
    Changes in Korean GAAP
    
    SKFAS No. 11, Discontinued Operations
    SKFAS No. 21, Preparation and Presentation of
    Financial Statements I
    SKFAS No. 22, Share-based Payments
    SKFAS No. 23, Earnings Per Share
    SKFAS No. 25, Consolidated Financial Statements   41




---



##### Table of Contents



U.S.
    GAAP Reconciliation
      Recent
    Accounting Pronouncements in U.S. GAAP
  SFAS 157-1 SFAS 157-2 SFAS 157-1, SFAS 157-2, SFAS 157-1 SFAS 157-2
     42




---



##### Table of Contents



Item 5.C.
    Research
    and Development, Patents and Licenses, Etc.          Item 5.D.
    Trend
    Information   43




---



##### Table of Contents



Item 5.E.
    Off-balance
    Sheet Arrangements    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
      
    the Director Candidate Recommendation Committee;
    the Evaluation and Compensation Committee;
    the Finance and Operation Committee;
    the Executive Management Committee;
    the Audit Committee; and
    the Insider Trading Committee.     44




---



##### Table of Contents



Standing
    Directors
    YearsYears as


withName

Position

Responsibilities and Division

Director


POSCO


Age


Expiration of Term of OfficeLee, Ku-Taek

Chief Executive Officer and Representative Director




18



39



62


February 2010Yoon, Seok-Man

President and Representative Director

Chief Marketing Officer


4



31



59


February 2010Chung, Joon-Yang

President and Representative Director

Chief Operating Officer and Technology Officer


4



33



60


February 2010Cho, Soung-Sik

Senior Executive Vice President

Managing Director, POSCO-India Pvt. Ltd.


2



33



57


February 2009Lee, Dong-Hee

Senior Executive Vice President

Chief Finance Officer


2



31



58


February 2009Choi, Jong-Tae

Senior Executive Vice President

Chief Staff Officer


0



34



58


February 2011     Outside
    Directors
    Years asName

Position

Principal Occupation

Director


Age


Expiration of Term of OfficeSuh, Yoon-Suk

Chairman of the Board

Professor, Ewha Womans University


4



53


February 2009Park, Young-Ju

Director

CEO, Eagon Industrial Co., Ltd.


4



67


February 2009Jones, Jeffrey D.

Director

Attorney, Kim & Chang


4



56


February 2010Park, Won-Soon

Director

Executive Director, The Beautiful Foundation


4



52


February 2010Sun, Wook

Director

CEO, Nongshim Co., Ltd.


3



63


February 2011Ahn, Charles

Director

Chairman of the Board, AhnLab, Inc.


3



46


February 2011Huh, Sung-Kwan

Director

Former President, Gwangju Institute of Science and Technology


2



60


February 2009Park, Sang-Yong

Director

Professor, Yonsei University


0



57


February 2011       Senior
    Management
    Years withName

Position

Responsibility and Division

POSCO


AgeHur, Nam-Suk

Senior Executive Vice President

General Superintendent, Gwangyang Works


33



58Chung, Keel-Sou

Senior Executive Vice President

Chief of Stainless Steel Division


33



58 45




---



##### Table of Contents



Years withName

Position

Responsibility and Division

POSCO


AgeKim, Sang-Ho

Executive Vice President

Legal Affairs Dept.


7



54Oh, Chang-Kwan

Executive Vice President

General Superintendent, Pohang Works


30



55Kwon, Young-Tae

Executive Vice President

Raw Materials Procurement Dept.


33



57Chang, Hyun-Shik

Executive Vice President

Energy Business Dept.


6



57Kim, Jin-Il

Executive Vice President

Vietnam Project Dept.


33



55Kwon, Oh-Joon

Executive Vice President

General Superintendent, Technical Research Laboratories


21



57Park, Han-Yong

Executive Vice President

Human Resources Dept.


30



57Kim, Sang-Young

Executive Vice President

Corporate Communication Dept.


21



56Kim, Soo-Kwan

Executive Vice President

General Superintendent, Human Resources Development Center,
    Corporate Contribution Dept.


31



56Cho, Jun-Gil

Senior Vice President

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


31



56Yoo, Kwang-Jae

Senior Vice President

Stainless Steel Production and Technology


30



56Yoon, Yong-Chul

Senior Vice President

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


30



55Cho, Noi-Ha

Senior Vice President

Production Order and Process Dept., Technical Service Dept.,
    Market Development Group, Automotive Flat Products Service Group


30



55Yoon, Yong-Won

Senior Vice President

Facilities Investment Planning Dept., Pohang New Steel Making
    Plant Project Dept., Gwangyang Plate Mill Project Dept., Raw
    Materials Handling Buildup Project Dept.


30



56Park, Ki-Hong

Senior Vice President

Finance Dept.


2



50Choo, Wung-Yong

Senior Vice President

European Union Office


25



55Kim, Sung-Kwan

Senior Vice President

India Project Dept.


31



57Jang, Byung-Hyo

Senior Vice President

POSCO-Japan Co., Ltd


31



54Kim, Joon-Sik

Senior Vice President

Technology Development Dept., Magnesium Business Dept.


27



54Jang, Young-Ik

Senior Vice President

Stainless Steel Raw Materials Procurement Dept.


29



54Kim, Moon-Seok

Senior Vice President

Seoul Office


29



54Yun, Tai-Han

Senior Vice President

Hot Rolled Steel Sales Dept., API Steel Sales Group, Plate Sales
    Dept., Wire Rod Sales Dept.


28



55Cho, Bong-Rae

Senior Vice President

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


28



55Chang, In-Hwan

Senior Vice President

Cold Rolled Steel Sales Dept., Automotive Flat Products Sales
    Dept., Automotive Flat Products Exports Dept., Flat Products
    Sales SCM Dept., Coated Steel Sales Dept., Electrical Steel
    Sales Group


27



53Kong, Yoon-Chan

Senior Vice President

Deputy General Superintendent, Gwangyang Works (Administration)


28



55Lee, In-Bong

Senior Vice President

Information Planning Dept.


27



53Shin, Jung-Suk

Senior Vice President

Zhangjiagang Pohang Stainless Steel Co. Ltd.


29



55 46




---



##### Table of Contents



Years withName

Position

Responsibility and Division

POSCO


AgeAn, Byung-Sik

Senior Vice President

Deputy General Superintendent, Pohang Works (Maintenance)


30



52Baek, Sung-Kwan

Senior Vice President

Investment Management Dept.


27



52Cho, Chang-Hwan

Senior Vice President

Deputy General Superintendent, Gwangyang Works (Maintenance)


28



53Yoon, Dong-Jun

Senior Vice President

Business Innovation Dept.


24



49Lee, Kyung-Hoon

Senior Vice President

Environment & Energy Dept.


29



54Chang, Song-Hwan

Senior Vice President

Deputy General Superintendent, Pohang Works (Administration)


27



53Lee, Hoo-Geun

Senior Vice President

FINEX Research & Development Project Dept.


25



50Woo, Jong-Soo

Senior Vice President

Deputy General Superintendent, Technical Research Laboratories


28



52Kang, Chang-Gyun

Senior Vice President

Auditing Dept.


28



52Lee, Jung-Sik

Senior Vice President

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


28



53Suh, Young-Sea

Senior Vice President

Stainless Steel Strategy Group, Stainless Steel Hot Rolled
    Product Sales Dept., Stainless Steel Cold Rolled Product Sales
    Dept.


24



52Park, Myung-Kil

Senior Vice President

Materials Purchasing and Supply Management Dept.


22



49Lee, Young-Hoon

Senior Vice President

Corporate Strategic Planning Dept.


22



48Hwang, Eun-Yeon

Senior Vice President

Marketing Strategy Dept., Sales & Production Planning
    Group, Sales Logistics Group


21



49   Item 6.B.
    Compensation  Compensation
    of Directors and Officers
      Item 6.C.
    Board
    Practices  Director
    Candidate Recommendation Committee
   47




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##### Table of Contents



Evaluation
    and Compensation Committee
    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.    Insider
    Trading Committee
   48




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##### Table of Contents



Differences
    in Corporate Governance Practices
    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 14 directors are Outside
    Directors. Under the our articles of incorporation, we may have
    up to six Standing Directors and nine 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 Standing 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 more than three directors and satisfy the requirements of
    Rule 10A-3
    under the Exchange Act

We maintain an Audit Committee comprised of four 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 its 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 incorporations to delete the provision allowing grant of stock
options to officers and directors.Consequently, we may not grant stock options to officers and directors starting February 24, 2006. 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.  49




---



##### Table of Contents



Item 6.D.
    Employees         50




---



##### Table of Contents



Item 6.E.
    Share
    Ownership  Common
    Stock
    Number of CommonShareholders

Shares OwnedYoon, Yong-Won


1,879Choi, Jong-Tae


1,573Hur, Nam-Suk


1,002Yoo, Kwang-Jae


500Kim, Jin-Il


200Yoon, Dong-Jun


177Lee, In-Bong


145Jang, Young-Ik


138Yun, Tai-Han


130Chang, In-Hwan


130Kim, Joon-Sik


128Baek, Sung-Kwan


100Shin, Jung-Suk


98Yoon, Yong-Chul


81Lee, Jung-Sik


69Kim, Soo-Kwan


42Lee, Young-Hoon


29Lee, Kyung-Hoon


18Chang, Hyun-Shik


15Park, Han-Yong


12Woo, Jong-Soo


10Kwon, Oh-Joon


2Cho, Jun-Gil


2Lee, Hoo-Geun


2Cho, Chang-Hwan


1Chang, Song-Hwan


1Total


6,484  51




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##### Table of Contents



Stock
    Options
      Exercise Period

Exercise


Granted


Exercised


ExercisableDirectors

Grant Date

From

To

Price


Options


Options


OptionsLee, Ku-Taek

July 23, 2001

7/24/2003

7/23/2008


98,900



45,184



34,518



10,666July 23, 2004

7/24/2006

7/23/2011


151,700



49,000



0



49,000Yoon, Seok-Man

September 18, 2002

9/19/2004

9/18/2009


116,100



11,179



6,000



5,179July 23, 2004

7/24/2006

7/23/2011


151,700



7,840



0



7,840Chung, 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



0



4,900Cho, Soung-Sik

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



192



1,729Lee, Dong-Hee

April 26, 2003

4/27/2005

4/26/2010


102,900



9,604



5,960



3,644Choi, Jong-Tae

July 23, 2001

7/24/2003

7/23/2008


98,900



9,037



7,903



1,134April 26, 2003

4/27/2005

4/26/2010


102,900



1,921



192



1,729Park,Young-Ju

July 23, 2004

7/24/2006

7/23/2011


151,700



1,862



0



1,862Jones, Jeffrey D

July 23, 2004

7/24/2006

7/23/2011


151,700



1,862



1,862



0Suh, Yoon-Suk

July 23, 2004

7/24/2006

7/23/2011


151,700



1,862



500



1,362Sun, Wook

April 28, 2005

4/29/2007

4/28/2012


194,900



2,000



0



2,000Ahn, Charles

April 28, 2005

4/29/2007

4/28/2012


194,900



2,000



0



2,000   OptionsExercise Period

Exercise


Granted


ExercisedExecutive Officers

Grant Date

From

To

Price


Options


Options


ExercisableHur, Nam-Suk

April 27, 2002

4/28/2004

4/27/2009


136,400



9,316



9,316



0April 28, 2005

4/29/2007

4/28/2012


194,900



2,000



0



2,000Chung, Keel-Sou

July 23, 2004

7/24/2006

7/23/2011


151,700



9,800



0



9,800Kim, Sang-Ho

April 28, 2005

4/29/2007

4/28/2012


194,900



12,000



12,000



0Oh, Chang-Kwan

April 27, 2002

4/28/2004

4/27/2009


136,400



9,316



3,931



5,385Kwon, Young-Tae

September 18, 2002

9/19/2004

9/18/2009


116,100



9,316



931



8,385Chang, Hyun-Shik

April 26, 2003

4/27/2005

4/26/2010


102,900



9,604



9,604



0Kim, Jin-Il

April 26, 2003

4/27/2005

4/26/2010


102,900



9,604



9,492



112Kwon, Oh-Joon

April 26, 2003

4/27/2005

4/26/2010


102,900



9,604



8,604



1,000Park, Han-Yong

April 26, 2003

4/27/2005

4/26/2010


102,900



9,604



9,604



0Kim, Sang-Young

July 23, 2004

7/24/2006

7/23/2011


151,700



9,800



0



9,800Cho, Jun-Gil

April 28, 2005

4/29/2007

4/28/2012


194,900



10,000



0



10,000Yoo, Kwang-Jae

April 28, 2005

4/29/2007

4/28/2012


194,900



10,000



10,000



0Yoon, Yong-Chul

April 28, 2005

4/29/2007

4/28/2012


194,900



10,000



0



10,000Cho, 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



0  52




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##### Table of Contents



Item 7.
    Major
    Shareholders and Related Party Transactions  Item 7.A.
    Major
    Shareholders    Number ofShareholders

Shares Owned


PercentageNippon Steel Corporation(1)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


3,660,603



4.20National Pension Service


3,404,897



3.91SK Telecom


2,481,310



2.85Pohang University of Science and Technology


2,000,000



2.29Directors and executive officers as a group


6,484



0.01Public(2)


59,592,195



68.35POSCO (held in the form of treasury stock)


9,430,749



10.81POSCO (held through treasury stock fund)


2,215,885



2.54Total issued shares of common stock


87,186,835



100.00
%     (1)
    
    Held in the form of ADRs.(2)
    
    Includes ADRs.    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
   53




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##### Table of Contents



DIVIDENDS
      Annual





Average TotalDividend per


Interim


DividendCommon Stock


Dividend per


per CommonYear

to Public


Common Stock


Stock(In won)2003


5,000



1,000



6,0002004


6,500



1,500



8,0002005


6,000



2,000



8,0002006


6,000



2,000



8,0002007


7,500



2,500



10,000       Item 8.B.
    Significant
    Changes  Not applicable
  Item 9.
    The
    Offer and Listing  Item 9.A.
    Offer
    and Listing Details  Market
    Price Information
  Notes
  Not applicable
 54




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##### Table of Contents



Common
    Stock
    Price


Average DailyHigh


Low


Trading Volume(In won)


(Number of shares)2003First Quarter


133,000



92,400



336,187Second Quarter


127,000



97,500



300,224Third Quarter


152,500



123,500



310,936Fourth Quarter


163,000



131,500



345,2722004First Quarter


181,000



156,500



312,764Second Quarter


177,000



131,000



413,523Third Quarter


184,000



145,000



241,698Fourth Quarter


203,000



163,000



287,6322005First Quarter


225,500



176,500



293,360Second Quarter


203,000



174,500



298,650Third Quarter


240,500



182,000



295,458Fourth Quarter


236,500



199,500



334,1402006First Quarter


251,500



196,500



391,776Second Quarter


287,000



217,500



381,220Third Quarter


254,000



225,500



269,202Fourth Quarter


318,500



239,000



243,5472007First Quarter


395,000



286,500



282,570Second Quarter


481,000



366,000



251,054Third Quarter


673,000



445,000



290,037Fourth Quarter


765,000



557,000



336,9322008First Quarter


582,000



417,000



333,766January


582,000



465,000



355,143February


555,000



487,500



278,397March


530,000



417,000



367,758Second Quarter (through June 23)


607,000



445,000



378,173April


522,000



445,000



431,208May


607,000



491,000



413,782June (through June 23)


596,000



529,000



289,529  55




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##### Table of Contents



ADSs
      Price


Average DailyHigh


Low


Trading Volume(In US$)


(Number of ADSs)2003First Quarter


28.66



18.46



324,595Second Quarter


26.55



19.26



333,511Third Quarter


32.49



26.08



262,191Fourth Quarter


33.97



28.98



477,5802004First Quarter


38.43



33.55



578,963Second Quarter


39.01



27.97



1,013,306Third Quarter


40.14



32.47



729,723Fourth Quarter


47.50



36.49



765,0032005First 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



418,434January


147.74



129.06



454,638February


146.13



125.50



362,235March


135.40



108.41



436,620Second Quarter (through June 23)


147.05



112.80



259,072April


134.07



112.80



315,663May


144.38



123.09



243,528June (through June 23)


147.05



128.08



218,025  56




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##### Table of Contents



Item 9.B.
    Plan
    of Distribution  Not applicable
  Item 9.C.
    Markets  The
    Korean Securities Market
         57




---



##### Table of Contents



Period AverageDividend


PriceYield(1)(2)


EarningsYear

Opening


High


Low


Closing


(Percent)


Ratio(2)(3)1979


131.28



131.28



104.38



118.97



17.8



3.81980


100.00



119.36



100.00



106.87



20.9



2.61981


97.95



165.95



93.14



131.37



13.2



3.11982


123.60



134.48



106.00



128.99



10.5



3.41983


122.52



134.46



115.59



121.21



6.9



3.81984


115.25



142.46



115.25



142.46



5.1



4.51985


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 (through June 23)


1,891.45



1,901.13



1,537.53



1,715.59



1.6



14.7     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 Stock Market Division of the Korea
    Exchange. Starting in April 2000, excludes classified companies,
    companies which did not submit annual reports to the Stock
    Market Division of the Korea Exchange, 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. 58




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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      59




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##### Table of Contents



Market Capitalization on the Last Day of Each PeriodNumber of








Average Daily Trading Volume, ValueListed


(Billions of


(Millions of


Thousands of


(Millions of


(Thousands ofYear

Companies


Won)


US$)(1)


Shares


Won)


US$) (1)1979


355


W
2,609


US$
5,391



5,382


W
4,579


US$
4,6411980


352



2,527



3,829



5,654



3,897



5,9051981


343



2,959



4,224



10,565



8,708



12,4321982


334



3,000



4,408



9,704



6,667



8,9041983


328



3,490



4,387



9,325



5,941



7,4681984


336



5,149



6,223



14,847



10,642



12,8621985


342



6,570



7,381



18,925



12,315



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 (through June 23)


756



940,190



904,900



311,798



5,965,681



5,741,753     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.   60




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##### Table of Contents



Further
    Opening of the Korean Securities Market
          Protection
    of Customers Interest in Case of Insolvency of Securities
    Companies
       61




---



##### 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
     62




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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 Korean Securities and Exchange Act;
    issued to members of our employee stock ownership association
    pursuant to the Korean Securities and Exchange Act;
    represented by depositary receipts pursuant to the Korean
    Securities and Exchange Act;
    issued in a general public offering pursuant to a board
    resolution in accordance with the Korean Securities and Exchange
    Act, the amount of which is no more than 10% of the outstanding
    Shares;
    issued to our creditors pursuant to a debt-equity swap;
    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.     63




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##### Table of Contents



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
      
    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; 64




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##### Table of Contents




    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
  20-day
  Register
    of Shareholders and Record Dates
    and/or
 65




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##### Table of Contents



Annual
    Report
      Transfer
    of Shares
      36-3,
  Acquisition
    of Shares by Us
      Liquidation
    Rights
    Item 10.C.
    Material
    Contracts   66




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##### Table of Contents



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 the
    movement of capital between Korea and other countries is likely
    to adversely affect the Korean 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
   67




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##### 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;
    acquisition and disposal of shares through overseas stock
    exchange market if such shares are simultaneously listed on the
    Stock Market Division or the KOSDAQ Market Division of the Korea
    Exchange and such overseas stock exchange; and
    arms length transactions between foreigners, if all of
    such foreigners belong to the investment group managed by the
    same person. 68




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##### Table of Contents



provided, however,
     69




---



##### Table of Contents



Item 10.E.
    Taxation  Form 20-F,
  Korean
    Taxation
    
    a resident of Korea;
    a corporation with registered office or main office is 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
     70




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##### Table of Contents



Taxation
    of Capital Gains
          Tax
    Treaties
  Korea-United Korea-United Korea-United
 71




---



##### Table of Contents



Inheritance
    Tax and Gift Tax
        Securities
    Transaction Tax
        United
    States Taxation
   72




---



##### Table of Contents




    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;
    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 note, share of common stock or
    ADS.  Shares
    of Common Stock and ADSs
    Dividends
     73




---



##### 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   74




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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
     75




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##### Table of Contents



Interest
    Rate Risk
    and/or
  MaturitiesDecember 31, 2007


December 31, 20062008


2009


2010


2011


2012


Thereafter


Total


Fair Value


Total


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


281



335



112



1,006



517



34



2,285



2,276



1,652



1,641Average weighted rate(1)


4.32
%


4.67
%


4.77
%


4.92
%


4.92
%


3.85
%


4.78
%






4.68
%


Variable rate






2











45







47



47



5



5Average weighted rate(1)






6.12
%










3.75
%






3.85
%






5.31
%


Sub-total


281



337



112



1,006



562



34



2,332



2,323



1,657



1,646Foreign currency, principally Dollars and Yen:Fixed rate


1,728



322



119



6



7



698



2,880



2,952



2,697



2,754Average weighted rate(1)


3.30
%


5.63
%


7.07
%


0.90
%


2.04
%


3.60
%


3.78
%






3.27
%


Variable rate


47



32



84















163



163



28



28Average weighted rate(1)


5.18
%


5.22
%


















5.04
%






6.17
%


Sub-total


1,775



354



203



6



7



698



3,043



3,115



2,725



2,782Total


2,056



691



315



1,012



569



732



5,375



5,438



4,382



4,428     (1)
    
    Weighted average rates of the portfolio at the period end.  Commodity
    Price Risk
    Equity
    Price Risk
    Item 12.
    Description
    of Securities Other than Equity Securities  Not applicable
 76




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##### Table of Contents



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  Not applicable
 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     77




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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  Sang-Yong.
  Item 16B.
    Code
    of Ethics  Form 20-F www.posco.com.
 78




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##### Table of Contents



Item 16C.
    Principal
    Accountant Fees and Services  Audit and
    Non-Audit Fees
    For the Year Ended December 31,2006


2007(In millions of won)Audit fees

W
1,485


W
1,791Audit-related fees


141



0Tax fees


104



139Other fees






14Total fees

W
1,730


W
1,944           Audit
    Committee Pre-Approval Policies and Procedures
  case-by-case
  Item 16D.
    Exemptions
    from the Listing Standards for Audit Committees  Not applicable
 79




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##### Table of Contents



Item 16E.
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers    Total Number of


Maximum Number ofShares Purchased as


Shares that May YetTotal Number of


Average Price Paid


Part of Publicly


Be Purchased UnderPeriod

Shares Purchased


per Share


Announced Plans


the Plans(In won)January 1 to January 31


30,000
(1)

W
289,845







February 1 to February 29


803,666



365,909



803,666



1,811,939March 1 to March 31


1,240,578



373,941



1,240,578



571,361April 1 to April 30


571,361



386,256



571,361



May 1 to May 31














June 1 to June 30


2,911
(1)


458,594







July 1 to July 31


40,919
(1)


516,255







August 1 to August 31


220,255
(1)


491,601







September 1 to September 30


20,374
(1)


624,274







October 1 to October 31


22,000
(1)


635,220







November 1 to November 30


103,702
(1)


573,989







December 1 to December 31


76,297
(1)


582,364







Total


3,132,063


W
398,697



2,615,605



     (1)
    
    Stocks purchased through the treasury stock fund that was
    partially funded by the sale of 872,000 treasury shares to
    Hyundai Mipo Dockyard Co., Ltd. 80




---



##### 



PART III  Item 17.
    Financial
    Statements  Not applicable
  Item 18.
    Financial
    Statements   
 PageReport of Independent Registered Public
    Accounting Firm


F-1Consolidated Balance Sheets as of
    December 31, 2006 and 2007


F-3Consolidated Statements of Income for the Years
    Ended December 31, 2005, 2006 and 2007


F-5Consolidated Statements of Changes in
    Shareholders Equity for the Years Ended December 31,
    2005, 2006 and 2007


F-6Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2005, 2006 and 2007


F-10Notes to Consolidated Financial Statements


F-12   81




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##### Table of Contents



Item 19.
    Exhibits  1
.1



Articles of incorporation of POSCO (English translation)
    (incorporated by reference to Exhibit 1.1 to the
    Registrants Annual Report on Form 20-F for the fiscal
    year ended December 31, 2006)*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)*7
.1



Computation of ratio of earnings to fixed charges8
.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 200215
.1



Consent of Samil PricewaterhouseCoopers, the Korean member firm
    of PricewaterhouseCoopers     *
    
    Filed previously 82




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm     Internal Control  Integrated Framework Form 20-F.
      Samil
    PricewaterhouseCoopers is the Korean member firm of
    PricewaterhouseCoopers. PricewaterhouseCoopers refers to the
    network of member firms of PricewaterhouseCoopers International
    Limited, each of which is a separate and independent legal
    entity.
 F-1




---



##### Table of Contents



F-2




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Balance Sheets
 December 31,
    2007 and 2006
  (Note 2)2007


2006


2007(In millions of Korean won and thousands of US dollar)ASSETSCurrent assetsCash and cash equivalents, net of government grants
    (Notes 3, 28 and 31)

W
1,292,581


W
936,289


$
1,381,258Short-term financial instruments (Notes 3, 13 and 28)


1,743,079



867,310



1,862,662Trading securities (Note 4)


1,286,939



2,000,647



1,375,229Current portion of available-for-sales securities (Note 7)


32,113



13,375



34,316Current portion of held-to-maturity securities (Note 7)


192,393



153,476



205,592Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (Notes 5, 13,
    28 and 29)


4,035,602



3,491,660



4,312,462Other accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (Notes 5, 28
    and 29)


214,956



246,805



229,702Inventories, net (Notes 6, 13 and 30)


4,902,016



4,018,205



5,238,316Deferred income tax assets (Note 25)


101,982



118,073



108,978Other current assets, net of allowance for doubtful accounts
    (Note 11)


591,872



391,113



632,478Total current assets


14,393,533



12,236,953



15,380,993Property, plant and equipment, net (Notes 8, 13 and 30)


15,581,765



14,643,120



16,650,743Investment securities (Notes 7, 13 and 28)


5,178,723



3,165,055



5,534,006Intangible assets, net (Notes 9 and 30)


570,779



557,082



609,937Long-term loans receivable, net of allowance for doubtful
    accounts and present value discount (Notes 5, 28 and 29)


40,474



62,295



43,251Long-term trade accounts and notes receivable, net of allowance
    for doubtful accounts and present value discount (Notes 5
    and 28)


39,919



44,347



42,657Deferred income tax assets (Note 25)


279,903



266,866



299,105Guarantee deposits (Note 28)


57,485



60,368



61,428Long-term financial instruments (Notes 3, 13 and 28)


17,065



12,339



18,236Other long-term assets, net of allowance for doubtful accounts
    and present value discount (Note 11)


115,117



100,648



123,016Total assets

W
36,274,763


W
31,149,073


$
38,763,372  F-3




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Balance Sheets  (Continued)
  (Note 2)2007


2006


2007(In millions of Korean won and thousands of US dollar)LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesTrade accounts and notes payable (Notes 28 and 29)

W
2,246,890


W
1,507,227


$
2,401,036Short-term borrowings (Notes 12, 28 and 29)


1,572,020



1,238,749



1,679,868Current portion of long-term debts, net of discount on
    debentures issued (Notes 13 and 28)


483,402



404,412



516,565Accrued expenses (Note 28)


172,971



221,936



184,838Other accounts and notes payable (Notes 28 and 29)


502,665



290,867



537,150Withholdings (Note 28)


133,495



133,131



142,653Income tax payable


930,822



701,037



994,681Deferred income tax liabilities (Note 25)


120,992



77,541



129,292Other current liabilities (Note 15)


461,358



507,395



493,010Total current liabilities


6,624,615



5,082,295



7,079,093Long-term debts, net of current portion and discount on
    debentures issued (Notes 13, 28 and 29)


3,306,486



2,725,502



3,533,326Accrued severance benefits, net (Note 14)


336,095



331,006



359,152Deferred income tax liabilities (Note 25)


654,969



460,342



699,903Other long-term liabilities (Notes 15 and 21)


234,858



148,186



250,970Total liabilities


11,157,023



8,747,331



11,922,444Commitments and contingencies (Note 16)Shareholders equityCommon stock (Notes 1 and 17)


482,403



482,403



515,498Capital surplus (Note 18)


4,176,592



4,035,273



4,463,125Capital adjustments, net (Note 20)


(2,727,147
)


(1,678,229
)


(2,914,242
)Accumulated other comprehensive income (Notes 22
    and 27)


784,933



209,754



838,783Retained earnings (Note 19)


21,767,302



18,863,333



23,260,63524,484,083



21,912,534



26,163,799Minority interest


633,657



489,208



677,129Total shareholders equity


25,117,740



22,401,742



26,840,928Total liabilities and shareholders equity

W
36,274,763


W
31,149,073


$
38,763,372    F-4




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##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Income
 Years
    Ended December 31, 2007, 2006 and 2005
  (Note 2)2007


2006


2005


2007(In millions of Korean won and thousands of US dollar,except per share amounts)Sales (Notes 29 and 30)

W
31,607,741


W
25,842,326


W
26,301,788


$
33,776,172Cost of goods sold (Note 29)


24,902,663



19,896,764



18,767,195



26,611,095Gross profit


6,705,078



5,945,562



7,534,593



7,165,077Selling and administrative expenses (Notes 23, 32
    and 33)


1,785,217



1,556,415



1,451,317



1,907,691Operating income


4,919,861



4,389,147



6,083,276



5,257,386Non-operating incomeInterest and dividend income (Note 29)


234,841



182,832



161,135



250,952Gain on foreign currency transactions


158,346



156,722



114,615



169,209Gain on foreign currency translation


19,179



84,269



148,857



20,495Gain on valuation of trading securities


16,039



19,467



15,357



17,139Gain on disposal of trading securities


57,236



67,284



59,436



61,163Gain on disposal of property, plant and equipment


15,182



19,144



24,225



16,223Gain on valuation of derivatives (Note 22)


12,741



1,857



1,671



13,615Gain on derivative transactions (Note 22)


17,689



15,477



3,857



18,903Earnings of equity method investees (Note 7)


71,563



47,147



26,095



76,472Gain on recovery of allowance for doubtful accounts


41,124



13,776



18,591



43,945Others


174,567



141,248



213,827



186,543818,507



749,223



787,666



874,660Non-operating expensesInterest expense (Note 29)


239,913



183,290



149,337



256,373Other bad debt expense


16,335



70,370



30,146



17,455Loss on foreign currency transactions


130,679



137,567



95,646



139,644Loss on foreign currency translation


65,432



4,855



9,091



69,921Losses of equity method investees (Note 7)


28,929



722



6,371



30,913Donations (Note 24)


197,366



154,678



153,018



210,906Loss on disposal of property, plant and equipment


43,544



54,179



42,815



46,531Loss on valuation of derivatives (Note 22)


3,617



820



21,393



3,865Loss on derivative transactions (Note 22)


6,312



40,363



9,000



6,746Loss on impairment of investments


11,542



2,088



11,846



12,334Others


95,768



204,847



854,090



102,337839,437



853,779



1,382,753



897,026Net income before income tax expense


4,898,931



4,284,591



5,488,189



5,235,020Income tax expense (Note 25)


(1,274,226
)


(921,951
)


(1,473,589
)


(1,361,644
)Net income (loss) of consolidated subsidiaries before acquisition


(53,259
)


9,558



7,607



(56,913
)Net income

W
3,677,964


W
3,353,082


W
4,006,993


$
3,930,289Net income attributable to controlling interest

W
3,558,660


W
3,314,181


W
4,022,492


$
3,802,800Net income attributable to minority interest

W
119,304


W
38,901


W
(15,499
)

$
127,489Basic and diluted earnings per share (Note 26) (in Korean
    won and US dollar)

W
46,854


W
42,115


W
50,790


$
50    F-5




---



##### Table of Contents





POSCO and
    Subsidiaries
 Consolidated
    Statements of Changes in Shareholders Equity
    Years Ended December 31, 2007, 2006 and 2005  AccumulatedOtherCommon


Common


Capital


Capital


Comprehensive


Retained


MinorityStock


Amount


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean won and thousands of US dollar)Balance as of January 1, 2005


87,186,835


W
482,403


W
3,895,378


W
(703,328
)

W
(447,406
)

W
12,851,118


W
307,891


W
16,386,056Net income for 2005






















4,022,492







4,022,492Effect of change in scope of consolidation










167











3,981







4,148Effect of change in percentage of ownership of investees










(12,893
)










598







(12,295
)Dividends






















(680,794
)






(680,794
)Change in treasury stock










108,018



(279,061
)














(171,043
)Overseas operations translation adjustment (Note 27)


















(30,251
)










(30,251
)Changes in valuation gain and loss on investment securities
    (Note 27)


















324,757











324,757Changes in capital adjustment arising from equity method
    investments (Note 27)


















(35,364
)










(35,364
)Effect of change in percentage of minority interest


























62,223



62,223Minority interest in income of consolidated subsidiaries


























(15,499
)


(15,499
)Others










739



16,956







(28,503
)


30,055



19,247Balance as of December 31, 2005


87,186,835


W
482,403


W
3,991,409


W
(965,433
)

W
(188,264
)

W
16,168,892


W
384,670


W
19,873,677  F-6




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##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Shareholders
    Equity  (Continued)
  AccumulatedOtherCommon


Common


Capital


Capital


Comprehensive


Retained


MinorityStock


Amount


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean won and thousands of US dollar)Balance as of January 1, 2006


87,186,835


W
482,403


W
3,991,409


W
(965,433
)

W
(188,264
)

W
16,168,892


W
384,670


W
19,873,677Net income for 2006






















3,314,181







3,314,181Effect of change in scope of consolidation (Note 1)










(1,012
)










40,649







39,637Effect of change in percentage of ownership of investees










(8,645
)


















(8,645
)Dividends






















(636,487
)






(636,487
)Change in treasury stock (Note 20)










50,565



(711,485
)














(660,920
)Overseas operations translation adjustment (Note 27)


















(46,086
)










(46,086
)Changes in valuation gain and loss on investment securities
    (Note 27)


















432,469











432,469Changes in capital adjustment arising from equity method
    investments (Note 27)


















11,635











11,635Effect of change in percentage of minority interest


























61,639



61,639Minority interest in income of consolidated subsidiaries


























38,901



38,901Others










2,956



(1,311
)






(23,902
)


3,998



(18,259
)Balance as of December 31, 2006


87,186,835


W
482,403


W
4,035,273


W
(1,678,229
)

W
209,754


W
18,863,333


W
489,208


W
22,401,742  F-7




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Shareholders
    Equity  (Continued)
  AccumulatedOtherCommon


Common


Capital


Capital


Comprehensive


Retained


MinorityStock


Amount


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean won and thousands of US dollar)Balance as of January 1, 2007


87,186,835


W
482,403


W
4,035,273


W
(1,678,229
)

W
209,754


W
18,863,333


W
489,208


W
22,401,742Net income for 2007






















3,558,660







3,558,660Effect of change in scope of consolidation (Note 1)










37















62,024



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










(5,500
)


















(5,500
)Dividends






















(655,099
)






(655,099
)Change in treasury stock (Note 20)










175,231



(1,045,274
)














(870,043
)Overseas operations translation adjustment (Note 27)


















87,957











87,957Changes in valuation gain and loss on investment securities
    (Note 27)


















498,711











498,711Changes in capital adjustment arising from equity method
    investments (Note 27)


















(7,455
)










(7,455
)Changes in valuation of derivatives (Note 27)


















(4,034
)










(4,034
)Effect of change in percentage of minority interest


























16,380



16,380Minority interest in income of consolidated subsidiaries


























119,304



119,304Others










(28,449
)


(3,644
)






408



(53,259
)


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


87,186,835


W
482,403


W
4,176,592


W
(2,727,147
)

W
784,933


W
21,767,302


W
633,657


W
25,117,740  F-8




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Shareholders
    Equity  (Continued)
  AccumulatedOtherCommon


Common


Capital


Capital


Comprehensive


Retained


MinorityStock


Amount


Surplus


Adjustments


Income


Earnings


Interest


Total(Thousands of US dollar)Balance as of January 1, 2007


87,186,835


$
515,498


$
4,312,110


$
(1,793,363
)

$
224,145


$
20,157,440


$
522,770


$
23,938,600Net income for 2007






















3,802,800







3,802,800Effect of change in scope of consolidation (Note 1)










40















66,280



66,320Effect of change in percentage of ownership of investees










(5,877
)


















(5,877
)Dividends






















(700,041
)






(700,041
)Change in treasury stock (Note 20)










187,252



(1,116,985
)














(929,733
)Overseas operations translation adjustment (Note 27)


















93,991











93,991Changes in valuation gain and loss on investment securities
    (Note 27)


















532,924











532,924Changes in capital adjustment arising from equity method
    investments (Note 27)


















(7,966
)










(7,966
)Changes in valuation of derivatives (Note 27)


















(4,311
)










(4,311
)Effect of change in percentage of minority interest


























17,504



17,504Minority interest in income of consolidated subsidiaries


























127,489



127,489Others










(30,400
)


(3,894
)






436



(56,914
)


(90,772
)Balance as of December 31, 2007


87,186,835


$
515,498


$
4,463,125


$
(2,914,242
)

$
838,783


$
23,260,635


$
677,129


$
26,840,928    F-9




---



##### Table of Contents



POSCO and
    SubsidiariesConsolidated Statements of Cash Flows
 Years Ended December 31, 2007, 2006 and 2005
  (Note 2)2007


2006


2005


2007(In millions of Korean won and thousands of US dollar)Cash flows from operating activitiesNet income

W
3,677,964


W
3,353,082


W
4,006,993


$
3,930,289Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation and amortization


2,126,729



1,782,738



1,612,554



2,272,632Accrual of severance benefits


211,758



144,931



213,082



226,285Provision for doubtful accounts, net


37,237



173,931



115,865



39,792Loss (gain) on foreign currency translation, net


49,334



(76,453
)


(138,296
)


52,719Gain on valuation of trading securities, net


(15,599
)


(18,863
)


(15,124
)


(16,669
)Gain on valuation of derivatives, net


(9,124
)


(1,037
)


19,722



(9,750
)Loss (gain) on derivatives transaction, net


(11,377
)


24,886



5,143



(12,157
)Gain on disposal of trading securities and investments, net


(57,199
)


(66,507
)


(58,865
)


(61,123
)Loss on disposal of property, plant and equipment, net


28,362



35,035



18,590



30,308Earnings of equity method investees, net


(42,634
)


(46,425
)


(19,724
)


(45,559
)Net income (loss) of consolidated subsidiaries before acquisition


(53,259
)


9,558



7,607



(56,913
)Others


263,988



374,968



391,783



282,0982,528,216



2,336,762



2,152,337



2,701,662Changes in operating assets and liabilitiesIncrease in trade accounts and notes receivable


(613,548
)


(398,201
)


45,112



(655,640
)Increase in inventories


(461,226
)


(380,143
)


(706,528
)


(492,868
)Decrease (increase) in other accounts and notes receivable


67,929



(30,932
)


(94,499
)


72,589Increase in accrued income


(15,218
)


(26,205
)


(19,757
)


(16,262
)Increase in advance payments


(70,847
)


(73,034
)


(83,702
)


(75,708
)Increase in prepaid expenses


(23,658
)


(5,009
)


(1,360
)


(25,281
)Increase in trade accounts and notes payable


561,078



272,270



(170,131
)


599,570Increase in other accounts and notes payable


164,460



122,673



(7,571
)


175,742Increase (decrease) in advances received


(16,884
)


78,449



(7,888
)


(18,042
)Decrease in accrued expenses


(108,184
)


(459,579
)


493,376



(115,606
)Increase (decrease) in income tax payable


162,806



(715,691
)


281,240



173,975Deferred income tax, net


(20,127
)


(59,480
)


(151,602
)


(21,508
)Payment of severance benefits


(64,975
)


(36,817
)


(84,049
)


(69,432
)Increase in group severance insurance deposits


(147,366
)


(48,880
)


(98,790
)


(157,476
)Increase (decrease) in other current liabilities


(13,055
)


5,855



(30,479
)


(13,951
)Others


(54,105
)


(9,616
)


(50,321
)


(57,817
)(652,920
)


(1,764,340
)


(686,949
)


(697,713
)Net cash provided by operating activities


5,553,260



3,925,504



5,472,381



5,934,238 F-10




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Cash Flows  (Continued)
  (Note 2)2007


2006


2005


2007(In millions of Korean won and thousands of US dollar)Cash flows from investing activitiesDisposal of trading securities


9,064,842



15,322,978



12,758,304



9,686,731Acquisition of trading securities


(8,173,811
)


(14,516,637
)


(12,536,599
)


(8,734,570
)Disposal of available-for-sale securities


9,412



145,990



347,987



10,058Acquisition of available-for-sale securities


(1,180,449
)


(653,466
)


(319,854
)


(1,261,433
)Disposal of short-term financial instruments


1,705,169



1,516,362



1,322,222



1,822,151Acquisition of short-term financial instruments


(2,678,616
)


(1,610,510
)


(1,434,935
)


(2,862,380
)Disposal of long-term financial instruments


34,555



113,339



1,509



36,926Acquisition of property, plant and equipment


(2,892,247
)


(3,709,422
)


(3,360,537
)


(3,090,668
)Disposal of property, plant and equipment


34,958



425,976



66,273



37,356Proceeds from short-term loans


108,221



64,436



107,484



115,646Short-term loans provided


(50,687
)


(62,641
)


(119,033
)


(54,164
)Long-term loans provided


(24,235
)


(6,388
)


(33,406
)


(25,898
)Acquisition of intangible assets


(81,946
)


(131,575
)


(81,605
)


(87,568
)Acquisition of other investment assets


(160,098
)


(131,095
)


(239,211
)


(171,081
)Others


21,220



(130,557
)


77,814



22,672Net cash used in investing activities


(4,263,712
)


(3,363,210
)


(3,443,587
)


(4,556,222
)Cash flows from financing activitiesProceeds from short-term borrowings


6,811,282



4,119,189



4,828,860



7,278,566Proceeds from long-term debt


1,054,138



2,160,279



594,312



1,126,457Proceeds from other long-term liabilities


37,060



15,535



497,193



39,603Disposal of treasury stock


406,991



69,779



931,664



434,912Repayment of current portion of long-term debt


(278,699
)


(1,188,281
)


(1,040,410
)


(297,818
)Repayment of short-term borrowings


(6,599,799
)


(3,821,014
)


(4,715,293
)


(7,052,574
)Repayment of long-term debt


(248,087
)


(165,212
)


(328,037
)


(265,107
)Payment of cash dividends


(655,099
)


(636,487
)


(680,794
)


(700,041
)Acquisition of treasury stock


(1,291,362
)


(851,123
)


(1,295,163
)


(1,379,956
)Repayment of other long-term liabilities


(94,072
)


(78,173
)


(398,998
)


(100,526
)Others


(143,209
)


106,643



(279,863
)


(153,034
)Net cash used in financing activities


(1,000,856
)


(268,864
)


(1,886,529
)


(1,069,518
)Effect of exchange rate changes on cash and cash equivalents


30,901



(15,245
)


(4,425
)


33,021Net increase in cash and cash equivalents from changes in
    consolidated subsidiaries


36,815



4,365



33,939



39,341Net increase in cash and cash equivalents


356,407



282,550



171,779



380,859Cash and cash equivalentsBeginning of the year


936,421



653,871



482,092



1,000,663End of the year

W
1,292,828


W
936,421


W
653,871


$
1,381,522   Supplemental
    cash flow information for the years ended December 31 is
    follows:
  2007


2006


2005


2007(In millions of Korean won and thousands of US dollar)Cash paid during the year for interest

W
229,113


W
179,501


W
154,240


$
244,831Cash paid during the year for Income tax


1,107,888



1,305,077



1,443,439



1,183,894    F-11




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes
    to Consolidated Financial Statements
 December 31, 2007 and 2006
  1.
    Consolidated
    Companies    The
    Controlling Company
      Number of


Percentage ofShares


Ownership (%)Nippon Steel Corporation(1)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


3,660,603



4.20National Pension Service


3,404,897



3.91SK Telecom Co., Ltd.


2,481,310



2.85Pohang University of Science and Technology


2,000,000



2.29Others


71,245,313



81.7187,186,835



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.   F-12




---



##### Table of Contents





POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Consolidated
    Subsidiaries
    Percentage ofNumber of











Percentage of


Ownership of

Summary of Financial InformationOutstanding





Number of Shares





Ownership


Subsidiaries







Net IncomeSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


(%)

Total Assets


Net Assets


(Loss)


Location(In millions of Korean won)(1)DomesticPOSCO E & C

Engineering and construction


30,000,000



27,281,080







27,281,080



90.94





2,763,452



1,358,478



205,847


PohangPosteel Co., Ltd.

Steel sales and service


18,000,000



17,155,000







17,155,000



95.31





532,013



324,736



19,093


SeoulPOSCON Co., Ltd.

Electronic control devices manufacturing


3,519,740



3,098,610







3,098,610



88.04





271,475



149,729



23,633


PohangPohang Coated Steel Co., Ltd.

Coated steel manufacturing


6,000,000



3,412,000







3,412,000



56.87





403,993



275,322



9,306


PohangPOSCO Machinery & Engineering Co., Ltd.

Steel work maintenance


1,700,000



1,700,000







1,700,000



100.00





103,308



50,029



(1,624
)

PohangPOSDATA Co., Ltd.

Computer hardware and software distribution


81,551,600



50,440,720







50,440,720



61.85





288,171



163,733



5,005


SungnamPOSCO Research Institute

Economic research and consulting


3,800,000



3,800,000







3,800,000



100.00





26,335



23,185



175


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)


76,779



41,992



(2,045
)

SuncheonPOS-AC Co., Ltd.

Architecture and consulting


230,000



230,000







230,000



100.00





46,627



30,321



7,027


SeoulPOSCO Specialty Steel Co., Ltd.

Specialty steel manufacturing


26,000,000



26,000,000







26,000,000



100.00





1,062,479



491,770



60,238


ChangwonPOSCO Machinery Co., Ltd.

Machinery installation


1,000,000



1,000,000







1,000,000



100.00





43,711



22,770



(10,365
)

GwangyangPOSTECH Venture Capital Corp.

Investment in venture companies


6,000,000



5,700,000







5,700,000



95.00





40,455



38,732



6,816


PohangPOSCO Refractories & Environment Company Ltd. (POSREC)

Manufacturing


5,907,000



3,544,200







3,544,200



60.00





174,308



132,953



16,899


PohangPOSCO Terminal Co., Ltd.

Distribution and warehousing


5,000,000



2,550,000







2,550,000



51.00





40,709



35,915



3,315


GwangyangMetapolis Co., Ltd.

Construction


10,560,000







4,229,280



4,229,280



40.00


POSCO E & C
    (30.62)


357,740



61,651



23,361


Seoul(3)Posmate Co., Ltd.

Facilities management


714,286



214,286







214,286



30.00





60,273



36,694



6,484


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)


144,942



77,793



10,727


PohangPOSCO Power Corp.

Generation of Electricity


40,000,000



40,000,000







40,000,000



100.00





1,007,130



523,318



34,994


SeoulPostech 2006 Energy Fund

Investment in new technology


570







126



126



22.11


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


29,340



29,177



558


SeoulPOSCORE Co., Ltd.

Components manufacturing and sales


3,907,151







1,992,647



1,992,647



51.00


Posteel (51.00)


66,372



12,919



(13,217
)

Chenan(3)  F-13




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Percentage ofNumber of











Percentage of


Ownership of

Summary of Financial InformationOutstanding





Number of Shares





Ownership


Subsidiaries







Net IncomeSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


(%)

Total Assets


Net Assets


(Loss)


Location(In millions of Korean won)(1)OverseasPOSCO America Corporation (POSAM)

Steel trading


320,796



319,024



1,772



320,796



100.00


POSCAN 
    (0.55)


191,976



110,200



(18,189
)

USAPOSCO Australia Pty. Ltd. (POSA)

Steel trading


761,775



761,775







761,775



100.00





323,885



181,140



18,081


AustraliaPOSCO Canada Ltd. (POSCAN)

Coal trading


1,099,885







1,099,885



1,099,885



100.00


Posteel (100.00)


131,664



112,591



6,539


CanadaPOSCAN Elkview Coal Ltd.

Coal trading


304,061







304,061



304,061



100.00


POSCAN
    (100.00)


35,934



35,742



1,385


CanadaPOSCO Asia Co., Ltd. (POA)

Steel trading


9,360,000



9,360,000







9,360,000



100.00





77,944



20,861



2,316


ChinaVSC POSCO Steel Corporation (VPS)

Steel manufacturing


















40.00


Posteel (5.00)


35,491



15,234



4,100


Vietnam(2)DALIAN POSCO  CFM Coated Steel Co., Ltd.

Coated steel manufacturing


















55.00


Posteel (10.00)
    POSCO-China
    (10.00)


67,646



9,625



(4,068
)

China(2)POS-Tianjin Coil Center Co., Ltd.

Steel service center


















70.00


Posteel (60.00)


31,440



9,988



1,402


China(2)POSMETAL Co., Ltd.

Steel service center


6,000







4,500



4,500



75.00


POSCO-Japan 
    (75.00)


30,519



6,736



135


JapanShanghai Real Estate Development Co., Ltd.

Real estate rental


















100.00


POSCO E&C
    (100.00)


138,092



92,360



9,091


China(2)IBC Corporation

Real estate rental


















60.00


POSCO E&C
    (60.00)


76,223



28,005



5,858


Vietnam(2)POSLILAMA Steel Structure Co., Ltd.

Steel structure fabrication and sales


















70.00


POSCO E&C
    (60.00)
    Posteel(10.00)


38,246



(14,156
)


90


Vietnam(2)Zhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)

Stainless steel manufacturing


















82.48


POSCO-China
    (23.88)


1,315,745



569,173



76,796


China(2)POSCO(Guangdong) Coated Steel Co., Ltd.

Coated steel manufacturing


















95.19


POSCO-China
    (11.53)


81,239



22,994



2,998


China(2)POSCO-Thailand Co., Ltd.

Steel service center


5,941,570



3,805,383



2,136,187



5,941,570



100.00


Posteel (35.95)


100,650



18,734



525


ThailandMyanmar-POSCO Steel Co., Ltd.

Specialty steel manufacturing and sales


19,200



13,440







13,440



70.00





8,819



3,581



48


Myanmar(3)  F-14




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Percentage ofNumber of











Percentage of


Ownership of

Summary of Financial InformationOutstanding





Number of Shares





Ownership


Subsidiaries







Net IncomeSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


(%)

Total Assets


Net Assets


(Loss)


Location(In millions of Korean won)(1)Zhangjiagang POSHA Steel Port Co., Ltd. (ZPSP)

Stainless steel manufacturing


















90.00


POSCO E&C
    (25.00)
    ZPSS (65.00)


11,735



11,654



673


China(2)POS-OPC Co., Ltd. (Fujiura  Butsuryu Center Co., Ltd.)

Warehousing


4,900







2,785



2,785



56.84


POSCO-Japan
    (56.84)


30,050



4,805



(600
)

Japan(3)POSCO Investment Co., Ltd.

Finance


5,000,000



5,000,000







5,000,000



100.00





157,712



68,609



3,553


ChinaPOSMMIT Steel Center SDN BHD (POSMMIT)

Steel service center


















70.00


Posteel (40.00)


48,399



16,445



2,291


Malaysia(2)(3)Qingdao Pohang Stainless Steel Co., Ltd.

Stainless steel manufacturing


















80.00


POSCO-China
    (10.00)


199,990



83,558



14,072


China(2)POSCO (SUZHOU) Automotive Processing Center Co., Ltd.

Steel service center


















100.00


POSCO-China 
    (10.00)


101,012



36,649



1,999


China(2)POSEC-Hawaii Inc.

Construction


24,400







24,400



24,400



100.00


POSCO E&C
    (100.00)


41,148



22,166



6,331


USAPOS-Qingdao Coil Center Co., Ltd.

Steel service center


















100.00


Posteel (100.00)


44,383



10,033



1,445


China(2)POS-ORE Pty. Ltd.

Iron ore mining and trading


17,500,001







17,500,001



17,500,001



100.00


POSA (100.00)


36,804



30,706



15,563


AustraliaPOSCO-China Holding Corp.

Investment


















100.00





197,989



196,271



6,219


China(2)POSCO-Japan Co., Ltd.

Steel trading


90,438



90,438







90,438



100.00





394,730



58,188



5,975


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

Facilities manufacturing


















100.00


POSCO E&C
    (100.00)


8,050



5,646



128


China(2)POS-CD Pty. Ltd.

Coal trading


12,550,000







12,550,000



12,550,000



100.00


POSA (100.00)


17,250



8,051



(1,793
)

AustraliaPOS-GC Pty. Ltd.

Coal trading


11,050,000







11,050,000



11,050,000



100.00


POSA (100.00)


17,139



8,298



(430
)

AustraliaPOSCO-India Private Ltd.

Coal trading


225,000,000



225,000,000







225,000,000



100.00





58,355



53,708






IndiaPOS-India Steel Processing Centre Pvt. Ltd.

Steel service center


65,790,858



42,764,058







42,764,058



65.00





44,391



20,653



4,799


IndiaPOS-NPC Co., Ltd.

Steel service center


49,000







44,100



44,100



90.00


POSCO-Japan
    (90.00)


33,053



2,518



605


Japan  F-15




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Percentage ofNumber of











Percentage of


Ownership of

Summary of Financial InformationOutstanding





Number of Shares





Ownership


Subsidiaries







Net IncomeSubsidiaries

Primary Business

Shares


POSCO


Subsidiaries


Total


(%)


(%)

Total Assets


Net Assets


(Loss)


Location(In millions of Korean won)(1)POSCO-Foshan steel processing Center Co., Ltd.

Steel service center


















100.00


POA (22.10) 
    POSCO-China
    (33.20)


98,900



21,537



(2,607
)

China(2)POSCO E&C (Beijing) Co., Ltd.

Construction and engineering


















100.00


POSCO E&C
    (100.00)


40,753



10,747



1,765


China(2)(3)POS-MPC S.A. de C.V.

Steel service center


1,656,638







1,010,550



1,010,550



61.00


POSAM
    (61.00)


82,591



13,410



(563
)

MexicoZhangjigang Pohang Port Co., Ltd.

Raw material and steel depot service


















100.00


ZPSS (47.30)
    POSA (27.70)
    POSCO-China
    (25.00)


22,677



11,042



487


China(2)POSCO-Vietnam Co., Ltd.

Cold-rolled steel manufacturing and sales


















100.00





154,164



146,713



(2,180
)

Vietnam(2)POSCO-Mexico Co., Ltd.

Cold-rolled steel manufacturing and sales


494,152,598



257,916,530



236,236,068



494,152,598



100.00


POSCAN
    (47.80)


40,440



40,435



(2,062
)

Mexico(3)POSS Delhi Steel Processing Centre Pvt. Ltd.

Steel service center


1,263



966







966



76.48





17,473



13,851



531


India(3)POS-NP Pty. Ltd.

Coal trading


35,000,000







35,000,000



35,000,000



100.00


POSA (100.00)


36,653



27,443



(1,284
)

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

Steel service center


11,040,000



8,832,000







8,832,000



80.00





10,003



9,946



(459
)

Vietnam(3)Suzhou POSCORE

Components manufacturing and sales


















100.00


POSCORE
    (100.00)


25,889



10,913



1,622


China(2)(3)     (1)
    
    Total assets, total liabilities and net assets of the
    Companys overseas subsidiaries are translated at the
    exchange rate as of the balance sheet date, and sales and net
    income are translated at the weighted-average exchange rate of
    the reporting period.(2)
    
    No shares have been issued in accordance with the local laws and
    regulations.(3)
    
    These subsidiaries are newly included in the consolidation. F-16




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Equity-Method
    Investees
    Percentage ofNumber of











Percentage of


Ownership ofPrimary

Outstanding


Number of Shares


Ownership


SubsidiariesInvestees

Business

Shares


POSCO


Subsidiaries


Total


(%)


(%)

Net Assets(1)


Location(In millions ofKorean won)DomesticeNtoB Corporation

E-business


3,200,000



560,000



300,000



860,000



26.88


POSCO E&C (3.75)


24,169


SeoulMIDAS Information Technology Co., Ltd.

Engineering


3,402,000







866,190



866,190



25.46


POSCO E&C (25.46)


20,957


SeoulSongdo New City Development Inc.

Real estate


















29.90


POSCO E&C (29.00)


(132,596
)

Seoul(3)Gail International Korea Ltd.

Real estate


















29.90


POSCO E&C (29.00)


38,560


Seoul(3)SNNC Co., Ltd.

Fe-Cr
    manufacturing


37,000,000



18,130,000







18,130,000



49.00





182,209


Gwangyang(2)Chungju Enterprise City

Construction


8,000,000







2,008,000



2,008,000



25.10


POSCO E&C (22.00)
    POADATA (3.10)


38,150


ChungjuOverseasKOBRASCO

Iron ore
    trading


4,021,438,370



2,010,719,185







2,010,719,185



50.00





85,021


Brazil(2)USS  POSCO Industries (UPI)

Steel
    processing


















50.00


POSAM (50.00)


124,222


USA(2.3)Poschrome (Proprietary) Limited

Fe-Cr
    manufacturing


86,700



21,675







21,675



25.00





26,720


Republic of
    South AfricaGuangdong Xingpu Steel Center Co., Ltd.

Steel
    processing


















21.00


Posteel (10.50)


14,928


China(3)POS-Hyundai Steel Manufacturing India Private Ltd.

Steel
    processing


23,455,600



2,345,558



4,573,842



6,919,400



29.50


Posteel (19.50)


13,644


IndiaPOSVINA Co., Ltd.

Steel
    manufacturing


















50.00





4,529


Vietnam(2.3)PT POSMI Steel Indonesia (POSMI)

Steel service
    center


12,600



1,193



3,579



4,772



37.87


Posteel (28.40)


8,380


Indonesia(2)  F-17




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Number of











Percentage of


Percentage ofPrimary

Outstanding


Number of Shares


Ownership


Ownership ofInvestees

Business

Shares


POSCO


Subsidiaries


Total


(%)


Subsidiaries (%)

Net Assets(1)


Location(In millions ofKorean won)POSCO Bioventures LP.

Investment in
    companies in
    the bio-tech
    industry


















100.00


POSAM(100.00)


35,190


USA(3.4)CAML Resources Pty. Ltd.

Material
    processing


9,715







3,239



3,239



33.34


POSA(33.34)


43,912


Australia(2)Nickel Mining Company SAS

Material
    processing


6,601,426



3,234,698







3,234,698



49.00





409,431


New
    Caledonia(2)Liaoning Rongyuan Posco Refractories Co., Ltd.

Manufacturing
    and sales


















35.00


POSREC (35.00)


4,203


China(2.3)Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.

Material
    processing


















30.00


POSCO-China
    (30.00)


14,609


China(2.3)An khanh New City Development

Construction


















50.00


POSCO E&C (50.00)


21,787


Vietnam(2.3)Henan Tsingpu Ferro Alloy Co., Ltd.

Material
    processing


















49.00


Zhangjiagang STS
    (49.00)


15,827


China(2.3)Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.

Specialty steel
    manufacturing


















34.00


POSCO-China (10.00)


29,672


China(2.3)BX Steel POSCO Cold Rolled sheet Co., Ltd.

Steel
    manufacturing


















25.00





207,462


China(3)     (1)
    
    Net assets of the Companys overseas subsidiaries are
    translated at the exchange rate as of the balance sheet date.(2)
    
    Although the Company owns over 30% equity interest in these
    investees, the Company is not their major shareholder. They were
    therefore excluded from consolidation.(3)
    
    No shares have been issued in accordance with the local laws and
    regulations.(4)
    
    The Company owns 100% equity interest in POSCO Bioventures LP.
    However, due to an agreement with POSCO Bioventures LP., which
    prohibits the Company from engaging in management activities,
    POSCO Bioventures LP. was excluded from consolidation. F-18




---



##### Table of Contents





POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Subsidiaries
    or Investees Excluded from the Consolidated Financial
    Statements
  Location

Investees

Country

ReasonDomestic

POSWITH Co., Ltd

Korea

Small companyBusan-Gimhae Light Rail Transit Co., Ltd.

Korea

Non-majority controlPohang Water Environment

Korea

Non-majority controlPajoo & Viro

Korea

Non-majority controlIncheon-Gimpo Highway

Korea

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

Korea

Non-majority controlUisinseol LRT Co. Ltd.

Korea

Non-majority controlGreen Cheonan Co., Ltd.

Korea

Non-majority controlGarolim Tidal Power Plant Co., Ltd

Korea

Non-majority controlGreen Jangryang Co., Ltd.

Korea

Non-majority controlPHP Co., Ltd.

Korea

Small companyTaegisan Wind Power Corporation

Korea

Small companyInnovalley co., Ltd.

Korea

Non-majority controlPOSBRO Co., Ltd

Korea

Small companyApplied Science Corp.

Korea

Small companySentech Korea Corp.

Korea

Small companyAROMA POSTECH RENEWABLE ENERGY,CO., LTD.

Korea

Non-majority controlKOREASOLARPARK CO., Ltd.

Korea

Small companyHJ photovoltaics, Inc.

Korea

Small companyOverseas

POSK Steel Processing center Co., Ltd. (POSK-PPC)

China

Small companyPOSCO Poland Steel Processing Center (POSCO-PWPC)

Poland

Small companyPOSCO-SAMSUNG-SUZHOU Processing Center Co. (POSS-SZPC)

China

Small companyPOSCO (Chongqing) Automotive Processing Center (POSCO-CCPC)

China

Small companyPOSCO Mexico Human Tech

Mexico

Small companyPOSCO-SAMSUNG-Slovakia Processing Center Co., Ltd. (POSS-SLPC)

Slovakia

Small companyEurope Steel Distribution Center (POSCO-ESDC, Logistics, Trading
    and Investment d.o.o)

Slovenia

Small companyHAMOS

Vietnam

Small companyUnited Spiral Pipe (USP)

USA

Small companyPT. POSNESIA

Indonesia

Under liquidationPOSCO E&C Nigeria Ltd.

Nigeria

Small companyPOSCO E&C India Private Ltd.

India

Small companyVECTUS Limited

UK

Small companyPOSCO Philippine Manila Processing Center Inc.
    (POSCO-PMPC)

Philippine

Small companyDalian Poscon Dongbang Automatic Co., Ltd

China

Small companyPOSDATA-China

China

Small companyMiller Pohang Coal Company Pty Ltd. (MPCC)

Australia

Small companyQingdao Posco Steel Processing Co., Ltd

China

Small companyOverseas

Zhangjiagang BLZ Pohang International Trading CO., Ltd.

China

Small companyYingkou Posrec Refractories Co., Ltd.

China

Small companyZhangjiagang Pohang Refractories Co., Ltd.

China

Small companySan Pu Trading Co. Ltd

China

Small companyPOSCO SeAH Steel Wire(Nantong) Oo., Ltd

China

Small companyPOSCO-JYPC Co., Ltd.

Japan

Small companyHK Lamination(M)SDN. BHD

Hongkong

Small company  F-19




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Change
    in Scope of Consolidation
  W
  W W W W
  2.
    Summary
    of Significant Accounting Policies    Basis
    of Consolidated Financial Statements Presentation
    Accounting
    Estimates
    Application
    of the Statements of Korean Financial Accounting
    Standards
  ,
 F-20




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    
    SKFAS No. 11, Discontinued Operations
    SKFAS No. 21, Preparation and Presentation of Financial
    Statements I
    SKFAS No. 22, Share-based Payments
    SKFAS No. 23, Earnings Per Share
    SKFAS No. 25, Consolidated Financial Statements  Preparation and
    Presentation of Financial Statements I
    Principles
    of Consolidation
      Cash
    and Cash Equivalents, and Financial Instruments
    Revenue
    Recognition
       F-21




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Allowance
    for Doubtful Accounts
    Inventories
  materials-in-transit, first-in,
  Investments
    in Securities
  Investments in Securities
        Investments
    in Affiliates
   F-22




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
            Property,
    Plant and Equipment
    EstimatedUseful LivesBuildings and structures

5-60 yearsMachinery and equipment

3-25 yearsTools

4-10 yearsVehicles

3-10 yearsFurniture and fixtures

3-10 years      F-23




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Intangible
    Assets
    EstimatedUseful LivesGoodwill


5 yearsNegative goodwill


5-10 yearsIntellectual property rights


5-10 yearsPort facilities usage rights


1-75 years
(2)Land Usage Right


20-50 years
(2)Deferred development expenses(1)Long-term power capacity rights


Contract termOther intangible assets


2-25 years     (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 and
    recorded 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)
    
    Port facilities usage rights and land usage right with estimated
    useful lives of 20 years or more, and which represent the
    rights to use certain port facilities and land, are amortized
    over the term of exclusive rights.    Discounts
    on Debentures
    Government
    Grants
      Valuation
    of Assets and Liabilities at Present Value
   F-24




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Restructuring
    of Receivables
    Accrued
    Severance Benefits
        Derivative
    Instruments
    Lease
    Transactions
      Foreign
    Currency Translation
   F-25




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Translation
    of Foreign Operations
    Reclassification
    of Prior Year Consolidated Financial Statement
    Presentation
    Income
    Taxes
      Impairment
    of Assets
    Capitalization
    of Financing Expenses
    Contingent
    Liabilities
   F-26




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Sale
    of Receivables
    Treasury
    Stock
    Stock
    Appreciation Rights
    Basic
    Earnings Per Share
    United
    States Dollar Amounts
  W
    Depreciation of Property,Company

Inventories(1)

Plant and EquipmentPOSCO

Moving-average method

Straight-line methodPOSCO E & C



Posteel Co., Ltd.



POSCON Co., Ltd.



Straight-line method,
    Declining-balance method F-27




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Depreciation of Property,Company

Inventories(1)

Plant and EquipmentPohang Coated Steel Co., Ltd.

Gross average method

Straight-line methodPOSCO Machinery & Engineering Co., Ltd.

Moving-average method

POSDATA Co., Ltd.



POSCO Research Institute

N/A

Seung Kwang Co., Ltd.

Gross average method

Straight-line method,
    Declining-balance methodPOS-AC Co., Ltd.

N/A

Posco Specialty Steel Co., Ltd.

Moving-average method

Straight-line methodPOSCO Machinery Corp.



POSTECH Venture Capital Co., Ltd.

N/A

Declining-balance methodPOSCO Refractories & Environment
    Company Ltd. (POSREC)

Moving-average method

Straight-line method,
    Declining-balance methodPOSCO Terminal Co., Ltd.



Metapolis Co., Ltd.



Declining-balance methodPosmate Co., Ltd.

N/A

Samjung Packing & Aluminum Co., Ltd.

Moving-average method

Straight-line method,
    Declining-balance methodPOSCO Power Corp.



Straight-line methodPostech 2006 Energy Fund

N/A

N/APOSCO America Corp. (POSAM)

Moving-average method

N/APOSCO Australia Pty. Ltd. (POSA)

Gross average method

POSCO Canada Ltd. (POSCAN)



Straight-line method,
    Unit of production methodPOSCAN Elkview Coal Ltd.

N/A

N/APOSCO Asia Co., Ltd. (POA)



Declining-balance methodVSC POSCO Steel Corporation (VPS)

Moving-average method

Straight-line methodDALIAN POSCO  CFM Coated Steel Co., Ltd.



POS-Tianjin Coil Center Co., Ltd.



POSMETAL Co., Ltd.



Shanghai Real Estate Development Co., Ltd.

N/A

IBC Corporation

Specific identification method

POSLILAMA Steel Structure Co., Ltd.

Moving-average method

Zhangjiagang Pohang Stainless Steel Co., Ltd.



POSCO(Guangdong) Coated Steel Co., Ltd.



POSCO-Thailand Co., Ltd.



Myanmar POSCO Steel Co., Ltd.



Zhangjiagang POSHA Steel Port Co., Ltd.



POS-OPC Co., Ltd.(Fujiura Butsuryu Center Co., Ltd.)

Specific identification method

POSCO Investment Co., Ltd.

N/A

POSMMIT Steel Centre SDN BHD

Moving-average method

Qingdao Pohang Stainless Steel Co., Ltd.



 F-28




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Depreciation of Property,Company

Inventories(1)

Plant and EquipmentPOSCO (Suzhou) Automotive Processing Center Co., Ltd.

Moving-average method

Straight-line methodPOSEC-Hawaii Inc.

N/A

POS-Qingdao Coil Center Co., Ltd.

Moving-average method

POSCO-China Holding Corp.

N/A

POS-ORE Pty. Ltd.

Gross average method

POSCO-Japan Co., Ltd.



POSCO E&C (Zhangjiagang)



Engineering & Consulting Co., Ltd.POS-GC Pty. Ltd.



POS-CD Pty. Ltd.



POSCO-India Private Ltd.

N/A

POS-India Steel Processing Centre Pvt. Ltd.

Specific identification method

POS-NPC Co., Ltd.

Moving-average method

POSCO-Foshan Steel Processing Center Co., Ltd.

Specific identification method

POS-MPC S.A. de C.V.



Zhangjigang Pohang Port Co., Ltd.

N/A

POSCO-Vietnam Co., Ltd.

Moving-average method

POSCO E&C (Beijing) Co., Ltd.

Specific identification method

POSCO-Mexico Co., Ltd.

N/A

POSS Delhi Steel Processing Centre Pvt. Ltd.

Specific identification method

POS-NP Pty. Ltd.

Gross average method

POSCO Vietnam Processing Center Co., Ltd.

Specific identification method

Suzhou POSCORE

Moving-average method

     (1)
    
    Specific identification method is used for
    materials-in-transit. F-29




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   3.
    Cash and
    Cash Equivalents, and Financial Instruments    Annual InterestRate (%)

2007


2006(In millions of Korean won)Cash and cash equivalentsCash on hand and bank deposits

0.00 ~2.00

W
95,292


W
19,925Checking accounts




16,103



4,123Corporate bank deposits

0.00 ~6.25


558,267



18,541Time deposits in foreign currency and others

2.02 ~5.05


286,679



567,333Maintained by overseas affiliates

0.00 ~12.00


336,487



326,4981,292,828



936,420Less : Government grants




(247
)


(131
)W
1,292,581


W
936,289Short-term financial instrumentsTime deposits

1.00 ~6.50

W
839,257


W
473,710Installment accounts

3.00 ~4.50


160



1,534Specified money in trust

5.00 ~6.25


3,002



20,447Certificates of deposit

5.20 ~7.06


769,430



199,000Commercial papers

5.91 ~5.91


14,587



20,220Others

0.50 ~7.06


54,902



127,591Maintained by overseas affiliates

2.25 ~8.50


61,741



24,808W
1,743,079


W
867,310Long-term financial instrumentsInstallment accounts

5.00 ~6.00

W
16,952


W
11,212Guarantee deposits for opening accounts




113



116Others








1,011W
17,065


W
12,339   W W W W W W W W W
 F-30




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Trading
    Securities    2007


2006(In millions of Korean won)Beneficiary certificates

W
1,285,650


W
1,985,888Corporate bond






14,118Money market fund


1,289



641W
1,286,939


W
2,000,647   5.
    Accounts
    and Notes Receivable, and Others    2007


2006(In millions of Korean won)Trade accounts and notes receivable

W
4,290,213


W
3,723,033Less: Allowance for doubtful accounts


(254,417
)


(231,214
)Present value discount


(194
)


(159
)W
4,035,602


W
3,491,660Other accounts and notes receivable

W
248,601


W
285,919Less: Allowance for doubtful accounts


(33,287
)


(38,572
)Present value discount


(358
)


(542
)W
214,956


W
246,805Long-term trade accounts and notes receivable

W
58,411


W
57,567Less: Allowance for doubtful accounts


(16,187
)


(9,901
)Present value discount


(2,305
)


(3,319
)W
39,919


W
44,347Long-term loans receivable

W
43,201


W
62,814Less: Allowance for doubtful accounts


(2,650
)


(469
)Present value discount


(77
)


(50
)W
40,474


W
62,295  F-31




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Face


Present Value


Book


Maturity

DiscountValue


Discount


Value


Date

Rate (%)(In millions of Korean won)Other accounts receivable 
    Tawryu Construction Co., Ltd.

W
9,418


W
114


W
9,304


2008

5.00BNG Steel Co., Ltd.


10,000



747



9,253


2009

5.60W
19,418


W
861


W
18,557Long-term loans receivable 
    Oh Sehwan and others

W
306


W
41


W
265


2017

7.50Riviera C.C


260



36



224


2011

3.70W
566


W
77


W
489Long-term trade accounts receivable 
    BNG Steel Co., Ltd.(1)

W
28,259


W
3,037


W
25,222


20082009

8.60Others


27,888



2,499



25,389


20102016

4.706.50W
56,147


W
5,536


W
50,611     (1)
    
    The Company provides allowance for bad debts on present value
    discounts incurred from restructured receivables under work-out
    plans.      AdditionsBalance at


Charged to


Change in





Balance atBeginning of


Costs and


Scope of





the End ofDescription

Period


Expenses


Consolidation


Deductions(1)


Period(In millions of Korean Won)Year ended December 31, 2007:Reserves deducted in the balance sheet from the assets to which
    the apply:Allowance for doubtful accounts

W
367,237


W
37,237


W



W
62,708


W
341,766Year ended December 31, 2006:Reserves deducted in the balance sheet from the assets to which
    the apply:Allowance for doubtful accounts


263,111



173,931







69,805



367,237Year ended December 31, 2005:Reserves deducted in the balance sheet from the assets to which
    the apply:Allowance for doubtful accounts


158,944



115,865



11



11,709



263,111     (1)
    
    Deduction for allowance for doubtful accounts includes amount
    written off as uncollectible and others. F-32




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   6.
    Inventories    2007


2006(In millions of Korean won)Finished goods

W
1,003,788


W
844,790By-products


24,983



30,795Semi-finished goods


1,386,307



893,359Raw materials


1,177,880



1,113,870Fuel and materials


520,882



395,331Materials-in-transit


786,278



716,271Others


1,898



23,789W
4,902,016


W
4,018,205   7.
    Investment
    Securities    2007


2006(In millions of Korean won)Available-for-sale securities

W
4,511,569


W
2,848,226Held-to-maturity securities


62,542



110,326Equity-method investments


604,612



206,503W
5,178,723


W
3,165,055   Available-for-Sale
    Securities
    2007


2006(In millions of Korean won)Current portion of available-for-sale securities
    Investments in bonds

W
32,113


W
13,375Available-for-sale securitiesMarketable equity securities


3,888,043



2,337,984Non-marketable equity securities


599,414



459,188Investments in bonds


3,762



35,581Equity investments


20,350



15,4734,511,569



2,848,226W
4,543,682


W
2,861,601  F-33




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006Number of


Percentage of


Acquisition


Book


BookShares


Ownership (%)


Cost


Value(1)


Value(In millions of Korean won)Hanil Iron & Steel Co., Ltd.


206,798



10.14


W
2,413


W
5,811


W
4,435HI Steel Co., Ltd.


135,357



9.95



1,609



2,430



2,166Moonbae Steel Co., Ltd.


1,849,380



9.02



3,588



8,230



2,395Hana Financial Group Inc.


4,663,776



2.20



29,998



235,054



228,058SK Telecom Co., Ltd.(2)


4,241,411



5.22



1,197,441



1,061,740



931,735Dong Yang Steel Pipe Co., Ltd.


1,564,250



2.45



3,911



2,831



1,025Nippon Steel Corporation


238,352,000



3.50



719,622



1,374,491



1,117,010Korea Line Corp.


217,373



2.17



8,067



35,867



10,760Hyundai Heavy Industries


1,477,000



1.94



343,505



653,572



Shinhan Financial Group Inc.


3,815,676



1.00



219,467



204,139



SeAH Steel Corp.


540,000



10.11



18,792



26,028



Thainox Stainless Public Company


1,200,000,000



15.00



42,301



46,243



Union Steel Co., Ltd.


1,005,000



9.80



40,212



23,618



MML


40,000,000



11.07



14,811



114,212



FUELCELL energy, inc.


3,822,630



5.61



27,141



35,577



Others










39,080



58,200



40,400W
2,711,958


W
3,888,043


W
2,337,984     (1)
    
    Marketable equity securities are stated at fair market value and
    the difference between the acquisition cost and the fair market
    value is accounted for under accumulated other comprehensive
    income in the consolidated balance sheets.(2)
    
    The 1,899,840 SK Telecom Co., Ltd. shares have been placed as a
    collateral for exchangeable bonds (Note 13). F-34




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2007


2006Number of


Percentage of


Acquisition


Book


BookShares


Ownership (%)


Cost


Value


Value(In millions of Korean won)Hankyung Shinmun Co., Ltd.


28,728



0.15


W
309


W
309


W
309Keo Yang Shipping Co., Ltd.


150,000



0.88



780



780



780Jeonnam Pro Football Co., Ltd.


19,799



13.20



99



99



99Dae Kyeong Special Steel Co., Ltd.


1,786,000



19.00



8,930



8,930



8,930The Korea Metal Journal Co., Ltd.


2,000



2.67



20



20



20Pohang Steelers Co., Ltd.


40,000



16.67



200



200



200Kihyup Technology Banking Corp.


600,000



10.34



3,000



3,000



3,000Poshome Co., Ltd.


10,000



3.69



50



50



50LG Powercom Corporation(1)


6,300,000



5.00



246,000



93,398



106,845The Seoul Shinmun Co., Ltd.


1,614,000



19.40



7,479







ESCO Professionals, Ltd.


4,210



7.02



21



21



21TFS Global Co., Ltd.


5,290



8.82



26



26



26The Siam United Steel


11,071,000



12.30



34,658



34,658



34,658Global Unity Ltd.


70,649



13.33



710



710



710PT. POSNESIA Stainless Steel Industry(4)


29,610,000



70.00



9,474



1,567



1,567BX STEEL POSCO Cold Rolled Sheet Co., Ltd.(3)


















26,803CTA Co., Ltd.


73,390



14.68



37



37



37Woori DCI Co., Ltd.


5,653



18.84



28



28



28RCC Co., Ltd.


9,053



18.11



45



45



45Myanmar- POSCO Steel Co., Ltd.(5)


















3,717Nickel Mining Company SAS(3)


















28Wuhan Excellent Steel Center(2)






5.00



432



432



432POSCO Steel Processing Center Co., Ltd. 
    (POSK-PPC)(2),(4)






20.00



1,869



1,869



928POSWITH Co., LTD(4)


320,000



100.00



1,600



1,600



MTS Korea Co., Ltd.


11,076



18.46



55



55



Korea ST Co., Ltd.


796,000



19.90



13,930



13,930



POSCO Poland Steel Processing Center (POS-PPC)(4)


30,000



30.00



3,803



3,803



POSCO-SAMSUNG-SUZHOU Processing Center
    (POSS-SZPC)(2),(4)






30.00



1,608



1,608



POSCO (Chongqing) Automotive Processing Center
    (POS-CPC)(2),(4)






90.00



6,201



6,201



POSCO Mexico Human Tech(2),(4)






100.00



3



3



POSCO-SAMSUNG-Slovakia Processing Center
    (POSS-SLPC)(2),(4)






30.00



1,794



1,794



Europe Steel Distribution Center (POS-ESDC, Logistics, Trading
    and Investment d.o.o)(2),(4)






50.00



1,893



1,893



HAMOS(2),(4)






20.00



998



998



Incheon International Airport Railroad Co., Ltd.(1)


22,101,940



11.96



110,510



179,026



110,510Busan-Gimhae Light Rail Transit Co., Ltd.(4)


3,590,720



20.85



17,954



17,954



17,954Seoul Metro Line Nine Corporation


3,405,812



19.98



17,030



17,030



8,515Hankuk Leisure Co., Ltd.


839,964



16.42



8,627



8,627



8,476Vectus Limited(4)


2,211,837



99.59



7,011



7,006



4,219U-space Co., Ltd.


2,800,000



10.00



14,000



14,000



Daejeon Cogeneration Plant Co., Ltd.(1)


752,400



19.80



3,762



11,196



Shinbundang Railroad Co., Ltd


2,061,000



6.73



10,305



10,305



Kenertec Co., Ltd.(2)










10,000



10,000



EcoTown


1,596,000



19.00



7,980



7,980



Pohang Youngil New Port


1,123,200



7.20



5,616



5,616



Gyeong Su Highway Corp


992,000



4.52



4,960



4,960



Others










105,006



127,650



120,281W
668,813


W
599,414


W
459,188  F-35




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (1)
    
    The fair values of LG Powercom Corporation and two other
    investees were based on the valuation report of a public rating
    services company. Investments without an objective fair value
    were recorded as acquisition costs, except for LG Powercom
    Corporation and two other investees.(2)
    
    No shares have been issued in accordance with the local laws or
    regulations.(3)
    
    The investments in these entities are reclassified from
    available-for-sale securities to equity-method investments in
    2007.(4)
    
    Investees under liquidation, or in possession of total assets of
    less than W7,000 million as of
    December 31, 2007, were excluded from the equity method
    investments.(5)
    
    The entity is a consolidated subsidiary in 2007.    2007


2006Beginning


Increase


Ending


Beginning


Increase


EndingBalance


(Decrease)


Balance


Balance


(Decrease)


Balance(In millions of Korean won)Marketable equity securitiesSK Telecom Co., Ltd.

W
(185,185
)

W
86,802


W
(98,383
)

W
(352,910
)

W
167,725


W
(185,185
)Hana Financial Group Inc.


143,594



5,072



148,666



132,918



10,676



143,594Moonbae Steel Co., Ltd.


(865
)


4,230



3,365



(496
)


(369
)


(865
)Hanil Iron & Steel Co., Ltd.


1,467



997



2,464



1,039



428



1,467HI Steel Co., Ltd.


404



191



595



404







404Korea Line Corporation


1,952



18,203



20,155



(1,783
)


3,735



1,952Nippon Steel Corporation


412,453



62,327



474,780



180,562



231,891



412,453Hyundai Heavy Industries






224,798



224,798











SeAH Steel Corp.






5,246



5,246











Thainox Stainless Public Company Limited






2,858



2,858











Shinhan Financial Group Inc.






(11,114
)


(11,114
)










Dong Yang Steel Pipe Co., Ltd.


(2,092
)


1,310



(782
)


(2,041
)


(51
)


(2,092
)Union Steel Co., Ltd.






(12,031
)


(12,031
)










Others


11,550



97,668



109,218



6,755



4,795



11,550383,278



486,557



869,835



(35,552
)


418,830



383,278Non-marketable equity securitiesLG Powercom Corporation


(100,887
)


8,573



(92,314
)


(115,813
)


14,926



(100,887
)Others


(618
)


3,581



2,963



670



(1,288
)


(618
)(101,505
)


12,154



(89,351
)


(115,143
)


13,638



(101,505
)W
281,773


W
498,711


W
780,484


W
(150,695
)

W
432,468


W
281,773  F-36




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006Acquisition


Book


BookMaturity

Cost


Value


Value(In millions of Korean won)Government bonds

Less than 1 year

W
4,694


W
4,694


W
1-5 years


76



76



15-10 years


48



48



Others

Less than 1 year


27,000



27,419



13,3751-5 years


4,118



3,638



35,58035,936



35,875



48,956Less: Current portion




(31,694
)


(32,113
)


(13,375
)W
4,242


W
3,762


W
35,581     2007


2006Acquisition


Book


BookCost


Value


Value(In millions of Korean won)Contractor financial fund

W
12,673


W
15,635


W
12,284Software financial fund and others


4,694



4,715



3,189W
17,367


W
20,350


W
15,473     2007


2006Gross


Gross








Gross


GrossAmortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


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

W
4,818


W



W



W
4,818


W
1


W



W



W
1Other bonds


31,118



419



(480
)


31,057



48,452



503







48,95535,936



419



(480
)


35,875



48,453



503







48,956Marketable equity securities


2,711,958



1,357,567



(181,482
)


3,888,043



1,806,004



794,156



(262,176
)


2,337,984Non-Marketable equity securities


668,813



123,409



(192,808
)


599,414



599,195







(140,007
)


459,188W
3,416,707


W
1,481,395


W
(374,770
)

W
4,523,332


W
2,453,652


W
794,659


W
(402,183
)

W
2,846,128   W W W W
 F-37




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Held-To-Maturity
    Securities
    2007


2006Acquisition


Book


BookMaturity

Cost


Value


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

Less than 1

W
192,366


W
192,393


W
153,476Held-to-maturity securities

1-5 years


31,624



31,635



79,854Government bonds

5-10 years


30,892



30,907



30,47262,516



62,542



110,326W
254,882


W
254,935


W
263,802   W W
  Equity-Method
    Investments
    Number of


Percentage of


Acquisition


Net


Book ValueShares Owned


Ownership (%)


Cost


Asset(1)


2007


2006(In millions of Korean won)InvesteeKOBRASCO


2,010,719,185



50.00


W
32,950


W
85,021


W
41,143


W
32,622POS-OPC Co., Ltd. (Fujiura Butsuryu Center Co., Ltd.)(3)






















835USS-POSCO Industries(2)






50.00



241,098



124,222



59,771



49,380Poschrome (Proprietary) Limited


21,675



25.00



4,859



26,720



5,165



4,826Guangdong Xingpu Steel Center Co., Ltd.(2)






21.00



1,852



14,928



3,026



2,487POS-Hyundai Steel Manufacturing India Private Limited


6,919,400



29.50



3,136



13,644



4,025



2,780eNtoB Corporation


860,000



26.88



4,900



24,169



6,149



4,399POSVINA Co., Ltd.(2)






50.00



1,527



4,529



2,192



2,066Posmmit Steel Centre SDN BHD(3)






















3,891PT POSMI Steel Indonesia


4,772



37.87



1,467



8,380



3,177



3,205MIDAS Information Technology Co., Ltd.


866,190



25.46



433



20,957



5,321



4,292CAML Resources Pty Ltd


3,239



33.34



40,388



43,912



28,155



37,717Nickel Mining Company SAS


3,234,698



49.00



157,585



409,431



200,622



SNNC Co., Ltd.


18,130,000



49.00



90,650



182,209



87,762



18,816Henan Tsingpu Ferro Alloy Co., Ltd.(2)






49.00



8,846



15,827



8,470



Zhongyue POSCO(Qinhuangdao)






34.00



9,516



29,672



10,043



Tinplate Industrial Co., Ltd.(2)BX Steel POSCO Cold Rolled






25.00



61,961



207,462



66,782



 F-38




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Number of


Percentage of


Acquisition


Net


Book ValueShares Owned


Ownership (%)


Cost


Asset(1)


2007


2006(In millions of Korean won)Sheet Co., Ltd.Songdo New City Development Inc.(2),(4)






29.90



6,674



(132,596
)






Gale International Korea, Inc.


4,265



29.90



21



38,560



11,385



2,070An Khanh New City Development(2)






50.00



11,359



21,787



10,893



Chungju enterprise City


2,008,000



25.10



10,040



38,150



9,576



POSCO Bioventures, L.P.(2)






100.00



46,102



35,190



35,190



33,931Liaoning Rongyuan POSCO Refractories Co., Ltd.(2)






35.00



1,125



4,203



1,380



Hubei Huaerliang POSCO Silicon






30.00



3,236



14,609



4,385



3,186Science & Technology Co., Ltd.(2)









W
739,725


W
1,230,986


W
604,612


W
206,503     (1)
    
    Due to the delay in the closing of the December 31, 2007
    accounts and the settlement of closing differences, the equity
    method of accounting is applied based on the most recent
    available December 31, 2007 financial information, which
    has not been audited or reviewed.(2)
    
    No shares have been issued in accordance with the local laws and
    regulations.(3)
    
    POS-OPC Co., Ltd. and POSMMIT Steel Centre SDN BHD are
    consolidated in 2007 and excluded from the equity-method
    investments.(4)
    
    The equity method of accounting has been suspended for
    investment in Songdo New City Development Inc. as the
    Companys net investments have been reduced to zero.
    Unrecorded changes in equity interest in Songdo New City
    Development Inc. in 2007 amounted to
    W884 million and the accumulated
    unrecorded changes in equity interest through 2006 amounted to
    W38,666 million. F-39




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Earnings(Losses) of


Other


As ofAs of January 1,


Equity Method


Increase


December 31,2007


Investees


(Decrease)(1)


2007(In millions of Korean won)InvesteeKOBRASCO

W
32,622


W
18,947


W
(10,426
)

W
41,143POS-OPC Co., Ltd.(Fujiura Butsuryu Center Co., Ltd.)


835







(835
)


USS-POSCO Industries


49,380



(10,096
)


20,487



59,771Poschrome (Proprietary) Limited


4,826



2,793



(2,454
)


5,165Guangdong Xingpu Steel Center Co., Ltd.


2,487



319



220



3,026POS-Hyundai Steel Manufacturing India Private Limited


2,780



827



418



4,025eNtoB Corporation


4,399



488



1,262



6,149POSVINA Co., Ltd.


2,066



172



(46
)


2,192Posmmit Steel Centre SDN BHD


3,891







(3,891
)


PT POSMI Steel Indonesia


3,205



(65
)


37



3,177MIDAS Information Technology Co., Ltd.


4,292



1,002



27



5,321Posco Power Co., Ltd.














CAML Resources Pty Ltd


37,717



(11,500
)


1,938



28,155Nickel Mining Company






32,229



168,393



200,622SNNC Co., Ltd.


18,816



(2,637
)


71,583



87,762Henan Tsingpu Ferro Alloy Co., Ltd.






(1,489
)


9,959



8,470Zhongyue POSCO(Qinhuangdao) Tinplate Industrial Co., Ltd.






(216
)


10,259



10,043BX Steel POSCO Cold Rolled Sheet Co., Ltd.






2,213



64,569



66,782Songdo New City Development Inc.














Gale International Korea, Inc.


2,070



11,408



(2,093
)


11,385AN KHANH NEW CITY DEVELOPMENT






(353
)


11,246



10,893Chungju enterprise City






(464
)


10,040



9,576POSCO BioVentures, L.P.


33,931



(1,066
)


2,325



35,190Liaoning Rongyuan POSCO Refractories Co., Ltd.






252



1,128



1,380Hubei Huaerliang POSCO Silicon


3,186



913



286



4,385Science & Technology Co., Ltd.Sozhou POSCORE(2)






(1,043
)


1,043



W
206,503


W
42,634


W
355,475


W
604,612     (1)
    
    Other increase or decrease represents the changes in investment
    securities due to acquisitions (disposals), dividends received,
    valuation gain or loss on investment securities, changes in
    retained earnings and others.(2)
    
    The entity is included in the scope of consolidation in 2007.
    The loss of equity method investee was incurred before
    acquisition.  F-40




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Earnings(Losses) of


OtherJanuary 1,


Equity Method


Increase


December 31,2006


Investees


(Decrease)(1)


2006(In millions of Korean won)InvesteeKOBRASCO

W
30,268


W
21,831


W
(19,477
)

W
32,622POS-OPC Co. Ltd.(Fujiura Butsuryu Center Co. Ltd.)


824



105



(94
)


835USS-POSCO Industries


61,707



8,469



(20,796
)


49,380Poschrome (Proprietary) Limited


6,153



1,481



(2,808
)


4,826Guangdong Xingpu Steel Center Co., Ltd.


2,985



(342
)


(156
)


2,487POS-Hyundai Steel Manufacturing India Private Limited


2,229



677



(126
)


2,780eNtoB Corporation


4,188



211







4,399POSVINA Co., Ltd.


1,593



975



(502
)


2,066Posmmit Steel Centre Sdn Bhd


3,212



737



(58
)


3,891PT POSMI Steel Indonesia


1,746



(78
)


1,537



3,205MIDAS Information Technology Co., Ltd.


3,227



1,255



(190
)


4,292Posco Power Co., Ltd.


290,255



1,580



(291,835
)


CAML Resources Pty Ltd


38,673



1,335



(2,291
)


37,717POSCO Bioventures. LP


33,716



4,521



(4,306
)


33,931Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.


3,412



(50
)


(176
)


3,186SNNC Co., Ltd.






(252
)


19,068



18,816Gale International Korea, Inc.






3,970



(1,900
)


2,070W
484,188


W
46,425


W
(324,110
)

W
206,503     (1)
    
    Other increase or decrease represents the changes in investment
    securities due to acquisitions (disposals), dividends received,
    valuation gain or loss on investment securities, changes in
    retained earnings and others. F-41




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2007


2006Property, Plant








Property, Plantand Equipment,








and Equipment,and Intangible








and IntangibleInventories


Assets


Total


Inventories


Assets


Total(In millions of Korean won)InvesteeKOBRASCO

W
3,000


W



W
3,000


W
5,370


W



W
5,370POS-OPC Co., Ltd.(Fujiura Butsuryu Center Co., Ltd.)














18







18USS-POSCO Industries


8,558







8,558



1,433







1,433Poschrome (Proprietary) Limited


(615
)






(615
)


(63
)






(63
)Guangdong Xingpu Steel Center Co., Ltd.


254







254



(358
)






(358
)eNtoB Corporation


(340
)


(18
)


(358
)


37



(6
)


31POSVINA Co., Ltd.


14







14



777







777Posmmit Steel Centre SDN BHD














306







306PT POSMI Steel Indonesia


125







125



(57
)






(57
)MIDAS Information Technology Co., Ltd.






(13
)


(13
)






(8
)


(8
)SNNC Co., Ltd.






(1,709
)


(1,709
)










Henan Tsingpu Ferro Alloy Co., Ltd.


127







127











W
11,123


W
(1,740
)

W
9,383


W
7,463


W
(14
)

W
7,449     January 1,


Increase


Amortization


December 31,


Increase


Amortization


December 31,2006


(Decrease)(1)


(Recovery)


2006


(Decrease)(1)


(Recovery)


2007(In millions of Korean won)eNtoB Corporation

W



W



W



W



W
670


W
80


W
590POSMMIT Steel Centre SDN BHD


39







20



19



(19
)






PT POSMI Steel Indonesia


354



49



182



221







187



34POSCO Power Corp.


65,804



(62,148
)


3,656















CAML Resources Pty. Ltd.


25,042







5,763



19,279







5,764



13,515SNNC Co., Ltd.


















209



21



188BX Steel POSCO Cold Rolled Sheet Co., Ltd.


















13,363



1,114



12,249W
91,239


W
(62,099
)

W
9,621


W
19,519


W
14,223


W
7,166


W
26,576  F-42




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (1)
    
    Increase or decrease mainly relates to the change in differences
    between the initial purchase price and the Companys
    initial proportionate ownership in the book value of the
    investees resulting from additional investments.  8.
    Property,
    Plant and Equipment    2007


2006(In millions of Korean won)Buildings and structures

W
7,004,719


W
6,308,203Machinery and equipment


27,312,692



24,280,940Vehicles


196,939



201,878Tools


425,335



402,294Furniture and fixtures


258,670



257,624Financial lease asset


11,466



35,209,821



31,450,939Less: Accumulated depreciation


(22,318,851
)


(20,804,990
)Less: Government Subsidy


(2,271
)


12,888,699



10,645,949Land


1,509,189



1,311,755Less: Accumulated impairment loss






1,509,189



1,311,755Construction-in-progress


1,183,877



2,685,416Less: Accumulated impairment loss






1,183,877



2,685,416W
15,581,765


W
14,643,120   W W
  W W
  W W
  Construction-in-progress construction-in-progress
 F-43




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  W W
  construction-in-progress W
    Elimination ofBeginning














Intercompany


EndingBalance


Acquisition(1)


Disposal


Depreciation(3)


Others(2)


Transactions


Balance(In millions of Korean won)Land

W
1,311,755


W
67,228


W
2,462


W



W
132,742


W
(74
)

W
1,509,189Buildings


2,400,099



366,769



16,560



193,798



232,302



(165,788
)


2,623,024Structures


1,366,558



361,420



10,862



122,054



29,130



(77,376
)


1,546,816Machinery and equipment


6,674,178



3,391,203



370,812



1,585,314



976,260



(558,966
)


8,526,549Vehicles


44,101



12,442



8,382



15,832



6,149



(1,532
)


36,946Tools


84,134



32,598



5,262



43,284



8,565



(1,368
)


75,383Furniture and fixtures


76,879



10,184



8,623



35,858



30,966



(4,396
)


69,152Financial Lease assets






11,466







637











10,829Construction-in-progress


2,685,416



2,937,680



73,678







(4,174,278
)


(191,263
)


1,183,877W
14,643,120


W
7,190,990


W
496,641


W
1,996,777


W
(2,758,164
)

W
(1,000,763
)

W
15,581,765     Elimination ofBeginning














Intercompany


EndingBalance


Acquisition(1)


Disposal


Depreciation(3)


Others(2)


Transactions


Balance(In millions of Korean won)Land

W
1,202,734


W
56,561


W
10,116


W



W
62,639


W
(63
)

W
1,311,755Buildings


2,268,834



314,727



7,770



175,188



165,398



(165,902
)


2,400,099Structures


1,246,290



175,023



3,569



110,623



136,735



(77,298
)


1,366,558Machinery and equipment


4,866,840



2,873,485



31,762



1,394,402



886,787



(526,770
)


6,674,178Vehicles


30,429



28,597



647



16,760



4,737



(2,255
)


44,101Tools


101,568



36,409



415



52,247



790



(1,971
)


84,134Furniture and fixtures


72,176



38,907



678



29,346



1,028



(5,208
)


76,879Construction-in-progress


2,482,839



3,346,112



441,589







(2,568,247
)


(133,699
)


2,685,416W
12,271,710


W
6,869,821


W
496,546


W
1,778,566


W
(1,310,133
)

W
(913,166
)

W
14,643,120     (1)
    
    Includes asset transfer from
    construction-in-progress.(2)
    
    Includes foreign currency translation adjustments, asset
    transfers and adjustments resulting from the effect of changes
    in the scope of consolidation.(3)
    
    Includes depreciation expense of idle property. F-44




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     2007(In millions ofKorean won)Financial lease assets

W
11,466Less: Accumulated depreciation


(637
)Net book value

W
10,829   MinimalLeaseExpenseLess 1 year

W
7711  5 years


4,421Over 5 years


5,536   9.
    Intangible
    Assets    2007


2006(In millions of Korean won)Goodwill

W
75,556


W
90,105Negative goodwill


(1,243
)


(1,388
)Intellectual property rights


1,811



1,221Land usage rights


13,100



23,439Development costs


91,965



67,862Port facilities usage rights


130,234



112,102Long-term electricity supply contract rights


61,857



68,544Other intangible assets(1)


197,499



195,197W
570,779


W
557,082     (1)
    
    The Company capitalized costs directly related to the Enterprise
    Resource Planning (ERP) system and the process innovation as
    other intangible assets. F-45




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Elimination ofBeginning








Amortization





Intercompany


EndingBalance


Acquisition


Disposal


(Recovery)


Others(1)


Transactions


Balance(In millions of Korean won)Goodwill

W
90,105


W
7,698


W



W
22,247


W



W



W
75,556Negative goodwill


(1,388
)










(406
)


(261
)






(1,243
)Intellectual property rights


1,221



3,260







1,067



(1,603
)






1,811Land usage rights


23,439







386



1,200



(8,753
)






13,100Development costs


67,862



42,749



75



14,684



(3,469
)


(418
)


91,965Port facilities usage rights


112,102



37,153







18,658



(1
)


(362
)


130,234Long-term electricity supply contract rights


68,544











6,687











61,857Other intangible assets


195,197



62,411



132



70,427



15,034



(4,584
)


197,499W
557,082


W
153,271


W
593


W
134,564


W
947


W
(5,364
)

W
570,779     Elimination ofBeginning








Amortization





Intercompany


EndingBalance


Acquisition


Disposal


(Recovery)


Others(1)


Transactions


Balance(In millions of Korean won)Goodwill

W



W
100,088


W



W
9,983


W



W



W
90,105Negative goodwill


(1,794
)










(406
)










(1,388
)Intellectual property rights


1,394



50



9



230



16







1,221Land usage rights


43,422



2,503



21,571



195



(720
)






23,439Development costs


47,299



3,527



418



5,025



22,870



(391
)


67,862Port facilities usage rights


127,258



3,272







18,429



1







112,102Long-term electricity supply contract rights






73,559







5,015











68,544Other intangible assets


236,130



58,057



650



66,340



(25,969
)


(6,031
)


195,197W
453,709


W
241,056


W
22,648


W
104,811


W
(3,802
)

W
(6,422
)

W
557,082     (1)
    
    Includes transfers of an asset, adjustments arising from foreign
    currency translations and changes in consolidation scope, and
    others.    2007


2006(In millions ofKorean won)Cost of goods sold

W
77,911


W
71,880Selling and administrative expenses


56,653



45,124W
134,564


W
117,004  F-46




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    RemainingEstimatedAccount



2007


2006


Useful LifeGoodwill

Excess investment amount over fair value in POSCO Power Co.,
    Ltd.

W
68,894


W
90,105


3 yearsPort facilities usage rights

Usage right of Masan circulation base


24,742



26,624


13 yearsOther intangible assets

Pohang/Gwangyang MES


30,719



69,621


1 years     (In millions of Korean won)2008

W
113,3292009


77,7412010


68,8532011


49,9032012


19,334W
329,160   10.
    Research
    and Development Costs, and Others  W W W W W W
  11.
    Other
    Assets    2007


2006(In millions of Korean won)Other current assetsShort-term loans receivable (Notes 28)

W
54,985


W
34,071Accrued income


53,600



74,037Advance payments


373,167



263,623Prepaid expenses


58,319



18,285Others


86,237



72,048626,308



462,064Less: Allowance for doubtful accounts


(34,436
)


(70,951
)W
591,872


W
391,113Other long-term assetsOther investment assets (Notes 5 and 8)

W
116,409


W
135,406Less: Allowance for doubtful accounts


(789
)


(34,646
)Present value discount


(503
)


(112
)W
115,117


W
100,648  F-47




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Short-Term
    Borrowings    Annual InterestFinancial Institutions

Rate (%)

2007


2006(In millions of Korean won)Won currency borrowingsShinhan Bank and others

0.8 ~ 6.49

W
247,598


W
111,394Foreign currency borrowingsYamaguchi Bank and others

4.90


8,110



24,029Shinhan Bank and others

0.35 ~ 17.00


1,316,312



1,103,3261,324,422



1,127,355W
1,572,020


W
1,238,749   13.
    Long-Term
    Debts    Annual InterestFinancial Institutions

Rate (%)

2007


2006(In millions of Korean won)DebenturesDomestic and foreign debentures

2.05 ~ 6.55

W
460,192


W
231,100Less: Discount on debentures issued




(527
)


(203
)459,665



230,897Won currency borrowingsKorea Exchange Bank and others

1.00-5.70


3,147



1,885Foreign currency borrowingsDevelopment Bank of Japan and others

1.00-4.6019,711



162,48522,858



164,370Loans from foreign financial institutionsSumitomo Bank and others

2.00LIBOR + 0.80


879



8,797Lease obligationHP Financial Services

5.00






348W
483,402


W
404,412  F-48




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Annual InterestRate (%)

2007


2006(In millions of Korean won)Domestic debentures

4.02 - 6.55

W
1,883,515


W
1,467,653Samurai bonds

2.05


416,665



390,915Euro bonds

5.88


281,460



278,880Exchangeable bonds(1)




430,182



403,596Float rating note

5.67


84,438



3,096,260



2,541,044Less: Current portion




(460,192
)


(231,100
)Discount on debentures issued




(12,195
)


(13,144
)W
2,623,873


W
2,296,800     (1)
    
    POSCO issued exchangeable bonds on August 20, 2003. They
    are exchangeable with 15,267,837 SK Telecom Co., Ltd. American
    Depository Receipts (ADRs). Details of exchangeable bonds are as
    follows:  Issuance date:

August 20, 2003Maturity date:

August 20, 2008 (full amount of principal is repaid if not
    exercised)Rate:

Interest rate of zero percentFace value:

JPY 51,622,000,000Issuance price:

JPY 51,880,110,000Exchangeable price:

JPY 3,019/ADRExercise call period:

Commencing ten business days following the issuance date until
    ten business days prior to maturity dateExercise put period:

Exactly three years following the payment date    F-49




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Annual InterestFinancial Institutions

Rate (%)

2007


2006(In millions of Korean won)Won currency borrowingsThe Korea Resources Corporation and others

Representative

W
45,100


W
77,951Borrowing Rate(1) ~2.25The Korea Development Bank and others

1.00 ~ 6.50


155,259



Less: Current portion




(3,147
)


(1,885
)197,212



76,066Foreign currency borrowings(2)Development Bank of Japan and others

1.08 ~ 6.65498,757



488,672Less: Current portion




(19,711
)


(162,485
)479,046



326,187Loans from foreign financial institutionsNatexis Banques Populaires

2.00


7,234



7,179Sumitomo Bank and others(3)








28,067Less: Current portion




(879
)


(8,797
)6,355



26,449W
682,613


W
428,702     (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 W957 million, the repayment
    of which depends on the result of the oil exploration in the
    Aral Sea in Uzbekistan with Korea National Oil Corporation.(3)
    
    The loans from Sumitomo Bank and others were scheduled to be
    redeemed until 2010, but the Company redeemed early during
    current year for the benefit of less interest expense.   F-50




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Won





Loans fromCurrency


Foreign Currency


Foreign FinancialYear

Debentures


Borrowings


Borrowings


Institutions


Total(In millions of Korean won)2008

W
460,192


W
3,147


W
19,711


W
879


W
483,9292009


329,455



7,466



352,774



879



690,5742010


178,488



17,597



117,826



879



314,7902011


930,000



76,458



5,364



879



1,012,701Thereafter


1,198,125



95,691



3,082



3,718



1,300,616W
3,096,260


W
200,359


W
498,757


W
7,234


W
3,802,610     Beneficiaries

2007


2006(In millions of Korean won)Land

Mizuho Bank and others

W
253,096


W
74,198Buildings and structures

The Korea Development Bank and others


187,611



134,531Machinery and equipment

The Korea Development Bank and others


392,230



461,413Short-term and long-term financial instruments

The Korea Development Bank


4,000



5,600Trade accounts and notes receivable

Mizuho Bank and others


47,268



44,445Available-for-sale securities

Exchangeable bond holder


685,402



410,796Held-to-maturity securities

Gyeongsangbuk-do provincial office


31,440



31,334W
1,601,047


W
1,162,317     2007


2006Foreign

Won


Foreign

WonFinancial Institutions

Currency

Equivalent


Currency

Equivalent(In millions of Korean won)Korea Development Bank

EUR 5,236,941

W
7,234


EUR 6,062,451

W
7,410   W
 F-51




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  14.
    Accrued
    Severance Benefits    Beginning











EndingBalance


Increase


Decrease


Adjustments(1)


Balance(In millions of Korean won)Accrued severance benefits

W
834,047


W
214,720


W
63,264


W
1,453


W
986,956National Pension Fund


(2,385
)






(181
)


(71
)


(2,275
)Group severance insurance deposits


(500,656
)


(179,882
)


(32,517
)


(565
)


(648,586
)W
331,006


W
34,838


W
30,566


W
817


W
336,095     Beginning











EndingBalance


Increase


Decrease


Adjustments(1)


Balance(In millions of Korean won)Accrued severance benefits

W
723,954


W
144,602


W
41,048


W
6,539


W
834,047National Pension Fund


(2,515
)






(218
)


(88
)


(2,385
)Group severance insurance deposits


(446,627
)


(113,682
)


(63,507
)


(3,854
)


(500,656
)W
274,812


W
30,920


W
(22,677
)

W
2,597


W
331,006     (1)
    
    Includes foreign currency adjustments, changes in consolidation
    scope and others.    (In millions of Korean won)2008

W
26,6552009


31,8312010


45,2632011


51,77820122017


448,912W
604,439    F-52




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  15.
    Other
    Liabilities    2007


2006(In millions of Korean won)Other current liabilitiesAdvances received

W
405,548


W
405,450Unearned revenue


1,725



2,648Others


54,085



99,297W
461,358


W
507,395Other long-term liabilitiesReserve for allowance

W
29,176


W
22,427Others (Note 21)


205,682



125,759W
234,858


W
148,186   16.
    Commitments
    and Contingencies    Amount


WonGrantors

Entity Being Guaranteed

Financial Institution

Guaranteed(1)


Equivalent(In millions)POSCO

BX STEEL POSCO Cold

Bank of China and others

CNY
145,200,000


W
18,651Rolled Sheet Co., Ltd.



US$
17,000,000



15,949Zhangjiagang Pohang
    Stainless Steel Co., Ltd.

Bank of China and others

US$
199,925,000



187,570Zhongyue
    POSCO(Qinhuangdao)

Industrial & Commercial Bank of China

US$
10,200,000



9,570Tinplate Industrial Co., Ltd.POSCO Investment Co.,

Bank of Tokyo-Mitsubishi

CNY
87,000,000



11,175Ltd.



US$
42,000,000



39,404POSCO E&C

Taegisan Wind Power
    Corporation

Standard Chartered Korea First Bank

KRW
12,252



12,252IBC Corporation

POSCO Investment Co., Ltd.

US$
15,000,000



14,073POSLILAMA Steel

The Export-Import Bank

US$
53,000,000



49,725Structure Co., Ltd.

of Korea and othersPOSCO-Japan Co., Ltd.

POSCO-JNPC Co., Ltd.

Lisona Bank and others

JPY
3,600,000,000



30,000POSCO-JOPC Co., Ltd.

Mizuho Bank and others

JPY
2,080,000,000



17,333POSCO Investment Co., Ltd.

Guangdong Pohang coated
    Steel Co., Ltd.

Bank of Tokyo-Mitsubishi

US$
1,000,000



938Zhangjiagang Pohang
    Stainless Steel Co., Ltd.

ING and others

US$
120,000,000



112,584Qingdao Pohang Stainless
    Steel Co., Ltd.

Bank of Tokyo-Mitsubishi

US$
52,500,000



49,256POSCO-MPPC S.A. de C.V.

Bank of Tokyo-Mitsubishi

US$
9,600,000



9,007W
577,487     (1)
    
    Foreign currencies other than US dollars, Japanese yen, and
    Chinese yuan are translated into US dollar amounts. F-53




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   W
    AmountGrantors

Entity Being Guaranteed

Financial Institution

Guaranteed(1)


Won Equivalent(In millions)POSCO

DC Chemical Co., Ltd.

E1 Co., Ltd.

KRW
640



640The Siam United Steel Co., Ltd.

Japan Bank for International Cooperation

US$
5,120,535



4,804Zeus

Related creditors

JPY
51,622,000,000



430,182POSCO E&C

Daejeon Energy System Co., Ltd.

Woori Bank

KRW
17,475



17,475Daejeon Cogeneration Plant Co., Ltd.

Woori Bank and others

KRW
22,600



22,600Pan Pacific Corp

Korea Exchange Bank

KRW
10,998



10,998POSTEEL

GIPI

Qutar National Bank and others

US$
12,000,000



11,258Samjung Packing & Aluminum Co., Ltd.

Pyungsan SI Ltd

Seoul Guarantee Insurance Company

KRW
5,262



5,262POSCO Machinery Co., Ltd

Jaesan Energy

Hana Bank

KRW
7,189



7,189Changhwan develop

Hana Bank

KRW
7,098



7,098Halla Electric Co., Ltd

Shinhan Bank

KRW
6,586



6,586POSCO E&C(Beijing) Co., Ltd.

YU RA CORPORATION

Korea Exchange Bank Beijing office

CNY
4,540,000



583STX Construction (Dalian) Co., Ltd.

Korea Exchange Bank Beijing office

CNY
12,680,000



1,629W
526,304     (1)
    
    Foreign currencies other than US dollars, Japanese yen, and
    Chinese yuan are translated into US dollar amounts.  W
  W W W W
  W
   F-54




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  W
  Year

Amount2008

W
6,9672009


5,1452010


1,9612011


1,968Thereafter


3,941W
19,982     Company

Plaintiff

Amount

Description(In millions of Korean won)POSCO

Songdo Construction Co.,Ltd. and others

2,728

15 lawsuits including claim for operation damages due to loss of
    the sands at beachPOSCO E & C

Kimboksik and other 28

7,382

Claim for restitution related to termination of 174 store
    agreements in Boondang MestarGujaeun and other 19

7,363

Claim for refund of Sindorim Posvill Bldg land sale amountHwangjaeho and others

6,140

Lawsuit filed on construction of residents-only sports comlex in
    Songdo FirstworldeRoomE&C Co., Ltd.

3,490

Claim for refund of unjust enrichment related to Ireland Park in
    YeoidoFS KOREA

2,754

Claim for consulting commission for sale of Jinju Department
    StoreDoo-A industrial Development Co.

2,010

Claim for restitution related to Daejeon Yuseong PJTOthers

7,260

Lawsuit for return of loans to Taewoong Development related to
    studio apartment in Seomyeon and othersPosteel Co., Ltd.

CORE METAL INDUSTRY CO., LTD.

US$1,246,535

Claim for restitution for cancellation of agreement (Partially
    won in 2nd judicial decision and appealed by plaintiff)          F-55




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    W
    W W W
  W W W
  W W
  W W W
  W W W
  W
 F-56




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  W W W
  W W W
  W W W
            W W W W
        W
  W W W
 F-57




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  W W
  W
            W W
  17.
    Capital
    Stock  W
  W
     F-58




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  18.
    Capital
    Surplus    2007


2006(In millions of Korean won)Additional paid-in capital

W
463,205


W
462,810Revaluation surplus


3,224,770



3,233,730Others


488,617



338,733W
4,176,592


W
4,035,273   19.
    Retained
    Earnings    2007


2006(In millions of Korean won)AppropriatedLegal reserve

W
241,202


W
241,201Appropriated retained earnings for business stabilization


918,300



918,300Other legal reserve


1,445,000



1,383,333Voluntary reserve


15,513,068



12,926,73318,117,570



15,469,567Unappropriated


3,649,732



3,393,766W
21,767,302


W
18,863,333   Legal
    Reserve
    Other
    Legal Reserve
    Voluntary
    Reserve
   F-59




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Dividends
    Interim Cash Dividends

2007


2006


2005(In millions of Korean won)Number of outstanding shares


75,816,426



77,780,460



78,759,934Dividend ratio


50
%


40
%


40
%Dividend amount

W
189,541


W
155,561


W
157,520   Year-End Cash Dividends

2007


2006


2005(In millions of Korean won)Number of outstanding shares


75,540,201



77,592,942



80,154,281Dividend ratio


150
%


120
%


120
%Dividend amount

W
566,552


W
465,558


W
480,926     2007


2006


2005Dividend


Dividend


Dividend


Dividend


Dividend


DividendPayout Ratio


Yield Ratio


Payout Ratio


Yield Ratio


Payout Ratio


Yield RatioCommon shares


21.25
%


1.74
%


18.74
%


2.59
%


15.87
%


3.96
%   20.
    Capital
    Adjustments    2007


2006(In millions of Korean won)Treasury stock

W
(2,715,964
)

W
(1,670,690
)Others


(11,183
)


(7,539
)W
(2,727,147
)

W
(1,678,229
)   W
   F-60




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  21.
    Stock
    Appreciation Rights    1st
    Grant

2nd
    Grant

3rd
    Grant

4th
    Grant

5th
    Grant

6th
    GrantBefore the modifications(1)Number of shares

498,000 shares

60,000 shares

22,000 shares

141,500 shares

218,600 shares

90,000 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(1)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 sharesNumber of shares cancelled

19,409 shares









Number of shares exercised

414,272 shares

42,126 shares

6,931 shares

100,598 shares

55,284 shares

52,000 sharesNumber of shares outstanding

19,895 shares

13,770 shares

13,564 shares

35,299 shares

158,944 shares

38,000 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     (1)
    
    The Company changed the number of shares granted and the
    exercise price as presented above, in accordance with the
    resolutions of the Board of Directors dated April 26, 2003,
    October 17, 2003, and October 22, 2004.      1st
    Grant


2nd
    Grant


3rd
    Grant


4th
    Grant


5th
    Grant


6th
    Grant


Total(In millions of Korean won)Prior periods

W
46,960


W
6,819


W
3,269


W
19,791


W
31,963


W
7,997


W
116,799Current period


13,865



7,231



4,568



15,354



56,860



26,003



123,881W
60,825


W
14,050


W
7,837


W
35,145


W
88,823


W
34,000


W
240,680   W
 F-61




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006


2005Number of Stock





Number of Stock


Weighted-Average


Number of Stock


Weighted-AverageStock Appreciation





Appreciation


Exercise Price per


Appreciation


Exercise Price perRights Outstanding,


Weighted-Average


Rights


Share


Rights


Share(In Korean won)Beginning of year


460,335


W
145,238



534,642


W
140,258



722,007


W
118,711Granted


















90,000



194,900Excercised


(180,863
)


145,344



(74,307
)


109,404



(277,365
)


101,899Canceled






















Forfeited






















Stock appreciation rights outstanding, end of year


279,472



145,170



460,335



145,238



534,642



140,258Excercisable at the year end


279,472


W
145,170



370,335


W
133,169



230,414


W
108,276Weighted-average fair value at grant date





W
116,176






W
116,176






W
116,176     Appreciation Rights OutstandingWeighted-Average

Weighted-AverageRemaining

Exercise PriceExercise Prices

Shares

Contractual Life

per Share(In Korean won)98,900



19,895


0.56 years

W
98,900136,400



13,770


1.32 years


136,400116,100



13,564


1.72 years


116,100102,900



35,299


2.32 years


102,900151,700



158,944


3.56 years


151,700194,900



38,000


4.33 years


194,900279,472


3.10 years

W
145,170  F-62




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  22.
    Derivatives    Income Statement


Comprehensive Income(*)Type of

Purpose of

Financial

Valuation


Valuation


Transaction


Transaction


Transaction


TransactionCompany

Transaction

Transaction

Institutions

Gain


Loss


Gain


Loss


Gain


Loss(In millions of Korean won)POSCO

Embedded
    derivative

Hedge

KOREA ZINC INC

W



W



W



W



W
488


W
2,926Currency future

Excahange
    rate hedge

HSBE and others


301















12,892



2,816POSCO E&C

Currency
    forward

Trading

Korea Exchange
    Bank and others


1,212



2,606











485



300Posteel Co.,Ltd.





SC Korea First
    Bank






















3Pohang Coated
    Steel Co.,Ltd.

Currency future

Trading or Hedge

SC Korea First
    Bank and others


2,374



987











3,023



114POSDATA

Currency
    forward

Cash flow hedge

Korea Exchange
    Bank






















10Currency
    forward

Trading

SC Korea First
    Bank


1



0











95



142POSCO Specialty
    Steel Co.,Ltd.

SWAP

Fair market
    value hedge

SC Korea First
    Bank


89



24















SWAP

Cash flow hedge

SC Korea First
    Bank














524







Currency
    forward

Trading

Woori Bank and others


















432



1POSCO Power Co.,Ltd.

SWAP

Fair market
    value hedge

ING Bank and others


1,368















274



SWAP

Cash flow hedge

ING Bank and others














3,510







POSCO Austrailia Pty. Ltd. (POSA)

Derivative

Trading

MML


7,359



















POS-MPC S.A.
    de C.V.

Currency future

Fair market
    value hedge

Standard
    Chartered


37



















W
12,741


W
3,617


W



W
4,034


W
17,689


W
6,312     (*)
    
    Gain and loss on valuation from cash flow hedge transactions are
    recorded as other comprehensive income, net of tax effect. F-63




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
     Type of

Purpose of

Financial

Valuation


Valuation


Transaction


TransactionCompany

Transaction

Transaction

Institutions

Gain


Loss


Gain


Loss(In millions of Korean won)POSCO

Currency
    forward

Trading

SC Korea First
    Bank and others

W



W



W
779


W
11,491Nickel future



Sempra Metal Ltd.














12,205POSCO E&C

Currency
    forward



Citibank Korea
    and others


1



791



732



920Posteel Co.,Ltd.





Hana bank
    and others










37



300Pohang Coated Steel Co.,





Shinhan Bank










1,258



843Ltd.

Option






1,856



12



1,734



83POSDATA

Currency
    forward

Cash flow hedge

Korea Exchange
    Bank










53



25POSCO Specialty
    Steel Co.,Ltd.



Fair market
    value hedge

SC Korea First
    Bank






17



190



78POSCO Power
    Co.,Ltd.

SWAP

Trading

Korea Development
    Bank and others










10,694



14,418W
1,857


W
820


W
15,477


W
40,363     Type of

Purpose of

Financial

Valuation


Valuation


Transaction


TransactionCompany

Transaction

Transaction

Institutions

Gain


Loss


Gain


Loss(In millions of Korean won)POSCO

Currency
    forward

Trading

SC Korea First 
    Bank and others

W



W
18,727


W
688


W
861Nickel future



Sempra Metal
    Ltd.










1,674



637POSCO E&C

Currency
    forward



Citibank Korea
    and others


1,546



1,982



600



6,722Posteel Co.,Ltd.





Hana bank and
    others










170



37Pohang Coated





Shinhan Bank






684



112



125Steel Co.,Ltd.

Option






125







486



564POSDATA

Currency
    forward



Korea Exchange
    Bank










90



12POSCO Specialty Steel Co.,Ltd.





SC Korea First Bank










37



42W
1,671


W
21,393


W
3,857


W
9,000  F-64




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  23.
    Selling
    and Administrative Expenses    2007


2006


2005(In millions of Korean won)Transportation and storage

W
619,499


W
539,589


W
492,921Salaries


218,206



183,943



168,746Welfare


123,584



111,666



116,542Depreciation and amortization


87,257



72,983



60,742Fees and charges


97,100



62,610



122,204Advertising


103,979



87,666



98,158Research and development expenses


52,846



54,035



52,545Severance benefits


44,779



26,109



29,475Sales commissions


54,955



42,644



23,409Travel


25,870



21,468



18,808Rent


19,389



16,313



16,345Repairs


12,693



8,846



14,736Training


20,094



18,496



17,367Office supplies


9,053



6,957



7,654Provision for doubtful accounts


62,026



117,337



104,310Meeting


10,240



9,368



9,680Taxes and public dues


29,519



18,936



14,914Vehicle expenses


3,947



2,941



2,155Membership fees


8,593



7,273



8,876Sales promotions


5,651



22,471



5,745Entertainment


10,561



7,904



7,315Others


165,376



116,860



58,670W
1,785,217


W
1,556,415


W
1,451,317   24.
    Donations    2007


2006


2005(In millions of Korean won)POSTECH

W
25,000


W
22,000


W
17,050POSCO Educational Foundation


47,200



33,000



33,000Employee benefit welfare


66,600



59,400



69,960Others


58,566



40,278



33,008W
197,366


W
154,678


W
153,018  F-65




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  25.
    Income
    Taxes    2007


2006


2005(In millions of Korean won)Current income taxes

W
1,341,252


W
1,086,215


W
1,624,515Deferred income taxes


51,397



28,531



(107,986
)Carryforward income tax


2,714



3,948



4,187Items charged directly to shareholders equity


(61,559
)


(19,180
)


(21,184
)Tax effect on elimination of intercompany profit and others


(59,578
)


(177,563
)


(25,943
)W
1,274,226


W
921,951


W
1,473,589     2007


2006


2005(In millions of Korean won)Net income before income tax expense

W
4,898,931


W
4,284,591


W
5,488,189Statutory tax rate (%)


27.5



27.5



27.5Income tax expense computed at statutory rate


1,347,206



1,178,260



1,509,252Tax credit


(159,816
)


(181,739
)


(215,892
)Others, net


86,836



(74,570
)


180,229Income tax expense

W
1,274,226


W
921,951


W
1,473,589Effective rate (%)


26.01



21.52



26.85  F-66




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Temporary Differences


Deferred Income TaxJanuary 1,


Increase


December 31,


January 1,


Increase


December 31,2007(1)


(Decrease)


2007


2007(1)


(Decrease)


2007(In millions of Korean won)Deductible temporary differences:Reserve for special repairs

W
(403,384
)

W
101,633


W
(301,751
)

W
(110,930
)

W
27,948


W
(82,982
)Allowance for doubtful accounts


345,789



(53,026
)


292,763



94,977



(14,445
)


80,532Reserve for technology


(1,484,767
)


383,033



(1,101,734
)


(408,311
)


105,335



(302,976
)Dividend income from related


304,162



62,071



366,233



83,644



17,070



100,714Depreciation expense


7,091



(155,084
)


(147,993
)


2,684



(42,799
)


(40,115
)Valuation of equity method


(718,357
)


(578,523
)


(1,296,880
)


(166,730
)


(107,640
)


(274,370
)Prepaid expenses


42,084



(7,653
)


34,431



11,555



(2,088
)


9,467Impairment loss on property, plant


516,305



(96,220
)


420,085



147,973



(26,490
)


121,483Accrued severance benefits


124,582



37,344



161,926



34,298



10,276



44,574Group severance insurance deposits


(37,376
)


(6,899
)


(44,275
)


(10,278
)


(1,897
)


(12,175
)Provision for construction losses


15,133



6,094



21,227



4,161



1,675



5,836Provision for construction warranty


18,935



2,130



21,065



5,154



640



5,794Appropriated Retained Earnings for Technological Development


(3,500
)


667



(2,833
)


(963
)


183



(780
)Accrued income


(7,952
)


(376
)


(8,328
)


(2,206
)


(107
)


(2,313
)Accrued on valuation of Inventories


441



254



695



121



69



190Accrued on guarantee loss


41,300



(41,300
)






11,358



(11,358
)


Others


333,308



(39,448
)


293,860



81,188



(7,769
)


73,419(906,206
)


(385,303
)


(1,291,509
)


(222,305
)


(51,397
)


(273,702
)Deferred tax from tax creditTax credit transferred from prior year


20,137



2,588



22,725



19,004



945



19,949Deficit carried forward


12,487



(3,299
)


9,188



3,434



(908
)


2,526Others














(5,416
)


(2,751
)


(8,167
)32,624



(711
)


31,913



17,022



(2,714
)


14,308Current and deferred income taxes Capital adjustment arising


(112,643
)


(160,305
)


(272,948
)


(30,975
)


(44,085
)


(75,060
)Gain on valuation of available-for-sale securities


(751,593
)


(564,179
)


(1,315,772
)


(206,689
)


(157,684
)


(364,373
)Loss on valuation of available-for-sale securities


394,401



(154,950
)


239,451



108,319



(42,428
)


65,891Others






4,276



4,276







1,176



1,176(469,835
)


(875,158
)


(1,344,993
)


(129,345
)


(243,021
)


(372,366
)Sub total














(334,628
)


(297,132
)


(631,760
)Tax effect on elimination of intercompany profit and others














178,105



59,578



237,683W
(156,523
)

W
(237,554
)

W
(394,077
)     (1)
    
    The income tax effect of temporary differences and the deferred
    income tax assets(liabilities) as of January 1, 2007,
    reflected the effect of tax assessment for the year ended
    December 31, 2007, and tax audit in the year ended
    December 31, 2006.(1)
    
    The income tax effect of temporary differences and the deferred
    income tax assets(liabilities) as of January 1, 2006,
    reflected the effect of tax assessment for the year ended
    December 31, 2006, and tax audit in the year ended
    December 31, 2005.    F-67




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Temporary Differences


Deferred Income TaxJanuary 1,


Increase


December 31,


January 1,


Increase


December 31,2006(1)


(Decrease)


2006


2006(1)


(Decrease)


2006(In millions of Korean won)Deductible temporary differences:Reserve for special repairs

W
(480,439
)

W
77,055


W
(403,384
)

W
(132,120
)

W
21,190


W
(110,930
)Allowance for doubtful accounts


226,593



119,200



345,793



62,340



32,782



95,122Reserve for technology developments


(1,302,186
)


(157,581
)


(1,459,767
)


(358,102
)


(43,334
)


(401,436
)Dividend income from related


256,503



47,659



304,162



70,538



13,106



83,644Depreciation expense


111,925



(104,108
)


7,817



31,732



(28,809
)


2,923Valuation of equity method investments


(389,678
)


(328,653
)


(718,331
)


(143,720
)


(23,007
)


(166,727
)Prepaid expenses


47,234



(5,149
)


42,085



12,988



(1,416
)


11,572Impairment loss on property, plant and equipment


517,740



(376
)


517,364



148,657



(148
)


148,509Accrued severance benefits


100,734



23,855



124,589



27,732



6,568



34,300Group severance insurance deposits


(60,190
)


(16,903
)


(77,093
)


(16,553
)


(4,649
)


(21,202
)Provision for construction losses


18,251



(3,161
)


15,090



5,019



(870
)


4,149Provision for construction warranty


12,154



4,582



16,736



3,343



1,260



4,603Appropriated retained earnings for technological development


(30,833
)


2,333



(28,500
)


(8,479
)


642



(7,837
)Accrued income


(5,224
)


(3,306
)


(8,530
)


(1,335
)


(1,027
)


(2,362
)Accrued on valuation of Inventories


18,145



38,971



57,116



4,990



10,717



15,707Accrued on guarantee loss


41,300



(228
)


41,072



11,358



(63
)


11,295Others


362,574



(46,914
)


315,660



53,391



(11,473
)


41,918(555,397
)


(352,724
)


(908,121
)


(228,221
)


(28,531
)


(256,752
)Deferred tax from tax credit transferred prior year and others:Tax credit transferred prior year


15,924



4,213



20,137



15,396



1,410



16,806Deficit carried forward


4,244



8,243



12,487



5,068



(2,202
)


2,866Others


2,029



(2,029
)






(2,196
)


(3,156
)


(5,352
)22,197



10,427



32,624



18,268



(3,948
)


14,320Current and deferred income taxes recognized directly to equity:Capital adjustment arising from equity method investments


(122,226
)


27,120



(95,106
)


(33,626
)


7,473



(26,153
)Gain on valuation of available-for-sale securities


(374,973
)


(350,021
)


(724,994
)


(103,118
)


(96,256
)


(199,374
)Loss on valuation of available-for-sale securities


591,159



(240,952
)


350,207



162,569



(66,409
)


96,160Others


454



(454
)






125



(125
)


94,414



(564,307
)


(469,893
)


25,950



(155,317
)


(129,367
)Sub total














(184,003
)


(187,796
)


(371,799
)Tax effect on elimination of intercompany profit and others














41,292



177,563



218,855W
(142,711
)

W
(10,233
)

W
(152,944
)  F-68




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  26.
    Earnings
    Per Share    2007


2006


2005Number of shares issued(1)


77,592,942



80,090,770



80,503,664Aquisition of treasury shares


1,640,073



1,396,589



1,305,529Weighted-average number of common shares


75,952,869



78,694,181



79,198,135     (1)
    
    The number of shares issued excludes the number of treasury
    shares as of January 1, 2007, 2006 and 2005.    2007


2006


2005(In millions of Korean won, except per share amounts)Net income attributable to controlling interest

W
3,558,660


W
3,314,181


W
4,022,492Weighted-average number of common shares outstanding


75,952,869



78,694,181



79,198,135Basic earnings per share

W
46,854


W
42,115


W
50,790   Diluted
    Earnings Per Share
    27.
    Comprehensive
    income    2007


2006


2005(In millions of Korean won)Net income

W
3,677,964


W
3,353,082


W
4,006,993Accumulated other comprehensive income:


575,179



398,019



259,142Gain on valuation of available-for-sale securities(1)


498,711



432,469



324,757Capital adjustment arising from equity method investments(2)


(7,455
)


11,636



(35,364
)Foreign currency translation adjustments(3)


87,957



(46,086
)


(30,251
)Gain on valuation of derivative instruments(4)


(4,034
)






W
4,253,143


W
3,751,101


W
4,266,135Comprehensive income attributable to controlling interest

W
4,118,011


W
3,721,622


W
4,277,958Comprehensive income attributable to minority interest

W
135,132


W
29,479


W
(11,823
)     (1)
    
    Includes income tax effects of
    W(−)192,094 million (2006:
    W(−)169,652 million, 2005:
    W59,005 million).(2)
    
    Includes income tax effects of
    W(−)34,698 million (2006:
    W1,705 million, 2005:
    W(−)14,883 million).(3)
    
    Includes income tax effects of
    W(−)11,451 million (2006:
    W5,753 million, 2005:
    W(−)18,727 million).(4)
    
    Includes income tax effects of
    W1,331 million. F-69




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   28.
    Assets
    and Liabilities Denominated in Foreign Currencies    2007


2006Won


WonForeign Currency(3)


Equivalent


Equivalent(In millions of Korean won, other currencies in thousands)AssetsCash and cash equivalents(1)

US$


231,556


W
217,246


W
288,671JPY


74,355



620



22EUR


27



37



Overseas
    subsidiaries (US$)


430,853



404,226



300,339Trade accounts and notes receivable

US$


323,175



303,203



216,285JPY


6,042,643



50,355



18,438EUR


7,796



10,768



9,157Overseas
    subsidiaries (US$)


773,033



725,259



431,449Other accounts and notes receivable

US$


5,235



4,499



28,011JPY


16,960



141



133EUR


11



15



Overseas
    subsidiaries (US$)


73,300



68,770



63,009Short-term and long-term loans receivable

Overseas subsidiaries (US$)


186,380



174,862



38,184Long-term trade accounts and notes receivable

Overseas subsidiaries (US$)


71



66



Investment securities(2)

Overseas subsidiaries (US$)


205,885



193,161



40,557Guarantee deposits

US$


427



401



151JPY










42EUR


41



57



Overseas
    subsidiaries (US$)


6,955



6,526



23,851Total







W
2,160,212


W
1,458,299   F-70




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  2007


2006Won


WonForeign Currency(3)


Equivalent


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

US$


410,215


W
384,863


W
48,922JPY


1,509,059



12,576



13,194EUR


1,042



1,440



3,864Overseas
    subsidiaries (US$)


520,780



488,595



314,976Other accounts and notes payable

US$


45,304



42,505



17,306JPY


636,330



5,302



6,326EUR


446



617



7,196Overseas
    subsidiaries (US$)


44,335



41,595



39,444Accrued expenses

US$


2,552



2,394



87Overseas
    subsidiaries (US$)


27,297



25,610



15,023Short-term borrowings

US$


194,394



182,380



14,112Overseas
    subsidiaries (US$)


1,355,638



1,271,860



1,098,220Withholdings

US$


5,122



4,805



21JPY


145,910



1,216



EUR


2,047



2,828



369Overseas
    subsidiaries (US$)


2,864



2,687



2,852Debentures(2, 4)

US$


390,000



365,898



278,880JPY


101,622,000



846,847



794,512Loans from foreign financial institutions(4)

US$


34,829



32,677



31,875JPY


384,000



3,200



4,503Overseas
    subsidiaries (US$)


538,323



505,055



289,809Foreign currency loans(4)

US$










13,868EUR


5,237



7,234



21,378W
4,232,184


W
3,016,737     (1)
    
    Includes cash and cash equivalents, short-term financial
    instruments and long-term financial instruments.(2)
    
    Presented at face value.(3)
    
    Currencies other than US dollars, Japanese yen, and Euros are
    converted into US dollars. The amounts of overseas subsidiaries
    are converted into US dollars.(4)
    
    Includes current portion of long-term debts. F-71




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   29.
    Related
    Party Transactions    Sales and Others(1)


Purchases and Others(1)2007


2006


2005


2007


2006


2005(In millions of Korean won)POSCO E&C

W
20,000


W
12,134


W
3,758


W
984,030


W
1,618,205


W
1,732,462Posteel Co., Ltd.


1,072,032



966,254



1,030,276



220,459



93,315



86,005POSCON Co., Ltd.


120



177



131



244,365



219,602



235,232Pohang Steel Co., Ltd.


436,206



367,443



426,007



1,327



853



1,105POSCO Machinery & Engineering Co., Ltd.


157



1,908



92



152,844



125,996



160,787POSDATA Co., Ltd.


4,516



2,290



1,009



173,660



175,046



182,149POSCO Research Institute


3











17,280



18,553



14,350Seung Kwang Co., Ltd.














69



6



110POS-AC Co., Ltd.


862



732



566



24,298



30,546



29,554POSCO Specialty Steel Co., Ltd.


5,175



2,844



3,440



88,258



70,299



53,618POSCO Machinery Co., Ltd.


3,480



1,929



121



114,378



76,189



107,648POSCO Refractories & Environment (POSREC)


250



166



261



213,753



211,122



195,329POSTECH Venture Capital Co., Ltd.


94



77



63











POSCO America Corporation (POSAM)


130,150



84,227



97,920



686



277



POSCO Australia Pty. Ltd. (POSA)


18,206



17,821



10,163



231



2,235



31,305POSCO Canada Ltd. (POSCAN)


40











71,120



91,502



102,841POSCO Asia Co., Ltd. (POA)


600,059



440,078



552,694



121,098



73,353



130,871Zhangjiagang Pohang Stainless Steel Co., Ltd.


22,474



487,037



723,522











POSCO  Japan Co., Ltd.


831,711



566,208



544,636



50,939



75,170



75,604Others


273,214



328,329



317,176



271,594



253,698



338,718W
3,418,749


W
3,279,654


W
3,711,835


W
2,750,389


W
3,135,967


W
3,477,688   F-72




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Receivables(2)


Payables(2)2007


2006


2007


2006(In millions of Korean won)POSCO E&C

W
186


W
7,933


W
105,178


W
77,678Posteel Co., Ltd.


104,624



69,539



12,386



3,198POSCON Co., Ltd.


7



1



24,842



18,016Pohang Steel Co., Ltd.


40,431



41,029



119



94POSCO Machinery & Engineering Co., Ltd.


6



4



20,431



13,211POSDATA Co., Ltd.


10



1



31,614



26,639POSCO Research Institute


1







6,394



3,766Seung Kwang Co., Ltd.






2,034







POS-AC Co., Ltd.


1







2,001



1,177POSCO Specialty Steel Co., Ltd.


40







8,067



3,103POSCO Machinery Co., Ltd.


50



30



10,445



11,203POSCO Refractories & Environment (POSREC)


9



9



24,265



23,742POSTECH Venture Capital Co., Ltd.










66



POSCO America Corporation (POSAM)


4,447



401







POSCO Australia Pty. Ltd. (POSA)














POSCO Canada Ltd. (POSCAN)


21



13



9,635



14,166POSCO Asia Co., Ltd. (POA)


24,323



20,827



1,922



1,277Zhangjiagang Pohang Stainless Steel Co., Ltd.






6







POSCO  Japan Co., Ltd.


30,952



20,685



6



5,428Others


18,974



9,430



25,711



23,396W
224,082


W
171,942


W
283,082


W
226,094     (1)
    
    Sales and others include sales, non-operating income and others;
    purchases and others include purchases, overhead expenses and
    others.(2)
    
    Receivables include trade accounts, other accounts receivable
    and others; payables include trade accounts, other accounts
    payable and others. F-73




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Sales and Others(1)


Purchases and Others(1)2007


2006


2005


2007


2006


2005(In millions of Korean won)eNtoB Corporation

W



W



W



W
216,920


W
134,703


W
170,258KOBRASCO














72,514



141,859



202,262POSCHROME


35











41,735



35,009



45,043POSVINA


5,056



2,684



11,239











USS  POSCO Industries (UPI)


245,814



356,190



312,377











Guangdong Xingpu Steel Conter Co., Ltd.


3,094



10,295















SNNC Co., Ltd.


343W
254,342


W
369,169


W
323,616


W
331,169


W
311,571


W
417,563   Receivables(2)

Payables(2)2007

2006

2007

2006(In millions of Korean won)eNtoB Corporation

W



W



W
2,999


W
1,917KOBRASCO










4,048



9,737POSCHROME














POSVINA














USS  POSCO Industries (UPI)


8











Guangdong Xingpu Steel Conter Co., Ltd.


4,276



2,337







SNNC Co., Ltd.


1W
4,285


W
2,337


W
7,047


W
11,654     (1)
    
    Sales and others include sales, non-operating income and others;
    purchases and others include purchases, overhead expenses and
    others.(2)
    
    Receivables include trade accounts, other accounts receivable
    and others; payables include trade accounts, other accounts
    payable and others. F-74




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Revenues




Expenses2007


2006


2005




2007


2006


2005(In millions of Korean won)Sales

W
8,111,931


W
7,670,446


W
8,293,069


Cost of goods sold

W
7,957,616


W
7,332,282


W
8,094,089Interest income


24,104



694



1,322


Interest expense


5,608



3,912



3,778Rental income


4,883



1,273



1,014


Selling and administrative expenses


171,400



259,038



156,157Others


12,409



8,107



3,074


Others


18,703



85,288



44,455W
8,153,327


W
7,680,520


W
8,298,479




W
8,153,327


W
7,680,520


W
8,298,479     Receivables




Payables2007


2006




2007


2006(In millions of Korean won)Trade accounts and
    notes receivable

W
740,252


W
709,207


Trade accounts and notes payable

W
468,811


W
494,980Short-term loans
    receivable


117,938



41,642


Short-term
    borrowings


136,750



71,630Other accounts and
    notes receivable


11,673



8,431


Other accounts and notes payable


263,149



173,648Long-term loans receivable


54,192



56,613


Long-term debts


24,443



25,121Other assets


201,439



113,497


Other liabilities


232,341



164,011W
1,125,494


W
929,390




W
1,125,494


W
929,390   30.
    Segment
    and Regional Information    Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean won)Statement of incomeSales

W
27,910,722


W
3,801,882


W
4,018,003


W
3,989,066


W
(8,111,932
)

W
31,607,741Less: Inter-segment


(4,738,741
)


(1,092,309
)


(874,520
)


(1,406,362
)


8,111,932



Net sales

W
23,171,981


W
2,709,573


W
3,143,483


W
2,582,704


W



W
31,607,741Operating profit

W
4,523,589


W
284,632


W
31,068


W
198,225


W
(117,653
)

W
4,919,861Depreciation and amortization


1,919,594



16,188



5,591



160,778



24,578



2,126,729Balance sheetInventories

W
4,258,206


W
454,338


W
126,182


W
145,708


W
(82,418
)

W
4,902,016Investments


8,205,751



565,983



333,688



775,105



(4,641,501
)


5,239,026Property, plant and equipment


15,110,911



142,157



198,856



1,341,015



(1,211,174
)


15,581,765Intangible assets


246,932



25,152



897



166,992



130,806



570,779Goodwill














75,556







75,556  F-75




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean won)Statement of incomeSales

W
23,727,533


W
3,752,233


W
3,046,127


W
2,986,879


W
(7,670,446
)

W
25,842,326Less: Inter-segment


(3,984,759
)


(1,631,547
)


(632,841
)


(1,421,299
)


7,670,446



Net sales

W
19,742,774


W
2,120,686


W
2,413,286


W
1,565,580


W



W
25,842,326Operating profit

W
4,078,997


W
282,489


W
24,202


W
252,283


W
(248,824
)

W
4,389,147Depreciation and amortization


1,712,672



12,284



5,967



141,114



(89,299
)


1,782,738Balance sheetInventories

W
3,550,674


W
225,378


W
127,600


W
217,963


W
(103,410
)

W
4,018,205Investments


5,867,366



434,047



276,560



527,388



(3,393,443
)


3,711,918Property, plant and equipment


14,075,709



75,712



201,797



1,358,874



(1,068,972
)


14,643,120Intangible assets


258,874



25,889



430



125,147



146,742



557,082Goodwill














90,105







90,105     Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean won)Statement of incomeSales

W
24,886,534


W
3,993,961


W
3,373,587


W
2,340,775


W
(8,293,069
)

W
26,301,788Less: Inter-segment


(3,974,711
)


(1,845,747
)


(990,742
)


(1,481,869
)


8,293,069



Net sales

W
20,911,823


W
2,148,214


W
2,382,845


W
858,906


W



W
26,301,788Operating profit

W
5,879,972


W
244,910


W
24,453


W
190,378


W
(256,437
)

W
6,083,276Depreciation and amortization


1,604,241



11,874



7,626



70,693



(81,880
)


1,612,554Balance sheetInventories

W
3,275,723


W
205,622


W
102,569


W
314,233


W
(105,553
)

W
3,792,594Investments


4,662,747



348,143



273,938



468,074



(2,611,346
)


3,141,556Property, plant and equipment


12,223,681



63,747



213,681



571,320



(800,719
)


12,271,710Intangible assets


326,780



26,712



505



110,527



(10,815
)


453,709  F-76




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Sales(1)


Long Lived-Asset2007


2006


2005


2007


2006(In millions of Korean won)Customer LocationKorea

W
19,969,637


W
17,250,163


W
18,566,060


W
15,603,437


W
14,658,557Japan


1,741,972



1,311,685



1,371,510



114,190



59,540China


4,503,900



3,070,422



3,117,909



1,153,915



1,102,657Asia/Pacific, excluding Japan and China


2,041,587



1,486,331



1,502,205



131,998



164,018North America


732,002



610,240



550,331



387



88,794Others


2,618,644



2,113,485



1,193,773



228,986



48,866Consolidation adjustments














(1,080,368
)


(922,230
)W
31,607,742


W
25,842,326


W
26,301,788


W
16,152,545


W
15,200,202     (1)
    
    Represents revenues, net of consolidation adjustments, incurred
    based on customers locations instead of the Company and
    subsidiaries locations.    Non-Financial Institution


Financial Institution2007


2006


2007


2006(In millions of Korean won)AssetsCurrent assets

W
14,315,689


W
12,161,686


W
77,844


W
75,267Non-Current assets


21,748,269



18,776,636



132,961



135,484Investment assets


5,109,363



3,576,481



129,663



135,437Property, plant and equipment


15,581,387



14,643,073



378



47Intangible assets


570,724



557,082



55



Other non-current assets


486,795







2,865



Total Assets

W
36,063,958


W
30,938,322


W
210,805


W
210,751LiabilitiesCurrent liabilities

W
6,533,867


W
4,994,824


W
90,748


W
87,471Non-Current liabilities


4,532,167



3,664,895



241



141Total Liabilities

W
11,066,034


W
8,659,719


W
90,989


W
87,612  F-77




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Non-Financial Institution


Financial Institution2007


2006


2007


2006(In millions of Korean won)Sales

W
31,594,856


W
25,832,162


W
12,885


W
10,164Cost of goods sold


24,896,387



19,891,544



6,276



5,220Selling and administrative expenses


1,781,474



1,553,868



3,743



2,547Operating income


4,916,995



4,386,750



2,866



2,397Non-operating income


805,060



743,536



13,447



5,687Non-operating expenses


834,844



851,338



4,593



2,441Net income before income tax expense


4,887,211



4,278,948



11,720



5,643Income tax expense


1,273,328



921,382



898



569Net income of Subsidiaries before purchasing


(53,259
)


9,558







Net income

W
3,667,142


W
3,348,008


W
10,822


W
5,074Net income attributable to controlling interest

W
3,547,838


W
3,309,107


W
10,822


W
5,074Net income attributable to minority interest

W
119,304


W
38,901


W



W
   31.
    Supplemental
    Cash Flow Information    2007


2006


2005(In millions of Korean won)Noncash financing activities:Reclassification of current portion of loans from foreign
    financial institutions

W
879


W
8,797


W
9,065Reclassification of current portion of long-term debt


22,858



164,370



54,933Reclassification of current portion of debentures


460,192



231,100



991,609Reclassification of current portion of held-to-maturity
    securities


192,393



153,476



2,688     32.
    Professional
    Staff Development Costs    2007


2006


2005(In millions of Korean won)Fees for studying abroad

W
6,314


W
3,999


W
3,319Fees for offsite training


3,025



4,498



4,217Tutorial fees


3,905



3,778



5,548Others


13,782



11,783



14,275W
27,026


W
24,058


W
27,359  F-78




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  33.
    Employees
    Welfare  W W W
  34.
    The
    Effect from Adjustment of Accounting Policy in Consolidated
    Subsidiaries    2007Net Assets Valuebefore


Adjustment


Net Assets ValueAdjustment


Amount


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

W
324,736


W
(626
)

W
324,110POSCON Co., Ltd.


149,729



901



150,630Pohang Coated Steel Co., Ltd.


275,322



(2,821
)


272,501POSCO Asia Co., Ltd.(POA)


20,861



(544
)


20,317Zhanjiagang Pohang Stainless Steel Co.,Ltd (ZPSS)


569,173



(42,750
)


526,423POSCO Investment Co., Ltd.


68,609



(1,574
)


67,035POSCO Refractories & Environment Company Ltd.(POSREC)


132,953



6,451



139,404Qingdao Pohang Stainless Steel Co., Ltd.


83,558



(6,215
)


77,343POSCO-Japan Co., Ltd.


58,188



(545
)


57,643Samjung Packing & Aluminum Co., Ltd.


77,793



2,362



80,155POSCO Power Corp.


523,318



(1,509
)


521,809   2006Net Assets Valuebefore


Adjustment


Net Assets ValueAdjustment


Amount


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

W
293,447


W
(650
)

W
292,797POSCON Co., Ltd.


129,593



(769
)


128,824Pohang Coated Steel Co., Ltd.


267,016



(2,922
)


264,094POSCO Asia Co., Ltd.(POA)


18,353



(349
)


18,004Zhanjiagang Pohang Stainless Steel Co.,Ltd (ZPSS)


481,471



(32,705
)


448,766POSCO Investment Co., Ltd.


64,793



(1,556
)


63,237POSCO Refractories & Environment Company Ltd.(POSREC)


120,342



(5,403
)


114,939Qingdao Pohang Stainless Steel Co., Ltd.


63,728



(4,309
)


59,419POSCO-Japan Co., Ltd.


49,481



(337
)


49,144Samjung Packing & Aluminum Co., Ltd.


68,955



(1,501
)


67,454  F-79




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  35.
    Significant
    Differences between Korean GAAP and U.S. GAAP  Reconciliation
    to U.S. Generally Accepted Accounting Principles
      (a)  Reconciliation
    of net income from Korean GAAP to U.S. GAAP
  Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won, except share data)For the year ended December 31, 2007Net income under Korean GAAP









W
3,558,660Adjustments:Fixed asset revaluation

W
16,985


W
(4,671
)


12,314Capitalized costs


23,853



(6,560
)


17,293Capitalized repairs


(882
)


243



(639
)Investment securities


511



(141
)


370Amortizing of goodwill


29,160



(8,019
)


21,141Derivatives


(71,011
)


19,529



(51,482
)Others, net


10,193



(2,803
)


7,390W
8,809


W
(2,422
)

W
6,387Net income as adjusted in accordance with U.S. GAAP









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









W
46,938Weighted-average shares outstanding










75,952,869   F-80




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won, except share data)For the year ended December 31, 2006Net income under Korean GAAP









W
3,314,181Adjustments:Fixed asset revaluation

W
20,152


W
(5,542
)


14,610Capitalized costs


35,435



(9,745
)


25,690Capitalized repairs


(1,269
)


349



(920
)Investment securities


54,070



(14,869
)


39,201Amortizing of goodwill


25,322



(6,964
)


18,358Others, net


(4,588
)


1,263



(3,325
)W
129,122


W
(35,508
)

W
93,614Net income as adjusted in accordance with U.S. GAAP









W
3,407,795Basic and diluted earnings per share, as adjusted, in accordance
    with U.S. GAAP









W
43,304Weighted-average shares outstanding










78,694,181   Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won, except share data)For the year ended December 31, 2005Net income under Korean GAAP









W
4,022,492Adjustments:Fixed asset revaluation

W
19,301


W
(5,222
)


14,079Capitalized costs


15,381



(4,230
)


11,151Capitalized repairs


(5,312
)


1,461



(3,851
)Investment securities


81,659



(22,456
)


59,203Amortizing of goodwill


8,875



(2,441
)


6,434Others, net


4,187



(12,097
)


(7,910
)W
124,091


W
(44,985
)

W
79,106Net income as adjusted in accordance with U.S. GAAP









W
4,101,598Basic and diluted earnings per share, as adjusted, in accordance
    with U.S. GAAP









W
51,789Weighted-average shares outstanding










79,198,135  F-81




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (b)  Reconciliation
    of shareholders equity from Korean GAAP to U.S.
    GAAP
  Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won)As of December 31, 2007Total shareholders equity under Korean GAAP









W
25,117,740Minority interest










(633,657
)24,484,083Adjustments:Fixed asset revaluation

W
(136,471
)

W
15,041



(121,430
)Capitalized costs


345,496



(95,011
)


250,485Capitalized repairs


1,573



(433
)


1,140Investment securities


(71,762
)


19,735



(52,027
)Amortization of goodwill


63,356



(17,423
)


45,933Derivatives


(71,011
)


19,529



(51,482
)Others, net


5,664



(1,558
)


4,106W
136,845


W
(60,120
)

W
76,725Shareholders equity, as adjusted, in accordance with U.S.
    GAAP









W
24,560,809   Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won)As of December 31, 2006Total shareholders equity under Korean GAAP









W
22,401,742Minority interest










(489,208
)21,912,534Adjustments:Fixed asset revaluation

W
(155,755
)

W
19,986



(135,769
)Capitalized costs


321,643



(88,452
)


233,191Capitalized repairs


2,455



(675
)


1,780Investment securities


(84,269
)


23,174



(61,095
)Amortizing of goodwill


34,196



(9,404
)


24,792Cumulative effect of FAS 123R


(4,097
)


1,127



(2,970
)Others, net


(431
)


119



(312
)W
113,742


W
(54,125
)

W
59,617Shareholders equity, as adjusted, in accordance with U.S.
    GAAP









W
21,972,151   F-82




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Adjustments


Income Tax


Adjustmentsbefore Income Tax


Effect


after Income Tax(In millions of Korean won)As of December 31, 2005Total shareholders equity under Korean GAAP









W
19,873,677Minority interest










(384,670
)19,489,007Adjustments:Fixed asset revaluation

W
(175,907
)

W
25,528



(150,379
)Capitalized costs


286,208



(78,707
)


207,501Capitalized repairs


3,724



(1,024
)


2,700Investment securities


(66,594
)


18,313



(48,281
)Amortization of goodwill


8,875



(2,441
)


6,434Others, net


60



(8,873
)


(8,813
)W
56,366


W
(47,204
)

W
9,162Shareholders equity, as adjusted, in accordance with U.S.
    GAAP









W
19,498,169   (c)
    Fixed
    asset revaluation    (d)
    Capitalized
    costs  W W W
   F-83




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006


2005(In millions of Korean won)Capitalized interest

W
104,014


W
123,350


W
86,269Depreciation of capitalized interest


(73,888
)


(72,034
)


(60,581
)Net income impact

W
30,126


W
51,316


W
25,688       2007


2006


2005(In millions of Korean won)Net income impact

W
(7,321
)

W
(13,782
)

W
(18,404
)   (e)
    Capitalized
    repairs    (f)
    Guarantees  W W W W
  (g)
    Stock
    Appreciation Rights   F-84




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      W
    2005(In millions of Korean won,except per-share amounts)Net Income, as reported

W
4,101,598Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects


4,574Deduct: Stock-based employee compensation expense determined
    under the fair value method, net of related tax effects


(6,457
)Pro forma net earnings


4,099,715Earning per share-basic:As reported


51,789Pro forma


51,765Earning per share-diluted:As reported


51,789Pro forma


51,765     2007Dividend yield range


1.74 ~2.98
%Expected volatility range


34.44 ~49.38
%Risk-free interest rate range


5.52 ~5.89
%Expected lives (in years)


0.45 ~3.51  F-85




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006


2005(In millions of Korean won)Net income impact

W
10,759


W
(4,171
)

W
2,455   W W W
  (h)
    Investment
    Securities    (i)
    Recognition
    of an impairment loss          (ii)
    Recognition
    of gain on disposal of available for sale investments  W
    2007


2006


2005(In millions of Korean won)Impairment loss

W



W
(1,026
)

W
(7,882
)Recognition of gains on disposal


511



55,096



89,541Net income impact

W
511


W
54,070


W
81,659  F-86




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Investment
    Securities:
  2007


2006


2005(In millions of Korean won)Book value at prior yearend plus investment acquired during
    current year

W
4,049,311


W
2,420,474


W
1,864,297Unrealized gains and losses incurred during current year


498,711



443,097



328,276Permanent impairment loss incurred during current year


(4,340
)


(1,970
)


(11,605
)Fair value (Korean GAAP)


4,543,682



2,861,601



2,180,968Accumulated other-than-temporary impairment


(73,851
)


(86,357
)


(68,682
)Fair value (US GAAP)

W
4,469,831


W
2,775,244


W
2,112,286   (i)
    Goodwill    (j)
    Embedded
    Derivatives          (k)
    Deferred
    Income Taxes   F-87




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  36.
    Additional
    Financial Information in Accordance with U.S. GAAP  (a)
    Deferred
    taxes in accordance with U.S. GAAP    2007


2006


2005(In millions of Korean won)Deferred tax assets:Fixed asset revaluation

W
15,041


W
19,986


W
25,528Investment securities






221,139



77,984Impairment loss on fixed assets


121,483



129,264



129,135Impairment loss on investment securities


19,735



45,979



23,078Allowance for doubtful accounts


80,532



91,478



61,142Allowance for severance benefits


32,399



21,964



101,867Depreciation expense






2,168



18,980Capital expenditures






74



Research and development expense










12,988Deferred taxes related to OCI






12,141



182,824Denied accrual expenses






78,402



120,198Derivatives


19,529







Others


292,116



45,172



86,287Total deferred tax assets


580,835



667,767



840,011   2007


2006


2005(In millions of Korean won)Deferred tax liabilities:Gain on valuation of equity method investments


178,171



118,895



134,441Reserve for repairs


82,982



110,930



132,120Accrued income


2,313



16,446



917Reserve for technology


303,756



397,375



388,117Capitalized repairs


433



675



1,024Capitalized costs


95,011



89,361



78,707Deferred taxes related to OCI


372,366



141,155



162,434Others










30,159Total deferred tax liabilities


1,035,032



874,837



927,919Net deferred tax assets (liabilities)

W
(454,197
)

W
(207,070
)

W
(87,908
)   (b)
    Comprehensive
    income   F-88




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2007


2006


2005(In millions of Korean won)Net income, as adjusted, in accordance with U.S GAAP

W
3,565,047


W
3,407,795


W
4,101,598Other comprehensive income, net of tax:Foreign currency translation adjustments


74,982



(51,838
)


(7,150
)Change in a fair value of a derivative instrument


(4,034
)






Unrealized gains (losses) on investments


521,124



351,307



85,195Reclassification adjustment for losses (gains)included in income


(658
)


43,135



(1,665
)Comprehensive income, as adjusted, in accordance with U.S. GAAP

W
4,156,461


W
3,750,399


W
4,177,978  F-89




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Foreign


Change in a


Unrealized


AccumulatedCurrency


Fair Value of


Gains


OtherTranslation


a Derivative


(Losses) on


ComprehensiveAdjustments


Instrument


Investments


Income(In millions of Korean won)Balance, December 31, 2004

W
11,536


W



W
177,723


W
189,259Foreign currency translation adjustments,net of tax benefit of W2,712 million


(7,150
)










(7,150
)Unrealized gains on investments, net of tax expense of
    W(32,316) million










85,195



85,195Less: Reclassification adjustment for net realized gain included
    in income, net of tax expense of
    W632 million










(1,665
)


(1,665
)Current period change


(7,150
)






83,530



76,380Balance, December 31, 2005

W
4,386


W



W
261,253


W
265,639Foreign currency translation adjustments,net of tax benefit of W19,663 million


(51,838
)










(51,838
)Unrealized gains on investments, net of tax expense of
    W(147,661) million










351,307



351,307Add: Reclassification adjustment for net realized losses
    included in income, net of tax benefit of
    W(16,362) million










43,135



43,135Current period change


(51,838
)






394,442



342,604Balance, December 31, 2006

W
(47,452
)

W



W
655,695


W
608,243Foreign currency translation adjustments,net of tax expense of W(28,441) million


74,982











74,982Change in a fair value of a derivative instrument, net of tax
    benefit of W1,530 million






(4,034
)






(4,034
)Unrealized gains on investments, net of tax expense of
    W(197,667) million










521,124



521,124Add: Reclassification adjustment for net realized losses
    included in income, net of tax benefit of
    W249 million










(658
)


(658
)Current period change


74,982



(4,034
)


520,466



591,414Balance, December 31, 2007

W
27,530


W
(4,034
)

W
1,176,161


W
1,199,657   (c)
    Fair
    Value of financial instruments    (i) Cash and cash equivalents, short-term financial
    instruments, trading securities, trade accounts and notes
    receivable, trade accounts and notes payable, and short-term
    borrowings
 F-90




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    (ii) Investment Securities
    (iii) Long-Term loans, trade account and notes
    receivable
    (iv) Long-Term debt
      2007


2006Carrying





CarryingAmount


Fair Value


Amount


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

W
1,292,581


W
1,292,581


W
936,288


W
936,288Short-term financial instruments


1,743,079



1,743,079



867,310



867,310Trading securities


1,286,939



1,286,939



2,000,647



2,000,647Trade accounts and notes receivable, including long-term loans


3,819,857



3,819,857



3,845,106



3,845,106Investment securities


5,178,723



5,178,723



3,165,055



3,165,055Short-term borrowings


1,572,020



1,572,020



1,238,749



1,238,749Trade accounts and notes payable


2,246,890



2,246,890



1,507,227



1,507,227Long-term debt, including current portion


3,789,889



3,808,261



3,129,914



3,189,205   (d)
    Minority
    interest    (e)
    Classification
    differences in the Consolidated Statements of
    Income   F-91




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  W W W
  Components
    of Other non-operating expenses
    2007


2006


2005(In millions of Korean won)Loss on disposal of investments

W
17,660


W
66,116


W
121,474Loss on impairment of property, plantand equipment


1,011



2,740



Provision for early retirement benefits(1)






14,672



418,567Additional payment of income tax






13,472



194,506Others


77,097



107,847



119,543Total

W
95,768


W
204,847


W
854,090     (1)
    
    In 2000, the Company initiated an ongoing plan to offer special
    termination benefits to employees who voluntarily accept early
    retirement and received applications for early retirement from
    employees. The Company recorded no expense for the year ended
    December 31, 2007 and recorded an expense amounting to
    W14,672 million and
    W418,567 million, for the years ended
    December 31, 2006 and 2005, respectively, which represents
    lump sum early retirement benefits which were either paid or
    accrued for the applicants who were notified of acceptance and
    approval of their applications at each year end. The employees
    were terminated effective on or before December 31, 2006
    and all liabilities associated with these early retirement
    benefits were settled by December 2006.  (f)
    Consolidated
    statement of cash flows    W W W
 F-92




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Components
    of Others financing activities
    2007


2006


2005(In millions of Korean won)Proceeds from other current liabilities

W



W
88,907


W
2,289Repayment of other current liabilities










(1,640
)Dividends paid by subsidiaries


(13,765
)


(7,530
)


(11,300
)Issuance of new shares by subsidiaries


1,996



67,431



39,675Additional acquisition of interest of subsidiaries(*)


(142,778
)


(42,165
)


(308,887
)Proceeds from disposal of interest of subsidiaries


11,338







Total

W
(143,209
)

W
106,643


W
(279,863
)     (*)
    
    Additional acquisition of minority interests in a subsidiary is
    classified as investment activities under US GAAP, while it is
    required to be classified as financing activities under Korean
    GAAP.  (g)
    Segment    Subtotalbefore


ReconcilingSteel


Construction


Trading


Others


Elimination


Adjustments


Consolidated(In millions of Korean won)Segments total assets

W
33,869,372


W
3,246,818


W
1,195,492


W
4,295,711


W
42,607,393


W
(6,332,630
)

W
36,274,763   37.
    Recent
    Accounting Pronouncements  U.S.
    GAAP
  SFAS 157-1 SFAS 157-2 SFAS 157-1, SFAS 157-2, 157-1 SFAS 157-2
   F-93




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
         F-94




---



##### Table of Contents



SIGNATURES
  Form 20-F
     (Registrant)
  Lee,
    Ku-Taek
   Title:
    Chief Executive Officer




---



##### Table of Contents



Exhibit Index
  1
.1



Articles of incorporation of POSCO (English translation)
    (incorporated by reference to Exhibit 1.1 to the
    Registrants Annual Report on Form 20-F for the fiscal
    year ended December 31, 2006)*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)*7
.1



Computation of ratio of earnings to fixed charges8
.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 200215
.1



Consent of Samil PricewaterhouseCoopers, the Korean member firm
    of PricewaterhouseCoopers     *
    
    Filed previously