##### Table of Contents





As filed
    with the Securities and Exchange Commission on June 29,
    2009
     UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549Form 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, 2008ORo

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)
  Park, Sung-Jin
 POSCO Center, 892 Daechi-4-dong,
    Gangnam-gu,
 Seoul, Korea
    135-777
 Telephone: +82-2-3457-0428;
    E-mail:
    sjp0428@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, 2008, there were 76,569,916 shares
    of common stock, par value Won 5,000 per share, outstanding
    (not including 10,616,919 shares of common stock held by
    the company as treasury shares)
  þ o
  o þ
  þ o
  Regulation S-T o o
    Large accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o  o o þ
  o þ
  Rule 12b-2 o 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


4Item 3.C.

Reasons for Offer and Use of Proceeds


4Item 3.D.

Risk Factors


5ITEM 4.

INFORMATION ON THE COMPANY


14Item 4.A.

History and Development of the Company


14Item 4.B.

Business Overview


14Item 4.C.

Organizational Structure


28Item 4.D.

Property, Plants and Equipment


28ITEM 4A.

UNRESOLVED STAFF COMMENTS


30ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


30Item 5.A.

Operating Results


30Item 5.B.

Liquidity and Capital Resources


40Item 5.C.

Research and Development, Patents and Licenses,
    Etc.


46Item 5.D.

Trend Information


46Item 5.E.

Off-balance Sheet Arrangements


46Item 5.F.

Tabular Disclosure of Contractual Obligations


46Item 5.G.

Safe Harbor


46ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


47Item 6.A.

Directors and Senior Management


47Item 6.B.

Compensation


50Item 6.C.

Board Practices


50Item 6.D.

Employees


51Item 6.E.

Share Ownership


52ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


54Item 7.A.

Major Shareholders


54Item 7.B.

Related Party Transactions


54Item 7.C.

Interests of Experts and Counsel


54ITEM 8.

FINANCIAL INFORMATION


54Item 8A.

Consolidated Statements and Other Financial
    Information


54Item 8B.

Significant Changes


55 i




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ITEM 9.

THE OFFER AND LISTING


55Item 9.A.

Offer and Listing Details


55Item 9.B.

Plan of Distribution


58Item 9.C.

Markets


58Item 9.D.

Selling Shareholders


63Item 9.E.

Dilution


63Item 9.F.

Expenses of the Issuer


63ITEM 10.

ADDITIONAL INFORMATION


63Item 10.A.

Share Capital


63Item 10.B.

Memorandum and Articles of Association


63Item 10.C.

Material Contracts


67Item 10.D.

Exchange Controls


67Item 10.E.

Taxation


71Item 10.F.

Dividends and Paying Agents


76Item 10.G.

Statements by Experts


76Item 10.H.

Documents on Display


76Item 10.I.

Subsidiary Information


76ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


76ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


78Item 12.A.

Debt Securities


78Item 12.B.

Warrants and Rights


78Item 12.C.

Other Securities


78Item 12.D.

American Depositary Shares


78PART II


78ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


78ITEM 14.

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


78ITEM 15.

CONTROLS AND PROCEDURES


78ITEM 16.

[RESERVED]


79ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


79ITEM 16B.

CODE OF ETHICS


80ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


80ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


80ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


81ITEM 16G.

CORPORATE GOVERNANCE


81PART III


83ITEM 17.

FINANCIAL STATEMENTS


83ITEM 18.

FINANCIAL STATEMENTS


83ITEM 19.

EXHIBITS


84EX-1.1EX-8.1EX-12.1EX-12.2EX-13.1   ii




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GLOSSARY  ADR
    
    American Depositary Receipt evidencing ADSs.ADR depositary
    
    The Bank of New York Mellon.ADS
    
    American Depositary Share representing one-fourth of one share
    of Common Stock.Australian Dollar or A$
    
    The currency of the Commonwealth of Australia.Commercial Code
    
    Commercial Code of the Republic of Koreacommon stock
    
    Common stock, par value Won 5,000 per share, of POSCO.deposit agreement
    
    Deposit Agreement, dated as of September 26, 1994, among
    POSCO, the ADR Depositary and all holders and beneficial owners
    from time to time of ADRs issued thereunder, as amended by
    amendment no. 1 thereto dated June 25, 1997.Dollars, $ or US$
    
    The currency of the United States of America.FSCMA
    
    Financial Investment Services and Capital Markets Act of the
    Republic of KoreaGovernment
    
    The government of the Republic of Korea.Yen or JPY
    
    The currency of Japan.Korea
    
    The Republic of Korea.Korean GAAP
    
    Generally accepted accounting principles in the Republic of
    Korea.Gwangyang Works
    
    Gwangyang Steel Works.We
    
    POSCO and its consolidated subsidiaries.Pohang Works
    
    Pohang Steel Works.Securities Act
    
    The United States Securities Act of 1933, as amended.Securities Exchange Act
    
    The United States Securities Exchange Act of 1934, as amended.SEC
    
    The United States Securities and Exchange Commission.tons
    
    Metric tons (1,000 kilograms), equal to 2,204.6 pounds.U.S. GAAP
    
    Generally accepted accounting principles in the United States of
    America.Won or W
    
    The currency of the Republic of Korea.   1




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




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INCOME
    STATEMENT DATA
  For the Year Ended December 31,2004

2005

2006

2007

2008

2008(10)(In billions of Won and millions of dollars, except per share
    data)Korean GAAP:Sales(1)

W
23,973


W
26,302


W
25,842


W
31,608


W
41,743


US$
33,077Cost of goods sold(2)


17,361



18,767



19,897



24,903



32,562



25,802Selling and administrative expenses


1,293



1,451



1,556



1,785



2,006



1,590Operating income


5,319



6,083



4,389



4,920



7,174



5,684Interest expense


192



149



183



240



345



273Foreign currency transaction and translation gains (losses), net


179



159



99



(19
)


(940
)


(745
)Donations


170



153



155



197



143



113Income tax expenses


1,502



1,474



922



1,274



1,734



1,374Net income


3,841



4,007



3,353



3,678



4,350



3,447Net income attributable to controlling interest


3,814



4,022



3,314



3,559



4,379



3,470Net income attributable to minority interest


27



(15
)


39



119



(29
)


(23
)Basic and diluted earnings per share of common stock(3)


47,185



50,790



42,115



46,854



58,002



45.96Dividends per share of common stock


8,000



8,000



8,000



10,000



10,000



7.92U.S. GAAP(4):Operating income

W
5,299


W
5,671


W
4,259


W
4,967


W
7,129


US$
5,649Net income


3,460



4,102



3,408



3,565



4,106



3,254Basic and diluted earnings per share of common stock


42,806



51,789



43,304



46,938



54,387



43.10   BALANCE
    SHEET DATA
  As of December 31,2004

2005

2006

2007

2008

2008(10)(In billions of Won and millions of dollars, except per share
    data)Korean GAAP:Working capital(5)

W
5,493


W
5,759


W
7,155


W
7,769


W
11,188


US$
8,865Property, plant and equipment, net(6)


10,440



12,272



14,643



15,582



18,069



14,318Total assets(6)


24,129



27,507



31,149



36,275



46,961



37,212Long-term debt(7)(8)(9)


2,051



1,131



2,726



3,306



6,896



5,464Capital stock


482



482



482



482



482



382Total shareholders equity(6)


16,386



19,874



22,402



25,118



28,344



22,460U.S. GAAP(4):Property, plant and equipment, net

W
10,541


W
12,420


W
14,860


W
15,836


W
18,328


US$
14,523Total assets


24,279



27,525



31,208



36,349



47,208



37,407Total shareholders equity


16,208



19,498



21,972



24,561



27,759



21,996     (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)
    
    See Note 26 of Notes to Consolidated Financial Statements
    for method of calculation.(4)
    
    A description of the significant differences between Korean GAAP
    and U.S. GAAP as well as the reconciliation to U.S. GAAP are
    provided in detail in Note 32 of Notes to Consolidated
    Financial Statements.(5)
    
    Working capital means current assets minus current
    liabilities.(6)
    
    Reflects revaluations of assets permitted under Korean law.(7)
    
    Net of current portion and discount on debentures issued.(8)
    
    For information regarding swap transactions entered into by us,
    see Item 5. Operating and Financial Review and
    Prospects  Item 5.A. Operating
    Results  Exchange Rate Fluctuations and
    Note 23 of Notes to Consolidated Financial Statements.(9)
    
    Monetary assets and liabilities denominated in foreign
    currencies are translated into Won at the basic rates in effect
    at the balance sheet date and resulting translation gains and
    losses are recognized in current operations. See Notes 2
    and 28 of Notes to Consolidated Financial Statements.(10)
    
    Translated into U.S. Dollars at the rate of Won 1,262.0 to
    US$1.00, the noon buying rate in the City of New York for
    cable transfers in Won as certified for customs purposes by the
    Federal Reserve Bank of New York, on December 31,
    2008. This translation should not be construed as a
    representation that the Won amounts represent, have been, or
    could be converted to U.S. Dollars at that rate or any other
    rate.  EXCHANGE
    RATE INFORMATION
    At End

AveragePeriod

of Period

Rate(1)

High

Low(Per US$1.00)2004


1,043.8



1,145.3



1,195.5



1,038.32005


1,013.8



1,024.2



1,060.3



998.22006


929.6



956.1



1,031.0



918.02007


938.2



929.2



950.0



902.22008


1,257.5



1,102.6



1,509.0



934.52009 (through June 26)


1,283.6



1,349.5



1,573.6



1,236.1January


1,368.5



1,346.1



1,391.0



1,257.5February


1,516.4



1,429.5



1,516.4



1,376.2March


1,377.1



1,462.0



1,573.6



1,328.9April


1,348.0



1,341.9



1,398.2



1,316.2May


1,272.9



1,258.7



1,307.3



1,236.1June (through June 26)


1,283.6



1,349.5



1,573.6



1,236.1       (1)
    
    The average rate for each year is calculated as the average of
    the market average exchange rates on the last business day of
    each month during the relevant year (or portion thereof). The
    average rate for a month is calculated as the average of the
    market average exchange rates on each business day during the
    relevant month (or portion thereof).  Item 3.B.
    Capitalization
    and Indebtedness  Not applicable
  Item 3.C.
    Reasons
    for Offer and Use of Proceeds  Not applicable
 4




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Item 3.D.
    Risk
    Factors    The
    global economic downturn may result in reduced demand and
    adversely affect our profitability.
    Korea
    is our most important market, and our current business and
    future growth could be materially and adversely affected if
    economic conditions in Korea deteriorate.
        
    continuing difficulties in the housing and financial sectors in
    the United States and elsewhere and the resulting adverse effect
    on the global financial markets;
    a slowdown in consumer spending and the overall economy;
    adverse changes or volatility in foreign currency reserve
    levels, commodity prices (including oil prices), exchange rates
    (including fluctuation of the Dollar or Yen exchange rates or
    revaluation of the Chinese renminbi), 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 Agreements with the United
    States and the European Union; 5




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
    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;
    the recurrence of severe acute respiratory syndrome or an
    outbreak of avian flu or influenza A (H1N1) 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 global oil supply or
    fluctuations 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
    58.3% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2008; 6




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
    an increase in Won terms in the costs of raw materials and
    equipment that we purchase from overseas sources and a
    substantial portion of our freight costs, which are denominated
    primarily in Dollars; and
    foreign exchange translation losses on liabilities, which lower
    our earnings for accounting purposes.      We are
    dependent on imported raw materials, and significant increases
    in market prices of essential raw materials could adversely
    affect our margins and profits.
      The
    expansion of steel production capacity, combined with the global
    economic downturn, may result in intensification of production
    over-capacity in the global steel industry and adversely affect
    our profitability.
      
    reduce export prices in Dollar terms of our principal products,
    which in turn may reduce our sales prices in Korea;
    increase competition in the Korean market as foreign producers
    seek to export steel products to Korea as other markets
    experience a slowdown;
    negatively affect demand for our products abroad and our ability
    to expand export sales; and
    affect our ability to increase steel production in general. 7




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Disruptions
    in global credit and financial markets and the resulting
    governmental actions around the world could have a material
    adverse impact on our business and the ability to meet the
    funding needs of us and our customers.
      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.
   8




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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.  We may
    from time to time engage in acquisitions for which we may be
    required to seek additional sources of capital.
    Several
    of our products have been and may become subject to anti-dumping
    or countervailing proceedings, which may have an adverse effect
    on our export sales.
   9




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Cyclical
    fluctuations based on macroeconomic factors may adversely affect
    POSCO E&Cs business and performance.
    Many
    of POSCO E&Cs domestic and overseas construction
    projects are on a fixed-price basis, which could result in
    losses for us in the event that unforeseen additional expenses
    arise with respect to the project.
      
    unanticipated variations in labor and equipment productivity
    over the term of a contract;
    unanticipated increases in labor, raw material, parts and
    components, subcontracting and overhead costs, including as a
    result of bad weather;
    delivery delays and corrective measures for poor
    workmanship; and
    errors in estimates and bidding.    POSCO
    E&Cs domestic residential property business is highly
    dependent on the real estate market in Korea.
   10




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We may
    not be able to successfully execute our diversification
    strategy.
    We are
    subject to environmental regulations, and our operations could
    expose us to substantial liabilities.
    Failure
    to protect our intellectual property rights could impair our
    competitiveness and harm our business and future
    prospects.
    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.
   11




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Escalations
    in tension with North Korea could have an adverse effect on us
    and the market value of our securities.
    surface-to-air
    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.
   12




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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.    U.S.
    investors may have difficulty enforcing civil liabilities
    against us and our directors and senior
    management.
  non-U.S. experts
  This
    annual report contains forward-looking statements
    that are subject to various risks and
    uncertainties.
   13




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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
      Business
    Strategy
   14




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Continue
    to Seek Growth Opportunities in the Steel Sector
        Maintain
    Technology Leadership
    Pursue
    Cost-Cutting through Operational and Process
    Innovations
   15




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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.    For the Year Ended December 31,2004

2005

2006

2007

2008Billions



Billions



Billions



Billions



BillionsSteel Products

of Won

%

of Won

%

of Won

%

of Won

%

of Won

%Hot rolled products


5,449



25.1



5,877



25.0



4,650



20.8



4,495



16.1



6,950



19.4Plates


1,987



9.1



2,253



9.6



2,380



10.7



2,847



10.2



4,710



13.2Wire rods


1,351



6.2



1,528



6.5



1,243



5.6



1,458



5.2



2,236



6.2Cold rolled products


6,564



30.2



7,527



32.0



6,765



30.3



8,672



31.1



11,751



32.8Silicon steel sheets


531



2.4



688



2.9



681



3.0



1,105



4.0



1,613



4.5Stainless steel products


4,920



22.6



4,543



19.3



5,751



25.8



8,268



29.7



7,271



20.3Others


952



4.4



1,132



4.7



859



3.8



1,003



3.7



1,305



3.6Total


21,753



100.0



23,547



100.0



22,329



100.0



27,848



100.0



35,836



100.0   16




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For the Year Ended December 31,2004

2005

2006

2007

2008Thousands



Thousands



Thousands



Thousands



ThousandsSteel Products

of Tons

%

of Tons

%

of Tons

%

of Tons

%

of Tons

%Hot rolled products


10,966



34.5



10,330



33.2



9,604



31.0



8,221



25.6



8,684



25.9Plates


3,385



10.6



3,193



10.3



3,615



11.7



3,926



12.2



4,853



14.5Wire rods


2,503



7.9



2,366



7.6



2,153



6.9



2,222



6.9



2,524



7.5Cold rolled products


10,242



32.2



10,468



33.6



10,864



35.1



12,146



37.8



12,736



38.0Silicon steel sheets


705



2.2



737



2.4



686



2.2



934



2.9



1,049



3.1Stainless steel products


2,069



6.5



1,919



6.2



2,260



7.3



2,694



8.4



2,060



6.1Others


1,926



6.1



2,100



6.7



1,802



5.8



1,967



6.2



1,616



4.8Total


31,796



100.0



31,115



100.0



30,984



100.0



32,110



100.0



33,522



100.0     Hot
    Rolled Products
        Plates
       17




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##### Table of Contents



Wire
    Rods
        Cold
    Rolled Products
        Silicon
    Steel Sheets
        Stainless
    Steel Products
        Others
   18




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##### Table of Contents



Markets
    Domestic
    Market
      For the Year Ended December 31,2004

2005

2006

2007

2008Thousands



Thousands



Thousands



Thousands



ThousandsSource

of Tons

%

of Tons

%

of Tons

%

of Tons

%

of Tons

%POSCOs sales


23,599



50.0



22,880



48.5



20,991



42.3



21,256



38.6



22,912



39.1Other Korean steel companies sales


15,969



33.9



15,957



33.9



18,052



36.4



21,224



38.5



20,658



35.3Imports(1)


7,595



16.1



8,287



17.6



10,591



21.3



12,628



22.9



15,002



25.6Total domestic sales(1)


47,163



100.0



47,124



100.0



49,634



100.0



55,108



100.0



58,572



100.0     (1)
    
    Source: 2008 Official Statistics, Korea Iron & Steel
    Association.           19




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##### Table of Contents



Exports
    For the Year Ended December 31,2004

2005

2006

2007

2008Thousands



Thousands



Thousands



Thousands



ThousandsRegion

of Tons

%

of Tons

%

of Tons

%

of Tons

%

of Tons

%China


3,138



38.3



2,640



32.1



2,524



25.3



3,186



29.4



2,551



24.0Japan


1,661



20.3



1,843



22.4



1,959



19.6



2,137



19.7



1,953



18.4Asia (other than China and Japan)


1,502



18.3



1,636



19.9



1,895



19.0



2,112



19.5



2,332



22.0North America


737



9.0



761



9.2



963



9.6



756



7.0



760



7.2Europe


116



1.4



34



0.4



318



3.2



546



5.0



510



4.8Others


1,043



12.7



1,320



16.0



2,335



23.3



2,117



19.4



2,504



23.6Total


8,198



100.0



8,234



100.0



9,994



100.0



10,854



100.0



10,610



100.0   For the Year Ended December 31,2004

2005

2006

2007

2008Thousands



Thousands



Thousands



Thousands



ThousandsSteel Products

of Tons

%

of Tons

%

of Tons

%

of Tons

%

of Tons

%Hot rolled products


2,049



25.0



1,960



23.8



2,477



24.8



1,531



14.1



2,018



19.0Plates


295



3.6



229



2.8



228



2.3



231



2.1



206



1.9Wire rods


252



3.1



333



4.1



498



5.0



502



4.6



605



5.7Cold rolled products


4,139



50.5



4,142



50.3



4,774



47.8



6,186



57.0



5,775



54.4Silicon steel sheets


245



3.0



262



3.2



369



3.7



511



4.7



576



5.4Stainless steel products


1,019



12.4



1,032



12.5



1,245



12.4



1,695



15.6



1,203



11.3Others


199



2.4



276



3.3



403



4.0



198



1.9



227



2.3Total


8,198



100.0



8,234



100.0



9,994



100.0



10,854



100.0



10,610



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

2006


2007


2008(In billions of Won)Korea

W
17,250


W
19,970


W
26,887China


3,070



4,504



4,876Asia (other than China and Japan)


1,486



2,042



3,069Japan


1,312



1,742



2,044North America


610



732



801Other


2,114



2,618



4,066Total


25,842



31,608



41,743    20




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##### Table of Contents



For the Year Ended December 31,2004

2005

2006

2007

2008Apparent crude steel use (million metric tons)


1,091



1,113



1,178



1,250



1,197Percentage of annual increase (decrease)


10.9
%


2.0
%


5.8
%


6.1
%


(4.2
)%              50-50
     21




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##### Table of Contents



Pricing
    Policy
        Raw
    Materials
  Steel
    Production
       22




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##### Table of Contents



Stainless
    Steel Production
      Transportation
    The
    Steelmaking Process
    Steel 
    Basic Oxygen Steelmaking Method
     23




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##### Table of Contents



Stainless
    Steel  Electric Arc Furnace Method
    Competition
  Domestic
    Market
        Export
    Markets
      Subsidiaries
    and Global Joint Ventures
  Steel
    Production
   24




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##### Table of Contents



25




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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.   26




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##### Table of Contents



Energy
          Others
      Insurance
   27




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##### Table of Contents



Item 4.C.
    Organizational
    Structure    Jurisdiction of

Percentage ofName

Incorporation

OwnershipPOSCO Engineering & Construction Co., Ltd.


Korea



89.5
%POSCO Power Corporation


Korea



100.0
%Zhangjiagang Pohang Stainless Steel Co., Ltd.


China



82.5
%POSCO Specialty Steel Co., Ltd.


Korea



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


Korea



95.3
%POSDATA Co., Ltd.


Korea



61.9
%   Item 4.D.
    Property,
    Plants and Equipment    Pohang
    Works
        For the Year Ended December 31,2004

2005

2006

2007

2008Crude steel and stainless steel production capacity (million
    tons per year)


13.30



13.30



13.30



14.30



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


13.45



13.36



12.60



13.66



14.94Capacity utilization rate (%)(1)


101.1



100.4



94.7



95.5



99.6     (1)
    
    Calculated by dividing actual crude steel and stainless steel
    output by the actual crude steel and stainless steel production
    capacity for the relevant period as determined by us.  Gwangyang
    Works
   28




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##### Table of Contents



For the Year Ended December 31,2004

2005

2006

2007

2008Crude steel production capacity (million tons per year)


16.70



16.70



16.70



16.70



18.00Actual crude steel output (million tons)


16.76



17.19



17.45



17.41



18.20Capacity utilization rate (%)(1)


100.4



102.9



104.5



104.2



101.1     (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
       29




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##### Table of Contents



Item 4A.
    Unresolved
    Staff Comments    Item 5.
    Operating
    and Financial Review and Prospects  Item 5.A.
    Operating
    Results    Overview
  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.       30




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##### Table of Contents



For the Year Ended December 31,Products

2006


2007


2008(In thousands of Won per ton)Hot rolled products

W
484.2


W
546.8


W
800.3Plates


658.4



725.2



970.6Wire rods


577.2



656.0



885.8Cold rolled products


622.7



714.0



922.7Silicon steel sheets


991.8



1,182.9



1,538.3Stainless steel products


2,544.3



3,069.0



3,530.4Others


476.6



509.5



806.5Average(1)

W
720.6


W
867.3


W
1,069.0     (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
   31




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##### Table of Contents



For the Year EndedDecember 31,2006

2007

2008(Percentage of net sales)Cost of goods sold


77.0
%


78.8
%


78.0
%Selling and administrative expenses(1)


6.0



5.6



4.8Total operating expenses


83.0



84.4



82.8Gross margin


23.0



21.2



22.0Operating margin


17.0



15.6



17.2     (1)
    
    See Note 24 of Notes to Consolidated Financial Statements.      For the Year EndedDecember 31,2006

2007

2008Crude steel and stainless steel production capacity (million
    tons per year)(1)


31.2



32.8



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


31.2



32.8



34.7Capacity utilization rate (%)


99.9



99.9



100.3Steel product sales (million tons)(2)


30.98



32.11



33.52Man-hours
    per ton of crude steel produced(3)


1.06



0.91



0.81     (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 0.8 million tons in 2006, 1.0 million
    tons in 2007 and 0.9 million tons in 2008.(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
    58.3% of our total long-term debt (excluding discounts on
    debentures issued and including current portion) as of
    December 31, 2008; 32




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##### Table of Contents




    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.      No. 2
    Mini-mill at Gwangyang Works
  construction-in-progress
  Reportable
    Operating Segments
    Inflation
    Critical
    Accounting Estimates
   33




---



##### Table of Contents



Allowance
    for Doubtful Accounts
    Valuation
    of Investment Securities and Derivatives
      held-to-maturity available-for-sale
     34




---



##### Table of Contents



Long-lived
    Assets
    and/or
  Inventories
  materials-in-transit
  Operating
    Results
  2008
    Compared to 2007
     35




---



##### Table of Contents



36




---



##### Table of Contents




    We recorded a substantial increase in net loss on foreign
    currency translation to Won 811 billion in 2008 from Won
    46 billion in 2007, as well as net loss on foreign currency
    transaction of Won 129 billion in 2008 compared to net gain
    on foreign currency transaction of Won 28 billion in 2007,
    primarily due to greater depreciation of the Won against the
    Dollar in 2008 compared to 2007.
    We recognized a 947% increase in loss on impairment of
    investments to Won 121 billion in 2008 from Won
    12 billion in 2007, primarily due to an impairment loss
    resulting from a decrease in the fair value of our July 2008
    investment in Macarthur Coal Limited.
    Our interest expense increased by 43.7% to Won 345 billion
    in 2008 from Won 240 billion in 2007 primarily due to
    increases in our outstanding long-term debt and short-term
    borrowings.    Segment
    Results  Steel
      Segment
    Results  Engineering and Construction
      Segment
    Results  Trading
   37




---



##### Table of Contents



Segment
    Results  Others
      2007
    Compared to 2006
           38




---



##### Table of Contents



Segment
    Results  Steel
   39




---



##### Table of Contents



Segment
    Results  Engineering and Construction
      Segment
    Results  Trading
      Segment
    Results  Others
      Item 5.B.
    Liquidity
    and Capital Resources    For the Year Ended December 31,2006


2007


2008(In billions of Won)Net cash provided by operating activities

W
3,926


W
5,553


W
3,687Net cash used in investing activities


3,363



4,264



5,803Net cash provided by (used in) financing activities


(269
)


(1,001
)


3,117Cash and cash equivalents at beginning of period


654



936



1,293Cash and cash equivalents at end of period


936



1,293



2,491Net increase in cash and cash equivalents


283



356



1,198  40




---



##### Table of Contents



Capital
    Requirements
    available-for-sale
      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


7,741



770



4,303



1,882



786Operating lease obligations


12



7



5







Purchase obligations



(a)



(a)



(a)



(a)



(a)Other long-term liabilities



(b)



(b)



(b)



(b)



(b)Total


7,753



777



4,308



1,882



786     (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
    five to ten years and provide for periodic price adjustments to
    then-market prices. As of December 31, 2008,
    384 million tons of iron ore and 51 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. 41




---



##### Table of Contents



Capital
    Resources
               42




---



##### Table of Contents



Liquidity
          As of December 31,2006


2007


2008(In billions of Won)Cash and cash equivalents, net of government grants

W
936


W
1,293


W
2,490Short-term financial instruments


867



1,743



1,827Trading securities


2,001



1,287



1,238Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount


3,492



4,036



5,894Inventories, net


4,018



4,902



8,662       As of December 31,2006


2007


2008(In billions of Won)Trade accounts and notes payable

W
1,507


W
2,247


W
3,070Short-term borrowings


1,239



1,572



3,254Income tax payable


701



931



2,083Current portion of long-term debt, net of discount on debentures
    issued


404



483



770  43




---



##### Table of Contents



Capital
    Expenditures and Capacity Expansion
      Estimated RemainingCost of CompletionExpected

Total Cost of

as of December 31,Project

Completion Date

Project

2008(In billions of Won)Pohang Works:Construction of a new steelmaking plant

June 2010


1,393



979Installation of stainless steel continuous tandem rolling mill

May 2009


319



47Capacity expansion of electrical steel plant

June 2009


283



68Capacity expansion of no. 4 sintering plant and
    installation of fine ore granulation facility

April 2010


160



128Gwangyang Works:Construction of no. 5 sintering plant and no. 5 coke
    plant

December 2011


1,987



1,813Construction of a new steel plate plant

July 2010


1,791



1,494Capacity expansion of no. 2 pickling and tandem cold
    rolling mill

April 2009


226



61Renovation of no. 1 hot rolling mill

September 2009


162



139Pohang and Gwangyang Works:Raw materials treatment facility upgrades

March 2016


809



736   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   44




---



##### Table of Contents



U.S.
    GAAP Reconciliation
      Recent
    Accounting Pronouncements in U.S. GAAP
  FAS 157-3, FAS 157-3 FAS 157-3
  No. 133-1 FIN 45-4, No. 133-1 FIN 45-4). No. 133-1 FIN 45-4 FIN 45-4 FIN 45-4 No. 133-1 FIN 45-4
     45




---



##### Table of Contents



Item 5.C.
    Research
    and Development, Patents and Licenses, Etc.          Item 5.D.
    Trend
    Information    Item 5.E.
    Off-balance
    Sheet Arrangements    Item 5.F.
    Tabular
    Disclosure of Contractual Obligations    Item 5.G.
    Safe
    Harbor   46




---



##### Table of Contents



Item 6.
    Directors,
    Senior Management and Employees  Item 6.A.
    Directors
    and Senior Management  Board of
    Directors
    sub-committees:
  
    the Director Candidate Recommendation Committee;
    the Evaluation and Compensation Committee;
    the Finance and Operation Committee;
    the Executive Management Committee;
    the Audit Committee; and
    the Insider Trading Committee.      Standing
    Directors
    YearsYears as

with



Expiration ofName

Position

Responsibilities and Division

Director

POSCO

Age

Term of OfficeChung, Joon-Yang

Chief Executive Officer and Representative Director




5



34



61



February 2012Yoon, Seok-Man

Standing Director




5



32



60



February 2010Lee, Dong-Hee

President and Representative Director

Chief Finance and Investment Officer


3



32



59



February 2010Choi, Jong-Tae

President and Representative Director

Chief Staff Officer


1



35



59



February 2011Hur, Nam-Suk

Senior Executive Vice President

Chief Operating Officer and Technology Officer


0



34



59



February 2010Chung, Keel-Sou

Senior Executive Vice President

Chief of Stainless Steel Division


0



34



59



February 2010    47




---



##### Table of Contents



Outside
    Directors
    Years as



Expiration ofName

Position

Principal Occupation

Director

Age

Term of OfficeSun, Wook

Chairman of the Board

CEO, Nongshim Co., Ltd.


4



64



February 2011Jones, Jeffrey D.

Director

Attorney, Kim & Chang


5



57



February 2010Ahn, Charles

Director

Chairman of the Board, AhnLab, Inc.


4



47



February 2011Park, Sang-Yong

Director

Professor, Yonsei University


1



58



February 2011Yoo, Jang-Hee

Director

President, East Asian Economic Association


0



68



February 2012Han, Joon-Ho

Director

CEO and Vice Chairman, Samchully Co., Ltd.


0



63



February 2012Lee, Young-Sun

Director

President, Hallym University


0



61



February 2012Kim, Byung-Ki

Director

Former President and Research Fellow, Samsung Economic Research
    Institute


0



59



February 2012Lee, Chang-Hee

Director

Professor, Seoul National University


0



49



February 2012     Senior
    Management
    Years withName

Position

Responsibility and Division

POSCO

AgeOh, Chang-Kwan

Senior Executive Vice President

Chief Marketing Officer


31



56Kwon, Young-Tae

Senior Executive Vice President

Raw Materials Procurement Dept.


34



59Kim, Jin-Il

Senior Executive Vice President

General Superintendent (Pohang Works)


34



56Kim, Sang-Young

Executive Vice President

Corporate Communication Dept.


22



57Cho, Noi-Ha

Executive Vice President

General Superintendent (Gwangyang Works)


31



56Yoon, Yong-Won

Executive Vice President

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


31



57Park, Ki-Hong

Executive Vice President

Corporate Strategy Dept., Green Development Project Dept.


3



51Choo, Wung-Yong

Executive Vice President

General Superintendent (Technical Research Laboratories)


26



56Chang, In-Hwan

Executive Vice President

Hot Rolled Products Marketing Dept.


28



54Yoo, Kwang-Jae

Senior Vice President

Stainless Steel Production and Technology


31



57Jang, Byung-Hyo

Senior Vice President

POSCO-Japan Co., Ltd.


32



55Kim, Joon-Sik

Senior Vice President

Order Processing and Technical Service Dept.


28



55 48




---



##### Table of Contents



Years withName

Position

Responsibility and Division

POSCO

AgeJang, Young-Ik

Senior Vice President

Stainless Steel Raw Materials Procurement Dept.


30



55Kim, Moon-Seok

Senior Vice President

Seoul Office, Corporate Contribution Group


30



56Cho, Bong-Rae

Senior Vice President

Deputy General Superintendent (Production, Pohang Works)


29



56Kong, Yoon-Chan

Senior Vice President

Deputy General Superintendent (Administration, Gwangyang Works)


29



56Lee, In-Bong

Senior Vice President

Process Innovation Dept.


28



54Shin, Jung-Suk

Senior Vice President

Zhangjiagang Pohang Stainless Steel Co., Ltd.


30



56An, Byung-Sik

Senior Vice President

Deputy General Superintendent (Maintenance, Gwangyang Works)


31



53Baek, Sung-Kwan

Senior Vice President

Business Investment Dept.


28



53Yoon, Dong-Jun

Senior Vice President

Global Human Resources Dept., Human Resources Development Center


25



50Lee, Kyung-Hoon

Senior Vice President

Environment & Energy Dept.


30



55Chang, Song-Hwan

Senior Vice President

Deputy General Superintendent (Administration, Pohang Works)


28



54Lee, Hoo-Geun

Senior Vice President

FINEX Research & Development Project Dept.


26



51Woo, Jong-Soo

Senior Vice President

European Union Office


29



53Kang, Chang-Gyun

Senior Vice President

Auditing Dept.


29



53Lee, Jung-Sik

Senior Vice President

Technology Development Dept., Magnesium Business Dept.,
    Production and Technology Supporting Team of POSCO-Vietnam
    /POSCO-Mexico, Oversea Cold Rolling Mill Project Supporting Team


29



54Suh, Young-Sea

Senior Vice President

Stainless Steel Marketing Dept.


25



53Park, Myung-Kil

Senior Vice President

Procurement Service Center, Corporate Collaboration and
    Prosperity Dept.


23



50Lee, Young-Hoon

Senior Vice President

Finance Dept.


23



49Hwang, Eun-Yeon

Senior Vice President

Marketing Strategy Dept.


22



50Kim, Yeung-Gyu

Senior Vice President

Labor and Outside Services Dept.


26



54Park, Kui-Chan

Senior Vice President

Dept. of External Affairs, Global R&D Center Project Dept.


2



52Park, Sung-Ho

Senior Vice President

Deputy General Superintendent (Technical Research Laboratories)


26



52Shin, Young-Kwan

Senior Vice President

Cold Rolled Products Marketing Dept.


24



51Oh, In-Hwan

Senior Vice President

Automative Flat Products Marketing Dept.


27



50Yeon, Kyu-Sung

Senior Vice President

Deputy General Superintendent (Maintenance, Pohang Works)


24



50Lee, Kyoung-Mok

Senior Vice President

Deputy General Superintendent (Production, Gwangyang Works)


27



53Jeon, Woo-Sig

Senior Vice President

Strategic Business Dept.


23



49  49




---



##### Table of Contents



Item 6.B.
    Compensation  Compensation
    of Directors and Officers
      Item 6.C.
    Board
    Practices  Director
    Candidate Recommendation Committee
    Evaluation
    and Compensation Committee
    Finance
    and Operation Committee
    Executive
    Management Committee
    Audit
    Committee
   50




---



##### Table of Contents




    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
    Item 6.D.
    Employees         51




---



##### Table of Contents



Item 6.E.
    Share
    Ownership  Common
    Stock
    Number ofCommon SharesShareholders

OwnedYoon, Yong-Won


2,178Choi, Jong-Tae


1,573Chung, Joon-Yang


1,400Lee, Dong-Hee


1,000Cho, Noi-Ha


600Yoo, Kwang-Jae


502Kwon, Young-Tae


500Oh, Chang-Kwan


400Woo, Jong-Soo


391Kim, Jin-Il


360Lee, Kyoung-Mok


322Oh, In-Hwan


320Lee, Kyung-Hoon


319Lee, Hoo-Geun


298Lee, Jung-Sik


296Park, Sung-Ho


296Kim, Sang-Young


293Yoon, Dong-Jun


284Jeon, Woo-Sig


262Chang, Song-Hwan


260Lee, In-Bong


249Jang, Young-Ik


242Suh, Young-Sea


236Chang, In-Hwan


234Jang, Byung-Hyo


232Kim, Joon-Sik


232Kong, Yoon-Chan


209Baek, Sung-Kwan


207Shin, Jung-Suk


205An, Byung-Sik


197Hwang, Eun-Yeon


119Choo, Wung-Yong


104Kim, Moon-Seok


104Cho, Bong-Rae


104Yeon, Kyu-Sung


95Lee, Young-Hoon


78Shin, Young-Kwan


67Kim, Yeung-Gyu


50Park, Kui-Chan


36Hur, Nam-Suk


2Total


14,856  52




---



##### Table of Contents



Stock
    Options
      Exercise Period

Exercise

Granted

Exercised

ExercisableDirectors

Grant Date

From

To

Price

Options

Options

OptionsChung, Joon-Yang

April 27, 2002


4/28/2004



4/27/2009



136,400



9,316



9,316



0July 23, 2004


7/24/2006



7/23/2011



151,700



4,900



0



4,900Yoon, 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



7,840Lee, 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



9,037



0April 26, 2003


4/27/2005



4/26/2010



102,900



1,921



1,921



0Hur, 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



9,800Sun, Wook

April 28, 2005


4/29/2007



4/28/2012



194,900



2,000



0



2,000Jones, Jeffrey D

July 23, 2004


7/24/2006



7/23/2011



151,700



1,862



1,862



0Ahn, Charles

April 28, 2005


4/29/2007



4/28/2012



194,900



2,000



0



2,000   Exercise Period

Exercise

Granted

Exercised

ExercisableExecutive Officers

Grant Date

From

To

Price

Options

Options

OptionsOh, Chang-Kwan

April 27, 2002


4/28/2004



4/27/2009



136,400



9,316



6,931



2,385Kwon, Young-Tae

September 18, 2002


9/19/2004



9/18/2009



116,100



9,316



931



8,385Kim, Jin-Il

April 26, 2003


4/27/2005



4/26/2010



102,900



9,604



9,492



112Kim, Sang-Young

July 23, 2004


7/24/2006



7/23/2011



151,700



9,800



0



9,800Cho, Noi-Ha

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



0



10,000Yoon, Yong-Won

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



10,000



0Yoo, Kwang-Jae

April 28, 2005


4/29/2007



4/28/2012



194,900



10,000



10,000



0  53




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##### Table of Contents



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

Shares Owned

PercentageNational Pension Service(1)


5,516,535



6.33Nippon Steel Corporation(2)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


3,620,298



4.15SK Telecom


2,481,310



2.85Pohang University of Science and Technology


2,000,000



2.29Directors and executive officers as a group


16,316



0.01Public(3)


58,540,745



67.14POSCO (held in the form of treasury stock)


8,255,034



9.47POSCO (held through treasury stock fund)


2,361,885



2.71Total issued shares of common stock


87,186,835



100.00
%     (1)
    
    National Pension Service acquired additional shares to increase
    its number of shareholding from 5,516,535 (6.33%) as of
    December 31, 2008 to 5,617,304 (6.44%) as of
    February 4, 2009.(2)
    
    Held in the form of ADRs.(3)
    
    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
   54




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##### Table of Contents



DIVIDENDS
      Annual Dividend per



Average TotalCommon Stock to

Interim Dividend per

Dividend perYear

Public

Common Stock

Common Stock(In Won)2004


6,500



1,500



8,0002005


6,000



2,000



8,0002006


6,000



2,000



8,0002007


7,500



2,500



10,0002008


7,500



2,500



10,000       Item 8.B.
    Significant
    Changes    Item 9.
    The
    Offer and Listing  Item 9.A.
    Offer
    and Listing Details  Market
    Price Information
  Notes
  Not applicable
  55




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##### Table of Contents



Common
    Stock
    Price

Average DailyHigh

Low

Trading Volume(Number of Shares)(In Won)2004First Quarter


181,000



156,500



329,447Second Quarter


177,000



131,000



439,035Third Quarter


184,000



145,000



245,191Fourth Quarter


203,000



163,000



298,0912005First Quarter


225,500



176,500



285,371Second Quarter


203,000



174,500



297,524Third Quarter


240,500



182,000



281,567Fourth Quarter


236,500



199,500



327,6392006First Quarter


251,500



196,500



420,095Second Quarter


287,000



217,500



380,671Third Quarter


254,000



225,500



270,661Fourth Quarter


318,500



239,000



244,7572007First Quarter


395,000



286,500



296,883Second Quarter


481,000



366,000



246,291Third Quarter


673,000



443,500



298,177Fourth Quarter


765,000



557,000



331,2862008First Quarter


575,000



437,000



334,157Second Quarter


594,000



450,000



382,083Third Quarter


544,000



410,000



389,984Fourth Quarter


436,500



242,000



600,1412009First Quarter


430,000



303,000



389,081January


430,000



340,500



371,389February


400,000



312,000



423,001March


382,000



303,000



378,225Second Quarter (through June 26)


432,000



398,500



370,780April


413,000



369,000



426,754May


435,000



389,000



403,082June (through June 26)


435,000



369,000



396,110  56




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##### Table of Contents



ADSs
      Price

Average DailyHigh

Low

Trading Volume(Number of ADSs)(In US$)2004First 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



418,434Second Quarter


147.05



112.80



249,329Third Quarter


133.73



88.35



294,629Fourth Quarter


89.00



47.14



355,6042009First Quarter


79.11



47.14



212,520January


79.11



61.49



188,030February


74.81



50.17



190,958March


71.46



47.14



252,573Second Quarter (through June 26)


89.00



69.23



170,322April


78.62



69.23



207,238May


89.00



77.87



170,565June (through June 26)


87.58



78.35



127,603  57




---



##### Table of Contents



Item 9.B.
    Plan
    of Distribution  Not applicable
  Item 9.C.
    Markets  The
    Korean Securities Market
         58




---



##### 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


1,891.45



1,888.88



938.75



1,124.47



2.6



8.92009 (through June 26)


1,401.57



1,404.01



1,388.38



1,394.53



2.4



19.7     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 KRX KOSPI Market. Starting in April
    2000, KOSPI 200 excludes classified companies, companies which
    did not submit annual reports to the KRX KOSPI Market, and
    companies which received qualified opinion from external
    auditors.(3)
    
    The price earnings ratio is based on figures for companies that
    record a profit in the preceding year. 59




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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      60




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##### Table of Contents



Market Capitalization on the Last Dayof 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


763



576,888



458,758



352,599



3,211,039



2,553,5102009 (through June 26)


761



721,831



562,064



563,257



5,856,004



4,559,863     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.   61




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##### Table of Contents



Further
    Opening of the Korean Securities Market
          Protection
    of Customers Interest in Case of Insolvency of Financial
    Investment Companies
         62




---



##### 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
       63




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##### Table of Contents



Distribution
    of Free Shares
    Preemptive
    Rights and Issuance of Additional Shares
      
    offered publicly or to underwriters for underwriting pursuant to
    the FSCMA;
    issued to members of our employee stock ownership association
    pursuant to the FSCMA;
    represented by depositary receipts pursuant to the FSCMA;
    issued in a general public offering pursuant to a board
    resolution in accordance with the FSCMA, the amount of which is
    no more than 10% of the outstanding Shares;
    issued to our creditors pursuant to a debt-equity swap;
    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.     64




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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;
    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.   65




---



##### Table of Contents



Rights of
    Dissenting Shareholders
  20-day
  Register
    of Shareholders and Record Dates
    and/or
  Annual
    Report
   66




---



##### Table of Contents



Transfer
    of Shares
      36-3,
  Acquisition
    of Shares by Us
      Liquidation
    Rights
    Item 10.C.
    Material
    Contracts    Item 10.D.
    Exchange
    Controls  Shares
    and ADSs
   67




---



##### Table of Contents




    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 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
   68




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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; 69




---



##### Table of Contents




    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 KRX KOSDAQ Market and such overseas
    stock exchange; and
    arms length transactions between foreigners, if all of
    such foreigners belong to an investment group managed by the
    same person.      provided, however,
   70




---



##### Table of Contents



Item 10.E.
    Taxation  Form 20-F,
  Korean
    Taxation
    
    a resident of Korea;
    a corporation with registered office or main office located in
    Korea or actual management of which takes place in Korea; or
    engaged in a trade or business in Korea through a permanent
    establishment or a fixed base to which the relevant income is
    attributable or with which the relevant income is effectively
    connected. 71




---



##### Table of Contents



Shares
    or ADSs
  Dividends
    on the Shares of Common Stock or ADSs
      Taxation
    of Capital Gains
         72




---



##### Table of Contents



Tax
    Treaties
  Korea-United Korea-United Korea-United
    Inheritance
    Tax and Gift Tax
        Securities
    Transaction Tax
     73




---



##### Table of Contents



United
    States Taxation
    
    a dealer in securities or currencies;
    a trader in securities that elects to use a mark-to-market
    method of accounting for your securities holdings;
    a bank;
    a life insurance company;
    a tax-exempt organization;
    a person that holds shares of common stock or ADSs that are a
    hedge or that are hedged against interest rate or currency risks;
    a person that holds shares of common stock or ADSs as part of a
    straddle or conversion transaction for tax purposes;
    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
   74




---



##### Table of Contents



Dividends
        Sales and
    Other Dispositions
    Foreign
    Tax Credit Considerations
  16-day
   75




---



##### Table of Contents



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
    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
   76




---



##### Table of Contents



Interest
    Rate Risk
    and/or
  MaturitiesDecember 31,

December 31,2008

2007Fair



Fair2009

2010

2011

2012

2013

Thereafter

Total

Value

Total

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


729



170



907



517



517



66



2,904



2,909



2,284



2,276Average weighted rate(1)


5.83
%


5.27
%


5.71
%


5.64
%


5.64
%


3.73
%


5.64
%






4.78
%


Variable rate


122



130



271



5



5



302



833



643



47



47Average weighted rate(1)


5.56
%


6.63
%


4.89
%


2.50
%


2.50
%


4.18
%


4.98
%






3.85
%


Sub-total


851



300



1,177



522



521



367



3,738



3,552



2,331



2,323Foreign currency, principally Dollars and Yen:Fixed rate


3,094



245



787



23



1,083



418



5,649



5,443



2,880



2,952Average weighted rate(1)


3.90
%


3.16
%


0.17
%


3.17
%


2.36
%


5.53
%


3.17
%






3.78
%


Variable rate


80



113



1,137







279







1,609



14



163



163Average weighted rate(1)


3.26
%


2.04
%


2.65
%






0.79
%






2.31
%






5.04
%


Sub-total


3,174



358



1,924



23



1,361



418



7,258



5,457



3,043



3,115Total


4,025



657



3,101



545



1,883



785



10,996



9,010



5,375



5,438     (1)
    
    Weighted average rates of the portfolio at the period end. 77




---



##### Table of Contents



Commodity
    Price Risk
    Equity
    Price Risk
    Item 12.
    Description
    of Securities Other than Equity Securities  Not applicable
  Item 12.A.Debt Securities
  Not applicable
  Item 12.B.Warrants and Rights
  Not applicable
  Item 12.C.Other Securities
  Not applicable
  Item 12.D.American Depositary Shares
  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)
 78




---



##### Table of Contents



b.
    Managements
    Annual Report on Internal Control over Financial
    Reporting            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
   79




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##### Table of Contents



Item 16B.Code of Ethics
  Form 20-F www.posco.com.
  Item 16C.Principal Accountant Fees and
    Services
  Audit and
    Non-Audit Fees
    For the Year Ended December 31,2007


2008(In millions of Won)Audit fees

W
1,791


W
2,539Audit-related fees






Tax fees


139



254Other fees


14



200Total fees

W
1,944


W
2,993           Audit
    Committee Pre-Approval Policies and Procedures
  case-by-case
  Item 16D.Exemptions from the Listing Standards for
    Audit Committees
  Not applicable
  80




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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 (In Won)


Announced Plans


the PlansJanuary 1 to January 31


43,000
(1)

W
543,692







February 1 to February 29














March 1 to March 31


30,000
(1)


448,431







April 1 to April 30














May 1 to May 31














June 1 to June 30














July 1 to July 31














August 1 to August 31














September 1 to September 30














October 1 to October 31














November 1 to November 30














December 1 to December 31














Total


73,000


W
504,544







     (1)
    
    Stocks purchased from the treasury stock fund  Item 16.G.Corporate Governance
    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 9 out of 15 directors are Outside
    Directors. Under 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. 81




---



##### Table of Contents



NYSE Corporate Governance Standards

POSCOs Corporate Governance PracticeCompensation 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 their shareholders to exercise their
    voting rights with respect to any material revision to the
    companys equity compensation plan

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

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

We have adopted a Code of Conduct for all directors, officers
    and employees.  A copy of our Code of Conduct is available on
    our website at www.posco.com.  82




---



##### 



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


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


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


F-3Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-4Consolidated Statements of Income for the Years
    Ended December 31, 2008, 2007 and 2006


F-6Consolidated Statements of Changes in
    Shareholders Equity for the Years Ended December 31,
    2008, 2007 and 2006


F-7Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


F-11Notes to Consolidated Financial Statements


F-13   83




---



##### Table of Contents



Item 19.
    Exhibits  1
.1



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



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



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



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



List of consolidated subsidiaries12
.1



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



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



Certification pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002     *
    
    Filed previously 84




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
  
                 F-1




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
                    F-2




---



##### Table of Contents



Report
    of Independent Registered Public Accounting Firm
             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-3




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated Balance Sheets
 As of December 31, 2008 and 2007
  (Note 2)2008


2007


2008(In millions of Korean won and thousands of US dollar)ASSETSCash and cash equivalents, net of government grants (note 3)

W
2,490,264



1,292,581


$
1,973,268Short-term financial instruments (note 3)


1,827,450



1,743,079



1,448,059Trading securities (note 4)


1,238,261



1,286,939



981,190Current portion of available-for-sales securities (note 7)


30,888



32,113



24,476Current portion of held-to-maturity securities (note 7)


20,613



192,393



16,333Trade accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (note 5)


5,894,093



4,035,602



4,670,438Other accounts and notes receivable, net of allowance for
    doubtful accounts and present value discount (note 5)


538,510



214,956



426,711Advance payments


1,033,513



373,167



818,949Inventories (notes 6 and 31)


8,661,721



4,902,016



6,863,487Deferred income tax assets (note 25)


109,578



101,982



86,829Other current assets, net of allowance for doubtful accounts
    (note 11)


352,742



218,705



279,511Total current assets


22,197,633



14,393,533



17,589,251Property, plant and equipment (notes 8 and 31)


42,230,169



37,902,887



33,462,893Less accumulated depreciation


(24,161,070
)


(22,321,122
)


(19,145,065
)Property, plant and equipment, net


18,069,099



15,581,765



14,317,828Investment securities, net (note 7)


5,177,482



5,178,723



4,102,601Intangible assets, net (notes 9 and 31)


723,767



570,779



573,508Long-term trade accounts and notes receivable, net of allowance
    for doubtful accounts and present value discount (note 5)


23,264



39,919



18,435Long-term loans receivable, net of allowance for doubtful
    accounts and present value discount (note 5)


80,287



40,474



63,619Deferred income tax assets (note 25)


317,023



279,903



251,207Guarantee deposits


65,540



57,485



51,933Long-term financial instruments (note 3)


16,462



17,065



13,044Other long-term assets, net of allowance for doubtful accounts
    and present value discount (note 11)


290,725



115,117



230,368Total non-current assets


24,763,649



21,881,230



19,622,543Total assets

W
46,961,282



36,274,763


$
37,211,794     F-4




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated Balance Sheets  (Continued)
 As of December 31, 2008 and 2007
  (Note 2)2008


2007


2008(In millions of Korean won and thousands of US dollar)LIABILITIES AND SHAREHOLDERS EQUITYTrade accounts and notes payable

W
3,070,436



2,246,890


$
2,432,992Short-term borrowings (note 12)


3,254,355



1,572,020



2,578,728Current portion of long-term debts, net of discount on
    debentures issued (notes 12 and 13)


770,142



483,402



610,255Accrued expenses


237,917



172,971



188,524Other accounts and notes payable


579,853



502,665



459,471Withholdings


126,538



133,495



100,268Income tax payable


2,083,472



930,822



1,650,929Advances received


597,514



405,548



473,466Deferred income tax liabilities (note 25)






120,992



Other current liabilities (note 15)


289,165



55,810



229,133Total current liabilities


11,009,392



6,624,615



8,723,766Long-term debts, net of current portion and discount on
    debentures issued (note 13)


6,895,862



3,306,486



5,464,235Accrued severance benefits, net (note 14)


383,718



336,095



304,055Deferred income tax liabilities (note 25)


70,363



654,969



55,755Other long-term liabilities (note 15)


257,742



234,858



204,233Total non-current liabilities


7,607,685



4,532,408



6,028,278Total liabilities


18,617,077



11,157,023



14,752,044Parent shareholders equityCapital stock (notes 1 and 17)


482,403



482,403



382,253Capital surplus (note 18)


4,319,083



4,176,592



3,422,411Capital adjustments, net (note 21)


(2,509,081
)


(2,727,147
)


(1,988,179
)Accumulated other comprehensive (loss) income


(21,986
)


784,933



(17,421
)Retained earnings (note 19)


25,393,246



21,767,302



20,121,43127,663,665



24,484,083



21,920,495Minority interest


680,540



633,657



539,255Total shareholders equity


28,344,205



25,117,740



22,459,750Total liabilities and shareholders equity

W
46,961,282



36,274,763


$
37,211,794     F-5




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated Statements of Income
 For the years ended December 31, 2008, 2007 and 2006
  (Note 2)2008


2007


2006


2008(In millions of Korean won and thousands of US dollar except
    per share information)Sales (note 31)

W
41,742,636



31,607,741



25,842,326


$
33,076,574Cost of goods sold (note 31)


32,562,339



24,902,663



19,896,764



25,802,170Gross profit


9,180,297



6,705,078



5,945,562



7,274,404Selling and administrative expenses (notes 24
    and 31)


2,006,368



1,785,217



1,556,415



1,589,832Operating income


7,173,929



4,919,861



4,389,147



5,684,572Non-operating income (note 31)Interest and dividend income


362,309



234,841



182,832



287,091Gain on foreign currency transactions


1,078,243



158,346



156,722



854,392Gain on foreign currency translation


122,287



19,179



84,269



96,899Gain on valuation of trading securities


16,535



16,039



19,467



13,102Gain on disposal of trading securities


55,056



57,236



67,284



43,626Gain on disposal of property, plant and equipment


14,392



15,182



19,144



11,404Gain on valuation of derivatives


346,932



12,741



1,857



274,907Gain on derivative transactions


41,575



17,689



15,477



32,943Equity in earnings of equity method accounted investees


32,931



71,563



47,147



26,094Gain on recovery of allowance for doubtful accounts


19,116



41,124



13,776



15,147Reversal of stock compensation expense


55,155











43,704Others


225,345



174,567



141,249



178,5622,369,876



818,507



749,224



1,877,871Non-operating expenses (note 31)Interest expense


344,686



239,913



183,290



273,127Other bad debt expense


23,269



16,335



70,370



18,438Loss on disposal of trading securities


1,243



37



777



985Loss on valuation of trading securities


3,870



440



604



3,067Loss on foreign currency transactions


1,207,257



130,679



137,567



956,622Loss on foreign currency translation


933,086



65,432



4,855



739,370Loss on derivative transactions


103,739



6,312



40,363



82,202Loss on valuation of derivatives


288,655



3,617



820



228,729Donations


142,570



197,366



154,678



112,972Loss on impairment of investments


120,840



11,542



2,088



95,752Loss on disposal of property, plant and equipment


53,823



43,544



54,179



42,649Loss on impairment of intangible assets


45,890











36,363Equity in losses of equity method accounted investees


56,795



28,929



722



45,004Others


122,443



95,291



203,467



97,0213,448,166



839,437



853,780



2,732,301Net income before income tax expense and net income (loss) of
    consolidated subsidiaries before acquisition


6,095,639



4,898,931



4,284,591



4,830,142Income tax expense (note 25)


(1,733,983
)


(1,274,226
)


(921,951
)


(1,373,996
)Net income (loss) of consolidated subsidiaries before
    acquisition (note 31)


11,552



(53,259
)


9,558



9,154Net income

W
4,350,104



3,677,964



3,353,082


$
3,446,992Net income attributable to controlling interest

W
4,378,751



3,558,660



3,314,181


$
3,469,692Net income (loss) attributable to minority interest
    (note 31)

W
(28,647
)


119,304



38,901


$
(22,700
)Basic and diluted earnings per share (note 26) (in
    Korean won and US dollar)

W
58,002



46,854



42,115


$
46     F-6




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated Statements of Changes in
    Equity
 For the years ended December 31, 2008, 2007 and 2006
  AccumulatedOtherComprehensiveCapital


Capital


Capital


(Loss)


Retained


MinorityStock


Surplus


Adjustments


Income


Earnings


Interest


Total(In millions of Korean won)Balance as of January 1, 2006

W
482,403



3,991,409



(965,433
)


(188,264
)


16,168,892



384,670



19,873,677Net income


















3,314,181



38,901



3,353,082Effect of changes in scope of consolidation






(1,012
)










40,649







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






(8,645
)


















(8,645
)Dividends


















(636,487
)






(636,487
)Changes in treasury stock






50,565



(711,485
)














(660,920
)Gain on valuation of available-for-sale securities, net














432,469











432,469Changes in capital adjustments of equity method accounted
    investees














11,635











11,635Foreign currency translation adjustments














(46,086
)










(46,086
)Loss on valuation of derivativesEffect of changes in percentage of minority interest






















61,639



61,639Others






2,956



(1,311
)






(23,902
)


3,998



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

W
482,403



4,035,273



(1,678,229
)


209,754



18,863,333



489,208



22,401,742     F-7




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Equity  (Continued)
 For the
    years ended December 31, 2008, 2007 and 2006
  AccumulatedOtherComprehensiveCapital


Capital


Capital


(Loss)


Retained


MinorityStock


Surplus


Adjustments


Income


Earnings


Interest


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

W
482,403



4,035,273



(1,678,229
)


209,754



18,863,333



489,208



22,401,742Net income


















3,558,660



119,304



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






37















62,024



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






(5,500
)


















(5,500
)Dividends


















(655,099
)






(655,099
)Changes in treasury stock






175,231



(1,045,274
)














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














498,711











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














(7,455
)










(7,455
)Foreign currency translation adjustments














87,957











87,957Loss on valuation of derivatives














(4,034
)










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






















16,380



16,380Others






(28,449
)


(3,644
)






408



(53,259
)


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

W
482,403



4,176,592



(2,727,147
)


784,933



21,767,302



633,657



25,117,740     F-8




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Equity  (Continued)
 For the
    years ended December 31, 2008, 2007 and 2006
  AccumulatedOtherComprehensiveCapital


Capital


Capital


(Loss)


Retained


MinorityStock


Surplus


Adjustments


Income


Earnings


Interest


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

W
482,403



4,176,592



(2,727,147
)


784,933



21,767,302



633,657



25,117,740Net income


















4,378,751



(28,647
)


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






















31,518



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






20,194



















20,194Dividends


















(755,037
)






(755,037
)Changes in treasury stock






121,938



213,951















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














(1,276,043
)










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














37,575











37,575Foreign currency translation adjustments














438,314











438,314Loss on valuation of derivatives














(6,765
)










(6,765
)Effect of changes in percentage of minority interest






















39,726



39,726Others






359



4,115







2,230



4,286



10,990Balance as of December 31, 2008

W
482,403



4,319,083



(2,509,081
)


(21,986
)


25,393,246



680,540



28,344,205     F-9




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Changes in Equity  (Continued)
 For the
    years ended December 31, 2008, 2007 and 2006
  AccumulatedOtherComprehensiveCapital


Capital


Capital


(Loss)


Retained


MinorityStock


Surplus


Adjustments


Income


Earnings


Interest


Total(In thousands of US dollar)Balance as of January 1, 2008

$
382,253



3,309,502



(2,160,972
)


621,975



17,248,258



502,105



19,903,121Net income


















3,469,692



(22,700
)


3,446,992Effect of changes in scope of consolidation






















24,975



24,975Effect of changes in percentage of ownership of investees






16,002



















16,002Dividends


















(598,286
)






(598,286
)Changes in treasury stock






96,623



169,533















266,156Unrealized loss on available-for-sale securities, net














(1,011,128
)










(1,011,128
)Changes in capital adjustments of equity method accounted
    investees














29,774











29,774Foreign currency translation adjustments














347,318











347,318Loss on valuation of derivatives














(5,360
)










(5,360
)Effect of changes in percentage of minority interest






















31,479



31,479Others






284



3,260







1,767



3,396



8,707Balance as of December 31, 2008

$
382,253



3,422,411



(1,988,179
)


(17,421
)


20,121,431



539,255



22,459,750     F-10




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated Statements of Cash Flows
 Years Ended December 31, 2008, 2007 and 2006
  (Note 2)2008


2007


2006


2008(In millions of Korean won and thousands of US dollar)Cash flows from operating activitiesNet income

W
4,350,104



3,677,964



3,353,082


$
3,446,991Adjustments to reconcile net income to net cash provided by
    operating activitiesDepreciation and amortization


2,379,291



2,126,729



1,782,738



1,885,333Accrual of severance benefits


314,156



211,758



144,931



248,935Provision for doubtful accounts, net


28,186



37,237



173,931



22,334Loss (gain) on derivatives transaction, net


62,165



(11,377
)


24,886



49,259Loss (gain) on foreign currency translation, net


750,464



49,334



(76,453
)


594,663Loss on impairment of investments


120,840



11,542



2,088



95,752Loss on disposal of property, plant and equipment, net


39,431



28,362



35,035



31,245Loss on impairment of intangible assets, net


45,890











36,363Gain on disposal of trading securities, net


(53,813
)


(57,199
)


(66,507
)


(42,641
)Gain on valuation of trading securities, net


(12,665
)


(15,599
)


(18,863
)


(10,035
)Gain on valuation of derivatives, net


(58,277
)


(9,124
)


(1,037
)


(46,178
)Equity in earnings (losses) of equity method accounted
    investees, net


23,864



(42,634
)


(46,425
)


18,910Other employee benefits


71,070



66,827



136,662



56,316Net income (loss) of consolidated subsidiaries before acquisition


11,552



(53,259
)


9,558



9,154Stock compensation expense, net


(55,155
)


123,881



49,885



(43,704
)Others


64,615



61,738



186,333



51,2013,731,614



2,528,216



2,336,762



2,956,907Changes in operating assets and liabilitiesIncrease in trade accounts and notes receivable


(1,538,854
)


(613,548
)


(398,201
)


(1,219,377
)Increase in inventories


(3,393,710
)


(461,226
)


(380,143
)


(2,689,152
)Decrease (increase) in other accounts and notes receivable


(222,706
)


67,929



(30,932
)


(176,471
)Increase in accrued income


(11,914
)


(15,218
)


(26,205
)


(9,441
)Increase in advance payments


(586,601
)


(70,847
)


(73,034
)


(464,818
)Increase in prepaid expenses


(11,468
)


(23,658
)


(5,009
)


(9,088
)Increase in trade accounts and notes payable


609,200



561,078



272,270



482,726Increase in other accounts and notes payable


7,829



164,460



122,673



6,203Increase (decrease) in advances received


215,491



(16,884
)


78,449



170,754Decrease in accrued expenses


94,716



(108,184
)


(459,579
)


75,052Increase (decrease) in income taxpayable


1,146,204



162,806



(715,691
)


908,244Deferred income tax, net


(432,528
)


(20,127
)


(59,480
)


(342,732
)Payment of severance benefits


(125,374
)


(64,975
)


(36,817
)


(99,346
)Increase in group severance insurance deposits


(141,807
)


(147,366
)


(48,880
)


(112,367
)Increase (decrease) in other current liabilities


28,816



(13,055
)


5,855



22,834Others


(31,997
)


(54,105
)


(9,616
)


(25,353
)(4,394,703
)


(652,920
)


(1,764,340
)


(3,482,332
)Net cash provided by operating activities


3,687,015



5,553,260



3,925,504



2,921,566     F-11




---



##### Table of Contents



POSCO and
    Subsidiaries
  Consolidated
    Statements of Cash Flows  (Continued)
 Years
    Ended December 31, 2008, 2007 and 2006
  (Note 2)2008


2007


2006


2008(In millions of Korean won and thousands of US dollar)Cash flows from investing activitiesAcquisition of trading securities

W
(7,058,161
)


(8,173,811
)


(14,516,637
)

$
(5,592,837
)Acquisition of short-term financial instruments


(5,098,326
)


(2,678,616
)


(1,610,510
)


(4,039,878
)Acquisition of available-for-sale securities


(1,357,622
)


(1,179,114
)


(55,935
)


(1,075,771
)Acquisition of property, plant and equipment


(4,093,313
)


(2,892,247
)


(3,709,422
)


(3,243,513
)Acquisition of intangible assets


(131,107
)


(81,946
)


(131,575
)


(103,888
)Acquisition of other long-term assets


(122,700
)


(160,098
)


(131,095
)


(97,227
)Short-term loans provided


(79,876
)


(50,687
)


(62,641
)


(63,293
)Long-term loans provided


(285,654
)


(24,235
)


(6,388
)


(226,350
)Payment for business acquisition, net of cash acquired


(279,031
)


(1,335
)


(597,531
)


(221,103
)Disposal of trading securities


7,008,770



9,064,842



15,322,978



5,553,701Disposal of short-term financial instruments


5,045,613



1,705,169



1,516,362



3,998,109Disposal of available-for-sale securities


26,752



9,412



145,990



21,198Disposal of long-term financial instruments


279,610



34,555



113,339



221,561Disposal of property, plant and equipment


53,773



34,958



425,976



42,609Collection on short-term loans


191,251



108,221



64,436



151,546Others


97,252



21,220



(130,557
)


77,062Net cash used in investing activities


(5,802,769
)


(4,263,712
)


(3,363,210
)


(4,598,074
)Cash flows from financing activitiesProceeds from short-term borrowings


10,233,819



6,811,282



4,119,189



8,109,207Proceeds from long-term debt


3,454,625



1,054,138



2,160,279



2,737,421Proceeds from other long-term liabilities


49,851



37,060



15,535



39,501Disposal of treasury stock


364,753



406,991



69,779



289,028Repayment of current portion of long-term debt


(491,635
)


(278,699
)


(1,188,281
)


(389,568
)Repayment of short-term borrowings


(9,042,662
)


(6,599,799
)


(3,821,014
)


(7,165,343
)Repayment of long-term debt


(369,348
)


(248,087
)


(165,212
)


(292,669
)Payment of cash dividends


(755,037
)


(655,099
)


(636,487
)


(598,286
)Acquisition of treasury stock


(36,832
)


(1,291,362
)


(851,123
)


(29,185
)Repayment of other long-term liabilities


(38,145
)


(94,072
)


(78,173
)


(30,226
)Others


(252,807
)


(143,209
)


106,644



(200,322
)Net cash used in financing activities


3,116,582



(1,000,856
)


(268,864
)


2,469,558Effect of exchange rate changes on cash and cash equivalents


141,536



30,901



(15,245
)


112,152Net increase in cash and cash equivalents from changes in
    consolidated subsidiaries


55,519



36,815



4,365



43,993Net increase in cash and cash equivalents


1,197,883



356,407



282,550



949,195Cash and cash equivalentsCash and cash equivalent at beginning of the year


1,292,828



936,421



653,871



1,024,428Cash and cash equivalent at end of the year (note 3)

W
2,490,711



1,292,828



936,421


$
1,973,623   Supplemental
    cash flow information for the years ended December 31 is as
    follows:
  2008

2007

2006

2008(In millions of Korean won and thousands of US dollar)Cash paid for interest

W
319,224



229,113



179,501


$
252,951Cash paid for income taxes


1,028,588



1,107,888



1,305,077



815,046     F-12




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements
 December 31, 2008 and 2007
  1.
    Consolidated
    Companies    The
    Controlling Company
      Percentage ofNumber of Shares

Ownership (%)National Pension Service


5,516,535



6.33Nippon Steel Corporation(*1)


4,394,712



5.04Mirae Asset Investments Co., Ltd.


3,620,298



4.15SK Telecom Co., Ltd.


2,481,310



2.85Pohang University of Science and Technology (POSTECH)


2,000,000



2.29Others


69,173,980



79.3487,186,835



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-13




---



##### Table of Contents



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









Percentage ofOutstanding

Number of Shares

Percentage of

Ownership ofSubsidiaries

Primary Business

Shares

POSCO

Subsidiaries

Total

Ownership (%)

Subsidiaries (%)

LocationDomesticPOSCO E & C Co., Ltd.

Engineering and construction


30,473,000



27,281,080







27,281,080



89.53




PohangPosteel Co., Ltd.

Steel sales and service


18,000,000



17,155,000







17,155,000



95.31




SeoulPOSCON Co., Ltd.

Electronic control devices manufacturing


3,519,740



3,098,610







3,098,610



88.04




PohangPOSCO Coated & Color Steel Co., Ltd.

Coated steel manufacturing


6,000,000



3,412,000







3,412,000



56.87




PohangPOSCO Machinery & Engineering Co., Ltd.

Steel work maintenance and machinery installation


1,700,000



1,700,000







1,700,000



100.00




PohangPOSDATA Co., Ltd.

Computer hardware and software distribution


81,551,600



50,440,720







50,440,720



61.85




SungnamPOSCO Research Institute

Economic research and consulting


3,800,000



3,800,000







3,800,000



100.00




SeoulSeung Kwang Co., Ltd.

Athletic facilities operation


3,945,000



2,737,000



1,208,000



3,945,000



100.00


POSCO E & C
    (30.62)

SuncheonPOSCO Architecs Consultants Co., Ltd.

Architecture and consulting


230,000



230,000







230,000



100.00




SeoulPOSCO Specialty Steel Co., Ltd.

Specialty steel manufacturing


26,000,000



26,000,000







26,000,000



100.00




ChangwonPOSCO Machinery Co., Ltd.

Steel work maintenance and machinery installation


1,000,000



1,000,000







1,000,000



100.00




GwangyangPOSTECH Venture Capital Corp.

Investment in venture companies


6,000,000



5,700,000







5,700,000



95.00




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

Manufacturing and sellings


5,907,000



3,544,200







3,544,200



60.00




PohangPOSCO Terminal Co., Ltd.

Transporting and warehousing


5,000,000



2,550,000







2,550,000



51.00




GwangyangMetapolis Co., Ltd.

Construction


10,560,000







4,229,280



4,229,280



40.05


POSCO E & C
    (40.05)

SeoulPOSMATE Co., Ltd.(*1)

Facilities management


714,286



214,286







214,286



30.00




SeoulSamjung Packing & Aluminum Co., Ltd.

Packing materials manufacturing


3,000,000



270,000



831,756



1,101,756



36.73


Posmate Co., Ltd. 
    (27.73)

PohangPOSCO Power Corp.

Generation of Electricity


40,000,000



40,000,000







40,000,000



100.00




SeoulPostech 2006 Energy Fund(*1)

Investment in new technology


570







126



126



22.11


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

SeoulPOSCORE Co., Ltd.

Components manufacturing and sales


3,907,151







1,992,647



1,992,647



51.00


Posteel (51.00)

CheonanPHP Co., Ltd.(*3)

Rental houses construction and management


400,000







400,000



400,000



100.00


POSCO E & C
    (100.00)

IncheonPNR Co., Ltd.(*3)

Steel by-products processing and sales


7,810,980



5,467,686







5,467,686



70.00




PohangMegaasset Co., Ltd.(*3)

Real estate rental and sales


2,000,000







2,000,000



2,000,000



100.00


POSCO E & C
    (100.00)

CheonanDaewoo Engineering Company(*3)

Construction and Engineering service


2,400,000







2,128,701



2,128,701



88.70


POSCO E & C
    (88.70)
    POSCO E & C
    (2 7. 50)

SungnamUniversal Studio Resort Development Co., Ltd.(*3)

Resort development


1,000,000







375,000



375,000



37.50


POSDATA Co.,
    Ltd .(10.00)

Hwaseong F-14




---



##### Table of Contents



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









Percentage ofOutstanding

Number of Shares

Percentage of

Ownership ofSubsidiaries

Primary Business

Shares

POSCO

Subsidiaries

Total

Ownership (%)

Subsidiaries (%)

LocationOverseasPOSCO America Corporation (POSAM)

Steel trading


356,500



354,531



1,969



356,500



100.00


POSCAN
    (0.55)

USAPOSCO Australia Pty. Ltd. (POSA)

Steel sellings and mine development


761,775



761,775







761,775



100.00




AustraliaPOSCO Canada Ltd. (POSCAN)

Coal trading


1,099,885







1,099,885



1,099,885



100.00


Posteel
    (100.00)

CanadaPOSCAN Elkview Coal Ltd.

Mine development


304,061







304,061



304,061



100.00


POSCAN
    (100.00)

CanadaPOSCO Asia Co., Ltd. (POA)

Steel trading


9,360,000



9,360,000







9,360,000



100.00




China
    (Hong Kong)VSC POSCO Steel Corporation (VPS)(*2)

Steel manufacturing


















40.00


Posteel
    (5.00)
    Posteel
    (15.00)

VietnamDalian POSCO - CFM Coated Steel Co., Ltd.(*2)

Coated steel manufacturing


















85.00


POSCO-China
    (40.00)

ChinaPOS-Tianjin Coil Center Co., Ltd.(*2)

Steel service center


















70.00


Posteel
    (60.00)

ChinaPOSMETAL Co., Ltd.

Steel service center


9,800







9,310



9,310



95.00


POSCO-Japan
    (95.00)

JapanShanghai Real Estate Development Co., Ltd.(*2)

Real estate rental


















100.00


POSCO E&C
    (100.00)

ChinaIBC Corporation(*2)

Real estate rental


















60.00


POSCO E&C
    (60.00)

VietnamPOSLILAMA Steel Structure Co., Ltd.(*2)

Steel structure fabrication and sales


















70.00


POSCO E&C
    (60.00)
    Posteel (10.00)

VietnamZhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)(*2)

Stainless steel manufacturing


















82.48


POSCO-China
    (23.88)

ChinaPOSCO (Guangdong) Steel Co., Ltd.(*2)

Coated steel manufacturing


















96.98


POSCO-China
    (10.43)

ChinaPOSCO Thailand Bangkok Processing Center Co.,Ltd.

Steel service center


14,857,921



12,721,734



2,136,187



14,857,921



100.00


Posteel
    (14.38)

ThailandMyanmar-POSCO Steel Co., Ltd.

Coated steel manufacturing and sales


19,200



13,440







13,440



70.00




MyanmarZhangjiagang POSHA Steel Port Co., Ltd. (ZPSP)(*2)

Raw material and steel depot service


















90.00


POSCO E&C
    (25.00)
    ZPSS
    (65.00)

ChinaPOSCO-JOPC Co., Ltd.

Steel service center


4,900







2,785



2,785



56.84


POSCO-Japan
    (56.84)

JapanPOSCO Investment Co., Ltd.

Finance


5,000,000



5,000,000







5,000,000



100.00




China
    (Hong Kong)POSCO-MKPC SDN BHD

Steel service center


56,550,200



25,269,900



14,315,238



39,585,138



70.00


Posteel (25.31)

MalaysiaQingdao Pohang Stainless Steel Co., Ltd.(*2)

Stainless steel manufacturing


















100.00


POSCO-China
    (10.00)
    ZPSS (20.00)

ChinaPOSCO (Suzhou) Automotive Processing Center Co., Ltd.(*2)

Steel service center


















100.00


POSCO-China
    (10.00)

ChinaPOSEC-Hawaii Inc.

Construction and sales


24,400







24,400



24,400



100.00


POSCO E&C
    (100.00)

USAPOS-Qingdao Coil Center Co., Ltd.(*2)

Steel service center


















100.00


Posteel
    (100.00)

ChinaPOS-ORE Pty. Ltd.

Iron ore mining and trading


17,500,001







17,500,001



17,500,001



100.00


POSA
    (100.00)

Australia F-15




---



##### Table of Contents



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









Percentage ofOutstanding

Number of Shares

Percentage of

Ownership ofSubsidiaries

Primary Business

Shares

POSCO

Subsidiaries

Total

Ownership (%)

Subsidiaries (%)

LocationPOSCO-China Holding Corp.(*2)

Holding company


















100.00




ChinaPOSCO-Japan Co., Ltd.

Steel trading


90,438



90,438







90,438



100.00




JapanPOSCO E&C (Zhangjiagang) Engineering & Consulting
    Co., Ltd.(*2)

Facilities manufacturing


















100.00


POSCO E&C
    (100.00)

ChinaPOS-CD Pty. Ltd.

Coal trading


12,550,000







12,550,000



12,550,000



100.00


POSA
    (100.00)

AustraliaPOS-GC Pty. Ltd.

Coal trading


11,050,000







11,050,000



11,050,000



100.00


POSA
    (100.00)

AustraliaPOSCO-India Private Ltd.

Steel manufacturing and sales


225,000,000



225,000,000







225,000,000



100.00




IndiaPOS-India Pune Steel Processing Centre Pvt. Ltd.

Steel service center


115,062,470



74,787,080







74,787,080



65.00




IndiaPOSCO-JNPC Co., Ltd.

Steel service center


49,000







44,100



44,100



90.00


POSCO-Japan
    (90.00)

JapanPOSCO-Foshan Steel Processing Center Co., Ltd.(*2)

Steel service center


















100.00


POA (24.20)
    POSCO-China
    (36.20)

ChinaPOSCO E&C (Beijing) Co., Ltd.(*2)

Construction and engineering


















100.00


POSCO E&C
    (100.00)

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

Steel service center


3,663,289







2,234,607



2,234,607



61.00


POSAM
    (61.00)

MexicoZPSS (47.30)Zhangjigang Pohang Port Co., Ltd.(*2)

Raw material and steel depot service


















100.00


ZPSP (27.70)
    POSCO-China
    (25.00)

ChinaPOSCO-Vietnam Co., Ltd.(*2)

Cold-rolled steel manufacturing and sales


















100.00




VietnamPOSCO-Mexico Co., Ltd.

Cold-rolled steel manufacturing and sales


1,541,191,740



1,304,955,672



236,236,068



1,541,191,740



100.00


POSCAN
    (15.33)

MexicoPOSS India Delhi Steel Processing Centre Private Limited

Steel service center


55,673,970



42,532,980







42,532,980



76.40




IndiaPOS-NP Pty. Ltd.

Coal trading


35,000,000







35,000,000



35,000,000



100.00


POSA (100.00)

AustraliaPOSCO-Vietnam Processing Center Co., Ltd.(*2)

Steel service center


















80.00




VietnamPOSCO (Chongqing) Automotive Processing Center Co., Ltd.(*2,3)

Steel service center


















100.00


POSCO-China
    (10.00)

ChinaSuzhou POSCORE Technology Co., Ltd.(*2)

Components manufacturing and sales


















100.00


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

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

Steel service center


49,000







31,550



31,550



64.39


POSCO-Japan
    (64.39)

JapanPOSCO-Malaysia SDN. BHD.(*3)

Steel service center


27,000,000



16,200,000







16,200,000



60.00


POSCAN
    (85.00)

MalaysiaPOS-Minerals Corporation(*3)

Mine development and operation


100







100



100



100.00


Samjung P&A 
    (15.00)

USAPOSCO (Wuhu) Automotive Processing Center Co., Ltd.(*2,3)

Steel service center


















100.00


POSCO-China
    (31.43)

China     (*1)
    
    These subsidiaries are included in the consolidated financial
    statements as the controlling company has control over them in
    consideration of board of directors and others.(*2)
    
    No shares have been issued in accordance with the local laws and
    regulations. F-16




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   (*3)
    
    These subsidiaries are newly included in the consolidation.    Summary of Financial InformationNet IncomeSubsidiaries

Total Assets

Total Liabilities

Net Assets

Sales

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


4,730,101



3,139,178



1,590,923



4,517,303



161,520Posteel Co., Ltd.


912,379



460,815



451,564



2,479,568



115,603POSCON Co., Ltd.


369,372



209,537



159,835



474,757



12,731POSCO Coated & Color Steel Co., Ltd.


487,758



270,905



216,853



956,381



(48,482
)POSCO Machinery & Engineering Co., Ltd.


136,787



79,413



57,374



295,481



3,263POSDATA Co., Ltd.


308,567



189,995



118,572



384,380



(78,749
)POSCO Research Institute


26,449



3,077



23,372



19,742



187Seung Kwang Co., Ltd.


76,929



36,984



39,945



12,620



(2,047
)POSCO Architecs Consultants Co., Ltd.


54,481



17,170



37,311



73,021



6,862POSCO Specialty Steel Co., Ltd.


1,007,588



440,881



566,707



1,679,748



77,316POSCO Machinery Co., Ltd.


60,925



33,122



27,803



142,125



5,033POSTECH Venture Capital Corp.


35,418



618



34,800



3,137



(2,231
)POSCO Refractories & Environment Co., Ltd. (POSREC)


233,415



78,686



154,729



446,939



25,181POSCO Terminal Co., Ltd.


50,200



11,297



38,903



66,420



11,592Metapolis Co., Ltd.


527,057



423,173



103,884



210,439



42,360Posmate Co., Ltd.


55,310



19,285



36,025



79,052



2,701Samjung Packing & Aluminum Co., Ltd.


154,668



97,861



56,807



373,682



(10,031
)POSCO Power Corp.


1,181,079



628,510



552,569



744,026



46,910Postech 2006 Energy Fund


29,393



3



29,390



1,184



212PHP Co., Ltd.


571,862



570,620



1,242







(600
)POSCORE Co., Ltd.


92,124



47,928



44,196



180,222



21,235PNR Co., Ltd.


51,725



12,185



39,540







485Megaasset Co., Ltd.


58,068



49,961



8,107



1,609



(1,893
)Daewoo Engineering Company


276,230



144,447



131,783



564,825



27,992Universal Studio Resort Development Co., Ltd.


10,000







10,000







OverseasPOSCO America Corporation (POSAM)


284,442



109,714



174,728



208,846



11,366POSCO Australia Pty. Ltd. (POSA)


348,774



210,739



138,035



122,733



38,523POSCO Canada Ltd. (POSCAN)


361,976



109,719



252,257



289,102



128,813POSCAN Elkview Coal Ltd.


46,508



2,699



43,809







4,976 F-17




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Summary of Financial InformationNet IncomeSubsidiaries

Total Assets

Total Liabilities

Net Assets

Sales

(Loss)(In millions of Korean won) (*)POSCO Asia Co., Ltd. (POA)


71,044



39,624



31,420



1,715,372



3,033VSC POSCO Steel Corporation (VPS)


68,785



50,485



18,300



207,048



1,747Dalian POSCO-CFM Coated Steel Co., Ltd.


51,822



37,336



14,486



136,075



596POS-Tianjin Coil Center Co., Ltd.


48,181



33,203



14,978



107,480



566POSMETAL Co., Ltd.


83,341



69,054



14,287



57,936



287Shanghai Real Estate Development Co., Ltd.


182,638



56,213



126,425



29,116



15,230IBC Corporation


95,102



62,472



32,630



23,697



11,326POSLILAMA Steel Structure Co., Ltd.


48,041



66,515



(18,474
)


68,147



442Zhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)


1,551,082



915,467



635,615



2,206,084



(131,021
)POSCO (Guangdong) Steel Co., Ltd.


104,143



67,707



36,436



151,814



(16,200
)POSCO Thailand Bangkok Processing Center Co., Ltd.


154,531



116,545



37,986



216,693



(10,472
)Myanmar-POSCO Steel Co., Ltd.


11,872



6,600



5,272



16,017



415Zhangjiagang POSHA Steel Port Co., Ltd. (ZPSP)


16,058



45



16,013



1,797



(30
)POSCO-JOPC Co., Ltd.


59,706



52,750



6,956



53,691



(268
)POSCO Investment Co., Ltd.


492,447



399,848



92,599



12,248



561POSCO-MKPC SDN BHD


95,701



52,983



42,718



122,621



5,708Qingdao Pohang Stainless Steel Co., Ltd.


256,315



123,582



132,733



449,276



(21,347
)POSCO (Suzhou) Automotive Processing Center Co., Ltd.


128,923



73,044



55,879



184,297



2,899POSEC-Hawaii Inc.


46,117



19,202



26,915



9,891



(2,450
)POS-Qingdao Coil Center Co., Ltd.


59,392



44,877



14,515



111,986



117POS-Ore Pty. Ltd.


68,080



10,492



57,588



81,156



42,268POSCO-China Holding Corp


267,957



15,976



251,981



88,891



(22,653
)POSCO-Japan Co., Ltd.


710,982



603,676



107,306



1,253,173



8,377POSCO E&C (Zhangjiagang) Engineering & Consulting
    Co., Ltd.


4,001



659



3,342



120



(299
)POS-CD Pty. Ltd.


31,433



23,459



7,974



5,389



(570
)POS-GC Pty. Ltd.


22,823



6,692



16,131



21,777



7,806POSCO-India Private Ltd.


59,303



331



58,972







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


121,973



87,829



34,144



97,726



(1,394
)POSCO-JNPC Co., Ltd.


112,682



106,704



5,978



110,639



1,352POSCO-Foshan Steel Processing Center Co., Ltd.


170,718



137,104



33,614



379,229



3,600POSCO E&C (Beijing) Co., Ltd.


57,975



35,731



22,244



92,761



748 F-18




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Summary of Financial InformationNet IncomeSubsidiaries

Total Assets

Total Liabilities

Net Assets

Sales

(Loss)(In millions of Korean won) (*)POS-MPC S.A. de C.V.


144,770



119,554



25,216



152,136



(8,140
)Zhangjigang Pohang Port Co., Ltd.


32,097



16,502



15,595



4,044



(199
)POSCO-Vietnam Co., Ltd.


513,860



282,481



231,379







(5,177
)POSCO-Mexico Co., Ltd.


242,643



126,191



116,452







(23,598
)POSS India Delhi Steel Processing Centre Pvt. Ltd.


52,260



44,032



8,228



40,409



(6,159
)POS-NP Pty. Ltd.


48,399



22,450



25,949



16,980



(3,454
)POSCO-Vietnam Processing Center Co., Ltd.


37,917



26,684



11,233



32,321



(891
)POSCO (Chongqing) Automotive Processing Center Co., Ltd.


46,808



36,893



9,915



26,909



75Suzhou POSCORE Technology Co., Ltd.


38,187



11,934



26,253



61,879



(15
)POSCO-JYPC Co., Ltd.


55,284



51,869



3,415



16,642



(2,203
)POSCO-Malaysia SDN. BHD


67,415



89,840



(22,425
)


50,445



(18,222
)POS-Minerals Corporation


126,034







126,034







(854
)POSCO (Wuhu) Automotive Processing Center Co., Ltd.


22,518



4,058



18,460







(417
)     (*)
    
    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 (loss) are translated at the average exchange rate of the
    reporting period.  Equity-Method
    Investees
    Number of









Percentage ofOutstanding

Number of Shares

Percentage of

Ownership ofInvestees

Primary Business

Shares

POSCO

Subsidiaries

Total

Ownership (%)

Subsidiaries (%)

LocationDomesticeNtoB Corporation

E-business


3,200,000



560,000



300,000



860,000



26.88


POSCO E&C (3.75)
    and Others

SeoulMIDAS Information Technology Co., Ltd.

Engineering


3,402,000







866,190



866,190



25.46


POSCO E&C (25.46)

SeoulSongdo New City Development Inc.(*2)

Real estate


















29.90


POSCO E&C (29.90)

SeoulGail International Korea Ltd.(*2)

Real estate


















29.90


POSCO E&C (29.90)

SeoulSNNC Co., Ltd.(*1)

Material manufacturing


37,000,000



18,130,000







18,130,000



49.00




GwangyangChungju Enterprise City

Construction


8,000,000







2,008,000



2,008,000



25.10


POSCO E&C (22.00)

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

Wind power plant construction and management


1,220,000







610,000



610,000



50.00


POSCO E&C (50.00)

HoengseongKOREA SOLAR PARK Co., Ltd.(*1)

Solar power plant construction and management


2,400,000







900,000



900,000



37.50


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

Youngam F-19




---



##### Table of Contents



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









Percentage ofOutstanding

Number of Shares

Percentage of

Ownership ofInvestees

Primary Business

Shares

POSCO

Subsidiaries

Total

Ownership (%)

Subsidiaries (%)

LocationChungla IBT Co., Ltd.(*2,4)

Multiplex development


















6.30


POSCO E&C (6.3)

IncheonOverseasKOBRASCO(*1)

Facilities lease


4,021,438,370



2,010,719,185







2,010,719,185



50.00




BrazilUSS - POSCO Industries (UPI)(*1,2)

Steel processing


















50.00


POSAM (50.00)

USAPoschrome (Proprietary) Limited

Material manufacturing


86,700



21,675







21,675



25.00




Republic of
    South AfricaGuangdong Xingpu Steel Center Co., Ltd.(*2)

Steel processing


















21.00


Posteel (10.50)

ChinaPOS-Hyundai Steel Manufacturing India Private Limited

Steel processing


23,455,600



2,345,558



4,573,842



6,919,400



29.50


Posteel (19.50)

IndiaPOSVINA Co., Ltd.(*1,2)

Steel manufacturing


















50.00




VietnamPT POSMI Steel Indonesia (POSMI)(*1)

Steel service center


12,600



1,193



3,579



4,772



37.87


Posteel (28.40)

IndonesiaPOSCO Bioventures L.P.(*2,3)

Investment in companies in the bio-tech industry


















100.00


POSAM(100.00)

USACAML Resources Pty. Ltd.(*1)

Material processing


9,715







3,239



3,239



33.34


POSA(33.34)

AustraliaNickel Mining Company SAS(*1)

Material processing


6,601,426



3,234,698







3,234,698



49.00




New
    CaledoniaLiaoning Rongyuan Posco Refractories Co., Ltd.(*1,2)

Manufacturing and sellings


















35.00


POSREC (35.00)

ChinaPOSCO-SK Steel Pinghu Processing Center Co., Ltd.(*2)

Steel service center


















20.00




ChinaHubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.(*2)

Material processing


















30.00


POSCO-China
    (30.00)

ChinaPOSCO Poland Wroclaw Steel Processing Center Co., Ltd.

Steel service center


100,000



30,000







30,000



30.00




PolandAh khanh New City Development(*1,2)

Construction


















50.00


POSCO E&C (50.00)

VietnamHenan Tsingpu Ferro Alloy Co., Ltd.(*1,2)

Material processing


















49.00


ZPSS (49.00)

ChinaUnited Spiral Pipe, LLC. (USP)(*1,2)

Steel pipe manufacturing and sales


















35.00


POSAM (35.00)

USAZhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.(*1,2)

Steel manufacturing


















34.00


POSCO-China
    (10.00)

ChinaBX Steel POSCO Cold Rolled sheet Co., Ltd.(*2)

Steel manufacturing


















25.00




ChinaPOSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.(*2)

Steel service center


















30.00




SlovakiaEureka Moly LLC.(*2)

Material processing


















20.00


POS-Mineral
    (20.00)

USAPOS UTEK Development(*2)

Construction


















25.00


POSCO E&C (25.00)

Russia  F-20




---



##### Table of Contents



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

Investees

Country

ReasonDomestic

HJ photovoltaics, Inc.

Korea

Small companyGarolim Tidal Power Plant Co., Ltd.

Korea

Small companyDaewoo national car Gwangju selling Co., Ltd.

Korea

Small companyBASYS INDUSTRY CO., LTD.

Korea

Small companySENTECH KOREA CORP.

Korea

Small companyApplied Science Corp.

Korea

Small companyPOSBRO Co., Ltd.

Korea

Small companyPOSWITH Co., Ltd.

Korea

Small companyPohang SFC Co., Ltd.

Korea

Small companyPoscoenc SongDo International Building Co., Ltd.

Korea

Small companyPOSTECH BD Newundertaking fund

Korea

Small companyPohang Fuelcell Power Corporation

Korea

Small companyAROMA POSTECH RENEWABLE ENERGY, CO., LTD.

Korea

Non-majority controlInnovalley Co., Ltd.

Korea

Non-majority controlDONGKWANG ELECTRIC CO., LTD.

Korea

Under liquidationMIRAE COMMUNICATION CO., LTD.

Korea

Under liquidationBusan-Gimhae Light Rail Transit Co., Ltd.

Korea

SOC business(*)Suwon Green Environment. Co., Ltd.

Korea

SOC business(*)Uisinseol LRT Co., Ltd.

Korea

SOC business(*)Incheon-Gimpo Highway

Korea

SOC business(*)Jangheung Environment Co., Ltd.

Korea

SOC business(*)Clean Paju Co., Ltd.

Korea

SOC business(*)Pajoo & Viro

Korea

SOC business(*)Green Jangryang Co., Ltd.

Korea

SOC business(*)Green Cheonan Co., Ltd.

Korea

SOC business(*)Universal Studios Resort Asset Management Coporation

Korea

Small companyOverseas

POSCO E&C Nigeria Ltd.

Nigeria

Small companyDWEMEX, S.A.DE C.V.

Mexico

Small companyPOS MPC Servicios de C.V.

Mexico

Small companyPOSCO E&C SMART

Mexico

Small company F-21




---



##### Table of Contents



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

Investees

Country

ReasonOverseas

POSCO MEXICO HUMAN TECH

Mexico

Small companyPOSCO-MESDC

Mexico

Small company&TV Communications, Inc.

USA

Small companyHAMOS

Vietnam

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

Slovenia

Small companyAZER POSCO E&C. LLC.

Azerbaijan

Small companyVECTUS LIMITED

UK

Small companyPOSCO E&C India Private Ltd.

India

Small companyPT.POSNESIA

Indonesia

Under liquidationDalian Poscon Dongbang Automatic Co., Ltd.

China

Small companySan Pu Trading Co., Ltd.

China

Small companyYingkou Posrec Refractories Co., Ltd.

China

Small companyZhangjiagang BLZ Pohang International Trading Co., Ltd.

China

Small companyZhangjiagang Pohang Refractories Co., Ltd.

China

Small companyQingdao Posco Steel Processing Co., Ltd

China

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

China

Small companyPOSCO-SAMSUNG-SUZHOU PROCESSING CENTER(POSS-SZPC)

China

Small companyPOSDATA-CHINA

China

Small companyPOSA Cayman

Cayman Islands

Small companyDAEWOO TECH THAILAND

Thailand

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

Philippine

Small companyMiller Pohang Coal Company Pty Ltd. (MPCC)

Australia

Non-majority controlPOS JK LLC.

UAE

Small companyPOSCO Gulf Logistics LLC.

UAE

Small company     (*)
    
    SOC (Social Overhead Capital) business represents
    capital spent on harbor facilities, universities and etc.   F-22




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Changes
    in Scope of Consolidation
  Investees

Location

ReasonPNR Co., Ltd.

Pohang

The Company made investments to establishMegaasset Co., Ltd.

Cheonan

The Company made investments to establishUniversal Studio Resort Development Co., Ltd.

Hwasung

The Company made investments to establishDaewoo Engineering Co., Ltd.

Sungnam

The Company newly acquired more than 50% of interest related to
    this investment in 2008PHP Co., Ltd.

Incheon

Total assets exceeded W7,000 million as of
    December 31, 2007POS-Minerals Corporation

USA

The Company made investments to establishPOSCO (Wuhu) Processing Center Co., Ltd.

China

The Company made investments to establishPOSCO-Malaysia SDN. BHD.

Malaysia

The Company newly acquired more than 50% of interest related to
    this investment in 2008POSCO-JYPC Co., Ltd.

Japan

Total assets exceeded W7,000 million as of
    December 31, 2007POSCO (Chongqing) Automotive Processing Center Co., Ltd.

China

Total assets exceeded W7,000 million as of
    December 31, 2007   W W W W
  The
    Effect from Adjustment of Accounting Policy in Consolidated
    Subsidiaries
    2008Net Assets Value

Adjustment

Net Assets ValueInvestees

Before Adjustment

Amount

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

W
451,564


W
(601
)

W
450,963POSCON Co., Ltd.


159,835



1,329



161,164POSCO Coated & Color Steel Co., Ltd.


216,853



(4,107
)


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


154,729



5,544



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


56,808



3,775



60,583POSCO Power Corp.


552,569



(7,910
)


544,659POSCO Asia Co., Ltd.


31,420



(352
)


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


635,615



(71,419
)


564,196POSCO Investment Co., Ltd.


92,599



(3,915
)


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


132,733



(21,682
)


111,051POSCO-Japan Co., Ltd.


107,306



(1,097
)


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


14,515



(34
)


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


22,244



(275
)


21,969   F-23




---



##### Table of Contents



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

Adjustment

Net Assets ValueInvestees

Before Adjustment

Amount

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


324,736



(626
)


324,111POSCON Co., Ltd.


149,729



901



150,630POSCO Coated & Color Steel Co., Ltd.


275,322



(2,821
)


272,501POSCO Refractories & Environment Co., Ltd. (POSREC)


132,953



6,451



139,404Samjung Packing & Aluminum Co., Ltd.


77,793



2,362



80,155POSCO Power Corp.


523,318



(1,509
)


521,809POSCO Asia Co., Ltd.


20,861



(544
)


20,317Zhangjiagang Pohang Stainless Steel Co., Ltd.


569,173



(42,750
)


526,423POSCO Investment Co., Ltd.


68,609



(1,574
)


67,036Qingdao Pohang Stainless Steel Co., Ltd.


83,558



(6,215
)


77,344POSCO-Japan Co., Ltd.


58,188



(545
)


57,643   2.
    Summary
    of significant accounting policies and basis of presenting
    financial statements      Basis
    of consolidated financial statements presentation
    Cash
    and Cash equivalents
    Revenue
    recognition
   F-24




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
          Allowance
    for doubtful accounts
      Inventories
  materials-in-transit
  Investments
    in Securities
  held-to-maturity, available-for-sale
  held-to-maturity. held-to-maturity available-for-sale
  held-to-maturity available-for-sale
 F-25




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Available-for-sale
  available-for-sale Held-to-maturity
    Available-for-sale Held-to-maturity
  Equity
    method investments
         F-26




---



##### Table of Contents



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

5 - 60 yearsMachinery and equipment

3 - 25 yearsVehicles

3 - 10 yearsTools

4 - 10 yearsFurniture and fixtures

3 - 10 yearsCapital lease asset (*)

18 years     (*)
    
    Capital lease asset is depreciated over the shorter of the lease
    term or the estimated useful lives of the asset.        Leases
   F-27




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Intangible
    assets
    Estimated Useful LivesGoodwill

5 - 20 yearsNegative goodwill

5 - 10 yearsIntellectual property rights

5 - 10 yearsResearch and development cost(*1)

3 - 10 yearsPort facilities usage rights(*2)

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

9 - 15 yearsOther 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 as
    development costs only if it is probable that future economic
    benefits that are attributable to the asset will flow into the
    entity and the cost of the asset can be measured reliably. The
    useful life of development costs is based on its estimated
    useful life, not to exceed 20 years from the date when the
    asset is available for use.(*2)
    
    As of December 31, 2008, port facilities usage rights are
    related to the quay and inventory yard donated by POSCO since
    April 1987 to the local bureaus of the Maritime Affairs and
    Fisheries in Kwangyang, Pohang, Pyoungtaek and Masan.(*3)
    
    The Company recognized the electricity supply contract initially
    at fair value as an identifiable intangible asset when the
    Company acquired POSCO Power Corp.. The electricity supply
    contract which was related to existing agreement of supplying
    electric power to Korea Electric Power Corporation met the
    criteria of recognizing identifiable intangible assets at
    acquisition date.    Discounts
    on debentures
    Accrued
    severance benefits
   F-28




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Restructuring
    of receivables
    Foreign
    currency transactions and translation
    Derivative
    financial instruments
        Provisions
    and contingent liabilities
            Treasury
    stock
   F-29




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Sale
    of receivables
    Income
    tax and deferred income tax
          Use of
    estimates
    Elimination
    of the investments of investing company and the
    stockholders equity of the investees
    Elimination
    of inter-company transactions
    (a) Calculation
    of unrealized gains and losses
   F-30




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    (b) Elimination
    of unrealized gains and losses
    Translation
    of Foreign Subsidiarys Financial Statements
    Consolidated
    Financial Statement Date
    Reclassification
    US
    Dollar Convenience Translation
  W
 F-31




---



##### Table of Contents



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


2008


2007(In millions of Korean won)Cash and cash equivalentsCash on hand and bank deposits


0.00
    ~
    3.00


W
74,657



95,292Checking accounts


0.00
    ~
    1.00



3,160



16,103Corporate bank deposits


0.00
    ~
    7.43



459,023



558,267Time deposits


5.01
    ~
    6.70



598,000



Time deposits in foreign currency and others


0.47
    ~
    6.70



517,561



286,679Maintained by overseas affiliates


0.00
    ~12.00



838,309



336,4872,490,710



1,292,828Less: Government grants






(446
)


(247
)W
2,490,264



1,292,581Short-term financial instrumentsTime deposits


2.25
    ~
    7.15


W
1,049,535



839,257Installment accounts










160Specified money in trust






80,455



3,002Certificates of deposit


5.50
    ~
    7.40



529,000



769,430Commercial papers


7.00
    ~
    7.70



20,000



14,587Others


0.10
    ~
    12.50



93,351



54,902Maintained by overseas affiliates


1.00
    ~
    15.60



55,109



61,741W
1,827,450



1,743,079Long-term financial instrumentsInstallment accounts


5.00
    ~
    10.00


W
16,355



16,952Guarantee deposits for opening accounts






107



113W
16,462



17,065   W W W W W W
 F-32




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  4.
    Trading
    Securities    2008


2007Acquisition Cost


Fair Value


Book Value


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

W
1,222,077



1,238,261



1,238,261



1,286,939   5.
    Accounts
    and Notes Receivable, and Others    2008


2007(In millions of Korean won)Trade accounts and notes receivable

W
6,158,066



4,290,213Less: Allowance for doubtful accounts


(263,802
)


(254,417
)Less: Present value discount


(171
)


(194
)W
5,894,093



4,035,602Other accounts and notes receivable

W
555,902



248,601Less: Allowance for doubtful accounts


(17,153
)


(33,287
)Less: Present value discount


(239
)


(358
)W
538,510



214,956Long-term trade accounts and notes receivable

W
29,623



58,411Less: Allowance for doubtful accounts


(4,528
)


(16,187
)Less: Present value discount


(1,831
)


(2,305
)W
23,264



39,919Long-term loans receivable

W
97,793



43,201Less: Allowance for doubtful accounts


(17,448
)


(2,650
)Less: Present value discount


(58
)


(77
)W
80,287



40,474  F-33




---



##### Table of Contents



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







DiscountFace Value


Discount


Book Value


Maturity

Rate (%)(In millions of Korean won)Other accounts receivableBNG Steel Co., Ltd.

W
10,000



239



9,761


2009


5.6W
10,000



239



9,761Long-term loans receivableLee Dongjoon and others

W
212



32



180


2017


7.5Riviera C.C


260



27



233


2011


3.7W
472



59



413Long-term trade accounts and notes receivableBNG Steel Co., Ltd.(*)

W
12,900



926



11,974


2009


8.6DK Dongsin Co., Ltd.(*)


9,087



383



8,704


2010


4.7Others


25,993



2,001



23,992


2011 2016


4.7 - 6.5W
47,980



3,310



44,670     (*)
    
    Discount at present value incurred from restructured receivables
    under work-out plans is presented as allowance for doubtful
    accounts.    AdditionsBalance at

Charged to

Changes in



Balance atBeginning of

Costs and

Scope of



the End ofDescription

Period

Expenses

Consolidation

Deductions (*)

Period(In millions of Korean won)Year ended December 31, 2008:Reserves deducted in the balance sheet from the assets to which
    they apply:Allowance for doubtful accounts

W
341,766


W
28,186


W
1,072


W
30,699


W
340,325Year ended December 31, 2007:Reserves deducted in the balance sheet from the assets to which
    they apply:Allowance for doubtful accounts


385,755



37,237







81,226



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


263,111



173,932



572



51,860



385,755     (*)
    
    Deduction for allowance for doubtful accounts includes amount
    written off as uncollectible and others. F-34




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   6.
    Inventories    2008


2007(In millions of Korean won)Finished goods

W
2,003,646



1,064,036By-products


41,841



24,983Semi-finished goods


2,389,245



1,387,703Raw materials


2,077,569



1,177,880Fuel and materials


563,136



520,882Materials-in-transit


1,698,042



786,278Others


8,251



3,7068,781,730



4,965,468Less: Provision for valuation loss


(120,009
)


(63,452
)W
8,661,721



4,902,016   W W
  7.
    Investment
    Securities    2008


2007(In millions of Korean won)Available-for-sale
    securities

W
4,257,625



4,511,569Held-to-maturity
    securities


87,321



62,542Equity-method investments


832,536



604,612W
5,177,482



5,178,723   Available-for-Sale
    Securities
    2008


2007(In millions of Korean won)Current portion of
    available-for-sale
    securitiesInvestments in bonds

W
30,888



32,113Available-for-sale
    securitiesMarketable equity securities


2,917,595



3,888,043Non-marketable equity securities


1,306,739



599,414Investments in bonds


8,467



3,762Equity investments


24,824



20,3504,257,625



4,511,569W
4,288,513



4,543,682  F-35




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    2008


2007Number of


Percentage of


Acquisition


Fair


Book


BookCompany

Shares


Ownership (%)


Cost


Value


Value(*1)


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


4,297,549



5.29


W
1,208,677


W
891,835


W
891,835


W
1,061,740Hana Financial Group Inc.


4,663,776



2.20



29,998



90,943



90,943



235,054Nippon Steel Corporation(*1)


238,352,000



3.50



719,622



963,486



963,486



1,374,491Hyundai Heavy Industries Co., Ltd.


1,477,000



1.94



343,505



294,661



294,661



653,572Hanil Iron & Steel Co., Ltd.


206,798



10.14



2,413



1,596



1,596



5,811HI Steel Co., Ltd.


135,357



9.95



1,609



1,766



1,766



2,430Munbae Steel Co., Ltd.


1,849,380



9.02



3,588



3,921



3,921



8,230Dong Yang Steel Pipe Co., Ltd.


1,564,250



2.45



3,911



1,400



1,400



2,831Korea Line Corp.


217,373



1.89



8,067



14,347



14,347



35,867Shinhan Financial Group Inc.


3,815,676



0.96



219,467



113,326



113,326



204,139SeAH Steel Corp.


540,000



10.11



18,792



23,490



23,490



26,028Thainox Stainless Public Company Limited


1,200,000,000



15.00



42,301



40,299



40,299



46,243Union Steel Co. , Ltd.


1,005,000



9.80



40,212



14,472



14,472



23,618Macarthur Coal Limited(*2)


21,215,700



10.00



420,805



55,927



55,927



Hanjin shipping Co., Ltd.


68,260



0.08



2,652



1,236



1,236



KB Financial Group Inc.


8,379,888



2.35



300,150



282,402



282,402



LG Powercom Corporation(*3)


6,300,000



5.00



246,000



39,000



39,000



DC Chemical Co., Ltd.


3,404







149



749



749



854Muchison Metals Ltd.


50,567,000



12.25



22,620



27,737



27,737



114,212Cockatoo Coal Ltd.


73,595,835



19.99



21,750



21,129



21,129



40,574Sandfire Resources NL


16,498,339



19.90



5,741



1,292



1,292



Silicon Motion Technology Corp.


136,925



0.42



3,052



394



394



2,284Pixelplus Co., Ltd.(*4)


159,156



4.78



2,606



62



62



346KOSES Co., Ltd.


328,857



6.13



617



401



401



1,483Aromasoft Corp Co., Ltd.


685,459



11.25



654



877



877



2,300i-Components Co., Ltd.


100,000



2.13



300



290



290



Maruichi Steel Tube Ltd.


345,100



0.37



13,942



11,906



11,906



7,995FuelCell Energy, Inc.


3,822,630



5.61



27,141



18,651



18,651



35,577Others






















2,364W
3,710,341


W
2,917,595


W
2,917,595


W
3,888,043     (*1)
    
    Certain portion of those investments have been pledged as
    collateral. (note 10)(*2)
    
    The Company recognized excess of the acquisition cost of
    MacArthur Coal Limited over the fair value at the acquisition
    date amounting to W 96,785 million as
    impairment losses.(*3)
    
    LG Powercom Corporation listed on the Korea Stock Exchange since
    November 2008 and i-Components Co., Ltd. listed on the KOSDAQ
    since December 2008 were reclassified to marketable equity
    securities from non-marketable equity securities.(*4)
    
    Impairment loss of W2,544 million was
    recognized in 2008 because there was an objective evidence that
    the recoverable amount is less than the carrying amount of the
    investment. F-36




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
     2008

2007Number of

Percentage of

Acquisition

Book

BookCompany

Shares

Ownership (%)

Cost

Value

Value(In millions of Korean won)The Siam United Steel(*1)


11,071,000



12.30


W
34,658


W
58,367


W
34,658Big Jump Energy Participacoes S.A.






16.20



667,824



667,824



GLOBAL UNITY LTD.


70,649



13.33



710



710



710PT-POSNESIA(*2)


29,610,000



70.00



9,474



1,567



1,567The Korea economic daily


28,728



0.15



309



309



309The Seoul Shinmun Co., Ltd.


1,614,000



19.40



7,479







THE KOREA METALJOURNAL Co., Ltd.


2,000



2.67



20



20



20Pohang Steelers Co., Ltd.


35,200



14.67



176



176



200Chunnam Dragons Football Club Co., Ltd.


19,799



13.20



99



99



99POSHOME Co., Ltd.


10,000



3.69



50



50



50Kihyup Technology Banking Corp.


600,000



10.34



3,000



3,000



3,000Samwon steel Co., Ltd.


1,786,000



19.00



8,930



8,930



8,930POSWITH Co., Ltd.(*2)


320,000



100.00



1,600



1,600



1,600Woori DCI Co., Ltd.


5,653



18.84



28



28



28RCC Co., Ltd.


9,053



18.11



45



45



45MTS Korea Inc.


11,076



18.46



55



55



55Taihan ST Corp., Ltd.


796,000



19.90



13,930



13,930



13,930WUHAN Excellent Steel Center (WESC)(*3)






5.00



432



432



432POSCO-SAMSUNG Suzhou Processing Center (POSS-SZPC)(*2,*3)






30.00



1,608



1,608



1,608POSCO MEXICO HUMAN TECH(*2,*3)






80.00



3



3



3Europe Steel Distribution Center (POS-ESDC, Logistics, Trading
    and Investment d.o.o)(*2,*3)






50.00



1,893



1,893



1,893HAMOS(*2,*3)






20.00



998



998



998Keo Yang Shipping Co., Ltd.(*5)


















780LG Powercom Corporation(*6)


















93,398ESCO Professionals., Ltd.


















21TFS Global Co., Ltd.


















26CTA Co., Ltd.


















37POSCO-SK STEEL Pinghu Processing Center Co., Ltd.(*4)


















1,869POSCO Poland Steel Processing Center Co., Ltd.(*4)


















3,803POSCO (Chongqing) AutomotiveProcessing Center Co., Ltd.(*7)


















6,201POSCO-SAMSUNG SlovakiaSteel Processing Center Co., Ltd.(*4)


















1,794Airport Railroad Co., Ltd.(*1)


22,101,940



11.90



110,510



179,026



179,026Daejeon Cogeneration Plant Co., Ltd.


















11,196Busan Gimhae Light Rail Transit Co., Ltd.(*2)


9,160,000



20.85



45,800



45,800



17,954   F-37




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  2008


2007Number of


Percentage of


Acquisition


Book


BookCompany

Shares


Ownership (%)


Cost


Value


Value(In millions of Korean won)Seoul Metro Line9 Corporation


4,090,985



12.25


W
20,455


W
20,455


W
17,030Korea Athletic Promotion Association


839,964



16.42



8,627



8,476



8,627VECTUS LIMITED(*2)


2,211,837



99.59



8,220



3,227



7,006U-Space Co., Ltd.


2,800,000



10.00



14,000



14,000



14,000Sinbundang Railroad Co., Ltd.


2,189,948



7.14



11,114



11,114



10,305Kenertec Co., Ltd.(*3)






0.00



10,000



10,000



10,000Eco-City Corporation


1,596,000



19.00



7,980



7,980



7,980Pohang Youngil New Port Corporation


1,123,200



7.20



5,616



5,616



5,616Gyeong Su Highway Co., Ltd.


992,000



3.20



4,960



4,960



4,960Dream Hub Project Financial Investment Co., Ltd.


2,400,000



1.20



12,000



12,000



Enk Co., Ltd.


500,000



9.70



10,000



10,000



& TV Communications, Inc.(*2)


582,000



68.70



6,096



7,510



Others










234,032



204,931



127,650W
1,262,731


W
1,306,739


W
599,414     (*1)
    
    The fair value of The Siam United Steel was based on the
    valuation report of a public rating services company. Except for
    The Siam United Steel, investments are recorded at cost since
    fair value is not readily determinable.(*2)
    
    Those investments were not accounted for using the equity method
    as either they are under liquidation proceedings as of
    December 31, 2008 or their total assets are less than
    W 7 billion as of December 31, 2007.(*3)
    
    No shares have been issued in accordance with the local laws or
    regulations.(*4)
    
    Those investments were reclassified to equity-method investments
    from
    available-for-sale
    securities since their total assets are greater than
    W 7 billion as of December 31, 2007.(*5)
    
    Keo Yang Shipping Co., Ltd. which merged with Han Jin Shipping
    Co., Ltd. was reclassified to marketable equity securities from
    non-marketable equity securities.(*6)
    
    LG Powercom Corporation listed on the Korea Stock Exchange since
    November, 2008 was reclassified to marketable equity securities
    from non-marketable equity securities.(*7)
    
    Those investments were reclassified to consolidated subsidiaries
    from
    available-for-sale
    securities since their total assets are greater than
    W 7 billion as of December 31, 2007. F-38




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   (d) Available-for-sale
  2008


2007Beginning


Increase


Ending


Beginning


Increase


EndingCompany

Balance


(Decrease)


Balance


Balance


(Decrease)


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

W
(98,383
)

W
(148,754
)

W
(247,137
)

W
(185,185
)

W
86,802


W
(98,383
)Hana Financial Group Inc.


148,666



(101,129
)


47,537



143,594



5,072



148,666Nippon Steel Corporation


474,780



(284,566
)


190,214



412,453



62,327



474,780Hyundai Heavy Industries Co., Ltd.


224,798



(262,896
)


(38,098
)






224,798



224,798Hanil Iron & Steel Co., Ltd.


2,464



(3,273
)


(809
)


1,467



997



2,464HI Steel Co., Ltd.


595



(472
)


123



404



191



595Munbae Steel Co., Ltd.


3,365



(3,275
)


90



(865
)


4,230



3,365Dong Yang Steel Pipe Co., Ltd.


(782
)


(1,176
)


(1,958
)


(2,092
)


1,310



(782
)Korea Line Corp.


20,155



(15,257
)


4,898



1,952



18,203



20,155Shinhan Financial Group Inc.


(11,114
)


(71,676
)


(82,790
)






(11,114
)


(11,114
)SeAH Steel Corp.


5,246



(1,582
)


3,664







5,246



5,246Thainox Stainless Public Company Limited


2,858



(4,420
)


(1,562
)






2,858



2,858Union Steel Co., Ltd.


(12,031
)


(8,046
)


(20,077
)






(12,031
)


(12,031
)MacArthur Coal Limited






(209,113
)


(209,113
)










Hanjin Shipping Co., Ltd.






(1,105
)


(1,105
)










KB Financial Group Inc.






(13,843
)


(13,843
)










LG Powercom Corporation


(92,314
)


(69,146
)


(161,460
)


(100,887
)


8,573



(92,314
)The Siam United Steel






18,493



18,493











Others


112,181



(94,807
)


17,374



10,932



101,249



112,181W
780,484


W
(1,276,043
)

W
(495,559
)

W
281,773


W
498,711


W
780,484     2008Acquisition





2007Maturity

Cost


Book Value


Book Value(In millions of Korean won)Government bonds

Less than 1 year

W
494


W
494


W
4,6941-5 years


97



97



765-10 years










48Corporate debt securities

Less than 1 year


30,394



30,394



27,4191-5 years


8,370



8,370



3,63839,355



39,355



35,875Less: Current portion




(30,888
)


(30,888
)


(32,113
)W
8,467


W
8,467


W
3,762  F-39




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    2008


2007AcquisitionCost


Book Value


Book Value(In millions of Korean won)Contractor financial fund

W
14,705


W
17,676


W
15,635Others


5,862



7,148



4,715W
20,567


W
24,824


W
20,350   available-for-sale
  2008


2007Gross


Gross








Gross


GrossAmortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost (*)


Gains


Losses


Value


Cost (*)


Gains


Losses


Value(In millions of Korean won)Debt securities:Government and municipal bonds

W
591


W



W



W
591


W
4,818


W



W



W
4,818Other bonds


38,764











38,764



31,118



419



(480
)


31,05739,355











39,355



35,936



419



(480
)


35,875Equity securities:Marketable equity securities


3,611,012



322,218



(1,015,635
)


2,917,595



2,711,958



1,357,567



(181,482
)


3,888,043Non-marketable equity securities


1,239,894



108,445



(41,600
)


1,306,739



643,390



123,409



(167,385
)


599,414Investment in capital


20,567



4,257







24,824



17,367



2,983







20,3504,871,473



434,920



(1,057,235
)


4,249,158



3,372,715



1,483,959



(348,867
)


4,507,807W
4,910,828


W
434,920


W
(1,057,235
)

W
4,288,513


W
3,408,651


W
1,484,378


W
(349,347
)

W
4,543,682     (*)
    
    Acquisition cost less impairment loss  available-for-sale W W W W W
 F-40




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  Held-To-Maturity
    Securities
  (a) Held-to-maturity
  2008


2007Acquisition


Book


BookMaturity

Cost


Value


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

Less than 1 year

W
20,613


W
20,613


W
192,393Held-to-maturity
    securities Government bonds

1-5 years


92,563



86,756



31,6355-10 years


565



565



30,90793,128



87,321



62,542W
113,741


W
107,934


W
254,935     (*)
    
    Certain portion of the government bonds has been pledged as
    collateral for the consolidated subsidiaries. (note 10) F-41




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   Equity-Method
    Investments
    2008

2007Number of

Percentage of

Acquisition

Net Asset

Book

BookInvestees(*1)

Shares

Ownership (%)

Cost

Value

Value

Value(In millions of Korean won)eNtoB Corporation(*3)


860,000



28.44


W
5,550


W
7,717


W
7,519


W
6,149Midas IT Co., Ltd.


866,190



25.46



433



6,945



6,926



5,321Songdo Cosmopolitan City Development Inc.(*3,6)






29.90



6,674



(104,929
)






Gale International Korea Inc.(*3)






29.90



427



7,080



6,983



11,385SNNC Co., Ltd.


18,130,000



49.00



90,650



65,782



59,020



87,762Chungju Enterprise City


2,008,000



25.10



10,040



7,715



7,686



9,576Taegisan Wind Power Corporation(*2)


610,000



50.00



3,050



2,787



5,273



KOREA SOLAR PARK Co., Ltd.(*2)


900,000



37.50



2,250



798



1,847



Chungla International Business Town Co., Ltd.(*3,4)






6.27



3,910



3,392



3,354



KOBRASCO(*2)


2,010,719,185



50.00



32,950



68,736



57,656



41,143USS-POSCO Industries (UPI)(*2,3)






50.00



244,532



77,816



51,330



59,771Poschrome (Proprietary) Limited


21,675



25.00



4,859



12,386



5,004



5,165Guangdong Xingpu Steel Center Co., Ltd.(*3)






21.00



1,852



5,579



5,422



3,026POS-Hyundai Steel Manufacturing India Private Limited


6,919,400



29.50



3,136



4,657



4,657



4,025POSVINA Co., Ltd.(*2,3)






50.00



1,527



2,605



2,455



2,192PT POSMI Steel Indonesia (POSMI)(*2)


4,772



37.87



3,187



4,166



3,767



3,177POSCO Bioventures L.P.(*3,5)






100.00



46,102



39,584



39,584



35,190CAML Resources Pty. Ltd.(*2)


3,239



33.34



40,388



24,209



31,959



28,155Nickel Mining Company SAS(*2)


3,234,698



49.00



157,585



254,402



220,553



200,622Liaoning Rongyuan PoscoRefractories Co., Ltd.(*2,3)






35.00



1,105



2,336



2,175



1,380POSCO-SK Steel Pinghu Processing Center Co., Ltd.(*3)






20.00



1,869



2,947



2,845



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






30.00



3,236



10,526



10,552



4,385POSCO Poland Wroclaw Steel Processing Center Co., Ltd.


30,000



30.00



3,803



3,796



3,225



Ah khanh New City Development(*2,3)






50.00



20,429



21,184



21,184



10,893Henan Tsingpu Ferro Alloy Co., Ltd.(*2,3)






49.00



8,846



4,945



5,084



8,470United Spiral Pipe, LLC. (USP)(*2,3)






35.00



29,108



31,718



32,260



   F-42




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  2008


2007Number of


Percentage of


Acquisition


Net Asset


Book


BookInvestees(*1)

Shares


Ownership (%)


Cost


Value


Value


Value(In millions of Korean won)Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.(*2,3)






34.00


W
9,517


W
17,135


W
16,944


W
10,043BX Steel POSCO Cold Rolled sheet Co., Ltd.(*3)






25.00



61,961



81,199



90,776



66,782POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.(*3)






30.00



1,794



3,027



2,879



Eureka Moly LLC.(*3)






20.00



121,209



26,760



121,209



POS UTEK Development(*3)






25.00



2,664



2,408



2,408



W
924,643


W
699,408


W
832,536


W
604,612     (*1)
    
    Due to the difference in the closing schedule of
    December 31, 2008, the equity method of accounting is
    applied based on the most recent available financial
    information, which has not been audited or reviewed.(*2)
    
    Although the Company owns over 30% equity interest in these
    subsidiaries, the Company is not their major shareholder,
    excluding them from consolidation.(*3)
    
    No shares have been issued in accordance with the local laws or
    regulations.(*4)
    
    Subsidiaries are included in the consolidated financial
    statement as it is deemed to be substantially influenced by the
    controlling company, delegated the 40% of voting rights from
    other major shareholders.(*5)
    
    POSCO Bioventures L.P. is not included in the consolidated
    financial statement as it is not substantially controlled by the
    controlling company while the company holds 100% of equity
    interest.(*6)
    
    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 2008 amounted to
    W65,379 million and the accumulated
    unrecorded changes in equity interest prior to 2008 amounted to
    W39,550 million. F-43




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
     2008


2007Property, Plant








Property, Plantand Equipment,








and Equipment,and Intangible








and IntangibleInvestee

Inventories


Assets


Total


Inventories


Assets


Total(In millions of Korean won)eNtoB Corporation

W
123


W
10


W
133


W
(340
)

W
(18
)

W
(358
)Midas IT Co., Ltd.






(2
)


(2
)






(13
)


(13
)SNNC Co., Ltd.


3,094



(5,938
)


(2,844
)






(1,709
)


(1,709
)KOREA SOLAR PARK Co., Ltd.






(65
)


(65
)










KOBRASCO


(12,450
)






(12,450
)


3,000







3,000USS-POSCO Industries (UPI)


(6,268
)






(6,268
)


8,558







8,558Poschrome (Proprietary) Limited


(7,674
)






(7,674
)


(615
)






(615
)Guangdong Xingpu Steel Center Co., Ltd.


(66
)






(66
)


254







254POSVINA Co., Ltd.


(77
)






(77
)


14







14PT POSMI Steel Indonesia (POSMI)


(393
)






(393
)


125







125Nickel Mining Company SAS


(10,508
)






(10,508
)










POSCO-SK Steel Pinghu Processing Center Co., Ltd.


(168
)






(168
)










Henan Tsingpu Ferro Alloy Co., Ltd.


27







27



127







127Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.


(167
)






(167
)










W
(34,527
)

W
(5,995
)

W
(40,522
)

W
11,123


W
(1,740
)

W
9,383  F-44




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    Dec. 31








Dec. 31








Dec. 312006


Increase





2007


Increase





2008Investee

Balance


(Decrease)


Amortization


Balance


(Decrease)


Amortization


Balance(In millions of Korean won)eNtoB Corporation

W



W
670


W
(80
)

W
590


W
244


W
(138
)

W
696SNNC Co., Ltd.






209



(21
)


188







(42
)


146KOREA SOLAR PARK Co., Ltd.


















1,392



(278
)


1,114POSMMIT Steel Centre SDN BHD


19



(19
)


















PT POSMI Steel Indonesia


221







(187
)


34







(10
)


24CAML Resources Pty Ltd.


19,279







(5,764
)


13,515







(5,764
)


7,751POSCO Poland Wroclaw Steel Processing Center Co., Ltd.


















243



(243
)


BX Steel POSCO Cold Rolled sheet Co., Ltd.






13,363



(1,114
)


12,249







(2,672
)


9,577POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.


















98



(98
)


W
19,519


W
14,223


W
(7,166
)

W
26,576


W
1,977


W
(9,245
)

W
19,308  F-45




---



##### Table of Contents



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








EquityDec. 31


Method


Other


Dec. 31


Method


Other


Dec. 312006


Profits


Increase


2007


Profits


Increase


2008Investees

Balance


(Losses)


(Decrease) (*)


Balance


(Losses)


(Decrease) (*)


Balance(In millions of Korean won)eNtoB Corporation

W
4,399


W
488


W
1,262


W
6,149


W
748


W
622


W
7,519Midas IT Co., Ltd.


4,292



1,002



27



5,321



1,788



(183
)


6,926Songdo Cosmopolitan City


























Gale International Korea Inc.


2,070



11,408



(2,093
)


11,385



3,308



(7,710
)


6,983SNNC Co., Ltd.


18,816



(2,637
)


71,583



87,762



(28,742
)






59,020Chungju Enterprise City






(464
)


10,040



9,576



(1,847
)


(43
)


7,686Teajisan Wind Power Generation


















2,413



2,860



5,273KOREA SOLAR PARK Co., Ltd.


















(433
)


2,280



1,847Chungla International Business Town Co., Ltd.


















(539
)


3,893



3,354KOBRASCO


32,622



18,947



(10,426
)


41,143



35,385



(18,872
)


57,656POSCO-JOPC Co., Ltd.


835







(835
)














USS - POSCO Industries (UPI)


49,380



(10,096
)


20,487



59,771



308



(8,749
)


51,330Poschrome (Proprietary) Limited


4,826



2,793



(2,454
)


5,165



3,288



(3,449
)


5,004Guangdong Xingpu Steel Center Co., Ltd.


2,487



319



220



3,026



886



1,510



5,422POS-Hyundai Steel Manufacturing India Private Limited


2,780



827



418



4,025



231



401



4,657POSVINA Co., Ltd.


2,066



172



(46
)


2,192



(29
)


292



2,455POSMMIT Steel Centre SDN BHD


3,891







(3,891
)














PT POSMI Steel Indonesia (POSMI)


3,205



(65
)


37



3,177



147



443



3,767POSCO Bio ventures L.P.


33,931



(1,066
)


2,325



35,190



(8,288
)


12,682



39,584CAML Resources Pty. Ltd.


37,717



(11,500
)


1,938



28,155



3,617



187



31,959Nickel Mining Company SAS






32,229



168,393



200,622



(35,918
)


55,849



220,553Liaoning Rongyuan Posco Refractories Co., Ltd.






252



1,128



1,380



347



448



2,175POSCO-SK Steel Pinghu Processing Center Co., Ltd.


















(34
)


2,879



2,845Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.


3,186



913



286



4,385



4,000



2,167



10,552POSCO Poland Wroclaw Steel Processing Center Co., Ltd.


















(1,037
)


4,262



3,225Ah khanh New City Development






(353
)


11,246



10,893



(2,697
)


12,988



21,184Henan Tsingpu Ferro Alloy Co., Ltd.






(1,489
)


9,959



8,470



(5,043
)


1,657



5,084United Spiral Pipe, LLC. (USP)


















(1,393
)


33,653



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






(216
)


10,259



10,043



2,361



4,540



16,944POSCO-CORE






(1,043
)


1,043















BX Steel POSCO Cold Rolled sheet Co., Ltd.






2,213



64,569



66,782



3,261



20,733



90,776POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.


















273



2,606



2,879Eureka Moly LLC






















121,209



121,209POS UTEK Development


















(225
)


2,633



2,408W
206,503


W
42,634


W
355,475


W
604,612


W
(23,864
)

W
251,788


W
832,536  F-46




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    (*)
    
    Other increase or decrease represents the changes in investment
    securities due to acquisitions (disposals), dividends received,
    changes in capital adjustments arising from translations of
    financial statements of overseas investees and others.    Net IncomeInvestee

Total Assets

Total Liabilities

Sales

(Loss)(In millions of Korean won)eNtoB Corporation

W
79,825


W
52,688


W
756,983


W
2,624Midas IT Co., Ltd.


42,991



15,716



29,113



5,637Songdo Cosmopolitan City Development Inc.


1,980,494



2,331,426



785,032



(75,565
)Gale International Korea Inc.


30,609



6,931



47,154



21,680SNNC Co., Ltd.


409,132



274,883



34,358



(47,959
)Chungju Enterprise City


66,026



35,289







(7,512
)Teajisan Wind Power Generation Co., Ltd.


75,391



69,817



255



(266
)KOREA SOLAR PARK Co., Ltd.


20,555



18,426



1,771



(239
)Chungla International Business Town Co., Ltd.


119,367



65,524







(7,859
)KOBRASCO


248,692



111,220



309,199



93,868USS-POSCO Industries (UPI)


650,816



495,185



1,325,532



44,098Poschrome (Proprietary) Limited


54,718



5,173



86,844



36,931Guangdong Xingpu Steel Center Co., Ltd.


66,788



40,220



96,503



4,048POS-Hyundai Steel Manufacturing India Private Limited


20,799



5,011



22,842



783POSVINA Co., Ltd.


8,925



3,716



39,753



96PT POSMI Steel Indonesia (POSMI)


90,171



79,171



97,725



1,252POSCO Bio ventures L.P.


39,584











(9,940
)CAML Resources Pty. Ltd.


158,624



86,013



154,983



34,534Nickel Mining Company SAS


627,425



108,238



159,080



(1,077
)Liaoning Rongyuan Posco Refractories Co., Ltd.


16,874



10,201



19,511



1,190POSCO-SK Steel (Pinghu) Processing Center Co., Ltd.


60,965



46,229



68,863



623Hubei Huaerliang POSCO Silicon Science & Technology
    Co., Ltd.


53,292



18,206



87,453



13,333POSCO Poland Wroclaw Steel Processing Center Co., Ltd.


64,854



52,200



55,459



(2,478
)Ah khanh New City Development


136,575



94,208







(5,352
)Henan Tsingpu Ferro Alloy Co., Ltd.


42,420



32,328



118,639



(10,878
)United Spiral Pipe, LLC. (USP)


98,274



7,650







(3,980
)Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.


125,521



75,125



137,991



6,802BX Steel POSCO Cold Rolled sheet Co., Ltd.


1,203,363



878,567



1,026,640



23,732POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.


43,465



33,374



32,512



1,238Eureka Moly


143,080



9,281







(3,405
)POS UTEK Development


9,631











(900
)  F-47




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  8.
    Property,
    Plant and Equipment    2008


2007(In millions of Korean won)Buildings and structures

W
7,629,084


W
7,004,719Machinery and equipment


28,854,834



27,312,692Vehicles


205,973



196,939Tools


467,142



425,335Furniture and fixtures


302,801



258,670Capital lease assets


11,900



11,46637,471,734



35,209,821Less: Accumulated depreciation


(24,156,260
)


(22,318,851
)Less: Accumulated impairment loss


(2,810
)


Less: Government grants


(2,000
)


(2,271
)13,310,664



12,888,699Land


1,861,451



1,509,189Construction-in-progress


2,896,984



1,183,877W
18,069,099


W
15,581,765   W W
  W W
  W W
   F-48




---



##### Table of Contents



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














Intercompany


EndingBalance


Acquisition(*1)


Disposal


Depreciation(*2)


Others(*3)


Transactions


Balance(In millions of Korean won)Land

W
1,509,189


W
119,753


W
(26,404
)

W



W
260,018


W
(1,105
)

W
1,861,451Buildings


2,623,024



231,885



(11,123
)


(216,416
)


405,973



(177,441
)


2,855,902Structures


1,546,816



152,673



(5,687
)


(130,600
)


104,876



(77,847
)


1,590,231Machinery and equipment


8,526,549



1,479,351



(29,270
)


(1,795,165
)


978,965



(524,831
)


8,635,599Vehicles


36,946



10,928



(2,064
)


(15,040
)


4,038



(885
)


33,923Tools


75,383



54,086



(548
)


(43,896
)


10,306



(935
)


94,396Furniture and fixtures


69,152



48,066



(733
)


(34,838
)


13,859



(5,472
)


90,034Capital Lease assets


10,829



403







(687
)


34







10,579Construction-in-progress


1,183,877



4,014,374



(33,483
)






(2,018,206
)


(249,578
)


2,896,984W
15,581,765


W
6,111,519


W
(109,312
)

W
(2,236,642
)

W
(240,137
)

W
(1,038,094
)

W
18,069,099     (*1)
    
    Includes asset transfer from
    construction-in-progress.(*2)
    
    Includes depreciation expense of idle property.(*3)
    
    Includes foreign currency translation adjustments, asset
    transfers and adjustments resulting from the effect of changes
    in the scope of consolidation, etc.    Elimination ofBeginning














Intercompany


EndingBalance


Acquisition


Disposal


Depreciation


Others


Transactions


Balance(In millions of Korean won)Land

W
1,311,755


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
)


69,152Capital 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  F-49




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    MinimumLease Payments(In millions of Korean won)Less 1 year

W
1,4781
    ~
    5 years


5,180Over 5 years


7,192W
13,850   9.
    Intangible
    Assets    2008


2007(In millions of Korean won)Goodwill

W
270,842


W
75,556Negative goodwill


(575
)


(1,243
)Intellectual property rights


18,266



1,811Research and development costs, net of government grants


82,221



91,965Port facilities usage rights


116,078



130,234Long-term electricity supply contract rights


55,170



61,857Others


181,765



210,599W
723,767


W
570,779     For the Year Ended December 31, 2008Elimination ofBeginning








Amortization





Intercompany


EndingBalance


Acquisition


Disposal


(Recovery)


Others(*1)


Transactions


Balance(In millions of Korean won)Goodwill

W
75,556


W
230,489


W



W
(33,327
)

W
(1,876
)

W



W
270,842Negative goodwill


(1,243
)










406



262







(575
)Intellectual property rights


1,811



2,625



(360
)


(1,237
)


15,427







18,266Research and development costs, net of government grants(*3)


91,965



40,066



(2,037
)


(18,071
)


(29,214
)


(488
)


82,221Port facilities usage rights


130,234



7,562







(21,604
)


362



(476
)


116,078Long-term electricity supply contract rights


61,857











(6,687
)










55,170Others(*2)


210,599



72,532



(8,795
)


(66,896
)


(22,700
)


(2,975
)


181,765W
570,779


W
353,274


W
(11,192
)

W
(147,416
)

W
(37,739
)

W
(3,939
)

W
723,767     (*1)
    
    Includes transfers of an asset, adjustments arising from foreign
    currency translations and changes in consolidation scope, and
    others.(*2)
    
    The Company has recorded expenses related to the ERP system and
    production innovation as other intangible assets. F-50




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   (*3)
    
    For the year ended December 31, 2008, the Company
    recognized impairment loss on development cost amounting to
    W45,890 million including
    W45,362 million of impairment loss
    recognized by POSDATA Co., Ltd. as it is assumed that the future
    economic benefits will not flow into the Company.    For the Year Ended December 31, 2007Elimination ofBeginning








Amortization





Intercompany


EndingBalance


Acquisition


Disposal


(Recovery)


Others


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
)






1,811Research and development costs, net of government grants


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
)










61,857Others


218,636



62,411



(518
)


(71,627
)


6,281



(4,584
)


210,599W
557,082


W
153,271


W
(593
)

W
(134,564
)

W
947


W
(5,364
)

W
570,779     2008


2007(In millions of Korean won)Cost of goods sold

W
75,826



77,911Selling and administrative expenses


71,590



56,653W
147,416



134,564     ResidualDescription

2008


2007


Useful Life(In millions of Korean won)Goodwill

Excess investment amount over fair value in POSCO Power
    Corp.

W
47,682


W
68,894



2 yearsExcess investment amount over fair value in Daewoo Engineering
    Company


209,461







19 years   W W W W W W
 F-51




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  10.
    Pledged
    assets    Beneficiaries

2008


2007(In millions of Korean won)Land (note 8)

Mizuho Bank and others

W
225,628


W
253,096Buildings and structures (note 8)

Woori Bank and others


172,159



187,611Machinery and equipment (note 8)

The Korea Development Bank and others


431,626



392,230Short-term financial instruments (note 3)

The Korea Development Bank and others


3,000



4,000Trade accounts and notes receivable (note 5)

YAMAGUCHI Bank and others


84,557



47,268Available-for-sale
    securities(*1) (note 7)

Exchangeable bond holder and others


2,033,862



685,402Held-to-maturity
    securities(*2) (note 7)

Gyeongsangbuk-do provincial office


31,553



31,440Equity investments (note 7)

Related creditors


7,196



W
2,989,581


W
1,601,047     (*1)
    
    As of December 31, 2008, 1,955,978 shares, equivalent
    to 17,603,801 ADRs of SK Telecom Co., Ltd. have been pledged as
    collateral for the exchangeable bonds issued
    (note 13) and 194,025,000 shares of Nippon Steel
    Corporation have been pledged as collateral for the 1st samuri
    bonds issued. In addition, 2,341,569 shares of SK Telecom
    Co., Ltd. and 410,000 shares of Hyundai Heavy Industries
    Co., Ltd. have been pledged as collateral for the indulgence of
    income tax prepayment.(*2)
    
    As of December 31, 2008, government bonds and bonds issued
    by Seoul Metropolitan Rapid Transit Corp, amounting to
    W29,693 million and
    W1,860 million, respectively, were
    provided as collateral to the Gyungsangbuk-do Province Office as
    guarantee for environmental remediation of POSCO No. 4
    disposal site.    2008


2007Foreign


Won


Foreign


WonFinancial Institution

Currency


Equivalent


Currency


Equivalent(In millions of Korean won)Korea Development Bank


EUR 4,600,591


W
8,171



EUR 5,236,941


W
7,234     W
 F-52




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  11.
    Other
    Assets    2008


2007(In millions of Korean won)Other current assetsShort-term loans receivable (note 28)

W
95,918



54,985Accrued income


58,003



53,600Prepaid expenses


82,891



58,319Others(*)


150,016



86,237386,828



253,141Less: Allowance for doubtful accounts


(34,086
)


(34,436
)W
352,742



218,705Other long-term assetsOther investment assets

W
294,033



116,409Less: Allowance for doubtful accounts


(3,308
)


(789
)Less: Present value discount






(503
)W
290,725



115,117     (*)
    
    The amount of others as of December 31, 2008 mainly
    represents current derivative assets amounting to
    W129,738 million (note 23). Among
    other investment assets, W150,053 million
    as of December 31, 2008 is related to derivative assets
    (note 23).  12.
    Short-Term
    Borrowings and Current Portion of Long-Term Debts    Annual InterestFinancial Institutions

Rate (%)

2008


2007(In millions of Korean won)Won currency borrowingsABN and others

0.72
    ~
    8.77


KRW



509,129


W
509,129



247,598



247,598Foreign currency borrowingsBank of America

2.60


USD



125,196,920



157,435



8,644,609



8,110Shinhan Bank and others

0.83
    ~
    17.00


AUD



374,657,835



2,587,791



60,000,000



1,316,312CNY



41,537,351,633







2,828,126,153INR



60,104,572







JPY



3,888,813,928







33,100,000,000MMK



2,619,618,058







1,629,025,320MYR



617,346,480







92,161,065THB



203,334,260







1,142,600,000USD



507,400,000







601,453,111VND



517,359,889,314







2,745,226







1,324,422W
3,254,355







1,572,020  F-53




---



##### Table of Contents



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

Rate (%)

2008


2007(In millions of Korean won)DebenturesDomestic and foreign debentures

4.02
    ~
    5.60


KRW



332,102


W
332,102



460,192



460,192Less: Discount on debentures issued












(205
)






(527
)331,897







459,665Won currency borrowingsKorea Exchange Bank and others

1.00
    ~
    6.98


KRW



9,475



9,475



3,147



3,147Foreign currency borrowingsDevelopment Bank of Japan and others

0.55
    ~
    7.04


CNY



29,000,000



427,640



51,758,999JPY



2,267,000,000







892,000,000MYR











THB











USD



309,624,451







6,000,000



19,711437,115







22,858Loans from foreign financial institutionsNATIXIS

2.00


EUR



636,350



1,130



636,350



879W
770,142







483,402   13.
    Long-Term
    Debts    AnnualIssue date


Maturity


Interest Rate


2008


2007(In millions of Korean won)Domestic Debentures


10/21/2004
    ~



10/04/2008
    ~



4.02
    ~
    6.55



KRW



2,584,102


W
3,137,102



1,883,515



1,967,95308/05/2013



08/05/2013







USD



340,000,000







90,000,000JPY



29,000,000,000







9th Samurai Bonds(Public)


06/28/2006



06/28/2013



2.05



JPY



50,000,000,000



696,945



50,000,000,000



416,6651st Samurai Bonds(Private)


12/29/2008



12/29/2011



Tibor +1.6



JPY



50,000,000,000



696,945







1st FRN


11/11/2008



11/11/2013



Tibor +2.6



JPY



20,000,000,000



278,778







1st Euro Bonds










5.88



USD



300,000,000



377,250



300,000,000



281,460Exchangeable Bonds


08/20/2003



08/20/2008







JPY











51,622,000,000



430,182Exchangeable Bonds(*)


08/19/2008



08/19/2013







JPY



52,795,000,000



735,904







5,922,924







3,096,260Add: Premium on bond redemption






















11,112







Less: Current portion






















(332,102
)






(460,192
)Less: Discount on debentures issued






















(74,990
)






(12,194
)W
5,526,944







2,623,874  F-54




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    (*)
    
    The Company issued exchangeable bonds, which are exchangeable
    with 17,603,801 SK Telecom Co., Ltd. ADRs, on August 19,
    2008. Details of exchangeable bonds are as follows:  Issuance date:

August 19, 2008Maturity date:

August 19, 2013Rate:

Interest rate of zero percentFace value:

JPY 52,795,000,000Issuance price:

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

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

JPY 2,999.11/ADRFair value of exchangeable right

JPY 2,867,605,334Exercise period of exchangeable right:

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

August 19, 2011     Financial Institutions

Annual Interest Rate (%)

2008


2007(In millions of Korean won)Won currency borrowingsThe Korea Resources Corporation

Representative Borrowing Rate(*1) - 2.25

KRW


49,308


W
49,308



45,100



45,100The Korea Development Bank and others

1.00
    ~
    7.10

KRW


595,037



595,037



155,259



155,259Less: Current portion










(9,475
)






(3,147
)634,870







197,212Foreign currency borrowings(*2)The Korea Resources Corporation and others

Representative Borrowing Rate(*1) - 2.25

CNY


29,000,000



1,154,647



138,758,999



498,757JPY


12,099,500,000







8,244,000,000MYR


140,000,000







THB










298,347USD


745,808,410







439,330,045Less: Current portion










(427,640
)






(19,711
)727,007







479,046Loans from foreign financial institutionsNATIXIS

2.00

EUR


4,600,591



8,171



5,236,941



7,234Less: Current portion










(1,130
)






(879
)7,041







6,355W
1,368,918







682,613  F-55




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    (*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 borrowings
    amounting to W2,923 million, the repayment
    of which depends on the result of the oil exploration in the
    Aral Sea in Uzbekistan with Korea National Oil Corporation.
    (note 16)    Foreign Currency


Loans from ForeignPeriod

Debentures(*)


Borrowings


Borrowings


Financial Institutions


Total(In millions of Korean won)2009

W
332,102


W
9,475


W
427,640


W
1,130


W
770,3472010


265,175



147,552



243,535



1,130



657,3922011


2,983,786



77,265



38,775



1,130



3,100,9562012


500,000



21,580



22,072



1,130



544,782Thereafter


1,852,973



388,473



422,625



3,651



2,667,722W
5,934,036


W
644,345


W
1,154,647


W
8,171


W
7,741,199     (*)
    
    The amount includes premium on bond redemption.  14.
    Accrued
    Severance Benefits    2008


2007(In millions of Korean won)Estimated severance benefits at the beginning of period

W
986,956



834,047Provision for severance benefits


314,156



214,720Payment


(125,374
)


(63,264
)Others(*)


332



1,453Estimated severance benefits at the end of period

W
1,176,070



986,956Transfer to National Pension Fund


(1,959
)


(2,275
)Deposit for severance benefits trust


(790,393
)


(648,586
)Net balance at the end of period

W
383,718



336,095     (*)
    
    Includes foreign currency adjustments, changes in consolidation
    scope and others.    Period

Amount(In millions of Korean won)2009

W
19,6622010


28,6112011


36,6282012


44,6862013
    ~
    2018


453,190W
582,777  F-56




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    15.
    Other
    Liabilities    2008


2007(In millions of Korean won)Other current liabilitiesUnearned revenue

W
2,292



1,725Derivatives liabilities


225,137



9,069Others


61,736



45,016W
289,165



55,810Other long-term liabilitiesReserve for allowance

W
35,558



29,176Derivatives liabilities


52,896



3,711Liability related to stock appreciation rights


38,147



123,479Deposit received


70,274



45,225Others


60,867



33,267W
257,742



234,858   16.
    Commitments
    and Contingencies    Grantors

Entity Being Guaranteed

Financial Institution

Amount


Won Equivalent(In millions of Korean won)POSCO

BX STEEL POSCO Cold Rolled Sheet Co., Ltd.

Bank of China and others


CNY



423,440,000


W
77,951USD



15,840,000



19,919Zhangjiagang Pohang
    Stainless Steel Co., Ltd.

Bank of China and others


USD



199,925,000



251,406POSCO Investment Co., Ltd.

Bank of Tokyo-Mitsubishi and others


CNY



29,000,000



5,339USD



142,000,000



178,565MYR



180,000,000



65,072POSCO-Vietnam  Co., Ltd.

The Export-Import Bank of Korea


USD



200,000,000



251,500POSCO E&C Co., Ltd.

Taegisan Wind Power Corporation

SC Korea First BankKRW



48,000



48,000IBC Corporation

The Export-Import Bank of Korea


USD



20,000,000



25,150POSLILAMA Steel Structure Co., Ltd.

The Export-Import Bank of Korea and others


USD



55,155,000



69,357Daewoo Engineering Company




USD



217,440,000



273,431Posteel Co., Ltd.

POSCO Canada Ltd.

Shinhan Bank


USD



12,484,500



15,699Zhangjiagang Pohang
    Stainless Steel Co., Ltd.

Qingdao Pohang Stainless Steel Co., Ltd.

China Construction Bank Corporation


USD



14,000,000



17,605POSCO E&C
    (Zhangjiagang) Engineering & Co., Ltd.

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

Korea Exchange Bank


CNY



8,000,000



1,473POSCO Investment Co., Ltd.

Zhangjiagang Pohang  Stainless Steel Co., Ltd.

ING and others


USD



120,000,000



150,900Qingdao Pohang Stainless Steel Co., Ltd.

Bank of Tokyo-Mitsubishi


USD



42,000,000



52,815 F-57




---



##### Table of Contents



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

Entity Being Guaranteed

Financial Institution

Amount


Won Equivalent(In millions of Korean won)POSCO-Mexico Co., Ltd.

HSBC


USD



100,000,000



125,750POSCO-MPC S.A. de. C.V.

Bank of Tokyo-Mitsubishi


USD



30,600,000



38,480POSCO Poland Wroclaw Steel
    Processing Center Co., Ltd.

HSBCUSD



5,929,690



7,457Zhongyue POSCO

HSBC(Qinhuangdao)
    Tinplate Industrial Co., Ltd.




USD



3,693,120



4,644POSCO-Malaysia SDN BHD

HSBC and others


USD



63,306,150



79,607POSCO-Japan Co., Ltd.

POSMETAL Co., Ltd.

Mizuho Bank and others


JPY



1,740,000,000



24,254POSCO-JOPC Co., Ltd.

Mizuho Bank and others


JPY



2,800,000,000



39,029POSCO-JNPC Co., Ltd.

Mizuho Bank and others


JPY



4,800,000,000



66,907POSCO-JYPC Co., Ltd.

Mizuho Bank and others


JPY



3,100,000,000



43,211W
1,933,521   W
    Entity Being



AmountGrantors

Guaranteed

Financial Institution

Guaranteed


Won Equivalent(In millions of Korean won)POSCO

DC Chemical Co., Ltd.

E1 Coporation


KRW



320


W
320Zeus

Related creditors


JPY



52,795,000,000



735,904POSCO E & C Co., Ltd.

The first district of Minrak, Busan

Kookmin Bank


KRW



38,680



38,680Association of the first
    district of Mokdong, Daejeon

Woori Bank


KRW



5,060



5,060Pan Pacific Corp.

Korea Exchange Bank


KRW



10,998



10,998Posteel Co., Ltd.

GIPI

Qutar National Bank and others


USD



12,000,000



15,090Asia Speciality Steel Co., Ltd.

Yamaguchi Bank and others


JPY



2,700,000,000



37,635POSCON Co., Ltd.

Dalian Poscon Dongbang
    Automatic Co., Ltd.

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


KRW



1,878



1,878POSCO Machinery
    & Engineering Co., Ltd.

Jaesan Energy Co., Ltd.

Hana Bank


KRW



7,189



7,189Changhwan Dep. Co., Ltd.

Hana Bank


KRW



6,980



6,980Halla Precision Eng. Co., Ltd.

Shinhan BankKRW



5,712



5,712Samjung Packing &
    Aluminum Co., Ltd.

Pyungsan Si Co., Ltd.

Seoul Guarantee Insurance Company


KRW



963



963Daewoo Engineering
    Company

Dongwon Systems Corporation

Korean National HousingCoporation


KRW



17,100



17,100Vasis Corp.

Hyundai Rotem Company and others


KRW



754



754Sen Structural Engineers Co., Ltd.

Youngdong Construction Co., Ltd.and others


KRW



69



69Kocen Co., Ltd.

Korea Power Engineering Co., Inc. and others


KRW



13,121



13,121Hyundai ENG Co., Ltd.

Samsung C&T Corporation and others


KRW



44,915



44,915W
942,368   W
 F-58




---



##### Table of Contents



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

Amount(In millions of Korean won)2009

W
6,4672010


3,4532011


1,2102012


3762013


8Thereafter


2W
11,516     Company

Plaintiff

Amount


Description(In millions of Korean won)POSCO

Songdo Construction Co., Ltd. and others


6,898


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

National Tax Service and others


42,339


Litigation on penalties levied and 47 other litigationsPOSCO Machinery & Engineering Co., Ltd.

Wonwoo Construction Co., Ltd.


188


Claims on fees payable for the construction providedDaewoo Engineering Company

Dong Yang Cement Corp.


5,792


Provision for construction warranty of Dong-Yang Cement Power
    Plant.POSCO Architects & Consultants Co., Ltd.

Miwha Concrete Co., Ltd.


38


Claims on consulting fees payablePOSCON Co., Ltd.

Korea Labor Welfare Corporation


106


Claims on indemnityPOS-Tianjin Coil Center Co., Ltd.

Beijing Tian Yu


93


Claim of accounts receivable collection.          F-59




---



##### 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-60




---



##### 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
  W W W
  W W W W
 F-61




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
                        17  Capital
    Stock
  W
    W W
   F-62




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  18  Capital
    Surplus
    2008


2007(In millions of Korean won)Additional paid-in capital

W
463,825



463,205Revaluation surplus


3,224,770



3,224,770Others


630,488



488,617W
4,319,083



4,176,592   19.
    Retained
    Earnings    2008


2007(In millions of Korean won)AppropriatedLegal reserve

W
241,202



241,202Appropriated retained earnings for business rationalization


918,300



918,300Reserve under Korean Tax Law


1,071,667



1,445,000Voluntary reserve


18,739,895



15,513,06820,971,064



18,117,570Unappropriated


4,422,182



3,649,732W
25,393,246



21,767,302   20.
    Dividends    Interim
    Cash Dividends
  2008


2007


2006Dividend


Dividend


Dividend


Dividend


Dividend


DividendRatio (%)


Amount


Ratio (%)


Amount


Ratio (%)


Amount(In millions of Korean won)Common shares


50


W
188,485



50


W
189,541



40


W
155,561   Year-end
    Cash Dividends
  2008


2007


2006Dividend


Dividend


Dividend


Dividend


Dividend


DividendRatio (%)


Amount


Ratio (%)


Amount


Ratio (%)


Amount(In millions of Korean won)Common shares


150


W
574,274



150


W
566,552



120


W
465,558  F-63




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    2008

2007

2006Dividend Payout

Dividend Yield

Dividend Payout

Dividend Yield

Dividend Payout

Dividend YieldRatio(%)

Ratio (%)

Ratio (%)

Ratio (%)

Ratio (%)

Ratio (%)Common shares


17.42



2.63



21.25



1.74



18.74



2.59   21.
    Capital
    Adjustments    2008


2007(In millions of Korean won)Treasury stock Others

W
(2,502,014
)


(2,715,964
)(7,067
)


(11,183
)W
(2,509,081
)


(2,727,147
)     2008


2007Number of Shares


Book Value


Book Value(In millions of Korean won)Treasury stock


8,255,034


W
1,760,819



2,011,601Specified money in trust


2,361,885



741,195



704,36310,616,919


W
2,502,014



2,715,964     22.
    Stock
    Appreciation Rights    1st Grant

2nd Grant

3rd Grant

4th Grant

5th Grant

6th Grant

TotalBefore the modifications(*)Number of shares

498,000 shares

60,000 shares

22,000 shares

141,500 shares

218,600 shares

90,000 shares

1,030,100 sharesExercise price

W98,400 per share

W135,800 per share

W115,600 per share

W102,900 per share

W151,700 per share

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

July 23, 2001

April 27, 2002

September 18, 2002

April 26, 2003

July 23, 2004

April 28, 2005Exercise price

W98,900 per share

W136,400 per share

W116,100 per share

W102,900 per share

W151,700 per share

W194,900 per shareNumber of shares granted

453,576 shares

55,896 shares

20,495 shares

135,897 shares

214,228 shares

90,000 shares

970,092 sharesNumber of shares cancelled

19,409 shares









19,409 sharesNumber of shares exercised

434,167 shares

50,511 shares

6,931 shares

118,909 shares

79,684 shares

62,000 shares

752,202 sharesNumber of shares outstanding



5,385 shares

13,564 shares

16,988 shares

134,544 shares

28,000 shares

198,481 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  F-64




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
     (*)
    
    The Company modified the number of shares granted under the
    stock appreciation rights and the exercise price, as presented
    above (1st, 2nd, 3rd, 4th and 5th), in accordance with the
    resolutions of the Board of Directors on April 26, 2003,
    October 17, 2003 and October 22, 2004.(b)
    
    Stock appreciation rights are all related to POSCO and these
    stock appreciation rights were fully vested.(c)
    
    Expense (or income) related to stock appreciation rights granted
    to executives incurred for the year ended December 31, 2008
    are as follows:  1st Grant


2nd Grant


3rd Grant


4th Grant


5th Grant


6th Grant


Total(In millions of Korean won)Prior periods

W
60,825


W
14,050


W
7,837


W
35,145


W
88,823


W
34,000


W
240,680Current period


(880
)


(3,249
)


(2,994
)


(5,375
)


(34,143
)


(8,514
)


(55,155
)W
59,945


W
10,801


W
4,843


W
29,770


W
54,680


W
25,486


W
185,525   W W
    2008


2007


2006Number of Stock


Weighted-Average


Number of Stock


Weighted-Average


Number of Stock


Weighted-AverageStock Appreciation

Appreciation


Exercise Price per


Appreciation


Exercise Price per


Appreciation


Exercise Price perRights Outstanding

Rights


Share


Rights


Share


Rights


Share(In Korean Korean won)Beginning of year


279,472


W
145,170



460,335


W
145,238



534,642


W
140,258Granted






















Excercised


(80,991
)


115,715



(180,863
)


145,344



(74,307
)


109,404Canceled






















Forfeited






















Stock appreciation rights outstanding, end of year


198,481



150,770



279,472



145,170



460,335



145,238Exercisable at the year end


198,481


W
150,770



279,472


W
145,170



370,335


W
133,169Weighted-average fair value at grant date





W
140,206






W
116,176






W
116,176     Appreciation Rights OutstandingWeighted-Average


Weighted-AverageRemaining


Exercise PriceExercise Prices

Shares


Contractual Life


per Share(In Korean won)136,400


5,385



0.32 years


W
136,400116,100


13,564



0.72 years



116,100102,900


16,988



1.32 years



102,900151,700


134,544



2.56 years



151,700194,900


28,000



3.33 years



194,900198,481



2.37 years


W
150,770  F-65




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  23.
    Derivative
    Financial Instruments    Valuation Gain/LossComprehensive


Transaction Gain/LossIncome Statement


Income (*2)


Income StatementCompany

Type of Transaction

Purpose of Transaction

Financial Institutions

2008


2007


2008


2007


2006


2008


2007(In millions of Korean won)POSCO

Currency forward

Hedge

Woori Bank and others

W



W
301


W







W



W
830


W
7,638Embedded derivative (*1)

Exchangeable Bonds

Related creditors17,985























POSCO E&C Co., Ltd.

Currency forward

Fair  market  value hedge

HSBC and others


(124,870
)


(1,394
)










(790
)


(53,070
)


185Currency Swap

Cash flow hedge

Calyon Bank and others


72,182







(4,634
)










1,718



Valuation of Fixed contract

Fair  market  value hedge




177,940























Posteel Co.,Ltd.

Currency forward

Trading

SC Korea First Bank






















2,659



(3
)POSCO Coated & Color Steel Co., Ltd.

Currency forward

Trading

Shinhan Bank






















(3,325
)


49Currency Option

Trading

SC Korea First Bank and others


(138,472
)


1,329











1,844



(19,228
)


2,860Currency Swap

Trading

SC Korea First Bank and others


10,451



58















9,570



POSCO Machinery & Engineering Co., Ltd.

Currency forward

Trading

Korea Exchange Bank and others


(2,482
)


















(3,606
)


POSDATA Co., Ltd.

Currency forward

Cash flow hedge

Korea Exchange Bank


























(10
)POSCO Specialty Steel Co., Ltd.

Currency forward

Trading

SC Korea First Bank


(2
)


1











(17
)






(47
)Currency Swap

Fair market value hedge

SC Korea First Bank






65



















Currency Swap

Cash flow hedge

SC Korea First Bank














(524
)






9,186



Samjung Packing & Aluminum Co., Ltd.

Currency future

Trading

Woori Bank and others


215























POSCO Power Corp.

Currency forward

Trading

Nong Hyup Bank and others






















(1,365
)


431Currency Swap

Cash flow hedge

Calyon Bank and others


28,737



1,368



(6,035
)


(3,510
)










274Currency Swap

Cash flow hedge

Bank of Tokyo-Mitsubishi UFJ


23,063







(131
)














Daewoo Engineering Company

Currency forward

Trading

Citi Bank


(5,886
)


















(5,385
)


POSCO Austria Pty. Ltd.

Derivatives

Trading

MML


(584
)


7,359



















POS-MPC S.A. de C.V.

Currency future

Cash flow hedge

Standard Chartered






37















(149
)


W
58,277


W
9,124


W
(10,800
)

W
(4,034
)

W
1,037


W
(62,165
)

W
11,377     (*1)
    
    The Company applied derivative accounting as exchangeable right
    to investors related to exchangeable bond issued in
    August 19, 2008 met the criteria of embedded derivatives.
    Fair values of exchangeable right are
    W27,184 million (JPY 2,867,605,334) at the
    date of issue and W9,199 million (JPY
    659,937,500) as of December 31, 2008. This exchangeable
    right is included in other long-term liabilities. (note 13)(*2)
    
    Unrealized gain and loss on derivative financial instruments
    designated as cash flow hedges are recorded as other
    comprehensive income, net of tax effect. F-66




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   24.
    Selling
    and Administrative Expenses    2008


2007


2006(In millions of Korean won)Transportation and storage

W
781,425


W
619,499


W
539,589Salaries


256,959



218,206



183,943Welfare


159,732



123,584



111,666Depreciation and amortization


106,271



87,257



72,983Fees and charges


124,123



97,100



62,610Advertising


98,780



103,979



87,666Research and development expenses


94,571



52,846



54,035Severance benefits


52,433



44,779



26,109Sales commissions


83,057



54,955



42,644Travel


30,537



25,870



21,468Rent


24,204



19,389



16,313Repairs


13,135



12,693



8,846Training


24,397



20,094



18,496Office supplies


8,482



9,053



6,957Provision for doubtful accounts


24,033



62,026



117,337Meeting


11,612



10,240



9,368Taxes and public dues


29,595



29,519



18,936Vehicle expenses


4,626



3,947



2,941Membership fees


8,312



8,593



7,273Sales promotions


7,638



5,651



22,471Entertainment


12,542



10,561



7,904Others


49,904



165,376



116,860W
2,006,368


W
1,785,217


W
1,556,415   25.
    Income
    Taxes    2008


2007


2006(In millions of Korean won)Current income taxes(*)

W
2,181,238


W
1,341,252


W
1,086,215Deferred income taxes


(358,250
)


51,397



28,531Carryforward income tax


(9,976
)


2,714



3,948Items charged directly to shareholders equity


(50,923
)


(61,559
)


(19,180
)Tax effect due to consolidation entries


(28,106
)


(59,578
)


(177,563
)W
1,733,983


W
1,274,226


W
921,951     (*)
    
    Additional tax payments (or tax refunds) arising from finalized
    tax assessment are added or deducted in current income taxes. F-67




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   W
    2008


2007


2006(In millions of Korean won)Net income before income tax expense

W
6,095,639


W
4,898,931


W
4,284,591Income tax expense computed at statutory rate


1,676,301



1,347,206



1,178,260Adjustments:Tax credit


(167,962
)


(159,816
)


(181,739
)Effect of changes in tax rate


74,493







Others, net (*)


151,151



86,836



(74,570
)Income tax expense

W
1,733,983


W
1,274,226


W
921,951Effective rate (%)


28.4



26.0



21.5     (*)
    
    Others mainly consist of changes in deferred tax assets subject
    to possibility of realization amounting to
    W119,632 million for the year ended
    December 31, 2008. F-68




---



##### Table of Contents



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


Deferred Income TaxDec. 31, 2007


Inc. (dec.)


Dec. 31, 2008


Dec. 31, 2007


Inc. (dec.)


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

W
(301,751
)

W
19,926


W
(281,825
)

W
(82,982
)

W
20,560


W
(62,422
)Allowance for doubtful accounts


292,763



(192
)


292,571



80,532



(16,746
)


63,786Reserve for technology developments


(1,101,734
)


1,092,270



(9,464
)


(302,976
)


300,826



(2,150
)Dividend income from related companies


366,233



65,264



431,497



100,714



(5,785
)


94,929Depreciation expense


(147,993
)


(126,675
)


(274,668
)


(40,115
)


(20,079
)


(60,194
)Valuation of equity method investments


(1,296,880
)


(79,165
)


(1,376,045
)


(274,370
)


63,566



(210,804
)Prepaid expenses


34,431



34,796



69,227



9,467



6,822



16,289Impairment loss on property, plant and equipment


420,085



(294,058
)


126,027



121,483



(78,816
)


42,667Gain/Loss on foreign currency






634,028



634,028







140,283



140,283Accrued severance benefits


161,926



13,312



175,238



44,574



(5,198
)


39,376Group severance insurance deposits


(44,275
)


(70,466
)


(114,741
)


(12,175
)


(13,746
)


(25,921
)Provision for construction losses


21,227



15,016



36,243



5,836



2,276



8,112Provision for construction warranty


21,065



5,530



26,595



5,794



58



5,852Appropriated retained earnings for technological development


(2,833
)


833



(2,000
)


(780
)


318



(462
)Accrued income


(8,328
)


8,396



68



(2,313
)


2,328



15Accrued on valuation of Inventories


695



11,426



12,121



190



2,754



2,944Others


293,860



(18,491
)


275,369



73,419



(41,171
)


32,248W
(1,291,509
)

W
1,311,750


W
20,241


W
(273,702
)

W
358,250


W
84,548Deferred tax from tax credit and others:Tax credit

W
22,725


W
(4,424
)

W
18,301


W
19,949


W
(3,478
)

W
16,471Deficit carried forward


9,188



26,326



35,514



2,526



5,287



7,813Others














(8,167
)


8,167



W
31,913


W
21,902


W
53,815


W
14,308


W
9,976


W
24,284Deferred income taxes recognized directly to equity:Capital adjustment arising from equity method investments

W
(272,948
)

W
(448,800
)

W
(721,748
)

W
(75,060
)

W
(84,440
)

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


(1,315,772
)


975,546



(340,226
)


(364,373
)


290,151



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


239,451



723,091



962,542



65,891



146,249



212,140Others


4,276



10,342



14,618



1,176



2,023



3,199W
(1,344,993
)

W
1,260,179


W
(84,814
)

W
(372,366
)

W
353,983


W
(18,383
)Tax effect on elimination of intercompany profit














237,683



28,106



265,789W
(394,077
)

W
750,315


W
356,238  F-69




---



##### Table of Contents



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


Deferred Income TaxDec. 31, 2006


Inc. (dec.)


Dec. 31, 2007


Dec. 31, 2006(*1)


Inc. (dec.)


Dec. 31, 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 developments


(1,484,767
)


383,033



(1,101,734
)


(408,311
)


105,335



(302,976
)Dividend income from related companies


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 investments


(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 and equipment


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 securities


41,300



(41,300
)






11,358



(11,358
)


Others


333,308



(39,448
)


293,860



81,188



(7,769
)


73,419W
(906,206
)

W
(385,303
)

W
(1,291,509
)

W
(222,305
)

W
(51,397
)

W
(273,702
)Deferred tax from tax credit and others:Tax credit

W
20,137


W
2,588


W
22,725


W
19,004


W
945


W
19,949Deficit carried forward


12,487



(3,299
)


9,188



3,434



(908
)


2,526Others














(5,416
)


(2,751
)


(8,167
)W
32,624


W
(711
)

W
31,913


W
17,022


W
(2,714
)

W
14,308Deferred income taxes recognized directly to equity:Capital adjustment arising from equity method investments

W
(112,643
)

W
(160,305
)

W
(272,948
)

W
(30,975
)

W
(44,085
)

W
(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



1,176W
(469,835
)

W
(875,158
)

W
(1,344,993
)

W
(129,345
)

W
(243,021
)

W
(372,366
)Tax effect on elimination of intercompany profit














178,105



59,578



237,683W
(156,523
)

W
(237,554
)

W
(394,077
)   26.
    Earnings
    Per Share    2008


2007


2006(In millions of Korean won except per share information)Net income attributable to controlling interest

W
4,378,751


W
3,558,660


W
3,314,181Weighted-average number of common shares outstanding (*)


75,493,523



75,952,869



78,694,181Basic and diluted earnings per share

W
58,002


W
46,854


W
42,115  F-70




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    (*)
    
    Basic and diluted earnings per share is computed by dividing net
    income allocated to common stock, by the weighted-average number
    of common shares outstanding for the years ended
    December 31, 2008, 2007 and 2006 :  2008


2007


2006Total number of common shares issued


87,186,835



87,186,835



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


(11,693,312
)


(11,233,966
)


(8,492,654
)Weighted-average number of common shares outstanding


75,493,523



75,952,869



78,694,181   27.
    Comprehensive
    income    2008


2007


2006(In millions of Korean won)Net income

W
4,350,104


W
3,677,964


W
3,353,082Other comprehensive incomeGain (loss) on valuation of available-for-sale securities, net


(1,714,939
)


690,805



602,121Less: tax effect


427,512



(192,094
)


(169,652
)Changes in capital adjustments arising from equity method
    accounted investments


48,139



27,243



9,931Less: tax effect


(11,903
)


(34,698
)


1,705Foreign currency translation adjustments


576,489



99,408



(51,839
)Less: tax effect


(75,291
)


(11,451
)


5,753Gain on valuation of derivative instruments


(9,175
)


(5,365
)


Less: tax effect


1,868



1,331



(757,300
)


575,179



398,019Comprehensive income

W
3,592,804


W
4,253,143


W
3,751,101Controlling interest

W
3,571,832


W
4,118,011


W
3,721,622Minority interest

W
20,972


W
135,132


W
29,479  F-71




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  28.
    Assets
    and Liabilities Denominated in Foreign Currencies    2008


2007Won





WonForeign Currency(*2)


Equivalent


Foreign Currency(*2)


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

USD


129,977


W
163,447


USD


231,556


W
217,246JPY


574,721



8,011


JPY


74,355



620EUR


2,313



4,109


EUR


27



37Foreign
    subsidiaries


728,786



916,448


Foreign
    subsidiaries


430,853



404,226Trade accounts and notes receivable

USD


370,388



465,763


USD


323,175



303,203JPY


6,855,809



95,562


JPY


6,042,643



50,355EUR


14,802



26,292


EUR


7,796



10,768Foreign
    subsidiaries


807,654



1,015,625


Foreign
    subsidiaries


773,033



725,259Other accounts and notes receivable

USD


5,740



7,218


USD


5,235



4,499JPY


8,879



124


JPY


16,960



141EUR









EUR


11



15Foreign
    subsidiaries


101,680



127,863


Foreign
    subsidiaries


73,300



68,770Short-term and long-term loans receivable

Foreign
    subsidiaries


331,900



417,365


Foreign
    subsidiaries


186,380



174,862Long-term trade accounts and notes receivable

Foreign
    subsidiaries


71



89


Foreign
    subsidiaries


71



66Investment securities(*1)

Foreign
    subsidiaries


96,983



121,956


Foreign
    subsidiaries


205,885



193,161Guarantee deposits

USD


553



695


USD


427



401EUR


129



229


EUR


41



57Foreign
    subsidiaries


7,355



9,249


Foreign
    subsidiaries


6,955



6,526W
3,380,045








W
2,160,212     (*1)
    
    Presented at face value.(*2)
    
    Currencies other than US dollars, Japanese yen, and Euros are
    converted into US dollars. The amounts of overseas subsidiaries
    are converted into US dollars.  F-72




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  2008


2007Won





WonForeign Currency(*2)


Equivalent


Foreign Currency(*2)


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

USD


432,531


W
543,907


USD


410,215


W
384,863JPY


5,308,193



73,990


JPY


1,509,059



12,576EUR


3,455



6,136


EUR


1,042



1,440Foreign
    subsidiaries


439,043



552,097


Foreign
    subsidiaries


520,780



488,595Other accounts and notes payable

USD


37,652



47,347


USD


45,304



42,505JPY


2,861,507



39,886


JPY


636,330



5,302EUR


9,256



16,441


EUR


446



617Foreign
    subsidiaries


76,183



95,800


Foreign
    subsidiaries


44,335



41,595Accrued expenses

USD


1,573



1,977


USD


2,552



2,394JPY


2,322



32


JPY






Foreign
    subsidiaries


26,472



33,289


Foreign
    subsidiaries


27,297



25,610Short-term borrowings

USD


304,956



383,482


USD


194,394



182,380Foreign
    subsidiaries


1,926,753



2,422,892


Foreign
    subsidiaries


1,355,638



1,271,860Withholdings

USD


19,349



24,331


USD


5,122



4,805JPY


161,870



2,256


JPY


145,910



1,216EUR


5,179



9,199


EUR


2,047



2,828Foreign
    subsidiaries


3,688



4,638


Foreign
    subsidiaries


2,864



2,687Debentures(*1,3)

USD


640,000



804,800


USD


390,000



365,898JPY


182,592,205



2,545,134


JPY


101,622,000



846,847Foreign
    subsidiaries


15,776



19,838


Foreign
    subsidiaries






Long-term borrowings(*3)

USD


36,134



45,439


USD


34,829



32,677JPY


192,000



2,676


JPY


384,000



3,200Foreign
    subsidiaries


923,439



1,161,224


Foreign
    subsidiaries


538,323



505,055Loans from foreign financial institutions(*3)

EUR


4,601



8,172


EUR


5,237



7,234W
8,844,983








W
4,232,184     (*1)
    
    Presented at face value.(*2)
    
    Currencies other than US dollars, Japanese yen, and Euros are
    converted into US dollars. The amounts of overseas subsidiaries
    are converted into US dollars.(*3)
    
    Includes current portion of long-term debts. F-73




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
   29.
    Related
    Party Transactions    Domestic (25)
    
    POSCO E&C Co., Ltd., Posteel Co., Ltd., POSCON Co., Ltd.,
    POSCO Coated & Color Steel Co., Ltd., POSCO
    Machinery & Engineering Co., Ltd., POSDATA Co., Ltd.,
    POSCO Research Institute, Seung Kwang Co., Ltd., POSCO
    Architects & Consultants Co., Ltd., POSCO Specialty
    Steel Co., Ltd., POSCO Machinery Co., Ltd., POSTECH Venture
    Capital Corp, POSTECH 2006 Energy Fund, POSCO
    Refractories & Environment Co., Ltd. (POSREC), POSCO
    Terminal Co., Ltd., POSMATE Co., Ltd., Samjung
    Packing & Aluminum Co., Ltd., POSCO Power Corp., PHP
    Co., Ltd., PNR Co., Ltd., Megaasset Co., Ltd., Daewoo
    engineering Company, Metapolis Co., Ltd., POSCORE Co., Ltd.
    Universal Studio Resort Development Co., Ltd.Overseas (48)
    
    POSCO America Corporation(POSAM), POSCO Australia Pty.
    Ltd.(POSA), POSCO Canada Ltd.(POSCAN), POSCAN Elkview Coal Ltd.,
    POSCO Asia Co., Ltd.(POA), VSC POSCO Steel Corporation(VPS),
    Dalian POSCO-CFM Coated Steel Co., Ltd., POS-Tianjin Coil Center
    Co., Ltd., POSMETAL Co., Ltd., Shanghai Real Estate Development
    Co., Ltd., IBC Corporation, POSLILAMA Steel Structure Co., Ltd.,
    Zhangjiagang Pohang Stainless Steel Co., Ltd., POSCO (Guangdong)
    Steel Co., Ltd., POSCO Thailand Bangkok Processing Center Co.,
    Ltd., Myanmar POSCO Steel Co., Ltd., Zhangjiagang POSHA Steel
    Port Co., Ltd.(ZPSP), POSCO-JOPC Co., Ltd., POSCO Investment
    Co., Ltd., POSCO-MKPC SDN BHD, Qingdao Pohang Stainless Steel
    Co., Ltd., POSCO(Suzhou) Automotive Processing Center Co., Ltd.,
    POSEC-Hawaii Inc., POS-Qingdao Coil Center Co., Ltd., POS-Ore
    Pty. Ltd., POSCO-China Holding Corp., POSCO-Japan Co., Ltd.,
    POSCO E&C(Zhangjiagang) Engineering & Consulting
    Co., Ltd., POS-CD Pty. Ltd, POS-GC Pty. Ltd, POSCO-India Private
    Ltd.,
    POS-India
    Pune Steel Processing Centre Pvt. Ltd., POSCO-JNPC Co., Ltd.,
    POSCO-Foshan Steel Processing Center Co.,Ltd., POSCO E&C
    (Beijing) Co., Ltd., POS-MPC S. A. de C.V., Zhangjigang Pohang
    Port Co., Ltd., POSCO-Vietnam Co., Ltd., POSCO-Mexico Co., Ltd.,
    POSS India Delhi Steel Processing Centre Private Limited, POS-NP
    Pty. Ltd., POSCO Vietnam Processing Center Co., Ltd.,
    POSCO(Chongqing) Automotive Processing Center Co, Ltd., Suzhou
    POSCORE Technology Co., Ltd., POSCO-JYPC Co., Ltd.,
    POSCO-Malaysia SDN. BHD., POS-Minerals Corporation, POSCO(Wuhu)
    Automotive Processing Center Co., Ltd. F-74




---



##### Table of Contents



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


Purchases and Others(*1)2008


2007


2006


2008


2007


2006(In millions of Korean won)POSCO E&C Co., Ltd.

W
13,626


W
20,000


W
12,134


W
1,121,335


W
984,030


W
1,618,205Posteel Co., Ltd.


1,455,354



1,072,032



966,254



244,908



220,459



93,315POSCON Co., Ltd.


105



120



177



229,119



244,365



219,602POSCO Coated & Color Steel Co., Ltd.


609,377



436,206



367,443



1,916



1,327



853POSCO Machinery & Engineering Co., Ltd.


4,309



157



1,908



158,275



152,844



125,996POSDATA Co., Ltd.


1,685



4,516



2,290



187,186



173,660



175,046POSCO Research Institute


3



3







18,946



17,280



18,553Seung Kwang Co., Ltd.


3











89



69



6POSCO Architects & Consultants Co., Ltd.


936



862



732



29,455



24,298



30,546POSCO Specialty Steel Co., Ltd.


3,697



5,175



2,844



27,122



88,258



70,299POSCO Machinery Co., Ltd.


15,302



3,480



1,929



79,549



114,378



76,189POSCO Refractories & Environment Co., Ltd. (POSREC)


57,189



250



166



350,153



213,753



211,122POSTECH Venture Capital Co., Ltd.


83



94



77











POSCO America Corporation (POSAM)


168,663



130,150



84,227



93



686



277POSCO Australia Pty. Ltd. (POSA)


27,695



18,206



17,821



71



231



2,235POSCO Canada Ltd. (POSCAN)


40



40







289,015



71,120



91,502POSCO Asia Co., Ltd. (POA)


951,867



600,059



440,078



215,318



121,098



73,353Zhangjiagang Pohang Stainless Steel Co., Ltd.


3,145



22,474



487,037











POSCO  Japan Co., Ltd.


1,191,222



831,711



566,208



23,233



50,939



75,170Others


720,997



273,214



328,329



318,164



271,594



253,698W
5,225,298


W
3,418,749


W
3,279,654


W
3,293,947


W
2,750,389


W
3,135,967   F-75




---



##### Table of Contents



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


Payables(*2)2008


2007


2008


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

W
396,743


W
186


W
249,792


W
105,178Posteel Co., Ltd.


220,360



104,624



21,651



12,386POSCON Co., Ltd.


62,895



7



62,943



24,842POSCO Coated & Color Steel Co., Ltd.


48,785



40,431



71



119POSCO Machinery & Engineering Co., Ltd.


18,770



6



26,054



20,431POSDATA Co., Ltd.


1,103



10



27,322



31,614POSCO Research Institute


54



1



3,780



6,394Seung Kwang Co., Ltd.


1,631











POSCO Architects Consultants Co., Ltd.


235



1



5,470



2,001POSCO Specialty Steel Co., Ltd.


1,843



40



4,522



8,067POSCO Machinery Co., Ltd.


5,032



50



16,401



10,445POSCO Refractories & Environment (POSREC)


19,064



9



57,788



24,265POSTECH Venture Capital Co., Ltd.










68



66POSCO America Corporation (POSAM)


2,818



4,447







POSCO Australia Pty. Ltd. (POSA)


18











POSCO Canada Ltd. (POSCAN)


20



21







9,635POSCO Asia Co., Ltd. (POA)


27,224



24,323



2,978



1,922Zhangjiagang Pohang Stainless Steel Co., Ltd.














POSCO  Japan Co., Ltd.


21,040



30,952



1,104



6Others


98,821



18,974



31,566



25,711W
926,456


W
224,082


W
511,510


W
283,082     Sales and Others(*1)


Purchases and Others(*1)2008


2007


2006


2008


2007


2006(In millions of Korean won)eNtoB Corporation

W



W



W



W
288,604


W
216,920


W
134,703KOBRASCO


4,115











63,968



72,514



141,859Poschrome (Proprietary) Limited


98



35







91,467



41,735



35,009POSVINA Co., Ltd.


12,550



5,056



2,684











USS  POSCO Industries (UPI)


428,092



245,814



356,190











Guangdong Xingpu Steel Center Co., Ltd.


10,011



3,094



10,295











SNNC Co., Ltd.


2,245



343







33,867







POSCO-SK Steel Pinghu 
    Processing Center Co., Ltd.


1



















W
457,112


W
254,342


W
369,169


W
477,906


W
331,169


W
311,571   F-76




---



##### Table of Contents



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


Payables(*2)2008


2007


2008


2007(In millions of Korean won)eNtoB Corporation

W



W



W
6,016


W
2,999KOBRASCO


4,115











4,048USS  POSCO Industries (UPI)






8







Guangdong Xingpu Steel Center Co., Ltd.


1,825



4,276







SNNC Co., Ltd.


19



1



1,926W
5,959


W
4,285


W
7,942


W
7,047     (*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-77




---



##### Table of Contents



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


Purchases andOthers(*1)


Others(*1)


Receivables(*2)


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

W
5,225,298


W
3,293,947


W
926,456


W
511,510POSCO E&C Co., Ltd.


1,711,219



200,040



330,325



769,571Posteel Co., Ltd.


479,042



1,739,816



103,151



227,596POSCON Co., Ltd.


285,717



25,021



90,499



82,757POSCO Coated & Color Steel Co., Ltd.


140,313



615,459



5,590



51,098POSCO Machinery & Engineering Co., Ltd.


177,064



11,920



36,241



21,271POSDATA Co., Ltd.


226,459



6,860



41,184



1,891POSCO Specialty Steel Co., Ltd.


118,480



52,415



9,498



17,051POSCO Machinery Co., Ltd.


88,118



17,828



21,622



6,280POSCO Refractories & Environment Co., Ltd. (POSREC)


365,429



59,201



64,168



19,304POSMATE Co., Ltd.


54,946



3,627



7,460



246Samjung Packing & Aluminum Co., Ltd.


287,345



27,610



31,779



2,684POSCORE Co., Ltd.


213



138,654



13



20,330POSCO America Corporation (POSAM)


9,731



201,742



2,782



2,827POSCO Canada Ltd. (POSCAN)


289,015



40







20POSCO Asia Co., Ltd. (POA)


690,482



1,209,891



40,363



32,170Zhangjiagang Pohang Stainless Steel Co., Ltd.


484,395



16,632



25,987



1,121Qingdao Pohang Stainless Steel Co., Ltd.


186,536



380,401



2,407



16,418POSCO  Japan Co., Ltd.


213,715



1,226,022



59,667



23,235POSS-India Delhi Steel Processing Centre Private Limited






21,553







4,930Others


407,165



2,192,003



659,458



646,3402008

W
11,440,682


W
11,440,682


W
2,458,650


W
2,458,6502007


8,153,327



8,153,327



1,125,494



1,125,4942006


7,680,520



7,680,520



929,390



929,390     (*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-78




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
     2008


2007(In millions of Korean won)Salaries

W
46,142



36,740Severance benefits


11,481



13,053Management achievement awards


37,347



27,865Stock compensation expense


(55,155
)


123,881Total

W
39,815



201,539     30.
    Significant
    non-cash Transaction  W
  31.
    Segment
    and Regional Information    Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean won)SalesTotal sales

W
38,448,113



5,528,105



5,656,959



3,749,459



(11,640,000
)

W
41,742,636Inter-company sales


(6,547,017
)


(1,855,696
)


(1,392,356
)


(1,844,931
)


11,640,000



Net sales

W
31,901,096



3,672,409



4,264,603



1,904,528






W
41,742,636Operating income

W
6,628,789



283,973



49,117



488,078



(276,028
)

W
7,173,929Inventories

W
7,569,508



847,481



323,164



219,574



(298,006
)

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


8,722,560



1,067,694



603,289



1,027,891



(6,143,269
)


5,278,165Equity method investments


5,094,239



659,363



537,533



688,493



(6,147,092
)


832,536Property, plant and equipment


17,393,603



614,477



231,164



1,637,042



(1,807,187
)


18,069,099Intangible assets(*1)


223,177



21,825



957



157,206



320,602



723,767Goodwill


13,698



209,461







47,683







270,842Total Assets

W
42,884,329



6,324,810



1,976,797



4,916,085



(9,140,739
)

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

W
2,171,387



17,710



5,660



150,177



35,124


W
2,380,058Capital expenditure


3,922,096



289,775



88,405



320,417



(527,380
)


4,093,313Stock compensation expenses

W



















W
  F-79




---



##### 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)SalesTotal sales

W
29,184,546



3,801,882



4,018,003



2,715,242



(8,111,932
)

W
31,607,741Inter-company sales


(4,757,641
)


(1,092,309
)


(874,520
)


(1,387,462
)


8,111,932



Net sales

W
24,426,905



2,709,573



3,143,483



1,327,780






W
31,607,741Operating income

W
4,534,201



284,632



31,068



187,613



(117,652
)

W
4,919,862Inventories

W
4,258,206



454,338



126,182



145,708



(82,418
)

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


8,205,751



565,983



333,688



775,105



(4,641,501
)


5,239,026Equity method investments


4,344,174



229,022



286,404



382,443



(4,637,431
)


604,612Property, plant and equipment


15,110,911



142,157



198,856



1,341,015



(1,211,174
)


15,581,765Intangible assets(*1)


246,932



25,152



897



166,992



130,806



570,779Goodwill














75,556







75,556Total Assets

W
34,634,495



3,246,818



1,195,492



3,530,588



(6,332,630
)

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

W
1,940,677



16,527



5,591



140,059



24,578


W
2,127,432Capital expenditure


2,787,662



79,961



919



241,643



(217,939
)


2,892,246Stock compensation expenses

W
123,881


















W
123,881     Engineering and








ConsolidationSteel


Construction


Trading


Others


Adjustment


Consolidated(In millions of Korean won)SalesTotal sales

W
24,281,677



3,752,233



3,046,127



2,432,735



(7,670,446
)

W
25,842,326Inter-company sales


(3,998,412
)


(1,631,547
)


(632,841
)


(1,407,646
)


7,670,446



Net sales

W
20,283,265



2,120,686



2,413,286



1,025,089






W
25,842,326Operating income

W
4,080,066



282,489



24,202



251,214



(248,824
)

W
4,389,147Inventories

W
3,667,714



225,378



127,600



100,923



(103,410
)

W
4,018,205Investments (non-current)


5,871,650



434,047



276,560



523,104



(3,393,443
)


3,711,918Equity method investments


3,123,562



149,497



229,357



282,043



(3,577,956
)


206,503Property, plant and equipment


14,182,060



75,712



201,797



1,252,523



(1,068,972
)


14,643,120Intangible assets(*1)


262,442



25,889



430



121,579



146,742



557,082Goodwill














90,105







90,105Total Assets

W
29,975,590



2,255,377



1,026,031



2,990,563



(5,098,488
)

W
31,149,073Depreciation and amortization(*2)

W
1,719,028



12,284



5,967



135,782



(89,299
)

W
1,783,762Capital expenditure


4,043,973



26,966



233



59,300



(421,050
)


3,709,422Stock compensation expenses

W
49,885


















W
49,885     (*1)
    
    Includes goodwill.(*2)
    
    Includes depreciation expense of idle property. F-80




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
     Property, PlantSales(*1)


and EquipmentCustomer Location

2008


2007


2006


2008


2007(In millions of Korean won)Korea

W
26,886,852


W
19,969,637


W
17,250,163


W
15,487,750


W
14,112,173Japan


2,043,819



1,741,972



1,311,685



252,277



103,968China


4,875,784



4,503,900



3,070,422



1,350,731



1,026,810Asia/Pacific, excluding Japan and China


3,138,884



2,041,587



1,486,331



665,155



232,731North America


800,817



732,002



610,240



19,703



17,800Others


3,996,480



2,618,643



2,113,485



293,483



88,283W
41,742,636


W
31,607,741


W
25,842,326


W
18,069,099


W
15,581,765     (*1)
    
    Represents revenues, net of consolidation adjustments, incurred
    based on customers locations instead of the Company and
    subsidiaries locations.    Non-Financial Institution


Financial Institution2008


2007


2008


2007(In millions of Korean won)AssetsCurrent assets

W
21,819,672



14,315,689


W
377,961



77,844Non-Current assets


24,588,267



21,748,269



175,382



132,961Investment assets


5,106,522



5,109,363



171,643



129,663Property, plant and equipment


18,069,079



15,581,387



20



378Intangible assets


723,724



570,724



43



55Other non-current assets


688,942



486,795



3,676



2,865Total Assets


46,407,939



36,063,958



553,343



210,805LiabilitiesCurrent liabilities


10,609,425



6,533,867



399,967



90,748Non-Current liabilities


7,607,183



4,532,167



502



241Total Liabilities

W
18,216,608



11,066,034


W
400,469



90,989  F-81




---



##### Table of Contents



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


Financial Institution2008


2007


2008


2007(In millions of Korean won)Sales

W
41,727,093



31,594,856


W
15,543



12,885Cost of goods sold


32,555,721



24,896,387



6,618



6,276Selling and administrative expenses


1,999,701



1,781,474



6,667



3,743Operating income


7,171,671



4,916,995



2,258



2,866Non-operating income


2,368,851



805,060



1,025



13,447Non-operating expenses


3,441,729



834,844



6,437



4,593Net income before income tax expense


6,098,793



4,887,211



(3,154
)


11,720Income tax expense


1,734,095



1,273,328



(112
)


898Net income of Subsidiaries before purchasing


11,552



(53,259
)






Net income

W
4,353,146



3,667,142


W
(3,042
)


10,822Controlling interest

W
4,381,793



3,547,838


W
(3,042
)


10,822Minority interest

W
(28,647
)


119,304


W




  F-82




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  32.
    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 Before


Deferred Income Tax


Net AdjustmentsDeferred Income Tax


Effect


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









W
4,378,751Adjustments:Fixed asset revaluation

W
11,793


W
(2,593
)


9,200Capitalized costs


14,143



(3,112
)


11,031Capitalized repairs


(993
)


218



(775
)Investment securities


(442,568
)


97,365



(345,203
)Amortization of goodwill


40,124



(8,826
)


31,298Derivatives


(57,907
)


12,740



(45,167
)Others, net


(16,316
)


3,589



(12,727
)W
(451,724
)

W
99,381


W
(352,343
)Effects of changes in tax rates










14,225Tax effects resulting from intercompany transactions










65,257W
(272,861
)Net income in accordance with U.S. GAAP









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









W
54,387Weighted-average shares outstanding










75,493,523   F-83




---



##### Table of Contents



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


Deferred Income Tax


Net AdjustmentsDeferred Income Tax


Effect


to Net Income(In millions of Korean won, except share data)For the year ended December 31, 2007Net income attributable to controlling interest 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
)


370Amortization 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 in accordance with U.S. GAAP









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









W
46,938Weighted-average shares outstanding










75,952,869   Adjustments Before


Deferred Income Tax


Net AdjustmentsDeferred Income Tax


Effect


to Net Income(In millions of Korean won, except share data)For the year ended December 31, 2006Net income attributable to controlling interest 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
)


39,201Amortization 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 in accordance with U.S. GAAP









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









W
43,304Weighted-average shares outstanding










78,694,181  F-84




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##### 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 Before


Deferred Income Tax


Net AdjustmentsDeferred Income Tax Effect


Effect


to Shareholders Equity(In millions of Korean won)As of December 31, 2008Total shareholders equity under Korean GAAP









W
28,344,205Minority interest










(680,540
)27,663,665Adjustments:Fixed asset revaluation

W
(124,678
)

W
9,438



(115,240
)Capitalized costs


359,639



(79,121
)


280,518Capitalized repairs


580



(128
)


452Investment securities


(140,181
)


30,840



(109,341
)Amortization of goodwill


103,480



(22,766
)


80,714Derivatives


(128,918
)


30,564



(98,354
)Others, net


(10,652
)


2,344



(8,308
)Tax effects resulting from intercompany transactions






65,257



65,257W
59,270


W
36,428


W
95,698Shareholders equity in accordance with U.S. GAAP









W
27,759,363   Adjustments Before


Deferred Income Tax


Net AdjustmentsDeferred Income Tax Effect


Effect


to Shareholders Equity(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 in accordance with U.S. GAAP









W
24,560,809  F-85




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  (c)
    Fixed
    asset revaluation    (d)
    Capitalized
    costs  W W W
      2008


2007


2006(In millions of Korean won)Capitalized interest

W
96,980


W
104,014


W
123,350Depreciation of capitalized interest


(90,112
)


(73,888
)


(72,034
)Net income impact

W
6,868


W
30,126


W
51,316       2008


2007


2006(In millions of Korean won)Net income impact

W
6,434


W
(7,321
)

W
(13,782
)  F-86




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  (e)
    Capitalized
    repairs    (f)
    Guarantees  W W W W
  (g)
    Stock
    Appreciation Rights      W
 F-87




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    2008Dividend yield range

2.21~2.63%Expected volatility range

57.71~87.91%Risk-free interest rate range

3.97~4.67%Expected lives (in years)

0.26~2.75       2008


2007


2006(In millions of Korean won)Net income impact

W
(13,056
)

W
10,759


W
(4,171
)   W W W
  (h)
    Investment
    Securities    (i)
    Recognition
    of an impairment loss    available-for-sale
   F-88




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    W available-for-sale available-for-sales W W W W W
  W available-for-sale W W W W W
  (ii)
    Recognition
    of gain on disposal of available for sale investments  W
    2008


2007


2006(In millions of Korean Won)Impairment loss

W
(442,840
)

W



W
(1,026
)Recognition of gains on disposal


272



511



55,096Net income impact

W
(442,568
)

W
511


W
54,070   (iii)
    Classification
    of and accounting for certain non-marketable equity
    securities  available-for-sale available-for-sale
 F-89




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
      Available-for-Sale
    Securities and Other Investments Securities:
  2008


2007


2006(In millions of Korean won)Available-for-Sale
    Securities under Korean GAAPMarketable Securities

W
2,917,595


W
3,888,043


W
2,337,984Non-marketable Securities


1,370,918



655,639



523,617Total

W
4,288,513


W
4,543,682


W
2,861,601Available-for-Sale
    Securities and Other Investment Securities under
    U.S. GAAPAvailable-for-Sale
    Securities

W
2,917,595


W
3,888,043


W
2,337,984Other Investment Securities:Non-marketable Securities under Korean GAAP


1,370,918



655,639



523,617U.S. GAAP Adjustment


(145,686
)


(73,851
)


(86,357
)Other Investment Securities, at cost


1,225,232



581,778



437,260Total

W
4,142,827


W
4,469,831


W
2,775,244     available-for-sale
  Less Than 12 Months


12 Months or More


TotalUnrealized





Unrealized





UnrealizedLosses


Fair Value


Losses


Fair Value


Losses


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

W
78,938


W
701,197


W
2,037


W
11,906


W
80,975


W
713,103   (i)
    Goodwill      W
 F-90




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##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  (j)
    Embedded
    Derivatives    Prior
    to 2008
        2008
    and thereafter
    [2007-2]
    W
  (k)
    Change
    in hedge accounting  [2008-2] W W
 F-91




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  (l)
    Deferred
    Income Taxes        (m)
    Accounting
    for Uncertainty in Income Taxes         F-92




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  33.
    Additional
    Financial Information in Accordance with U.S. GAAP  (a)
    Deferred
    taxes in accordance with U.S. GAAP    2008


2007(In millions of Korean won)Deferred tax assets:Fixed asset revaluation

W
10,077


W
15,041Impairment loss on property, plant and equipment


42,667



121,483Impairment loss on investment securities


31,591



19,735Allowance for doubtful accounts


63,786



80,532Allowance for severance benefits


13,455



32,399Derivatives


34,138



19,529Gain/Loss on foreign currency translation


140,283



Loss on valuation of
    available-for-sale
    securities


212,140



65,891Others


35,093



55,609Total gross deferred tax assets

W
583,230


W
410,219Deferred tax liabilities:Equity in earnings of equity method investments and subsidiaries

W
298,388


W
253,231Reserve for special repairs


62,422



82,982Accrued income






2,313Reserve for technology developments


2,612



303,756Capitalized repairs


128



433Capitalized costs


76,490



95,011Gain on
    available-for-sale
    securities


74,222



364,373Total gross deferred tax liabilities

W
514,262


W
1,102,099Net deferred tax assets (liabilities)

W
68,968


W
(691,880
)     (b)
    Comprehensive
    income   F-93




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
    2008


2007


2006(In millions of Korean won)Net income in accordance with U.S. GAAP

W
4,105,890


W
3,565,047


W
3,407,795Other comprehensive income, net of tax:Foreign currency translation adjustments


405,466



74,982



(51,838
)Change in a fair value of a derivative instrument


(6,004
)


(4,034
)


Unrealized gains (losses) on investments


(933,578
)


521,124



351,307Reclassification adjustment for losses (gains) included in income


4



(658
)


43,135Comprehensive income, in accordance with U.S. GAAP

W
3,571,778


W
4,156,461


W
3,750,399     Change in Fair


Unrealized Gains


AccumulatedForeign Currency


Value of a


(Losses) on


OtherTranslation


Derivative


Investment


ComprehensiveAdjustments


Instrument


Securities


Income(In millions of Korean won)Balance, December 31, 2005

W
4,386


W



W
261,253


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


(51,838
)










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










351,307



351,307Add: Reclassification adjustment for net realized losses
    included in income, net of tax
    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
    W(28,441) million


74,982











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






(4,034
)






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










521,124



521,124Add: Reclassification adjustment for net realized losses
    included in income, net of tax 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
1,199,657Foreign currency translation adjustments, net of tax
    W(153,797) million


405,466











405,466Change in fair value of a derivative instrument, net of tax
    W2,277 million






(6,004
)






(6,004
)Unrealized loss on investments, net of tax
    W354,115 million










(933,578
)


(933,578
)Add: Reclassification adjustment for net realized losses
    included in income, net of tax W(1) million










4



4Current period change


405,466



(6,004
)


(933,574
)


(534,112
)Balance, December 31, 2008

W
432,996


W
(10,038
)

W
242,587


W
665,545  F-94




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  (c)
    Fair
    Value of financial instruments    (i) Cash and cash equivalents, short-term financial
    instruments, trading securities, trade accounts and notes
    receivable, loans receivable, trade accounts and notes payable,
    and short-term borrowings
    (ii) Investment Securities
    (iii) Derivative financial instruments
    (iv) Long-Term loans and trade accounts and notes
    receivable
    (v) Long-Term debt
      2008


2007Carrying


Fair


Carrying


FairAmount


Value


Amount


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

W
2,490,264


W
2,490,264


W
1,292,581


W
1,292,581Short-term financial instruments


1,827,450



1,827,450



1,743,079



1,743,079Trading securities


1,238,261



1,238,261



1,286,939



1,286,939Trade accounts and notes receivable and others


6,626,560



6,626,560



4,371,965



4,371,965Investments Securities, including current portionMarketable securities


2,917,595



2,917,595



3,888,043



3,888,043Not practicable


2,165,702







1,441,335



Short-term borrowings


3,254,355



3,254,355



1,572,020



1,572,020Long-term debt, including current portion


7,666,004



7,535,074



3,789,889



3,808,261   (d)  Fair
    Value of assets and liabilities
   F-95




---



##### Table of Contents



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


Level 2


Level 3


Total(In millions of Korean won)AssetsTrading securities

W
1,236,185


W



W



W
1,236,185Investments Securities


2,917,595











2,917,595Derivatives






134,307







134,307LiabilitiesDerivatives






276,542







276,542   (e)  Intangible
    assets
    Period

Amount(In millions of Korean won)2009

W
51,3802010


43,1152011


29,9282012


16,7432013


2,370W
143,536   (f)  Minority
    interest
    (g)
    Classification
    differences in the Consolidated Statements of
    Income   F-96




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  W W W
  (h)
    Consolidated
    statement of cash flows    W W W
  Components
    of Others financing activities
    2008


2007


2006(In millions of Korean won)Proceeds from other current liabilities

W



W



W
88,907Dividends paid to minority shareholders


(21,936
)


(13,765
)


(7,530
)Issuance of new shares by subsidiaries


71,448



1,996



67,431Additional acquisition of interest of subsidiaries(*)


(302,319
)


(142,778
)


(42,165
)Proceeds from disposal of interest of subsidiaries






11,338



Total

W
(252,807
)

W
(143,209
)

W
106,643     (*)
    
    Additional acquisition of minority interests in a subsidiary is
    classified as investing activities under U.S. GAAP, while it is
    required to be classified as financing activities under Korean
    GAAP.  (i)
    Significant
    Risks and Uncertainties      34.
    Recent
    Accounting Pronouncements  U.S.
    GAAP
  FAS 157-3, FAS 157-3
 F-97




---



##### Table of Contents



POSCO and
    Subsidiaries
  Notes to Consolidated Financial
    Statements  (Continued)
  FAS 157-3
  No. 133-1 FIN 45-4, No. 133-1 FIN 45-4). No. 133-1 FIN 45-4 FIN 45-4 FIN 45-4 No. 133-1 FIN 45-4
      Business Combinations
 F-98




---



##### Table of Contents



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




---



##### Table of Contents



Exhibit Index
  1
.1



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



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



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



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



List of consolidated subsidiaries12
.1



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



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



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