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Washington, D.C. 20549
Form 20-F
(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
For the transition period from to |
POSCO | The Republic of Korea | |
(Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
Title of Each Class | Name of Each Exchange on Which Registered | |
American 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.* |
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)
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
* | Not for trading, but only in connection with the registration of the American Depositary Shares. |
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“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$” | The currency of the United States of America. | |
“FSCMA” | Financial Investment Services and Capital Markets Act of the Republic of Korea | |
“Government” | The government of the Republic of Korea. | |
“Yen” or “JPY” | The currency of Japan. | |
“Korea” | The Republic of Korea. | |
“Korean GAAP” | Generally accepted accounting principles in the Republic of Korea. | |
“Gwangyang Works” | Gwangyang Steel Works. | |
“We” | POSCO and its consolidated subsidiaries. | |
“Pohang Works” | Pohang Steel Works. | |
“Securities Act” | The United States Securities Act of 1933, as amended. | |
“Securities Exchange Act” | The United States Securities Exchange Act of 1934, as amended. | |
“SEC” | The United States Securities and Exchange Commission. | |
“tons” | Metric tons (1,000 kilograms), equal to 2,204.6 pounds. | |
“U.S. GAAP” | Generally accepted accounting principles in the United States of America. | |
“Won” or “ | The currency of the Republic of Korea. |
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Item 1. | Identity of Directors, Senior Managers and Advisors |
Item 1.A. | Directors and Senior Management |
Item 1.B. | Advisers |
Item 1.C. | Auditors |
Item 2. | Offer Statistics and Expected Timetable |
Item 2.A. | Offer Statistics |
Item 2.B. | Method and Expected Timetable |
Item 3. | Key Information |
Item 3.A. | Selected Financial Data |
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�� | ||||||||||||||||||||||||
For the Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2008(10) | |||||||||||||||||||
(In billions of Won and millions of dollars, except per share data) | ||||||||||||||||||||||||
Korean GAAP: | ||||||||||||||||||||||||
Sales(1) | 23,973 | 26,302 | 25,842 | 31,608 | 41,743 | US$ | 33,077 | |||||||||||||||||
Cost of goods sold(2) | 17,361 | 18,767 | 19,897 | 24,903 | 32,562 | 25,802 | ||||||||||||||||||
Selling and administrative expenses | 1,293 | 1,451 | 1,556 | 1,785 | 2,006 | 1,590 | ||||||||||||||||||
Operating income | 5,319 | 6,083 | 4,389 | 4,920 | 7,174 | 5,684 | ||||||||||||||||||
Interest expense | 192 | 149 | 183 | 240 | 345 | 273 | ||||||||||||||||||
Foreign currency transaction and translation gains (losses), net | 179 | 159 | 99 | (19 | ) | (940 | ) | (745 | ) | |||||||||||||||
Donations | 170 | 153 | 155 | 197 | 143 | 113 | ||||||||||||||||||
Income tax expenses | 1,502 | 1,474 | 922 | 1,274 | 1,734 | 1,374 | ||||||||||||||||||
Net income | 3,841 | 4,007 | 3,353 | 3,678 | 4,350 | 3,447 | ||||||||||||||||||
Net income attributable to controlling interest | 3,814 | 4,022 | 3,314 | 3,559 | 4,379 | 3,470 | ||||||||||||||||||
Net 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 | 45.96 | ||||||||||||||||||
Dividends per share of common stock | 8,000 | 8,000 | 8,000 | 10,000 | 10,000 | 7.92 | ||||||||||||||||||
U.S. GAAP(4): | ||||||||||||||||||||||||
Operating income | 5,299 | 5,671 | 4,259 | 4,967 | 7,129 | US$ | 5,649 | |||||||||||||||||
Net income | 3,460 | 4,102 | 3,408 | 3,565 | 4,106 | 3,254 | ||||||||||||||||||
Basic and diluted earnings per share of common stock | 42,806 | 51,789 | 43,304 | 46,938 | 54,387 | 43.10 |
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) | 5,493 | 5,759 | 7,155 | 7,769 | 11,188 | US$ | 8,865 | |||||||||||||||||
Property, plant and equipment, net(6) | 10,440 | 12,272 | 14,643 | 15,582 | 18,069 | 14,318 | ||||||||||||||||||
Total assets(6) | 24,129 | 27,507 | 31,149 | 36,275 | 46,961 | 37,212 | ||||||||||||||||||
Long-term debt(7)(8)(9) | 2,051 | 1,131 | 2,726 | 3,306 | 6,896 | 5,464 | ||||||||||||||||||
Capital stock | 482 | 482 | 482 | 482 | 482 | 382 | ||||||||||||||||||
Total shareholders’ equity(6) | 16,386 | 19,874 | 22,402 | 25,118 | 28,344 | 22,460 | ||||||||||||||||||
U.S. GAAP(4): | ||||||||||||||||||||||||
Property, plant and equipment, net | 10,541 | 12,420 | 14,860 | 15,836 | 18,328 | US$ | 14,523 | |||||||||||||||||
Total assets | 24,279 | 27,525 | 31,208 | 36,349 | 47,208 | 37,407 | ||||||||||||||||||
Total 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. |
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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. |
At End | Average | |||||||||||||||
Period | of Period | Rate(1) | High | Low | ||||||||||||
(Per US$1.00) | ||||||||||||||||
2004 | 1,043.8 | 1,145.3 | 1,195.5 | 1,038.3 | ||||||||||||
2005 | 1,013.8 | 1,024.2 | 1,060.3 | 998.2 | ||||||||||||
2006 | 929.6 | 956.1 | 1,031.0 | 918.0 | ||||||||||||
2007 | 938.2 | 929.2 | 950.0 | 902.2 | ||||||||||||
2008 | 1,257.5 | 1,102.6 | 1,509.0 | 934.5 | ||||||||||||
2009 (through June 26) | 1,283.6 | 1,349.5 | 1,573.6 | 1,236.1 | ||||||||||||
January | 1,368.5 | 1,346.1 | 1,391.0 | 1,257.5 | ||||||||||||
February | 1,516.4 | 1,429.5 | 1,516.4 | 1,376.2 | ||||||||||||
March | 1,377.1 | 1,462.0 | 1,573.6 | 1,328.9 | ||||||||||||
April | 1,348.0 | 1,341.9 | 1,398.2 | 1,316.2 | ||||||||||||
May | 1,272.9 | 1,258.7 | 1,307.3 | 1,236.1 | ||||||||||||
June (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 |
Item 3.C. | Reasons for Offer and Use of Proceeds |
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Item 3.D. | Risk Factors |
• | 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; |
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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. |
• | 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; |
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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. |
• | 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. |
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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. |
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• | 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. |
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• | 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. |
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Item 4. | Information on the Company |
Item 4.A. | History and Development of the Company |
Item 4.B. | Business Overview |
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• | 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 | 2008 | ||||||||||||||||||||||||||||||||||||
Billions | Billions | Billions | Billions | Billions | ||||||||||||||||||||||||||||||||||||
Steel 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 | 19.4 | ||||||||||||||||||||||||||||||
Plates | 1,987 | 9.1 | 2,253 | 9.6 | 2,380 | 10.7 | 2,847 | 10.2 | 4,710 | 13.2 | ||||||||||||||||||||||||||||||
Wire rods | 1,351 | 6.2 | 1,528 | 6.5 | 1,243 | 5.6 | 1,458 | 5.2 | 2,236 | 6.2 | ||||||||||||||||||||||||||||||
Cold rolled products | 6,564 | 30.2 | 7,527 | 32.0 | 6,765 | 30.3 | 8,672 | 31.1 | 11,751 | 32.8 | ||||||||||||||||||||||||||||||
Silicon steel sheets | 531 | 2.4 | 688 | 2.9 | 681 | 3.0 | 1,105 | 4.0 | 1,613 | 4.5 | ||||||||||||||||||||||||||||||
Stainless steel products | 4,920 | 22.6 | 4,543 | 19.3 | 5,751 | 25.8 | 8,268 | 29.7 | 7,271 | 20.3 | ||||||||||||||||||||||||||||||
Others | 952 | 4.4 | 1,132 | 4.7 | 859 | 3.8 | 1,003 | 3.7 | 1,305 | 3.6 | ||||||||||||||||||||||||||||||
Total | 21,753 | 100.0 | 23,547 | 100.0 | 22,329 | 100.0 | 27,848 | 100.0 | 35,836 | 100.0 | ||||||||||||||||||||||||||||||
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For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||||||||
Thousands | Thousands | Thousands | Thousands | Thousands | ||||||||||||||||||||||||||||||||||||
Steel 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 | 25.9 | ||||||||||||||||||||||||||||||
Plates | 3,385 | 10.6 | 3,193 | 10.3 | 3,615 | 11.7 | 3,926 | 12.2 | 4,853 | 14.5 | ||||||||||||||||||||||||||||||
Wire rods | 2,503 | 7.9 | 2,366 | 7.6 | 2,153 | 6.9 | 2,222 | 6.9 | 2,524 | 7.5 | ||||||||||||||||||||||||||||||
Cold rolled products | 10,242 | 32.2 | 10,468 | 33.6 | 10,864 | 35.1 | 12,146 | 37.8 | 12,736 | 38.0 | ||||||||||||||||||||||||||||||
Silicon steel sheets | 705 | 2.2 | 737 | 2.4 | 686 | 2.2 | 934 | 2.9 | 1,049 | 3.1 | ||||||||||||||||||||||||||||||
Stainless steel products | 2,069 | 6.5 | 1,919 | 6.2 | 2,260 | 7.3 | 2,694 | 8.4 | 2,060 | 6.1 | ||||||||||||||||||||||||||||||
Others | 1,926 | 6.1 | 2,100 | 6.7 | 1,802 | 5.8 | 1,967 | 6.2 | 1,616 | 4.8 | ||||||||||||||||||||||||||||||
Total | 31,796 | 100.0 | 31,115 | 100.0 | 30,984 | 100.0 | 32,110 | 100.0 | 33,522 | 100.0 | ||||||||||||||||||||||||||||||
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For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||||||||
Thousands | Thousands | Thousands | Thousands | Thousands | ||||||||||||||||||||||||||||||||||||
Source | 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 | 39.1 | ||||||||||||||||||||||||||||||
Other Korean steel companies’ sales | 15,969 | 33.9 | 15,957 | 33.9 | 18,052 | 36.4 | 21,224 | 38.5 | 20,658 | 35.3 | ||||||||||||||||||||||||||||||
Imports(1) | 7,595 | 16.1 | 8,287 | 17.6 | 10,591 | 21.3 | 12,628 | 22.9 | 15,002 | 25.6 | ||||||||||||||||||||||||||||||
Total 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. |
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For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||||||||||||||||||||||
Thousands | Thousands | Thousands | Thousands | Thousands | ||||||||||||||||||||||||||||||||||||
Region | 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 | 24.0 | ||||||||||||||||||||||||||||||
Japan | 1,661 | 20.3 | 1,843 | 22.4 | 1,959 | 19.6 | 2,137 | 19.7 | 1,953 | 18.4 | ||||||||||||||||||||||||||||||
Asia (other than China and Japan) | 1,502 | 18.3 | 1,636 | 19.9 | 1,895 | 19.0 | 2,112 | 19.5 | 2,332 | 22.0 | ||||||||||||||||||||||||||||||
North America | 737 | 9.0 | 761 | 9.2 | 963 | 9.6 | 756 | 7.0 | 760 | 7.2 | ||||||||||||||||||||||||||||||
Europe | 116 | 1.4 | 34 | 0.4 | 318 | 3.2 | 546 | 5.0 | 510 | 4.8 | ||||||||||||||||||||||||||||||
Others | 1,043 | 12.7 | 1,320 | 16.0 | 2,335 | 23.3 | 2,117 | 19.4 | 2,504 | 23.6 | ||||||||||||||||||||||||||||||
Total | 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 | 2008 | ||||||||||||||||||||||||||||||||||||
Thousands | Thousands | Thousands | Thousands | Thousands | ||||||||||||||||||||||||||||||||||||
Steel 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 | 19.0 | ||||||||||||||||||||||||||||||
Plates | 295 | 3.6 | 229 | 2.8 | 228 | 2.3 | 231 | 2.1 | 206 | 1.9 | ||||||||||||||||||||||||||||||
Wire rods | 252 | 3.1 | 333 | 4.1 | 498 | 5.0 | 502 | 4.6 | 605 | 5.7 | ||||||||||||||||||||||||||||||
Cold rolled products | 4,139 | 50.5 | 4,142 | 50.3 | 4,774 | 47.8 | 6,186 | 57.0 | 5,775 | 54.4 | ||||||||||||||||||||||||||||||
Silicon steel sheets | 245 | 3.0 | 262 | 3.2 | 369 | 3.7 | 511 | 4.7 | 576 | 5.4 | ||||||||||||||||||||||||||||||
Stainless steel products | 1,019 | 12.4 | 1,032 | 12.5 | 1,245 | 12.4 | 1,695 | 15.6 | 1,203 | 11.3 | ||||||||||||||||||||||||||||||
Others | 199 | 2.4 | 276 | 3.3 | 403 | 4.0 | 198 | 1.9 | 227 | 2.3 | ||||||||||||||||||||||||||||||
Total | 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 | 17,250 | 19,970 | 26,887 | |||||||||
China | 3,070 | 4,504 | 4,876 | |||||||||
Asia (other than China and Japan) | 1,486 | 2,042 | 3,069 | |||||||||
Japan | 1,312 | 1,742 | 2,044 | |||||||||
North America | 610 | 732 | 801 | |||||||||
Other | 2,114 | 2,618 | 4,066 | |||||||||
Total | 25,842 | 31,608 | 41,743 | |||||||||
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For the Year Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Apparent crude steel use (million metric tons) | 1,091 | 1,113 | 1,178 | 1,250 | 1,197 | |||||||||||||||
Percentage of annual increase (decrease) | 10.9 | % | 2.0 | % | 5.8 | % | 6.1 | % | (4.2 | )% |
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• | 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. |
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Item 4.C. | Organizational Structure |
Jurisdiction of | Percentage of | |||||||
Name | Incorporation | Ownership | ||||||
POSCO 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 |
For the Year Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Crude steel and stainless steel production capacity (million tons per year) | 13.30 | 13.30 | 13.30 | 14.30 | 15.00 | |||||||||||||||
Actual crude steel and stainless steel output (million tons) | 13.45 | 13.36 | 12.60 | 13.66 | 14.94 | |||||||||||||||
Capacity 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. |
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For the Year Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Crude steel production capacity (million tons per year) | 16.70 | 16.70 | 16.70 | 16.70 | 18.00 | |||||||||||||||
Actual crude steel output (million tons) | 16.76 | 17.19 | 17.45 | 17.41 | 18.20 | |||||||||||||||
Capacity 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. |
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Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
Item 5.A. | Operating Results |
• | 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. |
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For the Year Ended December 31, | ||||||||||||
Products | 2006 | 2007 | 2008 | |||||||||
(In thousands of Won per ton) | ||||||||||||
Hot rolled products | 484.2 | 546.8 | 800.3 | |||||||||
Plates | 658.4 | 725.2 | 970.6 | |||||||||
Wire rods | 577.2 | 656.0 | 885.8 | |||||||||
Cold rolled products | 622.7 | 714.0 | 922.7 | |||||||||
Silicon steel sheets | 991.8 | 1,182.9 | 1,538.3 | |||||||||
Stainless steel products | 2,544.3 | 3,069.0 | 3,530.4 | |||||||||
Others | 476.6 | 509.5 | 806.5 | |||||||||
Average(1) | 720.6 | 867.3 | 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.” |
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For the Year Ended | ||||||||||||
December 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 | 4.8 | |||||||||
Total operating expenses | 83.0 | 84.4 | 82.8 | |||||||||
Gross margin | 23.0 | 21.2 | 22.0 | |||||||||
Operating margin | 17.0 | 15.6 | 17.2 |
(1) | See Note 24 of Notes to Consolidated Financial Statements. |
For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
Crude steel and stainless steel production capacity (million tons per year)(1) | 31.2 | 32.8 | 34.6 | |||||||||
Actual crude steel and stainless steel output (million tons) | 31.2 | 32.8 | 34.7 | |||||||||
Capacity utilization rate (%) | 99.9 | 99.9 | 100.3 | |||||||||
Steel product sales (million tons)(2) | 30.98 | 32.11 | 33.52 | |||||||||
Man-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. |
• | 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; |
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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 in Dollars; and | |
• | foreign exchange translation losses on liabilities, which lower our earnings for accounting purposes. |
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• | 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. |
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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 | 3,926 | 5,553 | 3,687 | |||||||||
Net cash used in investing activities | 3,363 | 4,264 | 5,803 | |||||||||
Net cash provided by (used in) financing activities | (269 | ) | (1,001 | ) | 3,117 | |||||||
Cash and cash equivalents at beginning of period | 654 | 936 | 1,293 | |||||||||
Cash and cash equivalents at end of period | 936 | 1,293 | 2,491 | |||||||||
Net increase in cash and cash equivalents | 283 | 356 | 1,198 |
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Payments Due by Period | ||||||||||||||||||||
Less Than | After | |||||||||||||||||||
Contractual 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 | 786 | |||||||||||||||
Operating 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. |
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As of December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In billions of Won) | ||||||||||||
Cash and cash equivalents, net of government grants | 936 | 1,293 | 2,490 | |||||||||
Short-term financial instruments | 867 | 1,743 | 1,827 | |||||||||
Trading securities | 2,001 | 1,287 | 1,238 | |||||||||
Trade accounts and notes receivable, net of allowance for doubtful accounts and present value discount | 3,492 | 4,036 | 5,894 | |||||||||
Inventories, net | 4,018 | 4,902 | 8,662 |
As of December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In billions of Won) | ||||||||||||
Trade accounts and notes payable | 1,507 | 2,247 | 3,070 | |||||||||
Short-term borrowings | 1,239 | 1,572 | 3,254 | |||||||||
Income tax payable | 701 | 931 | 2,083 | |||||||||
Current portion of long-term debt, net of discount on debentures issued | 404 | 483 | 770 |
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Estimated Remaining | ||||||||||
Cost of Completion | ||||||||||
Expected | 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 | 979 | |||||||
Installation of stainless steel continuous tandem rolling mill | May 2009 | 319 | 47 | |||||||
Capacity expansion of electrical steel plant | June 2009 | 283 | 68 | |||||||
Capacity expansion of no. 4 sintering plant and installation of fine ore granulation facility | April 2010 | 160 | 128 | |||||||
Gwangyang Works: | ||||||||||
Construction of no. 5 sintering plant and no. 5 coke plant | December 2011 | 1,987 | 1,813 | |||||||
Construction of a new steel plate plant | July 2010 | 1,791 | 1,494 | |||||||
Capacity expansion of no. 2 pickling and tandem cold rolling mill | April 2009 | 226 | 61 | |||||||
Renovation of no. 1 hot rolling mill | September 2009 | 162 | 139 | |||||||
Pohang and Gwangyang Works: | ||||||||||
Raw materials treatment facility upgrades | March 2016 | 809 | 736 |
• | 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” |
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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 |
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Item 6. | Directors, Senior Management and Employees |
Item 6.A. | Directors and Senior Management |
• | 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. |
Years | ||||||||||||||||||||
Years as | with | Expiration of | ||||||||||||||||||
Name | Position | Responsibilities and Division | Director | POSCO | Age | Term of Office | ||||||||||||||
Chung, Joon-Yang | Chief Executive Officer and Representative Director | — | 5 | 34 | 61 | February 2012 | ||||||||||||||
Yoon, Seok-Man | Standing Director | — | 5 | 32 | 60 | February 2010 | ||||||||||||||
Lee, Dong-Hee | President and Representative Director | Chief Finance and Investment Officer | 3 | 32 | 59 | February 2010 | ||||||||||||||
Choi, Jong-Tae | President and Representative Director | Chief Staff Officer | 1 | 35 | 59 | February 2011 | ||||||||||||||
Hur, Nam-Suk | Senior Executive Vice President | Chief Operating Officer and Technology Officer | 0 | 34 | 59 | February 2010 | ||||||||||||||
Chung, Keel-Sou | Senior Executive Vice President | Chief of Stainless Steel Division | 0 | 34 | 59 | February 2010 |
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Years as | Expiration of | |||||||||||||||
Name | Position | Principal Occupation | Director | Age | Term of Office | |||||||||||
Sun, Wook | Chairman of the Board | CEO, Nongshim Co., Ltd. | 4 | 64 | February 2011 | |||||||||||
Jones, Jeffrey D. | Director | Attorney, Kim & Chang | 5 | 57 | February 2010 | |||||||||||
Ahn, Charles | Director | Chairman of the Board, AhnLab, Inc. | 4 | 47 | February 2011 | |||||||||||
Park, Sang-Yong | Director | Professor, Yonsei University | 1 | 58 | February 2011 | |||||||||||
Yoo, Jang-Hee | Director | President, East Asian Economic Association | 0 | 68 | February 2012 | |||||||||||
Han, Joon-Ho | Director | CEO and Vice Chairman, Samchully Co., Ltd. | 0 | 63 | February 2012 | |||||||||||
Lee, Young-Sun | Director | President, Hallym University | 0 | 61 | February 2012 | |||||||||||
Kim, Byung-Ki | Director | Former President and Research Fellow, Samsung Economic Research Institute | 0 | 59 | February 2012 | |||||||||||
Lee, Chang-Hee | Director | Professor, Seoul National University | 0 | 49 | February 2012 |
Years with | ||||||||||||
Name | Position | Responsibility and Division | POSCO | Age | ||||||||
Oh, Chang-Kwan | Senior Executive Vice President | Chief Marketing Officer | 31 | 56 | ||||||||
Kwon, Young-Tae | Senior Executive Vice President | Raw Materials Procurement Dept. | 34 | 59 | ||||||||
Kim, Jin-Il | Senior Executive Vice President | General Superintendent (Pohang Works) | 34 | 56 | ||||||||
Kim, Sang-Young | Executive Vice President | Corporate Communication Dept. | 22 | 57 | ||||||||
Cho, Noi-Ha | Executive Vice President | General Superintendent (Gwangyang Works) | 31 | 56 | ||||||||
Yoon, 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 | 57 | ||||||||
Park, Ki-Hong | Executive Vice President | Corporate Strategy Dept., Green Development Project Dept. | 3 | 51 | ||||||||
Choo, Wung-Yong | Executive Vice President | General Superintendent (Technical Research Laboratories) | 26 | 56 | ||||||||
Chang, In-Hwan | Executive Vice President | Hot Rolled Products Marketing Dept. | 28 | 54 | ||||||||
Yoo, Kwang-Jae | Senior Vice President | Stainless Steel Production and Technology | 31 | 57 | ||||||||
Jang, Byung-Hyo | Senior Vice President | POSCO-Japan Co., Ltd. | 32 | 55 | ||||||||
Kim, Joon-Sik | Senior Vice President | Order Processing and Technical Service Dept. | 28 | 55 |
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Years with | ||||||||||||
Name | Position | Responsibility and Division | POSCO | Age | ||||||||
Jang, Young-Ik | Senior Vice President | Stainless Steel Raw Materials Procurement Dept. | 30 | 55 | ||||||||
Kim, Moon-Seok | Senior Vice President | Seoul Office, Corporate Contribution Group | 30 | 56 | ||||||||
Cho, Bong-Rae | Senior Vice President | Deputy General Superintendent (Production, Pohang Works) | 29 | 56 | ||||||||
Kong, Yoon-Chan | Senior Vice President | Deputy General Superintendent (Administration, Gwangyang Works) | 29 | 56 | ||||||||
Lee, In-Bong | Senior Vice President | Process Innovation Dept. | 28 | 54 | ||||||||
Shin, Jung-Suk | Senior Vice President | Zhangjiagang Pohang Stainless Steel Co., Ltd. | 30 | 56 | ||||||||
An, Byung-Sik | Senior Vice President | Deputy General Superintendent (Maintenance, Gwangyang Works) | 31 | 53 | ||||||||
Baek, Sung-Kwan | Senior Vice President | Business Investment Dept. | 28 | 53 | ||||||||
Yoon, Dong-Jun | Senior Vice President | Global Human Resources Dept., Human Resources Development Center | 25 | 50 | ||||||||
Lee, Kyung-Hoon | Senior Vice President | Environment & Energy Dept. | 30 | 55 | ||||||||
Chang, Song-Hwan | Senior Vice President | Deputy General Superintendent (Administration, Pohang Works) | 28 | 54 | ||||||||
Lee, Hoo-Geun | Senior Vice President | FINEX Research & Development Project Dept. | 26 | 51 | ||||||||
Woo, Jong-Soo | Senior Vice President | European Union Office | 29 | 53 | ||||||||
Kang, Chang-Gyun | Senior Vice President | Auditing Dept. | 29 | 53 | ||||||||
Lee, 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 | 54 | ||||||||
Suh, Young-Sea | Senior Vice President | Stainless Steel Marketing Dept. | 25 | 53 | ||||||||
Park, Myung-Kil | Senior Vice President | Procurement Service Center, Corporate Collaboration and Prosperity Dept. | 23 | 50 | ||||||||
Lee, Young-Hoon | Senior Vice President | Finance Dept. | 23 | 49 | ||||||||
Hwang, Eun-Yeon | Senior Vice President | Marketing Strategy Dept. | 22 | 50 | ||||||||
Kim, Yeung-Gyu | Senior Vice President | Labor and Outside Services Dept. | 26 | 54 | ||||||||
Park, Kui-Chan | Senior Vice President | Dept. of External Affairs, Global R&D Center Project Dept. | 2 | 52 | ||||||||
Park, Sung-Ho | Senior Vice President | Deputy General Superintendent (Technical Research Laboratories) | 26 | 52 | ||||||||
Shin, Young-Kwan | Senior Vice President | Cold Rolled Products Marketing Dept. | 24 | 51 | ||||||||
Oh, In-Hwan | Senior Vice President | Automative Flat Products Marketing Dept. | 27 | 50 | ||||||||
Yeon, Kyu-Sung | Senior Vice President | Deputy General Superintendent (Maintenance, Pohang Works) | 24 | 50 | ||||||||
Lee, Kyoung-Mok | Senior Vice President | Deputy General Superintendent (Production, Gwangyang Works) | 27 | 53 | ||||||||
Jeon, Woo-Sig | Senior Vice President | Strategic Business Dept. | 23 | 49 |
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Item 6.B. | Compensation |
Item 6.C. | Board Practices |
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• | 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. |
Item 6.D. | Employees |
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Item 6.E. | Share Ownership |
Number of | ||||
Common Shares | ||||
Shareholders | Owned | |||
Yoon, Yong-Won | 2,178 | |||
Choi, Jong-Tae | 1,573 | |||
Chung, Joon-Yang | 1,400 | |||
Lee, Dong-Hee | 1,000 | |||
Cho, Noi-Ha | 600 | |||
Yoo, Kwang-Jae | 502 | |||
Kwon, Young-Tae | 500 | |||
Oh, Chang-Kwan | 400 | |||
Woo, Jong-Soo | 391 | |||
Kim, Jin-Il | 360 | |||
Lee, Kyoung-Mok | 322 | |||
Oh, In-Hwan | 320 | |||
Lee, Kyung-Hoon | 319 | |||
Lee, Hoo-Geun | 298 | |||
Lee, Jung-Sik | 296 | |||
Park, Sung-Ho | 296 | |||
Kim, Sang-Young | 293 | |||
Yoon, Dong-Jun | 284 | |||
Jeon, Woo-Sig | 262 | |||
Chang, Song-Hwan | 260 | |||
Lee, In-Bong | 249 | |||
Jang, Young-Ik | 242 | |||
Suh, Young-Sea | 236 | |||
Chang, In-Hwan | 234 | |||
Jang, Byung-Hyo | 232 | |||
Kim, Joon-Sik | 232 | |||
Kong, Yoon-Chan | 209 | |||
Baek, Sung-Kwan | 207 | |||
Shin, Jung-Suk | 205 | |||
An, Byung-Sik | 197 | |||
Hwang, Eun-Yeon | 119 | |||
Choo, Wung-Yong | 104 | |||
Kim, Moon-Seok | 104 | |||
Cho, Bong-Rae | 104 | |||
Yeon, Kyu-Sung | 95 | |||
Lee, Young-Hoon | 78 | |||
Shin, Young-Kwan | 67 | |||
Kim, Yeung-Gyu | 50 | |||
Park, Kui-Chan | 36 | |||
Hur, Nam-Suk | 2 | |||
Total | 14,856 | |||
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Exercise Period | Exercise | Granted | Exercised | Exercisable | ||||||||||||||||||||||
Directors | Grant Date | From | To | Price | Options | Options | Options | |||||||||||||||||||
Chung, Joon-Yang | April 27, 2002 | 4/28/2004 | 4/27/2009 | 136,400 | 9,316 | 9,316 | 0 | |||||||||||||||||||
July 23, 2004 | 7/24/2006 | 7/23/2011 | 151,700 | 4,900 | 0 | 4,900 | ||||||||||||||||||||
Yoon, Seok-Man | September 18, 2002 | 9/19/2004 | 9/18/2009 | 116,100 | 11,179 | 6,000 | 5,179 | |||||||||||||||||||
July 23, 2004 | 7/24/2006 | 7/23/2011 | 151,700 | 7,840 | 0 | 7,840 | ||||||||||||||||||||
Lee, Dong-Hee | April 26, 2003 | 4/27/2005 | 4/26/2010 | 102,900 | 9,604 | 5,960 | 3,644 | |||||||||||||||||||
Choi, Jong-Tae | July 23, 2001 | 7/24/2003 | 7/23/2008 | 98,900 | 9,037 | 9,037 | 0 | |||||||||||||||||||
April 26, 2003 | 4/27/2005 | 4/26/2010 | 102,900 | 1,921 | 1,921 | 0 | ||||||||||||||||||||
Hur, Nam-Suk | April 27, 2002 | 4/28/2004 | 4/27/2009 | 136,400 | 9,316 | 9,316 | 0 | |||||||||||||||||||
April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 2,000 | 0 | 2,000 | ||||||||||||||||||||
Chung, Keel-Sou | July 23, 2004 | 7/24/2006 | 7/23/2011 | 151,700 | 9,800 | 0 | 9,800 | |||||||||||||||||||
Sun, Wook | April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 2,000 | 0 | 2,000 | |||||||||||||||||||
Jones, Jeffrey D | July 23, 2004 | 7/24/2006 | 7/23/2011 | 151,700 | 1,862 | 1,862 | 0 | |||||||||||||||||||
Ahn, Charles | April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 2,000 | 0 | 2,000 |
Exercise Period | Exercise | Granted | Exercised | Exercisable | ||||||||||||||||||||||
Executive Officers | Grant Date | From | To | Price | Options | Options | Options | |||||||||||||||||||
Oh, Chang-Kwan | April 27, 2002 | 4/28/2004 | 4/27/2009 | 136,400 | 9,316 | 6,931 | 2,385 | |||||||||||||||||||
Kwon, Young-Tae | September 18, 2002 | 9/19/2004 | 9/18/2009 | 116,100 | 9,316 | 931 | 8,385 | |||||||||||||||||||
Kim, Jin-Il | April 26, 2003 | 4/27/2005 | 4/26/2010 | 102,900 | 9,604 | 9,492 | 112 | |||||||||||||||||||
Kim, Sang-Young | July 23, 2004 | 7/24/2006 | 7/23/2011 | 151,700 | 9,800 | 0 | 9,800 | |||||||||||||||||||
Cho, Noi-Ha | April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 10,000 | 0 | 10,000 | |||||||||||||||||||
Yoon, Yong-Won | April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 10,000 | 10,000 | 0 | |||||||||||||||||||
Yoo, Kwang-Jae | April 28, 2005 | 4/29/2007 | 4/28/2012 | 194,900 | 10,000 | 10,000 | 0 |
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Item 7. | Major Shareholders and Related Party Transactions |
Item 7.A. | Major Shareholders |
Number of | ||||||||
Shareholders | Shares Owned | Percentage | ||||||
National Pension Service(1) | 5,516,535 | 6.33 | ||||||
Nippon Steel Corporation(2) | 4,394,712 | 5.04 | ||||||
Mirae Asset Investments Co., Ltd. | 3,620,298 | 4.15 | ||||||
SK Telecom | 2,481,310 | 2.85 | ||||||
Pohang University of Science and Technology | 2,000,000 | 2.29 | ||||||
Directors and executive officers as a group | 16,316 | 0.01 | ||||||
Public(3) | 58,540,745 | 67.14 | ||||||
POSCO (held in the form of treasury stock) | 8,255,034 | 9.47 | ||||||
POSCO (held through treasury stock fund) | 2,361,885 | 2.71 | ||||||
Total 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 |
Item 8. | Financial Information |
Item 8.A. | Consolidated Statements and Other Financial Information |
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Annual Dividend per | Average Total | |||||||||||
Common Stock to | Interim Dividend per | Dividend per | ||||||||||
Year | Public | Common Stock | Common Stock | |||||||||
(In Won) | ||||||||||||
2004 | 6,500 | 1,500 | 8,000 | |||||||||
2005 | 6,000 | 2,000 | 8,000 | |||||||||
2006 | 6,000 | 2,000 | 8,000 | |||||||||
2007 | 7,500 | 2,500 | 10,000 | |||||||||
2008 | 7,500 | 2,500 | 10,000 |
Item 8.B. | Significant Changes |
Item 9. | The Offer and Listing |
Item 9.A. | Offer and Listing Details |
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Price | Average Daily | |||||||||||
High | Low | Trading Volume | ||||||||||
(Number of Shares) | ||||||||||||
(In Won) | ||||||||||||
2004 | ||||||||||||
First Quarter | 181,000 | 156,500 | 329,447 | |||||||||
Second Quarter | 177,000 | 131,000 | 439,035 | |||||||||
Third Quarter | 184,000 | 145,000 | 245,191 | |||||||||
Fourth Quarter | 203,000 | 163,000 | 298,091 | |||||||||
2005 | ||||||||||||
First Quarter | 225,500 | 176,500 | 285,371 | |||||||||
Second Quarter | 203,000 | 174,500 | 297,524 | |||||||||
Third Quarter | 240,500 | 182,000 | 281,567 | |||||||||
Fourth Quarter | 236,500 | 199,500 | 327,639 | |||||||||
2006 | ||||||||||||
First Quarter | 251,500 | 196,500 | 420,095 | |||||||||
Second Quarter | 287,000 | 217,500 | 380,671 | |||||||||
Third Quarter | 254,000 | 225,500 | 270,661 | |||||||||
Fourth Quarter | 318,500 | 239,000 | 244,757 | |||||||||
2007 | ||||||||||||
First Quarter | 395,000 | 286,500 | 296,883 | |||||||||
Second Quarter | 481,000 | 366,000 | 246,291 | |||||||||
Third Quarter | 673,000 | 443,500 | 298,177 | |||||||||
Fourth Quarter | 765,000 | 557,000 | 331,286 | |||||||||
2008 | ||||||||||||
First Quarter | 575,000 | 437,000 | 334,157 | |||||||||
Second Quarter | 594,000 | 450,000 | 382,083 | |||||||||
Third Quarter | 544,000 | 410,000 | 389,984 | |||||||||
Fourth Quarter | 436,500 | 242,000 | 600,141 | |||||||||
2009 | ||||||||||||
First Quarter | 430,000 | 303,000 | 389,081 | |||||||||
January | 430,000 | 340,500 | 371,389 | |||||||||
February | 400,000 | 312,000 | 423,001 | |||||||||
March | 382,000 | 303,000 | 378,225 | |||||||||
Second Quarter (through June 26) | 432,000 | 398,500 | 370,780 | |||||||||
April | 413,000 | 369,000 | 426,754 | |||||||||
May | 435,000 | 389,000 | 403,082 | |||||||||
June (through June 26) | 435,000 | 369,000 | 396,110 |
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Price | Average Daily | |||||||||||
High | Low | Trading Volume | ||||||||||
(Number of ADSs) | ||||||||||||
(In US$) | ||||||||||||
2004 | ||||||||||||
First Quarter | 38.43 | 33.55 | 578,963 | |||||||||
Second Quarter | 39.01 | 27.97 | 1,013,306 | |||||||||
Third Quarter | 40.14 | 32.47 | 729,723 | |||||||||
Fourth Quarter | 47.50 | 36.49 | 765,003 | |||||||||
2005 | ||||||||||||
First Quarter | 54.85 | 41.22 | 866,811 | |||||||||
Second Quarter | 49.70 | 43.75 | 790,208 | |||||||||
Third Quarter | 57.08 | 44.12 | 606,928 | |||||||||
Fourth Quarter | 56.01 | 47.85 | 671,024 | |||||||||
2006 | ||||||||||||
First Quarter | 63.80 | 48.97 | 812,089 | |||||||||
Second Quarter | 74.41 | 56.07 | 922,906 | |||||||||
Third Quarter | 66.88 | 58.59 | 760,752 | |||||||||
Fourth Quarter | 84.88 | 63.00 | 748,789 | |||||||||
2007 | ||||||||||||
First Quarter | 106.88 | 76.49 | 770,003 | |||||||||
Second Quarter | 129.60 | 99.34 | 712,996 | |||||||||
Third Quarter | 184.54 | 124.50 | 809,315 | |||||||||
Fourth Quarter | 195.89 | 147.17 | 721,160 | |||||||||
2008 | ||||||||||||
First Quarter | 147.74 | 108.41 | 418,434 | |||||||||
Second Quarter | 147.05 | 112.80 | 249,329 | |||||||||
Third Quarter | 133.73 | 88.35 | 294,629 | |||||||||
Fourth Quarter | 89.00 | 47.14 | 355,604 | |||||||||
2009 | ||||||||||||
First Quarter | 79.11 | 47.14 | 212,520 | |||||||||
January | 79.11 | 61.49 | 188,030 | |||||||||
February | 74.81 | 50.17 | 190,958 | |||||||||
March | 71.46 | 47.14 | 252,573 | |||||||||
Second Quarter (through June 26) | 89.00 | 69.23 | 170,322 | |||||||||
April | 78.62 | 69.23 | 207,238 | |||||||||
May | 89.00 | 77.87 | 170,565 | |||||||||
June (through June 26) | 87.58 | 78.35 | 127,603 |
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Item 9.B. | Plan of Distribution |
Item 9.C. | Markets |
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Period Average | ||||||||||||||||||||||||
Dividend | Price | |||||||||||||||||||||||
Yield(1)(2) | Earnings | |||||||||||||||||||||||
Year | Opening | High | Low | Closing | (Percent) | Ratio(2)(3) | ||||||||||||||||||
1979 | 131.28 | 131.28 | 104.38 | 118.97 | 17.8 | 3.8 | ||||||||||||||||||
1980 | 100.00 | 119.36 | 100.00 | 106.87 | 20.9 | 2.6 | ||||||||||||||||||
1981 | 97.95 | 165.95 | 93.14 | 131.37 | 13.2 | 3.1 | ||||||||||||||||||
1982 | 123.60 | 134.48 | 106.00 | 128.99 | 10.5 | 3.4 | ||||||||||||||||||
1983 | 122.52 | 134.46 | 115.59 | 121.21 | 6.9 | 3.8 | ||||||||||||||||||
1984 | 115.25 | 142.46 | 115.25 | 142.46 | 5.1 | 4.5 | ||||||||||||||||||
1985 | 139.53 | 163.37 | 131.40 | 163.37 | 5.3 | 5.2 | ||||||||||||||||||
1986 | 161.40 | 279.67 | 153.85 | 272.61 | 4.3 | 7.6 | ||||||||||||||||||
1987 | 264.82 | 525.11 | 264.82 | 525.11 | 2.6 | 10.9 | ||||||||||||||||||
1988 | 532.04 | 922.56 | 527.89 | 907.20 | 2.4 | 11.2 | ||||||||||||||||||
1989 | 919.61 | 1,007.77 | 844.75 | 909.72 | 2.0 | 13.9 | ||||||||||||||||||
1990 | 908.59 | 928.82 | 566.27 | 696.11 | 2.2 | 12.8 | ||||||||||||||||||
1991 | 679.75 | 763.10 | 586.51 | 610.92 | 2.6 | 11.2 | ||||||||||||||||||
1992 | 624.23 | 691.48 | 459.07 | 678.44 | 2.2 | 10.9 | ||||||||||||||||||
1993 | 697.41 | 874.10 | 605.93 | 866.18 | 1.6 | 12.7 | ||||||||||||||||||
1994 | 879.32 | 1,138.75 | 855.37 | 1,027.37 | 1.2 | 16.2 | ||||||||||||||||||
1995 | 1,027.45 | 1,016.77 | 847.09 | 882.94 | 1.2 | 16.4 | ||||||||||||||||||
1996 | 882.29 | 986.84 | 651.22 | 651.22 | 1.3 | 17.8 | ||||||||||||||||||
1997 | 647.67 | 792.29 | 350.68 | 376.31 | 1.5 | 17.0 | ||||||||||||||||||
1998 | 374.41 | 579.86 | 280.00 | 562.46 | 1.9 | 10.8 | ||||||||||||||||||
1999 | 565.10 | 1,028.07 | 498.42 | 1,028.07 | 1.1 | 13.5 | ||||||||||||||||||
2000 | 1,028.33 | 1,059.04 | 500.60 | 504.62 | 1.6 | 18.6 | ||||||||||||||||||
2001 | 503.31 | 704.50 | 468.76 | 693.70 | 2.0 | 14.2 | ||||||||||||||||||
2002 | 698.00 | 937.61 | 584.04 | 627.55 | 1.4 | 17.8 | ||||||||||||||||||
2003 | 633.03 | 822.16 | 515.24 | 810.71 | 2.2 | 10.9 | ||||||||||||||||||
2004 | 821.26 | 936.06 | 719.59 | 895.92 | 2.1 | 15.8 | ||||||||||||||||||
2005 | 896.00 | 1,379.37 | 870.84 | 1,379.37 | 1.7 | 11.0 | ||||||||||||||||||
2006 | 1,383.32 | 1,464.70 | 1,203.86 | 1,434.46 | 1.7 | 11.4 | ||||||||||||||||||
2007 | 1,438.89 | 2,015.48 | 1,345.08 | 1,897.13 | 1.4 | 16.8 | ||||||||||||||||||
2008 | 1,891.45 | 1,888.88 | 938.75 | 1,124.47 | 2.6 | 8.9 | ||||||||||||||||||
2009 (through June 26) | 1,401.57 | 1,404.01 | 1,388.38 | 1,394.53 | 2.4 | 19.7 |
(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. |
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Rounded Down | ||||
Previous Day’s Closing Price (Won) | to (Won) | |||
Less than 5,000 | 5 | |||
5,000 to less than 10,000 | 10 | |||
10,000 to less than 50,000 | 50 | |||
50,000 to less than 100,000 | 100 | |||
100,000 to less than 500,000 | 500 | |||
500,000 or more | 1,000 |
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Market Capitalization on the Last Day | ||||||||||||||||||||||||
of Each Period | ||||||||||||||||||||||||
Number of | Average Daily Trading Volume, Value | |||||||||||||||||||||||
Listed | (Billions of | (Millions of | Thousands of | (Millions of | (Thousands of | |||||||||||||||||||
Year | Companies | Won) | US$)(1) | Shares | Won) | US$)(1) | ||||||||||||||||||
1979 | 355 | 2,609 | US$ | 5,391 | 5,382 | 4,579 | US$ | 4,641 | ||||||||||||||||
1980 | 352 | 2,527 | 3,829 | 5,654 | 3,897 | 5,905 | ||||||||||||||||||
1981 | 343 | 2,959 | 4,224 | 10,565 | 8,708 | 12,432 | ||||||||||||||||||
1982 | 334 | 3,000 | 4,408 | 9,704 | 6,667 | 8,904 | ||||||||||||||||||
1983 | 328 | 3,490 | 4,387 | 9,325 | 5,941 | 7,468 | ||||||||||||||||||
1984 | 336 | 5,149 | 6,223 | 14,847 | 10,642 | 12,862 | ||||||||||||||||||
1985 | 342 | 6,570 | 7,381 | 18,925 | 12,315 | 13,834 | ||||||||||||||||||
1986 | 355 | 11,994 | 13,924 | 31,755 | 32,870 | 38,159 | ||||||||||||||||||
1987 | 389 | 26,172 | 33,033 | 20,353 | 70,185 | 88,583 | ||||||||||||||||||
1988 | 502 | 64,544 | 94,348 | 10,367 | 198,364 | 289,963 | ||||||||||||||||||
1989 | 626 | 95,477 | 140,490 | 11,757 | 280,967 | 414,430 | ||||||||||||||||||
1990 | 669 | 79,020 | 110,301 | 10,866 | 183,692 | 256,411 | ||||||||||||||||||
1991 | 686 | 73,118 | 96,107 | 14,022 | 214,263 | 281,629 | ||||||||||||||||||
1992 | 688 | 84,712 | 107,448 | 24,028 | 308,246 | 390,977 | ||||||||||||||||||
1993 | 693 | 112,665 | 139,420 | 35,130 | 574,048 | 710,367 | ||||||||||||||||||
1994 | 699 | 151,217 | 191,730 | 36,862 | 776,257 | 984,223 | ||||||||||||||||||
1995 | 721 | 141,151 | 182,201 | 26,130 | 487,762 | 629,613 | ||||||||||||||||||
1996 | 760 | 117,370 | 139,031 | 26,571 | 486,834 | 576,680 | ||||||||||||||||||
1997 | 776 | 70,989 | 50,162 | 41,525 | 555,759 | 392,707 | ||||||||||||||||||
1998 | 748 | 137,799 | 114,091 | 97,716 | 660,429 | 546,803 | ||||||||||||||||||
1999 | 725 | 349,504 | 305,137 | 278,551 | 3,481,620 | 3,039,655 | ||||||||||||||||||
2000 | 704 | 188,042 | 149,275 | 306,163 | 2,602,211 | 2,065,739 | ||||||||||||||||||
2001 | 689 | 255,850 | 192,934 | 473,241 | 1,997,420 | 1,506,237 | ||||||||||||||||||
2002 | 683 | 258,681 | 215,496 | 857,245 | 3,041,598 | 2,533,815 | ||||||||||||||||||
2003 | 684 | 355,363 | 296,679 | 542,010 | 2,216,636 | 1,850,589 | ||||||||||||||||||
2004 | 683 | 412,588 | 395,275 | 372,895 | 2,232,109 | 2,138,445 | ||||||||||||||||||
2005 | 702 | 655,075 | 646,158 | 467,629 | 3,157,662 | 3,114,679 | ||||||||||||||||||
2006 | 731 | 704,588 | 757,948 | 279,096 | 3,435,180 | 3,695,331 | ||||||||||||||||||
2007 | 745 | 951,900 | 1,016,770 | 363,741 | 5,539,653 | 5,917,168 | ||||||||||||||||||
2008 | 763 | 576,888 | 458,758 | 352,599 | 3,211,039 | 2,553,510 | ||||||||||||||||||
2009 (through June 26) | 761 | 721,831 | 562,064 | 563,257 | 5,856,004 | 4,559,863 |
(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. |
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Item 9.D. | Selling Shareholders |
Item 9.E. | Dilution |
Item 9.F. | Expenses of the Issuer |
Item 10. | Additional Information |
Item 10.A. | Share Capital |
Item 10.B. | Memorandum and Articles of Association |
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• | 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. |
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• | 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. |
• | 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. |
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Item 10.C. | Material Contracts |
Item 10.D. | Exchange Controls |
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• | 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. |
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• | 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; |
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• | 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. |
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Item 10.E. | 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. |
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• | 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. |
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Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
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Maturities | ||||||||||||||||||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||
2008 | 2007 | |||||||||||||||||||||||||||||||||||||||
Fair | Fair | |||||||||||||||||||||||||||||||||||||||
2009 | 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 | 2,276 | ||||||||||||||||||||||||||||||
Average 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 | 47 | ||||||||||||||||||||||||||||||
Average 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 | 2,323 | ||||||||||||||||||||||||||||||
Foreign currency, principally Dollars and Yen: | ||||||||||||||||||||||||||||||||||||||||
Fixed rate | 3,094 | 245 | 787 | 23 | 1,083 | 418 | 5,649 | 5,443 | 2,880 | 2,952 | ||||||||||||||||||||||||||||||
Average 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 | 163 | ||||||||||||||||||||||||||||||
Average 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 | 3,115 | ||||||||||||||||||||||||||||||
Total | 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. |
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Item 12. | Description of Securities Other than Equity Securities |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 15. | Controls and Procedures |
a. | Disclosure Controls and Procedures |
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b. | Management’s Annual Report on Internal Control over Financial Reporting |
c. | Attestation Report of the Independent Registered Public Accounting Firm |
d. | Changes in Internal Control Over Financial Reporting |
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For the Year Ended December 31, | ||||||||
2007 | 2008 | |||||||
(In millions of Won) | ||||||||
Audit fees | 1,791 | 2,539 | ||||||
Audit-related fees | — | — | ||||||
Tax fees | 139 | 254 | ||||||
Other fees | 14 | 200 | ||||||
Total fees | 1,944 | 2,993 | ||||||
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Total Number of | Maximum Number of | |||||||||||||||
Shares Purchased as | Shares that May Yet | |||||||||||||||
Total Number of | Average Price Paid | Part of Publicly | be Purchased Under | |||||||||||||
Period | Shares Purchased | per Share (In Won) | Announced Plans | the Plans | ||||||||||||
January 1 to January 31 | 43,000 | (1) | 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 | 504,544 | — | — | ||||||||||||
(1) | Stocks purchased from the treasury stock fund |
NYSE Corporate Governance Standards | POSCO’s Corporate Governance Practice | |
Director Independence | ||
Independent 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 Committee | ||
Listed 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. |
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NYSE Corporate Governance Standards | POSCO’s Corporate Governance Practice | |
Compensation Committee | ||
Listed companies must have a compensation committee composed entirely of independent directors | We maintain an Evaluation and Compensation Committee composed of four Outside Directors. | |
Executive Session | ||
Listed 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 Committee | ||
Listed companies must have an audit committee that is composed of more than three directors and satisfy the requirements ofRule 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 Plan | ||
Listed 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 Guidelines | ||
Listed 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 atwww.posco.com. | |
Code of Business Conduct and Ethics | ||
Listed 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 atwww.posco.com. |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
Page | ||||
F-1 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-6 | ||||
F-7 | ||||
F-11 | ||||
F-13 |
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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 subsidiaries | |||
12 | .1 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
12 | .2 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
13 | .1 | — | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Filed previously |
84
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POSCO:
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
(Note 2) | ||||||||||||
2008 | 2007 | 2008 | ||||||||||
(In millions of Korean won and thousands of US dollar) | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents, net of government grants (note 3) | 2,490,264 | 1,292,581 | $ | 1,973,268 | ||||||||
Short-term financial instruments (note 3) | 1,827,450 | 1,743,079 | 1,448,059 | |||||||||
Trading securities (note 4) | 1,238,261 | 1,286,939 | 981,190 | |||||||||
Current portion of available-for-sales securities (note 7) | 30,888 | 32,113 | 24,476 | |||||||||
Current portion of held-to-maturity securities (note 7) | 20,613 | 192,393 | 16,333 | |||||||||
Trade accounts and notes receivable, net of allowance for doubtful accounts and present value discount (note 5) | 5,894,093 | 4,035,602 | 4,670,438 | |||||||||
Other accounts and notes receivable, net of allowance for doubtful accounts and present value discount (note 5) | 538,510 | 214,956 | 426,711 | |||||||||
Advance payments | 1,033,513 | 373,167 | 818,949 | |||||||||
Inventories (notes 6 and 31) | 8,661,721 | 4,902,016 | 6,863,487 | |||||||||
Deferred income tax assets (note 25) | 109,578 | 101,982 | 86,829 | |||||||||
Other current assets, net of allowance for doubtful accounts (note 11) | 352,742 | 218,705 | 279,511 | |||||||||
Total current assets | 22,197,633 | 14,393,533 | 17,589,251 | |||||||||
Property, plant and equipment (notes 8 and 31) | 42,230,169 | 37,902,887 | 33,462,893 | |||||||||
Less accumulated depreciation | (24,161,070 | ) | (22,321,122 | ) | (19,145,065 | ) | ||||||
Property, plant and equipment, net | 18,069,099 | 15,581,765 | 14,317,828 | |||||||||
Investment securities, net (note 7) | 5,177,482 | 5,178,723 | 4,102,601 | |||||||||
Intangible assets, net (notes 9 and 31) | 723,767 | 570,779 | 573,508 | |||||||||
Long-term trade accounts and notes receivable, net of allowance for doubtful accounts and present value discount (note 5) | 23,264 | 39,919 | 18,435 | |||||||||
Long-term loans receivable, net of allowance for doubtful accounts and present value discount (note 5) | 80,287 | 40,474 | 63,619 | |||||||||
Deferred income tax assets (note 25) | 317,023 | 279,903 | 251,207 | |||||||||
Guarantee deposits | 65,540 | 57,485 | 51,933 | |||||||||
Long-term financial instruments (note 3) | 16,462 | 17,065 | 13,044 | |||||||||
Other long-term assets, net of allowance for doubtful accounts and present value discount (note 11) | 290,725 | 115,117 | 230,368 | |||||||||
Total non-current assets | 24,763,649 | 21,881,230 | 19,622,543 | |||||||||
Total assets | 46,961,282 | 36,274,763 | $ | 37,211,794 | ||||||||
F-4
Table of Contents
(Note 2) | ||||||||||||
2008 | 2007 | 2008 | ||||||||||
(In millions of Korean won and thousands of US dollar) | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
Trade accounts and notes payable | 3,070,436 | 2,246,890 | $ | 2,432,992 | ||||||||
Short-term borrowings (note 12) | 3,254,355 | 1,572,020 | 2,578,728 | |||||||||
Current portion of long-term debts, net of discount on debentures issued (notes 12 and 13) | 770,142 | 483,402 | 610,255 | |||||||||
Accrued expenses | 237,917 | 172,971 | 188,524 | |||||||||
Other accounts and notes payable | 579,853 | 502,665 | 459,471 | |||||||||
Withholdings | 126,538 | 133,495 | 100,268 | |||||||||
Income tax payable | 2,083,472 | 930,822 | 1,650,929 | |||||||||
Advances received | 597,514 | 405,548 | 473,466 | |||||||||
Deferred income tax liabilities (note 25) | — | 120,992 | — | |||||||||
Other current liabilities (note 15) | 289,165 | 55,810 | 229,133 | |||||||||
Total current liabilities | 11,009,392 | 6,624,615 | 8,723,766 | |||||||||
Long-term debts, net of current portion and discount on debentures issued (note 13) | 6,895,862 | 3,306,486 | 5,464,235 | |||||||||
Accrued severance benefits, net (note 14) | 383,718 | 336,095 | 304,055 | |||||||||
Deferred income tax liabilities (note 25) | 70,363 | 654,969 | 55,755 | |||||||||
Other long-term liabilities (note 15) | 257,742 | 234,858 | 204,233 | |||||||||
Total non-current liabilities | 7,607,685 | 4,532,408 | 6,028,278 | |||||||||
Total liabilities | 18,617,077 | 11,157,023 | 14,752,044 | |||||||||
Parent shareholders’ equity | ||||||||||||
Capital stock (notes 1 and 17) | 482,403 | 482,403 | 382,253 | |||||||||
Capital surplus (note 18) | 4,319,083 | 4,176,592 | 3,422,411 | |||||||||
Capital 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 | 20,121,431 | |||||||||
27,663,665 | 24,484,083 | 21,920,495 | ||||||||||
Minority interest | 680,540 | 633,657 | 539,255 | |||||||||
Total shareholders’ equity | 28,344,205 | 25,117,740 | 22,459,750 | |||||||||
Total liabilities and shareholders’ equity | 46,961,282 | 36,274,763 | $ | 37,211,794 | ||||||||
F-5
Table of Contents
(Note 2) | ||||||||||||||||
2008 | 2007 | 2006 | 2008 | |||||||||||||
(In millions of Korean won and thousands of US dollar except per share information) | ||||||||||||||||
Sales (note 31) | 41,742,636 | 31,607,741 | 25,842,326 | $ | 33,076,574 | |||||||||||
Cost of goods sold (note 31) | 32,562,339 | 24,902,663 | 19,896,764 | 25,802,170 | ||||||||||||
Gross profit | 9,180,297 | 6,705,078 | 5,945,562 | 7,274,404 | ||||||||||||
Selling and administrative expenses (notes 24 and 31) | 2,006,368 | 1,785,217 | 1,556,415 | 1,589,832 | ||||||||||||
Operating income | 7,173,929 | 4,919,861 | 4,389,147 | 5,684,572 | ||||||||||||
Non-operating income (note 31) | ||||||||||||||||
Interest and dividend income | 362,309 | 234,841 | 182,832 | 287,091 | ||||||||||||
Gain on foreign currency transactions | 1,078,243 | 158,346 | 156,722 | 854,392 | ||||||||||||
Gain on foreign currency translation | 122,287 | 19,179 | 84,269 | 96,899 | ||||||||||||
Gain on valuation of trading securities | 16,535 | 16,039 | 19,467 | 13,102 | ||||||||||||
Gain on disposal of trading securities | 55,056 | 57,236 | 67,284 | 43,626 | ||||||||||||
Gain on disposal of property, plant and equipment | 14,392 | 15,182 | 19,144 | 11,404 | ||||||||||||
Gain on valuation of derivatives | 346,932 | 12,741 | 1,857 | 274,907 | ||||||||||||
Gain on derivative transactions | 41,575 | 17,689 | 15,477 | 32,943 | ||||||||||||
Equity in earnings of equity method accounted investees | 32,931 | 71,563 | 47,147 | 26,094 | ||||||||||||
Gain on recovery of allowance for doubtful accounts | 19,116 | 41,124 | 13,776 | 15,147 | ||||||||||||
Reversal of stock compensation expense | 55,155 | — | — | 43,704 | ||||||||||||
Others | 225,345 | 174,567 | 141,249 | 178,562 | ||||||||||||
2,369,876 | 818,507 | 749,224 | 1,877,871 | |||||||||||||
Non-operating expenses (note 31) | ||||||||||||||||
Interest expense | 344,686 | 239,913 | 183,290 | 273,127 | ||||||||||||
Other bad debt expense | 23,269 | 16,335 | 70,370 | 18,438 | ||||||||||||
Loss on disposal of trading securities | 1,243 | 37 | 777 | 985 | ||||||||||||
Loss on valuation of trading securities | 3,870 | 440 | 604 | 3,067 | ||||||||||||
Loss on foreign currency transactions | 1,207,257 | 130,679 | 137,567 | 956,622 | ||||||||||||
Loss on foreign currency translation | 933,086 | 65,432 | 4,855 | 739,370 | ||||||||||||
Loss on derivative transactions | 103,739 | 6,312 | 40,363 | 82,202 | ||||||||||||
Loss on valuation of derivatives | 288,655 | 3,617 | 820 | 228,729 | ||||||||||||
Donations | 142,570 | 197,366 | 154,678 | 112,972 | ||||||||||||
Loss on impairment of investments | 120,840 | 11,542 | 2,088 | 95,752 | ||||||||||||
Loss on disposal of property, plant and equipment | 53,823 | 43,544 | 54,179 | 42,649 | ||||||||||||
Loss on impairment of intangible assets | 45,890 | — | — | 36,363 | ||||||||||||
Equity in losses of equity method accounted investees | 56,795 | 28,929 | 722 | 45,004 | ||||||||||||
Others | 122,443 | 95,291 | 203,467 | 97,021 | ||||||||||||
3,448,166 | 839,437 | 853,780 | 2,732,301 | |||||||||||||
Net income before income tax expense and net income (loss) of consolidated subsidiaries before acquisition | 6,095,639 | 4,898,931 | 4,284,591 | 4,830,142 | ||||||||||||
Income 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 | 9,154 | |||||||||||
Net income | 4,350,104 | 3,677,964 | 3,353,082 | $ | 3,446,992 | |||||||||||
Net income attributable to controlling interest | 4,378,751 | 3,558,660 | 3,314,181 | $ | 3,469,692 | |||||||||||
Net income (loss) attributable to minority interest (note 31) | (28,647 | ) | 119,304 | 38,901 | $ | (22,700 | ) | |||||||||
Basic and diluted earnings per share (note 26)(in Korean won and US dollar) | 58,002 | 46,854 | 42,115 | $ | 46 |
F-6
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||||||
Capital | Capital | Capital | (Loss) | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2006 | 482,403 | 3,991,409 | (965,433 | ) | (188,264 | ) | 16,168,892 | 384,670 | 19,873,677 | |||||||||||||||||||
Net income | — | — | — | — | 3,314,181 | 38,901 | 3,353,082 | |||||||||||||||||||||
Effect of changes in scope of consolidation | — | (1,012 | ) | — | — | 40,649 | — | 39,637 | ||||||||||||||||||||
Effect 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 | — | — | 432,469 | |||||||||||||||||||||
Changes in capital adjustments of equity method accounted investees | — | — | — | 11,635 | — | — | 11,635 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | (46,086 | ) | — | — | (46,086 | ) | |||||||||||||||||||
Loss on valuation of derivatives | ||||||||||||||||||||||||||||
Effect of changes in percentage of minority interest | — | — | — | — | — | 61,639 | 61,639 | |||||||||||||||||||||
Others | — | 2,956 | (1,311 | ) | — | (23,902 | ) | 3,998 | (18,259 | ) | ||||||||||||||||||
Balance as of December 31, 2006 | 482,403 | 4,035,273 | (1,678,229 | ) | 209,754 | 18,863,333 | 489,208 | 22,401,742 | ||||||||||||||||||||
F-7
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||||||
Capital | Capital | Capital | (Loss) | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2007 | 482,403 | 4,035,273 | (1,678,229 | ) | 209,754 | 18,863,333 | 489,208 | 22,401,742 | ||||||||||||||||||||
Net income | — | — | — | — | 3,558,660 | 119,304 | 3,677,964 | |||||||||||||||||||||
Effect of changes in scope of consolidation | — | 37 | — | — | — | 62,024 | 62,061 | |||||||||||||||||||||
Effect 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 | — | — | 498,711 | |||||||||||||||||||||
Changes in capital adjustments of equity method accounted investees | — | — | — | (7,455 | ) | — | — | (7,455 | ) | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 87,957 | — | — | 87,957 | |||||||||||||||||||||
Loss on valuation of derivatives | — | — | — | (4,034 | ) | — | — | (4,034 | ) | |||||||||||||||||||
Effect of changes in percentage of minority interest | — | — | — | — | — | 16,380 | 16,380 | |||||||||||||||||||||
Others | — | (28,449 | ) | (3,644 | ) | — | 408 | (53,259 | ) | (84,944 | ) | |||||||||||||||||
Balance as of December 31, 2007 | 482,403 | 4,176,592 | (2,727,147 | ) | 784,933 | 21,767,302 | 633,657 | 25,117,740 | ||||||||||||||||||||
F-8
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||||||
Capital | Capital | Capital | (Loss) | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2008 | 482,403 | 4,176,592 | (2,727,147 | ) | 784,933 | 21,767,302 | 633,657 | 25,117,740 | ||||||||||||||||||||
Net income | — | — | — | — | 4,378,751 | (28,647 | ) | 4,350,104 | ||||||||||||||||||||
Effect of changes in scope of consolidation | — | — | — | — | — | 31,518 | 31,518 | |||||||||||||||||||||
Effect of changes in percentage of ownership of investees | — | 20,194 | — | — | — | — | 20,194 | |||||||||||||||||||||
Dividends | — | — | — | — | (755,037 | ) | — | (755,037 | ) | |||||||||||||||||||
Changes in treasury stock | — | 121,938 | 213,951 | — | — | — | 335,889 | |||||||||||||||||||||
Unrealized loss on available-for-sale securities, net | — | — | — | (1,276,043 | ) | — | — | (1,276,043 | ) | |||||||||||||||||||
Changes in capital adjustments of equity method accounted investees | — | — | — | 37,575 | — | — | 37,575 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 438,314 | — | — | 438,314 | |||||||||||||||||||||
Loss on valuation of derivatives | — | — | — | (6,765 | ) | — | — | (6,765 | ) | |||||||||||||||||||
Effect of changes in percentage of minority interest | — | — | — | — | — | 39,726 | 39,726 | |||||||||||||||||||||
Others | — | 359 | 4,115 | — | 2,230 | 4,286 | 10,990 | |||||||||||||||||||||
Balance as of December 31, 2008 | 482,403 | 4,319,083 | (2,509,081 | ) | (21,986 | ) | 25,393,246 | 680,540 | 28,344,205 | |||||||||||||||||||
F-9
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Comprehensive | ||||||||||||||||||||||||||||
Capital | Capital | Capital | (Loss) | Retained | Minority | |||||||||||||||||||||||
Stock | 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 | 19,903,121 | |||||||||||||||||||
Net income | — | — | — | — | 3,469,692 | (22,700 | ) | 3,446,992 | ||||||||||||||||||||
Effect of changes in scope of consolidation | — | — | — | — | — | 24,975 | 24,975 | |||||||||||||||||||||
Effect of changes in percentage of ownership of investees | — | 16,002 | — | — | — | — | 16,002 | |||||||||||||||||||||
Dividends | — | — | — | — | (598,286 | ) | — | (598,286 | ) | |||||||||||||||||||
Changes in treasury stock | — | 96,623 | 169,533 | — | — | — | 266,156 | |||||||||||||||||||||
Unrealized loss on available-for-sale securities, net | — | — | — | (1,011,128 | ) | — | — | (1,011,128 | ) | |||||||||||||||||||
Changes in capital adjustments of equity method accounted investees | — | — | — | 29,774 | — | — | 29,774 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 347,318 | — | — | 347,318 | |||||||||||||||||||||
Loss on valuation of derivatives | — | — | — | (5,360 | ) | — | — | (5,360 | ) | |||||||||||||||||||
Effect of changes in percentage of minority interest | — | — | — | — | — | 31,479 | 31,479 | |||||||||||||||||||||
Others | — | 284 | 3,260 | — | 1,767 | 3,396 | 8,707 | |||||||||||||||||||||
Balance 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
(Note 2) | ||||||||||||||||
2008 | 2007 | 2006 | 2008 | |||||||||||||
(In millions of Korean won and thousands of US dollar) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | 4,350,104 | 3,677,964 | 3,353,082 | $ | 3,446,991 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||||
Depreciation and amortization | 2,379,291 | 2,126,729 | 1,782,738 | 1,885,333 | ||||||||||||
Accrual of severance benefits | 314,156 | 211,758 | 144,931 | 248,935 | ||||||||||||
Provision for doubtful accounts, net | 28,186 | 37,237 | 173,931 | 22,334 | ||||||||||||
Loss (gain) on derivatives transaction, net | 62,165 | (11,377 | ) | 24,886 | 49,259 | |||||||||||
Loss (gain) on foreign currency translation, net | 750,464 | 49,334 | (76,453 | ) | 594,663 | |||||||||||
Loss on impairment of investments | 120,840 | 11,542 | 2,088 | 95,752 | ||||||||||||
Loss on disposal of property, plant and equipment, net | 39,431 | 28,362 | 35,035 | 31,245 | ||||||||||||
Loss on impairment of intangible assets, net | 45,890 | — | — | 36,363 | ||||||||||||
Gain 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 | ) | 18,910 | ||||||||||
Other employee benefits | 71,070 | 66,827 | 136,662 | 56,316 | ||||||||||||
Net income (loss) of consolidated subsidiaries before acquisition | 11,552 | (53,259 | ) | 9,558 | 9,154 | |||||||||||
Stock compensation expense, net | (55,155 | ) | 123,881 | 49,885 | (43,704 | ) | ||||||||||
Others | 64,615 | 61,738 | 186,333 | 51,201 | ||||||||||||
3,731,614 | 2,528,216 | 2,336,762 | 2,956,907 | |||||||||||||
Changes in operating assets and liabilities | ||||||||||||||||
Increase 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 | 482,726 | ||||||||||||
Increase in other accounts and notes payable | 7,829 | 164,460 | 122,673 | 6,203 | ||||||||||||
Increase (decrease) in advances received | 215,491 | (16,884 | ) | 78,449 | 170,754 | |||||||||||
Decrease in accrued expenses | 94,716 | (108,184 | ) | (459,579 | ) | 75,052 | ||||||||||
Increase (decrease) in income taxpayable | 1,146,204 | 162,806 | (715,691 | ) | 908,244 | |||||||||||
Deferred 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 | 22,834 | |||||||||||
Others | (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
(Note 2) | ||||||||||||||||
2008 | 2007 | 2006 | 2008 | |||||||||||||
(In millions of Korean won and thousands of US dollar) | ||||||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisition of trading securities | (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 | 5,553,701 | ||||||||||||
Disposal of short-term financial instruments | 5,045,613 | 1,705,169 | 1,516,362 | 3,998,109 | ||||||||||||
Disposal of available-for-sale securities | 26,752 | 9,412 | 145,990 | 21,198 | ||||||||||||
Disposal of long-term financial instruments | 279,610 | 34,555 | 113,339 | 221,561 | ||||||||||||
Disposal of property, plant and equipment | 53,773 | 34,958 | 425,976 | 42,609 | ||||||||||||
Collection on short-term loans | 191,251 | 108,221 | 64,436 | 151,546 | ||||||||||||
Others | 97,252 | 21,220 | (130,557 | ) | 77,062 | |||||||||||
Net cash used in investing activities | (5,802,769 | ) | (4,263,712 | ) | (3,363,210 | ) | (4,598,074 | ) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from short-term borrowings | 10,233,819 | 6,811,282 | 4,119,189 | 8,109,207 | ||||||||||||
Proceeds from long-term debt | 3,454,625 | 1,054,138 | 2,160,279 | 2,737,421 | ||||||||||||
Proceeds from other long-term liabilities | 49,851 | 37,060 | 15,535 | 39,501 | ||||||||||||
Disposal of treasury stock | 364,753 | 406,991 | 69,779 | 289,028 | ||||||||||||
Repayment 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 | ) | 2,469,558 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 141,536 | 30,901 | (15,245 | ) | 112,152 | |||||||||||
Net increase in cash and cash equivalents from changes in consolidated subsidiaries | 55,519 | 36,815 | 4,365 | 43,993 | ||||||||||||
Net increase in cash and cash equivalents | 1,197,883 | 356,407 | 282,550 | 949,195 | ||||||||||||
Cash and cash equivalents | ||||||||||||||||
Cash and cash equivalent at beginning of the year | 1,292,828 | 936,421 | 653,871 | 1,024,428 | ||||||||||||
Cash and cash equivalent at end of the year (note 3) | 2,490,711 | 1,292,828 | 936,421 | $ | 1,973,623 | |||||||||||
2008 | 2007 | 2006 | 2008 | |||||||||||||
(In millions of Korean won and thousands of US dollar) | ||||||||||||||||
Cash paid for interest | 319,224 | 229,113 | 179,501 | $ | 252,951 | |||||||||||
Cash paid for income taxes | 1,028,588 | 1,107,888 | 1,305,077 | 815,046 |
F-12
Table of Contents
1. | Consolidated Companies |
Percentage of | ||||||||
Number of Shares | Ownership (%) | |||||||
National Pension Service | 5,516,535 | 6.33 | ||||||
Nippon Steel Corporation(*1) | 4,394,712 | 5.04 | ||||||
Mirae Asset Investments Co., Ltd. | 3,620,298 | 4.15 | ||||||
SK Telecom Co., Ltd. | 2,481,310 | 2.85 | ||||||
Pohang University of Science and Technology (POSTECH) | 2,000,000 | 2.29 | ||||||
Others | 69,173,980 | 79.34 | ||||||
87,186,835 | 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 |
F-13
Table of Contents
Number of | Percentage of | |||||||||||||||||||||||||
Outstanding | Number of Shares | Percentage of | Ownership of | |||||||||||||||||||||||
Subsidiaries | Primary Business | Shares | POSCO | Subsidiaries | Total | Ownership (%) | Subsidiaries (%) | Location | ||||||||||||||||||
Domestic | ||||||||||||||||||||||||||
POSCO E & C Co., Ltd. | Engineering and construction | 30,473,000 | 27,281,080 | — | 27,281,080 | 89.53 | — | Pohang | ||||||||||||||||||
Posteel Co., Ltd. | Steel sales and service | 18,000,000 | 17,155,000 | — | 17,155,000 | 95.31 | — | Seoul | ||||||||||||||||||
POSCON Co., Ltd. | Electronic control devices manufacturing | 3,519,740 | 3,098,610 | — | 3,098,610 | 88.04 | — | Pohang | ||||||||||||||||||
POSCO Coated & Color Steel Co., Ltd. | Coated steel manufacturing | 6,000,000 | 3,412,000 | — | 3,412,000 | 56.87 | — | Pohang | ||||||||||||||||||
POSCO Machinery & Engineering Co., Ltd. | Steel work maintenance and machinery installation | 1,700,000 | 1,700,000 | — | 1,700,000 | 100.00 | — | Pohang | ||||||||||||||||||
POSDATA Co., Ltd. | Computer hardware and software distribution | 81,551,600 | 50,440,720 | — | 50,440,720 | 61.85 | — | Sungnam | ||||||||||||||||||
POSCO Research Institute | Economic research and consulting | 3,800,000 | 3,800,000 | — | 3,800,000 | 100.00 | — | Seoul | ||||||||||||||||||
Seung 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) | Suncheon | ||||||||||||||||||
POSCO Architecs Consultants Co., Ltd. | Architecture and consulting | 230,000 | 230,000 | — | 230,000 | 100.00 | — | Seoul | ||||||||||||||||||
POSCO Specialty Steel Co., Ltd. | Specialty steel manufacturing | 26,000,000 | 26,000,000 | — | 26,000,000 | 100.00 | — | Changwon | ||||||||||||||||||
POSCO Machinery Co., Ltd. | Steel work maintenance and machinery installation | 1,000,000 | 1,000,000 | — | 1,000,000 | 100.00 | — | Gwangyang | ||||||||||||||||||
POSTECH Venture Capital Corp. | Investment in venture companies | 6,000,000 | 5,700,000 | — | 5,700,000 | 95.00 | — | Pohang | ||||||||||||||||||
POSCO Refractories & Environment Company Co., Ltd. (POSREC) | Manufacturing and sellings | 5,907,000 | 3,544,200 | — | 3,544,200 | 60.00 | — | Pohang | ||||||||||||||||||
POSCO Terminal Co., Ltd. | Transporting and warehousing | 5,000,000 | 2,550,000 | — | 2,550,000 | 51.00 | — | Gwangyang | ||||||||||||||||||
Metapolis Co., Ltd. | Construction | 10,560,000 | — | 4,229,280 | 4,229,280 | 40.05 | POSCO E & C (40.05) | Seoul | ||||||||||||||||||
POSMATE Co., Ltd.(*1) | Facilities management | 714,286 | 214,286 | — | 214,286 | 30.00 | — | Seoul | ||||||||||||||||||
Samjung Packing & Aluminum Co., Ltd. | Packing materials manufacturing | 3,000,000 | 270,000 | 831,756 | 1,101,756 | 36.73 | Posmate Co., Ltd. (27.73) | Pohang | ||||||||||||||||||
POSCO Power Corp. | Generation of Electricity | 40,000,000 | 40,000,000 | — | 40,000,000 | 100.00 | — | Seoul | ||||||||||||||||||
Postech 2006 Energy Fund(*1) | Investment in new technology | 570 | — | 126 | 126 | 22.11 | POSTECH Venture Capital Corp (10.53) POSCO Power (11.58) | Seoul | ||||||||||||||||||
POSCORE Co., Ltd. | Components manufacturing and sales | 3,907,151 | — | 1,992,647 | 1,992,647 | 51.00 | Posteel (51.00) | Cheonan | ||||||||||||||||||
PHP Co., Ltd.(*3) | Rental houses construction and management | 400,000 | — | 400,000 | 400,000 | 100.00 | POSCO E & C (100.00) | Incheon | ||||||||||||||||||
PNR Co., Ltd.(*3) | Steel by-products processing and sales | 7,810,980 | 5,467,686 | — | 5,467,686 | 70.00 | — | Pohang | ||||||||||||||||||
Megaasset Co., Ltd.(*3) | Real estate rental and sales | 2,000,000 | — | 2,000,000 | 2,000,000 | 100.00 | POSCO E & C (100.00) | Cheonan | ||||||||||||||||||
Daewoo 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) | Sungnam | ||||||||||||||||||
Universal 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
Number of | Percentage of | |||||||||||||||||||||||||
Outstanding | Number of Shares | Percentage of | Ownership of | |||||||||||||||||||||||
Subsidiaries | Primary Business | Shares | POSCO | Subsidiaries | Total | Ownership (%) | Subsidiaries (%) | Location | ||||||||||||||||||
Overseas | ||||||||||||||||||||||||||
POSCO America Corporation (POSAM) | Steel trading | 356,500 | 354,531 | 1,969 | 356,500 | 100.00 | POSCAN (0.55) | USA | ||||||||||||||||||
POSCO Australia Pty. Ltd. (POSA) | Steel sellings and mine development | 761,775 | 761,775 | — | 761,775 | 100.00 | — | Australia | ||||||||||||||||||
POSCO Canada Ltd. (POSCAN) | Coal trading | 1,099,885 | — | 1,099,885 | 1,099,885 | 100.00 | Posteel (100.00) | Canada | ||||||||||||||||||
POSCAN Elkview Coal Ltd. | Mine development | 304,061 | — | 304,061 | 304,061 | 100.00 | POSCAN (100.00) | Canada | ||||||||||||||||||
POSCO 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) | Vietnam | ||||||||||||||||||
Dalian POSCO - CFM Coated Steel Co., Ltd.(*2) | Coated steel manufacturing | — | — | — | — | 85.00 | POSCO-China (40.00) | China | ||||||||||||||||||
POS-Tianjin Coil Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 70.00 | Posteel (60.00) | China | ||||||||||||||||||
POSMETAL Co., Ltd. | Steel service center | 9,800 | — | 9,310 | 9,310 | 95.00 | POSCO-Japan (95.00) | Japan | ||||||||||||||||||
Shanghai Real Estate Development Co., Ltd.(*2) | Real estate rental | — | — | — | — | 100.00 | POSCO E&C (100.00) | China | ||||||||||||||||||
IBC Corporation(*2) | Real estate rental | — | — | — | — | 60.00 | POSCO E&C (60.00) | Vietnam | ||||||||||||||||||
POSLILAMA Steel Structure Co., Ltd.(*2) | Steel structure fabrication and sales | — | — | — | — | 70.00 | POSCO E&C (60.00) Posteel (10.00) | Vietnam | ||||||||||||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. (ZPSS)(*2) | Stainless steel manufacturing | — | — | — | — | 82.48 | POSCO-China (23.88) | China | ||||||||||||||||||
POSCO (Guangdong) Steel Co., Ltd.(*2) | Coated steel manufacturing | — | — | — | — | 96.98 | POSCO-China (10.43) | China | ||||||||||||||||||
POSCO 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) | Thailand | ||||||||||||||||||
Myanmar-POSCO Steel Co., Ltd. | Coated steel manufacturing and sales | 19,200 | 13,440 | — | 13,440 | 70.00 | — | Myanmar | ||||||||||||||||||
Zhangjiagang POSHA Steel Port Co., Ltd. (ZPSP)(*2) | Raw material and steel depot service | — | — | — | — | 90.00 | POSCO E&C (25.00) ZPSS (65.00) | China | ||||||||||||||||||
POSCO-JOPC Co., Ltd. | Steel service center | 4,900 | — | 2,785 | 2,785 | 56.84 | POSCO-Japan (56.84) | Japan | ||||||||||||||||||
POSCO 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) | Malaysia | ||||||||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd.(*2) | Stainless steel manufacturing | — | — | — | — | 100.00 | POSCO-China (10.00) ZPSS (20.00) | China | ||||||||||||||||||
POSCO (Suzhou) Automotive Processing Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 100.00 | POSCO-China (10.00) | China | ||||||||||||||||||
POSEC-Hawaii Inc. | Construction and sales | 24,400 | — | 24,400 | 24,400 | 100.00 | POSCO E&C (100.00) | USA | ||||||||||||||||||
POS-Qingdao Coil Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 100.00 | Posteel (100.00) | China | ||||||||||||||||||
POS-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
Number of | Percentage of | |||||||||||||||||||||||||
Outstanding | Number of Shares | Percentage of | Ownership of | |||||||||||||||||||||||
Subsidiaries | Primary Business | Shares | POSCO | Subsidiaries | Total | Ownership (%) | Subsidiaries (%) | Location | ||||||||||||||||||
POSCO-China Holding Corp.(*2) | Holding company | — | — | — | — | 100.00 | — | China | ||||||||||||||||||
POSCO-Japan Co., Ltd. | Steel trading | 90,438 | 90,438 | — | 90,438 | 100.00 | — | Japan | ||||||||||||||||||
POSCO E&C (Zhangjiagang) Engineering & Consulting Co., Ltd.(*2) | Facilities manufacturing | — | — | — | — | 100.00 | POSCO E&C (100.00) | China | ||||||||||||||||||
POS-CD Pty. Ltd. | Coal trading | 12,550,000 | — | 12,550,000 | 12,550,000 | 100.00 | POSA (100.00) | Australia | ||||||||||||||||||
POS-GC Pty. Ltd. | Coal trading | 11,050,000 | — | 11,050,000 | 11,050,000 | 100.00 | POSA (100.00) | Australia | ||||||||||||||||||
POSCO-India Private Ltd. | Steel manufacturing and sales | 225,000,000 | 225,000,000 | — | 225,000,000 | 100.00 | — | India | ||||||||||||||||||
POS-India Pune Steel Processing Centre Pvt. Ltd. | Steel service center | 115,062,470 | 74,787,080 | — | 74,787,080 | 65.00 | — | India | ||||||||||||||||||
POSCO-JNPC Co., Ltd. | Steel service center | 49,000 | — | 44,100 | 44,100 | 90.00 | POSCO-Japan (90.00) | Japan | ||||||||||||||||||
POSCO-Foshan Steel Processing Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 100.00 | POA (24.20) POSCO-China (36.20) | China | ||||||||||||||||||
POSCO E&C (Beijing) Co., Ltd.(*2) | Construction and engineering | — | — | — | — | 100.00 | POSCO E&C (100.00) | China | ||||||||||||||||||
POS-MPC S.A. de C.V. | Steel service center | 3,663,289 | — | 2,234,607 | 2,234,607 | 61.00 | POSAM (61.00) | Mexico | ||||||||||||||||||
ZPSS (47.30) | ||||||||||||||||||||||||||
Zhangjigang Pohang Port Co., Ltd.(*2) | Raw material and steel depot service | — | — | — | — | 100.00 | ZPSP (27.70) POSCO-China (25.00) | China | ||||||||||||||||||
POSCO-Vietnam Co., Ltd.(*2) | Cold-rolled steel manufacturing and sales | — | — | — | — | 100.00 | — | Vietnam | ||||||||||||||||||
POSCO-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) | Mexico | ||||||||||||||||||
POSS India Delhi Steel Processing Centre Private Limited | Steel service center | 55,673,970 | 42,532,980 | — | 42,532,980 | 76.40 | — | India | ||||||||||||||||||
POS-NP Pty. Ltd. | Coal trading | 35,000,000 | — | 35,000,000 | 35,000,000 | 100.00 | POSA (100.00) | Australia | ||||||||||||||||||
POSCO-Vietnam Processing Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 80.00 | — | Vietnam | ||||||||||||||||||
POSCO (Chongqing) Automotive Processing Center Co., Ltd.(*2,3) | Steel service center | — | — | — | — | 100.00 | POSCO-China (10.00) | China | ||||||||||||||||||
Suzhou POSCORE Technology Co., Ltd.(*2) | Components manufacturing and sales | — | — | — | — | 100.00 | Posteel(15.15) POA(15.15) POSCORE(69.70) | China | ||||||||||||||||||
POSCO-JYPC Co., Ltd.(*3) | Steel service center | 49,000 | — | 31,550 | 31,550 | 64.39 | POSCO-Japan (64.39) | Japan | ||||||||||||||||||
POSCO-Malaysia SDN. BHD.(*3) | Steel service center | 27,000,000 | 16,200,000 | — | 16,200,000 | 60.00 | POSCAN (85.00) | Malaysia | ||||||||||||||||||
POS-Minerals Corporation(*3) | Mine development and operation | 100 | — | 100 | 100 | 100.00 | Samjung P&A (15.00) | USA | ||||||||||||||||||
POSCO (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
(*3) | These subsidiaries are newly included in the consolidation. |
Summary of Financial Information | ||||||||||||||||||||
Net Income | ||||||||||||||||||||
Subsidiaries | Total Assets | Total Liabilities | Net Assets | Sales | (Loss) | |||||||||||||||
(In millions of Korean won) (*) | ||||||||||||||||||||
Domestic | ||||||||||||||||||||
POSCO E & C Co., Ltd. | 4,730,101 | 3,139,178 | 1,590,923 | 4,517,303 | 161,520 | |||||||||||||||
Posteel Co., Ltd. | 912,379 | 460,815 | 451,564 | 2,479,568 | 115,603 | |||||||||||||||
POSCON Co., Ltd. | 369,372 | 209,537 | 159,835 | 474,757 | 12,731 | |||||||||||||||
POSCO 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 | 3,263 | |||||||||||||||
POSDATA Co., Ltd. | 308,567 | 189,995 | 118,572 | 384,380 | (78,749 | ) | ||||||||||||||
POSCO Research Institute | 26,449 | 3,077 | 23,372 | 19,742 | 187 | |||||||||||||||
Seung 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 | 6,862 | |||||||||||||||
POSCO Specialty Steel Co., Ltd. | 1,007,588 | 440,881 | 566,707 | 1,679,748 | 77,316 | |||||||||||||||
POSCO Machinery Co., Ltd. | 60,925 | 33,122 | 27,803 | 142,125 | 5,033 | |||||||||||||||
POSTECH 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 | 25,181 | |||||||||||||||
POSCO Terminal Co., Ltd. | 50,200 | 11,297 | 38,903 | 66,420 | 11,592 | |||||||||||||||
Metapolis Co., Ltd. | 527,057 | 423,173 | 103,884 | 210,439 | 42,360 | |||||||||||||||
Posmate Co., Ltd. | 55,310 | 19,285 | 36,025 | 79,052 | 2,701 | |||||||||||||||
Samjung 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 | 46,910 | |||||||||||||||
Postech 2006 Energy Fund | 29,393 | 3 | 29,390 | 1,184 | 212 | |||||||||||||||
PHP Co., Ltd. | 571,862 | 570,620 | 1,242 | — | (600 | ) | ||||||||||||||
POSCORE Co., Ltd. | 92,124 | 47,928 | 44,196 | 180,222 | 21,235 | |||||||||||||||
PNR Co., Ltd. | 51,725 | 12,185 | 39,540 | — | 485 | |||||||||||||||
Megaasset Co., Ltd. | 58,068 | 49,961 | 8,107 | 1,609 | (1,893 | ) | ||||||||||||||
Daewoo Engineering Company | 276,230 | 144,447 | 131,783 | 564,825 | 27,992 | |||||||||||||||
Universal Studio Resort Development Co., Ltd. | 10,000 | — | 10,000 | — | — | |||||||||||||||
Overseas | ||||||||||||||||||||
POSCO America Corporation (POSAM) | 284,442 | 109,714 | 174,728 | 208,846 | 11,366 | |||||||||||||||
POSCO Australia Pty. Ltd. (POSA) | 348,774 | 210,739 | 138,035 | 122,733 | 38,523 | |||||||||||||||
POSCO Canada Ltd. (POSCAN) | 361,976 | 109,719 | 252,257 | 289,102 | 128,813 | |||||||||||||||
POSCAN Elkview Coal Ltd. | 46,508 | 2,699 | 43,809 | — | 4,976 |
F-17
Table of Contents
Summary of Financial Information | ||||||||||||||||||||
Net Income | ||||||||||||||||||||
Subsidiaries | 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 | 3,033 | |||||||||||||||
VSC POSCO Steel Corporation (VPS) | 68,785 | 50,485 | 18,300 | 207,048 | 1,747 | |||||||||||||||
Dalian POSCO-CFM Coated Steel Co., Ltd. | 51,822 | 37,336 | 14,486 | 136,075 | 596 | |||||||||||||||
POS-Tianjin Coil Center Co., Ltd. | 48,181 | 33,203 | 14,978 | 107,480 | 566 | |||||||||||||||
POSMETAL Co., Ltd. | 83,341 | 69,054 | 14,287 | 57,936 | 287 | |||||||||||||||
Shanghai Real Estate Development Co., Ltd. | 182,638 | 56,213 | 126,425 | 29,116 | 15,230 | |||||||||||||||
IBC Corporation | 95,102 | 62,472 | 32,630 | 23,697 | 11,326 | |||||||||||||||
POSLILAMA Steel Structure Co., Ltd. | 48,041 | 66,515 | (18,474 | ) | 68,147 | 442 | ||||||||||||||
Zhangjiagang 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 | 415 | |||||||||||||||
Zhangjiagang 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 | 561 | |||||||||||||||
POSCO-MKPC SDN BHD | 95,701 | 52,983 | 42,718 | 122,621 | 5,708 | |||||||||||||||
Qingdao 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 | 2,899 | |||||||||||||||
POSEC-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 | 117 | |||||||||||||||
POS-Ore Pty. Ltd. | 68,080 | 10,492 | 57,588 | 81,156 | 42,268 | |||||||||||||||
POSCO-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 | 8,377 | |||||||||||||||
POSCO 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 | 7,806 | |||||||||||||||
POSCO-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 | 1,352 | |||||||||||||||
POSCO-Foshan Steel Processing Center Co., Ltd. | 170,718 | 137,104 | 33,614 | 379,229 | 3,600 | |||||||||||||||
POSCO E&C (Beijing) Co., Ltd. | 57,975 | 35,731 | 22,244 | 92,761 | 748 |
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Summary of Financial Information | ||||||||||||||||||||
Net Income | ||||||||||||||||||||
Subsidiaries | 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 | 75 | |||||||||||||||
Suzhou 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. |
Number of | Percentage of | |||||||||||||||||||||||||
Outstanding | Number of Shares | Percentage of | Ownership of | |||||||||||||||||||||||
Investees | Primary Business | Shares | POSCO | Subsidiaries | Total | Ownership (%) | Subsidiaries (%) | Location | ||||||||||||||||||
Domestic | ||||||||||||||||||||||||||
eNtoB Corporation | E-business | 3,200,000 | 560,000 | 300,000 | 860,000 | 26.88 | POSCO E&C (3.75) and Others | Seoul | ||||||||||||||||||
MIDAS Information Technology Co., Ltd. | Engineering | 3,402,000 | — | 866,190 | 866,190 | 25.46 | POSCO E&C (25.46) | Seoul | ||||||||||||||||||
Songdo New City Development Inc.(*2) | Real estate | — | — | — | — | 29.90 | POSCO E&C (29.90) | Seoul | ||||||||||||||||||
Gail International Korea Ltd.(*2) | Real estate | — | — | — | — | 29.90 | POSCO E&C (29.90) | Seoul | ||||||||||||||||||
SNNC Co., Ltd.(*1) | Material manufacturing | 37,000,000 | 18,130,000 | — | 18,130,000 | 49.00 | — | Gwangyang | ||||||||||||||||||
Chungju Enterprise City | Construction | 8,000,000 | — | 2,008,000 | 2,008,000 | 25.10 | POSCO E&C (22.00) | Chungju | ||||||||||||||||||
POADATA (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) | Hoengseong | ||||||||||||||||||
KOREA 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 |
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Number of | Percentage of | |||||||||||||||||||||||||
Outstanding | Number of Shares | Percentage of | Ownership of | |||||||||||||||||||||||
Investees | Primary Business | Shares | POSCO | Subsidiaries | Total | Ownership (%) | Subsidiaries (%) | Location | ||||||||||||||||||
Chungla IBT Co., Ltd.(*2,4) | Multiplex development | — | — | — | — | 6.30 | POSCO E&C (6.3) | Incheon | ||||||||||||||||||
Overseas | ||||||||||||||||||||||||||
KOBRASCO(*1) | Facilities lease | 4,021,438,370 | 2,010,719,185 | — | 2,010,719,185 | 50.00 | — | Brazil | ||||||||||||||||||
USS - POSCO Industries (UPI)(*1,2) | Steel processing | — | — | — | — | 50.00 | POSAM (50.00) | USA | ||||||||||||||||||
Poschrome (Proprietary) Limited | Material manufacturing | 86,700 | 21,675 | — | 21,675 | 25.00 | — | Republic of South Africa | ||||||||||||||||||
Guangdong Xingpu Steel Center Co., Ltd.(*2) | Steel processing | — | — | — | — | 21.00 | Posteel (10.50) | China | ||||||||||||||||||
POS-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) | India | ||||||||||||||||||
POSVINA Co., Ltd.(*1,2) | Steel manufacturing | — | — | — | — | 50.00 | — | Vietnam | ||||||||||||||||||
PT POSMI Steel Indonesia (POSMI)(*1) | Steel service center | 12,600 | 1,193 | 3,579 | 4,772 | 37.87 | Posteel (28.40) | Indonesia | ||||||||||||||||||
POSCO Bioventures L.P.(*2,3) | Investment in companies in the bio-tech industry | — | — | — | — | 100.00 | POSAM(100.00) | USA | ||||||||||||||||||
CAML Resources Pty. Ltd.(*1) | Material processing | 9,715 | — | 3,239 | 3,239 | 33.34 | POSA(33.34) | Australia | ||||||||||||||||||
Nickel Mining Company SAS(*1) | Material processing | 6,601,426 | 3,234,698 | — | 3,234,698 | 49.00 | — | New Caledonia | ||||||||||||||||||
Liaoning Rongyuan Posco Refractories Co., Ltd.(*1,2) | Manufacturing and sellings | — | — | — | — | 35.00 | POSREC (35.00) | China | ||||||||||||||||||
POSCO-SK Steel Pinghu Processing Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 20.00 | — | China | ||||||||||||||||||
Hubei Huaerliang POSCO Silicon Science & Technology Co., Ltd.(*2) | Material processing | — | — | — | — | 30.00 | POSCO-China (30.00) | China | ||||||||||||||||||
POSCO Poland Wroclaw Steel Processing Center Co., Ltd. | Steel service center | 100,000 | 30,000 | — | 30,000 | 30.00 | — | Poland | ||||||||||||||||||
Ah khanh New City Development(*1,2) | Construction | — | — | — | — | 50.00 | POSCO E&C (50.00) | Vietnam | ||||||||||||||||||
Henan Tsingpu Ferro Alloy Co., Ltd.(*1,2) | Material processing | — | — | — | — | 49.00 | ZPSS (49.00) | China | ||||||||||||||||||
United Spiral Pipe, LLC. (USP)(*1,2) | Steel pipe manufacturing and sales | — | — | — | — | 35.00 | POSAM (35.00) | USA | ||||||||||||||||||
Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.(*1,2) | Steel manufacturing | — | — | — | — | 34.00 | POSCO-China (10.00) | China | ||||||||||||||||||
BX Steel POSCO Cold Rolled sheet Co., Ltd.(*2) | Steel manufacturing | — | — | — | — | 25.00 | — | China | ||||||||||||||||||
POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd.(*2) | Steel service center | — | — | — | — | 30.00 | — | Slovakia | ||||||||||||||||||
Eureka Moly LLC.(*2) | Material processing | — | — | — | — | 20.00 | POS-Mineral (20.00) | USA | ||||||||||||||||||
POS UTEK Development(*2) | Construction | — | — | — | — | 25.00 | POSCO E&C (25.00) | Russia |
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(*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. |
Location | Investees | Country | Reason | |||
Domestic | HJ photovoltaics, Inc. | Korea | Small company | |||
Garolim Tidal Power Plant Co., Ltd. | Korea | Small company | ||||
Daewoo national car Gwangju selling Co., Ltd. | Korea | Small company | ||||
BASYS INDUSTRY CO., LTD. | Korea | Small company | ||||
SENTECH KOREA CORP. | Korea | Small company | ||||
Applied Science Corp. | Korea | Small company | ||||
POSBRO Co., Ltd. | Korea | Small company | ||||
POSWITH Co., Ltd. | Korea | Small company | ||||
Pohang SFC Co., Ltd. | Korea | Small company | ||||
Poscoenc SongDo International Building Co., Ltd. | Korea | Small company | ||||
POSTECH BD Newundertaking fund | Korea | Small company | ||||
Pohang Fuelcell Power Corporation | Korea | Small company | ||||
AROMA POSTECH RENEWABLE ENERGY, CO., LTD. | Korea | Non-majority control | ||||
Innovalley Co., Ltd. | Korea | Non-majority control | ||||
DONGKWANG ELECTRIC CO., LTD. | Korea | Under liquidation | ||||
MIRAE COMMUNICATION CO., LTD. | Korea | Under liquidation | ||||
Busan-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 company | ||||
Overseas | POSCO E&C Nigeria Ltd. | Nigeria | Small company | |||
DWEMEX, S.A.DE C.V. | Mexico | Small company | ||||
POS MPC Servicios de C.V. | Mexico | Small company | ||||
POSCO E&C SMART | Mexico | Small company |
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Location | Investees | Country | Reason | |||
Overseas | POSCO MEXICO HUMAN TECH | Mexico | Small company | |||
POSCO-MESDC | Mexico | Small company | ||||
&TV Communications, Inc. | USA | Small company | ||||
HAMOS | Vietnam | Small company | ||||
Europe Steel Distribution Center (POS-ESDC, Logistics, Trading and Investment d.o.o) | Slovenia | Small company | ||||
AZER POSCO E&C. LLC. | Azerbaijan | Small company | ||||
VECTUS LIMITED | UK | Small company | ||||
POSCO E&C India Private Ltd. | India | Small company | ||||
PT.POSNESIA | Indonesia | Under liquidation | ||||
Dalian Poscon Dongbang Automatic Co., Ltd. | China | Small company | ||||
San Pu Trading Co., Ltd. | China | Small company | ||||
Yingkou Posrec Refractories Co., Ltd. | China | Small company | ||||
Zhangjiagang BLZ Pohang International Trading Co., Ltd. | China | Small company | ||||
Zhangjiagang Pohang Refractories Co., Ltd. | China | Small company | ||||
Qingdao Posco Steel Processing Co., Ltd | China | Small company | ||||
POSCO SeAH Steel Wire (Nantong) Co., Ltd | China | Small company | ||||
POSCO-SAMSUNG-SUZHOU PROCESSING CENTER(POSS-SZPC) | China | Small company | ||||
POSDATA-CHINA | China | Small company | ||||
POSA Cayman | Cayman Islands | Small company | ||||
DAEWOO TECH THAILAND | Thailand | Small company | ||||
POSCO Philippine Manila Processing Center, Inc. (POS-PMPC) | Philippine | Small company | ||||
Miller Pohang Coal Company Pty Ltd. (MPCC) | Australia | Non-majority control | ||||
POS JK LLC. | UAE | Small company | ||||
POSCO Gulf Logistics LLC. | UAE | Small company |
(*) | SOC (“Social Overhead Capital”) business represents capital spent on harbor facilities, universities and etc. |
F-22
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Investees | Location | Reason | ||
PNR Co., Ltd. | Pohang | The Company made investments to establish | ||
Megaasset Co., Ltd. | Cheonan | The Company made investments to establish | ||
Universal Studio Resort Development Co., Ltd. | Hwasung | The Company made investments to establish | ||
Daewoo Engineering Co., Ltd. | Sungnam | The Company newly acquired more than 50% of interest related to this investment in 2008 | ||
PHP Co., Ltd. | Incheon | Total assets exceeded | ||
POS-Minerals Corporation | USA | The Company made investments to establish | ||
POSCO (Wuhu) Processing Center Co., Ltd. | China | The Company made investments to establish | ||
POSCO-Malaysia SDN. BHD. | Malaysia | The Company newly acquired more than 50% of interest related to this investment in 2008 | ||
POSCO-JYPC Co., Ltd. | Japan | Total assets exceeded | ||
POSCO (Chongqing) Automotive Processing Center Co., Ltd. | China | Total assets exceeded |
2008 | ||||||||||||
Net Assets Value | Adjustment | Net Assets Value | ||||||||||
Investees | Before Adjustment | Amount | After Adjustment | |||||||||
(In millions of Korean won) | ||||||||||||
Posteel Co., Ltd. | 451,564 | (601 | ) | 450,963 | ||||||||
POSCON Co., Ltd. | 159,835 | 1,329 | 161,164 | |||||||||
POSCO Coated & Color Steel Co., Ltd. | 216,853 | (4,107 | ) | 212,746 | ||||||||
POSCO Refractories & Environment Co., Ltd. (POSREC) | 154,729 | 5,544 | 160,273 | |||||||||
Samjung Packing & Aluminum Co., Ltd. | 56,808 | 3,775 | 60,583 | |||||||||
POSCO Power Corp. | 552,569 | (7,910 | ) | 544,659 | ||||||||
POSCO Asia Co., Ltd. | 31,420 | (352 | ) | 31,068 | ||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | 635,615 | (71,419 | ) | 564,196 | ||||||||
POSCO Investment Co., Ltd. | 92,599 | (3,915 | ) | 88,684 | ||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 132,733 | (21,682 | ) | 111,051 | ||||||||
POSCO-Japan Co., Ltd. | 107,306 | (1,097 | ) | 106,209 | ||||||||
POS-Qingdao Coil Center Co., Ltd. | 14,515 | (34 | ) | 14,481 | ||||||||
POSCO E&C (Beijing) Co., Ltd. | 22,244 | (275 | ) | 21,969 |
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Table of Contents
2007 | ||||||||||||
Net Assets Value | Adjustment | Net Assets Value | ||||||||||
Investees | Before Adjustment | Amount | After Adjustment | |||||||||
(In millions of Korean won) | ||||||||||||
Posteel Co., Ltd. | 324,736 | (626 | ) | 324,111 | ||||||||
POSCON Co., Ltd. | 149,729 | 901 | 150,630 | |||||||||
POSCO Coated & Color Steel Co., Ltd. | 275,322 | (2,821 | ) | 272,501 | ||||||||
POSCO Refractories & Environment Co., Ltd. (POSREC) | 132,953 | 6,451 | 139,404 | |||||||||
Samjung Packing & Aluminum Co., Ltd. | 77,793 | 2,362 | 80,155 | |||||||||
POSCO Power Corp. | 523,318 | (1,509 | ) | 521,809 | ||||||||
POSCO Asia Co., Ltd. | 20,861 | (544 | ) | 20,317 | ||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | 569,173 | (42,750 | ) | 526,423 | ||||||||
POSCO Investment Co., Ltd. | 68,609 | (1,574 | ) | 67,036 | ||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 83,558 | (6,215 | ) | 77,344 | ||||||||
POSCO-Japan Co., Ltd. | 58,188 | (545 | ) | 57,643 |
2. | Summary of significant accounting policies and basis of presenting financial statements |
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F-26
Table of Contents
Estimated Useful Lives | ||
Buildings and structures | 5 - 60 years | |
Machinery and equipment | 3 - 25 years | |
Vehicles | 3 - 10 years | |
Tools | 4 - 10 years | |
Furniture and fixtures | 3 - 10 years | |
Capital lease asset (*) | 18 years |
(*) | Capital lease asset is depreciated over the shorter of the lease term or the estimated useful lives of the asset. |
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Table of Contents
Estimated Useful Lives | ||
Goodwill | 5 - 20 years | |
Negative goodwill | 5 - 10 years | |
Intellectual property rights | 5 - 10 years | |
Research and development cost(*1) | 3 - 10 years | |
Port facilities usage rights(*2) | 3 - 75 years | |
Long - term electricity supply contract rights(*3) | 9 - 15 years | |
Other 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. |
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F-31
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3. | Cash and Cash Equivalents, and Financial Instruments |
Annual Interest Rate (%) | 2008 | 2007 | ||||||||||
(In millions of Korean won) | ||||||||||||
Cash and cash equivalents | ||||||||||||
Cash on hand and bank deposits | 0.00~ 3.00 | 74,657 | 95,292 | |||||||||
Checking accounts | 0.00~ 1.00 | 3,160 | 16,103 | |||||||||
Corporate bank deposits | 0.00~ 7.43 | 459,023 | 558,267 | |||||||||
Time deposits | 5.01~ 6.70 | 598,000 | — | |||||||||
Time deposits in foreign currency and others | 0.47~ 6.70 | 517,561 | 286,679 | |||||||||
Maintained by overseas affiliates | 0.00~12.00 | 838,309 | 336,487 | |||||||||
2,490,710 | 1,292,828 | |||||||||||
Less: Government grants | (446 | ) | (247 | ) | ||||||||
2,490,264 | 1,292,581 | |||||||||||
Short-term financial instruments | ||||||||||||
Time deposits | 2.25~ 7.15 | 1,049,535 | 839,257 | |||||||||
Installment accounts | — | — | 160 | |||||||||
Specified money in trust | — | 80,455 | 3,002 | |||||||||
Certificates of deposit | 5.50~ 7.40 | 529,000 | 769,430 | |||||||||
Commercial papers | 7.00~ 7.70 | 20,000 | 14,587 | |||||||||
Others | 0.10~ 12.50 | 93,351 | 54,902 | |||||||||
Maintained by overseas affiliates | 1.00~ 15.60 | 55,109 | 61,741 | |||||||||
1,827,450 | 1,743,079 | |||||||||||
Long-term financial instruments | ||||||||||||
Installment accounts | 5.00~ 10.00 | 16,355 | 16,952 | |||||||||
Guarantee deposits for opening accounts | — | 107 | 113 | |||||||||
16,462 | 17,065 | |||||||||||
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Table of Contents
4. | Trading Securities |
2008 | 2007 | |||||||||||||||
Acquisition Cost | Fair Value | Book Value | Book Value | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Beneficiary certificates and others | 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 | 6,158,066 | 4,290,213 | ||||||
Less: Allowance for doubtful accounts | (263,802 | ) | (254,417 | ) | ||||
Less: Present value discount | (171 | ) | (194 | ) | ||||
5,894,093 | 4,035,602 | |||||||
Other accounts and notes receivable | 555,902 | 248,601 | ||||||
Less: Allowance for doubtful accounts | (17,153 | ) | (33,287 | ) | ||||
Less: Present value discount | (239 | ) | (358 | ) | ||||
538,510 | 214,956 | |||||||
Long-term trade accounts and notes receivable | 29,623 | 58,411 | ||||||
Less: Allowance for doubtful accounts | (4,528 | ) | (16,187 | ) | ||||
Less: Present value discount | (1,831 | ) | (2,305 | ) | ||||
23,264 | 39,919 | |||||||
Long-term loans receivable | 97,793 | 43,201 | ||||||
Less: Allowance for doubtful accounts | (17,448 | ) | (2,650 | ) | ||||
Less: Present value discount | (58 | ) | (77 | ) | ||||
80,287 | 40,474 | |||||||
F-33
Table of Contents
Present | ||||||||||||||||||
Value | Discount | |||||||||||||||||
Face Value | Discount | Book Value | Maturity | Rate (%) | ||||||||||||||
(In millions of Korean won) | ||||||||||||||||||
Other accounts receivable | ||||||||||||||||||
BNG Steel Co., Ltd. | 10,000 | 239 | 9,761 | 2009 | 5.6 | |||||||||||||
10,000 | 239 | 9,761 | ||||||||||||||||
Long-term loans receivable | ||||||||||||||||||
Lee Dongjoon and others | 212 | 32 | 180 | 2017 | 7.5 | |||||||||||||
Riviera C.C | 260 | 27 | 233 | 2011 | 3.7 | |||||||||||||
472 | 59 | 413 | ||||||||||||||||
Long-term trade accounts and notes receivable | ||||||||||||||||||
BNG Steel Co., Ltd.(*) | 12,900 | 926 | 11,974 | 2009 | 8.6 | |||||||||||||
DK Dongsin Co., Ltd.(*) | 9,087 | 383 | 8,704 | 2010 | 4.7 | |||||||||||||
Others | 25,993 | 2,001 | 23,992 | 2011 2016 | 4.7 - 6.5 | |||||||||||||
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. |
Additions | ||||||||||||||||||||
Balance at | Charged to | Changes in | Balance at | |||||||||||||||||
Beginning of | Costs and | Scope of | the End of | |||||||||||||||||
Description | 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 | 341,766 | 28,186 | 1,072 | 30,699 | 340,325 | |||||||||||||||
Year 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 | 341,766 | |||||||||||||||
Year 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
6. | Inventories |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Finished goods | 2,003,646 | 1,064,036 | ||||||
By-products | 41,841 | 24,983 | ||||||
Semi-finished goods | 2,389,245 | 1,387,703 | ||||||
Raw materials | 2,077,569 | 1,177,880 | ||||||
Fuel and materials | 563,136 | 520,882 | ||||||
Materials-in-transit | 1,698,042 | 786,278 | ||||||
Others | 8,251 | 3,706 | ||||||
8,781,730 | 4,965,468 | |||||||
Less: Provision for valuation loss | (120,009 | ) | (63,452 | ) | ||||
8,661,721 | 4,902,016 | |||||||
7. | Investment Securities |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Available-for-sale securities | 4,257,625 | 4,511,569 | ||||||
Held-to-maturity securities | 87,321 | 62,542 | ||||||
Equity-method investments | 832,536 | 604,612 | ||||||
5,177,482 | 5,178,723 | |||||||
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Current portion ofavailable-for-sale securities | ||||||||
Investments in bonds | 30,888 | 32,113 | ||||||
Available-for-sale securities | ||||||||
Marketable equity securities | 2,917,595 | 3,888,043 | ||||||
Non-marketable equity securities | 1,306,739 | 599,414 | ||||||
Investments in bonds | 8,467 | 3,762 | ||||||
Equity investments | 24,824 | 20,350 | ||||||
4,257,625 | 4,511,569 | |||||||
4,288,513 | 4,543,682 | |||||||
F-35
Table of Contents
2008 | 2007 | |||||||||||||||||||||||
Number of | Percentage of | Acquisition | Fair | Book | Book | |||||||||||||||||||
Company | Shares | Ownership (%) | Cost | Value | Value(*1) | Value | ||||||||||||||||||
(In millions Korean of won) | ||||||||||||||||||||||||
SK Telecom Co., Ltd.(*1) | 4,297,549 | 5.29 | 1,208,677 | 891,835 | 891,835 | 1,061,740 | ||||||||||||||||||
Hana Financial Group Inc. | 4,663,776 | 2.20 | 29,998 | 90,943 | 90,943 | 235,054 | ||||||||||||||||||
Nippon Steel Corporation(*1) | 238,352,000 | 3.50 | 719,622 | 963,486 | 963,486 | 1,374,491 | ||||||||||||||||||
Hyundai Heavy Industries Co., Ltd. | 1,477,000 | 1.94 | 343,505 | 294,661 | 294,661 | 653,572 | ||||||||||||||||||
Hanil Iron & Steel Co., Ltd. | 206,798 | 10.14 | 2,413 | 1,596 | 1,596 | 5,811 | ||||||||||||||||||
HI Steel Co., Ltd. | 135,357 | 9.95 | 1,609 | 1,766 | 1,766 | 2,430 | ||||||||||||||||||
Munbae Steel Co., Ltd. | 1,849,380 | 9.02 | 3,588 | 3,921 | 3,921 | 8,230 | ||||||||||||||||||
Dong Yang Steel Pipe Co., Ltd. | 1,564,250 | 2.45 | 3,911 | 1,400 | 1,400 | 2,831 | ||||||||||||||||||
Korea Line Corp. | 217,373 | 1.89 | 8,067 | 14,347 | 14,347 | 35,867 | ||||||||||||||||||
Shinhan Financial Group Inc. | 3,815,676 | 0.96 | 219,467 | 113,326 | 113,326 | 204,139 | ||||||||||||||||||
SeAH Steel Corp. | 540,000 | 10.11 | 18,792 | 23,490 | 23,490 | 26,028 | ||||||||||||||||||
Thainox Stainless Public Company Limited | 1,200,000,000 | 15.00 | 42,301 | 40,299 | 40,299 | 46,243 | ||||||||||||||||||
Union Steel Co. , Ltd. | 1,005,000 | 9.80 | 40,212 | 14,472 | 14,472 | 23,618 | ||||||||||||||||||
Macarthur 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 | 854 | ||||||||||||||||||
Muchison Metals Ltd. | 50,567,000 | 12.25 | 22,620 | 27,737 | 27,737 | 114,212 | ||||||||||||||||||
Cockatoo Coal Ltd. | 73,595,835 | 19.99 | 21,750 | 21,129 | 21,129 | 40,574 | ||||||||||||||||||
Sandfire 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 | 2,284 | ||||||||||||||||||
Pixelplus Co., Ltd.(*4) | 159,156 | 4.78 | 2,606 | 62 | 62 | 346 | ||||||||||||||||||
KOSES Co., Ltd. | 328,857 | 6.13 | 617 | 401 | 401 | 1,483 | ||||||||||||||||||
Aromasoft Corp Co., Ltd. | 685,459 | 11.25 | 654 | 877 | 877 | 2,300 | ||||||||||||||||||
i-Components Co., Ltd. | 100,000 | 2.13 | 300 | 290 | 290 | — | ||||||||||||||||||
Maruichi Steel Tube Ltd. | 345,100 | 0.37 | 13,942 | 11,906 | 11,906 | 7,995 | ||||||||||||||||||
FuelCell Energy, Inc. | 3,822,630 | 5.61 | 27,141 | 18,651 | 18,651 | 35,577 | ||||||||||||||||||
Others | — | — | — | — | — | 2,364 | ||||||||||||||||||
3,710,341 | 2,917,595 | 2,917,595 | 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 | |
(*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 |
F-36
Table of Contents
2008 | 2007 | |||||||||||||||||||
Number of | Percentage of | Acquisition | Book | Book | ||||||||||||||||
Company | Shares | Ownership (%) | Cost | Value | Value | |||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||
The Siam United Steel(*1) | 11,071,000 | 12.30 | 34,658 | 58,367 | 34,658 | |||||||||||||||
Big Jump Energy Participacoes S.A. | — | 16.20 | 667,824 | 667,824 | — | |||||||||||||||
GLOBAL UNITY LTD. | 70,649 | 13.33 | 710 | 710 | 710 | |||||||||||||||
PT-POSNESIA(*2) | 29,610,000 | 70.00 | 9,474 | 1,567 | 1,567 | |||||||||||||||
The Korea economic daily | 28,728 | 0.15 | 309 | 309 | 309 | |||||||||||||||
The Seoul Shinmun Co., Ltd. | 1,614,000 | 19.40 | 7,479 | — | — | |||||||||||||||
THE KOREA METAL | ||||||||||||||||||||
JOURNAL Co., Ltd. | 2,000 | 2.67 | 20 | 20 | 20 | |||||||||||||||
Pohang Steelers Co., Ltd. | 35,200 | 14.67 | 176 | 176 | 200 | |||||||||||||||
Chunnam Dragons Football Club Co., Ltd. | 19,799 | 13.20 | 99 | 99 | 99 | |||||||||||||||
POSHOME Co., Ltd. | 10,000 | 3.69 | 50 | 50 | 50 | |||||||||||||||
Kihyup Technology Banking Corp. | 600,000 | 10.34 | 3,000 | 3,000 | 3,000 | |||||||||||||||
Samwon steel Co., Ltd. | 1,786,000 | 19.00 | 8,930 | 8,930 | 8,930 | |||||||||||||||
POSWITH Co., Ltd.(*2) | 320,000 | 100.00 | 1,600 | 1,600 | 1,600 | |||||||||||||||
Woori DCI Co., Ltd. | 5,653 | 18.84 | 28 | 28 | 28 | |||||||||||||||
RCC Co., Ltd. | 9,053 | 18.11 | 45 | 45 | 45 | |||||||||||||||
MTS Korea Inc. | 11,076 | 18.46 | 55 | 55 | 55 | |||||||||||||||
Taihan ST Corp., Ltd. | 796,000 | 19.90 | 13,930 | 13,930 | 13,930 | |||||||||||||||
WUHAN Excellent Steel Center (WESC)(*3) | — | 5.00 | 432 | 432 | 432 | |||||||||||||||
POSCO-SAMSUNG Suzhou Processing Center (POSS-SZPC)(*2,*3) | — | 30.00 | 1,608 | 1,608 | 1,608 | |||||||||||||||
POSCO MEXICO HUMAN TECH(*2,*3) | — | 80.00 | 3 | 3 | 3 | |||||||||||||||
Europe Steel Distribution Center (POS-ESDC, Logistics, Trading and Investment d.o.o)(*2,*3) | — | 50.00 | 1,893 | 1,893 | 1,893 | |||||||||||||||
HAMOS(*2,*3) | — | 20.00 | 998 | 998 | 998 | |||||||||||||||
Keo Yang Shipping Co., Ltd.(*5) | — | — | — | — | 780 | |||||||||||||||
LG Powercom Corporation(*6) | — | — | — | — | 93,398 | |||||||||||||||
ESCO Professionals., Ltd. | — | — | — | — | 21 | |||||||||||||||
TFS Global Co., Ltd. | — | — | — | — | 26 | |||||||||||||||
CTA Co., Ltd. | — | — | — | — | 37 | |||||||||||||||
POSCO-SK STEEL Pinghu Processing Center Co., Ltd.(*4) | — | — | — | — | 1,869 | |||||||||||||||
POSCO Poland Steel Processing Center Co., Ltd.(*4) | — | — | — | — | 3,803 | |||||||||||||||
POSCO (Chongqing) Automotive | ||||||||||||||||||||
Processing Center Co., Ltd.(*7) | — | — | — | — | 6,201 | |||||||||||||||
POSCO-SAMSUNG Slovakia | ||||||||||||||||||||
Steel Processing Center Co., Ltd.(*4) | — | — | — | — | 1,794 | |||||||||||||||
Airport Railroad Co., Ltd.(*1) | 22,101,940 | 11.90 | 110,510 | 179,026 | 179,026 | |||||||||||||||
Daejeon Cogeneration Plant Co., Ltd. | — | — | — | — | 11,196 | |||||||||||||||
Busan Gimhae Light Rail Transit Co., Ltd.(*2) | 9,160,000 | 20.85 | 45,800 | 45,800 | 17,954 |
F-37
Table of Contents
2008 | 2007 | |||||||||||||||||||
Number of | Percentage of | Acquisition | Book | Book | ||||||||||||||||
Company | Shares | Ownership (%) | Cost | Value | Value | |||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||
Seoul Metro Line9 Corporation | 4,090,985 | 12.25 | 20,455 | 20,455 | 17,030 | |||||||||||||||
Korea Athletic Promotion Association | 839,964 | 16.42 | 8,627 | 8,476 | 8,627 | |||||||||||||||
VECTUS LIMITED(*2) | 2,211,837 | 99.59 | 8,220 | 3,227 | 7,006 | |||||||||||||||
U-Space Co., Ltd. | 2,800,000 | 10.00 | 14,000 | 14,000 | 14,000 | |||||||||||||||
Sinbundang Railroad Co., Ltd. | 2,189,948 | 7.14 | 11,114 | 11,114 | 10,305 | |||||||||||||||
Kenertec Co., Ltd.(*3) | — | 0.00 | 10,000 | 10,000 | 10,000 | |||||||||||||||
Eco-City Corporation | 1,596,000 | 19.00 | 7,980 | 7,980 | 7,980 | |||||||||||||||
Pohang Youngil New Port Corporation | 1,123,200 | 7.20 | 5,616 | 5,616 | 5,616 | |||||||||||||||
Gyeong Su Highway Co., Ltd. | 992,000 | 3.20 | 4,960 | 4,960 | 4,960 | |||||||||||||||
Dream 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 | 127,650 | |||||||||||||||
1,262,731 | 1,306,739 | 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 | |
(*3) | No shares have been issued in accordance with the local laws or regulations. | |
(*4) | Those investments were reclassified to equity-method investments fromavailable-for-sale securities since their total assets are greater than | |
(*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 fromavailable-for-sale securities since their total assets are greater than |
F-38
Table of Contents
2008 | 2007 | |||||||||||||||||||||||
Beginning | Increase | Ending | Beginning | Increase | Ending | |||||||||||||||||||
Company | Balance | (Decrease) | Balance | Balance | (Decrease) | Balance | ||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
SK Telecom Co., Ltd. | (98,383 | ) | (148,754 | ) | (247,137 | ) | (185,185 | ) | 86,802 | (98,383 | ) | |||||||||||||
Hana Financial Group Inc. | 148,666 | (101,129 | ) | 47,537 | 143,594 | 5,072 | 148,666 | |||||||||||||||||
Nippon Steel Corporation | 474,780 | (284,566 | ) | 190,214 | 412,453 | 62,327 | 474,780 | |||||||||||||||||
Hyundai Heavy Industries Co., Ltd. | 224,798 | (262,896 | ) | (38,098 | ) | — | 224,798 | 224,798 | ||||||||||||||||
Hanil Iron & Steel Co., Ltd. | 2,464 | (3,273 | ) | (809 | ) | 1,467 | 997 | 2,464 | ||||||||||||||||
HI Steel Co., Ltd. | 595 | (472 | ) | 123 | 404 | 191 | 595 | |||||||||||||||||
Munbae Steel Co., Ltd. | 3,365 | (3,275 | ) | 90 | (865 | ) | 4,230 | 3,365 | ||||||||||||||||
Dong 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 | 20,155 | |||||||||||||||||
Shinhan Financial Group Inc. | (11,114 | ) | (71,676 | ) | (82,790 | ) | — | (11,114 | ) | (11,114 | ) | |||||||||||||
SeAH Steel Corp. | 5,246 | (1,582 | ) | 3,664 | — | 5,246 | 5,246 | |||||||||||||||||
Thainox Stainless Public Company Limited | 2,858 | (4,420 | ) | (1,562 | ) | — | 2,858 | 2,858 | ||||||||||||||||
Union 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 | 112,181 | |||||||||||||||||
780,484 | (1,276,043 | ) | (495,559 | ) | 281,773 | 498,711 | 780,484 | |||||||||||||||||
2008 | ||||||||||||||
Acquisition | 2007 | |||||||||||||
Maturity | Cost | Book Value | Book Value | |||||||||||
(In millions of Korean won) | ||||||||||||||
Government bonds | Less than 1 year | 494 | 494 | 4,694 | ||||||||||
1-5 years | 97 | 97 | 76 | |||||||||||
5-10 years | — | — | 48 | |||||||||||
Corporate debt securities | Less than 1 year | 30,394 | 30,394 | 27,419 | ||||||||||
1-5 years | 8,370 | 8,370 | 3,638 | |||||||||||
39,355 | 39,355 | 35,875 | ||||||||||||
Less: Current portion | (30,888 | ) | (30,888 | ) | (32,113 | ) | ||||||||
8,467 | 8,467 | 3,762 | ||||||||||||
F-39
Table of Contents
2008 | 2007 | |||||||||||
Acquisition | ||||||||||||
Cost | Book Value | Book Value | ||||||||||
(In millions of Korean won) | ||||||||||||
Contractor financial fund | 14,705 | 17,676 | 15,635 | |||||||||
Others | 5,862 | 7,148 | 4,715 | |||||||||
20,567 | 24,824 | 20,350 | ||||||||||
2008 | 2007 | |||||||||||||||||||||||||||||||
Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Amortized | Unrealized | Unrealized | Fair | |||||||||||||||||||||||||
Cost (*) | Gains | Losses | Value | Cost (*) | Gains | Losses | Value | |||||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||
Government and municipal bonds | 591 | — | — | 591 | 4,818 | — | — | 4,818 | ||||||||||||||||||||||||
Other bonds | 38,764 | — | — | 38,764 | 31,118 | 419 | (480 | ) | 31,057 | |||||||||||||||||||||||
39,355 | — | — | 39,355 | 35,936 | 419 | (480 | ) | 35,875 | ||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Marketable equity securities | 3,611,012 | 322,218 | (1,015,635 | ) | 2,917,595 | 2,711,958 | 1,357,567 | (181,482 | ) | 3,888,043 | ||||||||||||||||||||||
Non-marketable equity securities | 1,239,894 | 108,445 | (41,600 | ) | 1,306,739 | 643,390 | 123,409 | (167,385 | ) | 599,414 | ||||||||||||||||||||||
Investment in capital | 20,567 | 4,257 | — | 24,824 | 17,367 | 2,983 | — | 20,350 | ||||||||||||||||||||||||
4,871,473 | 434,920 | (1,057,235 | ) | 4,249,158 | 3,372,715 | 1,483,959 | (348,867 | ) | 4,507,807 | |||||||||||||||||||||||
4,910,828 | 434,920 | (1,057,235 | ) | 4,288,513 | 3,408,651 | 1,484,378 | (349,347 | ) | 4,543,682 | |||||||||||||||||||||||
(*) | Acquisition cost less impairment loss |
F-40
Table of Contents
2008 | 2007 | |||||||||||||
Acquisition | Book | Book | ||||||||||||
Maturity | Cost | Value | Value | |||||||||||
(In millions of Korean won) | ||||||||||||||
Current portion ofheld-to-maturity securities Government bonds | Less than 1 year | 20,613 | 20,613 | 192,393 | ||||||||||
Held-to-maturity securities Government bonds | 1-5 years | 92,563 | 86,756 | 31,635 | ||||||||||
5-10 years | 565 | 565 | 30,907 | |||||||||||
93,128 | 87,321 | 62,542 | ||||||||||||
113,741 | 107,934 | 254,935 | ||||||||||||
(*) | Certain portion of the government bonds has been pledged as collateral for the consolidated subsidiaries. (note 10) |
F-41
Table of Contents
2008 | 2007 | |||||||||||||||||||||||
Number of | Percentage of | Acquisition | Net Asset | Book | Book | |||||||||||||||||||
Investees(*1) | Shares | Ownership (%) | Cost | Value | Value | Value | ||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
eNtoB Corporation(*3) | 860,000 | 28.44 | 5,550 | 7,717 | 7,519 | 6,149 | ||||||||||||||||||
Midas IT Co., Ltd. | 866,190 | 25.46 | 433 | 6,945 | 6,926 | 5,321 | ||||||||||||||||||
Songdo Cosmopolitan City Development Inc.(*3,6) | — | 29.90 | 6,674 | (104,929 | ) | — | — | |||||||||||||||||
Gale International Korea Inc.(*3) | — | 29.90 | 427 | 7,080 | 6,983 | 11,385 | ||||||||||||||||||
SNNC Co., Ltd. | 18,130,000 | 49.00 | 90,650 | 65,782 | 59,020 | 87,762 | ||||||||||||||||||
Chungju Enterprise City | 2,008,000 | 25.10 | 10,040 | 7,715 | 7,686 | 9,576 | ||||||||||||||||||
Taegisan 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 | 41,143 | ||||||||||||||||||
USS-POSCO Industries (UPI)(*2,3) | — | 50.00 | 244,532 | 77,816 | 51,330 | 59,771 | ||||||||||||||||||
Poschrome (Proprietary) Limited | 21,675 | 25.00 | 4,859 | 12,386 | 5,004 | 5,165 | ||||||||||||||||||
Guangdong Xingpu Steel Center Co., Ltd.(*3) | — | 21.00 | 1,852 | 5,579 | 5,422 | 3,026 | ||||||||||||||||||
POS-Hyundai Steel Manufacturing India Private Limited | 6,919,400 | 29.50 | 3,136 | 4,657 | 4,657 | 4,025 | ||||||||||||||||||
POSVINA Co., Ltd.(*2,3) | — | 50.00 | 1,527 | 2,605 | 2,455 | 2,192 | ||||||||||||||||||
PT POSMI Steel Indonesia (POSMI)(*2) | 4,772 | 37.87 | 3,187 | 4,166 | 3,767 | 3,177 | ||||||||||||||||||
POSCO Bioventures L.P.(*3,5) | — | 100.00 | 46,102 | 39,584 | 39,584 | 35,190 | ||||||||||||||||||
CAML Resources Pty. Ltd.(*2) | 3,239 | 33.34 | 40,388 | 24,209 | 31,959 | 28,155 | ||||||||||||||||||
Nickel Mining Company SAS(*2) | 3,234,698 | 49.00 | 157,585 | 254,402 | 220,553 | 200,622 | ||||||||||||||||||
Liaoning Rongyuan Posco | ||||||||||||||||||||||||
Refractories Co., Ltd.(*2,3) | — | 35.00 | 1,105 | 2,336 | 2,175 | 1,380 | ||||||||||||||||||
POSCO-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 | 4,385 | ||||||||||||||||||
POSCO 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 | 10,893 | ||||||||||||||||||
Henan Tsingpu Ferro Alloy Co., Ltd.(*2,3) | — | 49.00 | 8,846 | 4,945 | 5,084 | 8,470 | ||||||||||||||||||
United Spiral Pipe, LLC. (USP)(*2,3) | — | 35.00 | 29,108 | 31,718 | 32,260 | — |
F-42
Table of Contents
2008 | 2007 | |||||||||||||||||||||||
Number of | Percentage of | Acquisition | Net Asset | Book | Book | |||||||||||||||||||
Investees(*1) | Shares | Ownership (%) | Cost | Value | Value | Value | ||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd.(*2,3) | — | 34.00 | 9,517 | 17,135 | 16,944 | 10,043 | ||||||||||||||||||
BX Steel POSCO Cold Rolled sheet Co., Ltd.(*3) | — | 25.00 | 61,961 | 81,199 | 90,776 | 66,782 | ||||||||||||||||||
POSCO-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 | — | ||||||||||||||||||
924,643 | 699,408 | 832,536 | 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 |
F-43
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2008 | 2007 | |||||||||||||||||||||||
Property, Plant | Property, Plant | |||||||||||||||||||||||
and Equipment, | and Equipment, | |||||||||||||||||||||||
and Intangible | and Intangible | |||||||||||||||||||||||
Investee | Inventories | Assets | Total | Inventories | Assets | Total | ||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
eNtoB Corporation | 123 | 10 | 133 | (340 | ) | (18 | ) | (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 | — | 3,000 | ||||||||||||||||
USS-POSCO Industries (UPI) | (6,268 | ) | — | (6,268 | ) | 8,558 | — | 8,558 | ||||||||||||||||
Poschrome (Proprietary) Limited | (7,674 | ) | — | (7,674 | ) | (615 | ) | — | (615 | ) | ||||||||||||||
Guangdong Xingpu Steel Center Co., Ltd. | (66 | ) | — | (66 | ) | 254 | — | 254 | ||||||||||||||||
POSVINA Co., Ltd. | (77 | ) | — | (77 | ) | 14 | — | 14 | ||||||||||||||||
PT POSMI Steel Indonesia (POSMI) | (393 | ) | — | (393 | ) | 125 | — | 125 | ||||||||||||||||
Nickel 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 | — | 127 | ||||||||||||||||||
Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd. | (167 | ) | — | (167 | ) | — | — | — | ||||||||||||||||
(34,527 | ) | (5,995 | ) | (40,522 | ) | 11,123 | (1,740 | ) | 9,383 | |||||||||||||||
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Dec. 31 | Dec. 31 | Dec. 31 | ||||||||||||||||||||||||||
2006 | Increase | 2007 | Increase | 2008 | ||||||||||||||||||||||||
Investee | Balance | (Decrease) | Amortization | Balance | (Decrease) | Amortization | Balance | |||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
eNtoB Corporation | — | 670 | (80 | ) | 590 | 244 | (138 | ) | 696 | |||||||||||||||||||
SNNC Co., Ltd. | — | 209 | (21 | ) | 188 | — | (42 | ) | 146 | |||||||||||||||||||
KOREA SOLAR PARK Co., Ltd. | — | — | — | — | 1,392 | (278 | ) | 1,114 | ||||||||||||||||||||
POSMMIT Steel Centre SDN BHD | 19 | (19 | ) | — | — | — | — | — | ||||||||||||||||||||
PT POSMI Steel Indonesia | 221 | — | (187 | ) | 34 | — | (10 | ) | 24 | |||||||||||||||||||
CAML Resources Pty Ltd. | 19,279 | — | (5,764 | ) | 13,515 | — | (5,764 | ) | 7,751 | |||||||||||||||||||
POSCO 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 | ) | 9,577 | |||||||||||||||||||
POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd. | — | — | — | — | 98 | (98 | ) | — | ||||||||||||||||||||
19,519 | 14,223 | (7,166 | ) | 26,576 | 1,977 | (9,245 | ) | 19,308 | ||||||||||||||||||||
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Equity | Equity | |||||||||||||||||||||||||||
Dec. 31 | Method | Other | Dec. 31 | Method | Other | Dec. 31 | ||||||||||||||||||||||
2006 | Profits | Increase | 2007 | Profits | Increase | 2008 | ||||||||||||||||||||||
Investees | Balance | (Losses) | (Decrease) (*) | Balance | (Losses) | (Decrease) (*) | Balance | |||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
eNtoB Corporation | 4,399 | 488 | 1,262 | 6,149 | 748 | 622 | 7,519 | |||||||||||||||||||||
Midas IT Co., Ltd. | 4,292 | 1,002 | 27 | 5,321 | 1,788 | (183 | ) | 6,926 | ||||||||||||||||||||
Songdo Cosmopolitan City | — | — | — | — | — | — | — | |||||||||||||||||||||
Gale International Korea Inc. | 2,070 | 11,408 | (2,093 | ) | 11,385 | 3,308 | (7,710 | ) | 6,983 | |||||||||||||||||||
SNNC Co., Ltd. | 18,816 | (2,637 | ) | 71,583 | 87,762 | (28,742 | ) | — | 59,020 | |||||||||||||||||||
Chungju Enterprise City | — | (464 | ) | 10,040 | 9,576 | (1,847 | ) | (43 | ) | 7,686 | ||||||||||||||||||
Teajisan Wind Power Generation | — | — | — | — | 2,413 | 2,860 | 5,273 | |||||||||||||||||||||
KOREA SOLAR PARK Co., Ltd. | — | — | — | — | (433 | ) | 2,280 | 1,847 | ||||||||||||||||||||
Chungla International Business Town Co., Ltd. | — | — | — | — | (539 | ) | 3,893 | 3,354 | ||||||||||||||||||||
KOBRASCO | 32,622 | 18,947 | (10,426 | ) | 41,143 | 35,385 | (18,872 | ) | 57,656 | |||||||||||||||||||
POSCO-JOPC Co., Ltd. | 835 | — | (835 | ) | — | — | — | — | ||||||||||||||||||||
USS - POSCO Industries (UPI) | 49,380 | (10,096 | ) | 20,487 | 59,771 | 308 | (8,749 | ) | 51,330 | |||||||||||||||||||
Poschrome (Proprietary) Limited | 4,826 | 2,793 | (2,454 | ) | 5,165 | 3,288 | (3,449 | ) | 5,004 | |||||||||||||||||||
Guangdong Xingpu Steel Center Co., Ltd. | 2,487 | 319 | 220 | 3,026 | 886 | 1,510 | 5,422 | |||||||||||||||||||||
POS-Hyundai Steel Manufacturing India Private Limited | 2,780 | 827 | 418 | 4,025 | 231 | 401 | 4,657 | |||||||||||||||||||||
POSVINA Co., Ltd. | 2,066 | 172 | (46 | ) | 2,192 | (29 | ) | 292 | 2,455 | |||||||||||||||||||
POSMMIT Steel Centre SDN BHD | 3,891 | — | (3,891 | ) | — | — | — | — | ||||||||||||||||||||
PT POSMI Steel Indonesia (POSMI) | 3,205 | (65 | ) | 37 | 3,177 | 147 | 443 | 3,767 | ||||||||||||||||||||
POSCO Bio ventures L.P. | 33,931 | (1,066 | ) | 2,325 | 35,190 | (8,288 | ) | 12,682 | 39,584 | |||||||||||||||||||
CAML Resources Pty. Ltd. | 37,717 | (11,500 | ) | 1,938 | 28,155 | 3,617 | 187 | 31,959 | ||||||||||||||||||||
Nickel Mining Company SAS | — | 32,229 | 168,393 | 200,622 | (35,918 | ) | 55,849 | 220,553 | ||||||||||||||||||||
Liaoning Rongyuan Posco Refractories Co., Ltd. | — | 252 | 1,128 | 1,380 | 347 | 448 | 2,175 | |||||||||||||||||||||
POSCO-SK Steel Pinghu Processing Center Co., Ltd. | — | — | — | — | (34 | ) | 2,879 | 2,845 | ||||||||||||||||||||
Hubei Huaerliang POSCO Silicon Science & Technology Co., Ltd. | 3,186 | 913 | 286 | 4,385 | 4,000 | 2,167 | 10,552 | |||||||||||||||||||||
POSCO Poland Wroclaw Steel Processing Center Co., Ltd. | — | — | — | — | (1,037 | ) | 4,262 | 3,225 | ||||||||||||||||||||
Ah khanh New City Development | — | (353 | ) | 11,246 | 10,893 | (2,697 | ) | 12,988 | 21,184 | |||||||||||||||||||
Henan Tsingpu Ferro Alloy Co., Ltd. | — | (1,489 | ) | 9,959 | 8,470 | (5,043 | ) | 1,657 | 5,084 | |||||||||||||||||||
United Spiral Pipe, LLC. (USP) | — | — | — | — | (1,393 | ) | 33,653 | 32,260 | ||||||||||||||||||||
Zhongyue POSCO (Qinhuangdau) Tinplate Industrial Co., Ltd. | — | (216 | ) | 10,259 | 10,043 | 2,361 | 4,540 | 16,944 | ||||||||||||||||||||
POSCO-CORE | — | (1,043 | ) | 1,043 | — | — | — | — | ||||||||||||||||||||
BX Steel POSCO Cold Rolled sheet Co., Ltd. | — | 2,213 | 64,569 | 66,782 | 3,261 | 20,733 | 90,776 | |||||||||||||||||||||
POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd. | — | — | — | — | 273 | 2,606 | 2,879 | |||||||||||||||||||||
Eureka Moly LLC | — | — | — | — | — | 121,209 | 121,209 | |||||||||||||||||||||
POS UTEK Development | — | — | — | — | (225 | ) | 2,633 | 2,408 | ||||||||||||||||||||
206,503 | 42,634 | 355,475 | 604,612 | (23,864 | ) | 251,788 | 832,536 | |||||||||||||||||||||
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(*) | 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 Income | ||||||||||||||||
Investee | Total Assets | Total Liabilities | Sales | (Loss) | ||||||||||||
(In millions of Korean won) | ||||||||||||||||
eNtoB Corporation | 79,825 | 52,688 | 756,983 | 2,624 | ||||||||||||
Midas IT Co., Ltd. | 42,991 | 15,716 | 29,113 | 5,637 | ||||||||||||
Songdo Cosmopolitan City Development Inc. | 1,980,494 | 2,331,426 | 785,032 | (75,565 | ) | |||||||||||
Gale International Korea Inc. | 30,609 | 6,931 | 47,154 | 21,680 | ||||||||||||
SNNC 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 | 93,868 | ||||||||||||
USS-POSCO Industries (UPI) | 650,816 | 495,185 | 1,325,532 | 44,098 | ||||||||||||
Poschrome (Proprietary) Limited | 54,718 | 5,173 | 86,844 | 36,931 | ||||||||||||
Guangdong Xingpu Steel Center Co., Ltd. | 66,788 | 40,220 | 96,503 | 4,048 | ||||||||||||
POS-Hyundai Steel Manufacturing India Private Limited | 20,799 | 5,011 | 22,842 | 783 | ||||||||||||
POSVINA Co., Ltd. | 8,925 | 3,716 | 39,753 | 96 | ||||||||||||
PT POSMI Steel Indonesia (POSMI) | 90,171 | 79,171 | 97,725 | 1,252 | ||||||||||||
POSCO Bio ventures L.P. | 39,584 | — | — | (9,940 | ) | |||||||||||
CAML Resources Pty. Ltd. | 158,624 | 86,013 | 154,983 | 34,534 | ||||||||||||
Nickel Mining Company SAS | 627,425 | 108,238 | 159,080 | (1,077 | ) | |||||||||||
Liaoning Rongyuan Posco Refractories Co., Ltd. | 16,874 | 10,201 | 19,511 | 1,190 | ||||||||||||
POSCO-SK Steel (Pinghu) Processing Center Co., Ltd. | 60,965 | 46,229 | 68,863 | 623 | ||||||||||||
Hubei Huaerliang POSCO Silicon Science & Technology Co., Ltd. | 53,292 | 18,206 | 87,453 | 13,333 | ||||||||||||
POSCO 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 | 6,802 | ||||||||||||
BX Steel POSCO Cold Rolled sheet Co., Ltd. | 1,203,363 | 878,567 | 1,026,640 | 23,732 | ||||||||||||
POSCO-SAMSUNG Slovakia Steel Processing Center Co., Ltd. | 43,465 | 33,374 | 32,512 | 1,238 | ||||||||||||
Eureka Moly | 143,080 | 9,281 | — | (3,405 | ) | |||||||||||
POS UTEK Development | 9,631 | — | — | (900 | ) |
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Table of Contents
8. | Property, Plant and Equipment |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Buildings and structures | 7,629,084 | 7,004,719 | ||||||
Machinery and equipment | 28,854,834 | 27,312,692 | ||||||
Vehicles | 205,973 | 196,939 | ||||||
Tools | 467,142 | 425,335 | ||||||
Furniture and fixtures | 302,801 | 258,670 | ||||||
Capital lease assets | 11,900 | 11,466 | ||||||
37,471,734 | 35,209,821 | |||||||
Less: Accumulated depreciation | (24,156,260 | ) | (22,318,851 | ) | ||||
Less: Accumulated impairment loss | (2,810 | ) | — | |||||
Less: Government grants | (2,000 | ) | (2,271 | ) | ||||
13,310,664 | 12,888,699 | |||||||
Land | 1,861,451 | 1,509,189 | ||||||
Construction-in-progress | 2,896,984 | 1,183,877 | ||||||
18,069,099 | 15,581,765 | |||||||
F-48
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Elimination of | ||||||||||||||||||||||||||||
Beginning | Intercompany | Ending | ||||||||||||||||||||||||||
Balance | Acquisition(*1) | Disposal | Depreciation(*2) | Others(*3) | Transactions | Balance | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Land | 1,509,189 | 119,753 | (26,404 | ) | — | 260,018 | (1,105 | ) | 1,861,451 | |||||||||||||||||||
Buildings | 2,623,024 | 231,885 | (11,123 | ) | (216,416 | ) | 405,973 | (177,441 | ) | 2,855,902 | ||||||||||||||||||
Structures | 1,546,816 | 152,673 | (5,687 | ) | (130,600 | ) | 104,876 | (77,847 | ) | 1,590,231 | ||||||||||||||||||
Machinery and equipment | 8,526,549 | 1,479,351 | (29,270 | ) | (1,795,165 | ) | 978,965 | (524,831 | ) | 8,635,599 | ||||||||||||||||||
Vehicles | 36,946 | 10,928 | (2,064 | ) | (15,040 | ) | 4,038 | (885 | ) | 33,923 | ||||||||||||||||||
Tools | 75,383 | 54,086 | (548 | ) | (43,896 | ) | 10,306 | (935 | ) | 94,396 | ||||||||||||||||||
Furniture and fixtures | 69,152 | 48,066 | (733 | ) | (34,838 | ) | 13,859 | (5,472 | ) | 90,034 | ||||||||||||||||||
Capital Lease assets | 10,829 | 403 | — | (687 | ) | 34 | — | 10,579 | ||||||||||||||||||||
Construction-in-progress | 1,183,877 | 4,014,374 | (33,483 | ) | — | (2,018,206 | ) | (249,578 | ) | 2,896,984 | ||||||||||||||||||
15,581,765 | 6,111,519 | (109,312 | ) | (2,236,642 | ) | (240,137 | ) | (1,038,094 | ) | 18,069,099 | ||||||||||||||||||
(*1) | Includes asset transfer fromconstruction-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 of | ||||||||||||||||||||||||||||
Beginning | Intercompany | Ending | ||||||||||||||||||||||||||
Balance | Acquisition | Disposal | Depreciation | Others | Transactions | Balance | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Land | 1,311,755 | 67,228 | (2,462 | ) | — | 132,742 | (74 | ) | 1,509,189 | |||||||||||||||||||
Buildings | 2,400,099 | 366,769 | (16,560 | ) | (193,798 | ) | 232,302 | (165,788 | ) | 2,623,024 | ||||||||||||||||||
Structures | 1,366,558 | 361,420 | (10,862 | ) | (122,054 | ) | 29,130 | (77,376 | ) | 1,546,816 | ||||||||||||||||||
Machinery and equipment | 6,674,178 | 3,391,203 | (370,812 | ) | (1,585,314 | ) | 976,260 | (558,966 | ) | 8,526,549 | ||||||||||||||||||
Vehicles | 44,101 | 12,442 | (8,382 | ) | (15,832 | ) | 6,149 | (1,532 | ) | 36,946 | ||||||||||||||||||
Tools | 84,134 | 32,598 | (5,262 | ) | (43,284 | ) | 8,565 | (1,368 | ) | 75,383 | ||||||||||||||||||
Furniture and fixtures | 76,879 | 10,184 | (8,623 | ) | (35,858 | ) | 30,966 | (4,396 | ) | 69,152 | ||||||||||||||||||
Capital Lease assets | — | 11,466 | — | (637 | ) | — | — | 10,829 | ||||||||||||||||||||
Construction-in-progress | 2,685,416 | 2,937,680 | (73,678 | ) | — | (4,174,278 | ) | (191,263 | ) | 1,183,877 | ||||||||||||||||||
14,643,120 | 7,190,990 | (496,641 | ) | (1,996,777 | ) | (2,758,164 | ) | (1,000,763 | ) | 15,581,765 | ||||||||||||||||||
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Minimum | ||||
Lease Payments | ||||
(In millions of Korean won) | ||||
Less 1 year | 1,478 | |||
1~ 5 years | 5,180 | |||
Over 5 years | 7,192 | |||
13,850 | ||||
9. | Intangible Assets |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Goodwill | 270,842 | 75,556 | ||||||
Negative goodwill | (575 | ) | (1,243 | ) | ||||
Intellectual property rights | 18,266 | 1,811 | ||||||
Research and development costs, net of government grants | 82,221 | 91,965 | ||||||
Port facilities usage rights | 116,078 | 130,234 | ||||||
Long-term electricity supply contract rights | 55,170 | 61,857 | ||||||
Others | 181,765 | 210,599 | ||||||
723,767 | 570,779 | |||||||
For the Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
Elimination of | ||||||||||||||||||||||||||||
Beginning | Amortization | Intercompany | Ending | |||||||||||||||||||||||||
Balance | Acquisition | Disposal | (Recovery) | Others(*1) | Transactions | Balance | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Goodwill | 75,556 | 230,489 | — | (33,327 | ) | (1,876 | ) | — | 270,842 | |||||||||||||||||||
Negative goodwill | (1,243 | ) | — | — | 406 | 262 | — | (575 | ) | |||||||||||||||||||
Intellectual property rights | 1,811 | 2,625 | (360 | ) | (1,237 | ) | 15,427 | — | 18,266 | |||||||||||||||||||
Research and development costs, net of government grants(*3) | 91,965 | 40,066 | (2,037 | ) | (18,071 | ) | (29,214 | ) | (488 | ) | 82,221 | |||||||||||||||||
Port facilities usage rights | 130,234 | 7,562 | — | (21,604 | ) | 362 | (476 | ) | 116,078 | |||||||||||||||||||
Long-term electricity supply contract rights | 61,857 | — | — | (6,687 | ) | — | — | 55,170 | ||||||||||||||||||||
Others(*2) | 210,599 | 72,532 | (8,795 | ) | (66,896 | ) | (22,700 | ) | (2,975 | ) | 181,765 | |||||||||||||||||
570,779 | 353,274 | (11,192 | ) | (147,416 | ) | (37,739 | ) | (3,939 | ) | 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. |
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Table of Contents
(*3) | For the year ended December 31, 2008, the Company recognized impairment loss on development cost amounting to |
For the Year Ended December 31, 2007 | ||||||||||||||||||||||||||||
Elimination of | ||||||||||||||||||||||||||||
Beginning | Amortization | Intercompany | Ending | |||||||||||||||||||||||||
Balance | Acquisition | Disposal | (Recovery) | Others | Transactions | Balance | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Goodwill | 90,105 | 7,698 | — | (22,247 | ) | — | 75,556 | |||||||||||||||||||||
Negative goodwill | (1,388 | ) | — | — | 406 | (261 | ) | — | (1,243 | ) | ||||||||||||||||||
Intellectual property rights | 1,221 | 3,260 | — | (1,067 | ) | (1,603 | ) | — | 1,811 | |||||||||||||||||||
Research and development costs, net of government grants | 67,862 | 42,749 | (75 | ) | (14,684 | ) | (3,469 | ) | (418 | ) | 91,965 | |||||||||||||||||
Port facilities usage rights | 112,102 | 37,153 | — | (18,658 | ) | (1 | ) | (362 | ) | 130,234 | ||||||||||||||||||
Long-term electricity supply contract rights | 68,544 | — | — | (6,687 | ) | — | — | 61,857 | ||||||||||||||||||||
Others | 218,636 | 62,411 | (518 | ) | (71,627 | ) | 6,281 | (4,584 | ) | 210,599 | ||||||||||||||||||
557,082 | 153,271 | (593 | ) | (134,564 | ) | 947 | (5,364 | ) | 570,779 | |||||||||||||||||||
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Cost of goods sold | 75,826 | 77,911 | ||||||
Selling and administrative expenses | 71,590 | 56,653 | ||||||
147,416 | 134,564 | |||||||
Residual | ||||||||||||||
Description | 2008 | 2007 | Useful Life | |||||||||||
(In millions of Korean won) | ||||||||||||||
Goodwill | Excess investment amount over fair value in POSCO Power Corp. | 47,682 | 68,894 | 2 years | ||||||||||
Excess investment amount over fair value in Daewoo Engineering Company | 209,461 | — | 19 years |
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10. | Pledged assets |
Beneficiaries | 2008 | 2007 | ||||||||
(In millions of Korean won) | ||||||||||
Land (note 8) | Mizuho Bank and others | 225,628 | 253,096 | |||||||
Buildings and structures (note 8) | Woori Bank and others | 172,159 | 187,611 | |||||||
Machinery and equipment (note 8) | The Korea Development Bank and others | 431,626 | 392,230 | |||||||
Short-term financial instruments (note 3) | The Korea Development Bank and others | 3,000 | 4,000 | |||||||
Trade accounts and notes receivable (note 5) | YAMAGUCHI Bank and others | 84,557 | 47,268 | |||||||
Available-for-sale securities(*1) (note 7) | Exchangeable bond holder and others | 2,033,862 | 685,402 | |||||||
Held-to-maturity securities(*2) (note 7) | Gyeongsangbuk-do provincial office | 31,553 | 31,440 | |||||||
Equity investments (note 7) | Related creditors | 7,196 | — | |||||||
2,989,581 | 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 |
2008 | 2007 | |||||||||||||||
Foreign | Won | Foreign | Won | |||||||||||||
Financial Institution | Currency | Equivalent | Currency | Equivalent | ||||||||||||
(In millions of Korean won) | ||||||||||||||||
Korea Development Bank | EUR 4,600,591 | 8,171 | EUR 5,236,941 | 7,234 | ||||||||||||
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11. | Other Assets |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Other current assets | ||||||||
Short-term loans receivable (note 28) | 95,918 | 54,985 | ||||||
Accrued income | 58,003 | 53,600 | ||||||
Prepaid expenses | 82,891 | 58,319 | ||||||
Others(*) | 150,016 | 86,237 | ||||||
386,828 | 253,141 | |||||||
Less: Allowance for doubtful accounts | (34,086 | ) | (34,436 | ) | ||||
352,742 | 218,705 | |||||||
Other long-term assets | ||||||||
Other investment assets | 294,033 | 116,409 | ||||||
Less: Allowance for doubtful accounts | (3,308 | ) | (789 | ) | ||||
Less: Present value discount | — | (503 | ) | |||||
290,725 | 115,117 | |||||||
(*) | The amount of others as of December 31, 2008 mainly represents current derivative assets amounting to |
12. | Short-Term Borrowings and Current Portion of Long-Term Debts |
Annual Interest | ||||||||||||||||||||||
Financial Institutions | Rate (%) | 2008 | 2007 | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||
Won currency borrowings | ||||||||||||||||||||||
ABN and others | 0.72~ 8.77 | KRW | 509,129 | 509,129 | 247,598 | 247,598 | ||||||||||||||||
Foreign currency borrowings | ||||||||||||||||||||||
Bank of America | 2.60 | USD | 125,196,920 | 157,435 | 8,644,609 | 8,110 | ||||||||||||||||
Shinhan Bank and others | 0.83~ 17.00 | AUD | 374,657,835 | 2,587,791 | 60,000,000 | 1,316,312 | ||||||||||||||||
CNY | 41,537,351,633 | 2,828,126,153 | ||||||||||||||||||||
INR | 60,104,572 | — | ||||||||||||||||||||
JPY | 3,888,813,928 | 33,100,000,000 | ||||||||||||||||||||
MMK | 2,619,618,058 | 1,629,025,320 | ||||||||||||||||||||
MYR | 617,346,480 | 92,161,065 | ||||||||||||||||||||
THB | 203,334,260 | 1,142,600,000 | ||||||||||||||||||||
USD | 507,400,000 | 601,453,111 | ||||||||||||||||||||
VND | 517,359,889,314 | — | ||||||||||||||||||||
2,745,226 | 1,324,422 | |||||||||||||||||||||
3,254,355 | 1,572,020 | |||||||||||||||||||||
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Annual Interest | ||||||||||||||||||||||
Financial Institutions | Rate (%) | 2008 | 2007 | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||
Debentures | ||||||||||||||||||||||
Domestic and foreign debentures | 4.02~ 5.60 | KRW | 332,102 | 332,102 | 460,192 | 460,192 | ||||||||||||||||
Less: Discount on debentures issued | (205 | ) | (527 | ) | ||||||||||||||||||
331,897 | 459,665 | |||||||||||||||||||||
Won currency borrowings | ||||||||||||||||||||||
Korea Exchange Bank and others | 1.00~ 6.98 | KRW | 9,475 | 9,475 | 3,147 | 3,147 | ||||||||||||||||
Foreign currency borrowings | ||||||||||||||||||||||
Development Bank of Japan and others | 0.55~ 7.04 | CNY | 29,000,000 | 427,640 | 51,758,999 | |||||||||||||||||
JPY | 2,267,000,000 | 892,000,000 | ||||||||||||||||||||
MYR | — | — | ||||||||||||||||||||
THB | — | — | ||||||||||||||||||||
USD | 309,624,451 | 6,000,000 | 19,711 | |||||||||||||||||||
437,115 | 22,858 | |||||||||||||||||||||
Loans from foreign financial institutionsNATIXIS | 2.00 | EUR | 636,350 | 1,130 | 636,350 | 879 | ||||||||||||||||
770,142 | 483,402 | |||||||||||||||||||||
13. | Long-Term Debts |
Annual | ||||||||||||||||||||||||||||||||
Issue 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 | 3,137,102 | 1,883,515 | 1,967,953 | ||||||||||||||||||||||||
08/05/2013 | 08/05/2013 | USD | 340,000,000 | 90,000,000 | ||||||||||||||||||||||||||||
JPY | 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 | 416,665 | ||||||||||||||||||||||||
1st 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 | 281,460 | ||||||||||||||||||||||||||
Exchangeable Bonds | 08/20/2003 | 08/20/2008 | — | JPY | — | — | 51,622,000,000 | 430,182 | ||||||||||||||||||||||||
Exchangeable Bonds(*) | 08/19/2008 | 08/19/2013 | — | JPY | 52,795,000,000 | 735,904 | — | — | ||||||||||||||||||||||||
5,922,924 | 3,096,260 | |||||||||||||||||||||||||||||||
Add: Premium on bond redemption | 11,112 | — | ||||||||||||||||||||||||||||||
Less: Current portion | (332,102 | ) | (460,192 | ) | ||||||||||||||||||||||||||||
Less: Discount on debentures issued | (74,990 | ) | (12,194 | ) | ||||||||||||||||||||||||||||
5,526,944 | 2,623,874 | |||||||||||||||||||||||||||||||
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(*) | 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, 2008 | |
Maturity date: | August 19, 2013 | |
Rate: | Interest rate of zero percent | |
Face value: | JPY 52,795,000,000 | |
Issuance price: | JPY 52,424,229,136 | |
Primium on bond redemption | JPY 797,204,500 (redeemed on put date or maturity date) | |
Exchangeable price: | JPY 2,999.11/ADR | |
Fair value of exchangeable right | JPY 2,867,605,334 | |
Exercise period of exchangeable right: | Commencing ten business days following the issuance date until ten business days prior to maturity date | |
Exercisable date of put by bondholders: | August 19, 2011 |
Financial Institutions | Annual Interest Rate (%) | 2008 | 2007 | |||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||
Won currency borrowings | ||||||||||||||||||||
The Korea Resources Corporation | Representative Borrowing Rate(*1) - 2.25 | KRW | 49,308 | 49,308 | 45,100 | 45,100 | ||||||||||||||
The Korea Development Bank and others | 1.00~ 7.10 | KRW | 595,037 | 595,037 | 155,259 | 155,259 | ||||||||||||||
Less: Current portion | (9,475 | ) | (3,147 | ) | ||||||||||||||||
634,870 | 197,212 | |||||||||||||||||||
Foreign 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 | 498,757 | ||||||||||||||
JPY | 12,099,500,000 | 8,244,000,000 | ||||||||||||||||||
MYR | 140,000,000 | — | ||||||||||||||||||
THB | — | 298,347 | ||||||||||||||||||
USD | 745,808,410 | 439,330,045 | ||||||||||||||||||
Less: Current portion | (427,640 | ) | (19,711 | ) | ||||||||||||||||
727,007 | 479,046 | |||||||||||||||||||
Loans from foreign financial institutions | ||||||||||||||||||||
NATIXIS | 2.00 | EUR | 4,600,591 | 8,171 | 5,236,941 | 7,234 | ||||||||||||||
Less: Current portion | (1,130 | ) | (879 | ) | ||||||||||||||||
7,041 | 6,355 | |||||||||||||||||||
1,368,918 | 682,613 | |||||||||||||||||||
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(*1) | The average yield of3-year government bond is utilized for the annual interest rate calculation. The average yield of3-year government bond is rounded off to the nearest 0.25% | |
(*2) | Foreign currency borrowings include long-term borrowings amounting to |
Foreign Currency | Loans from Foreign | |||||||||||||||||||
Period | Debentures(*) | Borrowings | Borrowings | Financial Institutions | Total | |||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||
2009 | 332,102 | 9,475 | 427,640 | 1,130 | 770,347 | |||||||||||||||
2010 | 265,175 | 147,552 | 243,535 | 1,130 | 657,392 | |||||||||||||||
2011 | 2,983,786 | 77,265 | 38,775 | 1,130 | 3,100,956 | |||||||||||||||
2012 | 500,000 | 21,580 | 22,072 | 1,130 | 544,782 | |||||||||||||||
Thereafter | 1,852,973 | 388,473 | 422,625 | 3,651 | 2,667,722 | |||||||||||||||
5,934,036 | 644,345 | 1,154,647 | 8,171 | 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 | 986,956 | 834,047 | ||||||
Provision for severance benefits | 314,156 | 214,720 | ||||||
Payment | (125,374 | ) | (63,264 | ) | ||||
Others(*) | 332 | 1,453 | ||||||
Estimated severance benefits at the end of period | 1,176,070 | 986,956 | ||||||
Transfer to National Pension Fund | (1,959 | ) | (2,275 | ) | ||||
Deposit for severance benefits trust | (790,393 | ) | (648,586 | ) | ||||
Net balance at the end of period | 383,718 | 336,095 | ||||||
(*) | Includes foreign currency adjustments, changes in consolidation scope and others. |
Period | Amount | |||
(In millions of Korean won) | ||||
2009 | 19,662 | |||
2010 | 28,611 | |||
2011 | 36,628 | |||
2012 | 44,686 | |||
2013~ 2018 | 453,190 | |||
582,777 | ||||
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15. | Other Liabilities |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Other current liabilities | ||||||||
Unearned revenue | 2,292 | 1,725 | ||||||
Derivatives liabilities | 225,137 | 9,069 | ||||||
Others | 61,736 | 45,016 | ||||||
289,165 | 55,810 | |||||||
Other long-term liabilities | ||||||||
Reserve for allowance | 35,558 | 29,176 | ||||||
Derivatives liabilities | 52,896 | 3,711 | ||||||
Liability related to stock appreciation rights | 38,147 | 123,479 | ||||||
Deposit received | 70,274 | 45,225 | ||||||
Others | 60,867 | 33,267 | ||||||
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 | 77,951 | |||||||||||
USD | 15,840,000 | 19,919 | ||||||||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | Bank of China and others | USD | 199,925,000 | 251,406 | ||||||||||||
POSCO Investment Co., Ltd. | Bank of Tokyo-Mitsubishi and others | CNY | 29,000,000 | 5,339 | ||||||||||||
USD | 142,000,000 | 178,565 | ||||||||||||||
MYR | 180,000,000 | 65,072 | ||||||||||||||
POSCO-Vietnam Co., Ltd. | The Export-Import Bank of Korea | USD | 200,000,000 | 251,500 | ||||||||||||
POSCO E&C Co., Ltd. | Taegisan Wind Power Corporation | SC Korea First Bank | ||||||||||||||
KRW | 48,000 | 48,000 | ||||||||||||||
IBC Corporation | The Export-Import Bank of Korea | USD | 20,000,000 | 25,150 | ||||||||||||
POSLILAMA Steel Structure Co., Ltd. | The Export-Import Bank of Korea and others | USD | 55,155,000 | 69,357 | ||||||||||||
Daewoo Engineering Company | — | USD | 217,440,000 | 273,431 | ||||||||||||
Posteel Co., Ltd. | POSCO Canada Ltd. | Shinhan Bank | USD | 12,484,500 | 15,699 | |||||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | Qingdao Pohang Stainless Steel Co., Ltd. | China Construction Bank Corporation | USD | 14,000,000 | 17,605 | |||||||||||
POSCO E&C (Zhangjiagang) Engineering & Co., Ltd. | POSCO E&C (Beijing) Co., Ltd. | Korea Exchange Bank | CNY | 8,000,000 | 1,473 | |||||||||||
POSCO Investment Co., Ltd. | Zhangjiagang Pohang Stainless Steel Co., Ltd. | ING and others | USD | 120,000,000 | 150,900 | |||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | Bank of Tokyo-Mitsubishi | USD | 42,000,000 | 52,815 |
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Grantors | Entity Being Guaranteed | Financial Institution | Amount | Won Equivalent | ||||||||||||
(In millions of Korean won) | ||||||||||||||||
POSCO-Mexico Co., Ltd. | HSBC | USD | 100,000,000 | 125,750 | ||||||||||||
POSCO-MPC S.A. de. C.V. | Bank of Tokyo-Mitsubishi | USD | 30,600,000 | 38,480 | ||||||||||||
POSCO Poland Wroclaw Steel Processing Center Co., Ltd. | HSBC | |||||||||||||||
USD | 5,929,690 | 7,457 | ||||||||||||||
Zhongyue POSCO | HSBC | |||||||||||||||
(Qinhuangdao) Tinplate Industrial Co., Ltd. | USD | 3,693,120 | 4,644 | |||||||||||||
POSCO-Malaysia SDN BHD | HSBC and others | USD | 63,306,150 | 79,607 | ||||||||||||
POSCO-Japan Co., Ltd. | POSMETAL Co., Ltd. | Mizuho Bank and others | JPY | 1,740,000,000 | 24,254 | |||||||||||
POSCO-JOPC Co., Ltd. | Mizuho Bank and others | JPY | 2,800,000,000 | 39,029 | ||||||||||||
POSCO-JNPC Co., Ltd. | Mizuho Bank and others | JPY | 4,800,000,000 | 66,907 | ||||||||||||
POSCO-JYPC Co., Ltd. | Mizuho Bank and others | JPY | 3,100,000,000 | 43,211 | ||||||||||||
1,933,521 | ||||||||||||||||
Entity Being | Amount | |||||||||||||||
Grantors | Guaranteed | Financial Institution | Guaranteed | Won Equivalent | ||||||||||||
(In millions of Korean won) | ||||||||||||||||
POSCO | DC Chemical Co., Ltd. | E1 Coporation | KRW | 320 | 320 | |||||||||||
Zeus | Related creditors | JPY | 52,795,000,000 | 735,904 | ||||||||||||
POSCO E & C Co., Ltd. | The first district of Minrak, Busan | Kookmin Bank | KRW | 38,680 | 38,680 | |||||||||||
Association of the first district of Mokdong, Daejeon | Woori Bank | KRW | 5,060 | 5,060 | ||||||||||||
Pan Pacific Corp. | Korea Exchange Bank | KRW | 10,998 | 10,998 | ||||||||||||
Posteel Co., Ltd. | GIPI | Qutar National Bank and others | USD | 12,000,000 | 15,090 | |||||||||||
Asia Speciality Steel Co., Ltd. | Yamaguchi Bank and others | JPY | 2,700,000,000 | 37,635 | ||||||||||||
POSCON Co., Ltd. | Dalian Poscon Dongbang Automatic Co., Ltd. | STX Construction (dalian) Co., Ltd. and others | KRW | 1,878 | 1,878 | |||||||||||
POSCO Machinery & Engineering Co., Ltd. | Jaesan Energy Co., Ltd. | Hana Bank | KRW | 7,189 | 7,189 | |||||||||||
Changhwan Dep. Co., Ltd. | Hana Bank | KRW | 6,980 | 6,980 | ||||||||||||
Halla Precision Eng. Co., Ltd. | Shinhan Bank | |||||||||||||||
KRW | 5,712 | 5,712 | ||||||||||||||
Samjung Packing & Aluminum Co., Ltd. | Pyungsan Si Co., Ltd. | Seoul Guarantee Insurance Company | KRW | 963 | 963 | |||||||||||
Daewoo Engineering Company | Dongwon Systems Corporation | Korean National Housing | ||||||||||||||
Coporation | KRW | 17,100 | 17,100 | |||||||||||||
Vasis Corp. | Hyundai Rotem Company and others | KRW | 754 | 754 | ||||||||||||
Sen Structural Engineers Co., Ltd. | Youngdong Construction Co., Ltd. | |||||||||||||||
and others | KRW | 69 | 69 | |||||||||||||
Kocen Co., Ltd. | Korea Power Engineering Co., Inc. and others | KRW | 13,121 | 13,121 | ||||||||||||
Hyundai ENG Co., Ltd. | Samsung C&T Corporation and others | KRW | 44,915 | 44,915 | ||||||||||||
942,368 | ||||||||||||||||
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Period | Amount | |||
(In millions of Korean won) | ||||
2009 | 6,467 | |||
2010 | 3,453 | |||
2011 | 1,210 | |||
2012 | 376 | |||
2013 | 8 | |||
Thereafter | 2 | |||
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 beach | |||||
POSCO E & C Co., Ltd. | National Tax Service and others | 42,339 | Litigation on penalties levied and 47 other litigations | |||||
POSCO Machinery & Engineering Co., Ltd. | Wonwoo Construction Co., Ltd. | 188 | Claims on fees payable for the construction provided | |||||
Daewoo 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 payable | |||||
POSCON Co., Ltd. | Korea Labor Welfare Corporation | 106 | Claims on indemnity | |||||
POS-Tianjin Coil Center Co., Ltd. | Beijing Tian Yu | 93 | Claim of accounts receivable collection. |
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2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Additional paid-in capital | 463,825 | 463,205 | ||||||
Revaluation surplus | 3,224,770 | 3,224,770 | ||||||
Others | 630,488 | 488,617 | ||||||
4,319,083 | 4,176,592 | |||||||
19. | Retained Earnings |
2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Appropriated | ||||||||
Legal reserve | 241,202 | 241,202 | ||||||
Appropriated retained earnings for business rationalization | 918,300 | 918,300 | ||||||
Reserve under Korean Tax Law | 1,071,667 | 1,445,000 | ||||||
Voluntary reserve | 18,739,895 | 15,513,068 | ||||||
20,971,064 | 18,117,570 | |||||||
Unappropriated | 4,422,182 | 3,649,732 | ||||||
25,393,246 | 21,767,302 | |||||||
20. | Dividends |
2008 | 2007 | 2006 | ||||||||||||||||||||||
Dividend | Dividend | Dividend | Dividend | Dividend | Dividend | |||||||||||||||||||
Ratio (%) | Amount | Ratio (%) | Amount | Ratio (%) | Amount | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Common shares | 50 | 188,485 | 50 | 189,541 | 40 | 155,561 | ||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||
Dividend | Dividend | Dividend | Dividend | Dividend | Dividend | |||||||||||||||||||
Ratio (%) | Amount | Ratio (%) | Amount | Ratio (%) | Amount | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Common shares | 150 | 574,274 | 150 | 566,552 | 120 | 465,558 | ||||||||||||||||||
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2008 | 2007 | 2006 | ||||||||||||||||||||||
Dividend Payout | Dividend Yield | Dividend Payout | Dividend Yield | Dividend Payout | Dividend Yield | |||||||||||||||||||
Ratio(%) | 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 | (2,502,014 | ) | (2,715,964 | ) | ||||
(7,067 | ) | (11,183 | ) | |||||
(2,509,081 | ) | (2,727,147 | ) | |||||
2008 | 2007 | |||||||||||
Number of Shares | Book Value | Book Value | ||||||||||
(In millions of Korean won) | ||||||||||||
Treasury stock | 8,255,034 | 1,760,819 | 2,011,601 | |||||||||
Specified money in trust | 2,361,885 | 741,195 | 704,363 | |||||||||
10,616,919 | 2,502,014 | 2,715,964 | ||||||||||
22. | Stock Appreciation Rights |
1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 5th Grant | 6th Grant | Total | ||||||||
Before 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 shares | |||||||
Exercise price | ||||||||||||||
After the modifications(*) | ||||||||||||||
Grant date | July 23, 2001 | April 27, 2002 | September 18, 2002 | April 26, 2003 | July 23, 2004 | April 28, 2005 | ||||||||
Exercise price | ||||||||||||||
Number of shares granted | 453,576 shares | 55,896 shares | 20,495 shares | 135,897 shares | 214,228 shares | 90,000 shares | 970,092 shares | |||||||
Number of shares cancelled | 19,409 shares | — | — | — | — | 19,409 shares | ||||||||
Number of shares exercised | 434,167 shares | 50,511 shares | 6,931 shares | 118,909 shares | 79,684 shares | 62,000 shares | 752,202 shares | |||||||
Number of shares outstanding | — | 5,385 shares | 13,564 shares | 16,988 shares | 134,544 shares | 28,000 shares | 198,481 shares | |||||||
Exercise 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 |
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(*) | 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 | 60,825 | 14,050 | 7,837 | 35,145 | 88,823 | 34,000 | 240,680 | |||||||||||||||||||||
Current period | (880 | ) | (3,249 | ) | (2,994 | ) | (5,375 | ) | (34,143 | ) | (8,514 | ) | (55,155 | ) | ||||||||||||||
59,945 | 10,801 | 4,843 | 29,770 | 54,680 | 25,486 | 185,525 | ||||||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||
Number of Stock | Weighted-Average | Number of Stock | Weighted-Average | Number of Stock | Weighted-Average | |||||||||||||||||||
Stock Appreciation | Appreciation | Exercise Price per | Appreciation | Exercise Price per | Appreciation | Exercise Price per | ||||||||||||||||||
Rights Outstanding | Rights | Share | Rights | Share | Rights | Share | ||||||||||||||||||
(In Korean Korean won) | ||||||||||||||||||||||||
Beginning of year | 279,472 | 145,170 | 460,335 | 145,238 | 534,642 | 140,258 | ||||||||||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||||||
Excercised | (80,991 | ) | 115,715 | (180,863 | ) | 145,344 | (74,307 | ) | 109,404 | |||||||||||||||
Canceled | — | — | — | — | — | — | ||||||||||||||||||
Forfeited | — | — | — | — | — | — | ||||||||||||||||||
Stock appreciation rights outstanding, end of year | 198,481 | 150,770 | 279,472 | 145,170 | 460,335 | 145,238 | ||||||||||||||||||
Exercisable at the year end | 198,481 | 150,770 | 279,472 | 145,170 | 370,335 | 133,169 | ||||||||||||||||||
Weighted-average fair value at grant date | 140,206 | 116,176 | 116,176 | |||||||||||||||||||||
Appreciation Rights Outstanding | ||||||||||||
Weighted-Average | Weighted-Average | |||||||||||
Remaining | Exercise Price | |||||||||||
Exercise Prices | Shares | Contractual Life | per Share | |||||||||
(In Korean won) | ||||||||||||
136,400 | 5,385 | 0.32 years | 136,400 | |||||||||
116,100 | 13,564 | 0.72 years | 116,100 | |||||||||
102,900 | 16,988 | 1.32 years | 102,900 | |||||||||
151,700 | 134,544 | 2.56 years | 151,700 | |||||||||
194,900 | 28,000 | 3.33 years | 194,900 | |||||||||
198,481 | 2.37 years | 150,770 | ||||||||||
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23. | Derivative Financial Instruments |
Valuation Gain/Loss | ||||||||||||||||||||||||||||||||||
Comprehensive | Transaction Gain/Loss | |||||||||||||||||||||||||||||||||
Income Statement | Income (*2) | Income Statement | ||||||||||||||||||||||||||||||||
Company | 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 | — | 301 | — | — | — | 830 | 7,638 | ||||||||||||||||||||||||
Embedded derivative (*1) | Exchangeable Bonds | Related creditors | ||||||||||||||||||||||||||||||||
17,985 | — | — | — | — | — | — | ||||||||||||||||||||||||||||
POSCO E&C Co., Ltd. | Currency forward | Fair market value hedge | HSBC and others | (124,870 | ) | (1,394 | ) | — | — | (790 | ) | (53,070 | ) | 185 | ||||||||||||||||||||
Currency 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 | ) | 49 | |||||||||||||||||||||||
Currency Option | Trading | SC Korea First Bank and others | (138,472 | ) | 1,329 | — | — | 1,844 | (19,228 | ) | 2,860 | |||||||||||||||||||||||
Currency 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 | ) | 431 | |||||||||||||||||||||||
Currency Swap | Cash flow hedge | Calyon Bank and others | 28,737 | 1,368 | (6,035 | ) | (3,510 | ) | — | — | 274 | |||||||||||||||||||||||
Currency 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 | ) | — | |||||||||||||||||||||||
58,277 | 9,124 | (10,800 | ) | (4,034 | ) | 1,037 | (62,165 | ) | 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 | |
(*2) | Unrealized gain and loss on derivative financial instruments designated as cash flow hedges are recorded as other comprehensive income, net of tax effect. |
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24. | Selling and Administrative Expenses |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Transportation and storage | 781,425 | 619,499 | 539,589 | |||||||||
Salaries | 256,959 | 218,206 | 183,943 | |||||||||
Welfare | 159,732 | 123,584 | 111,666 | |||||||||
Depreciation and amortization | 106,271 | 87,257 | 72,983 | |||||||||
Fees and charges | 124,123 | 97,100 | 62,610 | |||||||||
Advertising | 98,780 | 103,979 | 87,666 | |||||||||
Research and development expenses | 94,571 | 52,846 | 54,035 | |||||||||
Severance benefits | 52,433 | 44,779 | 26,109 | |||||||||
Sales commissions | 83,057 | 54,955 | 42,644 | |||||||||
Travel | 30,537 | 25,870 | 21,468 | |||||||||
Rent | 24,204 | 19,389 | 16,313 | |||||||||
Repairs | 13,135 | 12,693 | 8,846 | |||||||||
Training | 24,397 | 20,094 | 18,496 | |||||||||
Office supplies | 8,482 | 9,053 | 6,957 | |||||||||
Provision for doubtful accounts | 24,033 | 62,026 | 117,337 | |||||||||
Meeting | 11,612 | 10,240 | 9,368 | |||||||||
Taxes and public dues | 29,595 | 29,519 | 18,936 | |||||||||
Vehicle expenses | 4,626 | 3,947 | 2,941 | |||||||||
Membership fees | 8,312 | 8,593 | 7,273 | |||||||||
Sales promotions | 7,638 | 5,651 | 22,471 | |||||||||
Entertainment | 12,542 | 10,561 | 7,904 | |||||||||
Others | 49,904 | 165,376 | 116,860 | |||||||||
2,006,368 | 1,785,217 | 1,556,415 | ||||||||||
25. | Income Taxes |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Current income taxes(*) | 2,181,238 | 1,341,252 | 1,086,215 | |||||||||
Deferred income taxes | (358,250 | ) | 51,397 | 28,531 | ||||||||
Carryforward income tax | (9,976 | ) | 2,714 | 3,948 | ||||||||
Items charged directly to shareholders’ equity | (50,923 | ) | (61,559 | ) | (19,180 | ) | ||||||
Tax effect due to consolidation entries | (28,106 | ) | (59,578 | ) | (177,563 | ) | ||||||
1,733,983 | 1,274,226 | 921,951 | ||||||||||
(*) | Additional tax payments (or tax refunds) arising from finalized tax assessment are added or deducted in current income taxes. |
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2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Net income before income tax expense | 6,095,639 | 4,898,931 | 4,284,591 | |||||||||
Income tax expense computed at statutory rate | 1,676,301 | 1,347,206 | 1,178,260 | |||||||||
Adjustments: | ||||||||||||
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 | 1,733,983 | 1,274,226 | 921,951 | |||||||||
Effective rate (%) | 28.4 | 26.0 | 21.5 | |||||||||
(*) | Others mainly consist of changes in deferred tax assets subject to possibility of realization amounting to |
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Temporary Differences | Deferred Income Tax | |||||||||||||||||||||||
Dec. 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 | (301,751 | ) | 19,926 | (281,825 | ) | (82,982 | ) | 20,560 | (62,422 | ) | ||||||||||||||
Allowance for doubtful accounts | 292,763 | (192 | ) | 292,571 | 80,532 | (16,746 | ) | 63,786 | ||||||||||||||||
Reserve 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 | ) | 94,929 | |||||||||||||||||
Depreciation 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 | 16,289 | ||||||||||||||||||
Impairment loss on property, plant and equipment | 420,085 | (294,058 | ) | 126,027 | 121,483 | (78,816 | ) | 42,667 | ||||||||||||||||
Gain/Loss on foreign currency | — | 634,028 | 634,028 | — | 140,283 | 140,283 | ||||||||||||||||||
Accrued severance benefits | 161,926 | 13,312 | 175,238 | 44,574 | (5,198 | ) | 39,376 | |||||||||||||||||
Group 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 | 8,112 | ||||||||||||||||||
Provision for construction warranty | 21,065 | 5,530 | 26,595 | 5,794 | 58 | 5,852 | ||||||||||||||||||
Appropriated retained earnings for technological development | (2,833 | ) | 833 | (2,000 | ) | (780 | ) | 318 | (462 | ) | ||||||||||||||
Accrued income | (8,328 | ) | 8,396 | 68 | (2,313 | ) | 2,328 | 15 | ||||||||||||||||
Accrued on valuation of Inventories | 695 | 11,426 | 12,121 | 190 | 2,754 | 2,944 | ||||||||||||||||||
Others | 293,860 | (18,491 | ) | 275,369 | 73,419 | (41,171 | ) | 32,248 | ||||||||||||||||
(1,291,509 | ) | 1,311,750 | 20,241 | (273,702 | ) | 358,250 | 84,548 | |||||||||||||||||
Deferred tax from tax credit and others: | ||||||||||||||||||||||||
Tax credit | 22,725 | (4,424 | ) | 18,301 | 19,949 | (3,478 | ) | 16,471 | ||||||||||||||||
Deficit carried forward | 9,188 | 26,326 | 35,514 | 2,526 | 5,287 | 7,813 | ||||||||||||||||||
Others | — | — | — | (8,167 | ) | 8,167 | — | |||||||||||||||||
31,913 | 21,902 | 53,815 | 14,308 | 9,976 | 24,284 | |||||||||||||||||||
Deferred income taxes recognized directly to equity: | ||||||||||||||||||||||||
Capital adjustment arising from equity method investments | (272,948 | ) | (448,800 | ) | (721,748 | ) | (75,060 | ) | (84,440 | ) | (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 | 212,140 | ||||||||||||||||||
Others | 4,276 | 10,342 | 14,618 | 1,176 | 2,023 | 3,199 | ||||||||||||||||||
(1,344,993 | ) | 1,260,179 | (84,814 | ) | (372,366 | ) | 353,983 | (18,383 | ) | |||||||||||||||
Tax effect on elimination of intercompany profit | 237,683 | 28,106 | 265,789 | |||||||||||||||||||||
(394,077 | ) | 750,315 | 356,238 | |||||||||||||||||||||
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Temporary Differences | Deferred Income Tax | |||||||||||||||||||||||
Dec. 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 | (403,384 | ) | 101,633 | (301,751 | ) | (110,930 | ) | 27,948 | (82,982 | ) | ||||||||||||||
Allowance for doubtful accounts | 345,789 | (53,026 | ) | 292,763 | 94,977 | (14,445 | ) | 80,532 | ||||||||||||||||
Reserve 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 | 100,714 | ||||||||||||||||||
Depreciation 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 | ) | 9,467 | ||||||||||||||||
Impairment loss on property, plant and equipment | 516,305 | (96,220 | ) | 420,085 | 147,973 | (26,490 | ) | 121,483 | ||||||||||||||||
Accrued severance benefits | 124,582 | 37,344 | 161,926 | 34,298 | 10,276 | 44,574 | ||||||||||||||||||
Group 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 | 5,836 | ||||||||||||||||||
Provision for construction warranty | 18,935 | 2,130 | 21,065 | 5,154 | 640 | 5,794 | ||||||||||||||||||
Appropriated 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 | 190 | ||||||||||||||||||
Accrued on guarantee loss securities | 41,300 | (41,300 | ) | — | 11,358 | (11,358 | ) | — | ||||||||||||||||
Others | 333,308 | (39,448 | ) | 293,860 | 81,188 | (7,769 | ) | 73,419 | ||||||||||||||||
(906,206 | ) | (385,303 | ) | (1,291,509 | ) | (222,305 | ) | (51,397 | ) | (273,702 | ) | |||||||||||||
Deferred tax from tax credit and others: | ||||||||||||||||||||||||
Tax credit | 20,137 | 2,588 | 22,725 | 19,004 | 945 | 19,949 | ||||||||||||||||||
Deficit carried forward | 12,487 | (3,299 | ) | 9,188 | 3,434 | (908 | ) | 2,526 | ||||||||||||||||
Others | — | — | — | (5,416 | ) | (2,751 | ) | (8,167 | ) | |||||||||||||||
32,624 | (711 | ) | 31,913 | 17,022 | (2,714 | ) | 14,308 | |||||||||||||||||
Deferred income taxes recognized directly to equity: | ||||||||||||||||||||||||
Capital adjustment arising from equity method investments | (112,643 | ) | (160,305 | ) | (272,948 | ) | (30,975 | ) | (44,085 | ) | (75,060 | ) | ||||||||||||
Gain on valuation of available-for-sale securities | (751,593 | ) | (564,179 | ) | (1,315,772 | ) | (206,689 | ) | (157,684 | ) | (364,373 | ) | ||||||||||||
Loss on valuation of available-for-sale securities | 394,401 | (154,950 | ) | 239,451 | 108,319 | (42,428 | ) | 65,891 | ||||||||||||||||
Others | — | 4,276 | 4,276 | — | 1,176 | 1,176 | ||||||||||||||||||
(469,835 | ) | (875,158 | ) | (1,344,993 | ) | (129,345 | ) | (243,021 | ) | (372,366 | ) | |||||||||||||
Tax effect on elimination of intercompany profit | 178,105 | 59,578 | 237,683 | |||||||||||||||||||||
(156,523 | ) | (237,554 | ) | (394,077 | ) | |||||||||||||||||||
26. | Earnings Per Share |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won except per share information) | ||||||||||||
Net income attributable to controlling interest | 4,378,751 | 3,558,660 | 3,314,181 | |||||||||
Weighted-average number of common shares outstanding (*) | 75,493,523 | 75,952,869 | 78,694,181 | |||||||||
Basic and diluted earnings per share | 58,002 | 46,854 | 42,115 | |||||||||
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(*) | 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 | 2006 | ||||||||||
Total number of common shares issued | 87,186,835 | 87,186,835 | 87,186,835 | |||||||||
Weighted-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 | 4,350,104 | 3,677,964 | 3,353,082 | |||||||||
Other comprehensive income | ||||||||||||
Gain (loss) on valuation of available-for-sale securities, net | (1,714,939 | ) | 690,805 | 602,121 | ||||||||
Less: tax effect | 427,512 | (192,094 | ) | (169,652 | ) | |||||||
Changes in capital adjustments arising from equity method accounted investments | 48,139 | 27,243 | 9,931 | |||||||||
Less: tax effect | (11,903 | ) | (34,698 | ) | 1,705 | |||||||
Foreign currency translation adjustments | 576,489 | 99,408 | (51,839 | ) | ||||||||
Less: tax effect | (75,291 | ) | (11,451 | ) | 5,753 | |||||||
Gain on valuation of derivative instruments | (9,175 | ) | (5,365 | ) | — | |||||||
Less: tax effect | 1,868 | 1,331 | — | |||||||||
(757,300 | ) | 575,179 | 398,019 | |||||||||
Comprehensive income | 3,592,804 | 4,253,143 | 3,751,101 | |||||||||
Controlling interest | 3,571,832 | 4,118,011 | 3,721,622 | |||||||||
Minority interest | 20,972 | 135,132 | 29,479 |
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28. | Assets and Liabilities Denominated in Foreign Currencies |
2008 | 2007 | |||||||||||||||||||
Won | Won | |||||||||||||||||||
Foreign Currency(*2) | Equivalent | Foreign Currency(*2) | Equivalent | |||||||||||||||||
(In millions of Korean won, other currencies in thousands) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents and financial instruments | USD | 129,977 | 163,447 | USD | 231,556 | 217,246 | ||||||||||||||
JPY | 574,721 | 8,011 | JPY | 74,355 | 620 | |||||||||||||||
EUR | 2,313 | 4,109 | EUR | 27 | 37 | |||||||||||||||
Foreign subsidiaries | 728,786 | 916,448 | Foreign subsidiaries | 430,853 | 404,226 | |||||||||||||||
Trade accounts and notes receivable | USD | 370,388 | 465,763 | USD | 323,175 | 303,203 | ||||||||||||||
JPY | 6,855,809 | 95,562 | JPY | 6,042,643 | 50,355 | |||||||||||||||
EUR | 14,802 | 26,292 | EUR | 7,796 | 10,768 | |||||||||||||||
Foreign subsidiaries | 807,654 | 1,015,625 | Foreign subsidiaries | 773,033 | 725,259 | |||||||||||||||
Other accounts and notes receivable | USD | 5,740 | 7,218 | USD | 5,235 | 4,499 | ||||||||||||||
JPY | 8,879 | 124 | JPY | 16,960 | 141 | |||||||||||||||
EUR | — | — | EUR | 11 | 15 | |||||||||||||||
Foreign subsidiaries | 101,680 | 127,863 | Foreign subsidiaries | 73,300 | 68,770 | |||||||||||||||
Short-term and long-term loans receivable | Foreign subsidiaries | 331,900 | 417,365 | Foreign subsidiaries | 186,380 | 174,862 | ||||||||||||||
Long-term trade accounts and notes receivable | Foreign subsidiaries | 71 | 89 | Foreign subsidiaries | 71 | 66 | ||||||||||||||
Investment securities(*1) | Foreign subsidiaries | 96,983 | 121,956 | Foreign subsidiaries | 205,885 | 193,161 | ||||||||||||||
Guarantee deposits | USD | 553 | 695 | USD | 427 | 401 | ||||||||||||||
EUR | 129 | 229 | EUR | 41 | 57 | |||||||||||||||
Foreign subsidiaries | 7,355 | 9,249 | Foreign subsidiaries | 6,955 | 6,526 | |||||||||||||||
3,380,045 | 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. |
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2008 | 2007 | |||||||||||||||||||
Won | Won | |||||||||||||||||||
Foreign Currency(*2) | Equivalent | Foreign Currency(*2) | Equivalent | |||||||||||||||||
(In millions of Korean won, other currencies in thousands) | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Trade accounts and notes payable | USD | 432,531 | 543,907 | USD | 410,215 | 384,863 | ||||||||||||||
JPY | 5,308,193 | 73,990 | JPY | 1,509,059 | 12,576 | |||||||||||||||
EUR | 3,455 | 6,136 | EUR | 1,042 | 1,440 | |||||||||||||||
Foreign subsidiaries | 439,043 | 552,097 | Foreign subsidiaries | 520,780 | 488,595 | |||||||||||||||
Other accounts and notes payable | USD | 37,652 | 47,347 | USD | 45,304 | 42,505 | ||||||||||||||
JPY | 2,861,507 | 39,886 | JPY | 636,330 | 5,302 | |||||||||||||||
EUR | 9,256 | 16,441 | EUR | 446 | 617 | |||||||||||||||
Foreign subsidiaries | 76,183 | 95,800 | Foreign subsidiaries | 44,335 | 41,595 | |||||||||||||||
Accrued expenses | USD | 1,573 | 1,977 | USD | 2,552 | 2,394 | ||||||||||||||
JPY | 2,322 | 32 | JPY | — | — | |||||||||||||||
Foreign subsidiaries | 26,472 | 33,289 | Foreign subsidiaries | 27,297 | 25,610 | |||||||||||||||
Short-term borrowings | USD | 304,956 | 383,482 | USD | 194,394 | 182,380 | ||||||||||||||
Foreign subsidiaries | 1,926,753 | 2,422,892 | Foreign subsidiaries | 1,355,638 | 1,271,860 | |||||||||||||||
Withholdings | USD | 19,349 | 24,331 | USD | 5,122 | 4,805 | ||||||||||||||
JPY | 161,870 | 2,256 | JPY | 145,910 | 1,216 | |||||||||||||||
EUR | 5,179 | 9,199 | EUR | 2,047 | 2,828 | |||||||||||||||
Foreign subsidiaries | 3,688 | 4,638 | Foreign subsidiaries | 2,864 | 2,687 | |||||||||||||||
Debentures(*1,3) | USD | 640,000 | 804,800 | USD | 390,000 | 365,898 | ||||||||||||||
JPY | 182,592,205 | 2,545,134 | JPY | 101,622,000 | 846,847 | |||||||||||||||
Foreign subsidiaries | 15,776 | 19,838 | Foreign subsidiaries | — | — | |||||||||||||||
Long-term borrowings(*3) | USD | 36,134 | 45,439 | USD | 34,829 | 32,677 | ||||||||||||||
JPY | 192,000 | 2,676 | JPY | 384,000 | 3,200 | |||||||||||||||
Foreign subsidiaries | 923,439 | 1,161,224 | Foreign subsidiaries | 538,323 | 505,055 | |||||||||||||||
Loans from foreign financial institutions(*3) | EUR | 4,601 | 8,172 | EUR | 5,237 | 7,234 | ||||||||||||||
8,844,983 | 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
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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
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Sales and Others(*1) | Purchases and Others(*1) | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
POSCO E&C Co., Ltd. | 13,626 | 20,000 | 12,134 | 1,121,335 | 984,030 | 1,618,205 | ||||||||||||||||||
Posteel Co., Ltd. | 1,455,354 | 1,072,032 | 966,254 | 244,908 | 220,459 | 93,315 | ||||||||||||||||||
POSCON Co., Ltd. | 105 | 120 | 177 | 229,119 | 244,365 | 219,602 | ||||||||||||||||||
POSCO Coated & Color Steel Co., Ltd. | 609,377 | 436,206 | 367,443 | 1,916 | 1,327 | 853 | ||||||||||||||||||
POSCO Machinery & Engineering Co., Ltd. | 4,309 | 157 | 1,908 | 158,275 | 152,844 | 125,996 | ||||||||||||||||||
POSDATA Co., Ltd. | 1,685 | 4,516 | 2,290 | 187,186 | 173,660 | 175,046 | ||||||||||||||||||
POSCO Research Institute | 3 | 3 | — | 18,946 | 17,280 | 18,553 | ||||||||||||||||||
Seung Kwang Co., Ltd. | 3 | — | — | 89 | 69 | 6 | ||||||||||||||||||
POSCO Architects & Consultants Co., Ltd. | 936 | 862 | 732 | 29,455 | 24,298 | 30,546 | ||||||||||||||||||
POSCO Specialty Steel Co., Ltd. | 3,697 | 5,175 | 2,844 | 27,122 | 88,258 | 70,299 | ||||||||||||||||||
POSCO Machinery Co., Ltd. | 15,302 | 3,480 | 1,929 | 79,549 | 114,378 | 76,189 | ||||||||||||||||||
POSCO Refractories & Environment Co., Ltd. (POSREC) | 57,189 | 250 | 166 | 350,153 | 213,753 | 211,122 | ||||||||||||||||||
POSTECH Venture Capital Co., Ltd. | 83 | 94 | 77 | — | — | — | ||||||||||||||||||
POSCO America Corporation (POSAM) | 168,663 | 130,150 | 84,227 | 93 | 686 | 277 | ||||||||||||||||||
POSCO Australia Pty. Ltd. (POSA) | 27,695 | 18,206 | 17,821 | 71 | 231 | 2,235 | ||||||||||||||||||
POSCO Canada Ltd. (POSCAN) | 40 | 40 | — | 289,015 | 71,120 | 91,502 | ||||||||||||||||||
POSCO Asia Co., Ltd. (POA) | 951,867 | 600,059 | 440,078 | 215,318 | 121,098 | 73,353 | ||||||||||||||||||
Zhangjiagang 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 | 75,170 | ||||||||||||||||||
Others | 720,997 | 273,214 | 328,329 | 318,164 | 271,594 | 253,698 | ||||||||||||||||||
5,225,298 | 3,418,749 | 3,279,654 | 3,293,947 | 2,750,389 | 3,135,967 | |||||||||||||||||||
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Receivables(*2) | Payables(*2) | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
POSCO E&C Co., Ltd. | 396,743 | 186 | 249,792 | 105,178 | ||||||||||||
Posteel Co., Ltd. | 220,360 | 104,624 | 21,651 | 12,386 | ||||||||||||
POSCON Co., Ltd. | 62,895 | 7 | 62,943 | 24,842 | ||||||||||||
POSCO Coated & Color Steel Co., Ltd. | 48,785 | 40,431 | 71 | 119 | ||||||||||||
POSCO Machinery & Engineering Co., Ltd. | 18,770 | 6 | 26,054 | 20,431 | ||||||||||||
POSDATA Co., Ltd. | 1,103 | 10 | 27,322 | 31,614 | ||||||||||||
POSCO Research Institute | 54 | 1 | 3,780 | 6,394 | ||||||||||||
Seung Kwang Co., Ltd. | 1,631 | — | — | — | ||||||||||||
POSCO Architects Consultants Co., Ltd. | 235 | 1 | 5,470 | 2,001 | ||||||||||||
POSCO Specialty Steel Co., Ltd. | 1,843 | 40 | 4,522 | 8,067 | ||||||||||||
POSCO Machinery Co., Ltd. | 5,032 | 50 | 16,401 | 10,445 | ||||||||||||
POSCO Refractories & Environment (POSREC) | 19,064 | 9 | 57,788 | 24,265 | ||||||||||||
POSTECH Venture Capital Co., Ltd. | — | — | 68 | 66 | ||||||||||||
POSCO America Corporation (POSAM) | 2,818 | 4,447 | — | — | ||||||||||||
POSCO Australia Pty. Ltd. (POSA) | 18 | — | — | — | ||||||||||||
POSCO Canada Ltd. (POSCAN) | 20 | 21 | — | 9,635 | ||||||||||||
POSCO Asia Co., Ltd. (POA) | 27,224 | 24,323 | 2,978 | 1,922 | ||||||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | — | — | — | — | ||||||||||||
POSCO — Japan Co., Ltd. | 21,040 | 30,952 | 1,104 | 6 | ||||||||||||
Others | 98,821 | 18,974 | 31,566 | 25,711 | ||||||||||||
926,456 | 224,082 | 511,510 | 283,082 | |||||||||||||
Sales and Others(*1) | Purchases and Others(*1) | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
eNtoB Corporation | — | — | — | 288,604 | 216,920 | 134,703 | ||||||||||||||||||
KOBRASCO | 4,115 | — | — | 63,968 | 72,514 | 141,859 | ||||||||||||||||||
Poschrome (Proprietary) Limited | 98 | 35 | — | 91,467 | 41,735 | 35,009 | ||||||||||||||||||
POSVINA 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 | — | — | — | — | — | ||||||||||||||||||
457,112 | 254,342 | 369,169 | 477,906 | 331,169 | 311,571 | |||||||||||||||||||
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Receivables(*2) | Payables(*2) | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
eNtoB Corporation | — | — | 6,016 | 2,999 | ||||||||||||
KOBRASCO | 4,115 | — | — | 4,048 | ||||||||||||
USS — POSCO Industries (UPI) | — | 8 | — | — | ||||||||||||
Guangdong Xingpu Steel Center Co., Ltd. | 1,825 | 4,276 | — | — | ||||||||||||
SNNC Co., Ltd. | 19 | 1 | 1,926 | |||||||||||||
5,959 | 4,285 | 7,942 | 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. |
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Sales and | Purchases and | |||||||||||||||
Others(*1) | Others(*1) | Receivables(*2) | Payables(*2) | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Subsidiaries | ||||||||||||||||
POSCO | 5,225,298 | 3,293,947 | 926,456 | 511,510 | ||||||||||||
POSCO E&C Co., Ltd. | 1,711,219 | 200,040 | 330,325 | 769,571 | ||||||||||||
Posteel Co., Ltd. | 479,042 | 1,739,816 | 103,151 | 227,596 | ||||||||||||
POSCON Co., Ltd. | 285,717 | 25,021 | 90,499 | 82,757 | ||||||||||||
POSCO Coated & Color Steel Co., Ltd. | 140,313 | 615,459 | 5,590 | 51,098 | ||||||||||||
POSCO Machinery & Engineering Co., Ltd. | 177,064 | 11,920 | 36,241 | 21,271 | ||||||||||||
POSDATA Co., Ltd. | 226,459 | 6,860 | 41,184 | 1,891 | ||||||||||||
POSCO Specialty Steel Co., Ltd. | 118,480 | 52,415 | 9,498 | 17,051 | ||||||||||||
POSCO Machinery Co., Ltd. | 88,118 | 17,828 | 21,622 | 6,280 | ||||||||||||
POSCO Refractories & Environment Co., Ltd. (POSREC) | 365,429 | 59,201 | 64,168 | 19,304 | ||||||||||||
POSMATE Co., Ltd. | 54,946 | 3,627 | 7,460 | 246 | ||||||||||||
Samjung Packing & Aluminum Co., Ltd. | 287,345 | 27,610 | 31,779 | 2,684 | ||||||||||||
POSCORE Co., Ltd. | 213 | 138,654 | �� | 13 | 20,330 | |||||||||||
POSCO America Corporation (POSAM) | 9,731 | 201,742 | 2,782 | 2,827 | ||||||||||||
POSCO Canada Ltd. (POSCAN) | 289,015 | 40 | — | 20 | ||||||||||||
POSCO Asia Co., Ltd. (POA) | 690,482 | 1,209,891 | 40,363 | 32,170 | ||||||||||||
Zhangjiagang Pohang Stainless Steel Co., Ltd. | 484,395 | 16,632 | 25,987 | 1,121 | ||||||||||||
Qingdao Pohang Stainless Steel Co., Ltd. | 186,536 | 380,401 | 2,407 | 16,418 | ||||||||||||
POSCO — Japan Co., Ltd. | 213,715 | 1,226,022 | 59,667 | 23,235 | ||||||||||||
POSS-India Delhi Steel Processing Centre Private Limited | — | 21,553 | — | 4,930 | ||||||||||||
Others | 407,165 | 2,192,003 | 659,458 | 646,340 | ||||||||||||
2008 | 11,440,682 | 11,440,682 | 2,458,650 | 2,458,650 | ||||||||||||
2007 | 8,153,327 | 8,153,327 | 1,125,494 | 1,125,494 | ||||||||||||
2006 | 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. |
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2008 | 2007 | |||||||
(In millions of Korean won) | ||||||||
Salaries | 46,142 | 36,740 | ||||||
Severance benefits | 11,481 | 13,053 | ||||||
Management achievement awards | 37,347 | 27,865 | ||||||
Stock compensation expense | (55,155 | ) | 123,881 | |||||
Total | 39,815 | 201,539 | ||||||
30. | Significant non-cash Transaction |
31. | Segment and Regional Information |
Engineering and | Consolidation | |||||||||||||||||||||||
Steel | Construction | Trading | Others | Adjustment | Consolidated | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||
Total sales | 38,448,113 | 5,528,105 | 5,656,959 | 3,749,459 | (11,640,000 | ) | 41,742,636 | |||||||||||||||||
Inter-company sales | (6,547,017 | ) | (1,855,696 | ) | (1,392,356 | ) | (1,844,931 | ) | 11,640,000 | — | ||||||||||||||
Net sales | 31,901,096 | 3,672,409 | 4,264,603 | 1,904,528 | — | 41,742,636 | ||||||||||||||||||
Operating income | 6,628,789 | 283,973 | 49,117 | 488,078 | (276,028 | ) | 7,173,929 | |||||||||||||||||
Inventories | 7,569,508 | 847,481 | 323,164 | 219,574 | (298,006 | ) | 8,661,721 | |||||||||||||||||
Investments (non-current) | 8,722,560 | 1,067,694 | 603,289 | 1,027,891 | (6,143,269 | ) | 5,278,165 | |||||||||||||||||
Equity method investments | 5,094,239 | 659,363 | 537,533 | 688,493 | (6,147,092 | ) | 832,536 | |||||||||||||||||
Property, plant and equipment | 17,393,603 | 614,477 | 231,164 | 1,637,042 | (1,807,187 | ) | 18,069,099 | |||||||||||||||||
Intangible assets(*1) | 223,177 | 21,825 | 957 | 157,206 | 320,602 | 723,767 | ||||||||||||||||||
Goodwill | 13,698 | 209,461 | — | 47,683 | — | 270,842 | ||||||||||||||||||
Total Assets | 42,884,329 | 6,324,810 | 1,976,797 | 4,916,085 | (9,140,739 | ) | 46,961,282 | |||||||||||||||||
Depreciation and amortization(*2) | 2,171,387 | 17,710 | 5,660 | 150,177 | 35,124 | 2,380,058 | ||||||||||||||||||
Capital expenditure | 3,922,096 | 289,775 | 88,405 | 320,417 | (527,380 | ) | 4,093,313 | |||||||||||||||||
Stock compensation expenses | — | — | — | — | — | — |
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Engineering and | Consolidation | |||||||||||||||||||||||
Steel | Construction | Trading | Others | Adjustment | Consolidated | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||
Total sales | 29,184,546 | 3,801,882 | 4,018,003 | 2,715,242 | (8,111,932 | ) | 31,607,741 | |||||||||||||||||
Inter-company sales | (4,757,641 | ) | (1,092,309 | ) | (874,520 | ) | (1,387,462 | ) | 8,111,932 | — | ||||||||||||||
Net sales | 24,426,905 | 2,709,573 | 3,143,483 | 1,327,780 | — | 31,607,741 | ||||||||||||||||||
Operating income | 4,534,201 | 284,632 | 31,068 | 187,613 | (117,652 | ) | 4,919,862 | |||||||||||||||||
Inventories | 4,258,206 | 454,338 | 126,182 | 145,708 | (82,418 | ) | 4,902,016 | |||||||||||||||||
Investments (non-current) | 8,205,751 | 565,983 | 333,688 | 775,105 | (4,641,501 | ) | 5,239,026 | |||||||||||||||||
Equity method investments | 4,344,174 | 229,022 | 286,404 | 382,443 | (4,637,431 | ) | 604,612 | |||||||||||||||||
Property, plant and equipment | 15,110,911 | 142,157 | 198,856 | 1,341,015 | (1,211,174 | ) | 15,581,765 | |||||||||||||||||
Intangible assets(*1) | 246,932 | 25,152 | 897 | 166,992 | 130,806 | 570,779 | ||||||||||||||||||
Goodwill | — | — | — | 75,556 | — | 75,556 | ||||||||||||||||||
Total Assets | 34,634,495 | 3,246,818 | 1,195,492 | 3,530,588 | (6,332,630 | ) | 36,274,763 | |||||||||||||||||
Depreciation and amortization(*2) | 1,940,677 | 16,527 | 5,591 | 140,059 | 24,578 | 2,127,432 | ||||||||||||||||||
Capital expenditure | 2,787,662 | 79,961 | 919 | 241,643 | (217,939 | ) | 2,892,246 | |||||||||||||||||
Stock compensation expenses | 123,881 | — | — | — | — | 123,881 |
Engineering and | Consolidation | |||||||||||||||||||||||
Steel | Construction | Trading | Others | Adjustment | Consolidated | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||
Total sales | 24,281,677 | 3,752,233 | 3,046,127 | 2,432,735 | (7,670,446 | ) | 25,842,326 | |||||||||||||||||
Inter-company sales | (3,998,412 | ) | (1,631,547 | ) | (632,841 | ) | (1,407,646 | ) | 7,670,446 | — | ||||||||||||||
Net sales | 20,283,265 | 2,120,686 | 2,413,286 | 1,025,089 | — | 25,842,326 | ||||||||||||||||||
Operating income | 4,080,066 | 282,489 | 24,202 | 251,214 | (248,824 | ) | 4,389,147 | |||||||||||||||||
Inventories | 3,667,714 | 225,378 | 127,600 | 100,923 | (103,410 | ) | 4,018,205 | |||||||||||||||||
Investments (non-current) | 5,871,650 | 434,047 | 276,560 | 523,104 | (3,393,443 | ) | 3,711,918 | |||||||||||||||||
Equity method investments | 3,123,562 | 149,497 | 229,357 | 282,043 | (3,577,956 | ) | 206,503 | |||||||||||||||||
Property, plant and equipment | 14,182,060 | 75,712 | 201,797 | 1,252,523 | (1,068,972 | ) | 14,643,120 | |||||||||||||||||
Intangible assets(*1) | 262,442 | 25,889 | 430 | 121,579 | 146,742 | 557,082 | ||||||||||||||||||
Goodwill | — | — | — | 90,105 | — | 90,105 | ||||||||||||||||||
Total Assets | 29,975,590 | 2,255,377 | 1,026,031 | 2,990,563 | (5,098,488 | ) | 31,149,073 | |||||||||||||||||
Depreciation and amortization(*2) | 1,719,028 | 12,284 | 5,967 | 135,782 | (89,299 | ) | 1,783,762 | |||||||||||||||||
Capital expenditure | 4,043,973 | 26,966 | 233 | 59,300 | (421,050 | ) | 3,709,422 | |||||||||||||||||
Stock compensation expenses | 49,885 | — | — | — | — | 49,885 |
(*1) | Includes goodwill. | |
(*2) | Includes depreciation expense of idle property. |
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Property, Plant | ||||||||||||||||||||
Sales(*1) | and Equipment | |||||||||||||||||||
Customer Location | 2008 | 2007 | 2006 | 2008 | 2007 | |||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||
Korea | 26,886,852 | 19,969,637 | 17,250,163 | 15,487,750 | 14,112,173 | |||||||||||||||
Japan | 2,043,819 | 1,741,972 | 1,311,685 | 252,277 | 103,968 | |||||||||||||||
China | 4,875,784 | 4,503,900 | 3,070,422 | 1,350,731 | 1,026,810 | |||||||||||||||
Asia/Pacific, excluding Japan and China | 3,138,884 | 2,041,587 | 1,486,331 | 665,155 | 232,731 | |||||||||||||||
North America | 800,817 | 732,002 | 610,240 | 19,703 | 17,800 | |||||||||||||||
Others | 3,996,480 | 2,618,643 | 2,113,485 | 293,483 | 88,283 | |||||||||||||||
41,742,636 | 31,607,741 | 25,842,326 | 18,069,099 | 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 Institution | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Assets | ||||||||||||||||
Current assets | 21,819,672 | 14,315,689 | 377,961 | 77,844 | ||||||||||||
Non-Current assets | 24,588,267 | 21,748,269 | 175,382 | 132,961 | ||||||||||||
Investment assets | 5,106,522 | 5,109,363 | 171,643 | 129,663 | ||||||||||||
Property, plant and equipment | 18,069,079 | 15,581,387 | 20 | 378 | ||||||||||||
Intangible assets | 723,724 | 570,724 | 43 | 55 | ||||||||||||
Other non-current assets | 688,942 | 486,795 | 3,676 | 2,865 | ||||||||||||
Total Assets | 46,407,939 | 36,063,958 | 553,343 | 210,805 | ||||||||||||
Liabilities | ||||||||||||||||
Current liabilities | 10,609,425 | 6,533,867 | 399,967 | 90,748 | ||||||||||||
Non-Current liabilities | 7,607,183 | 4,532,167 | 502 | 241 | ||||||||||||
Total Liabilities | 18,216,608 | 11,066,034 | 400,469 | 90,989 | ||||||||||||
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Non-Financial Institution | Financial Institution | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Sales | 41,727,093 | 31,594,856 | 15,543 | 12,885 | ||||||||||||
Cost of goods sold | 32,555,721 | 24,896,387 | 6,618 | 6,276 | ||||||||||||
Selling and administrative expenses | 1,999,701 | 1,781,474 | 6,667 | 3,743 | ||||||||||||
Operating income | 7,171,671 | 4,916,995 | 2,258 | 2,866 | ||||||||||||
Non-operating income | 2,368,851 | 805,060 | 1,025 | 13,447 | ||||||||||||
Non-operating expenses | 3,441,729 | 834,844 | 6,437 | 4,593 | ||||||||||||
Net income before income tax expense | 6,098,793 | 4,887,211 | (3,154 | ) | 11,720 | |||||||||||
Income tax expense | 1,734,095 | 1,273,328 | (112 | ) | 898 | |||||||||||
Net income of Subsidiaries before purchasing | 11,552 | (53,259 | ) | — | — | |||||||||||
Net income | 4,353,146 | 3,667,142 | (3,042 | ) | 10,822 | |||||||||||
Controlling interest | 4,381,793 | 3,547,838 | (3,042 | ) | 10,822 | |||||||||||
Minority interest | (28,647 | ) | 119,304 | — | — |
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32. | Significant Differences between Korean GAAP and U.S. GAAP |
(a) | Reconciliation of net income from Korean GAAP to U.S. GAAP |
Adjustments Before | Deferred Income Tax | Net Adjustments | ||||||||||
Deferred Income Tax | Effect | to Net Income | ||||||||||
(In millions of Korean won, except share data) | ||||||||||||
For the year ended December 31, 2008 | ||||||||||||
Net income attributable to controlling interest under Korean GAAP | 4,378,751 | |||||||||||
Adjustments: | ||||||||||||
Fixed asset revaluation | 11,793 | (2,593 | ) | 9,200 | ||||||||
Capitalized costs | 14,143 | (3,112 | ) | 11,031 | ||||||||
Capitalized repairs | (993 | ) | 218 | (775 | ) | |||||||
Investment securities | (442,568 | ) | 97,365 | (345,203 | ) | |||||||
Amortization of goodwill | 40,124 | (8,826 | ) | 31,298 | ||||||||
Derivatives | (57,907 | ) | 12,740 | (45,167 | ) | |||||||
Others, net | (16,316 | ) | 3,589 | (12,727 | ) | |||||||
(451,724 | ) | 99,381 | (352,343 | ) | ||||||||
Effects of changes in tax rates | 14,225 | |||||||||||
Tax effects resulting from intercompany transactions | 65,257 | |||||||||||
(272,861 | ) | |||||||||||
Net income in accordance with U.S. GAAP | 4,105,890 | |||||||||||
Basic and diluted earnings per share in accordance with U.S. GAAP | 54,387 | |||||||||||
Weighted-average shares outstanding | 75,493,523 | |||||||||||
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Adjustments Before | Deferred Income Tax | Net Adjustments | ||||||||||
Deferred Income Tax | Effect | to Net Income | ||||||||||
(In millions of Korean won, except share data) | ||||||||||||
For the year ended December 31, 2007 | ||||||||||||
Net income attributable to controlling interest under Korean GAAP | 3,558,660 | |||||||||||
Adjustments: | ||||||||||||
Fixed asset revaluation | 16,985 | (4,671 | ) | 12,314 | ||||||||
Capitalized costs | 23,853 | (6,560 | ) | 17,293 | ||||||||
Capitalized repairs | (882 | ) | 243 | (639 | ) | |||||||
Investment securities | 511 | (141 | ) | 370 | ||||||||
Amortization of goodwill | 29,160 | (8,019 | ) | 21,141 | ||||||||
Derivatives | (71,011 | ) | 19,529 | (51,482 | ) | |||||||
Others, net | 10,193 | (2,803 | ) | 7,390 | ||||||||
8,809 | (2,422 | ) | 6,387 | |||||||||
Net income in accordance with U.S. GAAP | 3,565,047 | |||||||||||
Basic and diluted earnings per share in accordance with U.S. GAAP | 46,938 | |||||||||||
Weighted-average shares outstanding | 75,952,869 | |||||||||||
Adjustments Before | Deferred Income Tax | Net Adjustments | ||||||||||
Deferred Income Tax | Effect | to Net Income | ||||||||||
(In millions of Korean won, except share data) | ||||||||||||
For the year ended December 31, 2006 | ||||||||||||
Net income attributable to controlling interest under Korean GAAP | 3,314,181 | |||||||||||
Adjustments: | ||||||||||||
Fixed asset revaluation | 20,152 | (5,542 | ) | 14,610 | ||||||||
Capitalized costs | 35,435 | (9,745 | ) | 25,690 | ||||||||
Capitalized repairs | (1,269 | ) | 349 | (920 | ) | |||||||
Investment securities | 54,070 | (14,869 | ) | 39,201 | ||||||||
Amortization of goodwill | 25,322 | (6,964 | ) | 18,358 | ||||||||
Others, net | (4,588 | ) | 1,263 | (3,325 | ) | |||||||
129,122 | (35,508 | ) | 93,614 | |||||||||
Net income in accordance with U.S. GAAP | 3,407,795 | |||||||||||
Basic and diluted earnings per share in accordance with U.S. GAAP | 43,304 | |||||||||||
Weighted-average shares outstanding | 78,694,181 | |||||||||||
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(b) | Reconciliation of shareholders’ equity from Korean GAAP to U.S. GAAP |
Adjustments Before | Deferred Income Tax | Net Adjustments | ||||||||||
Deferred Income Tax Effect | Effect | to Shareholders’ Equity | ||||||||||
(In millions of Korean won) | ||||||||||||
As of December 31, 2008 | ||||||||||||
Total shareholders’ equity under Korean GAAP | 28,344,205 | |||||||||||
Minority interest | (680,540 | ) | ||||||||||
27,663,665 | ||||||||||||
Adjustments: | ||||||||||||
Fixed asset revaluation | (124,678 | ) | 9,438 | (115,240 | ) | |||||||
Capitalized costs | 359,639 | (79,121 | ) | 280,518 | ||||||||
Capitalized repairs | 580 | (128 | ) | 452 | ||||||||
Investment securities | (140,181 | ) | 30,840 | (109,341 | ) | |||||||
Amortization of goodwill | 103,480 | (22,766 | ) | 80,714 | ||||||||
Derivatives | (128,918 | ) | 30,564 | (98,354 | ) | |||||||
Others, net | (10,652 | ) | 2,344 | (8,308 | ) | |||||||
Tax effects resulting from intercompany transactions | — | 65,257 | 65,257 | |||||||||
59,270 | 36,428 | 95,698 | ||||||||||
Shareholders’ equity in accordance with U.S. GAAP | 27,759,363 | |||||||||||
Adjustments Before | Deferred Income Tax | Net Adjustments | ||||||||||
Deferred Income Tax Effect | Effect | to Shareholders’ Equity | ||||||||||
(In millions of Korean won) | ||||||||||||
As of December 31, 2007 | ||||||||||||
Total shareholders’ equity under Korean GAAP | 25,117,740 | |||||||||||
Minority interest | (633,657 | ) | ||||||||||
24,484,083 | ||||||||||||
Adjustments: | ||||||||||||
Fixed asset revaluation | (136,471 | ) | 15,041 | (121,430 | ) | |||||||
Capitalized costs | 345,496 | (95,011 | ) | 250,485 | ||||||||
Capitalized repairs | 1,573 | (433 | ) | 1,140 | ||||||||
Investment securities | (71,762 | ) | 19,735 | (52,027 | ) | |||||||
Amortization of goodwill | 63,356 | (17,423 | ) | 45,933 | ||||||||
Derivatives | (71,011 | ) | 19,529 | (51,482 | ) | |||||||
Others, net | 5,664 | (1,558 | ) | 4,106 | ||||||||
136,845 | (60,120 | ) | 76,725 | |||||||||
Shareholders’ equity in accordance with U.S. GAAP | 24,560,809 | |||||||||||
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(c) | Fixed asset revaluation |
(d) | Capitalized costs |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Capitalized interest | 96,980 | 104,014 | 123,350 | |||||||||
Depreciation of capitalized interest | (90,112 | ) | (73,888 | ) | (72,034 | ) | ||||||
Net income impact | 6,868 | 30,126 | 51,316 | |||||||||
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Net income impact | 6,434 | (7,321 | ) | (13,782 | ) | |||||||
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(e) | Capitalized repairs |
(f) | Guarantees |
(g) | Stock Appreciation Rights |
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2008 | ||
Dividend 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 | (13,056 | ) | 10,759 | (4,171 | ) | |||||||
(h) | Investment Securities |
(i) | Recognition of an impairment loss |
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(ii) | Recognition of gain on disposal of available for sale investments |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean Won) | ||||||||||||
Impairment loss | (442,840 | ) | — | (1,026 | ) | |||||||
Recognition of gains on disposal | 272 | 511 | 55,096 | |||||||||
Net income impact | (442,568 | ) | 511 | 54,070 | ||||||||
(iii) | Classification of and accounting for certain non-marketable equity securities |
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2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Available-for-Sale Securities under Korean GAAP | ||||||||||||
Marketable Securities | 2,917,595 | 3,888,043 | 2,337,984 | |||||||||
Non-marketable Securities | 1,370,918 | 655,639 | 523,617 | |||||||||
Total | 4,288,513 | 4,543,682 | 2,861,601 | |||||||||
Available-for-Sale Securities and Other Investment Securities under U.S. GAAP | ||||||||||||
Available-for-Sale Securities | 2,917,595 | 3,888,043 | 2,337,984 | |||||||||
Other Investment Securities: | ||||||||||||
Non-marketable Securities under Korean GAAP | 1,370,918 | 655,639 | 523,617 | |||||||||
U.S. GAAP Adjustment | (145,686 | ) | (73,851 | ) | (86,357 | ) | ||||||
Other Investment Securities, at cost | 1,225,232 | 581,778 | 437,260 | |||||||||
Total | 4,142,827 | 4,469,831 | 2,775,244 | |||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Losses | Fair Value | Losses | Fair Value | Losses | Fair Value | |||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||
Available for Sale Securities: | ||||||||||||||||||||||||
Equity securities | 78,938 | 701,197 | 2,037 | 11,906 | 80,975 | 713,103 | ||||||||||||||||||
(i) | Goodwill |
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(j) | Embedded Derivatives |
(k) | Change in hedge accounting |
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(l) | Deferred Income Taxes |
(m) | Accounting for Uncertainty in Income Taxes |
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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 | 10,077 | 15,041 | ||||||
Impairment loss on property, plant and equipment | 42,667 | 121,483 | ||||||
Impairment loss on investment securities | 31,591 | 19,735 | ||||||
Allowance for doubtful accounts | 63,786 | 80,532 | ||||||
Allowance for severance benefits | 13,455 | 32,399 | ||||||
Derivatives | 34,138 | 19,529 | ||||||
Gain/Loss on foreign currency translation | 140,283 | — | ||||||
Loss on valuation ofavailable-for-sale securities | 212,140 | 65,891 | ||||||
Others | 35,093 | 55,609 | ||||||
Total gross deferred tax assets | 583,230 | 410,219 | ||||||
Deferred tax liabilities: | ||||||||
Equity in earnings of equity method investments and subsidiaries | 298,388 | 253,231 | ||||||
Reserve for special repairs | 62,422 | 82,982 | ||||||
Accrued income | — | 2,313 | ||||||
Reserve for technology developments | 2,612 | 303,756 | ||||||
Capitalized repairs | 128 | 433 | ||||||
Capitalized costs | 76,490 | 95,011 | ||||||
Gain onavailable-for-sale securities | 74,222 | 364,373 | ||||||
Total gross deferred tax liabilities | 514,262 | 1,102,099 | ||||||
Net deferred tax assets (liabilities) | 68,968 | (691,880 | ) | |||||
(b) | Comprehensive income |
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2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Net income in accordance with U.S. GAAP | 4,105,890 | 3,565,047 | 3,407,795 | |||||||||
Other 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 | 351,307 | ||||||||
Reclassification adjustment for losses (gains) included in income | 4 | (658 | ) | 43,135 | ||||||||
Comprehensive income, in accordance with U.S. GAAP | 3,571,778 | 4,156,461 | 3,750,399 | |||||||||
Change in Fair | Unrealized Gains | Accumulated | ||||||||||||||
Foreign Currency | Value of a | (Losses) on | Other | |||||||||||||
Translation | Derivative | Investment | Comprehensive | |||||||||||||
Adjustments | Instrument | Securities | Income | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Balance, December 31, 2005 | 4,386 | — | 261,253 | 265,639 | ||||||||||||
Foreign currency translation adjustments, net of tax | (51,838 | ) | — | — | (51,838 | ) | ||||||||||
Unrealized gains on investments, net of tax | — | — | 351,307 | 351,307 | ||||||||||||
Add: Reclassification adjustment for net realized losses included in income, net of tax | — | — | 43,135 | 43,135 | ||||||||||||
Current period change | (51,838 | ) | — | 394,442 | 342,604 | |||||||||||
Balance, December 31, 2006 | (47,452 | ) | — | 655,695 | 608,243 | |||||||||||
Foreign currency translation adjustments, net of tax | 74,982 | — | — | 74,982 | ||||||||||||
Change in fair value of a derivative instrument, net of | — | (4,034 | ) | — | (4,034 | ) | ||||||||||
Unrealized gains on investments, net of tax | — | — | 521,124 | 521,124 | ||||||||||||
Add: Reclassification adjustment for net realized losses included in income, net of tax | — | — | (658 | ) | (658 | ) | ||||||||||
Current period change | 74,982 | (4,034 | ) | 520,466 | 591,414 | |||||||||||
Balance, December 31, 2007 | 27,530 | (4,034 | ) | 1,176,161 | 1,199,657 | |||||||||||
Foreign currency translation adjustments, net of tax | 405,466 | — | — | 405,466 | ||||||||||||
Change in fair value of a derivative instrument, net of tax | — | (6,004 | ) | — | (6,004 | ) | ||||||||||
Unrealized loss on investments, net of tax | — | — | (933,578 | ) | (933,578 | ) | ||||||||||
Add: Reclassification adjustment for net realized losses included in income, net of tax | — | — | 4 | 4 | ||||||||||||
Current period change | 405,466 | (6,004 | ) | (933,574 | ) | (534,112 | ) | |||||||||
Balance, December 31, 2008 | 432,996 | (10,038 | ) | 242,587 | 665,545 | |||||||||||
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(c) | Fair Value of financial instruments |
2008 | 2007 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In millions of Korean won) | ||||||||||||||||
Cash and cash equivalents | 2,490,264 | 2,490,264 | 1,292,581 | 1,292,581 | ||||||||||||
Short-term financial instruments | 1,827,450 | 1,827,450 | 1,743,079 | 1,743,079 | ||||||||||||
Trading securities | 1,238,261 | 1,238,261 | 1,286,939 | 1,286,939 | ||||||||||||
Trade accounts and notes receivable and others | 6,626,560 | 6,626,560 | 4,371,965 | 4,371,965 | ||||||||||||
Investments Securities, including current portion | ||||||||||||||||
Marketable securities | 2,917,595 | 2,917,595 | 3,888,043 | 3,888,043 | ||||||||||||
Not practicable | 2,165,702 | — | 1,441,335 | — | ||||||||||||
Short-term borrowings | 3,254,355 | 3,254,355 | 1,572,020 | 1,572,020 | ||||||||||||
Long-term debt, including current portion | 7,666,004 | 7,535,074 | 3,789,889 | 3,808,261 |
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• | 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) | ||||||||||||||||
Assets | ||||||||||||||||
Trading securities | 1,236,185 | — | — | 1,236,185 | ||||||||||||
Investments Securities | 2,917,595 | — | — | 2,917,595 | ||||||||||||
Derivatives | — | 134,307 | — | 134,307 | ||||||||||||
Liabilities | ||||||||||||||||
Derivatives | — | 276,542 | — | 276,542 |
Period | Amount | |||
(In millions of Korean won) | ||||
2009 | 51,380 | |||
2010 | 43,115 | |||
2011 | 29,928 | |||
2012 | 16,743 | |||
2013 | 2,370 | |||
143,536 | ||||
(g) | Classification differences in the Consolidated Statements of Income |
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(h) | Consolidated statement of cash flows |
2008 | 2007 | 2006 | ||||||||||
(In millions of Korean won) | ||||||||||||
Proceeds from other current liabilities | — | — | 88,907 | |||||||||
Dividends paid to minority shareholders | (21,936 | ) | (13,765 | ) | (7,530 | ) | ||||||
Issuance of new shares by subsidiaries | 71,448 | 1,996 | 67,431 | |||||||||
Additional acquisition of interest of subsidiaries(*) | (302,319 | ) | (142,778 | ) | (42,165 | ) | ||||||
Proceeds from disposal of interest of subsidiaries | — | 11,338 | — | |||||||||
Total | (252,807 | ) | (143,209 | ) | 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 |
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Title: | Chief Executive Officer and Representative Director |
Table of Contents
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 subsidiaries | |||
12 | .1 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
12 | .2 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
13 | .1 | — | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Filed previously |