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DOOSAN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS a. Parent Doosan Corporation (the “Parent”) was incorporated in 1933 under the name of Sohwa-Kirin Beer, Ltd. to manufacture and sell beer. After changing its name several times, the Parent Company changed its name to Doosan Corporation on September 1, 1998. On September 1, 1998, the Parent merged with Doosan Trading Co., Ltd., Doosan Machinery Co., Ltd., Doosan Baekwha Co., Ltd., Doosan Electronics Co., Ltd., Doosan Dong-A Co., Ltd. and others. On December 31, 2001, the Parent merged with Doosan Techpack Co., Ltd. and I.K. Enterprise Co., Ltd. and then merged with Daehan Liquor Co., Ltd. on December 1, 2002. The Parent is now primarily engaged in manufacturing electronics, and has manufacturing facilities in Jeungpyong and Gimcheon. The Parent spun off the Publishing segment to establish Doosan Dong-A Co., Ltd. on October 1, 2008 and spun off the Techpack segment to establish Techpack Solution Co., Ltd. on December 1, 2008. On December 19, 2008, the Parent sold off shares of Techpack Solution Co., Ltd. to MBK private fund. On March 2, 2009, the Parent Company transferred Alcoholic Beverages business segment to Lotte Liquor BG Co., Ltd. On January 1, 2009, the Parent Company has become a business-running holding company. On July 1, 2010, the Parent Company merged with Doosan Mottrol Holdings Co., Ltd. and Doosan Mottrol Co., Ltd. On December 31, 2010, the Parent Company transferred Apparel business segment to Polo Ralph Lauren Korea. Since June 1973, the Parent's shares have been listed in the Korea Exchange (formerly Korea Stock Exchange). After several capital increases, the Parent’s capital stock as of December 31, 2010 is ₩154,062 million including ₩28,849 million of preferred stock. The Parent Company’s shares as of December 31, 2010 are owned as follows: Ownership Number of shares percentage (%) Related party 9,081,691 36.26% Treasury stock 6,701,890 26.76% National Pension 643,364 2.57% Others 8,615,666 34.40% Total 25,042,611 100.00% Meanwhile, as of December 31, 2010, the largest shareholder and others hold 51.7% and 48.3% of preferred stock of the Parent, respectively. b. Consolidated Subsidiaries The consolidated financial statements included the subsidiaries of which the Parent is the largest stockholder with more than 30% of ownership interests. The consolidated subsidiaries as of December 31, 2010 and 2009 are as follows (In millions of Korean won): (2010) Subsidiaries’ Number of Ownership Fiscal year Companies Primary business equity shares (%) (Note 1) Location end Neoplux Co., Ltd. Venture capital ₩ 40,005 4,155,910 66.71 Korea December 31 Neoplux No. 1 Private Equity Fund (Note 3) Financing 68,037 3,300 15.00 〃 〃 Oricom Inc. Advertising 43,184 1,458,230 69.19 〃 〃 SRS Korea Co., Ltd. Manufacturing 43,710 1,015,127 50.91 〃 〃 N Shaper Corp. Other 16,503 1,217,514 100.00 〃 〃 Doosan Feed & Livestock Co., Ltd. Manufacturing 21,929 2,200,000 100.00 〃 〃 Doosan Tower Co., Ltd. Real estate 161,629 6,000,000 100.00 〃 〃 Doosan Dong-A Co., Ltd. Publishing 33,065 2,000,000 100.00 〃 〃 Doosan Bears, Inc. Sports (1,381) 200,000 100.00 〃 〃 DIP Holdings Co., Ltd. Holding company 218,779 284,950 100.00 〃 〃 Doosan DST Co., Ltd. Manufacturing 382,132 10,181,818 50.91 〃 〃 〃 Doosan Electro-Materials Singapore Pte Co., Wholesale & retail (5,576) 427,140 100.00 Singapore Ltd. Doosan Hong Kong Co., Ltd. (“DSH”) 〃 (15,712) 64,000 100.00 Hong Kong 〃 Doosan Shanghai Chemical Co., Ltd. Manufacturing (940) (Note 2) 100.00 China 〃 〃 Doosan Heavy Industries & Construction Co., 〃 3,536,951 436,452,166 41.25 Korea Ltd. (“DHC”) Doosan Engineering & Construction Co., Ltd. Construction 1,256,128 82,535,631 72.75 〃 〃 Doosan Cuvex Co., Ltd. Golf resort 149,165 6,000,000 100.00 〃 〃 Rexcon Co., Ltd. Manufacturing 118,451 2,000,000 100.00 〃 〃 Doosan AMC Co., Ltd. Real estate (6,214) 100,000 100.00 〃 〃 Doosan Capital Co., Ltd. Financial service 173,010 8,000,000 40.57 〃 〃 Doosan China Financial Leasing Corp. 〃 85,567 (Note 2) 100.00 China 〃 BNG Securities Co., Ltd. 〃 5,562 782,554 97.82 Korea March 31 Doosan Engine Co., Ltd. (“DE”) Manufacturing 339,316 29,650,000 42.66 〃 December 31 Doosan Marine Industry Co., Ltd. 〃 18,268 (Note 2) 100.00 China 〃 Doosan Hydro Technology, Inc. 〃 (6,764) 486 100.00 U.S.A. 〃 S.C. Doosan IMGB S.A. Co., Ltd. 〃 4,696 99,370,787 99.76 Romania 〃 〃 Doosan Heavy Industries Vietnam Haiphong 〃 24,764 (Note 2) 90.00 Vietnam Co., Ltd. 〃 Hanjung Power Co., Ltd. Electric power 18,666 17,126,866 51.00 Papua New Guinea HFC Controls. Corp. Manufacturing 6,851 6,000 100.00 U.S.A 〃 Doosan Projects India Co., Ltd. 〃 6,640 116,997 100.00 India 〃 Doosan Heavy Industries America Co., Ltd. Wholesale & retail 2,633 600 100.00 U.S.A 〃 Doosan Heavy Industries Japan Co., Ltd. 〃 2,145 1,000 100.00 Japan 〃 Doosan Heavy Industries Vietnam Co., Ltd. Manufacturing 155,540 (Note 2) 100.00 Vietnam 〃 Subsidiaries’ Number of Ownership Fiscal year Companies Primary business equity shares (%) (Note 1) Location end Doosan Heavy Industries Indonesia Co., Ltd. Manufacturing (₩12,640) 2,200 55.00 Indonesia December 31 〃 Doosan Heavy Industries European Holdings Holding company 4,655 (Note 2) 100.00 Luxemburg S.a.r.l 〃 Doosan Power Systems Co., Ltd. and 15 Manufacturing 471,696 40,708,646 100.00 U.K overseas consolidated subsidiaries Doosan Power Systems Czech Investment Co. 〃 603,038 38 100.00 Czech 〃 Ltd and 2 overseas consolidated subsidiaries. Doosan Infracore Co., Ltd. (“DI”) 〃 1,313,276 75,509,366 44.83 Korea 〃 Doosan Infracore China Co., Ltd. 〃 503,696 (Note 2) 100.00 China 〃 Doosan Infracore Belgium S.A. Co., Ltd. 〃 109,975 45,396,845 100.00 Belgium 〃 Doosan Infracore Machine Tools Yantai Co., 〃 33,229 (Note 2) 100.00 China 〃 Ltd. Doosan Infracore XinJiang Machinery Co., Ltd. Wholesale & retail 5,571 (Note 2) 60.00 〃 〃 Doosan Infracore (China) Investment Co., Ltd. Holding company 83,576 (Note 2) 100.00 〃 〃 Doosan Infracore Suzhou Co., Ltd. Wholesale & retail 65,596 (Note 2) 100.00 〃 〃 Doosan Infracore U.K. Co., Ltd. 〃 26,491 2,900,000 100.00 U.K 〃 Doosan Infracore Germany GmbH. Co., Ltd. 〃 19,090 (Note 2) 100.00 Germany 〃 Doosan Infracore America Corp. 〃 60,441 1,529 100.00 U.S.A 〃 Doosan Infracore Japan Corp. 〃 1,261 200 100.00 Japan 〃 Doosan Infracore (Shandong) Co., Ltd. 〃 36,188 (Note 2) 90.00 China 〃 Doosan Infracore India Private Co., Ltd. 〃 1,407 4,511,620 99.99 India 〃 〃 Doosan International Manufacturing China Co., Manufacturing 17,466 (Note 2) 100.00 China Ltd. Doosan International do Brasil Commercial and Wholesale & retail 363 99,999 100.00 Brazil 〃 Market Related Consulting Ltda. Doosan International Mexico S.A. de C.V. Co., 〃 (573) 10,439 90.00 Mexico 〃 Ltd. Doosan Bobcat Chile Co., Ltd. 〃 8,237 999,999 100.00 Chile 〃 Doosan International India Private Co., Ltd. 〃 16,085 128,251 100.00 India 〃 Doosan International Korea Co., Ltd. 〃 6,979 11,974 100.00 Korea 〃 Bobcat Co., Ltd. 〃 6,749 15,430 100.00 Japan 〃 Doosan Moxy IP Co., Ltd. 〃 (3,989) 100,000 100.00 Norway 〃 Doosan Holdings Europe Co., Ltd. (“DHEL”) & Holding company 869,214 21,820 100.00 Ireland 〃 27 overseas consolidated subsidiaries Doosan Infracore International, Inc. (“DII”) & 12 Wholesale & retail 751,502 19,636 100.00 U.S.A 〃 overseas consolidated subsidiaries Doosan Moxy Co., Ltd. & 4 overseas 〃 52,642 10,720,000 100.00 Norway 〃 consolidated subsidiaries & others (2009) Subsidiaries’ Number of Ownership Fiscal year Companies Primary business equity shares (%) (Note 1) Location end Samhwa Crown & Closure Co., Ltd. Manufacturing ₩85,627 513,852 24.04 Korea December 31 Neoplux Co., Ltd. Venture capital 42,049 4,155,910 66.71 〃 〃 Neoplux No. 1 Private Equity Fund (Note 3) Financing 22,875 3,300 15.00 〃 〃 Oricom Inc. Advertising 39,187 1,458,230 69.19 〃 〃 SRS Korea Co., Ltd. Manufacturing 29,265 1,015,127 50.91 〃 〃 Doosan Feed & Livestock Co., Ltd. 〃 16,913 2,200,000 100.00 〃 〃 Doosan Tower Co., Ltd. Real estate 153,534 6,000,000 100.00 〃 〃 Doosan Dong-A Co., Ltd. Publishing 31,646 2,000,000 100.00 〃 〃 Doosan Mottrol Holdings Co., Ltd. (Note 4) Holding company 140,879 116,000 100.00 〃 〃 Doosan Mottrol Co., Ltd. (Note 4) Manufacturing 112,629 22,365,481 95.45 〃 〃 DIP Holdings Co., Ltd. Holding company 164,402 284,950 100.00 〃 〃 Doosan DST Co., Ltd. Manufacturing 315,045 10,181,818 50.91 〃 〃 Doosan Electro-Materials Singapore Pte Co., Wholesale & retail (6,887) 427,140 100.00 Singapore 〃 Ltd. Doosan Hong Kong Co., Ltd. 〃 (17,123) 64,000 100.00 Hong Kong 〃 Doosan Shanghai Chemical Co., Ltd. Manufacturing (1,841) (Note 2) 100.00 China 〃 Doosan Heavy Industries & Construction Co., 〃 3,319,472 43,645,207 41.28 Korea 〃 Ltd. Doosan Engineering & Construction Co., Ltd. Construction 872,742 37,196,484 52.18 〃 〃 Doosan Cuvex Co., Ltd. Golf resort 148,355 6,000,000 100.00 〃 〃 Rexcon Co., Ltd. Manufacturing 114,592 2,000,000 100.00 〃 〃 Doosan Mecatec Co., Ltd. (Note 4) 〃 354,503 10,968,000 100.00 〃 〃 N Shaper Corp. Office work Supporting 13,147 1,217,514 100.00 〃 〃 Doosan Capital Co., Ltd. Financial service 205,604 8,000,000 39.97 〃 〃 Doosan China Financial Leasing Corp.