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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended April 4, 2009

Commission file number 1-4119

NUCOR CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   13-1860817
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
1915 Rexford Road, Charlotte, North Carolina   28211
(Address of principal executive offices)   (Zip Code)

(704) 366-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x        Accelerated filer  ¨        Non-accelerated filer  ¨        Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

314,256,709 shares of common stock were outstanding at April 4, 2009.

 

 

 


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Nucor Corporation

Form 10-Q

April 4, 2009

INDEX

 

               Page

Part I

  

Financial Information

  
  

Item 1

  

Financial Statements (unaudited)

  
     

Condensed Consolidated Statements of Earnings - Three Months (13 Weeks) Ended April 4, 2009 and March 29, 2008

   3
     

Condensed Consolidated Balance Sheets - April 4, 2009 and December 31, 2008

   4
     

Condensed Consolidated Statements of Cash Flows - Three Months (13 Weeks) Ended April 4, 2009 and March  29, 2008

   5
     

Notes to Condensed Consolidated Financial Statements

   6
  

Item 2

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   16
  

Item 3

  

Quantitative and Qualitative Disclosures About Market Risk

   23
  

Item 4

  

Controls and Procedures

   24

Part II

  

Other Information

  
  

Item 1

  

Legal Proceedings

   24
  

Item 1A

  

Risk Factors

   24
  

Item 6

  

Exhibits

   25

Signatures

      25

List of Exhibits to Form 10-Q

   26


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PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

Nucor Corporation Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)

 

     Three Months (13 Weeks) Ended
     April 4, 2009     March 29, 2008

Net sales

   $ 2,654,319     $ 4,974,269
              

Costs, expenses and other:

    

Cost of products sold

     2,778,324       4,071,592

Marketing, administrative and other expenses

     125,376       169,714

Interest expense, net

     32,365       18,345
              
     2,936,065       4,259,651
              

Earnings (loss) before income taxes and noncontrolling interests

     (281,746 )     714,618

Provision for (benefit from) income taxes

     (91,221 )     213,093
              

Net earnings (loss)

     (190,525 )     501,525

Earnings (loss) attributable to noncontrolling interests

     (880 )     91,771
              

Net earnings (loss) attributable to Nucor stockholders

   $ (189,645 )   $ 409,754
              

Net earnings per share:

    

Basic

     ($0.60 )   $ 1.42

Diluted

     ($0.60 )   $ 1.41

Average shares outstanding:

    

Basic

     314,319       288,208

Diluted

     314,319       289,305

Dividends declared per share

   $ 0.35     $ 0.52

See notes to condensed consolidated financial statements.

 

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Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

     April 4, 2009     Dec. 31, 2008  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 1,900,079     $ 2,355,130  

Accounts receivable, net

     933,763       1,228,807  

Inventories

     1,883,956       2,408,157  

Other current assets

     472,046       405,392  
                

Total current assets

     5,189,844       6,397,486  

Property, plant and equipment, net

     4,126,427       4,131,861  

Goodwill

     1,728,442       1,732,045  

Other intangible assets, net

     925,986       946,545  

Other assets

     615,775       666,506  
                

Total assets

   $ 12,586,474     $ 13,874,443  
                

LIABILITIES

    

Current liabilities:

    

Short-term debt

   $ 6,299     $ 8,622  

Long-term debt due within one year

     5,400       180,400  

Accounts payable

     406,218       534,161  

Federal income taxes payable

     —         199,044  

Salaries, wages and related accruals

     168,729       580,090  

Accrued expenses and other current liabilities

     353,527       351,875  
                

Total current liabilities

     940,173       1,854,192  
                

Long-term debt due after one year

     3,086,200       3,086,200  
                

Deferred credits and other liabilities

     695,613       677,370  
                

Total liabilities

     4,721,986       5,617,762  
                

EQUITY

    

Nucor stockholders’ equity:

    

Common stock

     149,654       149,628  

Additional paid-in capital

     1,641,678       1,629,981  

Retained earnings

     7,560,360       7,860,629  

Accumulated other comprehensive loss, net of income taxes

     (249,055 )     (190,262 )

Treasury stock

     (1,515,387 )     (1,520,772 )
                
     7,587,250       7,929,204  

Noncontrolling interests

     277,238       327,477  
                

Total equity

     7,864,488       8,256,681  
                

Total liabilities and equity

   $ 12,586,474     $ 13,874,443  
                

See notes to condensed consolidated financial statements.

 

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Nucor Corporation Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Operating activities:

    

Net earnings (loss)

   $ (190,525 )   $ 501,525  

Adjustments:

    

Depreciation

     119,699       109,662  

Amortization

     18,142       13,411  

Stock-based compensation

     10,225       9,635  

Deferred income taxes

     (51,693 )     (8,663 )

Settlement of derivative hedges

     (13,355 )     (283 )

Changes in assets and liabilities (exclusive of acquisitions):

    

Accounts receivable

     292,398       33,005  

Inventories

     522,744       8,014  

Accounts payable

     (127,657 )     16,245  

Federal income taxes

     (204,553 )     189,411  

Salaries, wages and related accruals

     (404,173 )     (162,496 )

Other

     42,742       (41,987 )
                

Cash provided by operating activities

     13,994       667,479  
                

Investing activities:

    

Capital expenditures

     (125,966 )     (226,238 )

Investment in affiliates

     (8,468 )     (17,118 )

Disposition of plant and equipment

     2,234       1,250  

Acquisitions (net of cash acquired)

     —         (1,402,179 )

Purchases of investments

     —         (209,605 )

Proceeds from the sale of investments

     —         392,055  
                

Cash used in investing activities

     (132,200 )     (1,461,835 )
                

Financing activities:

    

Net change in short-term debt

     (2,320 )     (10,501 )

Proceeds from the issuance of long-term debt

     —         400,000  

Repayment of long-term debt

     (175,000 )     —    

Issuance of common stock

     1,028       6,158  

Excess tax benefits from stock-based compensation

     (700 )     7,300  

Distributions to minority interests

     (49,339 )     (91,993 )

Cash dividends

     (110,514 )     (176,556 )
                

Cash provided by (used in) financing activities

     (336,845 )     134,408  
                

Decrease in cash and cash equivalents

     (455,051 )     (659,948 )

Cash and cash equivalents - beginning of year

     2,355,130       1,393,943  
                

Cash and cash equivalents - end of three months

   $ 1,900,079     $ 733,995  
                

See notes to condensed consolidated financial statements.

 

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Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited)

 

1. BASIS OF INTERIM PRESENTATION: The information furnished in Item I reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods and are of a normal and recurring nature. The information furnished has not been audited; however, the December 31, 2008 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in Nucor’s annual report for the fiscal year ended December 31, 2008. Certain amounts for the prior year have been reclassified to conform to the 2009 presentation.

Recently Adopted Accounting Pronouncements - In January 2009, Nucor adopted Financial Accounting Standards Board (FASB) Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51” (SFAS 160), which amends current accounting and reporting for a noncontrolling interest in a subsidiary and the deconsolidation of a subsidiary. Upon adoption of this standard, noncontrolling interest of $327.5 million was reclassified to equity as of December 31, 2008 and the corresponding earnings attributable to noncontrolling interests for the period ended March 29, 2008 has been presented as a reconciling item in the consolidated statements of earnings.

In January 2009, Nucor adopted FASB Staff Position (FSP) Emerging Issues Task Force 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of both basic and diluted earnings per share. The impact to diluted and basic earnings per share for the prior year quarter due to adoption of this FSP was less than $0.01.

Recently Issued Accounting Pronouncements - In April 2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” which provides additional guidance in accordance with SFAS 157. If an entity concludes that either the volume or level of activity for an asset or liability has significantly decreased from normal market activity, or that price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Disclosures in interim and annual periods must include inputs and valuation techniques used to measure fair value, along with any changes in valuation techniques and related inputs during the period. In addition, disclosures for debt and equity securities must be provided on a more disaggregated basis than what was required in FAS No. 157. This FSP is effective for interim and annual reporting periods ending after June 15, 2009 and is not expected to have a material impact on Nucor’s consolidated financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Bulletin (APB) 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which requires disclosures about the fair value of financial instruments for publicly traded companies for both interim and annual periods. Historically, these disclosures were only required annually. The interim disclosures are intended to provide financial statement users with more timely and transparent information about the effects of current market conditions on an entity’s financial instruments that are not otherwise reported at fair value. This FSP is effective for interim reporting periods ending after June 15, 2009 and is not expected to have a material impact on Nucor’s consolidated financial statements.

In April 2009, the FASB issued FSP FAS 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” This FSP modifies FAS 141(R) to provide that contingent assets acquired or liabilities assumed in a business combination be recorded at fair value if the acquisition-date fair value can be determined during the measurement period. If not,

 

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such items would be recognized at the acquisition date if they meet the recognition requirements of FAS 5. In periods after the acquisition date, an acquirer shall account for contingent assets and liabilities that were not recognized at the acquisition date in accordance with other applicable GAAP, as appropriate. Items not recognized as part of the acquisition but recognized subsequently would be reflected in that subsequent period’s income. This FSP has no immediate impact on Nucor’s consolidated financial statements, but will apply to any future acquisitions.

 

2. INVENTORIES: Inventories consist of approximately 53% raw materials and supplies and 47% finished and semi-finished products at April 4, 2009 (47% and 53%, respectively, at December 31, 2008). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.

Inventories valued using the last-in, first-out (LIFO) method of accounting represent approximately 62% of total inventories as of April 4, 2009 (65% as of December 31, 2008). If the first-in, first-out (FIFO) method of accounting had been used, inventories would have been $818.4 million higher at April 4, 2009 ($923.4 million higher at December 31, 2008). Use of the lower of cost or market reduced inventories by $110.8 million at April 4, 2009 ($51.3 million at December 31, 2008).

 

3. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is recorded net of accumulated depreciation of $4.46 billion at April 4, 2009 ($4.35 billion at December 31, 2008).

 

4. GOODWILL AND OTHER INTANGIBLE ASSETS: The change in the net carrying amount of goodwill for the quarter ended April 4, 2009 by segment is as follows (in thousands):

 

     Steel Mills    Steel Products     Raw Materials    All Other    Total  

Balance at December 31, 2008

   $ 208,466    $ 755,562     $ 665,075    $ 102,942    $ 1,732,045  

Purchase price adjustments of previous acquisitions

     —        (44 )     —        —        (44 )

Translation

     —        (3,559 )     —        —        (3,559 )
                                     

Balance at April 4, 2009

   $ 208,466    $ 751,959     $ 665,075    $ 102,942    $ 1,728,442  
                                     

Intangible assets with estimated useful lives of five to 22 years are comprised of the following (in thousands):

 

     April 4, 2009    December 31, 2008
     Gross
Amount
   Accumulated
Amortization
   Gross
Amount
   Accumulated
Amortization

Customer relationships

   $ 895,338    $ 95,878    $ 897,477    $ 80,235

Trademarks and trade names

     118,456      8,671      118,734      7,150

Other

     27,869      11,128      27,869      10,150
                           
   $ 1,041,663    $ 115,677    $ 1,044,080    $ 97,535
                           

Intangible asset amortization expense for the first quarter of 2009 and 2008 was $18.1 million and $13.4 million, respectively. Annual amortization expense is estimated to be $71.1 million in 2009; $68.9 million in 2010; $65.9 million in 2011; $62.8 million in 2012; and $59.4 million in 2013.

 

5. EQUITY INVESTMENTS: The carrying value of our equity investments in domestic and foreign companies was $576.0 million at April 4, 2009 ($626.4 million at December 31, 2008) and is recorded in other assets in the consolidated balance sheets. Equity method investment losses attributable to Nucor were $38.0 million and $11.3 million in the first quarter of 2009 and 2008, respectively. The results of our equity investments are included in marketing, administrative, and other expenses in the consolidated statements of earnings.

 

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Nucor’s most significant equity method investment is a 50% economic and voting interest in Duferdofin-Nucor S.r.l., a steel manufacturer with three structural mills located in Italy. Nucor accounts for its investment in Duferdofin-Nucor (on a one-month lag basis) under the equity method, as control and risk of loss are shared equally between the partners. Duferdofin-Nucor losses attributable to Nucor for the first quarter of 2009 included a pre-tax charge of $33.4 million to write down inventories to the lower or cost or market.

Nucor’s investment in Duferdofin-Nucor at April 4, 2009 was $528.5 million ($581.9 million at December 31, 2008). Nucor’s 50% share of the total net assets of Duferdofin-Nucor at April 4, 2009 on a historical basis was $61.6 million, resulting in a basis difference of $466.9 million due to the step-up to fair value of certain assets and liabilities attributable to Duferdofin-Nucor as well as the identification of goodwill and definite-lived intangible assets. This basis difference, excluding the portion attributable to goodwill, is being amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate.

 

6. CURRENT LIABILITIES: Book overdrafts, included in accounts payable in the consolidated balance sheet, were $49.8 million at April 4, 2009 ($62.1 million at December 31, 2008). Accrued vacation, included in salaries, wages and related accruals in the consolidated balance sheet, was $67.0 million at April 4, 2009 ($73.1 million at December 31, 2008). Dividends payable, included in accrued expenses and other current liabilities in the consolidated balance sheet, was $110.6 million at April 4, 2009 ($110.5 million at December 31, 2008).

 

7. DERIVATIVES: Nucor uses derivative financial instruments from time-to-time primarily to partially manage its exposure to price risk related to natural gas purchases used in the production process as well as copper and aluminum purchased for resale to its customers. In addition, Nucor uses derivatives from time-to-time to partially manage its exposure to changes in interest rates on outstanding debt instruments and uses forward foreign exchange contracts to hedge cash flows associated with certain assets and liabilities, firm commitments and anticipated transactions.

Nucor recognizes all derivative instruments in the condensed consolidated balance sheets at fair value. Any resulting changes in fair value are recorded as adjustments to other comprehensive income (loss), net of tax, or recognized in net earnings, as appropriate.

At April 4, 2009, natural gas swaps covering 56.9 million MMBTUs and foreign currency contracts with a notional value of $46.4 million were outstanding.

 

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The following tables summarize information regarding Nucor’s derivative instruments (in thousands):

Fair Values of Derivative Instruments

 

     April 4, 2009
     Balance Sheet Location   Fair Value

Asset derivatives not designated as hedging instruments under SFAS 133:

    

Commodity contracts

   Other current assets   $ 281
        

Liability derivatives designated as hedging instruments under SFAS 133:

    

Commodity contracts

   Accrued expenses and other current liabilities   $ 47,800

Commodity contracts

   Deferred credits and other liabilities     93,800
        

Total liability derivatives designated as hedging instruments under SFAS 133

       141,600
        

Liability derivatives not designated as hedging instruments under SFAS 133:

    

Foreign exchange contracts

   Accrued expenses and other current liabilities     491
        

Total liability derivatives

     $ 142,091
        

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

 

Derivatives in SFAS 133 Cash
Flow Hedging Relationships

   Amount of Gain or
(Loss) Recognized
in OCI on
Derivative
(Effective Portion)
Three Months
(13 Weeks)
Ended April 4, 2009
    Location of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
   Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
Three Months
(13 Weeks)
Ended April 4, 2009
    Location of Gain or
(Loss) Recognized
in Income on
Derivative
(Ineffective Portion)
   Amount of Gain or
(Loss) Recognized
in Income on
Derivative
(Ineffective Portion)
Three Months
(13 Weeks)
Ended April 4, 2009
 

Commodity contracts

   $ (36,130 )   Cost of products sold    $ (9,139 )   Cost of products sold    $ (2,700 )
                              
   $ (36,130 )      $ (9,139 )      $ (2,700 )
                              

Derivatives Not Designated as Hedging Instruments

 

Derivatives Not Designated as Hedging Instruments Under SFAS 133

   Location of Gain or
(Loss) Recognized in
Income on Derivative
   Amount of Gain or
(Loss) Recognized in
Income on Derivative
Three Months (13 weeks)
Ended April 4, 2009
 

Commodity contracts

   Cost of products sold    $ 1,283  

Foreign exchange contracts

   Cost of products sold      (491 )
           

Total

      $ 792  
           

 

  8. FAIR VALUE MEASUREMENTS: The following table summarizes information regarding Nucor’s financial assets and financial liabilities that are measured at fair value as of April 4, 2009 (in thousands). Nucor does not currently have any non-financial assets or liabilities that are measured at fair value on a recurring basis.

 

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           Fair Value Measurements at Reporting Date Using

Description

   Carrying
Amount in
Condensed
Consolidated
Balance Sheet
    Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)

Cash equivalents

   $ 1,799,906     $ 1,799,906    $ —       $ —  

Derivatives

     (141,810 )     —        (141,810 )     —  

Fair value measurements for Nucor’s cash equivalents are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Fair value measurements for Nucor’s derivatives are classified under Level 2 because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices and spot and future exchange rates.

 

9. CONTINGENCIES: Nucor has been named, along with other major steel producers, as a co-defendant in several related antitrust class-action complaints filed by Standard Iron Works and other steel purchasers in the United States District Court for the Northern District of Illinois. The cases are filed as class actions. The plaintiffs allege that from January 2005 to the present, eight steel manufacturers, including Nucor, engaged in anticompetitive activities with respect to the production and sale of steel. The plaintiffs seek monetary and other relief. Although we believe the plaintiffs’ claims are without merit and will vigorously defend against them, we cannot at this time predict the outcome of this litigation or determine Nucor’s potential exposure.

Nucor is subject to environmental laws and regulations established by federal, state and local authorities and, accordingly, makes provision for the estimated costs of compliance. Of the undiscounted total $39.0 million of accrued environmental costs at April 4, 2009 ($27.1 million at December 31, 2008), $22.0 million was classified in accrued expenses and other current liabilities ($16.1 million at December 31, 2008) and $17.0 million was classified in deferred credits and other liabilities ($11.0 million at December 31, 2008).

Other contingent liabilities with respect to product warranties, legal proceedings and other matters arise in the normal course of business. In the opinion of management, no such matters exist that, individually or in the aggregate, would have a material effect on the consolidated financial statements.

 

10. STOCK-BASED COMPENSATION: Stock Options – A summary of activity under Nucor’s stock option plans for the quarter ended April 4, 2009 is as follows (in thousands, except year and per share amounts):

 

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     Shares     Weighted -
Average
Exercise
Price
   Weighted -
Average
Remaining
Contractual Life
   Aggregate
Intrinsic
Value

Number of shares under option:

          

Outstanding at beginning of year

   1,299     $ 20.80      

Exercised

   (65 )   $ 16.20       $ 1,729

Canceled

   —         —        
              

Outstanding at April 4, 2009

   1,234     $ 21.04    2.3 years    $ 27,946
              

Options exercisable at April 4, 2009

   1,234     $ 21.04    2.3 years    $ 27,946
              

As of March 1, 2006, all outstanding options were vested; therefore, no compensation expense related to stock options was recorded in the first quarters of 2009 or 2008. The amount of cash received for the exercise of stock options totaled $1.0 million and $6.2 million in the first quarter of 2009 and 2008, respectively.

Restricted Stock Awards – Nucor’s Senior Officers Annual Incentive Plan (the “AIP”) and Long-Term Incentive Plan (the “LTIP”) authorize the award of shares of common stock to officers subject to certain conditions and restrictions. The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age fifty-five while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period.

The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up to one-half of an annual incentive award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age fifty-five while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor.

A summary of Nucor’s restricted stock activity under the AIP and LTIP for the first quarter of 2009 is as follows (shares in thousands):

 

     Shares     Grant Date
Fair Value

Restricted stock awards and units:

    

Unvested at beginning of year

   375     $ 61.57

Granted

   256     $ 32.16

Vested

   (337 )   $ 48.54

Canceled

   —         —  
        

Unvested at April 4, 2009

   294     $ 50.92
        

Shares reserved for future grants

   1,731    
        

 

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Compensation expense for common stock and common stock units awarded under the AIP and LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $1.4 million and $4.3 million in the first quarter of 2009 and 2008, respectively. At April 4, 2009, unrecognized compensation expense related to unvested restricted stock was $5.8 million, which is expected to be recognized over a weighted-average period of 1.8 years.

Restricted Stock Units – Nucor annually grants restricted stock units (“RSUs”) to key employees, officers and non-employee directors. The RSUs typically vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. A portion of the RSUs awarded to senior officers vest upon the officer’s retirement. Retirement, for purposes of vesting in these units only, means termination of employment with approval of the Compensation and Executive Development Committee after satisfying age and years of service requirements. RSUs granted to non-employee directors are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the board of directors.

RSUs granted to employees who are eligible for retirement on the date of grant or will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who are not retirement-eligible is recognized on a straight-line basis over the vesting period. Cash dividend equivalents are paid to participants each quarter. Dividend equivalents paid on units expected to vest are recognized as a reduction in retained earnings.

The fair value of the RSUs is determined based on the closing stock price of Nucor’s common stock on the day before the grant. A summary of Nucor’s restricted stock for the first quarter of 2009 is as follows (shares in thousands):

 

     Shares     Grant Date
Fair Value

Restricted stock units:

    

Unvested at beginning of year

   1,139     $ 67.67

Granted

   —         —  

Vested

   (36 )   $ 64.80

Canceled

   (3 )   $ 74.80
        

Unvested at April 4, 2009

   1,100     $ 67.75
        

Shares reserved for future grants

   17,014    
        

Compensation expense for RSUs was $8.8 million in the first quarter of 2009 ($5.3 million in the first quarter of 2008). As of April 4, 2009, unrecognized compensation expense related to unvested RSUs was $42.6 million, which is expected to be recognized over a weighted-average period of 1.1 years.

 

11. EMPLOYEE BENEFIT PLAN: Nucor has a Profit Sharing and Retirement Savings Plan for qualified employees. Nucor’s expense for these benefits was $3.7 million and $67.8 million in the first quarter of 2009 and 2008, respectively.

 

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12. INTEREST EXPENSE: The components of net interest expense are as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Interest expense

   $ 39,682     $ 29,784  

Interest income

     (7,317 )     (11,439 )
                

Interest expense, net

   $ 32,365     $ 18,345  
                

 

13. INCOME TAXES: The Internal Revenue Service (“IRS”) is currently examining Nucor’s 2005 and 2006 federal income tax returns. Management believes that the Company has adequately provided for any adjustments that may arise from this audit. Nucor has substantially concluded U.S. federal income tax matters for years through 2004. The 2007 and 2008 tax years are open to examination by the IRS. The tax years 2003 through 2008 remain open to examination by other major taxing jurisdictions to which Nucor is subject.

 

14. COMPREHENSIVE INCOME: The components of total comprehensive income are as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Net earnings (loss)

   $ (190,525 )   $ 501,525  

Net unrealized gain (loss) on hedging derivatives, net of income taxes

     (36,130 )     35,756  

Reclassification adjustment for loss on settlement of hedging derivatives included in net income, net of income taxes

     9,139       183  

Foreign currency translation loss, net of income taxes

     (31,822 )     (12,848 )
                

Comprehensive income (loss)

     (249,338 )     524,616  

Comprehensive (income)/loss attributable to noncontrolling interests

     900       (91,728 )
                

Comprehensive income (loss) attributable to Nucor stockholders

   $ (248,438 )   $ 432,888  
                

 

15. SEGMENTS: Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate, and Nucor’s equity investment in Duferdofin-Nucor. The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, steel fasteners, metal building systems, light gauge steel framing, steel grating and expanded metal, and wire and wire mesh. The raw materials segment includes DJJ, the scrap broker and processor that Nucor acquired on February 29, 2008; Nu-Iron Unlimited, a facility that produces direct reduced iron used by the steel mills; and certain equity method investments. The “All other” category primarily includes Nucor’s steel trading businesses. The segments are consistent with the way Nucor manages its business, which is primarily based upon the similarity of the types of products produced and sold by each segment.

Net interest expense, other income, profit sharing expense, stock-based compensation, gains on foreign currency exchange contracts and changes in the LIFO reserve are shown under Corporate/eliminations. Corporate assets primarily include cash and cash equivalents, allowances to eliminate intercompany profit in inventory, fair value of natural gas hedges, deferred income tax assets and investments in affiliates.

 

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The company’s results by segment were as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Net sales to external customers:

    

Steel mills

   $ 1,656,240     $ 3,759,453  

Steel products

     713,827       885,507  

Raw materials

     236,931       235,229  

All other

     47,321       94,080  
                
   $ 2,654,319     $ 4,974,269  
                

Intercompany sales:

    

Steel mills

   $ 220,548     $ 486,555  

Steel products

     6,020       8,298  

Raw materials

     567,964       668,327  

All other

     2,555       342  

Corporate/eliminations

     (797,087 )     (1,163,522 )
                
   $ —       $ —    
                

Earnings (loss) before income taxes and noncontrolling interests:

    

Steel mills

   $ (226,875 )   $ 799,284  

Steel products

     (33,576 )     50,186  

Raw materials

     (31,537 )     16,576  

All other

     (10,119 )     2,768  

Corporate/eliminations

     20,361       (154,196 )
                
   $ (281,746 )   $ 714,618  
                
     April 4, 2009     Dec. 31, 2008  

Segment assets:

    

Steel mills

   $ 6,180,501     $ 6,603,944  

Steel products

     2,898,354       3,207,318  

Raw materials

     2,209,307       2,324,857  

All other

     194,748       207,767  

Corporate/eliminations

     1,103,564       1,530,557  
                
   $ 12,586,474     $ 13,874,443  
                

 

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16. EARNINGS PER SHARE: The computations of basic and diluted net earnings per share are as follows (in thousands, except per share amounts):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Basic net earnings per share:

    

Basic net earnings (loss)

   $ (189,645 )   $ 409,754  

Earnings allocated to participating securities

     (369 )     (1,260 )
                

Net earnings (loss) available to common stockholders

   $ (190,014 )   $ 408,494  
                

Average shares outstanding

     314,319       288,208  
                

Basic net earnings per share

     ($0.60 )   $ 1.42  
                

Diluted net earnings per share:

    

Diluted net earnings (loss)

   $ (189,645 )   $ 409,754  

Earnings allocated to participating securities

     (369 )     (1,258 )
                

Net earnings (loss) available to common stockholders

   $ (190,014 )   $ 408,496  
                

Diluted average shares outstanding:

    

Basic shares outstanding

     314,319       288,208  

Dilutive effect of stock options and other

     —         1,097  
                
     314,319       289,305  
                

Diluted net earnings per share

     ($0.60 )   $ 1.41  
                

The number of shares that were not included in the diluted net earnings per share calculation because to do so would have been antidilutive was immaterial for all periods presented.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements made in this quarterly report are forward-looking statements that involve risks and uncertainties. These forward-looking statements reflect the Company’s best judgment based on current information, and although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may vary materially from the results and expectations discussed in this report. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to volatility in steel prices and changes in the supply and cost of raw materials, including pig iron and scrap steel; (2) availability and cost of electricity and natural gas; (3) market demand for steel products, which, in the case of many of our products, is driven by the level of non-residential construction activity in the U.S.; (4) competitive pressure on sales and pricing, including pressure from imports and substitute materials; (5) uncertainties surrounding the global economy, including the severe economic downturn in construction markets and excess world capacity for steel production; (6) fluctuations in currency conversion rates; (7) U.S. and foreign trade policy affecting steel imports or exports; (8) significant changes in government regulations affecting environmental compliance; (9) the cyclical nature of the steel industry; (10) capital investments and their impact on our performance; and (11) our safety performance.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements included elsewhere in this report, as well as the audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2008.

Critical Accounting Policies and Estimates

We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of our consolidated financial statements and should be read in conjunction with the critical accounting policies and estimates included in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2008.

Inventories Inventories are stated at the lower of cost or market. All inventories held by the parent company and Nucor-Yamato Steel Company are valued using the LIFO method of accounting except for supplies that are consumed indirectly in the production process, which are valued using the FIFO method of accounting. All inventories held by the parent company’s other subsidiaries are valued using the FIFO method of accounting. The Company records any amount required to reduce the carrying value of inventory to net realizable value as a charge to cost of products sold.

Should steel selling prices continue to decline in future quarters, further write-downs of inventory could result. Specifically, the valuation of raw material inventories purchased during periods of peak market pricing held by subsidiaries valued using the FIFO method of accounting would most likely be impacted. Low utilization rates at our steel mills have continued to hinder our ability to work through high priced scrap and scrap substitutes (particularly pig iron), leading to period-end exposure when comparing carrying value to net realizable value.

Asset Impairments We evaluate our property, plant and equipment and finite-lived intangible assets for potential impairment on an individual asset basis or at the lowest level asset grouping for which cash flows can be separately identified. Asset impairments are assessed whenever changes in circumstances could indicate that the carrying amounts of those productive assets could exceed their projected undiscounted cash flows. Some of the estimated values for assets that we currently use in our operations utilize judgments and assumptions of future undiscounted cash flows that the assets will produce. When it is determined that an impairment exists, the related assets are written down to estimated fair market value.

 

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Certain long-lived asset groupings were tested for impairment in accordance with Statement of Financial Accounting Standard No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” during the fourth quarter of 2008. Undiscounted cash flows for each asset grouping were estimated using management’s long-range estimates of market conditions associated with each asset grouping over the estimated useful life of the principal asset within the group. Our undiscounted cash flow analysis indicated that those long-lived asset groupings were recoverable as of December 31, 2008; however, if our projected cash flows are not realized, either because of an extended recessionary period or other unforeseen events, impairment charges may be required in future periods. A 10% decrease in the projected cash flows of each of our asset groupings would not result in an impairment. No impairment testing was deemed necessary in the first quarter of 2009.

Goodwill Goodwill is tested annually for impairment and whenever events or circumstances change that would make it more likely than not that an impairment may have occurred. We perform our annual impairment analysis as of the first day of the fourth quarter each year. The evaluation of impairment involves comparing the current estimated fair value of each reporting unit to the recorded value, including goodwill.

Nucor uses a discounted cash flow model to determine the current estimated fair value of its reporting units. Key assumptions used to determine the fair value of each reporting unit as part of our annual testing were: (a) expected cash flow for the five year period following the testing date (including market share, sales volumes and prices, costs to produce and estimated capital needs); (b) an estimated terminal value using a terminal year growth rate of 3.5% - 4.0% depending on the growth prospects of the reporting unit; (c) a discount rate based on management’s best estimate of the after-tax weighted average cost of capital; and (d) a probability-weighted scenario approach by which varying cash flows are assigned to certain scenarios based on the likelihood of occurrence. Management considers historical and anticipated future results, general economic and market conditions, the impact of planned business and operational strategies and all available information at the time the fair values of its reporting units are estimated.

For goodwill impairment testing performed in the fourth quarter of 2008, all reporting units had fair values in excess of their carrying values by at least 25% except for the Buildings Group and Cold Finish reporting units which, as a result, would be most impacted by changes in our assumptions and estimates. Goodwill amounts recorded at the Buildings Group and Cold Finish reporting units as of the annual test date of September 28, 2008 were $167.1 million and $44.5 million, respectively. As of the annual test date of September 28, 2008, the fair value of the Buildings Group and Cold Finish reporting units exceeded carrying value by $93.0 million and $37.3 million, respectively. A 50 basis point increase in the discount rate, a critical assumption in which a minor change can have a significant impact on the estimated fair value, would decrease the fair value of the Buildings Group and Cold Finish reporting units by $38.6 million and $24.0 million, respectively, resulting in no goodwill impairment charge.

Changes in the judgments and estimates underlying our analysis of goodwill for possible impairment, including expected future operating cash flows and discount rate, could decrease the fair value of the reporting units in the future and could result in an impairment of goodwill. We will continue to monitor events or circumstances that occur throughout the year to determine whether such change would more likely than not reduce the fair value of a reporting unit below its carrying amount. No impairment testing was deemed necessary in the first quarter of 2009.

Equity Method Investments Investments in joint ventures in which Nucor shares control over the financial and operating decisions but in which Nucor is not the primary beneficiary are accounted for under the equity method. The results of these investments (excluding impairment charges) are included in the Company’s marketing, administrative and other expenses in the consolidated statements of operations.

Each of the Company’s equity method investments is subject to a review for impairment, if and when circumstances indicate that a decline in value below its carrying amount is other than temporary. Under these circumstances, the Company would write the investment down to its estimated fair value, which would become its new carrying amount.

 

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Overview

Nucor and affiliates are manufacturers of steel and steel products, with operating facilities and customers primarily located in North America. Additionally, Nucor is a scrap processor and broker and is North America’s largest recycler. Nucor reports its results in three segments: steel mills, steel products and raw materials.

The steel mills segment produces carbon and alloy steel in bars, beams, sheet and plate. The steel products segment produces steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. The raw materials segment produces direct reduced iron used by the steel mills; brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap.

In February 2008, Nucor acquired the stock of SHV North America Corporation, which owned 100% of The David J. Joseph Company and related affiliates, for a purchase price of approximately $1.44 billion. DJJ now operates as a wholly owned subsidiary of Nucor Corporation and is headquartered in Cincinnati, Ohio. The principal activities of DJJ, which has been the broker of ferrous scrap to Nucor since 1969, include the operation of scrap recycling facilities (processing); brokerage services for scrap, ferro-alloys, pig iron and scrap substitutes; mill and industrial services; and rail and logistics services. DJJ is included in Nucor’s raw materials segment.

During the first quarter of 2009, the average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 45%, 45% and 44%, respectively, compared with 92%, 70% and 76%, respectively, in the first quarter of 2008.

Results of Operations

Net Sales Net sales to external customers by segment for the first quarters of 2009 and 2008 were as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009    March 29, 2008    % Change  

Steel mills

   $ 1,656,240    $ 3,759,453    -56 %

Steel products

     713,827      885,507    -19 %

Raw materials

     236,931      235,229    1 %

All other

     47,321      94,080    -50 %
                

Net sales

   $ 2,654,319    $ 4,974,269    -47 %
                

Net sales for the first quarter of 2009 decreased 47% from the first quarter of 2008. Average sales price per ton decreased 7% from $770 in the first quarter of 2008 to $716 in the first quarter of 2009, while total tons shipped to outside customers decreased 43% over the same period last year. Net sales decreased 36% from the fourth quarter of 2008 due to a 26% decrease in average sales price per ton over the fourth quarter of 2008, combined with a 14% decrease in total tons shipped to outside customers.

 

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In the steel mills segment, production and sales tons were as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009    March 29, 2008    % Change  

Steel production

   2,879    5,831    -51 %
            

Outside steel shipments

   2,433    5,203    -53 %

Inside steel shipments

   375    748    -50 %
            

Total steel shipments

   2,808    5,951    -53 %
            

Net sales for the steel mills segment decreased 56% over the first quarter of 2008 due to a 53% decrease in tons sold to outside customers combined with a 6% decrease in the average sales price per ton from $723 to $682.

Tonnage data for the steel products segment is as follows:

 

     Three Months (13 weeks) Ended  
     April 4, 2009    March 29, 2008    % Change  

Joist production

   60    132    -55 %

Deck sales

   75    116    -35 %

Cold finish sales

   80    136    -41 %

Fabricated concrete reinforcing steel sales

   208    179    16 %

The 19% decrease in the steel products segment’s sales for the first quarter was due to a 25% decrease in volume, partially offset by a $147 (11%) increase in the average sales price per ton. Fabricated concrete reinforcing steel sales increased year over year primarily due to acquisitions made by Harris Steel during 2008, the largest of which was Ambassador Steel Corporation in August 2008.

The sales for the raw materials segment were flat from the first quarter of 2008 to the first quarter of 2009; however, only one month of DJJ’s sales were included in Nucor’s consolidated results in the first quarter of 2008. Prior to the acquisition of DJJ, Nucor had no outside sales of raw materials. In the first quarter of 2009, approximately 74% of outside sales in the raw materials segment were from the brokerage operations of DJJ and approximately 25% of the outside sales were from the scrap processing facilities (72% and 27%, respectively, in the first quarter of 2008).

The “All other” category includes the steel trading businesses that Nucor owns through Harris Steel. The period over period decrease in sales is due to decreases in both volume and pricing.

Gross Margins For the first quarter of 2009, Nucor recorded gross margins of $(124.0) million (-5%), compared to $902.7 million (18%) in the first quarter of 2008. The year-over-year dollar and gross margin percentage decreases were the result of the decreased average sales price per ton for all products and the 43% decrease in total shipments to outside customers. Additionally, the decreases were due to the following:

 

   

Energy costs increased $11 per ton over the prior year period due to decreased utilization rates across all product lines.

 

   

In the steel mills segment, the average scrap and scrap substitute cost per ton used remained unchanged from the first quarter of 2008; however, metal margins (the difference between the selling price of steel and the cost of scrap and scrap substitutes) decreased. The significantly lower production rates of our steel mills have further slowed the rate at which our sheet mills are consuming higher-cost iron units, in particular pig iron inventories, which were purchased prior to

 

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the collapse in both the economy and scrap/pig iron pricing in last year’s fourth quarter. We increased the rate of pig iron consumption at our steel mills midway through the first quarter, which had the effect of decreasing the gross margin for the period.

 

   

In the steel products segment, the average price of raw materials used increased approximately 30% from the first quarter of 2008 to the first quarter of 2009.

 

   

DJJ’s business of collecting and processing ferrous and non-ferrous materials for resale typically operates at lower margins than Nucor has historically experienced as a manufacturer of steel and steel products.

 

   

Nucor incurred a charge of approximately $60 million in the first quarter of 2009 to write down inventories to the lower of cost or market (none in the first quarter of 2008).

 

 

 

Pre-operating and start-up costs of new facilities increased to $33.2 million in the first quarter of 2009, compared with $22.9 million in the first quarter of 2008. In 2009, these costs primarily related to the start-up of the SBQ mill in Memphis, Tennessee, the start-up of the building systems facility in Brigham City, Utah, and the Castrip® project in Blytheville, Arkansas. In the first quarter of 2008, the pre-operating and start-up costs were attributable to those projects as well as to the HIsmelt project in Kwinana, Australia.

The decrease in our gross margin was partially offset by a LIFO credit of $105.0 million in the first quarter of 2009, compared with a charge of $69.0 million in last year’s first quarter. (LIFO charges or credits for interim periods are based on management’s estimates of both inventory prices and quantities at year-end. The actual amounts will likely differ from these estimated amounts, and such differences may be significant.)

Marketing, Administrative and Other Expenses The major components of marketing, administrative and other expenses are typically freight and profit sharing costs. Although total freight costs were down approximately 40% over the prior year quarter, unit freight costs increased 11%. The increase was primarily due to inefficiencies created by decreased shipments. No profit sharing costs were incurred in the first quarter of 2009 due to Nucor recording a consolidated net loss for the period.

Equity method investment losses are also included in marketing, administrative and other expenses and were $38.0 million and $11.3 million in the first quarter of 2009 and 2008, respectively. The increase in the equity method investment losses is primarily due to a pre-tax charge of $33.4 million to write down inventories to the lower of cost or market at Duferdofin-Nucor S.r.l. in the first quarter of 2009. Nucor acquired a 50% economic and voting interest in Duferdofin-Nucor in July 2008.

Interest Expense Net interest expense for the first quarter of 2009 and 2008 was as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 4, 2009     March 29, 2008  

Interest expense

   $ 39,682     $ 29,784  

Interest income

     (7,317 )     (11,439 )
                

Interest expense, net

   $ 32,365     $ 18,345  
                

Gross interest expense increased 33% due to a 28% increase in average debt outstanding. Gross interest income decreased 36% due to a significant decrease in the average interest rate earned on investments. The decrease in rates was partially offset by a 56% increase in average investments attributable to cash received from the issuance of debt and equity during the second quarter of 2008.

Noncontrolling Interests Noncontrolling interests represent the income attributable to the noncontrolling partners of Nucor’s joint ventures, Nucor-Yamato Steel Company (“NYS”), Novosteel S.A., and Barker Steel Company, Inc., of which Nucor owns 51%, 75% and 90%, respectively. The decrease in noncontrolling interests is primarily attributable to the decreased earnings of NYS, which were due to the

 

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weakening of the structural steel market. Under the NYS partnership agreement, the minimum amount of cash to be distributed each year to the partners is the amount needed by each partner to pay applicable U.S. federal and state income taxes. In the first quarter of 2009 and 2008, the amount of cash distributed to noncontrolling interest holders exceeded amounts allocated to noncontrolling interests based on mutual agreement of the general partners; however, the cumulative amount of cash distributed to partners was less than the cumulative net earnings of the partnership.

Provision for Income Taxes Nucor had an effective tax rate of 32.5% in the first quarter of 2009, compared with 34.2% in the first quarter 2008. The effective tax rate declined from 2008 to 2009 due to the pretax loss position in 2009 and the related reduction in domestic manufacturing deduction benefits. The IRS is currently examining Nucor’s 2005 and 2006 federal income tax returns. Management believes that the Company has adequately provided for any adjustments that may arise from this audit.

Net Earnings and Return on Equity Nucor reported a net consolidated loss of $189.6 million, or $0.60 per diluted share, in the first quarter of 2009 compared to consolidated net earnings of $409.8 million, or $1.41 per diluted share, in the first quarter of 2008. Net earnings (loss) as a percentage of net sales were (7.1%) in the first quarter of 2009 and 8.2% in the first quarter of 2008. Return on average stockholders’ equity was (9.5%) and 32.0% in the first quarter of 2009 and 2008, respectively.

Outlook The severity and scope of the global economic crisis is unprecedented, and we have not seen any evidence that this abrupt and severe decline in economic activity has reached a bottom. In fact, conditions have continued to worsen with each successive month in 2009. At this time, there are few signs of improvement, and we continue to believe that a significant economic recovery is not likely to begin in 2009.

Nucor’s largest exposure to market risk is via our steel and steel products segments. Our steel mills utilization rate was 45% for the first quarter of 2009, and almost all of our steel products facilities are operating at less than 50% of capacity. Service centers and other customers have continued reducing their inventories in response to these market conditions. We believe that the destocking process will eventually end, but that depends on economic conditions not getting worse than they are today. Approximately 60% of our steel and steel products segments sales are into the commercial, industrial and municipal construction markets. We expect the non-residential construction market to remain at depressed levels, resulting in decreased sales prices and volumes. Our largest single customer in the first quarter of 2009 represents approximately 12% of sales and consistently pays within terms. No other customer represents more than 4% of sales. We have only a small exposure to the U.S. automotive industry. Our exposure to market risk in our raw materials segment is mitigated by the fact that our steel mills use a significant portion of the products of that segment.

We remain confident about our future prospects despite the current economic cycle. We are maintaining or growing our market share, while many competitors who do not have our financial strength or highly variable and low cost structure are forced to shut down facilities. Our manufacturing processes are highly flexible and able to increase production quickly in response to any improvement in demand. This is especially true because our pay-for-performance culture has allowed us to avoid layoffs as our payroll expense has decreased dramatically due to lower production and other performance bonuses.

The dramatically lower production rates of our mills have further slowed the rate at which our sheet mills are consuming higher cost iron units, in particular pig iron inventories, which were purchased prior to the collapse in both the economy and scrap/pig iron pricing in last year’s fourth quarter. We expect that the impact from higher cost scrap will disappear during the second quarter. If these current production rates continue, the overhang from the high cost pig iron will, however, continue to impact our results through the third quarter. Pig iron consumption was increased midway through the first quarter. This increased consumption rate is expected to result in approximately $80 million higher raw material costs at our sheet mills for the second quarter. Any significant improvement in order entry and operating rates will speed up our raw material destocking process with a corresponding improvement in earnings.

 

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As we have progressed from September 2008 to April 2009, we have seen business and market conditions worsen each succeeding month. Entering the second quarter of 2009, both the U.S. economy and steel market conditions have continued to deteriorate, and we expect a second quarter loss greater than the first quarter as a result. Continued low operating rates, lower pricing and the consumption of high cost pig iron inventories for the full quarter at our sheet mills will negatively impact earnings.

Liquidity and capital resources

The current ratio was 5.5 at the end of the first quarter of 2009 and 3.5 at year-end 2008. Accounts receivable and inventories decreased 24% and 22%, respectively, since year-end, while net sales decreased 36% from the fourth quarter of 2008. Total accounts receivable have historically turned approximately monthly, with the accounts receivable for the steel products segment turning about every five weeks. In the first quarter of 2009, the sales for the steel products segment were a higher percentage of total sales, resulting in an accounts receivable turnover of approximately every five weeks. Inventories have historically turned approximately every five to six weeks. With decreased utilization and the accumulation of higher-cost scrap and scrap substitutes ordered at peak market prices in 2008, inventory turnover was approximately every 10 weeks in the first quarter of 2009. The current ratio was also impacted by the payment of approximately $305 million in the first quarter of 2009 for profit sharing and extraordinary bonuses related to our 2008 record performance.

Nucor’s conservative financial practices have served us well in the past and are serving us well today. Our cash and cash equivalents position remains robust at $1.9 billion as of April 4, 2009, and our $1.3 billion revolving credit facility is undrawn and does not expire until November 2012. Nucor repaid $175.0 million in notes that matured in January 2009, and we have no other material debt maturities until 2012. We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We carry the highest credit ratings of any metals and mining company in North America at A+ from Standard and Poor’s and A1 from Moody’s. Although Standard and Poor’s recently placed Nucor on credit watch with a negative outlook, Moody’s recently reaffirmed Nucor’s A1 rating and stable outlook. The credit markets have largely remained open and receptive to companies with an investment grade credit rating throughout the economic crisis, and Nucor’s present ratings place us five notches above the investment grade minimum of BBB-. Accordingly, even if we experience a credit rating downgrade as a result of the current economic conditions, we expect to continue to have access to the capital markets if needed.

Our credit facility includes only one financial covenant, which is a limit of 60% on the ratio of funded debt to total capitalization. In addition, the credit facility contains customary non-financial covenants, including a limit on Nucor’s ability to pledge Company’s assets and a limit on consolidations, mergers and sales of assets. As of April 4, 2009, our funded debt to total capital ratio was 28%, and we were in compliance with all other covenants under our credit facility. No borrowings were outstanding under the credit facility as of April 4, 2009.

In severely depressed market conditions such as we are experiencing today, we have several additional liquidity benefits. Nucor’s capital investment and maintenance practices give us the flexibility to reduce our current spending on our facilities to very low levels. Capital expenditures decreased 44% from $226.2 million during the first quarter of 2008 to $126.0 million in the first quarter of 2009. Capital expenditures for 2009 are projected to be $400 million compared to $1 billion in 2008. Additionally, we expect to generate significant cash from working capital throughout the balance of the year as our primary raw materials (steel scrap and scrap substitutes) fall in price due to the reduced demand, and lower pricing of our products results in lower balances in accounts receivable. Also, in the first quarter of 2009, we suspended our supplemental dividend. As a result, we expect to reduce our total dividends paid by approximately $215 million in 2009.

In February 2009, Nucor’s board of directors declared a quarterly cash dividend on Nucor’s common stock of $0.35 per share payable on May 12, 2009 to stockholders of record on March 31, 2009. This dividend is Nucor’s one-hundred and forty-fourth consecutive quarterly cash dividend.

 

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Funds provided from operations, cash and cash equivalents and existing credit facilities are expected to be adequate to meet future capital expenditure and working capital requirements for existing operations for at least the next 24 months.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, Nucor is exposed to a variety of market risks. We continually monitor these risks and develop appropriate strategies to manage them.

Interest Rate Risk - Nucor manages interest rate risk by using a combination of variable-rate and fixed-rate debt. Nucor also makes use of interest rate swaps to manage net exposure to interest rate changes. Management does not believe that Nucor’s exposure to interest rate market risk has significantly changed since December 31, 2008.

Commodity Price Risk - In the ordinary course of business, Nucor is exposed to market risk for price fluctuations of raw materials and energy, principally scrap steel, other ferrous and nonferrous metals, alloys and natural gas. We attempt to negotiate the best prices for our raw materials and energy requirements and to obtain prices for our steel products that match market price movements in response to supply and demand. Nucor has a raw material surcharge designed to pass through the historically high cost of scrap steel and other raw materials. Due to the currently lower cost of raw materials, the surcharge is not presently affecting our sales prices.

As a result of continued decreased sales due to weaker market conditions, we are holding higher levels of inventories of more expensive scrap and scrap substitutes. Since pig iron and certain grades of scrap have lead times of four to six months, dramatically reduced sales volumes resulted in the accumulation of increased tons of inventories ordered at peak market prices. We expect that the impact from higher-cost scrap will disappear during the second quarter. If our current production rates continue, the overhang from the high-cost pig iron will, however, continue to impact our results through the third quarter.

Nucor also uses derivative financial instruments to hedge a portion of our exposure to price risk related to natural gas purchases used in the production process and to hedge a portion of our aluminum and copper purchases and sales. Gains and losses from derivatives designated as hedges are deferred in accumulated other comprehensive income (loss) on the condensed consolidated balance sheets and recognized into earnings in the same period as the underlying physical transaction. At April 4, 2009, accumulated other comprehensive income (loss) includes $93.0 million in unrealized net-of-tax losses for the fair value of these derivative instruments. Changes in the fair values of derivatives not designated as hedges are recognized in earnings each period. The following table presents the negative effect on pre-tax income of a hypothetical change in the fair value of derivative instruments outstanding at April 4, 2009, due to an assumed 10% and 25% change in the market price of each of the indicated commodities (in thousands):

 

Commodity Derivative

   10% Change    25% Change

Natural gas

   $ 33,758    $ 84,395

Aluminum

     1,223      3,058

Copper

     99      247

Any resulting changes in fair value would be recorded as adjustments to other comprehensive income (loss), net of tax, or recognized in net earnings, as appropriate. These hypothetical losses would be partially offset by the benefit of lower prices paid or higher prices received for the physical commodities.

Foreign Currency Risk – Nucor is exposed to foreign currency risk through its operations in Canada and Trinidad and its joint ventures in Australia and Italy. We periodically use derivative contracts to mitigate the risk of currency fluctuations.

 

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures – As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting during the quarter ended April 4, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

Nucor has been named, along with other major steel producers, as a co-defendant in several related antitrust class-action complaints filed by Standard Iron Works and other steel purchasers between September 12, 2008 and October 6, 2008, in the United States District Court for the Northern District of Illinois. The cases are filed as class actions. The plaintiffs allege that from January 2005 to the present, eight steel manufacturers, including Nucor, engaged in anticompetitive activities with respect to the production and sale of steel. The plaintiffs seek, on behalf of themselves and the purported class, unspecified treble damages, attorneys’ fees, pre- and post-judgment interest and injunctive relief. Although we believe the plaintiffs’ claims are without merit and will vigorously defend against them, we cannot at this time predict the outcome of this litigation or determine Nucor’s potential exposure.

 

Item 1A. Risk Factors

There have been no material changes in Nucor’s risk factors from those included in Nucor’s annual report on Form 10-K.

 

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Table of Contents
Item 6. Exhibits

 

Exhibit No.

  

Description of Exhibit

10       Senior Officers Annual Incentive Plan as Amended and Restated Effective February 18, 2009
10.1    Senior Officers Long-term Incentive Plan as Amended and Restated Effective February 18, 2009
10.2    Severance Plan for Senior Officers and General Managers as Amended and Restated Effective February 18, 2009
12.1    Computation of Ratio of Earnings to Fixed Charges
31       Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1    Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32       Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1    Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Nucor Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

NUCOR CORPORATION
By:   /s/ Terry S. Lisenby
  Terry S. Lisenby
  Chief Financial Officer, Treasurer
and Executive Vice President

Dated: May 12, 2009

 

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Table of Contents

NUCOR CORPORATION

List of Exhibits to Form 10-Q – April 4, 2009

 

Exhibit No.

  

Description of Exhibit

10       Senior Officers Annual Incentive Plan as Amended and Restated Effective February 18, 2009
10.1    Senior Officers Long-term Incentive Plan as Amended and Restated Effective February 18, 2009
10.2    Severance Plan for Senior Officers and General Managers as Amended and Restated Effective February 18, 2009
12.1    Computation of Ratio of Earnings to Fixed Charges
31       Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1    Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32       Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1    Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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Senior Officers Annual Incentive Plan

Exhibit 10

NUCOR CORPORATION

SENIOR OFFICERS ANNUAL INCENTIVE PLAN

as amended and restated effective February 18, 2009


Table of Contents

 

ARTICLE I INTRODUCTION

   1
ARTICLE II DEFINITIONS    1
 

2.1

   “Adjusted Net Earnings”    1
 

2.2

   “Average Stockholders’ Equity”    1
 

2.3

   “Beneficiary”    1
 

2.4

   “Board”    1
 

2.5

   “Change in Control”    1
 

2.6

   “Change in Control Acceleration Event”    3
 

2.7

   “Code”    3
 

2.8

   “Company”    3
 

2.9

   “Compensation”    3
 

2.10

   “Committee”    3
 

2.11

   “Deferral Account”    3
 

2.12

   “Deferral Agreement”    3
 

2.13

   “Deferral Amount”    4
 

2.14

   “Deferral Incentive”    4
 

2.15

   “Effective Date”    4
 

2.16

   “Eligible Employee”    4
 

2.17

   “Employee”    4
 

2.18

   “Net Sales”    4
 

2.19

   “Other Performance Criteria”    4
 

2.20

   “Peer Group”    4
 

2.21

   “Performance Award”    4
 

2.22

   “Performance Period”    4
 

2.23

   “Plan”    5
 

2.24

   “Return on Average Stockholders’ Equity”    5
 

2.25

   “Revenue Growth”    5
 

2.26

   “Separation from Service”    5
 

2.27

   “Stockholders’ Equity”    5
 

2.28

   “Subsidiary”    5
ARTICLE III ADMINISTRATION    5
ARTICLE IV PERFORMANCE AWARDS    6
 

4.1

   Performance Awards.    6
 

4.2

   Performance Award Payments.    8
 

4.3

   Deferrals of Performance Awards.    8

 

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ARTICLE V MISCELLANEOUS    11
 

5.1

   Amendment or Termination.    11
 

5.2

   Assignability.    11
 

5.3

   Source of Benefits.    11
 

5.4

   No Promise of Continued Employment.    11
 

5.5

   Applicable Law.    11
 

5.6

   Code Section 409A.    12

 

ii


NUCOR CORPORATION

SENIOR OFFICERS ANNUAL INCENTIVE PLAN

as amended and restated effective February 18, 2009

ARTICLE I

INTRODUCTION

Nucor Corporation hereby amends and restates in its entirety the Nucor Corporation Senior Officers Annual Incentive Plan to read as set forth herein. The purpose of the Plan is to provide annual incentive compensation to senior officers based on the performance of Nucor Corporation consistent with the “performance based compensation” requirements of Section 162(m) of the Code.

ARTICLE II

DEFINITIONS

As used herein, the following words and phrases shall have meanings set forth below unless the context clearly indicates otherwise:

2.1 “Adjusted Net Earnings” for a Performance Period means the consolidated net earnings reported by the Company for the Performance Period in accordance with generally accepted accounting principles, before reported extraordinary items, but after charges or credits for taxes measured by income and Performance Awards under this Plan and performance awards under the Nucor Corporation Senior Officers Long-Term Incentive Plan.

2.2 “Average Stockholders’ Equity” for a Performance Period means the average of the Stockholders’ Equity of the Company as of the last day of the immediately preceding Performance Period and the last day of each month in the Performance Period.

2.3 “Beneficiary” means the person or persons designated by an Eligible Employee who are to receive any amounts payable under the Plan following the death of the Eligible Employee.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Change in Control” means and includes the occurrence of any one of the following events:

(a) individuals who, at the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director,


without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be an Incumbent Director;

(b) any person becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (b) shall not be a Change in Control if it is the result of any of the following acquisitions: (i) an acquisition directly by or from the Company or any Subsidiary; (ii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (iii) an acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) an acquisition pursuant to a Non-Qualifying Transaction (as defined in Section 2.5(c)); or

(c) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (a “Sale”), unless immediately following such Reorganization or Sale: (i) more than fifty percent (50%) of the total voting power of (x) the corporation resulting from such Reorganization or the corporation which has acquired all or substantially all of the assets of the Company (in either case, the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of one hundred percent (100%) of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by the Company Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which Company Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization or Sale, (ii) no person (other than (x) the Company, (y) any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation, or (z) a person who immediately prior to the Reorganization or Sale was the beneficial owner of twenty-five percent (25%) or more of the outstanding Company Voting Securities) is the beneficial owner, directly or indirectly, of twenty-five percent (25%) or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent

 

2


Corporation (or, if there is no Parent Corporation, the Surviving Corporation), and (iii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Reorganization or Sale were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization or Sale (any Reorganization or Sale which satisfies all of the foregoing criteria, a “Non-Qualifying Transaction”).

2.6 “Change in Control Acceleration Event” means a Change in Control that also constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company under Section 409A of the Code.

2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.8 “Company” means Nucor Corporation, a Delaware corporation and any successor thereto.

2.9 “Compensation” for a Performance Period means the annual base salary rate payable to an Eligible Employee as of the beginning of the Performance Period, before reduction pursuant to any plan or agreement between the Eligible Employee and the Company or any Subsidiary whereby compensation is deferred, including, without limitation, a plan whereby compensation is deferred in accordance with Code Section 401(k) or reduced in accordance with Code Section 125. Compensation shall not include any other form of compensation, whether taxable or non-taxable, including, but not limited to, annual or long-term incentive compensation, commissions, gains from the exercise or vesting of stock options, restricted stock or other equity-based awards or any other forms of additional compensation.

Notwithstanding the foregoing, in the event an Eligible Employee commences participation in the Plan effective as of any day other than January 1 or if the employment of an Eligible Employee is terminated during a Performance Period, then in either of such events, the Eligible Employee’s Compensation for the Performance Period shall be adjusted by multiplying such Compensation by a fraction, the numerator of which is the number of days during the Performance Period that the Eligible Employee was employed by the Company and participating in the Plan, and the denominator of which is the total number of days in the Performance Period.

2.10 “Committee” means all members of the Compensation and Executive Development Committee of the Board who are “outside directors” of the Company within the meaning of Section 162(m)(4)(C)(i) of the Code.

2.11 “Deferral Account” means the individual bookkeeping account maintained by the Company for an Eligible Employee to record the Eligible Employee’s Deferral Amounts and Deferral Incentive credits.

2.12 “Deferral Agreement” means the agreement or agreements entered into by an Eligible Employee which specify the Eligible Employee’s Deferral Amount.

 

3


2.13 “Deferral Amount” means the amount of a Performance Award that an Eligible Employee elects to defer under a Deferral Agreement.

2.14 “Deferral Incentive” means the incentive amount the Company will credit to an Eligible Employee’s Deferral Account pursuant to Section 4.3(b) based on the Eligible Employee’s Deferral Amount.

2.15 “Effective Date” of this amended and restated Plan means February 18, 2009.

2.16 “Eligible Employee” means an Employee who is designated as the Chairman or a Vice Chairman of the Board or the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the President, an Executive Vice President or a Vice President of the Company and any other Employee who is a senior officer of the Company or a Subsidiary and designated by the Committee as an Eligible Employee.

2.17 “Employee” means any person who is employed by the Company, including any such person who also serves as a member of the Board.

2.18 “Net Sales” means the consolidated net sales reported by the Company for a Performance Period in accordance with generally accepted accounting principles.

2.19 “Other Performance Criteria” means the relative or comparative achievement of one or more of the following criteria, or such other criteria, as may be determined by the Committee: (a) return on equity; (b) revenue growth; (c) earnings before interest, taxes, depreciation and amortization; (d) earnings before interest, taxes and amortization; (e) operating income; (f) pre- or after-tax income; (g) cash flow; (h) cash flow per share; (i) net earnings; (j) earnings per share; (k) return on invested capital; (l) return on assets; (m) economic value added (or an equivalent metric); (n) stock price performance; (o) total stockholder return; (p) improvement in or attainment of expense levels; (q) improvement in or attainment of working capital levels; or (r) debt reduction. Any of the Other Performance Criteria set forth above may measure performance on a Company-wide basis or with respect to one or more business units, divisions or Subsidiaries, and either in absolute terms, relative to the performance of one or more similarly situated companies, relative to the performance of an index covering a peer group of companies, or other external measures of the selected performance criteria.

2.20 “Peer Group” for a Performance Period means a group of not less than five (5) steel industry competitors designated by the Committee not later than ninety (90) days after the beginning of the Performance Period.

2.21 “Performance Award” means the incentive compensation awarded and payable to an Eligible Employee pursuant to Section 4.1 for a Performance Period.

2.22 “Performance Period” means the fiscal year of the Company beginning on January 1 and ending on December 31.

 

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2.23 “Plan” means the Nucor Corporation Senior Officers Annual Incentive Plan, as set forth herein and as amended from time to time.

2.24 “Return on Average Stockholders’ Equity” for a Performance Period means an amount, expressed as a percentage, determined by dividing (a) the Company’s Adjusted Net Earnings for the Performance Period by (b) the Company’s Average Stockholders’ Equity for the Performance Period.

2.25 “Revenue Growth” for a Performance Period means the percentage increase in the Company’s Net Sales for the Performance Period over the immediately preceding Performance Period.

2.26 “Separation from Service” means the termination of an Eligible Employee’s employment with the Company and its Subsidiaries, provided such termination also constitutes a separation from service under Section 409A of the Code.

2.27 “Stockholders’ Equity” means the sum of (a) issued capital stock, (b) additional paid-in capital and (c) earnings retained in the business and reserves created by appropriations therefrom, minus the cost of treasury stock, all as shown in the Company’s consolidated balance sheet.

2.28 “Subsidiary” means any corporation (other than the Company), limited liability company, or other business organization in an unbroken chain of entities beginning with the Company in which each of such entities other than the last one in the unbroken chain owns stock, units, or other interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock, units, or other interests in one of the other entities in that chain.

ARTICLE III

ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Committee shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Committee may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Committee upon all matters within its scope of authority shall be final and conclusive on all persons.

 

5


ARTICLE IV

PERFORMANCE AWARDS

 

4.1 Performance Awards.

(a) Maximum Performance Awards. The maximum Performance Award that may be made to an Eligible Employee for a Performance Period shall be three hundred percent (300%) of the Eligible Employee’s Compensation for the Performance Period. Seventy-five percent (75%) of the maximum Performance Award for a Performance Period (i.e., 225% of the Eligible Employee’s Compensation for the Performance Period) shall be available for award based on the Company’s Return on Average Stockholders’ Equity or Other Performance Criteria selected by the Committee for the Performance Period in accordance with Section 4.1(b). Twenty-five percent (25%) of the maximum Performance Award for a Performance Period (i.e., 75% of the Eligible Employee’s Compensation for the Performance Period) shall be available for award based on the Company’s relative Revenue Growth for the Performance Period in accordance with Section 4.1(c).

(b) Performance Awards Based on Return on Average Stockholders’ Equity (or Other Performance Criteria Selected by the Committee). The maximum Performance Award of two hundred twenty-five percent (225%) of each Eligible Employee’s Compensation for a Performance Period shall be awarded under this Section 4.1(b) if the Company’s Return on Average Stockholders’ Equity for the Performance Period equals or exceeds twenty percent (20%) (or, if the Committee has selected Other Performance Criteria for such Performance Period, the Company’s level of performance under such Other Performance Criteria equals or exceeds the level of performance designated by the Committee in writing during the first ninety (90) days of the Performance Period required for the maximum Performance Award). Not later than ninety (90) days after the beginning of each Performance Period, the Committee shall designate, in writing, a threshold Return on Average Stockholders’ Equity for the Performance Period of not less three percent (3%) and not more than seven percent (7%) (or such other threshold Return on Average Stockholders’ Equity or threshold level of performance under Other Performance Criteria selected by the Committee for such Performance Period) which must be achieved by the Company before any Performance Award may be made under this Section 4.1(b) for the Performance Period. In the event the threshold Return on Average Stockholders’ Equity (or threshold level of performance under Other Performance Criteria) is achieved by the Company for a Performance Period, a Performance Award of twenty percent (20%) (or other percentage selected by the Committee during the first ninety (90) days of the Performance Period) of each Eligible Employee’s Compensation for the Performance Period shall be awarded under this Section 4.1(b). In the event the Return on Average Stockholders’ Equity (or the Company’s performance level under Other Performance Criteria designated by the Committee) for a Performance Period exceeds the threshold performance level for the Performance Period but is less than twenty percent (20%) (or such other percentage or other level of performance under Other Performance Criteria designated by the Committee for the award of the maximum Performance Award for the Performance Period), the amount of the Performance Award, expressed as a percentage of each Eligible Employee’s Compensation for the Performance

 

6


Period, under this Section 4.1(b) for the Performance Period shall be determined by linear interpolation.

(c) Performance Awards Based on Relative Revenue Growth. Not later than ninety (90) days after the beginning of each Performance Period, the Committee shall designate, in writing, the amounts of the Performance Awards that will be made to each Eligible Employee, expressed as a percentage of the Eligible Employee’s Compensation for the Performance Period up to the maximum Performance Award of seventy-five percent (75%) of the Eligible Employee’s Compensation that may be awarded under this Section 4.1(c), for levels of Revenue Growth for the Performance Period when ranked against the revenue growth of the members of the Peer Group for the Performance Period, provided, however, the Committee’s designation of the amount of the Performance Award for each rank shall provide approximately linear progression from the minimum to the maximum award that may be made under this Section 4.1(c). The Company’s Peer Group ranking under this Section 4.1(c) and the corresponding annual Performance Awards shall be based on the most recent four (4) fiscal quarters of available financial information for a Peer Group member.

(d) Reduction or Forfeiture of Performance Awards. Notwithstanding the foregoing provisions of this Section 4.1:

(i) if the Company has no reported net earnings for a Performance Period that ends prior to a Change in Control, no Performance Awards will be made with respect to the Performance Period; and

(ii) the Committee in its sole and exclusive discretion may reduce (including a reduction to zero) the amount of the Performance Awards otherwise payable to Eligible Employees under the Plan for a Performance Period that ends prior to a Change in Control, provided the same percentage reduction is made to all of the Performance Awards otherwise payable for the Performance Period.

(e) Performance Awards Following a Change in Control. The Performance Award due for the Performance Period in which a Change in Control occurs shall not be less than the amount determined by multiplying the greater of:

(i) the Performance Award for the Performance Period but calculated under Section 4.1(a) based on the Company’s Return on Average Stockholders’ Equity or Other Performance Criteria and the Company’s Revenue Growth relative to the Peer Group, through the end of the calendar quarter immediately preceding the date of the Change in Control; or

(ii) one hundred fifty percent (150%) of the Eligible Employee’s Compensation for the Performance Period;

by a fraction, the numerator of which is the number of days during the Performance Period prior to the date of the Change in Control during which the Eligible Employee was employed by the Company and participating in the Plan, and the denominator of which is (A) three hundred sixty-five (365), if the Eligible Employee was employed by the Company and participating in the Plan as of the first day of the Performance Period or (B) if the Eligible Employee commenced

 

7


participation in the Plan after the beginning of the Performance Period, the number of days from the date the Eligible Employee commenced participation in the Plan through the last day of the Performance Period.

 

4.2 Performance Award Payments.

Subject to an Eligible Employee’s election in accordance with Section 4.3 to defer the payment of a Performance Award, an Eligible Employee’s Performance Award shall be paid by the Company to the Eligible Employee in cash, less applicable payroll and withholding taxes, within thirty (30) days after the later of (i) the completion of the independent audit of the Company’s financial statements for the Performance Period or (ii) the date the Committee certifies in writing the amount of Performance Awards payable under Section 4.1. In no event, however, shall payment of a Performance Award be made later than two and one-half (2 1 /2) months after the end of the Performance Period for the Performance Award.

 

4.3 Deferrals of Performance Awards.

(a) Deferral Agreement. Each Eligible Employee may elect, by entering into a Deferral Agreement with the Company, to defer any portion up to fifty percent (50%) (in increments of ten percent (10%)) of the Performance Award otherwise payable to the Eligible Employee for a Performance Period. To be effective to defer the payment of a Performance Award, an Eligible Employee must complete and return a Deferral Agreement to the Company in accordance with procedures established by the Committee before the beginning of the Performance Period. For the avoidance of doubt, an Employee who first becomes an Eligible Employee during a Performance Period shall not be permitted to enter into a Deferral Agreement for the deferral of a Performance Award for such Performance Period. The amount of any Performance Award that is deferred pursuant to the Eligible Employee’s Deferral Agreement is referred to in the Plan as the Deferral Amount.

An Eligible Employee’s Deferral Agreement shall be effective for one Performance Period. Therefore, an Eligible Employee must complete and sign a Deferral Agreement and return the agreement to the representative of the Company designated by the Committee before the beginning of each Performance Period for which a deferral of a Performance Award is intended to be made.

 

8


(b) Deferral Accounts; Deferral Incentive. An Eligible Employee’s Deferral Amount shall be converted to a number of common stock units determined by dividing the Deferral Amount by the closing price at which shares of the Company’s common stock are sold regular way on the New York Stock Exchange on the date the Deferral Amount would otherwise be paid to the Eligible Employee. Such common stock units shall be credited to a Deferral Account established and maintained on the books and records of the Company. In the event an Eligible Employee defers a Performance Award under the Plan, the Company shall credit a Deferral Incentive in the form of additional common stock units to the Eligible Employee’s Deferral Account. The number of common stock units comprising the Deferral Incentive for an Eligible Employee shall be determined by multiplying twenty-five percent (25%) by the number of common stock units resulting from the conversion of the Eligible Employee’s Deferral Amount into common stock units.

(c) Dividend Equivalent Payments; Adjustments to Common Stock Units. The Company shall pay to each Eligible Employee in cash, less applicable payroll and withholding taxes, within thirty (30) days after the payment date of any cash dividend with respect to shares of the Company’s common stock a dividend equivalent payment equal to the number of common stock units credited to the Eligible Employee’s Deferral Account as of the record date for such dividend multiplied by the per share amount of the dividend.

In the event a dividend with respect to shares of the Company’s common stock shall be declared and paid in additional shares or in the event the outstanding shares of the Company’s common stock shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation or changed into or exchanged for cash or property or the right to receive cash or property, then the Committee shall in its discretion equitably adjust the common stock units credited to the Deferral Accounts under the Plan to prevent substantial dilution or enlargement of the rights of Eligible Employees under the Plan.

(d) Vesting. An Eligible Employee shall be fully vested in the portion of the Eligible Employee’s Deferral Account attributable to the Eligible Employee’s Deferral Amounts. An Eligible Employee shall become fully vested in the portion of the Eligible Employee’s Deferral Account attributable to the Company’s Deferral Incentives upon the earlier of (i) attainment of age fifty-five (55) while employed by the Company or a Subsidiary, (ii) the date the Eligible Employee dies or becomes disabled while employed by the Company or a Subsidiary, or (iii) a Change in Control. In the event an Eligible Employee terminates employment prior to a Change in Control and prior to attaining age fifty-five (55) for any reason other than death or disability, the portion of the Eligible Employee’s Deferral Account that is not vested shall be forfeited.

(e) Payment of Deferral Accounts. Subject to Section 5.6, the vested portion of an Eligible Employee’s Deferral Account shall be paid to the Eligible Employee no earlier than fifteen (15) days and no later than ninety (90) days after the Eligible Employee’s Separation from Service. The form of payment shall be one share of the Company’s common stock for each common stock unit and cash for any fractional unit credited to the vested portion of the Deferral Account.

 

9


In accordance with procedures established by the Committee, but in no event later than the date an Eligible Employee enters into his or her first Deferral Agreement with the Company under the Plan, the Eligible Employee may elect a single sum payment of the Eligible Employee’s Deferral Account or payment in installments over a term certain of not more than five (5) years. In the event an Eligible Employee fails to make a valid method of payment election, distribution of the Eligible Employee’s Deferral Account shall be made in a single sum payment of shares of Company common stock and cash for any fractional unit credited to the vested portion of the Deferral Account.

(f) Cancellation of Deferral Agreements and Payment Elections upon Change in Control Acceleration Event. Notwithstanding the foregoing provisions of this Section 4.3, upon a Change in Control Acceleration Event, (i) an Eligible Employee’s Deferral Agreement shall be terminated and no portion of the Performance Award due for the Performance Period in which the Change in Control Acceleration Event occurs shall be deferred, (ii) any payment election made by an Eligible Employee under Section 4.3(e) shall be null and void, and (iii) subject to Section 5.6, the value of the Eligible Employee’s Deferral Account shall be paid to the Eligible Employee in a single cash payment, less applicable withholding taxes, within sixty (60) days following the Change in Control Acceleration Event (the “CIC Payment Date”). The value of an Eligible Employees’ Deferral Account for purposes of clause (iii) of the immediately preceding sentence shall be equal to the number of common stock units credited to the Eligible Employee’s Deferral Account as of the date of the Change in Control Acceleration Event multiplied by the closing price at which shares of the Company’s stock are sold regular way on the New York Stock Exchange on the last trading day prior to the date of the Change in Control Acceleration Event. In the event payment to an Eligible Employee is delayed beyond the CIC Payment Date due to the requirements of Section 5.6, the amount due to such Eligible Employee as of the CIC Payment Date shall be increased with interest at the prime rate, as published in The Wall Street Journal, plus 1% per annum, from the CIC Payment Date to the date the Eligible Employee receives payment of the amount due.

(g) Payment Following Death. An Eligible Employee may designate and change at any time the Beneficiary who is to receive distribution of the vested portion of the Participant’s Deferral Account in the event of the Eligible Employee’s death. Any such designation or change shall not be effective until received by the representative of the Company designated by the Committee. If an Eligible Employee has not properly designated a Beneficiary, if for any reason such designation shall not be legally effective, or if the designated Beneficiary shall predecease the Eligible Employee, then the Eligible Employee’s estate shall be treated as the Beneficiary.

In the event of an Eligible Employee’s death prior to distribution of all common stock units credited to the Eligible Employee’s Deferral Account, the Eligible Employee’s Beneficiary shall receive a distribution of the vested portion of such units (in the form of shares of Company common stock and cash for any fractional unit credited to the Deferral Account) as soon as practicable following the Participant’s death in a single sum payment.

 

10


ARTICLE V

MISCELLANEOUS

 

5.1 Amendment or Termination.

The Plan may be terminated or amended in any respect by resolution adopted by a majority of the Board, unless a Change in Control has previously occurred. If a Change in Control occurs, the Plan shall not be subject to amendment, change, substitution, deletion, revocation or termination in any respect which adversely affects the rights of Participants.

 

5.2 Assignability.

Eligible Employees shall not alienate, assign, sell, transfer, pledge, encumber, attach, mortgage, or otherwise hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder. No part of the amounts payable hereunder shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony, or separate maintenance, nor shall any person have any other claim to any benefit payable under this Plan as a result of a divorce or the Eligible Employee’s, or any other person’s, bankruptcy or insolvency.

 

5.3 Source of Benefits.

The Company shall make any cash payments due under the terms of this Plan directly from its assets or from any trust that the Company may choose to establish and maintain from time to time. Shares of the Company’s common stock that may be issued under the Plan may be either authorized and unissued shares or shares which have been reacquired by the Company. Nothing contained in this Plan shall give or be deemed to give any Eligible Employee or any other person any interest in any property of any such trust or in any property of the Company, nor shall any Eligible Employee or any other person have any right under this Plan not expressly provided by the terms hereof, as such terms may be interpreted and applied by the Committee in its discretion.

 

5.4 No Promise of Continued Employment.

Nothing in this Plan or in any materials describing or relating to this Plan grants, nor should it be deemed to grant, any person any employment right, nor does participation in this Plan imply that any person has been employed for any specific term or duration or that any person has any right to remain in the employ of the Company.

 

5.5 Applicable Law.

The Plan shall be construed in accordance with and governed by the laws of the State of North Carolina.

 

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5.6 Code Section 409A.

Notwithstanding anything in the Plan to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Plan by reason of a Participant’s Separation from Service, then to the extent necessary to comply with Code Section 409A:

(i) if the payment or distribution is payable in a lump sum, the Participant’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Separation from Service; and

(ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six (6) month period immediately following the Participant’s Separation from Service will be accumulated and the Participant’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Separation from Service and paid on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments or distributions will commence.

IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of the Company, hereby certifies that the foregoing Nucor Corporation Senior Officers Annual Incentive Plan has been authorized and approved by the Board.

 

NUCOR CORPORATION

/s/ Terry S. Lisenby

Terry S. Lisenby
Executive Vice President and Chief Financial Officer

 

12

Senior Officers Long-term Incentive Plan

Exhibit 10.1

NUCOR CORPORATION

SENIOR OFFICERS LONG-TERM INCENTIVE PLAN

as amended and restated effective February 18, 2009


Table of Contents

 

ARTICLE I INTRODUCTION

   1

ARTICLE II DEFINITIONS

   1

2.1

  

“Adjusted Net Earnings”

   1

2.2

  

“Average Invested Capital”

   1

2.3

  

“Beneficiary”

   1

2.4

  

“Board”

   1

2.5

  

“Change in Control”

   1

2.6

  

“Change in Control Acceleration Event”

   3

2.7

  

“Code”

   3

2.8

  

“Company”

   3

2.9

  

“Compensation”

   3

2.10

  

“Committee”

   3

2.11

  

“Deferral Account”

   3

2.12

  

“Deferral Agreement”

   3

2.13

  

“Effective Date”

   3

2.14

  

“Eligible Employee”

   3

2.15

  

“Employee”

   4

2.16

  

“General Industry Group”

   4

2.17

  

“Invested Capital”

   4

2.18

  

“Performance Award”

   4

2.19

  

“Performance Period”

   4

2.20

  

“Plan”

   4

2.21

  

“Restricted Stock Performance Award”

   4

2.22

  

“Return on Average Invested Capital”

   4

2.23

  

“Separation from Service”

   5

2.24

  

“Steel Peer Group”

   5

2.25

  

“Subsidiary”

   5

2.26

  

“Target Performance Award”

   5

ARTICLE III ADMINISTRATION

   5

ARTICLE IV PERFORMANCE AWARDS

   6

4.1

  

Performance Awards.

   6

4.2

  

Performance Award Payments.

   7

4.3

  

Deferrals of Restricted Stock Performance Awards.

   8

 

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ARTICLE V CHANGE IN CONTROL

   10

5.1

  

Termination of Plan and Performance Periods.

   10

5.2

  

Determination of Performance Awards.

   10

5.3

  

Payment of Performance Awards.

   10

5.4

  

Vesting.

   11

5.5

  

Payment of Deferral Accounts.

   11

ARTICLE VI MISCELLANEOUS

   11

6.1

  

Amendment or Termination.

   11

6.2

  

Assignability.

   11

6.3

  

Source of Benefits.

   12

6.4

  

No Promise of Continued Employment.

   12

6.5

  

Applicable Law.

   12

6.6

  

Code Section 409A.

   12

 

ii


NUCOR CORPORATION

SENIOR OFFICERS LONG-TERM INCENTIVE PLAN

as amended and restated effective February 18, 2009

ARTICLE I

INTRODUCTION

Nucor Corporation hereby amends and restates in its entirety the Nucor Corporation Senior Officers Long-Term Incentive Plan to read as set forth herein. The purpose of the Plan is to provide incentive compensation to senior officers based on Nucor Corporation’s long-term performance relative to that of its principal competitors in the steel industry and of other industrial companies, consistent with the “performance based compensation” requirements of Section 162(m) of the Code.

ARTICLE II

DEFINITIONS

As used herein, the following words and phrases shall have meanings set forth below unless the context clearly indicates otherwise:

2.1 “Adjusted Net Earnings” for a Performance Period means the consolidated net earnings reported by the Company for the Performance Period in accordance with generally accepted accounting principles, before reported extraordinary items, but after charges or credits for taxes measured by income and Performance Awards under this Plan and performance awards under the Nucor Corporation Senior Officers Annual Incentive Plan.

2.2 “Average Invested Capital” for a Performance Period means the average of the Invested Capital of the Company as of the last day of the immediately preceding Performance Period and the last day of each fiscal quarter in the Performance Period.

2.3 “Beneficiary” means the person or persons designated by an Eligible Employee who are to receive any amounts payable under the Plan following the death of the Eligible Employee.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Change in Control” means and includes the occurrence of any one of the following events:

(a) individuals who, at the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy


statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be an Incumbent Director;

(b) any person becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (b) shall not be a Change in Control if it is the result of any of the following acquisitions: (i) an acquisition directly by or from the Company or any Subsidiary; (ii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (iii) an acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) an acquisition pursuant to a Non-Qualifying Transaction (as defined in Section 2.5(c)); or

(c) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (a “Sale”), unless immediately following such Reorganization or Sale: (i) more than fifty percent (50%) of the total voting power of (x) the corporation resulting from such Reorganization or the corporation which has acquired all or substantially all of the assets of the Company (in either case, the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of one hundred percent (100%) of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by the Company Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which Company Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization or Sale, (ii) no person (other than (x) the Company, (y) any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation, or (z) a person who immediately prior to the Reorganization or Sale was the beneficial owner of twenty-five percent (25%) or more of the outstanding Company Voting Securities) is the beneficial owner, directly or indirectly, of twenty-five percent (25%) or more of the total

 

2


voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), and (iii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Reorganization or Sale were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization or Sale (any Reorganization or Sale which satisfies all of the foregoing criteria, a “Non-Qualifying Transaction”).

2.6 “Change in Control Acceleration Event” means a Change in Control that also constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company under Section 409A of the Code.

2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.8 “Company” means Nucor Corporation, a Delaware corporation.

2.9 “Compensation” for a Performance Period means the annual base salary rate payable to an Eligible Employee as of the beginning of a Performance Period, before reduction pursuant to any plan or agreement between the Eligible Employee and the Company or a Subsidiary whereby compensation is deferred, including, without limitation, a plan whereby compensation is deferred in accordance with Code Section 401(k) or reduced in accordance with Code Section 125. Compensation shall not include any other form of compensation, whether taxable or non-taxable, including, but not limited to, annual or long-term incentive compensation, commissions, gains from the exercise or vesting of stock options, restricted stock or other equity-based awards or any other forms of additional compensation.

2.10 “Committee” means all members of the Compensation and Executive Development Committee of the Board who are “outside directors” of the Company within the meaning of Section 162(m)(4)(C)(i) of the Code.

2.11 “Deferral Account” means the individual bookkeeping account maintained by the Company for an Eligible Employee to record the deferral of the Eligible Employee’s Restricted Stock Performance Award.

2.12 “Deferral Agreement” means the agreement or agreements entered into by an Eligible Employee which provide for the deferral of the Eligible Employee’s Restricted Stock Performance Award for a Performance Period.

2.13 “Effective Date” of this amended and restated Plan means February 18, 2009.

2.14 “Eligible Employee” means an Employee who is designated as the Chairman or a Vice Chairman of the Board or the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, the President, an Executive Vice President or a Vice President of the Company and any other Employee who is a senior officer of the Company or a Subsidiary and designated by the Committee as an Eligible Employee.

 

3


2.15 “Employee” means any person who is employed by the Company, including any such person who also serves as a member of the Board.

2.16 “General Industry Group” for a Performance Period means a group of not less than ten (10) companies designated by the Committee not later than ninety (90) days after the beginning of the Performance Period which are engaged in capital intensive industries and classified in either the Materials Sector or the Industrials Sector of the Global Industry Classification Standard.

2.17 “Invested Capital” means the sum of (a) long-term debt (comprising bonds, debentures and promissory notes having a maturity at the time of execution of more than one (1) year), (b) issued capital stock, (c) additional paid-in capital and (d) earnings retained in the business and reserves created by appropriations therefrom, minus the cost of treasury stock, all as shown in the Company’s consolidated balance sheet.

2.18 “Performance Award” means the incentive compensation awarded and payable to an Eligible Employee pursuant to Section 4.1 for a Performance Period.

2.19 “Performance Period” means:

(a) the one (1) fiscal year period commencing on the January 1 coinciding with or immediately preceding the date an Eligible Employee commences participation in the Plan and ending on the immediately succeeding December 31;

(b) the two (2) fiscal year period commencing on the January 1 coinciding with or immediately preceding the date an Eligible Employee commences participation in the Plan and ending on December 31 of the immediately succeeding fiscal year; and

(c) each period of three (3) consecutive fiscal years of the Company commencing on the January 1 coinciding with or immediately preceding the date an Eligible Employee commences participation in the Plan and on each January 1 thereafter.

2.20 “Plan” means the Nucor Corporation Senior Officers Long-Term Incentive Plan, as set forth herein and as amended from time to time.

2.21 “Restricted Stock Performance Award” is defined in Section 4.2.

2.22 “Return on Average Invested Capital” for a Performance Period means an amount, expressed as a percentage, determined by dividing (a) the Company’s Adjusted Net Earnings for the Performance Period by (b) the Company’s Average Invested Capital for the Performance Period.

 

4


2.23 “Separation from Service” means the termination of an Eligible Employee’s employment with the Company and its Subsidiaries, provided such termination also constitutes a separation from service under Section 409A of the Code.

2.24 “Steel Peer Group” for a Performance Period means a group of not less than five (5) steel industry competitors designated by the Committee not later than ninety (90) days after the beginning of the Performance Period.

2.25 “Subsidiary” means any corporation (other than the Company), limited liability company, or other business organization in an unbroken chain of entities beginning with the Company in which each of such entities other than the last one in the unbroken chain owns stock, units, or other interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock, units, or other interests in one of the other entities in that chain.

2.26 “Target Performance Award” for an Eligible Employee for a Performance Period means that number of shares of the Company’s common stock determined by dividing (a) eighty-five percent (85%) of the Eligible Employee’s Compensation for the Performance Period by (b) the closing price at which shares of the Company’s common stock are sold regular way on the New York Stock Exchange on the last trading day immediately preceding the beginning of the Performance Period. The Target Performance Award shall not be rounded up or down to a whole number of shares.

Notwithstanding the foregoing, in the event an Eligible Employee commences participation in the Plan effective as of any day other than January 1 or if the employment of an Eligible Employee is terminated during a Performance Period on or after the Eligible Employee attains age fifty-five (55) or due to the Eligible Employee’s death or disability, then in either of such events, the Eligible Employee’s Target Performance Award shall be adjusted by multiplying such Target Performance Award by a fraction, the numerator of which is the number of complete calendar months during the Performance Period that the Eligible Employee was employed by the Company and participating in the Plan, and the denominator of which is the total number of calendar months in the Performance Period.

ARTICLE III

ADMINISTRATION

This Plan shall be administered by the Committee. The Committee shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Committee shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Committee may deem expedient or appropriate that are not inconsistent with the intent of the Plan. The decision of the Committee upon all matters within its scope of authority shall be final and conclusive on all persons.

 

5


ARTICLE IV

PERFORMANCE AWARDS

 

4.1 Performance Awards.

(a) Maximum Performance Awards. The maximum Performance Award that may be made to an Eligible Employee with respect to any Performance Period shall be two (2) times the Eligible Employee’s Target Performance Award for the Performance Period. All Performance Awards under the Plan shall be based on the Company’s relative Return on Average Invested Capital in accordance with Section 4.1(b).

(b) Awards Based on Relative Return on Average Invested Capital.

(i) Steel Peer Group. Fifty percent (50%) of the maximum Performance Award for a Performance Period (i.e., 100% of the number of shares of the Company’s common stock comprising the Eligible Employee’s Target Performance Award for the Performance Period) shall be available for award based on the Company’s Return on Average Invested Capital for the Performance Period relative to the return on average invested capital of each company in the Steel Peer Group for the Performance Period. Not later than ninety (90) days after the beginning of each Performance Period, the Committee shall designate, in writing, the amounts of the Performance Awards that will be made to each Eligible Employee, expressed as a percentage of the number of shares comprising the Eligible Employee’s Target Performance Award for the Performance Period, for levels of Return on Average Invested Capital for the Performance Period when ranked against the return on average invested capital of the members of the Steel Peer Group for the Performance Period.

(ii) General Industry Group. The remaining fifty percent (50%) of the maximum Performance Award for a Performance Period (i.e., 100% of the number of shares of the Company’s common stock comprising the Eligible Employee’s Target Performance Award for the Performance Period) shall be available for award based on the Company’s Return on Average Invested Capital for the Performance Period relative to the return on average invested capital of each company in the General Industry Group for the Performance Period. Not later than ninety (90) days after the beginning of each Performance Period, the Committee shall designate, in writing, the amounts of the Performance Awards that will be made to each Eligible Employee, expressed as a percentage of the number of shares comprising the Eligible Employee’s Target Performance Award for the Performance Period, for levels of Return on Average Invested Capital for the Performance Period when ranked against the return on average invested capital of the members of the General Industry Group for the Performance Period.

The Committee’s designation of the amount of the Performance Award for the Company’s rankings against the Steel Peer Group and the General Industry Group shall provide

 

6


approximately equal progression in the amount of the award from the minimum to the maximum amount that may be awarded under Sections 4.1(b)(i) and (ii). The Company’s Steel Peer Group and General Industry Group rankings shall be based on the most recent available financial information for the members of the Steel Peer Group and General Industry Group.

(c) Reduction or Forfeiture of Performance Awards. Notwithstanding the foregoing provisions of this Section 4.1:

(i) if the Company has no reported net earnings for a Performance Period that ends prior to a Change in Control, no Performance Awards will be made with respect to the Performance Period;

(ii) the Committee in its sole and exclusive discretion may reduce (including a reduction to zero) the amount of the Performance Awards otherwise payable to Eligible Employees under the Plan for a Performance Period that ends prior to a Change in Control, provided the same percentage reduction is made to all of the Performance Awards otherwise payable for the Performance Period; and

(iii) if the employment of an Eligible Employee is terminated during a Performance Period prior to the Eligible Employee’s attainment of age fifty-five (55) for any reason other than the Eligible Employee’s death or disability, the Eligible Employee shall not receive any Performance Award under the Plan for the Performance Period.

 

4.2 Performance Award Payments.

An Eligible Employee’s Performance Award shall be paid by the Company to the Eligible Employee within thirty (30) days after the later of (i) the completion of the independent audit of the Company’s financial statements for the Performance Period or (ii) the date the Committee certifies in writing the amount of Performance Awards payable under Section 4.1. In no event, however, shall payment of a Performance Award be made later than two and one-half (2 1/2) months after the end of the Performance Period for the Performance Award. The value of fifty percent (50%) of the shares comprising an Eligible Employee’s Performance Award for a Performance Period, determined by multiplying the number of such shares by the closing price at which shares of the Company’s common stock are sold regular way on the New York Stock Exchange on the last trading day of the Performance Period, shall be paid to the Eligible Employee in cash, less applicable payroll and withholding taxes. The remaining fifty percent (50%) of the shares comprising the Eligible Employee’s Performance Award shall be rounded down to the next lower whole number of shares. Such whole number of shares shall constitute the Eligible Employee’s “Restricted Stock Performance Award” and shall be delivered to the Eligible Employee, unless the Eligible Employee makes an election in accordance with Section 4.3 to defer payment of the Restricted Stock Performance Award. The Restricted Stock Performance Award shares shall become vested in the Eligible Employee upon the Eligible Employee’s attainment of age fifty-five (55) while employed by the Company or a Subsidiary, in the event the Eligible Employee dies or becomes disabled while employed by the Company or a Subsidiary or, if earlier, in installments based on the Eligible Employee’s continued employment with the Company or a Subsidiary through each of the following vesting dates:

 

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Vesting Date

   Vested Portion of Restricted
Stock Performance Award
 

1st anniversary of payment date

   33 1/3 %

2nd anniversary of payment date

   66 2/3 %

3rd anniversary of payment date

   100 %

In the event an Eligible Employee’s employment with the Company and its Subsidiaries terminates for any reason, the Eligible Employee shall, for no consideration, forfeit to the Company coincident with such termination all shares in the Restricted Stock Performance Award that have not become vested in the Eligible Employee.

 

4.3 Deferrals of Restricted Stock Performance Awards.

(a) Deferral Agreement. Each Eligible Employee may elect, by entering into a Deferral Agreement with the Company, to defer payment of all (and not less than all) of the Restricted Stock Performance Award otherwise payable to the Eligible Employee for a Performance Period. To be effective to defer the payment of a Restricted Stock Performance Award, an Eligible Employee must complete and return a Deferral Agreement to the Company in accordance with procedures established by the Committee for such purpose on or before the date that is six (6) months before the end of the Performance Period; provided, however, an Employee who first becomes an Eligible Employee during a Performance Period shall not be permitted to enter into a Deferral Agreement for the deferral of a Restricted Stock Performance Award for such Performance Period.

An Eligible Employee’s Deferral Agreement shall be effective for one Performance Period. Therefore, an Eligible Employee must complete and sign a Deferral Agreement and return the agreement to the representative of the Company designated by the Committee on or before the date that is six (6) months before the end of the Performance Period for which a deferral of a Restricted Stock Performance Award is intended to be made.

(b) Deferral Accounts. In the event an Eligible Employee defers the payment of a Restricted Stock Performance Award, the number of shares comprising such award shall be converted into an equivalent number of common stock units, and such units shall be credited to a Deferral Account established and maintained in the Eligible Employee’s name on the books and records of the Company.

(c) Dividend Equivalent Payments; Adjustments to Common Stock Units. The Company shall pay to each Eligible Employee in cash, less applicable payroll and withholding taxes, within thirty (30) days after the payment date of any cash dividend with respect to shares of the Company’s common stock a dividend equivalent payment equal to the number of common stock units credited to the Eligible Employee’s Deferral Account as of the record date for such dividend multiplied by the per share amount of the dividend.

In the event a dividend with respect to shares of the Company’s common stock shall be declared and paid in additional shares or in the event the outstanding shares of the Company’s

 

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common stock shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation or changed into or exchanged for cash or property or the right to receive cash or property, then the Committee shall in its discretion equitably adjust the common stock units credited to the Deferral Accounts under the Plan to prevent substantial dilution or enlargement of the rights of Eligible Employees under the Plan.

(d) Vesting. An Eligible Employee shall become vested in the common stock units credited to the Eligible Employee’s Deferral Account in accordance with the vesting provisions of Section 4.2 that would have applied to the Restricted Stock Performance Award shares from which such units were derived. In the event an Eligible Employee terminates employment prior to attaining age fifty-five (55) for any reason other than death or disability, the common stock units credited to the Eligible Employee’s Deferral Account that are not vested shall be forfeited.

(e) Payment of Deferral Accounts. Subject to Section 6.6, the vested portion of an Eligible Employee’s Deferral Account shall be paid to the Eligible Employee no earlier than fifteen (15) days and no later than ninety (90) days after the Eligible Employee’s Separation from Service. The form of payment shall be one share of the Company’s common stock for each common stock unit and cash for any fractional unit credited to the vested portion of the Deferral Account.

In accordance with procedures established by the Committee, but in no event later than the date an Eligible Employee enters into his or her first Deferral Agreement with the Company under the Plan, the Eligible Employee may elect a single sum payment of the Eligible Employee’s Deferral Account or payment in installments over a term certain of not more than five (5) years. In the event an Eligible Employee fails to make a valid method of payment election, distribution of the Eligible Employee’s Deferral Account shall be made in a single sum payment of shares of Company common stock and cash for any fractional unit credited to the Deferral Account.

(f) Payment Following Death. An Eligible Employee may designate and change at any time the Beneficiary who is to receive distribution of the vested portion of the Participant’s Deferral Account in the event of the Eligible Employee’s death. Any such designation or change shall not be effective until received by the representative of the Company designated by the Committee. If an Eligible Employee has not properly designated a Beneficiary, if for any reason such designation shall not be legally effective, or if the designated Beneficiary shall predecease the Eligible Employee, then the Eligible Employee’s estate shall be treated as the Beneficiary.

In the event of an Eligible Employee’s death prior to distribution of all common stock units credited to the Eligible Employee’s Deferral Account, the Eligible Employee’s Beneficiary shall receive a distribution of the vested portion of such units (in the form of shares of Company common stock and cash for any fractional unit credited to the Deferral Account) as soon as practicable but in no event later than ninety (90) days following the Participant’s death in a single sum payment.

 

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ARTICLE V

CHANGE IN CONTROL

 

5.1 Termination of Plan and Performance Periods.

The Plan, and all Performance Periods then in progress, shall terminate upon a Change in Control. Performance Awards for such terminated Performance Periods shall be determined and paid following the Change in Control in accordance with this Article V notwithstanding any contrary provision of the Plan.

 

5.2 Determination of Performance Awards.

The Performance Award for each Performance Period that ended on a Change in Control in accordance with Section 5.1 shall be equal to the greater of:

(a) the Performance Award calculated in the manner described in Sections 4.1(a) and (b) based on the Company’s Return on Average Invested Capital relative to the Steel Peer Group and the General Industry Peer Group as of the end of the calendar quarter immediately preceding the Change in Control; or

(b) the Eligible Employee’s Target Performance Award for such Performance Period.

Provided that, an Eligible Employee’s Target Performance Award for a Performance Period used for purposes of determining the amount in clauses (a) and (b) above shall not be adjusted as provided in the second paragraph of the definition of Target Performance Award (i.e., the adjustment for Eligible Employees who first participate in the Plan after the beginning of a Performance Period) but shall be adjusted by multiplying the Target Performance Award for the Performance Period by a fraction, the numerator of which is the number of days during the Performance Period that ended on the Change in Control during which the Eligible Employee was employed by the Company and participating in the Plan, and the denominator of which is the number of days that would have been in such Performance Period if it had not ended due to the Change in Control.

 

5.3 Payment of Performance Awards.

The value of an Eligible Employee’s Performance Awards determined under Section 5.2 shall be paid by the Company to the Eligible Employee in a single cash payment, less applicable withholding taxes, within sixty (60) days following the Change in Control. Such value shall be equal to the aggregate number of shares comprising the Eligible Employee’s Performance Awards multiplied by the closing price at which shares of the Company’s stock are sold regular way on the New York Stock Exchange on the last trading day prior to the Change in Control. An Eligible Employee shall not be permitted to defer payment of the amount due to the Eligible Employee under this Section 5.3.

 

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5.4 Vesting.

Upon a Change in Control, an Eligible Employee shall become fully vested and have a nonforfeitable interest in, and shall be entitled to receive payment for, all of the Eligible Employee’s Performance Awards, including the portion of such Performance Awards that are Restricted Stock Performance Awards, for all Performance Periods that ended prior to the Change in Control and, if applicable, the common stock units credited to the Eligible Employee’s Deferral Account.

 

5.5 Payment of Deferral Accounts.

Any payment election made by an Eligible Employee under Section 4.3(e) shall be null and void and have no further force or effect from and after a Change in Control Acceleration Event, and subject to Section 6.6, the value of the Eligible Employee’s Deferral Account shall be paid to the Eligible Employee in a single cash payment, less applicable withholding taxes, within sixty (60) days following the Change in Control Acceleration Event (the “CIC Payment Date”). Such value shall be equal to the number of common stock units credited to the Eligible Employee’s Deferral Account as of the date of the Change in Control Acceleration Event multiplied by the closing price at which shares of the Company’s stock are sold regular way on the New York Stock Exchange on the last trading day prior to the date of the Change in Control Acceleration Event.

In the event that payment to an Eligible Employee is delayed beyond the CIC Payment Date due to the requirements of Section 6.6, the amount due to such Eligible Employee as of the CIC Payment Date shall be increased with interest at the prime rate, as published in The Wall Street Journal, plus 1% per annum, from the CIC Payment Date to the date the Eligible Employee receives payment of the amount due.

ARTICLE VI

MISCELLANEOUS

 

6.1 Amendment or Termination.

The Board expressly reserves for itself and for the Committee the right and the power to amend or terminate the Plan at any time. Unless the Committee otherwise expressly provides at the time the action is taken, no Performance Awards shall be paid to any Eligible Employee on or after the date of any termination of the Plan.

 

6.2 Assignability.

Eligible Employees shall not alienate, assign, sell, transfer, pledge, encumber, attach, mortgage, or otherwise hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder. No part of the amounts payable hereunder shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony, or separate maintenance, nor shall any person have any other claim to any benefit payable under this Plan as a result of a divorce or the Eligible Employee’s, or any other person’s, bankruptcy or insolvency.

 

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6.3 Source of Benefits.

The Company shall make any cash payments due under the terms of this Plan directly from its assets or from any trust that the Company may choose to establish and maintain from time to time. Shares of the Company’s common stock that may be issued under the Plan may be either authorized and unissued shares or shares which have been reacquired by the Company. Nothing contained in this Plan shall give or be deemed to give any Eligible Employee or any other person any interest in any property of any such trust or in any property of the Company, nor shall any Eligible Employee or any other person have any right under this Plan not expressly provided by the terms hereof, as such terms may be interpreted and applied by the Committee in its discretion.

 

6.4 No Promise of Continued Employment.

Nothing in this Plan or in any materials describing or relating to this Plan grants, nor should it be deemed to grant, any person any employment right, nor does participation in this Plan imply that any person has been employed for any specific term or duration or that any person has any right to remain in the employ of the Company.

 

6.5 Applicable Law.

The Plan shall be construed in accordance with and governed by the laws of the State of North Carolina.

 

6.6 Code Section 409A.

Notwithstanding anything in the Plan to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Plan by reason of a Participant’s Separation from Service, then to the extent necessary to comply with Code Section 409A:

(i) if the payment or distribution is payable in a lump sum, the Participant’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Separation from Service; and

(ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six (6) month period immediately following the Participant’s Separation from Service will be accumulated and the Participant’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Separation from Service and paid on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments or distributions will commence.

 

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IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of the Company, hereby certifies that the foregoing Nucor Corporation Senior Officers Long-Term Incentive Plan has been authorized and approved by the Board.

 

NUCOR CORPORATION

/s/ Terry S. Lisenby

Terry S. Lisenby
Executive Vice President and Chief Financial Officer

 

13

Severance Plan for Senior Officers and General Managers

Exhibit 10.2

NUCOR CORPORATION

SEVERANCE PLAN FOR SENIOR OFFICERS AND GENERAL MANAGERS

as amended and restated effective February 18, 2009


Table of Contents

 

ARTICLE I INTRODUCTION    1
ARTICLE II DEFINITIONS    1

2.1

     “AIP”    1

2.2

     “Base Salary”    1

2.3

     “Board”    1

2.4

     “Change in Control”    1

2.5

     “Change in Control Severance Benefits”    3

2.6

     “Change in Control Severance Period”    3

2.7

     “Code”    3

2.8

     “Committee”    3

2.9

     “Company”    3

2.10

     “Date of Termination”    3

2.11

     “Effective Date”    3

2.12

     “Employee”    3

2.13

     “Equity Award Plan”    3

2.14

     “General Severance Benefits”    4

2.15

     “Good Reason”    4

2.16

     “LTIP”    4

2.17

     “Month’s Base Pay”    4

2.18

     “Participant”    4

2.19

     “Plan”    5

2.20

     “Severance Benefits”    5

2.21

     “Severance Multiple”    5

2.22

     “Subsidiary”    5

2.23

     “Year of Service”    5
ARTICLE III ELIGIBILITY    5

3.1

     Participation    5

3.2

     Duration of Participation    5
ARTICLE IV GENERAL SEVERANCE BENEFITS    6

4.1

     Right to General Severance Benefits    6

4.2

     General Severance Benefits    6

4.3

     Other Benefits Payable    7
ARTICLE V CHANGE IN CONTROL SEVERANCE BENEFITS    7

5.1

     Terminations of Employment Which Trigger Change in Control Severance Benefits    7

5.2

     Change in Control Severance Benefits    7

5.3

     Change in Control Severance Benefits for Certain Managers and Directors    10

5.4

     Payment Obligations Absolute    10

5.5

     General Several Benefits Not Payable    10


ARTICLE VI NON-COMPETITION AND NON-SOLICITATION AGREEMENT; WAIVER AND RELEASE AGREEMENT    10

6.1

     Non-Competition and Non-Solicitation Agreement    10

6.2

     Waiver and Release Agreement    11

6.3

     Effect of Breach    11
ARTICLE VII SUCCESSOR TO COMPANY    11
ARTICLE VIII DURATION, AMENDMENT AND TERMINATION    11

8.1

     Amendment and Termination    11

8.2

     Form of Amendment    12
ARTICLE IX MISCELLANEOUS    12

9.1

     Employment Status    12

9.2

     Non-exclusivity of Rights and Benefits    12

9.3

     Validity and Severability    12

9.4

     Governing Law    12

9.5

     Named Fiduciary; Administration    12

9.6

     Claims Procedure    12

9.7

     Unfunded Plan Status    13

9.8

     Tax Withholding    13

9.9

     Nonalienation of Benefits    13

9.10

     Facility of Payment    13

9.11

     Gender and Number    14

9.12

     Headings    14

9.13

     Code Section 280G    14

9.14

     Code Section 409A    14

 

ii


NUCOR CORPORATION

SEVERANCE PLAN FOR SENIOR OFFICERS AND GENERAL MANAGERS

as amended and restated effective February 18, 2009

ARTICLE I

INTRODUCTION

The Company maintains the Nucor Corporation Severance Plan for Senior Officers and General Managers to provide severance benefits for senior officers and general managers upon their separation from service with the Company. The Company desires to amend the Plan to (i) add additional provisions to be effective in the event of a Participant’s separation from service following a Change in Control and (ii) otherwise meet current needs. The amendments can best be made by amending and restating the Plan in its entirety. This instrument sets forth the amended and restated Plan.

NOW, THEREFORE, the Plan, as heretofore amended, is hereby amended and restated in its entirety effective February 18, 2009 to consist of the following Articles I through IX:

ARTICLE II

DEFINITIONS

As used herein, the following words and phrases shall have meanings set forth below unless the context clearly indicates otherwise:

2.1 “AIP” shall mean the Nucor Corporation Senior Officers Annual Incentive Plan and any successor plan.

2.2 “Base Salary” shall mean the amount a Participant is entitled to receive from the Company or a Subsidiary in cash as wages or salary on an annualized basis in consideration for his or her services, (i) including any such amounts which have been deferred and (ii) excluding all other elements of compensation such as, without limitation, any bonuses, commissions, overtime, health benefits, perquisites and incentive compensation. For the purpose of determining a Participant’s Change in Control Severance Benefits, “Base Salary” shall mean, with respect to any Participant, the greater of (i) the Participant’s highest Base Salary during the twelve (12) month period immediately preceding the Change in Control and (ii) the Participant’s highest Base Salary in effect at any time thereafter.

2.3 “Board” shall mean the Board of Directors of the Company.

2.4 “Change in Control” shall mean and include the occurrence of any one of the following events:

(a) individuals who, at the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board,


provided that any person becoming a director after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as described in Rule 14a-11 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be an Incumbent Director;

(b) any person becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (b) shall not be a Change in Control if it is the result of any of the following acquisitions: (i) an acquisition directly by or from the Company or any Subsidiary; (ii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (iii) an acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) an acquisition pursuant to a Non-Qualifying Transaction (as defined in Section 2.4(c)); or

(c) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Reorganization”), or the sale or other disposition of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (a “Sale”), unless immediately following such Reorganization or Sale: (i) more than fifty percent (50%) of the total voting power of (x) the corporation resulting from such Reorganization or the corporation which has acquired all or substantially all of the assets of the Company (in either case, the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of one hundred percent (100%) of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by the Company Voting Securities that were outstanding immediately prior to such Reorganization or Sale (or, if applicable, is represented by shares into which Company Voting Securities were converted pursuant to such Reorganization or Sale), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization or Sale, (ii) no person (other than (x) the Company, (y) any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation, or (z) a person

 

2


who immediately prior to the Reorganization or Sale was the beneficial owner of twenty-five percent (25%) or more of the outstanding Company Voting Securities) is the beneficial owner, directly or indirectly, of twenty-five percent (25%) or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), and (iii) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Reorganization or Sale were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization or Sale (any Reorganization or Sale which satisfies all of the foregoing criteria, a “Non-Qualifying Transaction”).

2.5 “Change in Control Severance Benefits” shall mean the payments and benefits provided under Article V.

2.6 “Change in Control Severance Period” shall mean the period beginning on a Participant’s Date of Termination with a duration in months equal to (i) with respect to a Participant who is the Chief Executive Officer, the Chief Operating Officer, Steel Making Operations, the Chief Financial Officer or an Executive Vice President of the Company, the Participant’s Severance Multiple times twelve (12) and (ii) with respect to any other Participant, the number of Month’s Base Pay that the Participant is entitled to receive as Change in Control Severance Benefits.

2.7 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

2.8 “Committee” shall mean the Compensation and Executive Development Committee of the Board.

2.9 “Company” shall mean Nucor Corporation, a Delaware corporation and any successor thereto.

2.10 “Date of Termination” shall mean the date of a Participant’s separation from service with the Company and its Subsidiaries. For purposes of the Plan, the term “separation from service” shall be defined as provided in Section 409A of the Code and applicable regulations.

2.11 “Effective Date” of this amended and restated Plan shall mean February 18, 2009. The original effective date of the Plan was October 1, 2007.

2.12 “Employee” shall mean any person who is employed by the Company, including any such person who also serves as a member of the Board.

2.13 “Equity Award Plan” shall mean the Nucor Corporation 2005 Stock Option and Award Plan and any successor plan and the award methodology adopted by the Committee and in effect thereunder from time to time.

 

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2.14 “General Severance Benefits” shall mean the payments and benefits provided under Article IV.

2.15 “Good Reason” shall mean, with respect to a Participant, the occurrence of any of the following events after a Change in Control:

(a) a reduction in the Participant’s Base Salary;

(b) a reduction in the Participant’s annual or long-term incentive compensation opportunity under the AIP, the LTIP or other annual or long-term incentive plan for which the Participant is eligible from the Participant’s annual or long-term incentive compensation opportunity under the AIP, the LTIP or other annual or long-term incentive plan for which the Participant is eligible immediately prior to the Change in Control;

(c) a reduction in the value of the Participant’s target equity incentive award under the Equity Award Plan from the value of the Participant’s target equity incentive award under the Equity Award Plan immediately prior to the Change in Control;

(d) a reduction in the aggregate level of employee benefits offered to the Participant in comparison to the employee benefit programs and arrangements enjoyed by the Participant immediately prior to the Change in Control;

(e) a change in the Participant’s principal work location to a work location that is more than 50 miles from the location where the Participant was based immediately prior to the Change in Control; or

(f) the assignment to the Participant of any duties inconsistent in any respect with the Participant’s position, authority, duties or responsibilities as in effect immediately prior to the public announcement of the Change in Control (including offices, titles, reporting requirements and relationships and status) or any other action by the Company which results in any diminution in the Participant’s position, authority, duties or responsibilities.

Any good faith determination of Good Reason made by the Participant shall be conclusive and binding on the Company.

2.16 “LTIP” shall mean the Nucor Corporation Senior Officers Long-Term Incentive Plan and any successor plan.

2.17 “Month’s Base Pay” shall mean the Participant’s Base Salary divided by twelve (12).

2.18 “Participant” shall mean an Employee who meets the eligibility requirements of Section 3.1.

 

4


2.19 “Plan” shall mean the Nucor Corporation Severance Plan for Senior Officers and General Managers, as set forth herein and as amended from time to time.

2.20 “Severance Benefits” shall mean Change in Control Severance Benefits and General Severance Benefits.

2.21 “Severance Multiple” shall mean (i) 3.0, with respect to the Chief Executive Officer of the Company, (ii) 2.5, with respect to the Chief Operating Officer, Steel Making Operations and the Chief Financial Officer of the Company, and (iii) 2.0, with respect to any Executive Vice President of the Company.

2.22 “Subsidiary” shall mean any corporation (other than the Company), limited liability company, or other business organization in an unbroken chain of entities beginning with the Company in which each of such entities other than the last one in the unbroken chain owns stock, units, or other interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock, units, or other interests in one of the other entities in that chain.

2.23 “Year of Service” shall mean each continuous twelve (12) month period of employment, including fractional portions thereof and periods of authorized vacation, authorized leave of absence and short-term disability leave, with the Company and its Subsidiaries or their respective successors. Employment with an entity prior to the date it became a Subsidiary shall not be considered for purposes of determining a Participant’s Years of Service unless the agreement pursuant to which the Subsidiary was acquired by the Company provides otherwise or the Company otherwise agrees in writing to consider such employment for purposes of determining a Participant’s Years of Service.

ARTICLE III

ELIGIBILITY

3.1 Participation. Each Employee who is determined by the Committee to be a Senior Officer or a General Manager of the Company shall be eligible to be a Participant in the Plan. In addition, each Employee who is employed at the Company’s corporate headquarters as a Department Manager, Director or Manager shall be a Participant solely for purposes of Section 5.3. Notwithstanding the foregoing, if an Employee is party to a written employment agreement with the Company or a Subsidiary that expressly precludes the Employee’s participation in the Plan, the Employee shall not be eligible to be a Participant or receive General Severance Benefits under Article IV; however, such Employee shall be eligible to be a Participant and receive Change in Control Severance Benefits in accordance with Article V.

3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan when he or she no longer is a Senior Officer or a General Manager of the Company or a Department Manager, Director or Manager employed at the Company’s headquarters. Notwithstanding the foregoing, a Participant who has become entitled to receive Severance

 

5


Benefits shall remain a Participant in the Plan until the full amount of the Severance Benefits and any other amounts payable under the Plan have been paid to the Participant.

ARTICLE IV

GENERAL SEVERANCE BENEFITS

4.1 Right to General Severance Benefits. A Participant shall be entitled to receive General Severance Benefits from the Company as provided in Section 4.2, if (i) on the Participant’s Date of Termination, he is a Senior Officer or General Manager of the Company (as determined in the Committee’s sole discretion), (ii) the Participant’s employment with the Company and its Subsidiaries is terminated for any reason, including due to the Participant’s death, disability, voluntary retirement, involuntary termination or resignation, and (iii) the Participant executes a Non-Competition and Non-Solicitation Agreement and a Waiver and Release Agreement as provided in Article VI.

4.2 General Severance Benefits.

(a) General. If a Participant’s employment is terminated in circumstances entitling him or her to General Severance Benefits as provided in Section 4.1, the Company shall pay such Participant General Severance Benefits in an amount equal to the greater of (i) six (6) Month’s Base Pay or (ii) the product of (A) one Month’s Base Pay and (B) the number of the Participant’s Years of Service through the Participant’s Date of Termination; provided that, if the Participant is under age fifty-five (55) as of the Participant’s Date of Termination, the Participant’s General Severance Benefits shall not be less than the sum of the value, as of the Participant’s Date of Termination, of the Participant’s forfeitable deferred common stock units credited to the Participant’s deferral account under the LTIP and the Participant’s forfeitable shares of restricted stock awarded under the LTIP. (For the avoidance of doubt, the minimum amount of General Severance Benefits payable to a Participant who is under age fifty-five (55) as of the Participant’s Date of Termination shall not include the value of the Participant’s forfeitable deferred common stock units credited to the Participant’s deferral account under the AIP or the value of any forfeitable restricted stock units or forfeitable shares of restricted stock awarded to the Participant under the Equity Award Plan). A Participant’s General Severance Benefits shall be reduced and offset, but not below zero, by (i) any severance pay or pay in lieu of notice required to be paid to the Participant under applicable law, including, without limitation, the Worker Adjustment and Retraining Notification Act or any similar state or local law and (ii) any severance benefits provided to a Participant pursuant to any employment agreement between the Participant and the Company except to the extent specifically provided otherwise in such employment agreement. Subject to Section 9.14, General Severance Benefits shall be paid at the time and in the form described in Section 4.2(b).

(b) Time and Form of Payment. If a Participant’s employment with the Company and its Subsidiaries is terminated for any reason other than the Participant’s death, the Participant’s General Severance Benefits shall be paid to the Participant in twenty-four (24) equal monthly installments, without interest or other increment thereon,

 

6


commencing with the first month following the Participant’s Date of Termination, and if the Participant dies during the twenty-four (24) month installment payment period, the remaining payments that would have been paid to the Participant shall be paid to the Participant’s estate in a single sum payment as soon as practicable but not more than ninety (90) days following the Participant’s death. In the event a Participant dies while employed by the Company or a Subsidiary, the Participant’s General Severance Benefits shall be paid to the Participant’s estate in a single sum payment as soon as practicable following the Participant’s death.

4.3 Other Benefits Payable. General Severance Benefits provided pursuant to Section 4.2 shall be provided in addition to, and not in lieu of, all other accrued or earned and vested equity awards, deferred compensation, rights, options or other benefits which may be owed to a Participant upon or following termination.

ARTICLE V

CHANGE IN CONTROL SEVERANCE BENEFITS

5.1 Terminations of Employment Which Trigger Change in Control Severance Benefits. A Participant shall be entitled to receive Change in Control Severance Benefits from the Company as provided in Section 5.2, in lieu of General Severance Benefits under Article IV, if (i) a Change in Control has occurred and the Participant’s employment with the Company and its Subsidiaries is involuntarily terminated by the Company or is voluntarily terminated by the Participant for Good Reason, provided that, (x) such termination occurs after such Change in Control and on or before the second anniversary thereof, or (y) the termination occurs before such Change in Control but the Participant can reasonably demonstrate that such termination or the event or action causing Good Reason to occur, as applicable, occurred at the request of a third party who had taken steps reasonably calculated to effect a Change in Control, and (ii) the Participant executes a Non-Competition and Non-Solicitation Agreement and a Waiver and Release Agreement as provided in Article VI. Change in Control Severance Benefits shall not be payable to a Participant who terminates employment with the Company due to the Participant’s death, disability, voluntary retirement or resignation without Good Reason.

5.2 Change in Control Severance Benefits.

(a) Executive Officers. If a Participant is the Chief Executive Officer, the Chief Operating Officer, Steel Making Operations, the Chief Financial Officer or an Executive Vice President of the Company and the Participant’s employment is terminated under circumstances entitling him or her to Change in Control Severance Benefits as provided in Section 5.1, the Company shall pay such Participant, in a single lump sum payment in cash, and subject to Section 9.14, within ten (10) days of the Participant’s Date of Termination, Change in Control Severance Benefits in an amount equal to the sum of:

(i) the product of the Participant’s Severance Multiple multiplied by the sum of (A) the Participant’s Base Salary, (B) the greater of (y) 150% of the Participant’s Base Salary and (z) the Participant’s average performance award

 

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under the AIP (including any portion thereof the Participant elected to defer but excluding the related “Deferral Incentive” (as defined in the AIP)) for the three fiscal years prior to the Participant’s Date of Termination (or if less, the number of fiscal years prior to the Participant’s Date of Termination during which the Participant participated in the AIP), and (C) the greater (y) 85% of the Participant’s Base Salary and (z) the value of the Participant’s performance award under the LTIP for the performance period applicable to the Participant that ended immediately prior to the Participant’s Date of Termination (including any portion thereof the Participant elected to defer) based on the closing price of the Company’s common stock on the last trading day of such Performance Period;

(ii) if the Participant’s Date of Termination occurs prior to the annual grant date under the Equity Award Plan (which date is currently June 1) for the year in which such Date of Termination occurs, an amount equal to the aggregate dollar value of the base equity award and the performance-based equity award the Participant would have become entitled to receive under the Equity Award Plan for such year if the Participant’s employment had continued to the annual grant date; and

(iii) the sum of (A) the dollar value of the performance-based equity award the Participant would have become entitled to receive under the Equity Award Plan if the Participant’s employment had continued to the annual grant date under the Equity Award Plan (which date is currently June 1) for the year immediately following the year of the Participant’s Date of Termination based on the Company’s performance through the Change in Control and (B) the dollar value of the base (non-performance-based) equity award the Participant would have become entitled to receive under the Equity Award Plan if the Participant’s employment had continued to the annual grant date under the Equity Award Plan for the year immediately following the year of the Participant’s Date of Termination.

(b) Other Participants. If a Participant is not the Chief Executive Officer, the Chief Operating Officer, Steel Making Operations, the Chief Financial Officer or an Executive Vice President of the Company and the Participant’s employment is terminated under circumstances entitling him or her to Change in Control Severance Benefits as provided in Section 5.1, the Company shall pay such Participant, in a single lump sum payment in cash, and subject to Section 9.14, within ten (10) days of the Participant’s Date of Termination, Change in Control Severance Benefits in an amount equal to the sum of:

(i) the greatest of (A) twelve (12) Month’s Base Pay, (B) the product of (y) one and one-half (1 1/2) Month’s Base Pay and (z) the number of the Participant’s Years of Service through the Participant’s Date of Termination up to a maximum of thirty-six (36) Years of Service or (C) the product of (y) one Month’s Base Pay and (z) the number of the Participant’s Years of Service through the Participant’s Date of Termination;

 

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(ii) if the Participant’s Date of Termination occurs prior to the annual grant date under the Equity Award Plan (which date is currently June 1) for the year in which such Date of Termination occurs, an amount equal to the aggregate dollar value of the base equity award and the performance-based equity award the Participant would have become entitled to receive under the Equity Award Plan for such year if the Participant’s employment had continued to the annual grant date; and

(iii) the sum of (A) the dollar value of the performance-based equity award the Participant would have become entitled to receive under the Equity Award Plan if the Participant’s employment had continued to the annual grant date under the Equity Award Plan (which date is currently June 1) for the year immediately following the year of the Participant’s Date of Termination based on the Company’s performance through the Change in Control and (B) the dollar value of the base (non-performance-based) equity award the Participant would have become entitled to receive under the Equity Award Plan if the Participant’s employment had continued to the annual grant date under the Equity Award Plan for the year immediately following the year of the Participant’s Date of Termination.

(c) Offsets. A Participant’s Change in Control Severance Benefits shall be reduced and offset, but not below zero, by (i) any severance pay or pay in lieu of notice required to be paid to the Participant under applicable law, including, without limitation, the Worker Adjustment and Retraining Notification Act or any similar state or local law and (ii) any severance benefits provided to a Participant pursuant to any employment agreement between the Participant and the Company except to the extent specifically provided otherwise in such employment agreement.

(d) Welfare Benefits. A Participant entitled to Change in Control Severance Benefits pursuant to Section 5.1 shall continue to be provided with medical, dental, and prescription drug benefits comparable to the benefits provided to the Participant immediately prior to the Participant’s Date of Termination, or if more favorable to the Participant, the Change in Control, for the duration of the Change in Control Severance Period with the same contribution rate for which the Participant would have been responsible if the Participant had remained employed through the Change in Control Severance Period. Any benefits so provided shall not be considered a continuation of coverage required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; provided that, if the Participant becomes reemployed with another employer and is eligible to receive medical, dental or prescription drug insurance coverage under another employer-provided plan (regardless of whether the Participant actually enrolls under such coverage), then the medical, dental or prescription drug insurance benefits provided pursuant to this Section shall be secondary to those provided under such other plan during such applicable period of eligibility.

 

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5.3 Change in Control Severance Benefits for Certain Managers and Directors. A Department Manager, Manager or Director employed at the Company’s corporate headquarters as of the date of a Change in Control (a “Manager”) shall be entitled to receive Change in Control Severance Benefits pursuant to this Section 5.3 if (i) the Manager’s employment with the Company or a Subsidiary is involuntarily terminated by the Company or is voluntarily terminated by the Manager for Good Reason, provided that, (a) such termination occurs after a Change in Control and on or before the first anniversary thereof, or (b) the termination occurs before such Change in Control but the Manager can reasonably demonstrate that such termination or the event or action causing Good Reason to occur, as applicable, occurred at the request of a third party who had taken steps reasonably calculated to effect a Change in Control and (ii) the Manager executes a Waiver and Release Agreement as provided in Section 6.2. Such severance benefits shall be equal to the greater of (i) three (3) Month’s Base Pay or (ii) the product of (A) one Month’s Base Pay and (B) the number of the Manager’s Years of Service through the Manager’s Date of Termination up to a maximum of twelve (12) Years of Service, less any severance pay or pay in lieu of notice required to be paid to the Manager under applicable law, including, without limitation, the Worker Adjustment and Retraining Notification Act or any similar state or local law. Payment under this Section shall be made to a Manager in a lump sum in cash within ten (10) days of the Manager’s Date of Termination. A Manager who receives severance benefits pursuant to this Section 5.3 shall be entitled to continue to receive welfare benefits as described in Section 5.2(d), and the “Change in Control Severance Period” for such purposes shall mean the period beginning on a Manager’s Date of Termination with a duration in months equal to the number of Month’s Base Pay the Manager is entitled to receive as severance benefits pursuant to this Section 5.3.

5.4 Payment Obligations Absolute. Upon a Change in Control, the obligations of the Company to pay and provide the Change in Control Severance Benefits described in Sections 5.2 and 5.3 shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company or any of its subsidiaries may have against any Participant. In no event shall a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to a Participant under any of the provisions of this Plan, nor shall the amount of any payment hereunder be reduced by any compensation earned by a Participant as a result of employment by another employer, except with respect to the continued welfare benefits provided under Section 5.2(d).

5.5 General Several Benefits Not Payable. The Change in Control Severance Benefits provided pursuant to Section 5.2 above shall be provided in lieu of and not in addition to the General Severance Benefits provided in Article IV.

ARTICLE VI

NON-COMPETITION AND NON-SOLICITATION AGREEMENT;

WAIVER AND RELEASE AGREEMENT

6.1 Non-Competition and Non-Solicitation Agreement. As a condition to the receipt of Severance Benefits, a Participant shall enter into an agreement in form and content reasonably satisfactory to the Committee pursuant to which the Participant agrees to refrain, for a reasonable

 

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period of time following the Participant’s Date of Termination, from (i) competing with the Company, (ii) soliciting or influencing any customer or prospective customer of the Company to alter its business with the Company or to do business with another company, (iii) soliciting or offering employment to any employee of the Company, or (iv) disclosing any confidential information or trade secrets of the Company.

6.2 Waiver and Release Agreement. As a condition to the receipt of Severance Benefits, a Participant must submit a signed Waiver and Release Agreement in form and content reasonably satisfactory to the Committee on or within forty-five (45) days of the Participant’s Date of Termination. A Participant may revoke the signed Waiver and Release Agreement within seven (7) days of signing. Any such revocation must be made in writing and must be received by the Committee within such seven (7) day period. A Participant who timely revokes a Waiver and Release Agreement shall not be eligible to receive Severance Benefits under the Plan.

6.3 Effect of Breach. In the event a Participant breaches any agreement entered into in accordance with Section 6.1 or fails to sign a Waiver and Release Agreement in accordance with Section 6.2, the Committee may require the Participant to (a) immediately forfeit any portion of the Severance Benefits that is then outstanding and (b) return to the Company all or some of the economic value of the Severance Benefits that was realized or obtained by the Participant prior to the breach.

ARTICLE VII

SUCCESSOR TO COMPANY

This Plan shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under this Plan if no succession had taken place. In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this Plan, the Company shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under this Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The term “Company,” as used in this Plan, shall mean the Company as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this Plan.

ARTICLE VIII

DURATION, AMENDMENT AND TERMINATION

8.1 Amendment and Termination. The Plan may be terminated or amended in any respect by resolution adopted by a majority of the Board, unless a Change in Control has previously occurred. If a Change in Control occurs, the Plan shall not be subject to amendment, change, substitution, deletion, revocation or termination in any respect which adversely affects the rights of Participants for a period of two (2) years following the date of the Change in Control.

 

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8.2 Form of Amendment. The form of any amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Company, certifying that the amendment or termination has been approved by the Board. An amendment of the Plan in accordance with the terms hereof shall automatically effect a corresponding amendment to all Participants’ rights hereunder. A termination of the Plan, in accordance with the terms hereof, shall automatically effect a termination of all Participants’ rights and benefits hereunder.

ARTICLE IX

MISCELLANEOUS

9.1 Employment Status. This Plan does not constitute a contract of employment or impose on the Company or any Subsidiary any obligation to retain the Participant as an Employee, to change the status of the Participant’s employment, or to change the Company’s policies or those of its subsidiaries’ regarding termination of employment.

9.2 Non-exclusivity of Rights and Benefits. Nothing in this Plan shall prevent or limit a Participant’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its Subsidiaries and for which the Participant may qualify. Amounts which are or become vested benefits or which a Participant is otherwise entitled to receive under the AIP, the LTIP, the Equity Award Plan or any other plan, policy, practice or program of or any contract or agreement with the Company or any of Subsidiaries at or subsequent to the Participant’s Date of Termination or a Change in Control shall be payable or provided in accordance with such plan, policy, practice or program or contract or agreement.

9.3 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.4 Governing Law. The validity, interpretation, construction and performance of the Plan shall in all respects be governed by the laws of North Carolina, without reference to principles of conflict of law.

9.5 Named Fiduciary; Administration. The Company is the named fiduciary of the Plan, with full authority to control and manage the operation and administration of the Plan, acting through the Committee and the Board.

9.6 Claims Procedure. If an Employee or former Employee makes a written request alleging a right to receive benefits under the Plan or alleging a right to receive an adjustment in benefits being paid under the Plan, the Company shall treat it as a claim for benefits. All claims for Severance Benefits under the Plan shall be sent to the Human Resources Department of the Company and must be received within thirty (30) days after the Date of Termination. If the Company determines that any individual who has claimed a right to receive Severance Benefits under the Plan is not entitled to receive all or any part of the benefits claimed, it will inform the claimant in writing of its determination and the reasons therefor in terms calculated to be

 

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understood by the claimant. The notice will be sent within thirty (30) days of the written request, unless the Company determines additional time, not exceeding forty-five (45) days, is needed. The notice shall make specific reference to the pertinent Plan provisions on which the denial is based, and describe any additional material or information that is necessary. Such notice shall, in addition, inform the claimant what procedure the claimant should follow to take advantage of the review procedures set forth below in the event the claimant desires to contest the denial of the claim. The claimant may, within ninety (90) days thereafter, submit in writing to the Company a notice that the claimant contests the denial of his or her claim by the Company and desires a further review. The Company shall, within thirty (30) days thereafter, review the claim and authorize the claimant to appear personally and review pertinent documents and submit issues and comments relating to the claim to the persons responsible for making the determination on behalf of the Company. The Company will render its final decision with specific reasons therefor in writing and will transmit it to the claimant within thirty (30) days of the written request for review, unless the Company determines additional time, not exceeding thirty (30) days, is needed, and so notifies the Participant. If the Company fails to respond to a claim filed in accordance with the foregoing within thirty (30) days or any such extended period, the Company shall be deemed to have denied the claim.

9.7 Unfunded Plan Status. This Plan is intended to be an unfunded plan. All payments pursuant to the Plan shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company as a result of participating in the Plan. Notwithstanding the foregoing, the Company may (but shall not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Company’s creditors, to assist it in accumulating funds to pay its obligations under the Plan.

9.8 Tax Withholding. Any payment provided for hereunder shall be paid net of any applicable tax withholding required under federal, state, local or foreign law.

9.9 Nonalienation of Benefits. Except as otherwise specifically provided herein, amounts payable under the Plan shall not be subject to any manner of anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, including any liability which is for alimony of other payments for the support of a spouse or former spouse, or for any other relative of a Participant, prior to actually being received by the person entitled to payment under the terms of the Plan. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish, execute or levy upon, otherwise dispose of any right to amounts payable hereunder, shall be null and void.

9.10 Facility of Payment.

(a) If a Participant is declared an incompetent, and a conservator, guardian, or other person legally charged with his or her care has been appointed, any Severance Benefits to which such individual is entitled may be paid or provided to such conservator, guardian, or other person legally charged with his or her care;

 

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(b) If a Participant is incompetent, the Company may (i) require the appointment of a conservator or guardian, (ii) distribute amounts to his or her spouse, with respect to a Participant who is married, or to such other relative of an unmarried Participant for the benefit of such Participant, or (iii) distribute such amounts directly to or for the benefit of such Participant; provided however, that a conservator, guardian, or other person charged with his or her care has not been appointed.

9.11 Gender and Number. Except when the context indicates to the contrary, when used herein masculine terms shall be deemed to include the feminine, and plural the singular.

9.12 Headings. The headings of Articles and Sections are included solely for convenience of reference, and are not to be used in the interpretation of the provisions of the Plan.

9.13 Code Section 280G. Notwithstanding any other provisions of the Plan, in the event that any payment or benefit received or to be received by a Participant in connection with a Change in Control or the termination of the Participant’s employment (whether pursuant to the terms of this Plan or any other plan, arrangement or agreement with the Company) (all such payments and benefits, the “Total Payments”) would not be deductible (in whole or part), by the Company (or an affiliate making such payment or providing such benefit) as a result of Section 280G of the Code, then the Total Payments shall be reduced if, and only if, such reduction results in the Participant’s receipt, on an after-tax basis, of a greater amount of the Total Payments after taking into account all applicable federal, state and local employment taxes, income taxes and the excise tax imposed by Section 4999 of the Code (all computed at the highest applicable marginal rate). Any reduction in the Total Payments required by this Section 9.13 shall first reduce the cash Severance Benefits (if necessary, to zero), and all other Severance Benefits shall thereafter be reduced (if necessary, to zero); provided, however, the Participant may elect to have the noncash Severance Benefits reduced (or eliminated) prior to any reduction of the cash Severance Benefits.

9.14 Code Section 409A.

(a) Delay of Certain Payments. Notwithstanding anything in the Plan to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Plan by reason of a Participant’s termination of employment, then to the extent necessary to comply with Code Section 409A:

(i) if the payment or distribution is payable in a lump sum, the Participant’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Date of Termination; and

(ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six (6)

 

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month period immediately following the Participant’s Date of Termination will be accumulated and the Participant’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of the Participant’s death or the seventh month following the Participant’s Date of Termination and paid on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments or distributions will commence.

(b) Expense Reimbursements. To the extent any expense reimbursement or in-kind benefit to which a Participant is or may be entitled to receive under the Plan constitutes non-exempt “deferred compensation” for purposes of Section 409A of the Code, then (i) such reimbursement shall be paid to the Participant as soon as administratively practicable after the Participant submits a valid claim for reimbursement, but in no event later than the last day of the Participant’s taxable year following the taxable year in which the expense was incurred, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year of the Participant shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Participant, and (iii) the Participant’s right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

(c) Separation from Service Required. A termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan providing for the payment of any amounts or benefits subject to Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Plan, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”

(d) Interpretation and Administration. Nothing in this Plan shall operate or be construed to cause the Plan to fail to comply with the requirements of Code Section 409A and, to the extent applicable, it is intended that the Plan comply with the provisions of Code Section 409A and shall be administered in a manner consistent with that intent. Any provision of this Plan that would cause the Plan or any payment made hereunder to fail to satisfy Code Section 409A shall have no force and effect until amended by the Company to comply with Code Section 409A (which amendment may be retroactive to the extent permitted by Code Section 409A) and may be made by the Company without the consent of any Participant.

 

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IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of the Company, hereby certifies that the foregoing Nucor Corporation Severance Plan for Senior Officers and General Managers, as amended and restated effective February 18, 2009, has been authorized and approved by the Board.

 

NUCOR CORPORATION

/s/ Terry S. Lisenby

Terry S. Lisenby
Executive Vice President and Chief Financial Officer

 

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Computation of Ration of Earnings

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

 

     Year-ended December 31,     Three Months Ended  
     2004     2005     2006     2007     2008     Mar 29
2008
    Apr 4
2009
 
           (In thousands, except ratios)                    

Earnings

              

Earnings/(loss) before income taxes and noncontrolling interests

   $ 1,806,731     $ 2,137,733     $ 2,911,556     $ 2,546,816     $ 3,104,391     $ 714,618     $ (281,746 )

Plus/(Less): losses/(earnings) from equity investments

     (4,070 )     (476 )     17,690       24,618       36,920       11,257       37,997  

Plus: fixed charges (includes interest expense and amortization of bond issuance costs and settled swaps and estimated interest on rent expense)

     30,645       36,571       40,351       55,402       146,360       30,372       46,024  

Plus: amortization of capitalized interest

     108       216       216       216       300       54       138  

Plus: distributed income of equity investees

     —         —         3,172       8,072       20,117       4,003       4,361  

Less: interest capitalized

     (1,310 )     —         —         (3,700 )     (10,020 )     (370 )     (5,840 )

Plus/(Less): losses/(earnings) in noncontrolling interests in subsidiaries that have not incurred fixed charges

     (80,840 )     (110,650 )     (219,121 )     (293,604 )     (314,277 )     (91,780 )     33  
                                                        
   $ 1,751,264     $ 2,063,394     $ 2,753,864     $ 2,337,820     $ 2,983,791     $ 668,154     $ (199,033 )
                                                        

Fixed charges

              

Interest expense and amortization of bond issuance and settled swaps

     30,645       36,571       40,351       55,052       144,845       30,154       45,523  

Estimated interest on rent expense

     —         —         —         350       1,515       218       501  
                                                        

Total Fixed Charges

     30,645       36,571       40,351       55,402       146,360       30,372       46,024  
                                                        

Ratio of earnings to fixed charges

     57.15       56.42       68.25       42.20       20.39       22.00       (4.32 )
Section 302 CEO Certification

Exhibit 31

Certification of Principal Executive Officer

Pursuant to Rule 13a-14(a)/15d-14(a)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Daniel R. DiMicco, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Nucor Corporation;

 

  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 12, 2009     /s/ Daniel R. DiMicco
    Daniel R. DiMicco
    Chairman, President and
Chief Executive Officer

 

Section 302 CFO Certification

Exhibit 31.1

Certification of Principal Financial Officer

Pursuant to Rule 13a-14(a)/15d-14(a)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Terry S. Lisenby, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Nucor Corporation;

 

  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: May 12, 2009     /s/ Terry S. Lisenby
    Terry S. Lisenby
    Chief Financial Officer, Treasurer
and Executive Vice President
Section 906 CEO Certification

Exhibit 32

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Daniel R. DiMicco, Chairman, President and Chief Executive Officer (principal executive officer) of Nucor Corporation (the “Registrant”), certify, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended April 4, 2009 of the Registrant (the “Report”), that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

/s/ Daniel R. DiMicco
Name:   Daniel R. DiMicco
Date:   May 12, 2009
Section 906 CFO Certification

Exhibit 32.1

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Terry S. Lisenby, Chief Financial Officer, Treasurer and Executive Vice President (principal financial officer) of Nucor Corporation (the “Registrant”), certify, to the best of my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended April 4, 2009 of the Registrant (the “Report”), that:

 

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 

/s/ Terry S. Lisenby
Name:   Terry S. Lisenby
Date:   May 12, 2009