Table of Contents

 

 

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 3, 2010

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  x    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

315,125,260 shares of common stock were outstanding at April 3, 2010.

 

 

 


Table of Contents

Nucor Corporation

Form 10-Q

April 3, 2010

INDEX

 

               Page

Part I

  

Financial Information

  
  

Item 1

  

Financial Statements (unaudited)

  
      Condensed Consolidated Statements of Earnings - Three Months (13 Weeks) Ended April 3, 2010 and April 4, 2009    3
      Condensed Consolidated Balance Sheets - April 3, 2010 and December 31, 2009    4
      Condensed Consolidated Statements of Cash Flows - Three Months (13 Weeks) Ended April 3, 2010 and April 4, 2009    5
     

Notes to Condensed Consolidated Financial Statements

   6
  

Item 2

  

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

   17
  

Item 3

  

Quantitative and Qualitative Disclosures About Market Risk

   22
  

Item 4

  

Controls and Procedures

   22

Part II

  

Other Information

  
  

Item 1A

  

Risk Factors

   23
  

Item 6

  

Exhibits

   23

Signatures

   23

List of Exhibits to Form 10-Q

   24

 

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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 3, 2010    April 4, 2009  

Net sales

   $ 3,654,842    $ 2,654,319   
               

Costs, expenses and other:

     

Cost of products sold

     3,442,047      2,778,324   

Marketing, administrative and other expenses

     92,594      87,379   

Equity in losses of unconsolidated affiliates

     18,377      37,997   

Interest expense, net

     37,788      32,365   
               
     3,590,806      2,936,065   
               

Earnings (loss) before income taxes and noncontrolling interests

     64,036      (281,746

Provision for (benefit from) income taxes

     22,842      (91,221
               

Net earnings (loss)

     41,194      (190,525

Earnings (loss) attributable to noncontrolling interests

     10,230      (880
               

Net earnings (loss) attributable to Nucor stockholders

   $ 30,964    $ (189,645
               

Net earnings (loss) per share:

     

Basic

   $ 0.10    $ (0.60

Diluted

   $ 0.10    $ (0.60

Average shares outstanding:

     

Basic

     315,461      314,319   

Diluted

     316,228      314,319   

Dividends declared per share

   $ 0.36    $ 0.35   

See notes to condensed consolidated financial statements.

 

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Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

     April 3, 2010     Dec. 31, 2009  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 1,659,589      $ 2,016,981   

Short-term investments

     340,495        225,000   

Accounts receivable, net

     1,302,316        1,116,035   

Inventories, net

     1,624,971        1,312,903   

Other current assets

     534,415        511,329   
                

Total current assets

     5,461,786        5,182,248   

Property, plant and equipment, net

     3,963,467        4,013,836   

Goodwill

     1,831,294        1,803,021   

Other intangible assets, net

     905,143        902,922   

Other assets

     641,012        669,877   
                

Total assets

   $ 12,802,702      $ 12,571,904   
                

LIABILITIES

    

Current liabilities:

    

Short-term debt

   $ 9,075      $ 1,748   

Long-term debt due within one year

     6,000        6,000   

Accounts payable

     941,458        707,038   

Salaries, wages and related accruals

     186,885        154,997   

Accrued expenses and other current liabilities

     397,738        357,274   
                

Total current liabilities

     1,541,156        1,227,057   

Long-term debt due after one year

     3,080,200        3,080,200   

Deferred credits and other liabilities

     672,004        680,358   
                

Total liabilities

     5,293,360        4,987,615   
                

EQUITY

    

Nucor stockholders’ equity:

    

Common stock

     149,930        149,877   

Additional paid-in capital

     1,688,263        1,675,777   

Retained earnings

     7,036,907        7,120,218   

Accumulated other comprehensive loss,
net of income taxes

  

 

(58,608

 

 

(41,056

    

Treasury stock

     (1,510,856     (1,514,290
                

Total Nucor stockholders’ equity

     7,305,636        7,390,526   

Noncontrolling interests

     203,706        193,763   
                

Total equity

     7,509,342        7,584,289   
                

Total liabilities and equity

   $ 12,802,702      $ 12,571,904   
                

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 3, 2010     April 4, 2009  

Operating activities:

  

 

Net earnings (loss)

   $ 41,194      $ (190,525

Adjustments:

  

 

Depreciation

     127,883        119,699   

Amortization

     18,221        18,142   

Stock-based compensation

     10,396        10,225   

Deferred income taxes

     2,443        (51,693

Equity in losses of unconsolidated affiliates

     18,377        37,997   

Changes in assets and liabilities (exclusive of acquisitions):

    

Accounts receivable

     (179,297     292,398   

Inventories

     (303,001     522,744   

Accounts payable

     232,877        (127,657

Federal income taxes

     17,566        (204,553

Salaries, wages and related accruals

     35,747        (404,173

Other

     (25,443     (8,462
                

Cash provided by (used in) operating activities

     (3,037     14,142   
                

Investing activities:

  

 

Capital expenditures

     (54,216     (125,966

Investment in and advances to affiliates

     (80,461     (8,468

Repayment of advances to affiliates

     48,884        —     

Disposition of plant and equipment

     3,046        2,234   

Acquisitions (net of cash acquired)

     (55,694     —     

Purchases of investments

     (240,495     —     

Proceeds from the sale of investments

     125,000        —     
                

Cash used in investing activities

     (253,936     (132,200
                

Financing activities:

  

 

Net change in short-term debt (exclusive of acquisitions)

     7,312        (2,320

Repayment of long-term debt

     —          (175,000

Issuance of common stock

     1,462        1,028   

Excess tax benefits from stock-based compensation

     500        (700

Distributions to noncontrolling interests

     (294     (49,339

Cash dividends

     (114,193     (110,514
                

Cash used in financing activities

     (105,213     (336,845
                

Effect of exchange rate changes on cash

     4,794        (148
                

Decrease in cash and cash equivalents

     (357,392     (455,051

Cash and cash equivalents - beginning of year

     2,016,981        2,355,130   
                

Cash and cash equivalents - end of three months

   $ 1,659,589      $ 1,900,079   
                

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 unless otherwise noted. The information furnished has not been audited; however, the December 31, 2009 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, 2009. Certain amounts for the prior year have been reclassified to conform to the 2010 presentation.

Recently Adopted Accounting Pronouncements - In January 2010, Nucor adopted accounting guidance regarding the consolidation of variable interest entities (“VIEs”). The new guidance requires a qualitative approach to identifying a controlling financial interest in a VIE, and requires ongoing reassessments of whether an entity is a VIE and whether an entity is the primary beneficiary of a VIE. Adoption of this accounting standard had no impact on Nucor’s consolidated financial statements during the three months ended April 3, 2010.

In January 2010, Nucor adopted accounting guidance that requires an entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. Adoption of this accounting standard did not have a material impact on Nucor’s consolidated financial statements.

Recently Issued Accounting Pronouncements - In January 2010, the Financial Accounting Standards Board issued changes to disclosure requirements for fair value measurements. For fair value measurements using significant unobservable inputs (Level 3), the changes require a reporting entity to present separate information about gross purchases, sales, issuances and settlements. These changes are effective for Nucor beginning January 2011. The adoption of this guidance is not expected to have an impact on the consolidated financial statements.

 

2. INVENTORIES: Inventories consist of approximately 47% raw materials and supplies and 53% finished and semi-finished products at April 3, 2010 (48% and 52%, respectively, at December 31, 2009). 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 47% of total inventories as of April 3, 2010 (48% as of December 31, 2009). If the first-in, first-out (FIFO) method of accounting had been used, inventories would have been $480.4 million higher at April 3, 2010 ($456.4 million higher at December 31, 2009). Use of the lower of cost or market methodology reduced inventories by $4.6 million at April 3, 2010 ($9.2 million at December 31, 2009).

 

3. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is recorded net of accumulated depreciation of $4.91 billion at April 3, 2010 ($4.78 billion at December 31, 2009).

 

4. GOODWILL AND OTHER INTANGIBLE ASSETS: The change in the net carrying amount of goodwill for the quarter ended April 3, 2010 by segment is as follows (in thousands):

 

     Steel Mills    Steel Products    Raw Materials    All Other    Total

Balance at December 31, 2009

   $ 268,466    $ 780,628    $ 665,075    $ 88,852    $ 1,803,021

Acquisitions

     —        —        14,841      —        14,841

Translation

     —        13,432      —        —        13,432
                                  

Balance at April 3, 2010

   $ 268,466    $ 794,060    $ 679,916    $ 88,852    $ 1,831,294
                                  

 

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Nucor completed its annual goodwill impairment testing during the fourth quarter of 2009 and concluded that there was no impairment of goodwill for any of our reporting units. The annual evaluation performed in 2009 used forward-looking projections and included significant expected improvements in the future cash flows of two of Nucor’s reporting units, Buildings Group and Steel Trading. As a result of the global economic recession, operating results of each of these reporting units declined significantly in the fourth quarter of 2008 and remained depressed throughout 2009. Nucor expects operating results of these two units to improve when general economic conditions improve. If Nucor’s assessment of the relevant facts and circumstances changes, economic conditions fail to improve, or actual performance in any of these reporting units falls short of expected results, noncash impairment charges may be required. Total goodwill associated with the Buildings Group and Steel Trading reporting units as of April 3, 2010 were $165.3 million and $88.9 million, respectively. An impairment of goodwill may also lead Nucor to record an impairment of other intangible assets. Total finite-lived intangible assets associated with the Buildings Group and Steel Trading reporting units as of April 3, 2010 were $90.8 million and $13.4 million, respectively.

Intangible assets with estimated useful lives of five to 22 years are amortized on a straight-line or accelerated basis and are comprised of the following (in thousands):

 

     April 3, 2010    December 31, 2009
     Gross
Amount
   Accumulated
Amortization
   Gross
Amount
   Accumulated
Amortization

Customer relationships

   $ 942,301    $ 158,697    $ 922,839    $ 142,886

Trademarks and trade names

     123,117      14,737      122,136      13,159

Other

     27,869      14,710      27,869      13,877
                           
   $ 1,093,287    $ 188,144    $ 1,072,844    $ 169,922
                           

Intangible asset amortization expense for the first quarter of 2010 and 2009 was $18.2 million and $18.1 million, respectively. Annual amortization expense is estimated to be $68.6 million in 2010; $64.3 million in 2011; $61.3 million in 2012; $57.8 million in 2013; and $55.7 million in 2014.

 

5. EQUITY INVESTMENTS: The carrying value of our equity investments in domestic and foreign companies was $591.4 million at April 3, 2010 ($582.5 million at December 31, 2009) and is recorded in other assets in the condensed consolidated balance sheets.

In 2008, Nucor acquired a 50% economic and voting interest in Duferdofin Nucor S.r.l., an Italian steel manufacturer. Nucor accounts for the 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 members.

Nucor’s investment in Duferdofin Nucor at April 3, 2010 was $546.6 million ($534.0 million at December 31, 2009). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $83.3 million at April 3, 2010, resulting in a basis difference of $463.3 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 ($325.2 million) and finite-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. Amortization expense and other purchase accounting adjustments associated with the fair value step-up was $5.9 million and $12.3 million in the first quarter of 2010 and 2009, respectively.

 

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During the first quarter of 2010, Duferdofin Nucor repaid €35 million ($48.9 million as of the payment date) of notes receivable that were outstanding with Nucor as of December 31, 2009. Nucor then contributed additional capital in the form of equity of €45 million ($63.7 million as of the contribution date) to the joint venture. Also, Nucor issued an additional note receivable to Duferdofin Nucor with a notional value of €10 million ($13.5 million as of April 3, 2010). The note receivable bears interest at the twelve-month Euro Interbank Offered Rate (Euribor) as of the date of the note plus 1% per year. The interest rate will reset on September 30, 2010 to the Euribor twelve month rate as of that date plus 1% per year. The principal amount is due on January 31, 2016. Accordingly, the note receivable was classified in other assets in the condensed consolidated balance sheets as of April 3, 2010.

Nucor reviews its equity investments for impairment if and when circumstances indicate a potential loss in value of an investment which is other than a temporary decline. In the fourth quarter of 2009, the Company concluded it had a triggering event requiring assessment for impairment of its equity investment in Duferdofin Nucor due to the significant decline in the global demand for steel, which has significantly impacted the financial results of the equity investment. Based on the results of the impairment analysis, the Company determined that the estimated fair value of our investment in Duferdofin Nucor approximated the carrying value as of December 31, 2009. Nucor determines the estimated fair value of our investment in Duferdofin Nucor using a discounted cash flow model, based on a weighted-average of multiple discounted cash flow scenarios. The assumptions that most significantly affect the fair value determination include projected revenues and the discount rate. The Company will continue to monitor trends in the global demand for steel, specifically within the European and North African markets in which Duferdofin Nucor operates. It is reasonably possible that the estimates used in our valuation as of December 31, 2009 could change based on actual performance and result in a determination that there is an other than temporary impairment of our investment.

 

6. CURRENT LIABILITIES: Book overdrafts, included in accounts payable in the condensed consolidated balance sheets, were $53.1 million at April 3, 2010 ($73.7 million at December 31, 2009). Dividends payable, included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, were $114.3 million at April 3, 2010 ($114.2 million at December 31, 2009).

 

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 3, 2010, natural gas swaps covering 28.5 million MMBTUs (extending through December 2012) and foreign currency contracts with a notional value of $4.9 million (extending through May 2010) were outstanding.

 

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

Fair Values of Derivative Instruments

 

    

Balance Sheet Location

   Fair Value at  
      April 3, 2010     Dec. 31, 2009  

Asset derivatives not designated as hedging instruments:

       

Foreign exchange contracts

   Other current assets    $ 19      $ 445   
                   

Liability derivatives designated as hedging instruments:

       

Commodity contracts

   Accrued expenses and other current liabilities    $ (18,100   $ (23,000

Commodity contracts

   Deferred credits and other liabilities      (71,500     (72,900
                   

Total liability derivatives designated as hedging instruments

        (89,600     (95,900

Liability derivatives not designated as hedging instruments:

       

Commodity contracts

   Accrued expenses and other current liabilities      (1,701     (3,665
                   

Total liability derivatives

      $ (91,301   $ (99,565
                   

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

 

     

Statement of

Earnings Location

  Amount of Gain or
(Loss) Recognized
in OCI on
Derivative
(Effective Portion)
    Amount of Gain or
(Loss) Reclassified

from Accumulated
OCI into Earnings
(Effective Portion)
    Amount of Gain or
(Loss) Recognized
in Earnings on
Derivative
(Ineffective Portion)
 
Derivatives in Cash      Three Months (13 weeks) Ended     Three Months (13 weeks) Ended     Three Months (13 weeks) Ended  

Flow Hedging Relationships

     April 3, 2010     April 4, 2009     April 3, 2010     April 4, 2009     April 3, 2010   April 4, 2009  

Commodity contracts

   Cost of products sold   $ (22,648   $ (36,130   $ (6,791   $ (9,139   $ 100   $ (2,700
                                                

Derivatives Not Designated as Hedging Instruments

 

Derivatives Not Designated as Hedging Instruments

   Statement of
Earnings  Location
   Amount of Gain or
(Loss) Recognized in
Earnings on Derivative
 
      Three Months (13 weeks) Ended  
      April 3, 2010    April 4, 2009  

Commodity contracts

   Cost of products sold    $ 105    $ 1,283   

Foreign exchange contracts

   Cost of products sold      85      (491
                  

Total

      $ 190    $ 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 3, 2010 and December 31, 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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Description

         Fair Value Measurements at Reporting Date Using
   Carrying
Amount in
Condensed
Consolidated
Balance Sheets
    Quoted Prices in
Active  Markets for
Identical Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs

(Level 3)

As of April 3, 2010

         

Assets:

         

Cash equivalents

   $ 1,559,830      $ 1,559,830    $ —       

Short-term investments

     340,495        340,495      —       

Foreign exchange contracts

     19        —        19     
                           

Total assets

   $ 1,900,344      $ 1,900,325    $ 19      —  
                           

Liabilities:

         

Commodity contracts

   $ (91,301     —      $ (91,301   —  
                           

As of December 31, 2009

         

Assets:

         

Cash equivalents

   $ 1,907,066      $ 1,907,066    $ —       

Short-term investments

     225,000        225,000      —       

Foreign exchange contracts

     445        —        445     
                           

Total assets

   $ 2,132,511      $ 2,132,066    $ 445      —  
                           

Liabilities:

         

Commodity contracts

   $ (99,565     —      $ (99,565   —  
                           

Fair value measurements for Nucor’s cash equivalents and short-term investments 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.

The fair value of long-term debt, including current maturities, was approximately $3.27 billion at April 3, 2010 ($3.30 billion at December 31, 2009). The fair value estimates were based on readily available market prices of our debt at April 3, 2010 and December 31, 2009, or similar debt with the same maturities, rating and interest rates.

 

9. CONTINGENCIES: 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 of $37.2 million of accrued environmental costs at April 3, 2010 ($37.4 million at December 31, 2009), $10.7 million was classified in accrued expenses and other current liabilities ($15.9 million at December 31, 2009) and $26.5 million was classified in deferred credits and other liabilities ($21.5 million at December 31, 2009).

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.

 

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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 which, in the event of an unfavorable outcome, 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 3, 2010 is as follows (in thousands, except year and per share amounts):

 

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

Number of shares under option:

          

Outstanding at beginning of year

   1,060      $ 21.95      

Exercised

   (113   $ 12.69       $ 3,490

Canceled

   —          —        
              

Outstanding at April 3, 2010

   947      $ 23.06    1.6 years    $ 21,673
              

Options exercisable at April 3, 2010

   947      $ 23.06    1.6 years    $ 21,673
              

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 2010 or 2009. The amount of cash received for the exercise of stock options totaled $1.5 million and $1.0 million in the first quarter of 2010 and 2009, respectively.

Restricted Stock Awards – Nucor’s Senior Officers Long-Term Incentive Plan (the “LTIP”) and Annual Incentive Plan (the “AIP”) 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.

 

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A summary of Nucor’s restricted stock activity under the AIP and LTIP for the first quarter of 2010 is as follows (shares in thousands):

 

     Shares     Grant Date
Fair Value

Restricted stock awards and units:

    

Unvested at beginning of year

   240      $ 50.75

Granted

   131      $ 44.82

Vested

   (213   $ 51.79

Canceled

   —          —  
        

Unvested at April 3, 2010

   158      $ 44.46
        

Shares reserved for future grants

   1,600     
        

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 in both the first quarter of 2010 and 2009. At April 3, 2010, unrecognized compensation expense related to unvested restricted stock was $3.2 million, which is expected to be recognized over a weighted-average period of 1.7 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 of the Board of Directors 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 unit activity for the first quarter of 2010 is as follows (shares in thousands):

 

     Shares     Grant Date
Fair Value

Restricted stock units:

    

Unvested at beginning of year

   1,464      $ 54.69

Granted

   —          —  

Vested

   (44   $ 56.66

Canceled

   (3   $ 52.60
        

Unvested at April 3, 2010

   1,417      $ 54.63
        

Shares reserved for future grants

   15,881     
        

 

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Compensation expense for RSUs was $9.0 million in the first quarter of 2010 ($8.8 million in the first quarter of 2009). As of April 3, 2010, unrecognized compensation expense related to unvested RSUs was $43.7 million, which is expected to be recognized over a weighted-average period of 1.6 years.

 

11. EMPLOYEE BENEFIT PLAN: Nucor has a Profit Sharing and Retirement Savings Plan for qualified employees. Nucor’s expense for these benefits was $6.4 million and $3.7 million in the first quarter of 2010 and 2009, respectively.

 

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

 

     Three Months (13 Weeks) Ended  
     April 3, 2010     April 4, 2009  

Interest expense

   $ 39,335      $ 39,682   

Interest income

     (1,547     (7,317
                

Interest expense, net

   $ 37,788      $ 32,365   
                

 

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, 2008 and 2009 tax years are open to examination by the IRS. The tax years 2005 through 2009 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

 

14. STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME: The following tables reflect the changes in stockholders’ equity attributable to both Nucor and the noncontrolling interests of Nucor’s joint ventures, primarily Nucor-Yamato Steel Company, Nucor Trading S.A. and Barker Steel Company, Inc., of which Nucor owns 51%, 75% and 90%, respectively (in thousands):

 

     Attributable to
Nucor Corporation
    Attributable to
Noncontrolling Interests
    Total  

Stockholders’ equity at December 31, 2009

   $ 7,390,526      $ 193,763      $ 7,584,289   
                        

Comprehensive income (loss):

      

Net earnings

     30,964        10,230        41,194   

Net unrealized loss on hedging derivatives, net of income taxes

     (22,648       (22,648

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

     6,791          6,791   

Foreign currency translation gain (loss)

     (1,694     7        (1,687
                        

Total comprehensive income

     13,413        10,237        23,650   

Stock options exercised

     1,436          1,436   

Issuance of stock under award plans, net of forfeitures

     13,936          13,936   

Amortization of unearned compensation

     600          600   

Dividends declared

     (114,275       (114,275

Distributions to noncontrolling interests

     —          (294     (294
                        

Stockholders’ equity at April 3, 2010

   $ 7,305,636      $ 203,706      $ 7,509,342   
                        

 

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     Attributable to
Nucor Corporation
    Attributable to
Noncontrolling Interests
    Total  

Stockholders’ equity at December 31, 2008

   $ 7,929,204      $ 327,477      $ 8,256,681   
                        

Comprehensive income (loss):

      

Net loss

     (189,645     (880     (190,525

Net unrealized loss on hedging derivatives, net of income taxes

     (36,130       (36,130

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

     9,139          9,139   

Foreign currency translation loss

     (31,802     (20     (31,822
                        

Total comprehensive loss

     (248,438     (900     (249,338

Stock options exercised

     1,053          1,053   

Issuance of stock under award plans, net of forfeitures

     15,455          15,455   

Amortization of unearned compensation

     600          600   

Dividends declared

     (110,624       (110,624

Distributions to noncontrolling interests

     —          (49,339     (49,339
                        

Stockholders’ equity at April 4, 2009

   $ 7,587,250      $ 277,238      $ 7,864,488   
                        

The components of total comprehensive income are as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 3, 2010     April 4, 2009  

Net earnings (loss)

   $ 41,194      $ (190,525

Net unrealized loss on hedging derivatives, net of income taxes

     (22,648     (36,130

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

     6,791        9,139   

Foreign currency translation loss

     (1,687     (31,822
                

Comprehensive income (loss)

     23,650        (249,338

Comprehensive (income) loss attributable to noncontrolling interests

     (10,237     900   
                

Comprehensive income (loss) attributable to Nucor stockholders

   $ 13,413      $ (248,438
                

 

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 The David J. Joseph Company (“DJJ”), a scrap broker and processor; 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 and changes in the LIFO reserve are shown under Corporate/eliminations. Corporate assets primarily include cash and cash equivalents, short-term investments, allowances to eliminate intercompany profit in inventory, fair value of natural gas hedges, deferred income tax assets, federal income taxes receivable, the LIFO reserve, capitalized interest, bond issuance costs and investments in and advances to affiliates.

 

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

 

     Three Months (13 Weeks) Ended  
     April 3, 2010     April 4, 2009  

Net sales to external customers:

    

Steel mills

   $ 2,612,016      $ 1,656,240   

Steel products

     561,035        713,827   

Raw materials

     396,745        236,931   

All other

     85,046        47,321   
                
   $ 3,654,842      $ 2,654,319   
                

Intercompany sales:

    

Steel mills

   $ 366,751      $ 220,548   

Steel products

     9,076        6,020   

Raw materials

     1,925,983        567,964   

All other

     1,927        2,555   

Corporate/eliminations

     (2,303,737     (797,087
                
   $ —        $ —     
                

Earnings (loss) before income taxes and noncontrolling interests:

    

Steel mills

   $ 158,500      $ (226,875

Steel products

     (67,696     (33,576

Raw materials

     32,784        (31,537

All other

     2,738        (10,119

Corporate/eliminations

     (62,290     20,361   
                
   $ 64,036      $ (281,746
                
     April 3, 2010     Dec. 31, 2009  

Segment assets:

    

Steel mills

   $ 5,868,818      $ 5,446,028   

Steel products

     2,767,063        2,707,678   

Raw materials

     2,655,828        2,417,649   

All other

     165,409        138,286   

Corporate/eliminations

     1,345,584        1,862,263   
                
   $ 12,802,702      $ 12,571,904   
                

 

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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 3, 2010     April 4, 2009  

Basic net earnings (loss) per share:

    

Basic net earnings (loss)

   $ 30,964      $ (189,645

Earnings allocated to participating securities

     (507     (369
                

Net earnings (loss) available to common stockholders

   $ 30,457      $ (190,014
                

Average shares outstanding

     315,461        314,319   
                

Basic net earnings (loss) per share

   $ 0.10      ($ 0.60
                

Diluted net earnings (loss) per share:

    

Diluted net earnings (loss)

   $ 30,964      $ (189,645

Earnings allocated to participating securities

     (507     (369
                

Net earnings (loss) available to common stockholders

   $ 30,457      $ (190,014
                

Diluted average shares outstanding:

    

Basic shares outstanding

     315,461        314,319   

Dilutive effect of stock options and other

     767        —     
                
     316,228        314,319   
                

Diluted net earnings (loss) per share

   $ 0.10      ($ 0.60
                

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.

 

17. SUBSEQUENT EVENTS: On April 6, 2010, a wholly owned subsidiary of Nucor acquired a 50% interest in a newly created company, NuMit LLC, for a purchase price of approximately $225.5 million. Our partner in this joint venture is Mitsui & Co. (U.S.A.), Inc. (“Mitsui”), which is a wholly owned subsidiary of Mitsui & Co., Ltd. NuMit will invest in various steel and steel related activities, both in North America and globally. Coinciding with the formation of NuMit was its first investment, Steel Technologies LLC, which owns all of the assets, operations, and business that were held by Mitsui in Steel Technologies, Inc. prior to the joint venture formation. Steel Technologies LLC operates 23 sheet processing facilities throughout the U.S., Canada, and Mexico.

At closing, Nucor extended a $40.0 million loan and a $60.0 million line of credit (of which $54.0 million was drawn down immediately) to Steel Technologies. The note receivable bears interest at the three month London Interbank Offered Rate (LIBOR) plus 90 basis points, and it matures on October 21, 2014. The line of credit bears interest at the one month LIBOR rate plus 70 basis points, and it matures on March 31, 2011. Steel Technologies primarily used the proceeds of the loan and the line of credit to reduce its outstanding indebtedness with Mitsui.

Nucor will account for this investment using the equity method. The transaction is not expected to result in a significant amount of goodwill.

 

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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. The words “believe,” “expect,” “project,” “will,” “should” and similar expressions are intended to identify those forward-looking statements. 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 projected 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 prevailing 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) impairment in the recorded value of inventory, fixed assets, goodwill or other long-lived assets; (6) uncertainties surrounding the global economy, including the severe economic downturn in construction markets and excess world capacity for steel production; (7) fluctuations in currency conversion rates; (8) U.S. and foreign trade policy affecting steel imports or exports; (9) significant changes in laws or government regulations affecting environmental compliance, including legislation and regulations that result in greater regulation of greenhouse gas emissions, which could increase our energy costs and our capital expenditures and operating costs; (10) the cyclical nature of the steel industry; (11) capital investments and their impact on our performance; and (12) 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, 2009.

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, which includes The David J. Joseph Company (“DJJ”), 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 March 2010, DJJ acquired the assets and business of Ocala Recycling LLC, which operates four scrap processing facilities in Florida, including one automobile shredder. Production at the four yards combined totals over 100,000 tons annually. DJJ operates the Ocala Recycling facilities as part of Trademark Metals Recycling LLC.

During the first quarter of 2010, the average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 73%, 46% and 66%, respectively, compared with 45%, 45% and 44%, respectively, in the first quarter of 2009.

 

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Results of Operations

Net Sales Net sales to external customers by segment for the first quarters of 2010 and 2009 were as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 3, 2010    April 4, 2009    % Change  

Steel mills

   $ 2,612,016    $ 1,656,240    58

Steel products

     561,035      713,827    -21

Raw materials

     396,745      236,931    67

All other

     85,046      47,321    80
                

Net sales

   $ 3,654,842    $ 2,654,319    38
                

Net sales for the first quarter of 2010 increased 38% from the first quarter of 2009. Average sales price per ton decreased 7% from $716 in the first quarter of 2009 to $665 in the first quarter of 2010, while total tons shipped to outside customers increased 48% over the same period last year.

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

 

     Three Months (13 Weeks) Ended  
     April 3, 2010    April 4, 2009    % Change  

Steel production

   4,712    2,879    64
            

Outside steel shipments

   4,066    2,433    67

Inside steel shipments

   640    375    71
            

Total steel shipments

   4,706    2,808    68
            

Net sales for the steel mills segment increased 58% over the first quarter of 2009 due to a 67% increase in tons sold to outside customers, partially offset by a 6% decrease in the average sales price per ton from $682 to $643.

Tonnage data for the steel products segment is as follows:

 

     Three Months (13 weeks) Ended  
     April 3, 2010    April 4, 2009    % Change  

Joist production

   59    60    -2

Deck sales

   68    75    -9

Cold finish sales

   111    80    39

Fabricated concrete reinforcing steel sales

   194    208    -7

The 21% decrease in the steel products segment’s sales from the first quarter of 2009 was due to a 23% decrease in average sales price per ton from $1,470 to $1,131, partially offset by a 3% increase in volume.

The sales for the raw materials segment increased 67% from the first quarter of 2009 due to increases in both pricing and volume. In the first quarter of 2010, approximately 88% of outside sales in the raw materials segment were from the brokerage operations of DJJ and approximately 12% of the outside sales were from the scrap processing facilities (74% and 25%, respectively, in the first quarter of 2009).

 

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The “All other” category includes the steel trading businesses. The period over period increase in sales is due to increased volume.

Gross Margins For the first quarter of 2010, Nucor recorded gross margins of $212.8 million (6%), compared to $(124.0) million (-5%) in the first quarter of 2009. The year-over-year increases in dollar and gross margin percentage were the result of the 48% increase in total shipments to outside customers and the following factors:

 

   

In the steel mills segment, the average scrap and scrap substitute cost per ton used decreased 5% from $333 the first quarter of 2009 to $318 in the first quarter of 2010. Although the average sales price per ton decreased 6%, metal margins (the difference between the selling price of steel and the cost of scrap and scrap substitutes) increased over the prior year quarter. In the first quarter of 2009, the sheet mills consumed higher-cost iron units, in particular pig iron inventories, which were purchased prior to the collapse of both the economy and scrap/pig iron pricing in the fourth quarter of 2008. As a result, gross margins in the first quarter of 2009 were decreased.

 

   

Energy costs decreased $10 per ton from the prior year period due to higher production volumes and the positive impact on productivity.

 

   

No charges were incurred to write down inventories to the lower of cost or market in the first quarter of 2010 (a charge of approximately $60 million was incurred in the first quarter of 2009).

The increase in our gross margin was partially offset by a LIFO charge of $24.0 million in the first quarter of 2010, compared with a credit of $105.0 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.)

Also partially offsetting the increase in gross margin were pre-operating and start-up costs of new facilities, which increased to $50.5 million in the first quarter of 2010 compared with $33.2 million in the first quarter of 2009. In 2010, these costs primarily related to the start-up of the SBQ mill in Memphis, Tennessee, and the galvanizing line in Decatur, Alabama.

Marketing, Administrative and Other Expenses Two major components of marketing, administrative and other expenses are freight and profit sharing costs. Unit freight costs increased approximately 3% over the prior year quarter. Profit sharing costs, which are based upon and fluctuate with pre-tax earnings, increased over 2009 due to Nucor’s increased profitability. No profit sharing costs were incurred in the first quarter of 2009 due to Nucor recording a consolidated net loss for the period.

Equity in Losses of Unconsolidated Affiliates Equity method investment losses were $18.4 million and $38.0 million in the first quarter of 2010 and 2009, respectively. The decrease in the equity method investment losses is primarily due to the pre-tax charge of $33.4 million incurred in the first quarter of 2009 to write down inventories to the lower of cost or market at Duferdofin Nucor S.r.l (none in the first quarter of 2010).

Interest Expense Net interest expense for the first quarter of 2010 and 2009 was as follows (in thousands):

 

     Three Months (13 Weeks) Ended  
     April 3, 2010     April 4, 2009  

Interest expense

   $ 39,335      $ 39,682   

Interest income

     (1,547     (7,317
                

Interest expense, net

   $ 37,788      $ 32,365   
                

 

 

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Gross interest income decreased 79% due primarily to a significant decrease in the average interest rate earned on investments.

Noncontrolling Interests Noncontrolling interests represent the income attributable to the noncontrolling partners of Nucor’s joint ventures, primarily Nucor-Yamato Steel Company (“NYS”), Nucor Trading S.A., and Barker Steel Company, Inc., of which Nucor owns 51%, 75% and 90%, respectively. The increase in noncontrolling interests is primarily attributable to the increased earnings of NYS, which were due to the improvement in 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, 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 35.7% in the first quarter of 2010, compared with 32.4% in the first quarter 2009. The changes in the rate between the periods are primarily due to the changes in relative proportions of net income or loss attributable to noncontrolling interests and equity method investments to total pre-tax income or loss. 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 consolidated net earnings of $31.0 million, or $0.10 per diluted share, in the first quarter of 2010 compared to a consolidated loss of $189.6 million, or $0.60 per diluted share, in the first quarter of 2009. Net earnings (loss) as a percentage of net sales were 0.8% in the first quarter of 2010 and (7.1)% in the first quarter of 2009. Return on average stockholders’ equity was 1.7% and (9.5%) in the first quarter of 2010 and 2009, respectively.

Outlook First quarter results showed significant improvement in the operating rates at our sheet and plate mills, as well as our scrap business. Overall, operating performance improved from the beginning of the quarter to the end of the quarter, and we expect the second quarter to be an improvement over our first quarter results. The most challenging markets for our products continue to be those associated with residential and non-residential construction, which continue to show little, if any, strength. This is particularly true for our downstream businesses.

Nucor’s largest exposure to market risk is via our steel mills and steel products segments. Our largest single customer in the first quarter of 2010 represented approximately 4% of sales and consistently pays within terms. We have only a small exposure to the U.S. automotive industry. In the raw materials segment, we are exposed to price fluctuations related to the purchase of scrap steel and iron ore. Our exposure to market risk is mitigated by the fact that our steel mills use a significant portion of the products of this 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 our 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 improvements in demand.

Liquidity and capital resources

Cash used by operating activities was $3.0 million in the first quarter of 2010, compared with cash provided by operating activities of $14.1 million in the first quarter of 2009. The increase in net earnings period over period was more than offset by changes in operating assets and liabilities of $(221.6) million in the current year quarter compared with $70.3 million in the prior year quarter.

The current ratio was 3.5 at the end of the first quarter of 2010 and 4.2 at year-end 2009. Accounts receivable and inventories increased 17% and 24%, respectively, since year-end, while net sales

 

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increased 24% from the fourth quarter of 2009. The increases in accounts receivable and inventories are due to higher sales prices and the increased cost of raw materials in the current year as compared to the fourth quarter of 2009, combined with increased volumes. In the first quarter of 2010, total accounts receivable turned approximately monthly and inventories turned approximately every five to six weeks. These turnover rates are comparable to Nucor’s historical performance, in contrast to the slower rates experienced in 2009. The current ratio was also impacted by the 33% increase in accounts payable, which is primarily attributable to the increased cost of raw materials combined with the 27% increase in steel production over last year’s fourth quarter.

Cash used in investing activities increased $121.7 million over the prior year period primarily due to the purchase of short-term investments. In addition, during the first quarter of 2010, Duferdofin Nucor repaid €35 million ($48.9 million as of the payment date) of notes receivable that were outstanding with Nucor as of December 31, 2009. Nucor then contributed additional capital in the form of equity of €45 million ($63.7 million as of the contribution date) to the joint venture. Also, Nucor issued an additional note receivable to Duferdofin Nucor with a notional value of €10 million ($13.5 million as of April 3, 2010).

Cash used in financing activities decreased $231.6 million from the prior year period primarily due to the repayment of $175.0 million in notes that matured in January 2009. There were no debt maturities in the first quarter of 2010.

Nucor’s conservative financial practices have served us well in the past and are serving us well today. Our cash and cash equivalents and short-term investments position remains robust at $2.0 billion as of April 3, 2010, and our $1.3 billion revolving credit facility is undrawn and does not expire until November 2012. The only long-term debt maturity over the next two years is a $6.0 million industrial development revenue bond maturing this year. Furthermore, 70% of our long-term debt matures in 2017 and beyond. 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, with an A rating from Standard and Poor’s and Moody’s. 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 several notches above the investment grade minimum of BBB-. Accordingly, 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 3, 2010, our funded debt to total capital ratio was 29%, and we were in compliance with all other covenants under our credit facility. No borrowings were outstanding under the credit facility as of April 3, 2010.

In 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 57% from $126.0 million during the first quarter of 2009 to $54.2 million in the first quarter of 2010. Capital expenditures for 2010 are projected to be $400 million.

In February 2010, Nucor’s board of directors declared a quarterly cash dividend on Nucor’s common stock of $0.36 per share payable on May 12, 2010 to stockholders of record on March 31, 2010. This dividend is Nucor’s 148th consecutive quarterly cash dividend.

Funds provided from operations, cash and cash equivalents, short-term investments and new borrowings under 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.

 

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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, 2009.

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 utilizes a raw material surcharge as a component of pricing steel to pass through the cost increases of scrap steel and other raw materials. In periods of stable demand for our products, our surcharge mechanism has worked effectively to reduce the normal time lag in passing through higher raw material costs so that we can maintain our gross margins. When demand for and cost of raw materials is lower, however, the surcharge impacts our sales prices to a lesser extent.

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 3, 2010, accumulated other comprehensive income (loss) includes $89.9 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 3, 2010, 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

   $ 15,400    $ 38,600

Aluminum

     2,015      5,037

Copper

     815      2,039

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.

 

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.

 

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Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting during the quarter ended April 3, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

 

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.

 

Item 6. Exhibits

 

Exhibit No.

 

Description of Exhibit

10   Retirement Separation Waiver and Release Agreement of Joseph A. Rutkowski
12   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
101    Financial statements from the quarterly report on Form 10-Q of Nucor Corporation for the quarter ended April 3, 2010, filed on May 11, 2010, formatted in XBRL: (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.

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/ James D. Frias

      James D. Frias
      Chief Financial Officer, Treasurer
      and Executive Vice President
Dated: May 11, 2010      

 

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NUCOR CORPORATION

List of Exhibits to Form 10-Q – April 3, 2010

 

Exhibit No.

 

Description of Exhibit

10   Retirement Separation Waiver and Release Agreement of Joseph A. Rutkowski
12   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
101    Financial statements from the quarterly report on Form 10-Q of Nucor Corporation for the quarter ended April 3, 2010, filed on May 11, 2010, formatted in XBRL: (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements tagged as blocks of text.

 

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Retirement Seperation Waiver and Release Agreement of Joseph A. Rutkowski

Exhibit 10

RETIREMENT SEPARATION WAIVER AND RELEASE AGREEMENT

This Retirement Separation Waiver and Release Agreement (“Agreement”) is entered into as of the 26 th day of February, 2010, by and between Joseph A. Rutkowski (“Executive”) and Nucor Corporation.

WHEREAS, Executive has spent twenty one (21) years as a Nucor (as defined below) employee, and has most recently been employed as Nucor Corporation’s Executive Vice President of Business Development;

WHEREAS, Executive has decided to retire from Nucor effective February 28, 2010 (the “Effective Date”);

WHEREAS, based upon the Severance Plan (as defined below), Executive shall be eligible to receive certain severance benefits contingent upon his agreement to the covenants set forth in this Agreement and his strict compliance with such covenants;

WHEREAS, pursuant to that certain Executive Employment Agreement by and between Executive and Nucor dated as of April 10, 2001, as amended by an Amendment Agreement dated as of November 7, 2007 (as amended, the “Employment Agreement”), Executive is entitled to certain post-separation benefits in addition to those granted under the Severance Plan provided that Executive adheres to the post-separation restrictive covenants set forth in the Employment Agreement;

WHEREAS, Nucor and Executive desire for this Agreement to, amongst other things, supersede (as of the Effective Date) the terms of the Employment Agreement;

WHEREAS, Executive’s years of experience as an Executive Officer of Nucor give him unique expertise and insight into Nucor’s operations and management; and

WHEREAS, the parties wish to enter into this Agreement during the course of Executive’s employment to set forth Executive’s post-separation benefit opportunities and to protect Nucor’s competitive advantages, confidential trade secrets and goodwill.

NOW, THEREFORE, in consideration of the reasons recited above, the severance and other post-separation benefits to be paid by Nucor to Executive upon termination of his full-time employment with Nucor, the mutual covenants and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and which consideration Executive was not otherwise entitled to receive, Executive and Nucor hereby agree effective as of the Effective Date as follows:

1. Recitals. The above recitals are true and correct and are incorporated herein by reference as if fully set forth herein.

2. Definitions. For purposes of this Agreement the following definitions shall apply:

(a) The term “Business” means the research, manufacture, marketing, sale and/or distribution of, or joint venture, strategic alliance or merger and acquisition activity with respect to any entities that engage in the research, manufacture, marketing, sale and/or distribution of, steel or steel products (including but not limited to flat-rolled steel, steel shapes, structural steel, light gauge steel framing, steel plate, steel joists and girders, steel deck, steel fasteners, metal


building systems, wire rod, welded-wire reinforcement rolls and sheets, cold finished Steel bars and wire, guard rail, fabricated concrete reinforcement bars, and structural welded-wire reinforcement) or steel or steel product inputs (including but not limited to scrap metal and direct reduced iron).

(b) The term “Code” means the Internal Revenue Code of 1986, as amended.

(c) The term “Competing Business” means any business activity (i) that is the same as, or is in direct competition with, any portion of the Business and (ii) in which Executive engaged in during the course of his employment with Nucor.

(d) The term “Confidential Information” shall include all confidential and proprietary information of Nucor, including, without limitation, any of the following information to the extent not generally known to third persons: financial and budgetary information and strategies; plant design, specifications, and layouts; equipment design, specifications, and layouts; product design and specifications; manufacturing processes, procedures, and specifications; data processing or other computer programs; research and development projects; marketing information and strategies; customer lists; vendor lists; information about customer preferences and buying patterns; information about prospective customers, vendors, or business opportunities; information about Nucor’s costs and the pricing structure used in sales to customers; information about Nucor’s overall corporate business strategy; and technological innovations used in Nucor’s business, to the extent that such information does not fall within the definition of Secret Information.

(e) The term “Customer” means the following alternatives:

(i) any and all customers of Nucor with whom Nucor is doing business as of the Effective Date, but if such definition is deemed overbroad by a court of law, then;

(ii) any customer of Nucor with whom Executive or Executive’s direct reports had significant contact or with whom Executive or Executive’s direct reports directly dealt on behalf of Nucor at the time of Executive’s last date of full time employment with Nucor, but if such definition is deemed overbroad by a court of law, then;

(iii) any customer of Nucor with whom Executive had significant contact or with whom Executive directly dealt on behalf of Nucor at the time of Executive’s last date of full time employment with Nucor.

Provided, however, that the term “Customer” shall not include any business or entity that no longer does business with Nucor without any direct or indirect interference by Executive or violation of this Agreement by Executive, and that ceased doing business with Nucor prior to any direct or indirect communication or contact by Executive.

(f) The term “Prospective Customer” means any person or entity who does not currently or has not yet purchased the products or services of Nucor, but who, at the time of Executive’s last date of full-time employment with Nucor has been targeted by Nucor as a potential user of the products or services of Nucor, and whom Executive or his direct reports participated in the solicitation of or on behalf of Nucor.

 

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(g) The term “Nucor” means Nucor Corporation and its direct and indirect subsidiaries and affiliates in existence or planned as of the Effective Date.

(h) The term “Restricted Territory” means Executive’s geographic area of responsibility at Nucor which Executive acknowledges extends to the full scope of Nucor operations throughout North America. “Restricted Territory” therefore consists of the following alternatives reasonably necessary to protect Nucor’s legitimate business interests:

(i) the United States, Canada, and Mexico, where Executive acknowledges Nucor engages in the Business, but if such territory is deemed overbroad by a court of law, then;

(ii) the United States, where Executive acknowledges Nucor engages in the Business, but if such territory is deemed overbroad by a court of law, then;

(iii) any state in the United States located within a three hundred (300) mile radius of a Nucor plant or facility, but if such territory is deemed overbroad by a court of law, then;

(iv) any state in the United States where a Customer or Prospective Customer is located.

(i) The term “Secret Information” means Nucor’s proprietary and confidential information (i) that is not generally known in the Business, which would be difficult for others to acquire or duplicate without improper means, (ii) that Nucor strives to keep secret, and (iii) from which Nucor derives substantial commercial benefit because of the fact that it is not generally known. As used in this Agreement, Nucor’s Secret Information includes, without limitation: (w) Nucor’s process of developing and producing raw material, and designing and manufacturing steel and iron products; (x) Nucor’s process for treating, processing or fabricating steel and iron products; (y) Nucor’s customer lists, non-public financial data, strategic business plans, competitor analysis, sales and marketing data, and proprietary margin, pricing, and cost data; and (z) any other information or data which meets the definition of Trade Secrets.

(j) The term “Severance Period” means the period of time commencing on the Effective Date and terminating twenty four (24) months thereafter.

(k) The term “Trade Secrets” has the meaning assigned to such term by the North Carolina Trade Secrets Protection Act.

3. Post-Retirement Benefits.

(a) Severance Plan. Executive recognizes and agrees that pursuant to the Nucor Corporation Severance Plan for Senior Officers and General Managers (the “Severance Plan”), Executive shall receive certain Severance Benefits (as defined in the Severance Plan) contingent upon his execution of this Agreement and strict compliance with the covenants contained herein. Based on Executive’s (a) January 1, 1989 date of hire, (b) effective retirement date of February 28, 2010 and (c) current annual base salary of Three Hundred Ninety Five Thousand Three Hundred Dollars ($395,300), Executive would be eligible to receive Severance Benefits under the Severance Plan totaling Six Hundred Ninety Seven Thousand Four Hundred Sixty Dollars and Eighty Two Cents ($697,460.82) payable in twenty-four (24) monthly installments of Twenty Nine Thousand Sixty Dollars and Eighty Seven Cents ($29,060.87) (the “Monthly Severance Plan Payments”). Subject to the provisions of Paragraph 3(c) of this Agreement, the payments of the

 

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Monthly Severance Plan Payments shall be made each month following the Effective Date. In the event Executive dies during the Severance Period and provided that Executive was not in breach of his obligations under this Agreement at the time of his death, the remaining Monthly Severance Plan Payments that would have been paid to Executive pursuant to the Severance Plan shall be paid to Executive’s estate in a single sum payment as soon as practicable (but in any event within ninety (90) days) following Executive’s death. All Monthly Severance Plan Payments shall be subject to regular and customary withholding.

(b) Non-Competition Payment.

(i) Contingent upon his execution of this Agreement and strict compliance with the covenants contained herein, Nucor will pay Executive One Hundred Ten Thousand Six Hundred Eighty Four Dollars ($110,684.00) each month (the “Monthly Non-Compete Payments”, and together with the Monthly Severance Plan Payments, collectively, the “Monthly Separation Payments”) for twenty-four (24) months following the Effective Date. Subject to the provisions of Paragraph 3(c) of this Agreement, the payments of the Monthly Non-Compete Payment shall be made each month following the Effective Date. All Monthly Non-Compete Payments shall be subject to regular and customary withholding.

(ii) If Executive dies prior to the Effective Date, Nucor’s obligations to make any payments of the Monthly Non-Compete Payments under this Agreement will automatically terminate and Executive’s estate and executors will have no rights to any payments of the Monthly Non-Compete Payments under this Agreement. If Executive dies during the first twelve months following the Effective Date, then Nucor will pay Executive’s estate the payments of the Monthly Non-Compete Payments through the end of the twelfth (12th) month following the Effective Date. If Executive dies twelve (12) or more months following the Effective Date, then Nucor’s obligations to make any payments of the Monthly Non-Compete Payments will automatically terminate without the necessity of Nucor providing notice (written or otherwise).

(iii) Executive acknowledges and agrees that the payments described in this Paragraph 3(b) (A) are the same payments that Executive would have been entitled to pursuant to Section 4 of the Employment Agreement and (B) are provided in lieu of, and not in addition to, the payments Executive would have been entitled to pursuant to Section 4 of the Employment Agreement.

(c) Compliance with 409A. Because Executive (i) is and will be as of the Effective Date a “specified employee” under Section 409A(a)(2)(B)(i) of the Code and (ii) the Monthly Separation Payments would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code, in order to comply with Section 409A of the Code, the Monthly Separation Payments that would otherwise be payable pursuant to Paragraphs 3(a) and 3(b) of this Agreement during the six (6) month period immediately following the Effective Date shall be accumulated and the Executive’s right to receive payment of such accumulated amount (which such amount shall not accrue interest) will be delayed until the seventh month following the Effective Date.

4. Acknowledgment of Nucor Protectable Interests. Executive acknowledges and agrees that Nucor competes in North America and throughout the world in the Business. Executive further acknowledges and agrees that Nucor has Secret Information and Confidential Information to which he has had access and has used in the course of his employment with Nucor. Executive acknowledges that

 

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Nucor’s Secret Information and Confidential Information are valuable to Nucor and provide it with a competitive advantage in the Business. Executive also acknowledges and agrees that during his employment with Nucor he has had substantial contact and developed goodwill with Nucor’s personnel (including, without limitation, executive officers and senior management of Nucor), customers, vendors and/or suppliers, joint venture and strategic partners, and potential acquisition targets, and that such goodwill is an important and valuable asset of Nucor.

5. Non-Competition Covenant. Executive hereby agrees that for the duration of the Severance Period, Executive shall not, directly or indirectly, within the Restricted Territory:

(a) engage in a Competing Business, whether as an employee, consultant, or in any other capacity;

(b) commence, establish or own (in whole or in part) any Competing Business, whether (i) by establishing a sole proprietorship, (ii) as a partner of a partnership, (iii) as a member of a limited liability company, (iv) as a shareholder of a corporation (except to the extent Executive is the holder of not more than five percent (5%) of any class of the outstanding stock of any company listed on a national securities exchange so long as Executive does not actively participate in the management or business of any such entity) or (v) as the owner of any similar equity interest in any such entity;

(c) provide any public endorsement of, or otherwise lend Executive’s name for use by, any person or entity engaged in a Competing Business; or

(d) engage in work that would inherently call on him in the fulfillment of his duties and responsibilities to reveal, rely upon, or otherwise use Nucor’s Confidential Information or Secret Information.

6. Nonsolicitation. Executive hereby agrees for the duration of the Severance Period, Executive will not, directly or indirectly, within the Restricted Territory, do any of the following:

(a) solicit, contact, or attempt to influence any Customer to limit, curtail, cancel, or terminate any business it transacts with, or products it receives from Nucor;

(b) solicit, contact, or attempt to influence any Prospective Customer to terminate any business negotiations it is having with Nucor, or to otherwise not do business with Nucor;

(c) solicit, contact, or attempt to influence any Customer to purchase products or services from an entity other than Nucor, which are the same or substantially similar to, or otherwise in competition with, those offered to the Customer by Nucor; or

(d) solicit, contact, or attempt to influence any Prospective Customer to purchase products or services from an entity other than Nucor, which are the same or substantially similar to, or otherwise in competition with, those offered to the Prospective Customer by Nucor.

7. Anti-Piracy.

(a) Executive agrees for the duration of the Severance Period, Executive will not, directly or indirectly, encourage, contact, or attempt to induce any employees of Nucor (i) with whom Executive had regular contact with as of the Effective Date, and (ii) who are employed by Nucor at the time of the encouragement, contact or attempted inducement, to end their employment relationship with Nucor.

 

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(b) Executive further agrees for the duration of the Severance Period not to hire for any reason any employees described in Paragraph 7(a) of this Agreement.

8. Confidentiality. Except and only as required by law, Executive shall not, at any time or in any manner, either directly or indirectly, disclose, divulge, reveal, or use any Confidential Information or Secret Information of Nucor that Executive learned of or otherwise acquired during his employment with Nucor. The provisions of this Paragraph 8 shall survive indefinitely.

9. Return of Property. Executive agrees that he shall return any and all Nucor property and information, regardless of medium or format, to Nucor no later than three (3) days following his last day of employment, and Executive shall not retain any copies of any Nucor information. Notwithstanding the foregoing, Executive may retain such Nucor property and information as is specifically agreed to by Nucor’s Chief Executive Officer, provided, however, that any information so retained by Executive shall be deemed Confidential Information and shall be subject to the restrictions set forth in Paragraph 8 of this Agreement.

10. Release. Executive agrees that, in consideration for the payments referenced in Paragraph 3, he, for himself, his heirs, executors, administrators, and assigns, hereby releases, waives, and forever discharges Nucor, its predecessors, successors and assigns, and its officers, directors, employees, agents, representatives and trustees (“Nucor Releasees”), from any and all claims or liabilities of whatever kind or nature which he ever had or which he now has, known or unknown, including, but not limited to, any claims arising under or pursuant to the Employment Agreement or any other contract claims; claims for bonuses, severance pay, employee or fringe benefits; and claims based on any state or federal wage, employment, or common laws, statutes, or amendments thereto, including, but not limited to: (i) any claim under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., or COBRA; (ii) any race, color, religion, sex, or national origin discrimination claims under Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000(e) et seq.; (iii) any claim of disability discrimination under the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12102 et seq.; (iv) any claim of retaliation or wrongful discharge, (v) any age discrimination claims under the Age Discrimination in Employment Act, as amended (“ADEA”), 29 U.S.C. § 621 et seq.; (v) any claim under the Fair Labor Standard Act of 1939 as amended, 29 U.S.C. § 201 et seq.; or (vi) any claim under the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; or any other claims related to or arising out of his employment relationship with Nucor or the termination thereof whether based on contract (including, without limitation, the Employment Agreement), quasi-contract, quantum merit implied contract, tort, wrongful or constructive discharge or any employment related claim. This release and waiver does not apply to claims that (x) Executive may have for incentive compensation earned under or pursuant to the Nucor Corporation Senior Officers Annual Incentive Plan or the Nucor Corporation Senior Officers Long-Term Incentive Plan for his employment with Nucor through the Effective Date, or (y) may arise after the date this Agreement is executed.

Nothing in this Paragraph 10 or elsewhere in this Agreement prevents or prohibits Executive from filing a claim with a government agency such as the United States Equal Employment Opportunity Commission that is responsible for enforcing a law on behalf of the government. However, Executive understands that because he is waiving and releasing all claims for monetary damages and any other forms of personal relief, he may only seek and receive non-financial forms of relief through any such claim.

11. Remedies. Executive agrees that in the event of a breach or threatened breach by Executive of any provision of this Agreement, monetary remedies may not be adequate and Executive

 

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agrees that Nucor is entitled to injunctive relief, without need to post bond or similar security, in lieu of or in addition to, such monetary remedies. In the event that Executive engages in or attempts to engage in any of the conduct prohibited in Paragraphs 5, 6, 7 or 8 of this Agreement or fails to comply with the provisions of Paragraph 9, Nucor shall be entitled, in Nucor’s sole discretion, to (a) cease all Monthly Separation Payments, and Executive shall immediately refund to Nucor any Monthly Separation Payments already paid to him, and/or (b) in addition to any other remedies available at law or in equity, to enforce the provisions of Paragraphs 5, 6, 7, 8 and 9 by temporary, preliminary and permanent injunction to restrain any violation or threatened violation by Executive of any provisions of Paragraphs 5, 6, 7, 8 and 9. Executive further agrees to reimburse Nucor its costs (including, without limitation, attorney’s fees) incurred for to enforce Paragraphs 5, 6, 7, 8 or 9.

12. Cooperation With Legal Matters: Executive agrees that after the Effective Date, he will cooperate with and assist Nucor, upon request and with reasonable notice, by providing information relevant to matters he gained knowledge of or was involved with while employed by meeting with Nucor’s attorneys or other representatives on such matters, and by appearing voluntarily for hearings, depositions, trials, or any regulatory or legal proceedings related to such matters. Executive understands that Nucor will reimburse him for any reasonable expense he incurs related to this cooperation and assistance, but will not be obligated to pay him any additional amounts.

13. Assignability. Neither this Agreement, nor any right or interest hereunder, shall be assignable by Executive, Executive’s beneficiaries, or legal representatives. Nucor, however, retains the right to assign this Agreement. This Agreement shall be binding upon Executive, Executive’s heirs, administrators, and representatives, and shall inure for the benefit of the Nucor Releasees and each of their respective heirs, administrators, representatives, executors, successors, and assigns.

14. Choice of Law and Venue. This Agreement’s validity, interpretation, performance and enforcement shall be construed and governed in accordance with, and by the laws of, the State of North Carolina, the location of Nucor Corporation’s corporate headquarters and Executive’s place of employment prior to the Effective Date. Executive, for himself and his successors and assigns, hereby expressly and irrevocably (a) consents to the exclusive jurisdiction of the state courts of Mecklenburg County, North Carolina for any action arising out of or related to this Agreement; and (b) waives any and all objection to any such action based on venue or forum non conveniens. Executive agrees that Nucor shall have the right to file and enforce any award, order, judgment, or injunction in any appropriate jurisdiction, and Executive waives service of process in connection with the filing and enforcement of the award, order, judgment, or injunction in any foreign jurisdiction and venue in which Nucor seeks to enforce the award, order, judgment, or injunction.

15. Severability. If any part of this Agreement is determined by a court of competent jurisdiction to be invalid in any respect, the parties agree that the court may modify by redaction any provision or part thereof to the extent reasonably necessary to protect Nucor’s legitimate business interests. The remaining provisions shall retain full force and effect.

16. Entire Agreement. This Agreement contains the entire agreement of the parties and supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof, including, without limitation, the Employment Agreement. This Agreement may be modified or amended only by an instrument in writing signed by Executive and Nucor and approved by Nucor’s Board of Directors. The language of this Agreement and all parts shall be construed as a whole and according to its reasonable and fair meaning, and not strictly for or against either party. The parties agree they have jointly drafted this Agreement and agree that any rules requiring construction of this Agreement against its drafter shall not be applied to this Agreement.

 

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17. No Violation of Public Policy; Executive’s Right of Rescission. Executive has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon Nucor under Paragraphs 5, 6, 7, 8, 9 and 11 of this Agreement and acknowledges and agrees that they are reasonable in scope, time, and territory; are designed to eliminate competition which would otherwise be unfair; do not interfere with Executive’s exercise of his inherent skill and experience; are reasonably required to protect the legitimate interests of Nucor; and do not confer a benefit upon Nucor disproportionate to the detriment to Executive. Before executing this Agreement, Executive is advised to consult with an attorney of his choice, at his expense. Executive has seven (7) days after execution hereof in which to revoke the Agreement, and this Agreement shall not become effective and enforceable until the expiration of seven (7) days following its execution by Executive. To revoke this Agreement, Executive should notify the Chief Executive Officer of Nucor, by fax confirmed by certified mail within such seven (7) day period. No attempted revocation after the expiration of such seven (7) day period shall have any effect on the terms of this Agreement.

18. Compliance with Older Workers Benefit Protection Act: In addition to the items noted, acknowledged or discussed in Paragraph 17 above, by signing this Agreement, Executive specifically acknowledges and represents that:

(a) Executive has been given a period of twenty-one days to consider the terms of this Agreement.

(b) The terms of this Agreement are clear and understandable to Executive; and

(c) The benefits Nucor will provide to Executive under this Agreement exceed the benefits that Executive was otherwise entitled to receive as an employee of Nucor.

 

8


IN WITNESS WHEREOF, Executive and Nucor have executed this Agreement as of the date first set forth above.

 

Executive:     

/s/ Joseph A. Rutkowski

  
     Joseph A. Rutkowski   
Nucor Corporation:     

/s/ A, Rae Eagle

  
    

By:  A, Rae Eagle

Its:  Secretary

  
Computation of Ratio of Earnings to Fixed Charges

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

 

     Year-ended December 31,     Three Months  Ended
April 3, 2010
 
     2005     2006     2007     2008     2009    
     (In thousands, except ratios)        

Earnings

            

Earnings/(loss) before income taxes and noncontrolling interests

   $ 2,137,733      $ 2,911,556      $ 2,546,816      $ 3,104,391      $ (413,978   $ 64,036   

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

     (476     17,690        24,618        36,920        82,341        18,377   

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

     36,571        40,351        55,381        146,360        168,317        39,828   

Plus: amortization of capitalized interest

     216        216        216        300        962        558   

Plus: distributed income of equity investees

     —          3,172        8,072        20,117        7,373        —     

Less: interest capitalized

     —          —          (3,700     (10,020     (16,390     (70

Less: pre-tax earnings in noncontrolling interests in subsidiaries that have not incurred fixed charges

     (110,650     (219,121     (293,604     (314,277     (57,865     (10,431
                                                

Total earnings/(loss) before fixed charges

   $ 2,063,394      $ 2,753,864      $ 2,337,799      $ 2,983,791      $ (229,240   $ 112,298   
                                                

Fixed charges

            

Interest cost and amortization of bond issuance and settled swaps

     36,571        40,351        55,052        144,845        166,313        39,405   

Estimated interest on rent expense

     —          —          329        1,515        2,004        423   
                                                

Total Fixed Charges

     36,571        40,351        55,381        146,360        168,317        39,828   
                                                

Ratio of earnings to fixed charges

     56.42        68.25        42.21        20.39        *        2.82   

 

* Earnings for the year ended December 31, 2009 were inadequate to cover fixed charges. The coverage deficiency was $397,557.
Certification of Principal Executive Officer Pursuant to Section 302

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 11, 2010  

/s/ Daniel R. DiMicco

  Daniel R. DiMicco
  Chairman, President and Chief Executive Officer
Certification of Principal Financial Officer Pursuant to Section 302

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, James D. Frias, 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 11, 2010  

/s/ James D. Frias

  James D. Frias
  Chief Financial Officer, Treasurer
  and Executive Vice President
Certification of Principal Executive Officer Pursuant to Section 906

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 3, 2010 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 11, 2010
Certification of Principal Financial Officer Pursuant to Section 906

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, James D. Frias, 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 3, 2010 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/ James D. Frias

Name:   James D. Frias
Date:   May 11, 2010