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 July 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

315,560,705 shares of common stock were outstanding at July 3, 2010.

 

 

 


Table of Contents

Nucor Corporation

Form 10-Q

July 3, 2010

INDEX

 

               Page

Part I

  

Financial Information

  
  

Item 1

  

Financial Statements (Unaudited)

  
      Condensed Consolidated Statements of Earnings - Three Months (13 Weeks) and Six Months (26 Weeks) Ended July 3, 2010 and July 4, 2009    3
      Condensed Consolidated Balance Sheets - July 3, 2010 and December 31, 2009    4
      Condensed Consolidated Statements of Cash Flows - Six Months (26 Weeks) Ended July 3, 2010 and July 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

   23
  

Item 4

  

Controls and Procedures

   24

Part II

  

Other Information

  
  

Item 1A

  

Risk Factors

   24
  

Item 6

  

Exhibits

   25

Signatures

   25

List of Exhibits to Form 10-Q

   26

 

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PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

Nucor Corporation Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010    July 4, 2009     July 3, 2010    July 4, 2009  

Net sales

   $ 4,195,966    $ 2,478,028      $ 7,850,808    $ 5,132,347   
                              

Costs, expenses and other:

          

Cost of products sold

     3,887,929      2,539,904        7,329,976      5,318,228   

Marketing, administrative and other expenses

     107,770      85,124        200,364      172,503   

Equity in losses of unconsolidated affiliates

     7,372      21,801        25,749      59,798   

Interest expense, net

     37,322      31,957        75,110      64,322   
                              
     4,040,393      2,678,786        7,631,199      5,614,851   
                              

Earnings (loss) before income taxes and noncontrolling interests

     155,573      (200,758     219,609      (482,504

Provision for (benefit from) income taxes

     49,355      (72,989     72,197      (164,210
                              

Net earnings (loss)

     106,218      (127,769     147,412      (318,294

Earnings attributable to noncontrolling interests

     15,226      5,568        25,456      4,688   
                              

Net earnings (loss) attributable to Nucor stockholders

   $ 90,992    $ (133,337   $ 121,956    $ (322,982
                              

Net earnings (loss) per share:

          

Basic

   $ 0.29      ($0.43   $ 0.38      ($1.03

Diluted

   $ 0.29      ($0.43   $ 0.38      ($1.03

Average shares outstanding:

          

Basic

     315,849      314,752        315,653      314,532   

Diluted

     316,472      314,752        316,349      314,532   

Dividends declared per share

   $ 0.36    $ 0.35      $ 0.72    $ 0.70   

See notes to condensed consolidated financial statements.

 

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Nucor Corporation Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

 

     July 3, 2010     Dec. 31, 2009  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 801,504      $ 2,016,981   

Short-term investments

     340,495        225,000   

Accounts receivable, net

     1,420,731        1,116,035   

Inventories, net

     1,951,732        1,312,903   

Other current assets

     672,471        511,329   
                

Total current assets

     5,186,933        5,182,248   

Property, plant and equipment, net

     3,903,903        4,013,836   

Goodwill

     1,828,058        1,803,021   

Other intangible assets, net

     886,164        902,922   

Other assets

     883,122        669,877   
                

Total assets

   $ 12,688,180      $ 12,571,904   
                

LIABILITIES

    

Current liabilities:

    

Short-term debt

   $ 2,599      $ 1,748   

Long-term debt due within one year

     —          6,000   

Accounts payable

     887,086        707,038   

Salaries, wages and related accruals

     222,904        154,997   

Accrued expenses and other current liabilities

     399,368        357,274   
                

Total current liabilities

     1,511,957        1,227,057   

Long-term debt due after one year

     3,080,200        3,080,200   

Deferred credits and other liabilities

     640,916        680,358   
                

Total liabilities

     5,233,073        4,987,615   
                

EQUITY

    

Nucor stockholders’ equity:

    

Common stock

     150,094        149,877   

Additional paid-in capital

     1,691,303        1,675,777   

Retained earnings

     7,013,528        7,120,218   

Accumulated other comprehensive loss,
net of income taxes

     (98,346     (41,056

Treasury stock

     (1,510,186     (1,514,290
                

Total Nucor stockholders’ equity

     7,246,393        7,390,526   

Noncontrolling interests

     208,714        193,763   
                

Total equity

     7,455,107        7,584,289   
                

Total liabilities and equity

   $ 12,688,180      $ 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)

 

     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009  

Operating activities:

  

 

Net earnings (loss)

   $ 147,412      $ (318,294

Adjustments:

  

 

Depreciation

     255,262        242,475   

Amortization

     35,855        36,001   

Stock-based compensation

     25,246        31,660   

Deferred income taxes

     4,178        (31,659

Equity in losses of unconsolidated affiliates

     25,749        59,798   

Changes in assets and liabilities (exclusive of acquisitions):

    

Accounts receivable

     (290,542     278,055   

Inventories

     (628,941     1,147,421   

Accounts payable

     178,286        (121,847

Federal income taxes

     (19,886     (285,735

Salaries, wages and related accruals

     72,791        (392,276

Other

     (99,169     (12,647
                

Cash provided by (used in) operating activities

     (293,759     632,952   
                

Investing activities:

  

 

Capital expenditures

     (163,219     (240,428

Investment in and advances to affiliates

     (402,391     (57,904

Repayment of advances to affiliates

     48,885        —     

Disposition of plant and equipment

     15,522        8,610   

Acquisitions (net of cash acquired)

     (63,722     (24,714

Purchases of investments

     (240,495     (136,389

Proceeds from the sale of investments

     125,000        —     
                

Cash used in investing activities

     (680,420     (450,825
                

Financing activities:

  

 

Net change in short-term debt

     852        (2,694

Repayment of long-term debt

     (6,000     (175,000

Issuance of common stock

     1,777        1,518   

Excess tax benefits from stock-based compensation

     (2,200     (700

Distributions to noncontrolling interests

     (10,511     (83,223

Cash dividends

     (228,465     (221,127
                

Cash used in financing activities

     (244,547     (481,226
                

Effect of exchange rate changes on cash

     3,249        4,172   
                

Decrease in cash and cash equivalents

     (1,215,477     (294,927

Cash and cash equivalents - beginning of year

     2,016,981        2,355,130   
                

Cash and cash equivalents - end of six months

   $ 801,504      $ 2,060,203   
                

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.

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 July 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 51% of total inventories as of July 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 $547.4 million higher at July 3, 2010 ($456.4 million higher at December 31, 2009). Use of the lower of cost or market method reduced inventories by $5.8 million at July 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 $5.03 billion at July 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 six months ended July 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

     —        10,196      —        —        10,196
                                  

Balance at July 3, 2010

   $ 268,466    $ 790,824    $ 679,916    $ 88,852    $ 1,828,058
                                  

 

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

 

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 through the second quarter of 2010. 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 or other 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 July 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 July 3, 2010 were $88.5 million and $13.2 million, respectively.

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

 

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

Customer relationships

   $ 940,935    $ 173,953    $ 922,839    $ 142,886

Trademarks and trade names

     123,137      16,285      122,136      13,159

Other

     27,869      15,539      27,869      13,877
                           
   $ 1,091,941    $ 205,777    $ 1,072,844    $ 169,922
                           

Intangible asset amortization expense was $17.7 million and $17.9 million in the second quarter of 2010 and 2009, respectively, and was $35.9 million and $36.0 million in the first six months of 2010 and 2009, respectively. Annual amortization expense is estimated to be $69.0 million in 2010; $64.4 million in 2011; $61.4 million in 2012; $57.9 million in 2013; and $55.8 million in 2014.

 

5. EQUITY INVESTMENTS: The carrying value of our equity investments in domestic and foreign companies was $764.3 million at July 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 July 3, 2010 was $503.8 million ($534.0 million at December 31, 2009). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $74.1 million at July 3, 2010, resulting in a basis difference of $429.7 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 ($303.0 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. Nucor’s 50% share of amortization expense and other purchase accounting adjustments associated with the fair value step-up was $2.8 million and $3.1 million in the second quarter of 2010 and 2009, respectively, and was $5.7 million and $9.3 million in the first six months of 2010 and 2009, respectively.

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 recorded an additional note receivable from Duferdofin Nucor with a notional value of €10 million ($12.5 million as of July 3, 2010). The note receivable bears interest at the

 

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

 

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 July 3, 2010.

In April 2010, Nucor acquired a 50% economic and voting interest in NuMit LLC. NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 23 sheet processing facilities throughout the U.S., Canada and Mexico. Nucor accounts for the investment in NuMit (on a one-month lag basis) under the equity method as control and risk of loss are shared equally between the members. The acquisition did not result in a significant amount of goodwill and intangible assets.

Nucor’s investment in NuMit at July 3, 2010 was $223.1 million, comprised of the purchase price of approximately $221.3 million plus equity method earnings since acquisition. Nucor also has recorded a $40.0 million note receivable from Steel Technologies LLC for a loan made at closing and has extended a $60.0 million line of credit (of which $59.0 million was outstanding at July 3, 2010) 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. As of July 3, 2010, the line of credit bears interest at the one month LIBOR rate plus 70 basis points, and it matures on March 31, 2011. The note receivable was classified in other assets and the line of credit was classified in other current assets in the condensed consolidated balance sheets as of July 3, 2010.

Nucor reviews its equity investments for impairment if and when circumstances indicate a potential loss in value of an investment that is an other than 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. No such changes have occurred as of July 3, 2010.

 

6. CURRENT LIABILITIES: Book overdrafts, included in accounts payable in the condensed consolidated balance sheets, were $94.4 million at July 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 $114.4 million at July 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 July 3, 2010, natural gas swaps covering 17.7 million MMBTUs (extending through December 2012) and foreign currency contracts with a notional value of $7.7 million (extending through August 2010) were outstanding.

 

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

 

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

Fair Values of Derivative Instruments

 

          Fair Value at  
    

Balance Sheet Location

   July 3, 2010     Dec. 31, 2009  

Asset derivatives not designated as hedging instruments:

       

Commodity contracts

   Other current assets    $ 6,198      $ —     

Foreign exchange contracts

   Other current assets      81        445   
                   

Total asset derivatives

      $ 6,279      $ 445   
                   

Liability derivatives designated as hedging instruments:

       

Commodity contracts

   Accrued expenses and other current liabilities    $ (3,000   $ (23,000

Commodity contracts

   Deferred credits and other liabilities      (53,300     (72,900
                   

Total liability derivatives designated as hedging instruments

        (56,300     (95,900

Liability derivatives not designated as hedging instruments:

       

Foreign exchange contracts

   Accrued expenses and other current liabilities      (105  

Commodity contracts

   Accrued expenses and other current liabilities        (3,665
                   

Total liability derivatives

      $ (56,405   $ (99,565
                   

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

Derivatives Designated as Hedging Instruments

 

      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

      July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009     July 3, 2010    July 4, 2009  

Commodity contracts

   Cost of products sold    $ (617   $ 838      $ (9,408   $ (10,689   $ 1,000    $ 300   
                                                  
      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       Six Months (26 weeks) Ended     Six Months (26 weeks) Ended     Six Months (26 weeks) Ended  

Flow Hedging Relationships

      July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009     July 3, 2010    July 4, 2009  

Commodity contracts

   Cost of products sold    $ (23,265   $ (35,292   $ (16,199   $ (19,828   $ 1,100    $ (2,400
                                                  

Derivatives Not Designated as Hedging Instruments

 

          Amount of Gain or
(Loss) Recognized in
Earnings on Derivative
    Amount of Gain or
(Loss) Recognized in
Earnings on Derivative
 

Derivatives Not Designated as Hedging
Instruments

   Statement of
Earnings  Location
   Three Months (13 weeks) Ended     Six Months (26 weeks) Ended  
      July 3, 2010    July 4, 2009     July 3, 2010    July 4, 2009  

Commodity contracts

   Cost of products sold    $ 9,429    $ 931      $ 9,534    $ 2,214   

Foreign exchange contracts

   Cost of products sold      71      (779     156      (1,270
                                 

Total

      $ 9,500    $ 152      $ 9,690    $ 944   
                                 

 

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

 

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 July 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.

 

           Fair Value Measurements at Reporting Date Using

Description

   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 July 3, 2010

         

Assets:

         

Cash equivalents

   $ 724,137      $ 724,137    $ —       

Short-term investments

     340,495        340,495      —       

Foreign exchange and commodity contracts

     6,279        —        6,279     
                           

Total assets

   $ 1,070,911      $ 1,064,632    $ 6,279      —  
                           

Liabilities:

         

Foreign exchange and commodity contracts

   $ (56,405     —      $ (56,405   —  
                           

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 $3.39 billion at July 3, 2010 ($3.30 billion at December 31, 2009). The fair value estimates were based on readily available market prices of our debt at July 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 $36.5 million of accrued environmental costs at July 3, 2010 ($37.4 million at December 31, 2009), $10.0 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) in the condensed consolidated balance sheets.

 

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

 

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.

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 – Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted prior to 2006 were exercisable six months after grant date and have a term of seven years. The stock options granted in 2010 are exercisable at the end of three years and have a term of 10 years. New shares are issued upon exercise of stock options. A summary of activity under Nucor’s stock option plans for the six months ended July 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      

Granted

   242      $ 41.43      

Exercised

   (128   $ 13.74       $ 3,818

Canceled

   —          —        
              

Outstanding at July 3, 2010

   1,174      $ 26.86    3.1 years    $ 13,282
              

Options exercisable at July 3, 2010

   932      $ 23.08    1.3 years    $ 13,282
              

For the 2010 stock option grant, the grant date fair value of $15.50 was calculated using the Black-Scholes option-pricing model with the following assumptions:

 

     2010  

Exercise price

   $ 41.43   

Expected dividend yield

     3.48

Expected stock price volatility

     50.58

Risk-free interest rate

     2.75

Expected life (years)

     6.5   

Compensation expense for stock options was $0.1 million in the second quarter and first six months of 2010 (none in 2009). As of July 3, 2010, unrecognized compensation expense related to options was $3.6 million, which is expected to be recognized over 2.9 years. The amount of cash received from the exercise of stock options totaled $0.3 million and $1.8 million in the second quarter and first half of 2010, respectively.

 

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

 

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

RSUs granted to employees who are eligible for retirement on the date of grant or will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since the 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 six months 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

   462      $ 43.05

Vested

   (684   $ 55.41

Canceled

   (7   $ 50.59
        

Unvested at July 3, 2010

   1,235      $ 49.96
        

Shares reserved for future grants (stock options and RSUs)

   14,789     
        

Compensation expense for RSUs was $13.5 million and $19.5 million in the second quarter of 2010 and 2009, respectively, and $22.5 million and $28.3 million in the first half of 2010 and 2009, respectively. As of July 3, 2010, unrecognized compensation expense related to unvested RSUs was $49.4 million, which is expected to be recognized over a weighted-average period of 2.1 years.

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

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

 

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

 

form of shares of common stock following their termination of employment with Nucor.

A summary of Nucor’s restricted stock activity under the AIP and LTIP for the first six months 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

   (223   $ 49.32

Canceled

   —          —  
        

Unvested at July 3, 2010

   148      $ 44.39
        

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 $1.1 million and $1.9 million in the second quarter of 2010 and 2009, respectively, and was $2.5 million and $3.3 million in the first half of 2010 and 2009, respectively. At July 3, 2010, unrecognized compensation expense related to unvested restricted stock was $2.6 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 $14.5 million and $1.8 million in the second quarter of 2010 and 2009, respectively, and was $20.9 million and $5.5 million in the first half of 2010 and 2009, respectively.

 

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009  

Interest expense

   $ 38,770      $ 35,477      $ 78,105      $ 75,159   

Interest income

     (1,448     (3,520     (2,995     (10,837
                                

Interest expense, net

   $ 37,322      $ 31,957      $ 75,110      $ 64,322   
                                

 

13. INCOME TAXES: Nucor has substantially concluded U.S. federal income tax matters for years through 2006. The 2007, 2008 and 2009 tax years are open to examination by the Internal Revenue Service (“IRS”). The tax years 2007 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):

 

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

 

     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

     121,956        25,456        147,412   

Net unrealized loss on hedging derivatives, net of income taxes

     (23,265     —          (23,265

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

     16,199        —          16,199   

Foreign currency translation gain (loss)

     (50,224     6        (50,218
                        

Total comprehensive income

     64,666        25,462        90,128   

Stock options

     1,855        —          1,855   

Issuance of stock under award plans, net of forfeitures

     16,791        —          16,791   

Amortization of unearned compensation

     1,200        —          1,200   

Dividends declared

     (228,645     —          (228,645

Distributions to noncontrolling interests

     —          (10,511     (10,511
                        

Stockholders’ equity at July 3, 2010

   $ 7,246,393      $ 208,714      $ 7,455,107   
                        
     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 earnings (loss)

     (322,982     4,688        (318,294

Net unrealized loss on hedging derivatives, net of income taxes

     (35,292     —          (35,292

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

     19,828        —          19,828   

Foreign currency translation gain

     54,523        84        54,607   
                        

Total comprehensive income (loss)

     (283,923     4,772        (279,151

Stock options

     1,573        —          1,573   

Issuance of stock under award plans, net of forfeitures

     28,257        —          28,257   

Amortization of unearned compensation

     1,700        —          1,700   

Dividends declared

     (221,593     —          (221,593

Distributions to noncontrolling interests

     —          (83,223     (83,223
                        

Stockholders’ equity at July 4, 2009

   $ 7,455,218      $ 249,026      $ 7,704,244   
                        

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009  

Net earnings (loss)

   $ 106,218      $ (127,769   $ 147,412      $ (318,294

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

     (617     838        (23,265     (35,292

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

     9,408        10,689        16,199        19,828   

Foreign currency translation gain (loss)

     (48,531     86,429        (50,218     54,607   
                                

Comprehensive income (loss)

     66,478        (29,813     90,128        (279,151

Comprehensive income attributable to noncontrolling interests

     (15,225     (5,672     (25,462     (4,772
                                

Comprehensive income (loss) attributable to Nucor stockholders

   $ 51,253      $ (35,485   $ 64,666      $ (283,923
                                

 

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

 

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 method investments in Duferdofin Nucor and NuMit. 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.

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009  

Net sales to external customers:

        

Steel mills

   $ 2,875,338      $ 1,429,284      $ 5,487,354      $ 3,085,524   

Steel products

     737,693        693,935        1,298,728        1,407,762   

Raw materials

     504,080        277,868        900,825        514,799   

All other

     78,855        76,941        163,901        124,262   
                                
   $ 4,195,966      $ 2,478,028      $ 7,850,808      $ 5,132,347   
                                

Intercompany sales:

        

Steel mills

   $ 437,019      $ 207,213      $ 803,770      $ 427,761   

Steel products

     12,106        7,321        21,182        13,341   

Raw materials

     2,390,344        391,899        4,316,327        959,863   

All other

     2,813        2,787        4,740        5,342   

Corporate/eliminations

     (2,842,282     (609,220     (5,146,019     (1,406,307
                                
   $ —        $ —        $ —        $ —     
                                

Earnings (loss) before income taxes and noncontrolling interests:

        

Steel mills

   $ 262,147      $ (205,426   $ 420,647      $ (432,301

Steel products

     (35,295     (17,649     (102,991     (51,225

Raw materials

     53,769        (31,621     86,553        (63,158

All other

     1,830        (3,282     4,568        (13,401

Corporate/eliminations

     (126,878     57,220        (189,168     77,581   
                                
   $ 155,573      $ (200,758   $ 219,609      $ (482,504
                                
     July 3, 2010     Dec. 31, 2009        

Segment assets:

      

Steel mills

   $ 6,288,344      $ 5,446,028     

Steel products

     2,880,757        2,707,678     

Raw materials

     2,719,960        2,417,649     

All other

     144,164        138,286     

Corporate/eliminations

     654,955        1,862,263     
                  
   $ 12,688,180      $ 12,571,904     
                  

 

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

 

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     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009  

Basic net earnings (loss) per share:

        

Basic net earnings (loss)

   $ 90,992      $ (133,337   $ 121,956      $ (322,982

Earnings allocated to participating securities

     (449     (543     (956     (912
                                

Net earnings (loss) available to common stockholders

   $ 90,543      $ (133,880   $ 121,000      $ (323,894
                                

Average shares outstanding

     315,849        314,752        315,653        314,532   
                                

Basic net earnings (loss) per share

   $ 0.29      ($ 0.43   $ 0.38      ($ 1.03
                                

Diluted net earnings (loss) per share:

        

Diluted net earnings (loss)

   $ 90,992      $ (133,337   $ 121,956      $ (322,982

Earnings allocated to participating securities

     (449     (543     (956     (912
                                

Net earnings (loss) available to common stockholders

   $ 90,543      $ (133,880   $ 121,000      $ (323,894
                                

Diluted average shares outstanding:

        

Basic shares outstanding

     315,849        314,752        315,653        314,532   

Dilutive effect of stock options and other

     623        —          696        —     
                                
     316,472        314,752        316,349        314,532   
                                

Diluted net earnings (loss) per share

   $ 0.29      ($ 0.43   $ 0.38      ($ 1.03
                                

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

 

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

Certain statements made in this quarterly report are forward-looking statements that involve risks and uncertainties. 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 and includes Nucor’s equity method investments in Duferdofin Nucor and NuMit LLC. 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 capacity at the four yards combined totals over 100,000 tons annually. DJJ operates the Ocala Recycling facilities as part of Trademark Metals Recycling LLC.

In April 2010, Nucor acquired a 50% economic and voting interest in NuMit LLC for approximately $221.3 million. NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 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 $59.0 million was outstanding at July 3, 2010) to Steel Technologies. Since Nucor accounts for this equity method investment on a one-month lag, only two months of NuMit’s earnings have been included in Nucor’s results for the second quarter of 2010.

 

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The average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 72%, 52% and 72%, respectively, in the first half of 2010, compared with 46%, 47% and 42%, respectively, in the first half of 2009.

Results of Operations

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010    July 4, 2009    % Change     July 3, 2010    July 4, 2009    % Change  

Steel mills

   $ 2,875,338    $ 1,429,284    101   $ 5,487,354    $ 3,085,524    78

Steel products

     737,693      693,935    6     1,298,728      1,407,762    -8

Raw materials

     504,080      277,868    81     900,825      514,799    75

All other

     78,855      76,941    2     163,901      124,262    32
                                

Net sales

   $ 4,195,966    $ 2,478,028    69   $ 7,850,808    $ 5,132,347    53
                                

Net sales for the second quarter of 2010 increased 69% from the second quarter of 2009. Average sales price per ton increased 25% from $602 in the second quarter of 2009 to $755 in the second quarter of 2010, while total tons shipped to outside customers increased 35% from the same period last year. Net sales increased 15% from the first quarter of this year due primarily to a 14% increase in average sales price per ton.

Net sales for the first six months of 2010 increased 53% from last year’s first six months. Average sales price per ton increased 8% from $656 in the first half of 2009 to $710 in the first half of 2010, while total tons shipped to outside customers increased 41% from the same period last year.

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010    July 4, 2009    % Change     July 3, 2010    July 4, 2009    % Change  

Steel production

   4,648    2,964    57   9,360    5,843    60
                        

Outside steel shipments

   3,922    2,569    53   7,988    5,002    60

Inside steel shipments

   675    430    57   1,315    805    63
                        

Total steel shipments

   4,597    2,999    53   9,303    5,807    60
                        

Net sales for the steel mills segment increased 101% from the second quarter of 2009 due to the 53% increase in tons sold to outside customers combined with a 32% increase in the average sales price per ton from $557 to $734.

The 78% increase in sales from the first half of 2009 to the first half of 2010 in the steel mills segment was attributable to the 60% increase in tons sold to outside customers combined with an 11% increase in the average sales price per ton from $617 to $687.

Selected tonnage data for the steel products segment is as follows (in thousands):

 

     Three Months (13 weeks) Ended     Six Months (26 weeks) Ended  
     July 3, 2010    July 4, 2009    % Change     July 3, 2010    July 4, 2009    % Change  

Joist production

   72    65    11   131    125    5

Deck sales

   81    73    11   149    148    1

Cold finish sales

   117    76    54   228    156    46

Fabricated concrete reinforcing steel sales

   266    255    4   460    463    -1

The 6% increase in the steel products segment’s sales for the second quarter was due to a 19% increase in volume, offset by a 10% decrease in the average sales price per ton from $1,299 to $1,174.

 

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The 8% decrease in the steel product segment’s sales for the first half of the year was attributable to the 16% decrease in the average sales price per ton from $1,380 to $1,155, offset by a 12% increase in volume.

The sales for the raw materials segment increased 81% from the second quarter of 2009 to the second quarter of 2010 and increased 75% from the first six months of 2009 to the first six months of 2010 primarily due to increased average sales price per ton and, to a lesser extent, to increased volume. In the second quarter of 2010, approximately 90% of outside sales in the raw materials segment were from the brokerage operations of DJJ and approximately 10% of the outside sales were from the scrap processing facilities (71% and 28%, respectively, in the second quarter of 2009). In the first half of 2010, approximately 89% of outside sales in the raw materials segment were from the brokerage operations of DJJ and approximately 11% of the outside sales were from the scrap processing facilities (73% and 26%, respectively, in the first half of 2009).

The “All other” category includes Nucor’s steel trading businesses. The quarter over quarter increase in sales is due to increased sales price per ton, offset by a decrease in volume. The year over year increase in sales is due to increases in both volume and pricing.

Gross Margins For the second quarter of 2010, Nucor recorded gross margins of $308.0 million (7%), compared to $(61.9) million (-2%) in the second quarter of 2009. The year-over-year dollar and gross margin percentage increases were the result of a 25% increase in the average sales price per ton and the 35% increase in total shipments to outside customers. Additionally, the increases were due to the following factors:

 

   

In the steel mills segment, the average scrap and scrap substitute cost per ton increased 20% from $312 in the second quarter of 2009 to $373 in the second quarter of 2010; however, metal margins (the difference between the selling price of steel and the cost of scrap and scrap substitutes) also increased. In the second 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 second quarter of 2009 were decreased.

 

   

Energy costs decreased $8 per ton from the prior year period due to efficiency improvements derived from increased utilization rates across all product lines.

 

   

In the steel products segment, the average price of raw materials used decreased approximately 5% from the second quarter of 2009 to the second quarter of 2010.

Nucor’s gross margins are significantly impacted by the application of the LIFO method of accounting. LIFO charges or credits for interim periods are based on management’s estimates of both inventory costs and quantities at year-end. The actual amounts will likely differ from these estimated amounts, and such differences may be significant. Annual charges or credits are largely based on the relative changes in cost and quantities year over year, primarily within raw material inventory in the steel mills segment. Gross margin was negatively impacted by a LIFO charge of $67.0 million in the second quarter of 2010, compared with a credit of $125.0 million in last year’s second quarter. The current year LIFO charge reflects management’s expectations of increasing costs and quantities in inventory at December 31, 2010 relative to prior year-end. The LIFO credit in the same period in 2009 was attributable to management’s expectations in the prior year of decreasing costs and quantities in inventory at December 31, 2009 relative to December 31, 2008.

Also partially offsetting the increase in gross margin were increased pre-operating and start-up costs of new facilities, which increased to $43.4 million in the second quarter of 2010, compared with $31.6 million in the second 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.

For the first half of 2010, Nucor recorded gross margins of $520.8 million (7%), compared to ($185.9) million (-4%) in the first half of 2009. The year-over-year dollar and gross margin percentage increases were the result of an 8% increase in the average sales price per ton and the 41% increase in total

 

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shipments to outside customers. Additionally, the increases were due to the following factors:

 

   

In the steel mills segment, the average scrap and scrap substitute cost per ton increased 7% from $322 in the first half of 2009 to $345 in the first half of 2010; however, metal margins also increased.

 

   

Energy costs decreased $9 per ton from the prior year period due to efficiency improvements derived from increased utilization rates across all product lines.

 

   

In the steel products segment, the average price of raw materials used decreased approximately 14% from the first six months of 2009 to the first six months of 2010.

The increase in gross margin was partially offset by a LIFO charge of $91.0 million in the first half of 2010, compared with a LIFO credit of $230.0 million in the first half of 2009. Also partially offsetting the increase in gross margin were increased pre-operating and start-up costs of new facilities, which increased to $93.9 million in the first half of 2010, compared to $64.8 million in the first half of 2009.

Marketing, Administrative and Other Expenses Two major components of marketing, administrative and other expenses are freight and profit sharing costs. Although total freight costs increased 27% from the prior year quarter, unit freight costs increased only 2%. Total freight costs were increased 15% from the first six months of 2009, while unit freight costs increased 2%. Unit freight costs did not increase the same magnitude as total freight costs due to efficiencies created by increased shipments. 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 half of 2009 due to Nucor reporting a consolidated net loss for the period.

Equity in Losses of Unconsolidated Affiliates Equity method investment losses were $7.4 million and $21.8 million in the second quarter of 2010 and 2009, respectively, and were $25.7 and $59.8 million in the first six months of 2010 and 2009, respectively. The decrease in the equity method investment losses is primarily due to the pre-tax charge to write-down inventories to the lower of cost or market at Duferdofin Nucor S.r.l. of $15.4 million in the second quarter of 2009 and $48.8 million in the first half of 2009 (none in 2010).

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

 

     Three Months (13 Weeks) Ended     Six Months (26 Weeks) Ended  
     July 3, 2010     July 4, 2009     July 3, 2010     July 4, 2009  

Interest expense

   $ 38,770      $ 35,477      $ 78,105      $ 75,159   

Interest income

     (1,448     (3,520     (2,995     (10,837
                                

Interest expense, net

   $ 37,322      $ 31,957      $ 75,110      $ 64,322   
                                

In the second quarter of 2010, gross interest expense increased 9% over the prior year primarily due to a decrease in capitalized interest as assets were placed into service. Gross interest income decreased 59% due to a significant decrease in the average interest rate earned on investments combined with a 40% decrease in average investments.

Gross interest expense increased 4% from the first half of 2009 to the first half of 2010 due to a decrease in capitalized interest as assets were placed into service. Gross interest income decreased 72% due to a significant decrease in the average interest rate earned on investments combined with a 21% decrease in average 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

 

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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 half 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 31.7% in the second quarter of 2010 compared with 36.4% in the second quarter of 2009. The effective tax rate in the first six months of 2010 was 32.9% compared with 34.0% in the first six months of 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 has substantially concluded U.S. federal income tax matters for Nucor’s 2005 and 2006 federal income tax returns.

Net Earnings and Return on Equity Nucor reported net earnings of $91.0 million, or $0.29 per diluted share, in the second quarter of 2010 compared to consolidated net loss of $133.3 million, or $0.43 per diluted share, in the second quarter of 2009. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were 2.2% in the second quarter of 2010 and (5.4%) in the second quarter of 2009.

Nucor reported consolidated net earnings of $122.0 million, or $0.38 per diluted share, in the first half of 2010, compared to a consolidated net loss of $323.0 million, or $1.03 per diluted share, in the first half of 2009. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were 1.6% and (6.3%), respectively, in the first half of 2010 and 2009. Return on average stockholders’ equity was approximately 3.3% and (8.3%) in the first half of 2010 and 2009, respectively.

Outlook Second quarter operating results excluding LIFO improved significantly over the first quarter, primarily due to increased margins; however, the continuation of the upward trend experienced through the first half of the year is by no means clear at present. There is a general slowdown taking place across all product lines as the overall economy has entered into a new period of uncertainty. This is the case both in the U.S. and globally. 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 half 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 $293.8 million in the first half of 2010, compared with cash provided by operating activities of $633.0 million in the first half of 2009. The increase in net earnings period over period was more than offset by changes in operating assets and liabilities of ($787.5) million in the first half of the current year compared with $613.0 million in the first half of the prior year.

The current ratio was 3.4 at the end of the second quarter of 2010 and 4.2 at year-end 2009. Accounts receivable and inventories increased 27% and 49%, respectively, since year-end, while quarterly net sales increased 43% 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 six months of 2010, total accounts

 

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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 25% increase in accounts payable, which is primarily attributable to the increased cost of raw materials combined with the 25% increase in steel production over last year’s fourth quarter.

Cash used in investing activities increased $229.6 million over the prior year period primarily due to increased investments in and advances to affiliates, mainly NuMit LLC and Duferdofin Nucor S.r.l. This increase in cash used for investments in affiliates was partially offset by a $77.2 million decrease in capital expenditures.

Cash used in financing activities decreased $236.7 million from the prior year period primarily due to the repayment of $175.0 million in notes that matured in January 2009. The only debt maturity in the first half of 2010 was $6.0 million in industrial revenue bonds. The decrease was also due to the $72.7 million decrease in distributions to noncontrolling interests. These distributions are made based on the mutual agreement of the general partners.

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 $1.14 billion as of July 3, 2010, and our $1.3 billion revolving credit facility is undrawn and does not expire until November 2012. We have no long-term debt maturing until 2012. 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, based upon Nucor’s present ratings, we expect to continue to have access to the capital markets at a reasonable cost of funds for liquidity purposes 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 July 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 July 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. As discussed earlier, capital expenditures decreased 32% from $240.4 million during the first half of 2009 to $163.2 million in the first half of 2010. Capital expenditures for 2010 are projected to be approximately $375 million.

In May 2010, Nucor’s board of directors declared a quarterly cash dividend on Nucor’s common stock of $0.36 per share payable on August 11, 2010 to stockholders of record on June 30, 2010. This dividend is Nucor’s 149th 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.

In order to partially manage exposure to natural gas price volatility, during the second quarter of 2010 Nucor entered into an agreement with a natural gas exploration and production firm that will involve drilling and completing on-shore natural gas wells in the United States over a seven-year period beginning in June 2010. In addition, certain raw material purchase commitments have been revised since year-end to reflect changes in current pricing of certain raw material inputs as compared to prices in effect at December 31, 2009. These contracts include multi-year commitments and minimum annual purchase requirements and are valued at estimated future prices. Changes in estimated pricing on contracts where we have minimum volume commitments can significantly impact our total obligations from period to period.

The following table sets forth, as of July 3, 2010, both the estimated minimum capital obligations

 

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under the natural gas agreement as well as additional incremental raw material purchase commitments since such commitments were presented in our 2009 Annual Report on Form 10-K (in thousands):

 

     Total    2010    2011-2012    2013-2014    2015 and
thereafter

Other unconditional purchase obligations

   $ 665,078    $ 33,254    $ 166,269    $ 199,523    $ 266,032

Additional raw material purchase commitments

     1,173,447      150,690      604,661      358,920      59,176
                                  

Total additional contractual obligations

   $ 1,838,525    $ 183,944    $ 770,930    $ 558,443    $ 325,208
                                  

There were no other significant changes to our contractual commitments as presented in our 2009 Annual Report on Form 10-K.

 

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 July 3, 2010, accumulated other comprehensive income (loss) includes $81.1 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 July 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

   $ 9,800    $ 24,600

Aluminum

     2,892      7,230

Copper

     137      342

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.

 

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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.

Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting during the quarter ended July 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.

 

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Item 6. Exhibits

 

Exhibit No.

  

Description of Exhibit

10    Senior Officers Long-Term Incentive Plan, Amendment No. 1
10.1    2010 Stock Option and Award Plan
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 July 3, 2010, filed on August 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

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: August 11, 2010

 

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NUCOR CORPORATION

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

 

Exhibit No.

  

Description of Exhibit

10    Senior Officers Long-Term Incentive Plan, Amendment No. 1
10.1    2010 Stock Option and Award Plan
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 July 3, 2010, filed on August 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

 

26

Senior Officers Long-Term Incentive Plan, Amend. 1

Exhibit 10

AMENDMENT NO. 1

NUCOR CORPORATION

SENIOR OFFICERS LONG-TERM INCENTIVE PLAN

THIS AMENDMENT NO. 1 (this “Amendment”) to the Nucor Corporation Senior Officers Long-Term Incentive Plan (as amended and restated effective February 18, 2009) (the “Plan”) is adopted as of the 13th day of May, 2010, by NUCOR CORPORATION, a Delaware corporation (the “Company”).

Statement of Purpose

The Company maintains the Plan to provide incentive compensation to senior officers of the Company. The Company desires to amend the Plan to clarify the circumstances under which Performance Awards under the Plan are forfeited in the event an Eligible Employee ceases to be employed as an Eligible Employee.

NOW, THEREFORE, the Company does hereby declare that the Plan is amended as follows:

1. The second paragraph of Section 2.26 of the Plan is amended to read as follows:

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

2. Section 4.1(c) of the Plan is amended by adding the following new Subsection (iv) immediately after Subsection (iii):

(iv) if an Employee ceases for any reason to be an Eligible Employee during a Performance Period prior to the date the Eligible Employee attains age fifty-five (55) (but remains an Employee), the Employee shall not receive any Performance Award under the Plan for the Performance Period.

3. Except as expressly or by necessary implication amended hereby, the Plan shall continue in full force and effect.

 

1


IN WITNESS WHEREOF, the Company has caused this Amendment No. 1 to be executed by its duly authorized officer as of the day and year written above.

 

NUCOR CORPORATION

/s/ James D. Frias

Name:    James D. Frias
Title:   

Chief Financial Officer, Treasurer

and Executive Vice President

 

2

2010 Stock Option and Award Plan

Exhibit 10.1

NUCOR CORPORATION

2010 STOCK OPTION AND AWARD PLAN


TABLE OF CONTENTS

 

         Page
ARTICLE I   INTRODUCTION    1
ARTICLE II   DEFINITIONS    1
ARTICLE III   ELIGIBILITY    3
ARTICLE IV   AWARDS    3

Section 4.1.

  General    3

Section 4.2.

  Stock Options    3

Section 4.3.

  Restricted Stock    4

Section 4.4.

  Restricted Stock Units    4

Section 4.5.

  Stock Appreciation Rights    5

Section 4.6.

  Performance Shares    5

Section 4.7.

  Limitation on Vesting of Certain Awards    6

Section 4.8.

  Restrictive Covenants    6
ARTICLE V   AWARD AGREEMENTS    7

Section 5.1.

  General    7

Section 5.2.

  Required Terms    7
ARTICLE VI   STOCK SUBJECT TO THE PLAN    7

Section 6.1.

  Aggregate Limitation    7

Section 6.2.

  Canceled or Forfeited Awards    7

Section 6.3.

  Shares to be Used    8

Section 6.4.

  Limitations on Individual Awards    8
ARTICLE VII   ADMINISTRATION    8
ARTICLE VIII   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION    8
ARTICLE IX   AMENDMENT AND TERMINATION    9

Section 9.1.

  Amendment of Plan    9

Section 9.2.

  Termination of Plan    9

Section 9.3.

  Procedure for Amendment or Termination    9
ARTICLE X   MISCELLANEOUS    9

Section 10.1.

  Rights of Employees and Directors    9

Section 10.2.

  Compliance with Law    9

Section 10.3.

  Unfunded Status    10

Section 10.4.

  Limits on Liability    10
ARTICLE XI   EFFECTIVE DATE; DURATION OF THE PLAN    10

 

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NUCOR CORPORATION

2010 STOCK OPTION AND AWARD PLAN

ARTICLE I

INTRODUCTION

The Company hereby adopts and establishes the Nucor Corporation 2010 Stock Option and Award Plan to attract and retain Employees and Directors of outstanding competence and to encourage and enable such Employees and Directors to obtain a financial interest in the Company.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall have the following meanings:

(a) “Award” means an award made to a Participant pursuant to Article III.

(b) “Award Agreement” means an agreement described in Article IV between the Company and a Participant setting forth the terms, conditions and limitations applicable to the Award made to the Participant.

(c) “Beneficiary,” with respect to a Participant, means (i) one or more persons as the Participant may designate as primary or contingent beneficiary in a writing delivered to the Company or the Committee or (ii) if there is no such valid designation in effect at the Participant’s death, the Participant’s estate.

(d) “Board” means the Board of Directors of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, and applicable regulations.

(f) “Committee” means (i) with respect to Article VI, Awards to Employees, the administration of such Awards and all other matters related to Awards to Employees, the Compensation and Executive Development Committee of the Board or such other committee or subcommittee as may be designated by the Board and (ii) with respect to Awards to Directors, the administration of such Awards and all other matters related to Awards to Directors, the Board.

(g) “Common Share” means a share of common stock, par value $0.40, of the Company.

(h) “Company” means Nucor Corporation, a Delaware corporation.

(i) “Compete” means to engage in the design, research, development, manufacture, marketing, sale or distribution of products that are the same as, or substantially similar to, products that are being designed, researched, developed, manufactured, marketed, sold or distributed by the Company or a Subsidiary.

(j) “Director” means a person who is a member of the Board and who is not an Employee.

 

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(k) “Disability” means “disability” or “disabled” as defined in any long-term disability plan sponsored by the Company or a Subsidiary in which the Participant participates. In the event the Participant does not participate in any long-term disability plan sponsored by the Company or a Subsidiary means the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. No Participant shall be considered to have a Disability unless he or she furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require.

(l) “Employee” means any person, including a member of the Board, who is employed by the Company or a Subsidiary.

(m) “Fair Market Value” of a Common Share means, on any given date, the closing price of such Common Share as reported on the New York Stock Exchange composite tape on such date, or if the Stock was not traded on the New York Stock Exchange on such day, then on the next preceding day that the Stock was traded on such exchange, all as reported by such source as the Committee may select.

(n) “Participant” means an Employee or Director who is awarded an Award by the Committee.

(o) “Performance Objective” is defined in Section 4.6.

(p) “Performance Period” is defined in Section 4.6.

(q) “Performance Share” means an Award of a unit under Section 4.6 that is valued by reference to the Fair Market Value of a Common Share.

(r) “Plan” means the Nucor Corporation 2010 Stock Option and Award Plan, as set forth herein and as amended from time to time.

(s) “Restricted Stock” means an Award of Common Shares under Section 4.3 that has certain restrictions attached to the ownership thereof.

(t) “Restricted Stock Unit” means an Award of a unit under Section 4.4 that represents the right to receive one Common Share.

(u) “Restricted Stock Unit Account” means the individual bookkeeping account maintained by the Company in the name of a Participant to record the Participant’s Restricted Stock Units and other amounts awarded to the Participant under Section 4.4.

(v) “Stock Appreciation Right” means an Award to benefit from appreciation in the Fair Market Value of a Common Share made pursuant to Section 4.5.

(w) “Stock Option” means a right to purchase a Common Share made pursuant to Section 4.2.

(x) “Subsidiary” means any corporation (other than the Company), limited liability company, or other business organization in an unbroken chain of entities beginning with the

 

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Company in which each of such entities other than the last one in the unbroken chain owns stock, units, or other interests possessing fifty percent (50%) or more of the total combined voting power of all classes of stock, units, or other interests in one of the other entities in that chain.

ARTICLE III

ELIGIBILITY

Awards may be made to any Director or Employee who is designated as a Participant from time to time by the Committee. The Committee shall determine which Employees and Directors shall be Participants, the type of Award to be made to each Participant, and the terms, conditions, and limitations applicable to each Award not inconsistent with the Plan.

ARTICLE IV

AWARDS

Section 4.1. General. Awards shall include, and be limited to, those described in this Article IV. The Committee may make Awards singly, in tandem, or in combination with other Awards, as the Committee may in its sole discretion determine.

Section 4.2. Stock Options. A Stock Option is a right to purchase a specified number of Common Shares at a specified exercise price during such time as the Committee shall determine, subject to the following:

(a) The exercise price per share of any Stock Option shall be no less than the Fair Market Value per Common Share subject to the option on the date such Stock Option is awarded.

(b) A Stock Option may be exercised for all (and not less than all) of the Stock subject to the Stock Option by giving notice of exercise to the Company or an agent designated by the Company to administer the exercise of Stock Options and complying with such other exercise terms and procedures as the Committee may specify.

(c) The term of each Stock Option shall not exceed ten (10) years.

(d) The exercise price of the Stock subject to the Stock Option may be paid, at the discretion of the Committee, by delivery to the Company or its designated agent of an irrevocable written notice of exercise form together with either (i) irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the shares as to which the Stock Option is to be exercised and to deliver the sale or margin loan proceeds directly to the Company to pay the exercise price, (ii) payment in full of the Stock Option exercise price in cash or cash equivalent acceptable to the Committee, or (iii) a sufficient number of Common Shares (delivered by attestation of ownership or actual delivery of one or more share certificates) to pay the exercise price; provided that, any such payment method will not be permitted to the extent to do so would result in additional accounting expense to the Company.

(e) Stock Options awarded to an Employee may be incentive stock options intended to qualify for special tax treatment under Section 422 of the Code, non-qualified stock options not intended to so qualify or a combination of incentive and non-qualified stock options.

 

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Section 4.3. Restricted Stock. Restricted Stock is Stock that is awarded to a Participant subject to such terms, conditions, and restrictions as the Committee deems appropriate, which may include, but are not limited to, restrictions upon the sale, assignment, transfer, or other disposition of the Restricted Stock and requirement of forfeiture of the Restricted Stock upon termination of employment under certain specified conditions. The Committee may provide for the lapse of any such term or condition or waive any such term or condition based on such factors or criteria as the Committee may determine.

Section 4.4. Restricted Stock Units.

(a) A Restricted Stock Unit is a unit awarded to a Participant that represents the Participant’s right to receive one Common Share. Each Restricted Stock Unit awarded to a Participant shall be credited to a Restricted Stock Unit Account established and maintained in the name of such Participant on the books and records of the Company. Each Restricted Stock Unit awarded to a Participant under this Plan shall be evidenced by an Award Agreement with the Company which shall contain the terms and conditions applicable to the Restricted Stock Unit.

(b) Restricted Stock Units awarded to a Participant under the Plan shall become vested in the Participant in accordance with the vesting schedule specified by the Company on the date the Restricted Stock Units are awarded.

(c) The Award Agreement for the Award of Restricted Stock Units shall specify whether dividend equivalents with respect to the Restricted Stock Units shall be paid in cash to the Participant or deemed reinvested in additional Restricted Stock Units. If the dividend equivalents are payable to a Participant in cash, the Company shall pay to the Participant in cash, less applicable payroll and withholding taxes, within thirty (30) days after the payment date of any cash dividend with respect to the Stock, a dividend equivalent payment equal to the number of Restricted Stock Units awarded to the Participant as of the record date for such dividend multiplied by the per share amount of the dividend. If the dividend equivalents are deemed reinvested in additional Restricted Stock Units, the Company shall credit to the Participant’s Restricted Stock Unit Account, within thirty (30) days after the payment date of any cash dividend with respect to the Stock, that number of additional Restricted Stock Units determined by dividing (i) the product of the total number of Restricted Stock Units credited to the Participant’s Restricted Stock Unit Account as of the record date for such dividend multiplied by the per share amount of the dividend by (ii) the Fair Market Value of a Common Share on such record date. All Restricted Stock Units credited to a Participant’s Restricted Stock Unit Account to record the deemed reinvestment of dividend equivalents in accordance with this Section 4.4(c) shall be fully vested when so credited.

(d) Unless an earlier payment date is specified in the Award Agreement for the Participant’s Restricted Stock Units, the vested Restricted Stock Units credited to a Participant’s Restricted Stock Unit Account shall be paid to the Participant, or in the event of the Participant’s death, to the Participant’s Beneficiary, no earlier than fifteen (15) days and no later than ninety (90) days after the date the Participant terminates service as a member of the Board or separates from service as an Employee, as applicable; provided, however, in no event will distribution be made to a Participant who is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) and the regulations thereunder, prior to the date which is six months after such Participant’s separation from service or, if earlier, such Participant’s death. The form of payment shall be one share of the Company’s common stock for each Restricted Stock Unit credited to the vested portion of the Participant’s Restricted Stock Unit Account and cash for any fractional unit.

 

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If permitted under the terms of the Award Agreement for the Participant’s Restricted Stock Units and in accordance with procedures established by the Committee, but in no event later than thirty (30) days after the date an individual initially becomes a Participant under the Plan, the Participant may elect a single sum payment of the Participant’s Restricted Stock Unit Account or payment in installments over a term certain of either three (3) or five (5) years. Any such election shall apply to a Participant’s entire Restricted Stock Unit Account and shall be irrevocable. In the event a Participant fails to make a valid method of payment election, distribution of the Participant’s Restricted Stock Unit Account shall be made in a single sum payment of shares of Company common stock and cash for any fractional unit credited to the Restricted Stock Unit Account.

Section 4.5. Stock Appreciation Rights.

(a) A Stock Appreciation Right is an Award entitling an eligible Participant to receive on the date of redemption an amount equal to the excess of the Fair Market Value of a Common Share on the date of redemption over an amount set by the Committee on the date of the Award that is no less than the Fair Market Value of a Common Share on the date of Award.

(b) Each eligible Participant receiving a Stock Appreciation Right under the Plan shall enter into an Award Agreement with the Company in a form specified by the Committee agreeing to the terms and conditions of the Stock Appreciation Right and such related matters as the Committee shall, in its sole discretion, determine.

(c) The Company shall redeem all of the Stock Appreciation Rights in accordance with the terms and conditions set forth in the Award Agreement. The redemption price shall be equal to the amount described in Section 4.5(a). The Company shall pay the amount due upon the redemption of Stock Appreciation Rights in the form of cash, Stock or a combination thereof (as determined by the Committee); provided, however, any Stock Appreciation Right, including one that entitles the holder to a cash payment on redemption, shall have terms that ensure the Participant shall not incur a tax penalty under Section 409A of the Code. Any Stock used for the payment of Stock Appreciation Rights may be delivered to the Participant subject to any restrictions deemed appropriate by the Committee.

Section 4.6. Performance Shares. Performance Shares may be awarded to a Participant in such amount and upon such terms, and at any time and from time to time, as shall be determined by the Committee. The vesting and payment of Performance Shares shall be contingent upon the degree of attainment of such performance goals (the “Performance Objectives”) over such period (the “Performance Period”) as shall be specified by the Committee at the time the Performance Shares are awarded. The Performance Objectives may be stated with respect to (i) the Company’s pre-tax earnings, (ii) the Company’s pre-tax earnings in relation to non-cash beginning assets (beginning assets less beginning cash and short-term investments), (iii) the achievement by the Company, a Subsidiary or an operating unit of stated objectives with respect to return on equity, earnings per share, total earnings, return on capital or return on assets, (iv) Fair Market Value, (v) revenues, (vi) total stockholder return, (vii) operating earnings or margin, (viii) economic profit or value created, (ix) strategic business criteria consisting of one or more objectives based on meeting specified goals relating to market penetration, geographic business expansion, cost targets, customer or employee satisfaction, human resources management, supervision of litigation or information technology or acquisitions or divestitures of subsidiaries, affiliates or joint ventures, or (x) any combination of the foregoing. The targeted level or levels of performance with respect to such business criteria may be established at such levels and in such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods (e.g., earnings growth), or as a goal compared to the performance of one or more comparable companies or an index covering multiple

 

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companies. The terms and conditions of an Award of Performance Shares shall be evidenced by an appropriate Award Agreement. The value of a Performance Share at any time shall be equal to the Fair Market Value of a Common Share at such time. During the course of a Performance Period, the Committee shall determine the number of Performance Shares as to which the Participant has earned a right to be paid pursuant to the terms of the applicable Award Agreement. The Committee shall pay any earned Performance Shares as soon as practical after they are earned in the form of cash, Stock or a combination thereof (as determined by the Committee) having an aggregate Fair Market Value equal to the value of the earned Performance Shares as of the date they are earned. Any Stock used for the payment of earned Performance Shares may be delivered to the Participant subject to any restrictions deemed appropriate by the Committee.

Section 4.7. Limitation on Vesting of Certain Awards. Subject to Section 4.8, Restricted Stock and Restricted Stock Units awarded to a Participant who is an Employee will vest over a minimum period of three years except in the event of the Participant’s death, Disability or retirement, or in the event of a change in control of the Company or other similar special circumstances. The foregoing notwithstanding, (i) any Restricted Stock and Restricted Stock Units as to which either the Award or vesting is based on, among other things, the achievement of one or more performance conditions generally will vest over a minimum period of one year except in the event of a Participant’s death, Disability or retirement, or in the event of a change in control of the Company or other similar special circumstances, (ii) a maximum of 100 shares of Restricted Stock may be awarded to an Employee who is not an officer without minimum vesting if such award is based on the length of the Employee’s continuous full-time service with the Company and its Subsidiaries and (iii) up to three percent (3%) of the Common Shares authorized under the Plan may be awarded as Restricted Stock or Restricted Stock Units without any minimum vesting requirements. For purposes of this Section 4.7, (i) a performance period that precedes the grant of an Award shall be treated as part of the vesting period if the Participant has been notified promptly after the commencement of the performance period that he or she has the opportunity to earn the Award based on performance and continued service, and (ii) vesting over a three-year period or one-year period will include periodic vesting over such period if the rate of such vesting is proportional (or less rapid) throughout such period.

Section 4.8. Restrictive Covenants.

(a) An Award Agreement may require, as determined by the Committee in its sole discretion, that in the event a Participant, at any time during the Participant’s employment with the Company and for a period of up to two (2) years thereafter, directly or indirectly (whether for compensation or otherwise), alone or as an agent, principal, partner, officer, employee, trustee, director, stockholder or in any other capacity, owns, manages, operates, joins, controls or participates in the ownership, management, operation or control of, or furnishes any capital to, or is connected in any manner with, or provides any services as a consultant for, any business which Competes with the Company or a Subsidiary, the Participant shall (i) immediately forfeit any portion of the Award subject to the Award Agreement that is then outstanding and (ii) return to the Company the economic value of the Award subject to the Award Agreement that was realized or obtained by the Participant since the date that is six (6) months before the date of the Participant’s action as described in this section.

(b) An Award Agreement may also require, as determined by the Committee in its sole discretion, that for a period of up to two (2) years from the date of termination of employment, in the event the Participant who received the Award subject to the Award Agreement, on his or her own behalf or on behalf of any person, firm or company, directly or indirectly, solicits or offers employment to any person who has been employed by the Company or a Subsidiary at any time during the six (6) months immediately preceding such solicitation or

 

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solicits, contacts or attempts to influence any “Customer” or “Prospective Customer” of the Company to alter its business with the Company or to conduct business with another business which Competes with the Company or a Subsidiary, the Participant shall (i) immediately forfeit all of the Award subject to the Award Agreement that is then outstanding and (ii) return to the Company the economic value of the Award subject to the Award Agreement that was realized or obtained by the Participant since the date that is six (6) months before the date of the Participant’s solicitation under this section. “Customer” means any customer of the Company with whom the Participant or the Participant’s direct reports had significant contact during the six (6) month period preceding the Participant’s termination of employment. “Prospective Customer” means any person or entity targeted by the Company as a potential user of the Company’s products or services, and whom the Participant or the Participant’s direct reports participated in the solicitation of during the six (6) month period preceding the Participant’s termination of employment.

ARTICLE V

AWARD AGREEMENTS

Section 5.1. General. Each Award under this Plan shall be evidenced by an Award Agreement setting forth the number of Common Shares subject to the Award and such other terms and conditions applicable to the Award as are determined by the Committee.

Section 5.2. Required Terms. In any event, Award Agreements shall include, at a minimum, explicitly or by reference, the following terms:

(a) An Award may not be assigned, pledged, or otherwise transferred except by will or by the laws of descent and distribution. During the lifetime of a Participant, an Award (including any Stock Option) may be exercised or surrendered only by such Participant.

(b) A provision describing the treatment of an Award in the event of the retirement, Disability, death, or other termination of a Participant’s employment as an Employee or service as a Director, including but not limited to terms relating to the vesting, time for exercise or surrender, forfeiture, or cancellation of an Award in such circumstances.

(c) A provision that a Participant shall have no rights as a stockholder with respect to any Stock subject to an Award until the date the Participant becomes the holder of record of such Stock. Except as provided in Article VIII, no adjustment shall be made for dividends or other rights, unless the Award Agreement specifically requires such adjustment, in which case grants of dividend equivalents or similar rights shall not be considered to be a grant of any other shareholder right.

ARTICLE VI

STOCK SUBJECT TO THE PLAN

Section 6.1. Aggregate Limitation. Subject to the adjustment provisions of Article VIII hereof, beginning on the Effective Date, there is hereby reserved for issuance under the Plan 15,500,000 Common Shares.

Section 6.2. Canceled or Forfeited Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting and make adjustments in the aggregate number of shares available under Section 6.1 above or otherwise specified in the Plan or in any Award

 

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hereunder if the number of Common Shares actually delivered differs from the number of Common Shares previously counted in connection with an Award. Common Shares subject to an Award that is canceled, expired, forfeited, settled in cash or is otherwise terminated without a delivery of Stock to a Participant will again be available for future Awards. Common Shares withheld in payment of the exercise price or taxes relating to an Award or surrendered in payment of any exercise price or taxes relating to an Award shall constitute Common Shares delivered to a Participant and shall not be available for future Awards under the Plan. This Section 6.2 shall apply to the number of shares reserved and available for incentive stock options only to the extent consistent with applicable Treasury Regulations relating to incentive stock options under Section 422 of the Code.

Section 6.3. Shares to be Used. The Common Shares which may be issued pursuant to an Award under the Plan may be authorized but unissued Stock, treasury Stock or Stock that may be acquired, subsequently or in anticipation of the transaction, in the open market to satisfy the requirements of the Plan.

Section 6.4. Limitations on Individual Awards. No Participant who is an Employee may own (directly or indirectly), at the date of an Award under the Plan, more than two percent (2%) of the total combined voting power or value of all classes of stock of the Company or a Subsidiary. No Participant who is a Director may own (directly or indirectly), at the date of an Award under the Plan, more than one percent (1%) of the total combined voting power or value of all classes of stock of the Company or a Subsidiary. The maximum number of Common Shares with respect to which Awards may be awarded to an Employee during a calendar year is 400,000.

ARTICLE VII

ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall have all of the powers necessary to enable it to properly carry out its duties under the Plan. Not in limitation of the foregoing, the Committee shall have the power to construe and interpret the Plan and to determine all questions that shall arise thereunder. The Committee shall have such other and further specified duties, powers, authority and discretion as are elsewhere in the Plan either expressly or by necessary implication conferred upon it. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective performance of its duties, and may delegate to such agents such powers and duties as the Committee may deem expedient or appropriate that are not inconsistent with the intent of the Plan to the fullest extent permitted under Delaware General Corporation Law (“DGCL”) Section 157 and related applicable DGCL Sections. The decision of the Committee or any agent of the Committee upon all matters within the scope of its authority shall be final and conclusive on all persons.

ARTICLE VIII

ADJUSTMENTS UPON CHANGES

IN CAPITALIZATION

In the event of a reorganization, recapitalization, Stock split, Stock dividend, exchange of Stock, combination of Stock, merger, consolidation or any other change in corporate structure of the Company affecting the Stock, or in the event of a sale by the Company of all or a significant part of its assets, or any distribution to its stockholders other than a normal cash dividend, the Committee shall make appropriate adjustment in the number, kind, price and value of shares of Stock authorized by this Plan and any adjustments to outstanding Awards, per person Award limits and performance goals as it determines appropriate so as to prevent dilution or enlargement of rights.

 

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ARTICLE IX

AMENDMENT AND TERMINATION

Section 9.1. Amendment of Plan. The Board has the right, at any time and from time to time, to amend in whole or in part any of the terms and provisions of the Plan and any or all Award Agreements under the Plan to the extent permitted by law for whatever reason(s) the Company may deem appropriate; provided, however, that any amendment is subject to stockholder approval if the amendment (i) increases the aggregate number of Common Shares that may be issued under the Plan (other than an adjustment pursuant to Article VIII), (ii) materially expands the class of individuals eligible to become Participants, (iii) expands the types of awards available under the Plan, (iv) materially extends the term of the Plan, (v) materially changes the method of determining the exercise price of a Stock Option, or (vi) otherwise is considered a “material revision” pursuant to Section 303A.08 of the Listed Company Manual of the New York Stock Exchange (“NYSE”). No amendment shall, without a Participant’s consent, adversely affect any rights of such Participant under any Award outstanding at the time such amendment is made. Without the approval of the stockholders of the Company, neither the Board nor the Committee will amend or replace previously awarded Stock Options or Stock Appreciation Rights in a transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed Company Manual of the NYSE. Neither the Board nor the Committee shall have any authority to waive or modify any other terms of an Award after the Award has been awarded to the extent the waived or modified term would be mandatory under the Plan for any Award newly awarded at the date of the waiver or modification. Notwithstanding the preceding, the Board may amend or modify the Plan or any outstanding Award to the extent necessary to cause the Plan or such Award to comply with the requirements of Sections 409A(a)(2), (3) and (4) of the Code (as amended by the American Jobs Creation Act of 2004) and any rules or regulations issued thereunder by the United States Department of the Treasury.

Section 9.2. Termination of Plan. The Company expressly reserves the right, at any time, to suspend or terminate the Plan and any or all Award Agreements under the Plan to the extent permitted by law for whatever reason(s) the Company may deem appropriate, including, without limitation, suspension or termination as to any Subsidiary, Employee, class of Employees or Director.

Section 9.3. Procedure for Amendment or Termination. Any amendment to the Plan or termination of the Plan shall be made by the Company by resolution of the Board and shall not require the approval or consent of any Subsidiary, Participant, or Beneficiary in order to be effective to the extent permitted by law. Any amendment to the Plan or termination of the Plan may be retroactive to the extent not prohibited by applicable law.

ARTICLE X

MISCELLANEOUS

Section 10.1. Rights of Employees and Directors. Status as an eligible Employee or Director shall not be construed as a commitment that any Award will be made under the Plan to such eligible Employee or Director or to eligible Employees or Directors generally. Nothing contained in the Plan (or in any other documents related to this Plan or to any Award) shall confer upon any Employee or Director any right to continue in the employ or service of the Company or any Subsidiary or constitute any contract or limit in any way the right of the Company to change such person’s compensation or other benefits or to terminate the employment or service of such person with or without cause.

Section 10.2. Compliance with Law. No Stock distributable pursuant to this Plan shall be issued and delivered unless the issuance and delivery complies with all applicable legal requirements

 

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including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as amended from time to time, or any successor statute, the Securities Exchange Act of 1934, as amended from time to time or any successor statute, and the requirements of the market systems or exchanges on which the Company’s Stock may, at the time, be traded or listed.

Section 10.3. Unfunded Status. The Plan shall be unfunded. Neither the Company, any Subsidiary, nor the Board shall be required to segregate any assets that may at any time be represented by Awards made pursuant to the Plan. Neither the Company, any Subsidiary, the Committee, nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan.

Section 10.4. Limits on Liability. Any liability of the Company or any Subsidiary to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan and the Award Agreement. Neither the Company nor any Subsidiary nor any member of the Board or the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken in good faith under the Plan. To the extent permitted by applicable law, the Company shall indemnify and hold harmless each member of the Board and the Committee from and against any and all liability, claims, demands, costs, and expenses (including the costs and expenses of attorneys incurred in connection with the investigation or defense of claims) in any manner connected with or arising out of any actions or inactions in connection with the administration of the Plan except for such actions or inactions which are not in good faith or which constitute willful misconduct.

ARTICLE XI

EFFECTIVE DATE; DURATION OF THE PLAN

The Plan shall be effective as of May 13, 2010 provided it is ratified and approved by the stockholders of the Company on such date. The Plan shall terminate and no Awards may be made under the Plan after June 30, 2020. Awards made on or before June 30, 2020 shall remain valid in accordance with their terms notwithstanding the termination of the Plan on June 30, 2020.

 

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Computation of Ratio of Earnings to Fixed Charges

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

 

     Year-ended December 31,     Six Months  Ended
July 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   $ 219,609   

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

     (476     17,690        24,618        36,920        82,341        25,749   

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        79,053   

Plus: amortization of capitalized interest

     216        216        216        300        962        1,116   

Plus: distributed income of equity investees

     —          3,172        8,072        20,117        7,373        4,923   

Less: interest capitalized

     —          —          (3,700     (10,020     (16,390     (100

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     (25,856
                                                

Total earnings/(loss) before fixed charges

   $ 2,063,394      $ 2,753,864      $ 2,337,799      $ 2,983,791      $ (229,240   $ 304,494   
                                                

Fixed charges

            

Interest cost and amortization of bond issuance and settled swaps

     36,571        40,351        55,052        144,845        166,313        78,205   

Estimated interest on rent expense

     —          —          329        1,515        2,004        848   
                                                

Total Fixed Charges

     36,571        40,351        55,381        146,360        168,317        79,053   
                                                

Ratio of earnings to fixed charges

     56.42        68.25        42.21        20.39        *        3.85   

 

* 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: August 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: August 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 July 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:   August 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 July 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:   August 11, 2010