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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-K

 

 

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2010     Commission file number 1-4119

OR

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

 

 

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)

Registrant’s telephone number, including area code: (704) 366-7000

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange

on which registered

Common stock, par value $0.40 per share   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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

Aggregate market value of common stock held by non-affiliates was approximately $11.72 billion based upon the closing sales price of the registrant’s common stock on the last day of our most recently completed second fiscal quarter, July 3, 2010.

315,900,930 shares of common stock were outstanding at February 18, 2011.

Documents incorporated by reference include: Portions of 2010 Annual Report (Parts I, II and IV), and Notice of 2011 Annual Meeting of Stockholders and Proxy Statement (Part III) to be filed within 120 days after Nucor’s fiscal year end.

 

 

 


Table of Contents

Nucor Corporation

Table of Contents

 

         

Page

PART I

Item 1

   Business    1

Item 1A

   Risk Factors    5

Item 1B

   Unresolved Staff Comments    9

Item 2

   Properties    10

Item 3

   Legal Proceedings    11

Item 4

   Removed and Reserved    11

Executive Officers of the Registrant

   12

PART II

     

Item 5

   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities    14

Item 6

   Selected Financial Data    14

Item 7

   Management’s Discussion and Analysis of Financial Condition and Results of Operations    14

Item 7A

   Quantitative and Qualitative Disclosures about Market Risk    14

Item 8

   Financial Statements and Supplementary Data    15

Item 9

   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    15

Item 9A

   Controls and Procedures    15

Item 9B

   Other Information    15

PART III

     

Item 10

   Directors, Executive Officers and Corporate Governance    16

Item 11

   Executive Compensation    16

Item 12

   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters    16

Item 13

   Certain Relationships and Related Transactions, and Director Independence    16

Item 14

   Principal Accountant Fees and Services    16

PART IV

     

Item 15

   Exhibits and Financial Statement Schedules    17

Signatures    

      21

Index to Financial Statement Schedule

   23

 

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PART I

 

Item 1. Business

Overview

Nucor Corporation and its affiliates (“Nucor” or the “Company”) manufacture steel and steel products. The Company also produces direct reduced iron (“DRI”) for use in the Company’s steel mills. Through The David J. Joseph Company and its affiliates (“DJJ”), which the Company acquired in 2008, the Company also processes ferrous and nonferrous metals and brokers ferrous and nonferrous metals, pig iron, hot briquetted iron (“HBI”) and DRI. Most of the Company’s operating facilities and customers are located in North America, but increasingly, Nucor is doing business outside of North America as well. The Company’s operations include several international trading companies that buy and sell steel and steel products manufactured by the Company and others.

Nucor is North America’s largest recycler, using scrap steel as the primary raw material in producing steel and steel products. In 2010, we recycled approximately 17 million tons of scrap steel.

General Development of our Business in Recent Years

Nucor has employed a multi-pronged growth strategy in recent years that allows for flexibility and the ability to capitalize on growth opportunities as they arise. The four prongs of that growth strategy have been: (1) optimizing existing operations, (2) growing through developing greenfield projects that capitalize on new technologies and unique marketplace opportunities, (3) acquiring other companies that will strengthen Nucor’s position as North America’s most diversified producer of steel and steel products and (4) growing internationally with an emphasis on leveraging strategic partnerships and new technologies.

Optimizing our existing operations has primarily involved targeting a significant portion of our capital expenditures each year on projects that will enhance the productivity and efficiency of our existing facilities. We have also capitalized upon any production downtime during the economic downturn of the past few years to develop new product offerings at our existing operations. Growing through greenfield projects has included the construction of our special bar quality steel mill in Memphis, Tennessee, which we completed in 2009. We also began commercial production in 2009 at a new facility in Blytheville, Arkansas, which uses breakthrough Castrip® technology to strip cast molten steel into near final shape and thickness with minimal hot or cold rolling, allowing lower investment and operating costs. The Castrip technology also reduces the overall environmental impact of producing steel by generating significantly lower emissions than traditional steel producing technologies. In late 2010, we announced that we have selected St. James Parish, Louisiana as the site where we plan to construct a new DRI facility with a capacity of 2,500,000 tons of DRI per year.

The pace at which we have been acquiring other companies slowed dramatically in late 2008, but in the preceding four years we completed numerous acquisitions. Since late 2006 our annual capacity to produce downstream value-added products has more than doubled to over 4.5 million tons through acquisitions of a steel decking producer, fabricators of rebar, cold finished bars and steel grating, a manufacturer of metal buildings and a wire mesh fabricator. The acquisition of DJJ in the spring of 2008 was a key part of our strategy to better manage the supply of ferrous scrap metal, the primary raw material used by our electric arc furnace steel mills.

In 2008 we grew internationally, by opening a European office and entering into a joint investment with Duferco S.A., Duferdofin Nucor S.r.l., which operates a one million tons-per-year steel melt shop with a bloom billet caster in Brescia, Italy and four rolling mills located throughout Italy. The customers for the products produced by Duferdofin Nucor S.r.l. are primarily steel service centers and distributors located in Italy, southern Europe and North Africa.

 

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In 2010, we entered into an agreement with Mitsui & Co. (U.S.A.) to form a newly created company, NuMit LLC, in which we own a 50% economic and voting interest. NuMit LLC owns 100% of the equity interest in Steel Technologies LLC, which operates 23 sheet processing facilities located throughout the United States, Canada and Mexico.

Segments

Nucor reports its results in three segments: steel mills, steel products and raw materials. Net sales to external customers, intercompany sales, depreciation expense, amortization expense, earnings (loss) before income taxes and noncontrolling interests, assets and capital expenditures by segment for each of the three fiscal years in the three-year period ended December 31, 2010 are set forth in Note 22 of the Notes to Consolidated Financial Statements included in Nucor’s 2010 Annual Report, which is hereby incorporated by reference. The steel mills are Nucor’s dominant segment representing approximately 69% of the Company’s sales to external customers in the fiscal year ended December 31, 2010.

Principal Products Produced

In the steel mills segment, Nucor produces sheet steel (hot and cold-rolled), plate steel, structural steel (wide-flange beams, beam blanks and sheet piling) and bar steel (blooms, billets, concrete reinforcing bar, merchant bar and special bar quality). Nucor manufactures steel principally from scrap steel and scrap steel substitutes using electric arc furnaces, continuous casting and automated rolling mills. In the steel products segment, Nucor 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. In the raw materials segment, the Company produces DRI; brokers ferrous and nonferrous metals, pig iron, HBI and DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap metal.

Markets and Marketing

The steel mills segment sells its products primarily to steel service centers, fabricators and manufacturers located throughout the United States, Canada, Mexico and, increasingly, elsewhere in the world. Nucor produces hot-rolled and cold-rolled sheet steel in standard grades and to customers’ specifications while maintaining inventories to fulfill anticipated orders. In 2010, approximately 40% of our sheet steel sales were to contract customers. These contracts permit price adjustments to reflect changes in prevailing raw material costs and typically have terms ranging from six to twelve months. The balance of our sheet steel sales was in the spot market at prevailing prices at the time of sale.

Our plate, structural, reinforcing and merchant bar steel come in standard sizes and grades, whereby we maintain inventory levels to meet our customers’ expected orders. In addition, our bar mill group manufactures hot-rolled special bar quality products to exacting specifications primarily servicing the automotive, energy, agricultural, heavy equipment and transportation sectors. Almost all of our plate, structural, and bar steel sales occur in the spot market at prevailing market prices.

In 2010, approximately 87% of the production by our steel mills segment was sold to external customers. The balance of the steel mill segment’s production went to our downstream joist, deck, rebar fabrication, fastener, metal buildings and cold finish operations.

In the steel products segment, we sell steel joists and joist girders, and steel deck to general contractors and fabricators located throughout the United States that we make to their order. We do not maintain inventories of these finished steel products. The majority of these contracts are firm, fixed-price contracts that are in most cases competitively bid against other suppliers. Longer term supply contracts may permit us to adjust our prices to

 

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reflect changes in prevailing raw materials costs. We sell fabricated reinforcing products only on a construction contract bid basis. These products are used by contractors in constructing highways, bridges, reservoirs, utilities, hospitals, schools, airports, stadiums and high-rise buildings. We manufacture cold finished steel, steel fasteners, steel grating, wire and wire mesh in standard sizes and maintain inventories of these products to fulfill anticipated orders. We sell cold finished steel and steel fasteners primarily to distributors and manufacturers located throughout the United States and Canada.

We market products from the steel mills and steel products segments mainly through in-house sales forces. The markets for these products are tied to capital and durable goods spending and are affected by changes in general economic conditions.

In the raw materials segment, the Company processes ferrous and nonferrous scrap metal for use in Nucor’s steel mills and for sale to various domestic and international external customers. The Company also brokers ferrous and nonferrous metals and scrap substitutes, supplies ferro-alloys, and provides transportation, material handling and other services to users of scrap metals. The primary external customers for ferrous scrap are electric arc furnace steel mills and foundries that use ferrous scrap as a raw material in their manufacturing process. External customers purchasing nonferrous scrap metal include aluminum can producers, secondary aluminum smelters, steel mills and other processors and consumers of various nonferrous metals. We market scrap metal products and related services to our external customers through in-house sales forces. In 2010, approximately 13% of the ferrous and nonferrous scrap tons processed and sold by the raw materials segment were sold to external customers.

The Company’s other operations include international trading companies that buy and sell steel and steel products that Nucor and other steel producers have manufactured.

Backlog

In the steel mills segment, Nucor’s backlog of orders was approximately $1.64 billion and $1.04 billion at December 31, 2010 and 2009, respectively. Nucor’s backlog of orders in the steel products segment was approximately $1.02 billion and $954.6 million at December 31, 2010 and 2009, respectively. Order backlogs for the steel mills segment include orders attributable to Nucor’s downstream businesses. The majority of these orders will be filled within one year. Order backlog within our raw materials segment is not significant because the majority of the raw materials that segment produces are used by internal divisions.

Sources and Availability of Raw Materials

The primary raw materials for our steel mills segment are ferrous scrap and scrap substitutes such as pig iron, DRI and HBI. As of December 31, 2010, DJJ operated 59 scrap yards, and the Company’s annual scrap processing capability was approaching five million tons. DJJ acquires ferrous scrap from numerous sources including manufacturers of products made from steel, industrial plants, scrap dealers, peddlers, auto wreckers and demolition firms. We purchase pig iron as needed from a variety of sources. Nucor operates a DRI plant in Trinidad with a capacity of 1,800,000 metric tons of DRI annually. The primary raw material for our DRI facility in Trinidad is iron ore, which we purchase from various international suppliers. Nucor has announced plans to construct a second DRI facility in the State of Louisiana at a location on the Mississippi river with a capacity of 2,500,000 tons of DRI annually. 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 U.S.-based proven reserves over a seven-year period that began in June 2010. Natural gas generated by this working interest drilling program will be sold to offset our exposure to the volatility of the price of gas consumed by our planned Louisiana DRI facility.

The primary raw material for our steel products segment is steel produced by Nucor’s steel mills.

 

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DJJ generally purchases ferrous and nonferrous scrap for sale to external customers from the same variety of sources it purchases ferrous scrap for use as a raw material in Nucor’s steel mills. DJJ does not purchase a significant amount of scrap metal from a single source or from a limited number of major sources. The availability and price of ferrous scrap are affected by changes in the global supply and demand for steel and steel products. Ferrous scrap and scrap substitutes are our single largest cost of products sold. A key part of our business strategy is to control a significant portion of the supply of high quality metallics needed to operate our steel mills.

Energy Consumption and Costs

Our steel mills are large consumers of electricity and natural gas. Our DRI facility in Trinidad is, and the DRI facility we are planning to construct in Louisiana will be, a large consumer of natural gas. Consequently, we use a variety of strategies to manage our exposure to price risk of natural gas, including cash flow hedges and a working interest agreement with a leading natural gas production firm to drill on-shore natural gas wells in the United States.

Historically, manufacturers in the United States have benefitted from relatively stable and competitive energy costs that have allowed them to compete on an equal footing in the increasingly global marketplace. The availability and prices of electricity and natural gas are influenced today, however, by many factors including changes in supply and demand, advances in drilling technology and increasingly, by changes in public policy relating to energy production and use. Because energy is such a significant cost of products sold for Nucor, we are continually striving to make our operations in all three of our business segments more energy efficient. We also monitor closely developments in public policy relating to energy production and consumption. When appropriate, we work to shape those developments in ways that we believe will allow us to continue to be a competitive producer of steel and steel products in an increasingly competitive global market place.

Competition

We compete in a variety of steel and metal markets, including markets for finished steel products, unfinished steel products, and raw materials. These markets are highly competitive with many firms participating and as a result of this highly competitive environment, we find that we primarily compete on price and service.

Our electric-arc furnace steel mills face many different forms of competition, including integrated steel producers (who use iron ore converted into liquid form in a blast furnace as their basic raw material instead of scrap steel), other electric-arc furnace mills, foreign imports and alternative materials. Our unfinished and finished steel products face domestic competition from both integrated steel producers and other electric-arc furnace mills. Large integrated steel producers have the ability to manufacture a wide variety of products, but they face significantly higher energy costs and are often burdened with higher capital and fixed operating costs. Electric-arc furnace mill producers such as Nucor are sensitive to increases in scrap prices, but tend to have lower capital and fixed operating costs compared with integrated steel producers.

Competition from foreign steel and steel product producers presents unique challenges for us. Imported steel often benefits from government subsidies, either directly or indirectly through government-owned enterprises or government-owned or controlled financial institutions. Foreign imports accounted for approximately 21% of the U.S. steel market in 2010. In particular, competition from steel imported from China, which accounts for more than 40% of the steel produced annually in the world, is a major challenge. Chinese producers, many of which are government-owned in whole or in part, continue to benefit from their government’s manipulation of foreign currency exchange rates and from the receipt of government subsidies, which allows them to sell their products below cost. These distorting trade practices are not only widely recognized as being unfair but also have been challenged successfully as violating world trade rules in some recent instances. One of many recent examples occurred when the United States International Trade Commission mandated an antidumping duty order on imports of certain oil country tubular goods from China because it determined that those products are sold in the United States at less than fair value.

 

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The Chinese unfair trade practices seriously undermine the ability of the Company and other domestic producers to compete on price when left unchallenged. China’s artificially lowered production costs have significantly contributed to the exodus of manufacturing jobs from the United States. When such a flight occurs, Nucor’s customer base is diminished, thereby providing us with fewer opportunities to supply steel to those shuttered businesses. Rigorous trade law enforcement is critical to our ability to maintain our competitive position against foreign producers that engage in unlawful trade practices. Nucor has been active in calling on policymakers to enforce global trade agreements and address the jobs crisis in the United States.

We also experience competition from other materials. Depending on our customers’ end use of our products, there are sometimes other materials, such as concrete, aluminum, plastics, composites and wood that compete with our steel products. When the price of steel relative to other raw materials rises, these alternatives become more attractive to our customers.

Competition in our scrap and raw materials business is also vigorous. The scrap metals market consists of many firms and is highly fragmented. Firms typically compete on price and geographic proximity to the sources of scrap metal.

Employees

Nucor has a simple, streamlined organizational structure to allow our employees to make quick decisions and be innovative. Our organization is highly decentralized, with most day-to-day operating decisions made by our division general managers and their staff. Only 90 employees are located in our executive office. The majority of Nucor’s 20,500 employees are not represented by labor unions.

Available Information

Nucor’s annual report on Form 10-K, quarterly reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports, are available on our website at www.nucor.com, as soon as reasonably practicable after Nucor files these reports electronically with, or furnishes them to, the Securities and Exchange Commission (“SEC”). Except as otherwise stated in these reports, the information contained on our website or available by hyperlink from our website is not incorporated into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC.

 

Item 1A. Risk Factors

Many of the factors that affect our business and operations involve risk and uncertainty. The factors described below are some of the risks that could materially negatively affect our business, financial condition and results of operations.

Recovery from the global recession and credit crisis has and likely will continue to adversely affect our business.

The sluggish pace of the recovery from the deep global recession that began in the United States in December 2007 and officially ended in June 2009 is continuing to have a material adverse effect on demand for our products and consequently the results of our operations, financial condition and cash flows.

Although credit markets have largely stabilized from the height of the financial crisis in the fourth quarter of 2008 and the first half of 2009, the effects of the financial crisis continue to present additional risks to us, our customers and suppliers. In particular, there is no guarantee that the credit markets or liquidity will not once again be restricted. Additionally, stricter lending standards have made it more difficult for some firms to access the credit markets. Although we believe we have adequate access to several sources of contractually committed borrowings and other available credit facilities, these risks could temporarily restrict our ability to borrow money

 

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on acceptable terms in the credit markets and potentially could affect our ability to draw on our credit facility. In addition, restricted access to the credit markets is also continuing to make it difficult or, in some cases, impossible for our customers to borrow money to fund their operations. Their lack of, or limited access to, capital would adversely affect their ability to purchase our products or, in some cases, to pay for our products on a timely basis.

Long-term unemployment for those unemployed for more than six months remains at historically high levels and the housing market and non-residential construction market remain depressed. High unemployment and a weak housing market have an impact on downstream demand for many of our products. Additionally, non-residential construction, including publicly financed state and municipal projects, has slowed significantly due to overcapacity of commercial properties and the reluctance of state and local governments to borrow to spend on capital projects when faced with stagnant or declining tax revenues and increased operating costs.

Our industry is cyclical and both recessions and prolonged periods of slow economic growth could have a material adverse effect on our business.

Demand for most of our products is cyclical in nature and sensitive to general economic conditions. Our business supports cyclical industries such as the commercial construction, energy, appliance and automotive industries. As a result, downturns in the United States economy or any of these industries could materially adversely affect our results of operations, financial condition and cash flows. The global economic recession of 2008/2009 and subsequent anemic economic recovery period, coupled with the lingering effects of the global financial and credit market disruptions, have had a historic negative impact on the steel industry and Nucor. These events contributed to an unprecedented decline in pricing for steel and steel products, weak end-markets and continued depressed demand, resulting in extraordinary volatility in our financial results in the last three years. After reporting record net earnings of $1.83 billion in 2008, we reported a net loss of $293.6 million in 2009, the first in the Company’s history. In 2010, we returned to profitability, reporting net income of $134.1 million, but the economic outlook remains uncertain both in the United States and globally. While we believe that the long-term prospects for the steel industry remain bright, we are unable to predict the duration of the depressed economic conditions that are contributing to reduced demand for our products. Future economic downturns or a prolonged stagnant economy could materially adversely affect our business, results of operations, financial condition and cash flows.

Overcapacity in the global steel industry could increase the level of steel imports, which may negatively affect our business, results of operations and cash flows.

Global steelmaking capacity exceeds global consumption of steel products. During periods of global economic weakness this overcapacity is amplified because of weaker global demand. This excess capacity often results in manufacturers in certain countries exporting significant amounts of steel and steel products at prices that are at or below their costs of production. In some countries the steel industry is subsidized or owned in whole or in part by the government, giving imported steel from those countries certain cost advantages. These imports, which are also affected by demand in the domestic market, international currency conversion rates and domestic and international government actions, can result in downward pressure on steel prices, which could materially adversely affect our business, results of operations, financial condition and cash flows.

In particular, steel production in China, the world’s largest producer and consumer of steel, currently exceeds Chinese demand and in recent years the production growth rate has exceeded the growth rate of demand. This rising overcapacity in China has the potential to result in a further increase in imports of low-priced, unfairly traded steel and steel products to the United States that could put our steel products at a competitive disadvantage. A continuation of this unbalanced growth trend or a significant decrease in China’s rate of economic expansion could result in increasing steel exports from China.

 

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Competition from other producers, imports or alternative materials may have a material adverse effect our business.

We face strong competition from other steel producers and imports that compete with our products on price and service. The steel markets are highly competitive and a number of firms, domestic and foreign, participate in the steel and raw materials markets. Depending on a variety of factors, including raw materials, energy, labor and capital costs, government control of currency exchange rates and government subsidies of foreign steel producers, our business may be materially adversely affected by competitive forces.

In many applications, steel competes with other materials, such as concrete, aluminum, composites, plastic and wood. Increased use of these materials in substitution for steel products could have a material adverse effect on prices and demand for our steel products.

In 2011, automobile producers must begin complying with new Corporate Average Fuel Economy (“CAFE”) mileage requirements for new cars and light trucks that they produce. As automobile producers work to produce vehicles in compliance with these new standards, they may reduce the amount of steel in cars and trucks to improve fuel economy, thereby reducing demand for steel and resulting in further over-supply of steel in North America.

The results of our operations are sensitive to volatility in steel prices and the cost of raw materials, particularly scrap steel.

We rely to an extent on outside vendors to supply us with raw materials, including both scrap and scrap substitutes, that are critical to the manufacture of our products. Although we have vertically integrated our business by constructing our DRI facility in Trinidad and acquiring DJJ in 2008, we still must purchase most of our primary raw material, steel scrap, from numerous other sources located throughout the United States. Although we believe that the supply of scrap and scrap substitutes is adequate to operate our facilities, purchase prices of these critical raw materials are volatile and are influenced by changes in scrap exports in response to changes in the scrap demands of our global competitors. At any given time, we may be unable to obtain an adequate supply of these critical raw materials with price and other terms acceptable to us. The availability and prices of raw materials may also be negatively affected by new laws and regulations, allocation by suppliers, interruptions in production, accidents or natural disasters, changes in exchange rates, worldwide price fluctuations, and the availability and cost of transportation. Many countries that export steel into our markets restrict the export of scrap, protecting the supply chain of some foreign competitors. This trade practice creates artificial competitive advantage for foreign producers that could limit our ability to compete in the U.S. market.

If our suppliers increase the prices of our critical raw materials, we may not have alternative sources of supply. In addition, to the extent that we have quoted prices to our customers and accepted customer orders for our products prior to purchasing necessary raw materials, we may be unable to raise the price of our products to cover all or part of the increased cost of the raw materials, although we have successfully used a raw material surcharge in the steel mills segment since 2004. Also, if we are unable to obtain adequate and timely deliveries of our required raw materials, we may be unable to timely manufacture sufficient quantities of our products. This could cause us to lose sales, incur additional costs and suffer harm to our reputation.

Changes in the availability and cost of electricity and natural gas are subject to volatile market conditions that could adversely affect our business.

Our steel mills are large consumers of electricity and natural gas. We rely upon third parties for our supply of energy resources consumed in the manufacture of our products. The prices for and availability of electricity, natural gas, oil and other energy resources are subject to volatile market conditions. These market conditions often are affected by weather, political and economic factors beyond our control, and we may be unable to raise the price of our products to cover increased energy costs. Disruptions in the supply of our energy resources could

 

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temporarily impair our ability to manufacture our products for our customers. Increases in our energy costs resulting from regulations that are not applicable across the entire steel market could materially adversely affect our business, results of operations, financial condition and cash flows.

Our steelmaking processes, and the manufacturing processes of many of our suppliers and customers, are energy intensive and generate carbon dioxide and other “Greenhouse Gasses” (“GHGs”), and regulation of GHGs, through new regulations or legislation in an onerous form, could have a material adverse impact on our results of operations, financial condition and cash flows.

Carbon is an essential raw material in Nucor’s production processes. As a carbon steel producer, Nucor will be affected, both directly and indirectly, if Congress passes legislation or the United States Environmental Protection Agency (“USEPA”) adopts standards intended to regulate GHG emissions. Cap-and-trade legislation designed to curb emissions of GHGs passed in the House of Representatives in 2009, but similar legislation failed to pass in the Senate in 2010. Several states have already adopted, and other states may in the future adopt, legislation or regulations implementing state-wide or in some cases regional cap-and-trade systems that apply to some or all industries that emit GHGs. To the extent that these programs cause an increase in the cost of energy they will have an impact on Nucor’s ability to operate in those regions.

The USEPA announced in December 2010 a timetable for issuing new rules under the Clean Air Act that will limit GHG emissions from new and refurbished power plants and new oil refineries with target dates of May and November 2012 for adopting final rules. Rules for existing plants and refineries would be issued by the EPA at an unspecified date thereafter. If the proposed regulations for power generation are adopted in a form that requires deep reductions in GHG emissions, we could incur increased indirect costs to manufacture our products as such regulations would result in an increased cost of the energy, primarily electricity, which we use extensively in the steelmaking process. Until all proposed GHG emission regulations are adopted in final form and all legal challenges to them, including the authority of the USEPA to adopt them, have been resolved, however, we cannot reliably estimate their impact on our financial condition, operating performance or ability to compete. Because some foreign steel producers will not be subject to these same indirect cost increases, our products could be at a further competitive disadvantage. In addition to increased costs of production, we could also incur costs to defend and resolve legal claims and other litigation related to GHG regulations and the alleged impact of our operations on climate change.

We plan to continue to implement our acquisition strategy and may encounter difficulties in integrating businesses we acquire.

We plan to continue to seek attractive opportunities to acquire businesses, enter into joint ventures and make other investments that are complementary to our existing strengths. Realizing the anticipated benefits of acquisitions or other transactions will depend on our ability to operate these businesses and integrate them with our operations and to cooperate with our strategic partners. Our business, results of operations, financial condition and cash flows could be materially adversely affected if we are unable to successfully integrate these businesses.

In addition, we may enter into joint ventures or acquisitions located outside the U.S., which may be adversely affected by foreign currency fluctuations, changes in economic conditions and changes in local government regulations and policies.

Our operations are subject to business interruptions and casualty losses.

The steelmaking business is subject to numerous inherent risks, particularly unplanned events such as explosions, fires, other accidents, natural or man-made disasters, acts of terrorism, inclement weather and transportation interruptions. While our insurance coverage could offset losses relating to some of those types of events, our results of operations and cash flows could be adversely impacted to the extent any such losses are not covered by our insurance.

 

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Our business requires substantial capital investment and maintenance expenditures, and our capital resources may not be adequate to provide for all of our cash requirements.

Our operations are capital intensive. For the five-year period ended December 31, 2010, our total capital expenditures, excluding acquisitions, were approximately $2.61 billion. Our business also requires substantial expenditures for routine maintenance. Although we expect requirements for our business needs, including the funding of capital expenditures, debt service for financings and any contingencies will be financed by internally generated funds or from borrowings under our $1.3 billion unsecured revolving credit facility, we cannot assure you that this will be the case. Additional acquisitions could require financing from external sources.

Environmental compliance and remediation could result in substantially increased costs and materially adversely impact our competitive position.

Our operations are subject to numerous federal, state and local laws and regulations relating to protection of the environment, and we, accordingly, make provision in our financial statements for the estimated costs of compliance. These laws are becoming increasingly stringent, resulting in inherent uncertainties in these estimates. To the extent that competitors, particularly foreign steel producers and manufacturers of competitive products, are not required to incur equivalent costs, our competitive position could be materially adversely impacted.

Changes in foreign currency may adversely affect our financial results.

Because of our international expansion efforts, we are exposed to changes in foreign exchange rates. Generally, each of our foreign operations both produces and sells in its local currency, limiting our exposure to foreign currency transactions. We monitor our exposures and, from time to time, may use forward currency contracts to hedge certain forecasted currency transactions. In addition to potential transaction losses, our reported results of operations and financial position could be negatively affected by exchange rates when the activities and balances of our foreign operations are translated into U.S. dollars for financial reporting purposes.

The accounting treatment of equity method investments, goodwill and other long-lived assets could result in future asset impairments, which would reduce our earnings.

We periodically test our equity method investments, goodwill and other long-lived assets to determine whether their estimated fair value is less than their value recorded on our balance sheet. The results of this testing for potential impairment may be adversely affected by the continuing uncertain market conditions for the steel industry, as well as changes in interest rates and general economic conditions. If we determine that the fair value of any of these long-lived assets is less than the value recorded on our balance sheet, we will incur a non-cash impairment loss that will negatively impact our results of operations.

Tax increases and changes in tax rules could adversely affect our financial results.

The steel industry and our business are sensitive to changes in taxes. As a company based in the U.S., Nucor is more exposed to the effects of changes in U.S. tax laws than some of our major competitors. Our provision for income taxes and cash tax liability in the future could be adversely affected by changes in U.S. tax laws. Potential changes that would adversely affect us include, but are not limited to, repealing LIFO (last-in, first-out treatment of inventory) and decreasing the ability of U.S. companies to receive a tax credit for foreign taxes paid or to defer the U.S. deduction of expenses in connection with investments made in other countries.

 

Item 1B. Unresolved Staff Comments

None.

 

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Item 2. Properties

Our principal operating facilities by segment are as follows:

 

Location

   Approximate
square footage

of facilities
    

Principal products

Steel mills:

     

Blytheville, Arkansas

     2,550,000       Steel shapes, flat-rolled steel

Crawfordsville, Indiana

     2,120,000       Flat-rolled steel

Berkeley County, South Carolina

     2,110,000       Flat-rolled steel, steel shapes

Decatur, Alabama

     2,000,000       Flat-rolled steel

Hickman, Arkansas

     1,420,000       Flat-rolled steel

Norfolk, Nebraska

     1,400,000       Steel shapes

Plymouth, Utah

     1,190,000       Steel shapes

Hertford County, North Carolina

     1,090,000       Steel plate

Jewett, Texas

     1,080,000       Steel shapes

Darlington, South Carolina

     850,000       Steel shapes

Seattle, Washington

     670,000       Steel shapes

Memphis, Tennessee

     520,000       Steel shapes

Auburn, New York

     450,000       Steel shapes

Marion, Ohio

     440,000       Steel shapes

Kankakee, Illinois

     430,000       Steel shapes

Kingman, Arizona

     380,000       Steel shapes

Tuscaloosa, Alabama

     370,000       Steel plate

Jackson, Mississippi

     350,000       Steel shapes

Birmingham, Alabama

     280,000       Steel shapes

Wallingford, Connecticut

     240,000       Steel shapes

Steel products:

     

Norfolk, Nebraska

     1,040,000       Joists, deck, cold finished bar

Brigham City, Utah

     760,000       Joists, cold finished bar

Grapeland, Texas

     680,000       Joists, deck

St. Joe, Indiana

     550,000       Joists, deck

Chemung, New York

     550,000       Joists, deck

Florence, South Carolina

     540,000       Joists, deck

Fort Payne, Alabama

     470,000       Joists, deck

Raw materials:

     

Point Lisas, Trinidad

     2,040,000       Direct reduced iron

Our steel mills segment also includes a distribution center in Pompano Beach, Florida.

In the steel products segment, we have 85 additional operating facilities in 37 states and 28 operating facilities in Canada. Our affiliate, Harris Steel, also operates multiple sales offices in Canada and certain other foreign locations.

In the raw materials segment, DJJ has 72 operating facilities in 14 states along with multiple brokerage offices in the U.S. and certain other foreign locations.

During 2010, the average utilization rates of all operating facilities in the steel mills, steel products and raw materials segments were approximately 70%, 54% and 69% of production capacity, respectively.

We also own our principal executive office in Charlotte, North Carolina.

 

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Item 3. Legal Proceedings

Nucor has been named, along with other major steel producers, as a co-defendant in several related antitrust class-action complaints filed by Standard Iron Works and other steel purchasers in the United States District Court for the Northern District of Illinois. 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 estimate the range of Nucor’s potential exposure.

In the course of normal compliance evaluation in 2008 at our steel mill in Marion, Ohio, we discovered and self-disclosed to the Ohio Environmental Protection Agency (the “Ohio EPA”) that the facility had failed to properly permit modifications to its power supply. The Ohio EPA has since issued notices of violation for this incident and ancillary issues arising from it. Although the initial notice of violation indicated that the Ohio EPA had not decided whether to seek civil penalties, the Ohio EPA has subsequently informed us that a civil penalty will be assessed. We do not believe that the amount of the civil penalty will have a material adverse effect on our consolidated financial condition or results of operations.

Nucor is involved in various other judicial and administrative proceedings as both plaintiff and defendant, arising in the ordinary course of business. Nucor does not believe that any such proceedings (including matters relating to contracts, torts, taxes, warranties and insurance) will have a material adverse effect on its business, operating results, financial condition or cash flows.

 

Item 4. Removed and Reserved

 

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Executive Officers of the Registrant

James R. Darsey (55)—Mr. Darsey has been an Executive Vice President of Nucor since September 2010. He was promoted to Vice President in 1996 and to President of the Vulcraft/Verco Group in 2007. He was General Manager of Nucor Steel, Jewett , Texas from 1999 to 2007; General Manager of Vulcraft, Grapeland, Texas from 1995 to 1999; Engineering Manager of Vulcraft, Grapeland, Texas from 1987 to 1995; and Engineering Manager of Vulcraft, Brigham City, Utah from 1986 to 1987. He began his Nucor career in 1979 as a Design Engineer at Vulcraft, Grapeland, Texas.

Daniel R. DiMicco (60)—Mr. DiMicco has been a director of Nucor since 2000 and was elected Chairman in 2006. Mr. DiMicco has served as Nucor’s Chief Executive Officer since 2000 and served as Vice Chairman from 2001 to 2006. He also served as President from 2000 to 2010. He was an Executive Vice President of Nucor from 1999 to 2000 and Vice President from 1992 to 1999, serving as General Manager of Nucor-Yamato Steel Company. Mr. DiMicco began his career with Nucor in 1982 at Nucor Steel, Plymouth, Utah.

John J. Ferriola (58)—Mr. Ferriola became President and Chief Operating Officer and was appointed to the Board of Directors on January 1, 2011. He was the Chief Operating Officer of Steelmaking Operations from 2007 to 2010. Mr. Ferriola previously served as an Executive Vice President of Nucor from 2002 to 2007 and was a Vice President from 1996 to 2001. He was General Manager of Nucor Steel, Crawfordsville, Indiana from 1998 to 2001; General Manager of Nucor Steel, Norfolk, Nebraska from 1995 to 1998; General Manager of Vulcraft, Grapeland, Texas in 1995; and Manager of Maintenance and Engineering at Nucor Steel, Jewett, Texas from 1992 to 1995.

James D. Frias (54)—Mr. Frias has been Chief Financial Officer, Treasurer and Executive Vice President since January 1, 2010. He was a Vice President of Nucor from 2006 to 2009. Mr. Frias previously served as Corporate Controller from 2001 to 2009; Controller of Nucor Steel, Crawfordsville, Indiana from 1994 to 2001; and Controller of Nucor Building Systems, Waterloo, Indiana from 1991 to 1994.

Keith B. Grass (54)—Mr. Grass is an Executive Vice President of Nucor and serves as President and Chief Executive Officer of DJJ. From January 2000 until Nucor acquired DJJ in February 2008, he served as the President and Chief Executive Officer of DJJ. Before he assumed that position with DJJ, Mr. Grass held the following positions with the same company: President and Chief Operating Officer of the Metal Recycling Division during 1999; President of the International Division from 1996 to 1998; Vice President of Trading from 1992 to 1996; District Manager of the Chicago trading office from 1988 to 1992; District Manager of the Detroit office from 1986 to 1988; and District Manager of the Omaha office from 1985 to 1986. Mr. Grass began his career as a brokerage representative in DJJ’s Chicago office in 1978.

Ladd R. Hall (54)—Mr. Hall has been an Executive Vice President of Nucor since September 2007 and was Vice President and General Manager of Nucor Steel, Berkeley County, South Carolina from 2000 to 2007; Vice President and General Manager of Nucor Steel, Darlington, South Carolina from 1998 to 2000; Vice President of Vulcraft, Brigham City, Utah from 1994 to 1998 and General Manager there from 1993 to 1994; General Manager of Vulcraft, Grapeland, Texas in 1993; Sales Manager of Vulcraft, Brigham City, Utah from 1988 to 1993; and Inside Sales at Nucor Steel Plymouth, Utah from 1981 to 1988.

Hamilton Lott, Jr. (61)—Mr. Lott has been an Executive Vice President of Nucor since September 1999 and was a Vice President from 1988 to 1999. He was General Manager of Vulcraft, Florence, South Carolina from 1993 to 1999; General Manager of Vulcraft, Grapeland, Texas from 1987 to 1993; Sales Manager of Vulcraft, St. Joe, Indiana from January 1987 to May 1987 and Engineering Manager there from 1982 to 1986. Mr. Lott began his career with Nucor as Design Engineer at Vulcraft, Florence, South Carolina in 1975.

 

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R. Joseph Stratman (54)—Mr. Stratman has been an Executive Vice President of Nucor since September 2007 and was Vice President and General Manager of Nucor-Yamato Steel Company from 1999 to 2007. He was Vice President of Nucor Steel, Norfolk, Nebraska in 1999 and General Manager there from 1998 to 1999; Controller of Nucor-Yamato Steel Company from 1991 to 1998; and Controller of Nucor Building Systems, Waterloo, Indiana from 1989 to 1991.

 

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PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Nucor has increased its base cash dividend every year since the Company began paying dividends in 1973. Nucor paid a total dividend of $1.44 per share in 2010 compared with $1.40 per share in 2009. In December 2010, the board of directors increased the base quarterly cash dividend on Nucor’s common stock to $0.3625 per share from $0.36 per share. In February 2011, the board of directors declared Nucor’s 152nd consecutive quarterly cash dividend of $0.3625 per share payable on May 11, 2011 to stockholders of record on March 31, 2011.

Additional information regarding the market for Nucor’s common stock, quarterly market price ranges, the number of stockholders and dividend payments is incorporated by reference to Nucor’s 2010 Annual Report, page 70.

 

Item 6. Selected Financial Data

Historical financial information is incorporated by reference to Nucor’s 2010 Annual Report, page 39.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information required by this item is incorporated by reference to Nucor’s 2010 Annual Report, page 2 (Forward-looking Statements) and pages 22 through 34.

 

Item 7A. 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. At December 31, 2010, 24% of Nucor’s long-term debt was in industrial revenue bonds that have variable interest rates that are adjusted weekly or annually. The remaining 76% of Nucor’s debt is at fixed rates. Future changes in interest rates are not expected to significantly impact earnings. Nucor also makes use of interest rate swaps to manage net exposure to interest rate changes. As of December 31, 2010, there were no such contracts outstanding. Nucor’s investment practice is to invest in securities that are highly liquid with short maturities. As a result, we do not expect changes in interest rates to have a significant impact on the value of our investment securities.

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

 

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comprehensive income (loss) on the consolidated balance sheets and recognized into earnings in the same period as the underlying physical transaction. At December 31, 2010, accumulated other comprehensive income (loss) included $68.9 million in unrealized net-of-tax losses for the fair value of these derivative instruments. Changes in the fair values of derivatives not designated as hedges are recognized in earnings each period. The following table presents the negative effect on pre-tax earnings of a hypothetical change in the fair value of derivative instruments outstanding at December 31, 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

   $ 9,500       $ 23,600   

Aluminum

     3,492         8,731   

Copper

     1,723         4,308   

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

Foreign Currency Risk—Nucor is exposed to foreign currency risk through its operations in Canada, Europe, Trinidad and Australia. We periodically use derivative contracts to mitigate the risk of currency fluctuations. Open foreign currency derivative contracts at December 31, 2010 and 2009 were insignificant.

 

Item 8. Financial Statements and Supplementary Data

Information required by this item is incorporated by reference to Nucor’s 2010 Annual Report, pages 40 through 66.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

 

Item 9A. 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 were effective as of the evaluation date.

Changes in Internal Control Over Financial Reporting—There were no changes in our internal control over financial reporting during the quarter ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report on Internal Control Over Financial Reporting—Management’s report on internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002 and the attestation report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, on the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2010 are incorporated by reference to Nucor’s 2010 Annual Report, pages 40 and 41.

 

Item 9B. Other Information

None.

 

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PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item about Nucor’s executive officers is contained in Part I, Item 1 of this Form 10-K. The other information required by this Item is contained in the sections of Nucor’s Notice of 2011 Annual Meeting of Stockholders and Proxy Statement (the “Proxy Statement”) captioned Election of Directors, Section 16(a) Beneficial Ownership Reporting Compliance and Corporate Governance and Board of Directors, which sections are incorporated by reference.

Nucor has adopted a Code of Ethics for Senior Financial Professionals (“Code of Ethics”) that applies to the Company’s Chief Executive Officer, Chief Financial Officer, Corporate Controller and other senior financial professionals, as well as Corporate Governance Principles for our Board of Directors and charters for our board committees. These documents are publicly available on our website, www.nucor.com. If we make any substantive amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on our website.

 

Item 11. Executive Compensation

The information required by this item is included under the headings Compensation Discussion and Analysis, Corporate Governance and Board of Directors, Report of the Compensation and Executive Development Committee in Nucor’s Proxy Statement and is incorporated herein by reference.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item with respect to security ownership of certain beneficial owners and management is incorporated by reference to Nucor’s Proxy Statement under the heading Security Ownership of Management and Certain Beneficial Owners.

The information regarding the number of securities issuable under equity compensation plans and the related weighted average exercise price is incorporated by reference to the Proxy Statement under the heading Equity Compensation Plan Information.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this item is incorporated by reference to Nucor’s Proxy Statement under the heading Corporate Governance and Board of Directors.

 

Item 14. Principal Accountant Fees and Services

Information about the fees in 2010 and 2009 for professional services rendered by our independent registered public accounting firm is incorporated by reference to Nucor’s Proxy Statement under the heading Fees Paid to Independent Registered Public Accounting Firm. The description of our audit committee’s policy on pre-approval of audit and permissible non-audit services of our independent registered public accounting firm is also incorporated by reference from the same section of the Proxy Statement.

 

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Table of Contents

PART IV

 

Item 15. Exhibits and Financial Statement Schedules

Financial Statements:

The following consolidated financial statements and the report of independent registered public accounting firm are incorporated by reference to Nucor’s 2010 Annual Report, pages 40 through 66:

 

   

Management’s Report on Internal Control Over Financial Reporting

 

   

Report of Independent Registered Public Accounting Firm

 

   

Consolidated Balance Sheets—December 31, 2010 and 2009

 

   

Consolidated Statements of Earnings—Years ended December 31, 2010, 2009 and 2008

 

   

Consolidated Statements of Stockholders’ Equity—Years ended December 31, 2010, 2009 and 2008

 

   

Consolidated Statements of Cash Flows—Years ended December 31, 2010, 2009 and 2008

 

   

Notes to Consolidated Financial Statements

Financial Statement Schedules:

The following financial statement schedule is included in this report as indicated:

 

     Page  

Report of Independent Registered Public Accounting Firm on Financial Statement Schedule

     24   

Schedule II—Valuation and Qualifying Accounts—Years ended December 31, 2010, 2009 and 2008

     25   

All other schedules are omitted because they are not required, not applicable, or the information is furnished in the consolidated financial statements or notes.

Exhibits:

 

3

   Restated Certificate of Incorporation (incorporated by reference to Form 8-K filed September 14, 2010)

3(i)

   By-Laws as amended and restated January 1, 2011 (incorporated by reference to Form 8-K filed January 3, 2011)

4

   Rights Agreement, dated as of March 8, 2001, between Nucor Corporation and American Stock Transfer & Trust Co. (incorporated by reference to Form 8-K filed March 9, 2001)

4(i)

   Amendment No. 1 to Rights Agreement dated as of May 16, 2006 between Nucor Corporation and American Stock Transfer & Trust Co. (incorporated by reference to Form 8-A 12B/A filed May 17, 2006)

4(ii)

   Indenture, dated as of January 12, 1999, between Nucor Corporation and The Bank of New York, as trustee (incorporated by reference to Form S-4 filed December 13, 2002)

4(iii)

   Second Supplemental Indenture, dated as of October 1, 2002, between Nucor Corporation and The Bank of New York, as trustee (incorporated by reference to Form S-4 filed December 13, 2002)

4(iv)

   Third Supplemental Indenture, dated as of December 3, 2007, between Nucor Corporation and The Bank of New York, as trustee (incorporated by reference to Form 8-K filed December 4, 2007)

4(v)

   Fourth Supplemental Indenture, dated as of June 2, 2008, between Nucor Corporation and The Bank of New York, as trustee (incorporated through reference to Form 8-K filed June 3, 2008)

 

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Table of Contents

4(vi)

   Fifth Supplemental Indenture, dated as of September 21, 2010, between Nucor Corporation and The Bank of New York, as trustee (incorporated by reference to Form 8-K filed September 21, 2010)

4(vii)

   Form of 4.875% Notes due 2012 (included in Exhibit 4(iii) above) (incorporated by reference to Form S-4 filed December 13, 2002)

4(viii)

   Form of 5.00% Notes due 2012 (included in Exhibit 4(iv) above) (incorporated by reference to Form 8-K filed December 4, 2007)

4(ix)

   Form of 5.75% Notes due 2017 (included in Exhibit 4(iv) above) (incorporated by reference to Form 8-K filed December 4, 2007)

4(x)

   Form of 6.40% Notes due 2037 (included in Exhibit 4(iv) above) (incorporated by reference to Form 8-K filed December 4, 2007)

4(xi)

   Form of 5.00% Notes due June 1, 2013 (included in Exhibit 4(v) above) (incorporated by reference to Form 8-K filed June 3, 2008)

4(xii)

   Form of 5.85% Notes due June 1, 2018 (included in Exhibit 4(v) above) (incorporated by reference to Form 8-K filed June 3, 2008)

4(xiii)

   Form of 6.40% Notes due December 1, 2037 (included in Exhibit 4(v) above) (incorporated by reference to Form 8-K filed June 3, 2008)

4(xiv)

   Form of 4.125% Notes due 2022 (included in Exhibit 4(vi) above) (incorporated by reference to Form 8-K filed September 21, 2010)

10

   1997 Key Employees Incentive Stock Option Plan (incorporated by reference to Form 10-K for year ended December 31, 2000) (1)

10(i)

   2003 Key Employees Incentive Stock Option Plan (as amended through Amendment 2003-1) (incorporated by reference to Form 10-Q for quarter ended October 4, 2003) (1)

10(ii)

   Non-Employee Director Equity Plan (incorporated by reference to Form 10-K for year ended December 31, 2000) (1)

10(iii)

   2005 Stock Option and Award Plan (incorporated by reference to Form 8-K filed May 17, 2005) (1)

10(iv)

   2005 Stock Option and Award Plan, Amendment No. 1 (incorporated by reference to Form 10-Q for quarter ended September 29, 2007) (1)

10(v)

   2010 Stock Option and Award Plan (incorporated by reference to Form 10-Q for quarter ended July 3, 2010) (1)

10(vi)

   Form of Restricted Stock Unit Award Agreement—time-vested awards (incorporated by reference to Form 10-K for year ended December 31, 2005) (1)

10(vii)

   Form of Restricted Stock Unit Award Agreement—retirement-vested awards (incorporated by reference to Form 10-K for year ended December 31, 2005) (1)

10(viii)

   Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (incorporated by reference to Form 10-Q for quarter ended April 1, 2006) (1)

10(ix)

   Form of Stock Option Award Agreement (incorporated by reference to Form 10-Q for quarter ended October 2, 2010) (1)

10(x)

   Employment Agreement of Daniel R. DiMicco (incorporated by reference to Form 10-Q for quarter ended June 30, 2001) (1)

10(xi)

   Amendment to Employment Agreement of Daniel R. DiMicco (incorporated by reference to Form 10-K for year ended December 31, 2007) (1)

 

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Table of Contents

10(xii)

   Employment Agreement of James D. Frias (incorporated by reference to Form 10-K for year ended December 31, 2009) (1)

10(xiii)

   Employment Agreement of Hamilton Lott, Jr. (incorporated by reference to Form 10-Q for quarter ended June 30, 2001) (1)

10(xiv)

   Amendment to Employment Agreement of Hamilton Lott, Jr. (incorporated by reference to Form 10-K for year ended December 31, 2007) (1)

10(xv)*

   Retirement Separation Waiver and Release Agreement of D. Michael Parrish (1)

10(xvi)

   Retirement Separation Waiver and Release Agreement of Joseph A. Rutkowski (incorporated by reference to Form 10-Q for quarter ended April 3, 2010) (1)

10(xvii)

   Employment Agreement of John J. Ferriola (incorporated by reference to Form 10-K for year ended December 31, 2001) (1)

10(xviii)

   Amendment to Employment Agreement of John J. Ferriola (incorporated by reference to Form 10-K for year ended December 31, 2007) (1)

10(xix)

   Employment Agreement of Ladd R. Hall (incorporated by reference to Form 10-Q for quarter ended September 29, 2007) (1)

10(xx)

   Employment Agreement of R. Joseph Stratman (incorporated by reference to Form 10-Q for quarter ended September 29, 2007) (1)

10(xxi)

   Employment Agreement of Keith B. Grass (incorporated by reference to Form 10-Q for quarter ended March 29, 2008) (1)

10(xxii)*

   Employment Agreement of James R. Darsey (1)

10(xxiii)

   Severance Plan for Senior Officers and General Managers as Amended and Restated Effective February 18, 2009 (incorporated by reference to Form 10-Q for quarter ended April 4, 2009) (1)

10(xxiv)

   Senior Officers Annual Incentive Plan As Amended and Restated Effective February 18, 2009 (incorporated by reference to Form 10-Q for quarter ended April 4, 2009) (1)

10(xxv)

   Senior Officers Long-Term Incentive Plan As Amended and Restated Effective February 18, 2009 (incorporated by reference to Form 10-Q for quarter ended April 4, 2009) (1)

10(xxvi)

   Senior Officers Long-Term Incentive Plan Amendment No. 1 Adopted May 13, 2010 (incorporated by reference to Form 10-Q for quarter ended July 3, 2010) (1)

10(xxvii)

   Underwriting Agreement dated May 22, 2008 among Nucor Corporation, Banc of America Securities LLC, Citigroup Capital Markets Inc. and J.P. Morgan Securities, Inc. (incorporated by reference to Form 8-K filed May 29, 2008)

10(xxviii)

   Underwriting Agreement dated May 28, 2008 among Nucor Corporation, Banc of America Securities LLC, Citigroup Capital Markets Inc. and J.P. Morgan Securities, Inc. (incorporated by reference to Form 8-K filed June 3, 2008)

10(xxix)

   Underwriting Agreement dated September 16, 2010 among Nucor Corporation, Banc of America Securities LLC, Citigroup Capital Markets Inc. and J.P. Morgan Securities, Inc. (incorporated by reference to Form 8-K filed September 21, 2010)

12*

   Computation of Ratio of Earnings to Fixed Charges

13*

   2010 Annual Report (portions incorporated by reference)

21*

   Subsidiaries

23*

   Consent of Independent Registered Public Accounting Firm

24

   Power of attorney (included on signature page)

 

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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(i)*

   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(i)*

   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**

   Nucor Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Earnings, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Stockholders’ Equity, and (v) the Notes to Consolidated Financial Statements.

 

* Filed herewith.
** Furnished herewith.
(1) Indicates a management contract or compensatory plan or arrangement.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NUCOR CORPORATION
By:   /S/ DANIEL R. DIMICCO
  Daniel R. DiMicco
  Chairman and
  Chief Executive Officer
Dated: February 28, 2011

POWER OF ATTORNEY

KNOW ALL PERSON BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James D. Frias and A. Rae Eagle, or any of them, his or her attorney-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorney-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/S/ DANIEL R. DIMICCO    

   

/S/ PETER C. BROWNING

Daniel R. DiMicco     Peter C. Browning
Chairman and Chief Executive Officer     Lead Director

/S/ JAMES D. FRIAS    

   

/S/ CLAYTON C. DALEY, JR.

James D. Frias     Clayton C. Daley, Jr.

Chief Financial Officer, Treasurer and

Executive Vice President

    Director
(Principal Financial Officer)    

/S/ MICHAEL D. KELLER

   

/S/ JOHN J. FERRIOLA

Michael D. Keller     John J. Ferriola
General Manager and Corporate Controller     Director, President and Chief
(Principal Accounting Officer)     Operating Officer
   
   

/S/ HARVEY B. GANTT

    Harvey B. Gantt
    Director
   

/S/ VICTORIA F. HAYNES

    Victoria F. Haynes
    Director

 

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Table of Contents
   

/S/ JAMES D. HLAVACEK

    James D. Hlavacek
    Director
   

/S/ BERNARD L. KASRIEL

    Bernard L. Kasriel
    Director
   

/S/ CHRISTOPHER J. KEARNEY

    Christopher J. Kearney
    Director
   

/S/ JOHN H. WALKER

    John H. Walker
    Director
Dated: February 28, 2011    

 

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Table of Contents

NUCOR CORPORATION

Index to Financial Statement Schedule

 

     Page  

Report of Independent Registered Public Accounting Firm on Financial Statement Schedule

     24   

Schedule II—Valuation and Qualifying Accounts—Years ended December 31, 2010, 2009 and 2008

     25   

 

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Table of Contents

Report of Independent Registered Public Accounting Firm on Financial Statement Schedule

To the Board of Directors and Stockholders of

Nucor Corporation:

Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February 28, 2011 appearing in the 2010 Annual Report to Stockholders of Nucor Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 28, 2011

 

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Table of Contents

NUCOR CORPORATION

Financial Statement Schedule

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands)

 

Description

   Balance at
beginning
of  year
     Additions
charged to
costs and
expenses
     Deductions     Balance at
end of year
 

Year ended December 31, 2010
LIFO Reserve

   $ 456,448       $ 163,966       $ —        $ 620,414   

Year ended December 31, 2009
LIFO Reserve

   $ 923,362       $ —         ($ 466,914   $ 456,448   

Year ended December 31, 2008
LIFO Reserve

   $ 581,528       $ 341,834       $ —        $ 923,362   

 

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Table of Contents

NUCOR CORPORATION

List of Exhibits to Form 10-K – December 31, 2010

 

Exhibit No.

 

Description of Exhibit

10(xv)   Retirement Separation Waiver and Release Agreement of D. Michael Parrish
10(xxii)   Employment Agreement of James R. Darsey
12   Computation of Ratio of Earnings to Fixed Charges
13   2010 Annual Report (portions incorporated by reference)
21   Subsidiaries
23   Consent of Independent Registered Public Accounting Firm
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(i)   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(i)   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   Nucor Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2010, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Earnings, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Stockholders’ Equity, and (v) the Notes to Consolidated Financial Statements.

 

26

Retirement Separation Waiver of D. Michael Parrish

Exhibit 10(xv)

RETIREMENT SEPARATION WAIVER AND RELEASE AGREEMENT

This Retirement Separation Waiver and Release Agreement (“Agreement”) is entered into as of the 23rd day of August, 2010, by and between D. Michael Parrish (“Executive”), a citizen and resident of North Carolina, and Nucor Corporation, a Delaware corporation with its principal place of business in Charlotte, North Carolina.

WHEREAS, Executive, currently a resident of North Carolina, has spent thirty five (35) years as a Nucor (as defined below) employee, and has most recently been employed as Nucor Corporation’s Executive Vice President of Bar Products;

WHEREAS, Executive has decided to retire from Nucor effective August 31, 2010 (the “Effective Date”);

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

WHEREAS, pursuant to that certain Executive Employment Agreement by and between Executive and Nucor dated as of April 10, 2001, as amended by an Amendment Agreement effective as of November 5, 2007 (as amended, the “Employment Agreement”), Executive is entitled to certain post-separation benefits in addition to those granted under the Severance Plan provided that Executive adheres to the post-separation restrictive covenants set forth in the Employment Agreement;

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

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

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

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

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

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

(a) The term “Business” means the research, manufacture, marketing, sale, placement and/or distribution of steel or steel products (including but not limited to flat-rolled steel, steel shapes, structural steel, light gauge steel framing, steel plate, steel joists and girders, steel deck, steel fasteners, metal building systems, wire rod, welded-wire reinforcement rolls and

 

   


sheets, cold finished steel bars and wire, special bar quality products, guard rail, fabricated concrete reinforcement bars, and structural welded-wire reinforcement) or steel or steel product inputs (including but not limited to scrap metal and direct reduced iron).

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

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

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

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

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

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

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

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

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

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

 

  2  


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

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

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

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

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

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

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

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

3. Post-Retirement Benefits.

(a) Severance Plan. Executive recognizes and agrees that pursuant to the Nucor Corporation Severance Plan for Senior Officers and General Managers (the “Severance Plan”), Executive shall receive certain Severance Benefits (as defined in the Severance Plan) contingent upon his execution of this Agreement and strict compliance with the covenants contained herein. Based on Executive’s (a) September 1, 1975 date of hire, (b) effective retirement date of August 31, 2010 and (c) current annual base salary of Three Hundred Ninety Five Thousand Three Hundred Dollars ($395,300), Executive would be eligible to receive Severance Benefits under the Severance Plan totaling One Million One Hundred Fifty Two Thousand Nine Hundred Fifty Eight Dollars and Thirty Three Cents ($1,152,958.33) payable in twenty-four (24) monthly installments of Forty Eight Thousand Thirty Nine Dollars and Ninety Three Cents ($48,039.93) (the “Monthly Severance Plan Payments”). Subject to the provisions of Paragraph 3(c) of this Agreement, the payments of the Monthly Severance Plan Payments shall be made each month following the Effective Date. In the event Executive dies during the Severance Period and

 

  3  


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

(b) Non-Competition Payment.

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

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

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

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

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

 

  4  


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

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

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

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

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

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

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

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

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

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

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

7. Anti-Piracy.

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

 

  5  


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

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

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

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

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

11. Remedies. Executive agrees that in the event of a breach or threatened breach by Executive of any provision of this Agreement, monetary remedies may not be adequate and Executive agrees that Nucor is entitled to injunctive relief, without need to post bond or similar security, in lieu of or in addition to, such monetary remedies. In the event that Executive engages in or attempts to engage in

 

  6  


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

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

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

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

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

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

 

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

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

(a) Executive has been given a period of twenty-one (21) days to consider the terms of this Agreement.

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

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

 

  8  


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

 

Executive:  

LOGO

  D. Michael Parrish
Nucor Corporation:  

LOGO

  By:   A. Rae Eagle
  Its:   Secretary

 

Employment Agreement of James R. Darsey

Exhibit 10(xxii)

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into between NUCOR CORPORATION, a Delaware corporation with its principal place of business in Charlotte, North Carolina, on behalf of itself and each of its affiliates and subsidiaries (all such entities, collectively, “Nucor”), and JAMES R. DARSEY (“Executive”), a resident of North Carolina.

WHEREAS, Executive has heretofore been employed at Nucor Corporation’s corporate headquarters in Charlotte, North Carolina as an at-will employee of Nucor in the position of Vice President of Nucor Corporation and President of Nucor Corporation’s Vulcraft/Verco Group (the “Prior Position”); and

WHEREAS, Nucor has offered Executive a promotion to the position of Executive Vice President of Bar Products effective September 1, 2010, contingent upon Executive’s execution of this Agreement, and Executive has accepted the promotion; and

WHEREAS, Nucor Corporation’s Board of Directors (the “Board”) has approved Executive’s promotion to the position of Executive Vice President of Bar Products contingent upon Executive’s execution of this Agreement; and

WHEREAS, prior to the effective date of the promotion, Executive and Nucor discussed the requirements of the restrictive covenants contained in this Agreement as a condition to Executive’s promotion; and

WHEREAS, Nucor’s promotion of Executive entitles Executive to receive increased compensation and benefits that Executive did not have prior to his promotion; and

WHEREAS, Executive agrees and acknowledges that in his new position of Executive Vice President of Bar Products he will acquire greater access to and knowledge of Nucor’s trade secrets and confidential information which Executive did not have prior to his promotion;

WHEREAS, the parties wish to formalize their employment relationship in writing and for Nucor to employ Executive under the terms and conditions set forth below; and

NOW, THEREFORE, in consideration for the promises and mutual agreements contained herein, the parties agree, effective as of September 1, 2010, as follows:

1. Employment. Nucor agrees to employ Executive in the position of Executive Vice President of Bar Products, and Executive agrees to accept employment in this position, subject to the terms and conditions set forth in this Agreement, including the confidentiality, non-competition and non-solicitation provisions which Executive acknowledges were discussed in detail prior to and made an express condition of his promotion to Executive Vice President of Bar Products. Executive acknowledges that the Board’s approval of Executive’s promotion to Executive Vice President of Bar Products is conditioned upon Executive’s execution of this Agreement.

2. Compensation and Benefits During Employment. Nucor will provide the following compensation and benefits to Executive:

(a) Nucor will pay Executive a base salary of Three Hundred Sixteen Thousand Seven Hundred Dollars ($316,700) per year, paid not less frequently than monthly in accordance with Nucor’s normal payroll practices, subject to withholding by Nucor and other deductions as

 

   


required by law. The parties acknowledge and agree that this amount exceeds the base salary Executive was entitled to receive in the Prior Position. Executive’s base salary is subject to adjustment up or down by the Board at its sole discretion and without notice to Executive.

(b) Executive will be a participant in, and eligible to receive awards of incentive compensation under and in accordance with the applicable terms and conditions of, Nucor’s senior officer annual and long term incentive compensation plans, as modified from time to time by, and in the sole discretion of, the Board.

(c) Executive shall be a participant in, and eligible to receive awards of equity-based compensation under and in accordance with the applicable terms and conditions of, Nucor’s senior officer equity incentive compensation plans, as modified from time to time by, and in the sole discretion of, the Board.

(d) Executive will be eligible for those employee benefits that are generally made available by Nucor to its executive officers.

3. Compensation Following Termination.

(a) From the date of Executive’s termination of employment with Nucor, whether by Executive or Nucor for any or no reason, and provided that Executive executes and returns to Nucor a separation and release agreement in form and substance satisfactory to Nucor, in its sole discretion, releasing any and all claims Executive has or may have against Nucor at the time of his termination of employment from Nucor, Nucor will pay Executive the Monthly Amount (as defined below) for twenty-four (24) months following Executive’s termination. The “Monthly Amount” shall be an amount equal to (i) the product of (A) the amount of Executive’s highest base salary level during the twelve (12) month period immediately prior to his date of termination, multiplied by (B) 3.36, (ii) divided by twelve (12). Subject to the provisions of Section 24 of this Agreement, the payments of the Monthly Amount shall be made at the end of each month following Executive’s termination of employment with Nucor on Nucor’s regular monthly payroll date.

(b) In exchange for Nucor’s agreement to pay the Monthly Amount as set forth in this Section 3, and other good and valuable consideration, including without limitation the compensation and benefits set forth in Section 2 of this Agreement, Executive agrees to strictly abide by the terms of Sections 8 through 13 of this Agreement.

(c) If Executive is employed by Nucor at the time of Executive’s death, Nucor’s obligations to make any payments of the Monthly Amount under this Agreement will automatically terminate and Executive’s estate and executors will have no rights to any payments of the Monthly Amount under this Agreement. If Executive dies during the first twelve (12) months following Executive’s termination from employment with Nucor, then Nucor will pay Executive’s estate the payments of the Monthly Amount due pursuant to Section 3(a) of this Agreement through the end of the twelfth (12th) month following Executive’s termination from employment with Nucor. If Executive dies twelve (12) or more months after termination of Executive’s employment with Nucor, then Nucor’s obligations to make any payments of the Monthly Amount under Section 3(a) of this Agreement will automatically terminate without the necessity of Nucor providing notice, written or otherwise.

(d) The amounts payable pursuant to this Section 3 of this Agreement shall be in addition to and not in lieu of any amounts payable to Executive pursuant to the Nucor

 

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Corporation Severance Plan for Senior Officers and General Managers (the “Severance Plan”), which such payments, if any, shall be governed by the terms and conditions of the Severance Plan.

4. Duties and Responsibilities; Best Efforts. While employed by Nucor, Executive shall perform such duties for and on behalf of Nucor as may be determined and assigned to Executive from time to time by the Chief Executive Officer of Nucor Corporation or the Board. Executive shall devote his full time and best efforts to the business and affairs of Nucor. During the term of Executive’s employment with Nucor, Executive will not undertake other paid employment or engage in any other business activity without the prior written consent of the Board.

5. Employment at Will. The parties acknowledge and agree that this Agreement does not create employment for a definite term and that Executive’s employment with Nucor is at will and terminable by Nucor or Executive at any time, with or without cause and with or without notice, unless otherwise expressly set forth in a separate written agreement executed by Executive and Nucor after the date of this Agreement.

6. Change in Executive’s Position. In the event that Nucor transfers, demotes, promotes, or otherwise changes Executive’s compensation or position with Nucor, the restrictions and post-termination obligations set forth in Sections 8 through 13 of this Agreement shall remain in full force and effect.

7. Recognition of Nucor’s Legitimate Interests. Executive understands and acknowledges that Nucor competes in North America and throughout the world in the research, manufacture, marketing, sale, distribution and/or placement of steel or steel products (including but not limited to flat-rolled steel, steel shapes, structural steel, light gauge steel framing, steel plate, steel joists and girders, steel deck, steel fasteners, metal building systems, wire rod, welded-wire reinforcement rolls and sheets, cold finished steel bars and wire, special quality bar products, guard rail, fabricated concrete reinforcement bars, and structural welded-wire reinforcement) or steel or steel product inputs (including but not limited to scrap metal and direct reduced iron) (all such activities, collectively, the “Business”). As part of Executive’s employment with Nucor, Executive acknowledges he will continue to have access to and gain knowledge of significant secret, confidential and proprietary information of the full range of operations of Nucor. In addition, Executive will continue to have access to training opportunities, contact with vendors, customers and prospective vendors and customers of Nucor, in which capacity he is expected to develop good relationships with such vendors, customers and prospective vendors and customers, and will gain intimate knowledge regarding the products and services of Nucor. Executive recognizes and agrees that Nucor has spent and will continue to spend substantial effort, time and money in developing relationships with its vendors and customers, that many such vendors and customers have long term relationships with Nucor, and that all vendors, customers and accounts that Executive may deal with during his employment with Nucor, are the vendors, customers and accounts of Nucor. Executive acknowledges that Nucor’s competitors would obtain an unfair advantage if Executive disclosed Nucor’s Secret Information or Confidential Information (as defined in Sections 8 and 9, respectively) to a competitor, used it on a competitor’s behalf, or if he were able to exploit the relationships he develops as an employee of Nucor to solicit business on behalf of a competitor.

8. Covenant Regarding Nucor’s Secret Information. Executive recognizes and agrees that he will have continued access to certain sensitive and confidential information of Nucor (a) that is not generally known in the steel business, which would be difficult for others to acquire or duplicate without improper means, (b) that Nucor strives to keep secret, and (c) from which Nucor derives substantial commercial benefit because of the fact that it is not generally known (the “Secret Information”), including without limitation: (i) Nucor’s process of developing and producing raw material, and designing and manufacturing steel and iron products; (ii) Nucor’s process for treating, processing or fabricating steel

 

  3  


and iron products; (iii) Nucor’s non-public financial data, strategic business plans, competitor analysis, sales and marketing data, and proprietary margin, pricing, and cost data; and (iv) any other information or data which meets the definition of “trade secrets” under the North Carolina Trade Secrets Protection Act. Executive agrees that unless he is expressly authorized by Nucor in writing, Executive will not use or disclose or allow to be used or disclosed Nucor’s Secret Information. This covenant shall survive until the Secret Information is generally known in the industry through no act or omission of the Executive or until Nucor knowingly authorizes the disclosure of or discloses the Secret Information, without any limitations on use or confidentiality. Executive acknowledges that he did not have knowledge of Nucor’s Secret Information prior to his employment with Nucor and that the Secret Information does not include Executive’s general skills and know-how.

9. Agreement to Maintain Confidentiality.

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

(b) During Executive’s employment with Nucor and at all times after the termination of Executive’s employment with Nucor, (i) Executive covenants and agrees to treat as confidential all Confidential Information submitted to Executive or received, compiled, developed, designed, produced, accessed, or otherwise discovered by the Executive from time to time while employed by Nucor, and (ii) Executive will not disclose or divulge the Confidential Information to any person, entity, firm or company whatsoever or use the Confidential Information for Executive’s own benefit or for the benefit of any person, entity, firm or company other than Nucor. This restriction will apply throughout the world; provided, however, that if the restrictions of this Section 9(b) when applied to any specific piece of Confidential Information would prevent Executive from using his general knowledge or skills in competition with Nucor or would otherwise substantially restrict the Executive’s ability to fairly compete with Nucor, then as to that piece of Confidential Information only, the scope of this restriction will apply only for the Restrictive Period (as defined below) and only within the Restricted Territory (as defined below).

(c) Executive specifically acknowledges that the Confidential Information, whether reduced to writing or maintained in the mind or memory of Executive, and whether compiled or created by Executive, Nucor, or any of its vendors, customers, or prospective vendors or customers derives independent economic value from not being readily known to or ascertainable by proper means by others who could obtain economic value from the disclosure or use of the Confidential Information. Executive also acknowledges that reasonable efforts have been put forth by Nucor to maintain the secrecy of the Confidential Information, that the Confidential Information is and will remain the sole property of Nucor or any of its vendors, customers or prospective vendors or customers, as the case may be, and that any retention and/or use of Confidential Information during or after the termination of Executive’s employment with Nucor

 

  4  


(except in the regular course of performing his duties hereunder) will constitute a misappropriation of the Confidential Information belonging to Nucor. Executive acknowledges and agrees that if he (i) accesses Confidential Information on any Nucor computer system within thirty (30) days prior the effective date of his voluntary resignation of employment with Nucor and (ii) transmits, copies or reproduces such Confidential Information in any manner or deletes any such Confidential Information, he is exceeding his authorized access to such computer system.

10. Noncompetition.

(a) Executive hereby agrees that for the duration of Executive’s employment with Nucor, and for a period of twenty-four (24) months thereafter (the “Restrictive Period”), Executive will NOT, within the Restricted Territory, do any of the following:

(i) engage in, whether as an employee, consultant, or in any other capacity, any business activity (A) that is the same as, or is in direct competition with, any portion of the Business, and (B) in which Executive engaged in during the course of his employment with Nucor (any such activities described in this Section 10(a)(i), “Competing Activities”);

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

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

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

(b) For purposes of this Agreement:

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

(A) Asia, Australia, Western Europe, Eastern Europe (including Russia), the Middle East, South America, Central America and North America, where Executive acknowledges Nucor engages in the Business, but if such territory is deemed overbroad by a court of law, then

(B) The United States, Canada, Mexico, Guatemala, Honduras, the Dominican Republic, Costa Rica, Colombia, Argentina and Brazil, where

 

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Executive acknowledges Nucor engages in the Business, but if such territory is deemed overbroad by a court of law, then;

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

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

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

(F) Any state in the United States where a Customer or Prospective Customer is located.

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

(A) any and all customers of Nucor with whom Nucor is doing business at the time of Executive’s termination of employment with Nucor, but if such definition is deemed overbroad by a court of law, then;

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

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

(D) any customer of Nucor about whom Executive had obtained Secret Information or Confidential Information by virtue of his employment with Nucor and with whom Executive had significant contact or with whom Executive directly dealt on behalf of Nucor at the time of Executive’s last date of full time employment;

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

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

 

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(iv) The term “solicit” means to initiate contact for the purpose of promoting, marketing, or selling products or services similar to those Nucor offered during the tenure of Executive’s employment with Nucor or to accept business from Customers or Prospective Customers.

(c) Executive specifically agrees that the post-termination obligations and restrictions in this Section 10 and in Sections 8, 9, 11, 12 and 13 will apply to Executive regardless of whether termination of employment is initiated by Nucor or Executive and regardless of the reason for termination of Executive’s employment. Further, Executive acknowledges and agrees that Nucor’s payment of the compensation described in Section 3 is intended to compensate Executive for the limitations on Executive’s competitive activities described in this Section 10 and Sections 11 and 12 for the Restrictive Period regardless of the reason for termination. Thus, for example, in the event that Nucor terminates Executive’s employment without cause, Executive expressly agrees that the obligations and restrictions in this Section 10 and Sections 8, 9, 11, 12 and 13 will apply to Executive notwithstanding the reasons or motivations of Nucor in terminating Executive’s employment.

11. Nonsolicitation. Executive hereby agrees that for the duration of Executive’s employment with Nucor, and for the Restrictive Period, Executive will NOT, within the Restricted Territory, do any of the following:

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

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

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

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

12. Antipiracy.

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

(b) Executive further agrees for the duration of the Restrictive Period not to hire for any reason any employees described in Section 12(a) of this Agreement.

13. Assignment of Intellectual Property Rights.

(a) Executive hereby assigns to Nucor Executive’s entire right, title and interest, including copyrights and patents, in any idea, invention, design of a useful article (whether the

 

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design is ornamental or otherwise), and any other work of authorship (collectively the “Developments”), made or conceived solely or jointly by Executive at any time during Executive’s employment by Nucor (whether prior or subsequent to the execution of this Agreement), or created wholly or in part by Executive, whether or not such Developments are patentable, copyrightable or susceptible to other forms of protection, where the Developments: (i) were developed, invented, or conceived within the scope of Executive’s employment with Nucor; (ii) relate to Nucor’s actual or demonstrably anticipated research or development; or (iii) result from any work performed by Executive on Nucor’s behalf.

(b) The assignment requirement in Section 13(a) shall not apply to an invention that Executive developed entirely on his own time without using Nucor’s equipment, supplies, facilities or Secret Information or Confidential Information except for those inventions that (i) relate to Nucor’s business or actual or demonstrably anticipated research or development, or (ii) result from any work performed by Executive for Nucor.

(c) In connection with any of the Developments assigned pursuant to Section 13(a): (i) Executive will promptly disclose them to Nucor’s management; and (ii) Executive will, on Nucor’s request, promptly execute a specific assignment of title to Nucor or its designee, and do anything else reasonably necessary to enable Nucor or its designee to secure a patent, copyright, or other form of protection therefore in the United States and in any other applicable country.

(d) Nothing in this Section 13 is intended to waive, or shall be construed as waiving, any assignment of any Developments to Nucor implied by law.

14. Severability. It is the intention of the parties to restrict the activities of Executive only to the extent reasonably necessary for the protection of Nucor’s legitimate interests. The parties specifically covenant and agree that should any of the provisions in this Agreement be deemed by a court of competent jurisdiction too broad for the protection of Nucor’s legitimate interests, the parties authorize the court to narrow, limit or modify the restrictions herein to the extent reasonably necessary to accomplish such purpose. In the event such limiting construction is impossible, such invalid or unenforceable provision shall be deemed severed from this Agreement and every other provision of this Agreement shall remain in full force and effect.

15. Enforcement. Executive understands and agrees that any breach or threatened breach by Executive of any of the provisions of Sections 8 through 13 of this Agreement shall be considered a material breach of this Agreement, and in the event of such a breach or threatened breach of this Agreement, Nucor shall be entitled to pursue any and all of its remedies under law or in equity arising out of such breach. If Nucor pursues either a temporary restraining order or temporary injunctive relief, then Executive agrees to expedited discovery with respect thereto and waives any requirement that Nucor post a bond. Executive further agrees that in the event of his breach of any of the provisions of Sections 8 through 13 of this Agreement, unless otherwise prohibited by law:

(a) Nucor shall be entitled to (i) cancel any unexercised stock options granted under any senior officer equity incentive compensation plan from and after the date of this Agreement (the “Post-Agreement Date Option Grants”), (ii) cease payment of any Monthly Amounts otherwise due hereunder, (iii) seek other appropriate relief, including, without limitation, repayment by Executive of any (A) Monthly Amounts already paid hereunder and (B) benefits already paid under any severance or similar benefit plans; and

(b) Executive shall (i) forfeit any (A) unexercised Post-Agreement Date Option Grants and (B) any shares of restricted stock or restricted stock units granted under any senior

 

  8  


officer equity incentive compensation plan that vested during the six (6) month period immediately preceding Executive’s termination of employment (the “Vested Stock”) and (ii) forfeit and immediately return upon demand by Nucor any profit realized by Executive from the exercise of any Post-Agreement Date Option Grants or sale or exchange of any Vested Stock during the six (6) month period preceding Executive’s breach of any of the provisions of Sections 8 through 13 of this Agreement.

Executive agrees that any breach or threatened breach of any of the provisions of Sections 8 through 13 will cause Nucor irreparable harm which cannot be remedied through monetary damages and the alternative relief set forth in Sections 15(a) and (b) shall not be considered an adequate remedy for the harm Nucor would incur. Executive further agrees that such remedies in Sections 15(a) and (b) will not preclude injunctive relief.

If Executive breaches or threatens to breach any of the provisions of Sections 10, 11 or 12 of this Agreement and Nucor obtains an injunction, preliminary or otherwise, ordering Executive to adhere to the restrictive period required by the applicable paragraph, then the applicable restrictive period will be extended by the number of days that have elapsed from the date of Executive’s termination until the time the injunction is granted.

Executive further agrees, unless otherwise prohibited by law, to pay Nucor’s attorneys’ fees and costs incurred in successfully enforcing its rights pursuant to this Section 15, or in defending against any action brought by Executive or on Executive’s behalf in violation of or under this Section 15 in which Nucor prevails. Executive agrees that Nucor’s actions pursuant to this Section 15, including, without limitation, filing a legal action, are permissible and are not and will not be considered by Executive to be retaliatory. Executive further represents and acknowledges that in the event of the termination of Executive’s employment for any reason, Executive’s experience and capabilities are such that Executive can obtain employment and that enforcement of this Agreement by way of injunction will not prevent Executive from earning a livelihood.

16. Reasonableness of Restrictions. Executive has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon Nucor under Sections 8, 9, 10, 11, 12, 13 and 15 and hereby acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which would otherwise be unfair to Nucor, do not interfere with Executive’s exercise of his inherent skill and experience, are reasonably required to protect the legitimate interests of Nucor, and do not confer a benefit upon Nucor disproportionate to the detriment to Executive. Executive certifies that he has had the opportunity to discuss this Agreement with such legal advisors as he chooses and that he understands its provisions and has entered into this Agreement freely and voluntarily.

17. Applicable Law. This Agreement is made in, and shall be interpreted, construed and governed according to the laws of, the State of North Carolina, regardless of choice of law principles of any jurisdiction to the contrary. Each party, for themselves and their successors and assigns, hereby irrevocably (a) consents to the exclusive jurisdiction of the North Carolina State courts located in Mecklenburg County, North Carolina and (b) waives any objection to any such action based on venue or forum non conveniens. Further, Executive hereby irrevocably consents to the jurisdiction of any court or similar body within the Restricted Territory for enforcement of any judgment entered in a court or similar body pursuant to this Agreement. This Agreement is intended, among other things, to supplement the provisions of the North Carolina Trade Secrets Protection Act, as amended from time to time, and the duties Executive owes to Nucor under the common law, including, but not limited to, the duty of loyalty.

 

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18. Executive to Return Property. Executive agrees that upon (a) the termination of Executive’s employment with Nucor and within three (3) business days thereof, whether by Executive or Nucor for any reason (with or without cause), or (b) the written request of Nucor, Executive (or in the event of the death or disability of Executive, Executive’s heirs, successors, assigns and legal representatives) shall return to Nucor any and all property of Nucor regardless of the medium in which such property is stored or kept, including but not limited to all Secret Information, Confidential Information, notes, data, tapes, computers, lists, customer lists, names of customers, reference items, phones, documents, sketches, drawings, software, product samples, rolodex cards, forms, manuals, keys, pass or access cards and equipment, without retaining any copies or summaries of such property. Executive further agrees that to the extent Secret Information or Confidential Information are in electronic format and in Executive’s possession, custody or control, Executive will provide all such copies to Nucor and will not keep copies in such format but, upon Nucor’s request, will confirm the permanent deletion or other destruction thereof.

19. Entire Agreement; Amendments. This Agreement discharges and cancels all previous agreements regarding Executive’s employment with Nucor, including without limitation that certain Executive Agreement by and between Nucor Corporation and Executive dated as of January 7, 2008, and constitutes the entire agreement between the parties with regard to the subject matter hereof. No agreements, representations, or statements of any party not contained herein shall be binding on either party. Further, no amendment or variation of the terms or conditions of this Agreement shall be valid unless in writing and signed by both parties.

20. Assignability. This Agreement and the rights and duties created hereunder shall not be assignable or delegable by Executive. Nucor may, at its option and without consent of Executive, assign its rights and duties hereunder to any successor entity or transferee of Nucor Corporation’s assets.

21. Binding Effect. This Agreement shall be binding upon and inure to the benefit of Nucor and Executive and their respective successors, assigns, heirs and legal representatives.

22. No Waiver. No failure or delay by any party to this Agreement to enforce any right specified in this Agreement will operate as a waiver of such right, nor will any single or partial exercise of a right preclude any further or later enforcement of the right within the period of the applicable statute of limitations. No waiver of any provision hereof shall be effective unless such waiver is set forth in a written instrument executed by the party waiving compliance.

23. Cooperation. Executive agrees that both during and after his employment, he shall, at Nucor’s request, render all assistance and perform all lawful acts that Nucor considers necessary or advisable in connection with any litigation involving Nucor or any of its directors, officers, employees, shareholders, agents, representatives, consultants, clients, customers or vendors. Executive understands and agrees that Nucor will reimburse him for any reasonable documented expense he incurs related to this cooperation and assistance, but will not be obligated to pay him any additional amounts.

24. Compliance with Code Section 409A. Notwithstanding anything in this Agreement to the contrary, if (a) Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986 (the “Code”) as of the date of his separation from service and (b) any amount or benefit that Nucor determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service, then to the extent necessary to comply with Code Section 409A: (i) if the payment or distribution is payable in a lump sum, Executive’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of Executive’s death or the seventh month following Executive’s separation from service, and (ii) if the payment,

 

  10  


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

For purposes of this Agreement, the term “separation from service” shall be defined as provided in Code Section 409A and applicable regulations, and Executive shall be a “specified employee” during the twelve (12) month period beginning April 1 each year if Executive met the requirements of Section 416(i)(l)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and disregarding Section 416(i)(5) of the Code) at any time during the twelve (12) month period ending on the December 31 immediately preceding his separation from service.

[Signatures Appear on Following Page]

 

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IN WITNESS WHEREOF, Executive and Nucor Corporation have executed this Agreement on the dates specified below.

 

EXECUTIVE

LOGO

James R. Darsey
Date:  

8/20/2010

NUCOR CORPORATION

LOGO

John J. Ferriola
Chief Operating Officer of Steelmaking Operations
Date:  

8/19/2010

 

   
Computation of Ratio of Earnings to Fixed Charges

Exhibit 12

Computation of Ratio of Earnings to Fixed Charges

 

     Year Ended December 31,  
     2006     2007     2008     2009     2010  
     (In thousands, except ratios)  

Earnings

          

Earnings/(loss) before income taxes and noncontrolling interests

   $ 2,911,556      $ 2,546,816      $ 3,104,391      $ (413,978   $ 267,115   

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

     17,690        24,618        36,920        82,341        32,082   

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

     40,351        55,381        146,360        168,317        163,626   

Plus: amortization of capitalized interest

     216        216        300        962        2,332   

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     (940

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

     (219,121     (293,604     (314,277     (57,865     (73,110
                                        

Total earnings/(loss) before fixed charges

   $ 2,753,864      $ 2,337,799      $ 2,983,791      $ (229,240   $ 396,028   
                                        

Fixed charges

          

Interest cost and amortization of bond issuance and settled swaps

     40,351        55,052        144,845        166,313        162,213   

Estimated interest on rent expense

     —          329        1,515        2,004        1,413   
                                        

Total fixed charges

     40,351        55,381        146,360        168,317        163,626   
                                        

Ratio of earnings to fixed charges

     68.25        42.21        20.39        *        2.42   

 

* Earnings for the year ended December 31, 2009 were inadequate to cover fixed charges. The coverage deficiency was $397,557.
2010 Annual Report (portions incorporated by reference)

Exhibit 13

 

    2        

    FINANCIAL HIGHLIGHTS

 

 

FINANCIAL HIGHLIGHTS      (dollar and share amounts in thousands, except per share data)   
       2010        2009        % CHANGE   
FOR THE YEAR       

 

Net sales

 

   $ 15,844,627      $ 11,190,296        42

Earnings:

 

      

Earnings (loss) before income taxes and noncontrolling interests

 

     267,115        (413,978     165

Provision for (benefit from) income taxes

 

     60,792        (176,800     134
                  

Net earnings (loss)

 

     206,323        (237,178     187

Earnings attributable to noncontrolling interests

 

     72,231        56,435        28
                  

Net earnings (loss) attributable to Nucor stockholders

 

     134,092        (293,613     146

Per share:

 

      

Basic

 

     0.42        (0.94     145

Diluted

 

     0.42        (0.94     145

Dividends declared per share

 

     1.4425        1.41        2

Percentage of net earnings (loss) to net sales

 

     0.8     -2.6     not meaningful   

Return on average stockholders’ equity

 

     1.8     -3.8     not meaningful   

Capital expenditures

 

     345,294        390,500        -12

Depreciation

 

     512,147        494,035        4

Acquisitions (net of cash acquired)

 

     64,788        32,720        98

Sales per employee

 

     777        539        44

AT YEAR END

 

                        

Working capital

 

   $ 4,356,737      $ 3,955,191        10

Property, plant and equipment, net

 

     3,852,118        4,013,836        -4

Long-term debt

 

     4,280,200        3,086,200        39

Total Nucor stockholders’ equity

 

     7,120,070        7,390,526        -4

Per share

 

     22.55        23.47        -4

Shares outstanding

 

     315,791        314,856          

Employees

 

    

 

20,500

 

  

 

   

 

20,400

 

  

 

   

 

 

  

 

FORWARD-LOOKING STATEMENTS Certain statements made in this annual 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 goodwill, equity investments, inventory, fixed assets 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 policies 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.


  22       

     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

     OPERATIONS

 

 

 

OVERVIEW

MACROECONOMIC CONDITIONS

The sluggish pace of the economic recovery since the worst national recession the United States has experienced in decades is continuing to adversely affect our business. Although the United States economy has been growing steadily since the second half of 2009, the unemployment rate remains high due to the loss of millions of jobs during the recession and the slow pace of the recovery. In some sectors of the economy, particularly housing and non-residential construction, the recovery has not yet begun. Employment is not expected to regain the peak reached during the most recent economic cycle for several more years. Until a stronger job recovery takes hold, consumer confidence and spending will remain low, indirectly negatively affecting demand for our products. We believe our net sales and financial results will be stronger in 2011 than in 2010, but they will continue to be adversely affected by these general economic factors as well as by the conditions specific to the steel industry that are described below.

CONDITIONS IN THE STEEL INDUSTRY

The steel industry has always been cyclical in nature, but North American producers of steel and steel products have been and are continuing to face some of the most challenging market conditions they have experienced in decades. The average capacity utilization rate of U.S. steel mills, which in 2009 was a historically unprecedented low of 52%, improved to 70% in 2010. This rate compares unfavorably to capacity utilization rates of 81% and 87% in 2008 and 2007, respectively. As domestic demand for steel and steel products is expected to improve only slowly in 2011, it is unlikely that average capacity utilization rates will increase significantly in 2011. The average utilization rates of all operating facilities in our steel mills, steel products and raw materials segments were approximately 70%, 54% and 69%, respectively, in 2010, compared with 54%, 49% and 53%, respectively, in 2009.

The steel industry has also historically been characterized by global overcapacity and intense competition for sales among producers. This aspect of the industry remains true today despite the bankruptcies of numerous domestic steel companies and ongoing global steel industry consolidation. The rapid and extraordinary increase in China’s total production of steel in the last decade has only compounded these characteristics of the steel industry. China is now the world’s largest producer of steel, and production there actually increased in 2009 compared to 2008, when production decreased sharply in the United States and most other steel-producing countries.

OUR CHALLENGES AND RISKS

Sales of many of our products are dependent upon capital spending in the non-residential construction markets in the United States, including not only in the industrial and commercial sectors, but also capital spending on infrastructure that is publicly funded such as bridges, schools, prisons and hospitals. Unlike recoveries from past recessions, the recovery from the recession of 2008/2009 has not included a strong recovery in the severely depressed non-residential construction market. In fact, capital spending on non-residential construction projects continues to show little, if any, strength, posing a significant challenge to our business. We do not expect to see a return to pre-recession growth in our net sales until we see a sustained increase in capital spending on these types of construction projects.

Artificially cheap exports by some of our major foreign competitors to the United States and elsewhere reduce our net sales and adversely impact our financial results. Direct steel imports in 2010 accounted for a 21% share of the U.S. market despite significant unused domestic steelmaking capacity. Aggressive enforcement of trade rules by the World Trade Organization (WTO) to limit unfairly traded imports remains uncertain, although it is critical to our ability to remain competitive. We have been encouraged by recent actions the United States government has taken before the WTO to challenge some of China’s trade practices as violating world trade rules, and we continue to believe that assertive enforcement of world trade rules must be one of the highest priorities of the United States government.

A major uncertainty we continue to face in our business is the price of our principal raw material, ferrous scrap, which is volatile and often increases rapidly in response to changes in domestic demand, unanticipated events that decrease the flow of scrap into scrap yards, and increased foreign demand for scrap. Increasing our prices for the products we sell quickly enough to offset increases in the prices we pay for ferrous scrap is challenging but critical to maintaining our profitability. We have a surcharge mechanism to offset changes in prices of our raw materials that is based upon widely-available market indices for prices of scrap and other raw materials. We monitor changes in those indices closely and make adjustments as needed, generally on a monthly basis, to our surcharges and sometimes directly to the selling prices for our products.

The majority of our steel sales are to spot market customers who place their orders each month based on their business needs and our pricing competitiveness. We include in our contract sales to customers a method of adjusting prices on a periodic basis to reflect changes in market pricing for scrap. Contract sales typically have terms ranging from six to twelve months. There will often be a timing difference between changes in the prices we pay for raw materials and the adjustments to our selling prices, but we attempt to manage this risk via the surcharge mechanism, which our customers understand is a necessary response to the unpredictable market forces affecting prices for our raw materials.


   

  23  

 

Another significant uncertainty we face is the cost of energy, primarily electricity and natural gas. Although electricity prices have historically been more stable than natural gas prices, proposed regulation of greenhouse gas emissions from new and refurbished power plants could increase our cost of electricity in future years, particularly if they are adopted in a form that requires deep reductions in greenhouse gas emissions. Adopting these regulations in an onerous form could lead to foreign producers that are not affected by them gaining a competitive advantage over us. We are monitoring these regulatory developments closely and will seek to educate public policy makers during the adoption process about their potential impact on our business.

OUR STRENGTHS AND OPPORTUNITIES

Our highly variable cost structure, combined with our financial strength and liquidity, has allowed us to succeed in cyclical severely depressed steel industry market conditions in the past. In such times, our incentive-based pay system reduces our payroll costs, both hourly and salary, which helps to offset lower selling prices. Our pay-for-performance system that is closely tied to our levels of production also allows us to keep our work force intact and to continue operating our facilities when some of our competitors with fixed costs are forced to shut down some of their facilities. Because we use electric arc furnaces to produce our steel, we can easily vary our production levels to match short-term changes in demand unlike our integrated competitors. We believe these strengths have given us opportunities to gain market share during such times.

We are North America’s most diversified steel producer. As a result, our short-term performance is not tied to any one market. The pie chart below shows the diversity of our product mix by total tons sold to outside customers in 2010.

LOGO

EVALUATING OUR OPERATING PERFORMANCE

We report our results of operations in three segments: steel mills, steel products and raw materials. Most of the steel we produce in our mills is sold to outside customers, but a significant percentage is used during each period internally by some of the facilities in our steel products segment.

We begin measuring our performance by comparing our net sales, both in total and by individual segment, during a reporting period to our net sales in the corresponding period in the prior year. In doing so, we focus on changes in and the reasons for such changes in the two key variables that have the greatest influence on our net sales, average sales price per ton during the period and total tons shipped to outside customers.

We also focus on both dollar and percentage changes in gross margins, which are key drivers of our profitability, and the reasons for such changes. There are many factors from period to period that can affect our gross margins. One consistent area of focus for us is changes in “metal margins,” which is the difference between the selling price of steel and the cost of scrap and scrap substitutes. Increases in the cost of scrap and scrap substitutes that are not offset by increases in the selling price of steel can quickly compress our margins and reduce our profitability.

Another factor affecting our gross margins in any given period is the application of the LIFO method of accounting to a substantial portion of our inventory (45% of total inventories as of December 31, 2010). LIFO charges or credits for interim periods are based on management’s interim period estimates, of both inventory costs and quantities at fiscal year-end. These estimates consider current and anticipated market conditions. The actual amounts may differ significantly from these estimated amounts. Annual LIFO charges or credits are largely based on the relative changes in cost and quantities year over year, primarily with raw material inventory in the steel mills segment.


  24  

 

    

Because we are such a large user of energy, material changes in energy costs per ton can significantly affect our gross margins as well. Lower energy costs per ton increase our gross margins. Generally, our energy costs per ton are lower when the average utilization rates of all operating facilities in our steel mills segment are higher.

Changes in marketing, administrative and other expenses, particularly freight and profit sharing costs, can have a material effect on our results of operations for a reporting period as well. Profit sharing costs vary significantly from period to period as they are based upon changes in our pre-tax earnings, and are a reflection of our pay-for-performance system that is closely tied to our levels of production.

EVALUATING OUR FINANCIAL CONDITION

We evaluate our financial condition each reporting period by focusing primarily on cash provided by operating activities, our current ratio, the turnover rate of our accounts receivable and inventories, the amount and reasons for changes in cash used in investing activities, the amount and reasons for changes in cash provided by financing activities and our cash and cash equivalents and short-term investments position at period end. Our conservative financial practices have served us well in the past and are serving us well today. As a result, our financial position remains strong despite the negative effects on our business of the current downturn in the economic cycle.

 

 

COMPARISON OF 2010 TO 2009

RESULTS OF OPERATIONS

NET SALES

Net sales to external customers by segment for 2010 and 2009 were as follows:

 

                 (in thousands)
Year Ended December 31,    2010      2009      % Change  
   

Steel mills

   $10,860,760      $7,159,512      52%  

Steel products

   2,831,209      2,691,322      5%  

Raw materials

   1,814,329      1,076,964      68%  

All other

   338,329      262,498      29%  
            

Total net sales to external customers

   $15,844,627      $11,190,296      42%  
            
                

Net sales for 2010 increased 42% from the prior year. The average sales price per ton increased 13% from $637 in 2009 to $720 in 2010, while total tons shipped to outside customers increased 25%.

LOGO


   

  25  

 

In the steel mills segment, production and sales tons were as follows:

 

                 (in thousands)

Year Ended December 31,

   2010      2009      % Change  
   

Steel production

   18,258      13,998      30%  
            

Outside steel shipments

   15,821      12,075      31%  

Inside steel shipments

   2,752      1,961      40%  
            

Total steel shipments

   18,573      14,036      32%  
            
                

Net sales to external customers in the steel mills segment increased 52% due to a 31% increase in tons sold to outside customers and a 16% increase in the average sales price per ton from $593 in 2009 to $689 in 2010. Total production levels at the steel mills increased 30% due to significant increases in outside shipments as well as in tons supplied to Nucor’s downstream businesses.

Tonnage data for the steel products segment is as follows:

 

                 (in thousands)

Year Ended December 31,

   2010      2009      % Change  
     

Joist production

   276      264      5%  

Deck sales

   306      310      -1%  

Cold finished sales

   462      330      40%  

Fabricated concrete
reinforcing steel sales

 

  

981  

 

  

954  

 

  

3%  

 

Net sales to external customers in the steel products segment increased 5% from 2009 due to a 12% increase in tons sold to outside customers partially offset by a 5% decrease in the average sales price per ton from $1,263 to $1,194.

Sales for the raw materials segment increased 68% from 2009 primarily due to increased prices. Approximately 88% of outside sales in the raw materials segment in 2010 were from brokerage operations of DJJ and approximately 12% of the outside sales were from the scrap processing facilities (80% and 19%, respectively, in 2009).

The “All other” category includes Nucor’s steel trading businesses. The year-over-year increases in sales are due to increases in both volume and price.

GROSS MARGIN

In 2010, Nucor recorded a gross margin of $843.7 million (5%) compared to $154.4 million (1%) in 2009. The year-over-year dollar and gross margin increases were the result of the 25% increase in total shipments to outside customers and the 13% increase in average selling price per ton. Additionally, the gross margin was impacted by the following factors:

 

In the steel mills segment, the average scrap and scrap substitute cost per ton used increased 16% from $303 in 2009 to $351 in 2010; however, metal margin dollars also increased. The results of the first nine months of 2009 included a substantially greater burden than in 2010 from the accelerated consumption of high-cost pig iron inventories, primarily at our sheet mills. These inventories were purchased prior to the collapse of both the economy and scrap/pig iron pricing in the fourth quarter of 2008. The consumption of the high-cost pig iron inventories was completed by the close of the third quarter of 2009, but had a negative impact of approximately $420 million on the 2009 gross margin.

 

Nucor’s gross margins are significantly impacted by the application of the LIFO method of accounting. LIFO 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. The average scrap and scrap substitute cost per ton in ending inventory within our steel mills segment at December 31, 2010 increased 32% as compared to December 31, 2009. At December 31, 2010, the tons on hand of inventory held at locations that value inventory using the LIFO method of accounting decreased from December 31, 2009 causing a liquidation of LIFO inventory layers in the current year. However, the increases in costs that we experienced more than offset the reduction in tons and the net result was a LIFO charge of $164.0 million in 2010 (versus a LIFO credit of $466.9 million in 2009). The increase in cost per ton was driven by increases in the demand for steel and the related raw materials, while the decrease in tons on hand resulted from the Company’s working capital management efforts.


  26  

 

    

 

• Pre-operating and start-up costs of new facilities increased to $174.8 million in 2010, compared with $160.0 million in 2009. In 2010, these costs primarily related to the SBQ mill in Memphis, Tennessee, and the galvanizing line in Decatur, Alabama. In 2009, these costs primarily related to the start-up of the SBQ mill, the construction and start-up of the galvanizing line, the proposed ironmaking facility and the Castrip project in Blytheville, Arkansas. Nucor defines pre-operating and start-up costs, all of which are expensed, as the losses attributable to facilities or major projects that are either under construction or in the early stages of operation. Once these facilities or projects have attained a utilization rate that is consistent with our similar operating facilities, they are no longer considered by Nucor to be in start-up.

   LOGO

 

• Total energy costs decreased $3 per ton from 2009 to 2010 primarily because of increased utilization rates across all product lines. As a result of the efficiency of Nucor’s steel mills, energy costs remained less than 8% of the sales dollar in 2010 and 2009.

  

MARKETING, ADMINISTRATIVE AND OTHER EXPENSES

Two major components of marketing, administrative and other expenses are freight and profit sharing costs. Although freight costs increased 10% over the prior year, unit freight costs increased only 4%. Higher fuel costs were partially offset by efficiencies created by increased shipments. Profit sharing costs, which are based upon and fluctuate with pre-tax earnings, more than doubled from 2009 to 2010 because of our return to profitability after a net loss in 2009. In 2010, profit sharing costs primarily consisted of $22.1 million of contributions made to the Company’s Profit Sharing and Retirement Savings Plan for qualified employees (including the Company’s matching contribution). In 2009, profit sharing costs primarily consisted of $9.6 million of matching contributions. Profit sharing costs also fluctuate based on Nucor’s achievement of certain financial performance goals, including comparisons of Nucor’s financial performance to peers in the steel industry and other companies. Stock-based compensation included in marketing, administrative and other expenses decreased 19% to $15.8 million in 2010 compared with $19.5 million in 2009 and includes costs associated with vesting of stock awards granted in prior years.

In December 2010, Nucor and its joint venture partners agreed to permanently close the HIsmelt plant in Kwinana, Western Australia. Nucor has a 25% interest in the joint venture that will be terminated. Nucor recorded a pre-tax charge of $10.0 million in the fourth quarter of 2010 for our portion of the estimated closure costs.

EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATES

Nucor incurred equity method investment losses of $32.1 million and $82.3 million in 2010 and 2009, respectively. The decrease in the equity method investment losses is primarily due to decreased losses at Duferdofin Nucor S.r.l., which included, a pre-tax charge to write down inventories to the lower of cost or market of $46.8 million in 2009 (none in 2010).

IMPAIRMENT OF NON-CURRENT ASSETS

Nucor recorded $2.8 million in charges for impairment of non-current assets in 2009 (none in 2010).

INTEREST EXPENSE (INCOME)

Net interest expense is detailed below:

 

       (in thousands)

Year Ended December 31,

   2010      2009       
   

Interest expense

   $161,140      $149,922       

Interest income

   (8,047)     (15,170)      
        

Interest expense, net

   $153,093      $134,752       
        
          

Gross interest expense increased 7% over 2009 primarily because of increased average debt outstanding of approximately 7%. Gross interest income decreased 47% because of a significant decrease in the average interest rate earned on investments combined with a 21% decrease in average investments.


   

  27  

 

NONCONTROLLING INTERESTS

Noncontrolling interests represent the income attributable to the minority interest 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 28% increase in noncontrolling interests was primarily attributable to the increased earnings of NYS, which were due to improvements in the structural steel market. Under the NYS limited partnership agreement, the minimum amount of cash to be distributed each year to the partners is the amount needed by each partner to pay applicable U.S. federal and state income taxes. In 2009, the amount of cash distributed to noncontrolling interest holders exceeded the earnings attributable 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

The effective tax rate in 2010 was 22.8% compared with 42.7% in 2009. The change in the rate between 2009 and 2010 was primarily due to the changes in relative proportions of net earnings or loss attributable to noncontrolling interests and equity method investments to total pre-tax earnings or loss. The change in rate was also caused by changes in the state income tax benefit in 2010 resulting from reductions in liabilities for uncertain tax positions due to statute closures. Nucor has substantially concluded U.S. federal income tax matters for years through 2006. The 2007 through 2010 tax years are open to examination by the Internal Revenue Service. The Canada Revenue Agency is currently examining the 2006 through 2008 income tax returns for two Harris Steel entities. Management believes that the Company has adequately provided for any adjustments that may arise from this audit. The tax years 2007 through 2010 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

NET EARNINGS AND RETURN ON EQUITY

Nucor reported net earnings of $134.1 million, or $0.42 per diluted share, in 2010 compared to a net loss of $293.6 million, or $0.94 per diluted share, in 2009. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were 1% in 2010 and (3%) in 2009. Return on average stockholders’ equity was 2% and (4%) in 2010 and 2009, respectively.

LOGO

 

 

COMPARISON OF 2009 TO 2008

RESULTS OF OPERATIONS

NET SALES

Net sales to external customers by segment for 2009 and 2008 were as follows:

 

               (in thousands

Year Ended December 31,

   2009      2008        % Change     
     

Steel mills

   $7,159,512      $16,477,900        -57%     

Steel products

   2,691,322      4,339,524        -38%     

Raw materials

   1,076,964      2,403,075        -55%     

All other

   262,498      442,825        -41%     
            

Total net sales to external customers

   $11,190,296      $23,663,324        -53%     
            
                    


  28  

 

    

Net sales for 2009 decreased 53% from the prior year due to the most challenging market conditions in Nucor’s history. The average sales price per ton decreased 32% from $940 in 2008 to $637 in 2009, while total tons shipped to outside customers decreased 30%.

In the steel mills segment, production and sales tons were as follows:

 

                 (in thousands)

Year Ended December 31,

   2009      2008      % Change  
     

Steel production

         13,998            20,446      -32%  
            

Outside steel shipments

   12,075      18,185      -34%  

Inside steel shipments

   1,961      2,747      -29%  
            

Total steel shipments

   14,036      20,932      -33%  
            
                

Net sales to external customers in the steel mills segment decreased 57% due to a 34% decrease in tons sold to outside customers and a 35% decrease in the average sales price per ton from $907 in 2008 to $593 in 2009. Total production levels at the steel mills decreased 32% due to significant decreases in outside shipments as well as in tons supplied to Nucor’s downstream businesses.

Tonnage data for the steel products segment was as follows:

 

                 (in thousands)

Year Ended December 31,

   2009      2008      % Change  
     

Joist production

   264      485      -46%  

Deck sales

   310      498      -38%  

Cold finished sales

   330      485      -32%  

Fabricated concrete
reinforcing steel sales

   954      955      —    

Net sales to external customers in the steel products segment decreased 38% from 2008 due to a 26% decrease in tons sold to outside customers and a 16% decrease in the average sales price per ton from $1,500 to $1,263.

Sales for the raw materials segment decreased 55% from 2008 due to declines in both volume and price. Only ten months of DJJ’s sales were included in Nucor’s consolidated results in 2008. Prior to the acquisition of DJJ, Nucor had no outside sales of raw materials. Approximately 77% of outside sales in the raw materials segment in 2008 were from brokerage operations of DJJ and approximately 22% of the outside sales were from the scrap processing facilities.

The “All other” category includes Nucor’s steel trading businesses. The year-over-year decreases in sales are primarily due to decreased sales prices per ton.

GROSS MARGIN

In 2009, Nucor recorded a gross margin of $154.4 million (1%) compared to $4.05 billion (17%) in 2008. The year-over-year dollar and gross margin decreases were the result of the 30% decrease in total shipments to outside customers and decreased average selling price per ton for all products. Additionally, the decreases were due to the following factors:

 

In the steel mills segment, the average scrap and scrap substitute cost per ton used decreased 31% from $438 in 2008 to $303 in 2009; however, metal margins also decreased. The consumption of the high-cost pig iron inventories had a negative impact of approximately $420 million on the 2009 gross margin.

 

Pre-operating and start-up costs of new facilities increased to $160.0 million in 2009, compared with $128.6 million in 2008. In 2008, these costs related to the HIsmelt project, the construction of the SBQ mill, the start-up of the Castrip facility, the construction of the galvanizing line and the start-up of our building systems plant in Brigham City, Utah.

 

Total energy costs increased $1 per ton from 2008 to 2009 due primarily to decreased utilization rates across all product lines.

The average scrap and scrap substitute cost per ton in ending inventory within our steel mills segment at December 31, 2009 decreased 38% as compared to December 31, 2008. The tons on hand of scrap and scrap substitutes within our steel mills segment at December 31, 2009 decreased 63% from the December 31, 2008 levels. The decreases in cost and tons in ending inventory as compared to the prior year resulted in a LIFO credit of $466.9 million in 2009 (charge of $341.8 million in 2008). These decreases were attributable to both the reduced demand for steel and related raw materials and our accelerated


   

  29  

 

consumption of high-cost pig iron inventories, primarily at our sheet mills, during the first nine months of 2009. The high-cost pig iron inventories were purchased prior to the collapse of both the economy and scrap/pig iron pricing in the fourth quarter of 2008.

MARKETING, ADMINISTRATIVE AND OTHER EXPENSES

Unit freight costs decreased 3% from 2008 to 2009 primarily due to lower fuel costs. Profit sharing costs, which are based upon and fluctuate with pre-tax earnings, decreased approximately 96% from 2008 to 2009 primarily due to our net loss for 2009. In 2009, profit sharing costs primarily consisted of $9.6 million of matching contributions made to the 401(k) portion of the Company’s Profit Sharing and Retirement Savings Plan for qualified employees. In 2008, profit sharing costs included $281.3 million for contributions to the Profit Sharing and Retirement Savings Plan (including the Company’s matching contribution) and an additional $36.2 million in extraordinary bonuses paid to employees for the achievement of record earnings during the year. Stock-based compensation included in marketing, administrative and other expenses increased 8% to $19.5 million in 2009 compared with $18.1 million in 2008, and includes costs associated with vesting of stock awards granted in prior years.

EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATES

Nucor incurred equity method investment losses of $82.3 million and $36.9 million in 2009 and 2008, respectively. The increase in the equity method investment losses is primarily due to losses at Duferdofin Nucor S.r.l., including, a pre-tax charge to write down inventories to the lower of cost or market of $46.8 million in 2009.

IMPAIRMENT OF NON-CURRENT ASSETS

In 2009, Nucor recorded $2.8 million in charges for impairment of non-current assets compared with $105.2 million in charges in 2008. Approximately $84.8 million of the impairment charge in 2008 was for the impairment of our investment in the HIsmelt joint venture. In December 2008, production at the HIsmelt plant was suspended due to market conditions.

INTEREST EXPENSE (INCOME)

Net interest expense is detailed below:

 

        (in thousands)

Year Ended December 31,

   2009       2008       
   

Interest expense

   $149,922       $134,554       

Interest income

   (15,170)      (44,071)      
         

Interest expense, net

   $134,752       $  90,483       
         
           

Gross interest expense increased 11% over 2008 primarily due to increased average debt outstanding of 4% and increased interest related to uncertain tax positions. Gross interest income decreased 66% primarily due to a significant decrease in the average interest rate earned on investments. The decrease in rates was offset by a 29% increase in average investments attributable to cash received from the issuance of debt and equity during the second quarter of 2008 and decreased acquisition activity and capital expenditures in 2009 as compared to 2008.

NONCONTROLLING INTERESTS

The 82% decrease in noncontrolling interests was primarily attributable to the decreased earnings of NYS, which were due to the significant weakening of the structural steel market.

PROVISION FOR INCOME TAXES

Nucor had an effective tax rate of 42.7% in 2009 compared with 30.9% in 2008. The change in the rate between 2008 and 2009 is primarily due to the changes in relative proportions of net income attributable to noncontrolling interests to total pre-tax earnings and to the pre-tax loss position in 2009 and the related reduction in domestic manufacturing deduction benefits. In 2008, Nucor recorded refundable state income tax credits of $6.1 million (none in 2009).

NET EARNINGS AND RETURN ON EQUITY

Nucor reported a net loss of $293.6 million or $0.94 per diluted share, in 2009 compared to record net earnings and earnings per share of $1.83 billion and $5.98 per diluted share in 2008. Net earnings (loss) attributable to Nucor stockholders as a percentage of net sales were (3%) in 2009 and 8% in 2008. Return on average stockholders’ equity was (4%) and 28% in 2009 and 2008, respectively.


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LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by operating activities provide us with a significant source of liquidity. When needed, we also have external short-term financing sources available including the issuance of commercial paper and borrowings under our bank credit facilities. We also issue long-term debt from time to time.

Nucor had no commercial paper outstanding at December 31, 2010, and our $1.3 billion revolving credit facility was undrawn and does not expire until November 2012. We believe our financial strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We currently carry the highest credit ratings of any metals and mining company in North America with an A rating from Standard & Poor’s and an A2 rating from Moody’s. Based upon these ratings, we expect to continue to have adequate access to the capital markets at a reasonable cost of funds for liquidity purposes when needed. Our credit ratings are dependent, however, upon a number of factors, both qualitative and quantitative, and are subject to change at any time. The disclosure of our credit ratings is made in order to enhance investors’ understanding of our sources of liquidity and the impact of our credit ratings on our cost of funds.

Nucor’s cash and cash equivalents and short-term investments position remains robust at $2.48 billion as of December 31, 2010. In addition, $598.5 million of restricted cash is available at December 31, 2010 for use in the construction of the DRI facility in Louisiana. Approximately $189.7 million and $158.7 million of the cash and cash equivalents position at December 31, 2010 and December 31, 2009, respectively, was held by our majority-owned joint ventures.

Selected Measures of Liquidity and Capital Resources:

 

           (in thousands)

December 31,

   2010      2009  

Cash and cash equivalents

   $1,325,406      $2,016,981  

Short-term investments

   $1,153,623      $225,000  

Working capital

   $4,356,737      $3,955,191  

Current ratio

   3.9      4.2  

 

The current ratio decreased from 4.2 at December 31, 2009 to 3.9 at December 31, 2010. Accounts receivable and inventories increased 29% and 19%, respectively, since 2009, while net sales in the fourth quarter increased 31% 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 2010, total accounts receivable turned approximately monthly and inventories turned approximately every five 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 27% increase in accounts payable, which is primarily attributable to the increased cost of raw materials. In addition, salaries, wages and related accruals increased primarily because of the increase in profit sharing and bonuses.

 

LOGO

  

 

Funds provided by 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.

  

 

We have a simple capital structure with no off-balance sheet arrangements or relationships with unconsolidated special purpose entities.

  

 

OPERATING ACTIVITIES

   Nucor generated cash provided by operating activities of $873.4 million in 2010 compared with $1.17 billion in 2009, a decrease of 26%. The increase in net earnings over the prior year was offset by changes in operating assets and liabilities of ($128.9) million in 2010 compared with $615.6 million in 2009. The funding of working capital (primarily accounts receivable and inventories) increased over the prior year due to higher levels of operations in 2010.


   

  31  

 

INVESTING ACTIVITIES

Our business is capital intensive; therefore, cash used in investing activities primarily represents capital expenditures for new facilities, the expansion and upgrading of existing facilities, and the acquisition of other companies. Additionally, the cash used in investing activities includes investments in joint ventures and purchases of and proceeds from the sale of investments. Cash used in investing activities increased to $2.26 billion in 2010 compared with $700.4 million in 2009 primarily due to the investment of funds received from the issuance of debt and the acquisition of a 50% interest in NuMit LLC for $221.3 million.

Nucor invested $345.3 million in new facilities (exclusive of acquisitions) and expansion or upgrading of existing facilities in 2010 compared with $390.5 million in 2009, a decrease of 12%. Nucor’s capital investment and maintenance practices give us the flexibility to reduce our current spending on our facilities to very low levels during severely depressed market conditions such as we experienced in 2009 and 2010.

FINANCING ACTIVITIES

Cash provided by financing activities was $691.8 million in 2010 compared with cash used in financing activities of $820.0 million in 2009. In September 2010, Nucor issued $600.0 million of 4.125% unsecured notes due in 2022 for general corporate purposes, including repayment of debt. In November 2010, Nucor issued $600.0 million in 30-year variable rate Gulf Opportunity Zone bonds to partially fund the construction of the DRI facility in Louisiana. Nucor repaid $6.0 million and $180.4 million of debt in 2010 and 2009, respectively.

In 2010, Nucor increased its quarterly base dividend resulting in dividends paid of $457.3 million ($443.1 million in 2009).

Although there were no repurchases in 2009 or 2010, approximately 27.2 million shares remain authorized for repurchase under the Company’s stock repurchase program.

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 the Company’s assets and a limit on consolidations, mergers and sales of assets. Our funded debt to total capital ratio was 37% and 29% at year-end 2010 and 2009, respectively, and we were in compliance with all other covenants under our credit facility.

MARKET RISK

Nucor’s largest exposure to market risk is in our steel mills and steel products segments. Our utilization rates for the steel mills and steel products facilities for the fourth quarter of 2010 were 68% and 52%, respectively. A significant portion of our steel and steel products segments’ sales are into the commercial, industrial and municipal construction markets, which continue to be very depressed. Our largest single customer in 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.

The majority of Nucor’s tax-exempt industrial revenue bonds (IDRBs), including the Gulf Opportunity Zone bonds, have variable interest rates that are adjusted weekly, with the rate of one IDRB adjusted annually. These IDRBs represent 24% of Nucor’s long-term debt outstanding at December 31, 2010. The remaining 76% of Nucor’s long-term debt is at fixed rates. Future changes in interest rates are not expected to significantly impact earnings. From time to time, Nucor makes use of interest rate swaps to manage interest rate risk. As of December 31, 2010, there were no such contracts outstanding. Nucor’s investment practice is to invest in securities that are highly liquid with short maturities. As a result, we do not expect changes in interest rates to have a significant impact on the value of our investment securities.

Nucor also uses derivative financial instruments from time to time 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 forward foreign exchange contracts from time to time to hedge cash flows associated with certain assets and liabilities, firm commitments and anticipated transactions. Nucor generally does not enter into derivative instruments for any purpose other than hedging the cash flows associated with specific volumes of commodities that will be purchased and processed in future periods and hedging the exposures related to changes in the fair value of outstanding fixed rate debt instruments and foreign currency transactions. Nucor recognizes all derivative instruments in the consolidated balance sheets at fair value.

The Company is exposed to foreign currency risk through its operations in Canada, Europe, Trinidad and Australia. When the Company entered into the agreement to acquire 50% of the stock of Duferdofin Nucor in 2008, Nucor became exposed to Euro currency fluctuations and hedged the exposure associated with the closing of the transaction in July 2008.


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CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

The following table sets forth our contractual obligations and other commercial commitments as of December 31, 2010 for the periods presented:

 

                                 (in thousands)  
    

 

Payments Due By Period

 
Contractual Obligations    Total      2011      2012 - 2013      2014 - 2015      2016 and thereafter  

Long-term debt

   $ 4,280,200       $       $ 900,000       $ 19,600       $ 3,360,600   

Estimated interest on long-term debt(1)

     2,053,739         178,645         312,420         268,003         1,294,671   

Operating leases

     104,242         29,489         35,863         20,783         18,107   

Raw material purchase commitments(2)

     4,959,046         1,343,339         1,431,423         1,276,284         908,000   

Utility purchase commitments(2)

     942,321         201,337         156,285         89,321         495,378   

Other unconditional purchase obligations(3)

     947,282         197,484         365,383         236,198         148,217   

Other long-term obligations(4)

     289,477         131,044         47,238         14,064         97,131   
                                            

Total contractual obligations

   $ 13,576,307       $ 2,081,338       $ 3,248,612       $ 1,924,253       $ 6,322,104   
                                            
                                              

 

(1)

   Interest is estimated using applicable rates at December 31, 2010 for Nucor’s outstanding fixed and variable rate debt.

(2)

   Nucor enters into contracts for the purchase of scrap and scrap substitutes, iron ore, electricity, natural gas and other raw materials and related services. These contracts include multi-year commitments and minimum annual purchase requirements and are valued at prices in effect on December 31, 2010, or according to the contract language. These contracts are part of normal operations and are reflected in historical operating cash flow trends. We do not believe such commitments will adversely affect our liquidity position.

(3)

   Purchase obligations include commitments for capital expenditures on operating machinery and equipment and payments related to the working interest natural gas drilling program.

(4)

   Other long-term obligations include amounts associated with Nucor’s early-retiree medical benefits, management compensation and guarantees.

Note:

   In addition to the amounts shown in the table above, $92.8 million of unrecognized tax benefits have been recorded as liabilities, and we are uncertain as to if or when such amounts may be settled. Related to these unrecognized tax benefits, we have also recorded a liability for potential penalties and interest of $30.6 million at December 31, 2010.

DIVIDENDS

Nucor has increased its base cash dividend every year since it began paying dividends in 1973. Nucor paid dividends of $1.44 per share in 2010 compared with $1.40 per share in 2009. In December 2010, the board of directors increased the base quarterly dividend to $0.3625 per share. The base quarterly dividend has more than tripled since the end of 2007. In February 2011, the board of directors declared Nucor’s 152nd consecutive quarterly cash dividend of $0.3625 per share payable on May 11, 2011 to stockholders of record on March 31, 2011.

OUTLOOK

Utilization rates, which improved throughout the fourth quarter, have continued to improve in early 2011 and we expect the trend to continue as we progress through the first quarter. In addition, recent price increases for all steel mill products are expected to have a positive impact on earnings as we return to profitability in the first quarter. This positive trend in earnings is expected to continue as we head into the second quarter. We are therefore cautiously optimistic regarding first half volume, pricing and profitability. On the negative side, it appears that we will continue to experience volatile raw material costs in 2011. We believe end markets are experiencing some real demand improvement that will continue throughout 2011. However, the improvement in operating rates that we expect to see in the first quarter of 2011 will be the result of a combination of both improving demand and steel buyers reacting to increasing raw material and steel prices. The most challenging markets for our products continue to be those associated with residential and non-residential construction.

In 2011, we will continue to allocate capital to investments that build our long-term earnings power. Capital expenditures are currently projected to be approximately $560 million in 2011, compared with $345 million in 2010. Included in this total are expenditures for our planned Louisiana DRI plant, our natural gas working interest program, and investments in our core operations to expand our product offerings and keep them state-of-the-art and globally competitive.

 

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation


   

  33  

 

of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at year end, and the reported amount of revenues and expenses during the year. On an ongoing basis, we evaluate our estimates, including those related to the valuation allowances for receivables; the carrying value of non-current assets; reserves for environmental obligations; and income taxes. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Accordingly, actual costs could differ materially from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of our consolidated financial statements.

ALLOWANCES FOR DOUBTFUL ACCOUNTS

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

INVENTORIES

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

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

LONG-LIVED ASSET IMPAIRMENTS

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

Certain long-lived asset groupings were tested for impairment during the fourth quarter of 2010. Undiscounted cash flows for each asset grouping were estimated using management’s long-range estimates of market conditions associated with each asset grouping over the estimated useful life of the principal asset within the group. Our undiscounted cash flow analysis indicated that those long-lived asset groupings were recoverable as of December 31, 2010; however, if our projected cash flows are not realized, either because of an extended recessionary period or other unforeseen events, impairment charges may be required in future periods. A 10% decrease in the projected cash flows of each of our asset groupings would not result in an impairment.

GOODWILL

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

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


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Our fourth quarter 2010 annual goodwill impairment analysis did not result in an impairment charge. Although the excess of fair value over carrying value for the majority of our reporting units improved from 2009 levels, they remain substantially lower than 2008. Accordingly, management does not currently believe that future impairment of these reporting units is probable. However, the performance of certain businesses that comprise our reporting units requires continued improvement. A 50 basis point increase in the discount rate, a critical assumption in which a minor change can have a significant impact on the estimated fair value, would not result in an impairment charge.

Nucor will continue to monitor operating results within all reporting units throughout the upcoming year in an effort to determine if events and circumstances warrant further interim impairment testing. Otherwise, all reporting units will again be subject to the required annual impairment test during our fourth quarter of 2011. Changes in the judgments and estimates underlying our analysis of goodwill for possible impairment, including expected future operating cash flows and discount rate, could decrease the estimated fair value of our reporting units in the future and could result in an impairment of goodwill.

EQUITY METHOD INVESTMENTS

Investments in joint ventures in which Nucor shares control over the financial and operating decisions but in which Nucor is not the primary beneficiary are accounted for under the equity method. Each of the Company’s equity method investments is subject to a review for impairment if, and when, circumstances indicate that the fair value of our investment could be less than carrying value. If the results of the review indicate a decline in the carrying value of our investment and that decline is other than temporary, the Company would write down the investment to its estimated fair value.

As a result of the continued decline in the global demand for steel and the losses incurred at the investment during 2010, we evaluated our investment in Duferdofin Nucor during the fourth quarter of 2010. Nucor determined 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 discounted cash flow scenarios require the use of unobservable inputs, including assumptions of projected revenues (including product volume, product mix and average selling prices), raw material costs and other production expenses, capital spending and other costs, as well as a discount rate. Estimates of projected revenues, expenses, capital spending and other costs are developed by Duferdofin Nucor and Nucor using historical data and available market data. Based on our analysis, the estimated fair value of our investment in Duferdofin Nucor exceeded carrying value as of December 31, 2010. As a result, we did not have an other-than-temporary impairment of our investment in Duferdofin Nucor in 2010.

Changes in management estimates to the unobservable inputs would change the valuation of the investment. The estimates for the projected revenue and discount rate are the assumptions that most significantly affect the fair value determination. A 50 basis point increase in the discount rate would not result in an impairment charge.

ENVIRONMENTAL REMEDIATION

We are subject to environmental laws and regulations established by federal, state and local authorities, and we make provision for the estimated costs related to compliance. Undiscounted remediation liabilities are accrued based on estimates of known environmental exposures. The accruals are reviewed periodically and, as investigations and remediation proceed, adjustments are made as we believe are necessary. The accruals are not reduced by possible recoveries from insurance carriers or other third parties. Our measurement of environmental liabilities is based on currently available facts, present laws and regulations, and current technology.

INCOME TAXES

We utilize the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Potential accrued interest and penalties related to unrecognized tax benefits within operations are recognized as a component of earnings before taxes and noncontrolling interests.

 

 

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to our consolidated financial statements for a discussion of new accounting pronouncements adopted by Nucor during 2010 and the expected financial impact of accounting pronouncements recently issued or proposed but not yet required to be adopted.


FIVE-YEAR FINANCIAL REVIEW    

 

       39  

 

    

(dollar and share amounts in thousands, except per share data)

 

 
     

 

2010

    2009     2008     2007     2006  

 

FOR THE YEAR

 

          

Net sales

 

   $ 15,844,627      $ 11,190,296      $ 23,663,324      $ 16,592,976      $ 14,751,270   

Costs, expenses and other:

 

          

Cost of products sold

 

     15,000,962        11,035,903        19,612,283        13,462,927        11,284,606   

Marketing, administrative and other expenses

 

     391,375        348,478        714,064        553,146        574,783   

Equity in losses of unconsolidated affiliates

 

     32,082        82,341        36,920        24,618        17,690   

Impairment of non-current assets

 

            2,800        105,183                 

Interest expense (income), net

 

     153,093        134,752        90,483        5,469        (37,365
                                        
     15,577,512        11,604,274        20,558,933        14,046,160        11,839,714   

Earnings (loss) before income taxes and noncontrolling interests

 

     267,115        (413,978     3,104,391        2,546,816        2,911,556   

Provision for (benefit from) income taxes

 

     60,792        (176,800     959,480        781,368        935,653   
                                        

Net earnings (loss)

 

     206,323        (237,178     2,144,911        1,765,448        1,975,903   

Earnings attributable to noncontrolling interests

 

     72,231        56,435        313,921        293,501        219,121   
                                        

Net earnings (loss) attributable to Nucor stockholders

 

 

     134,092        (293,613     1,830,990        1,471,947        1,756,782   

Net earnings (loss) per share:

 

          

Basic

 

     0.42        (0.94     5.99        4.96        5.73   

Diluted

 

     0.42        (0.94     5.98        4.94        5.68   

Dividends declared per share

 

     1.4425        1.41        1.91        2.44        2.15   

Percentage of net earnings (loss) to net sales

 

     0.8     -2.6     7.7     8.9     11.9

Return on average stockholders’ equity

 

     1.8     -3.8     28.1     29.5     38.3

Capital expenditures

 

     345,294        390,500        1,018,980        520,353        338,404   

Acquisitions (net of cash acquired)

 

     64,788        32,720        1,826,030        1,542,666        223,920   

Depreciation

 

     512,147        494,035        479,484        403,172        363,936   

Sales per employee

 

     777        539        1,155        1,085        1,273   

AT YEAR END

 

          

Current assets

 

   $ 5,861,175      $ 5,182,248      $ 6,397,486      $ 5,073,249      $ 4,683,065   

Current liabilities

 

     1,504,438        1,227,057        1,854,192        1,582,036        1,421,917   
                                        

Working capital

 

     4,356,737        3,955,191        4,543,294        3,491,213        3,261,148   

Cash provided by operating activities

 

     873,404        1,173,194        2,502,063        1,935,306        2,251,233   

Current ratio

 

     3.9        4.2        3.5        3.2        3.3   

Property, plant and equipment, net

 

     3,852,118        4,013,836        4,131,861        3,232,998        2,856,415   

Total assets

 

     13,921,910        12,571,904        13,874,443        9,826,122        7,893,018   

Long-term debt

 

     4,280,200        3,086,200        3,266,600        2,250,300        922,300   

Percentage of debt to capital(1)

 

     36.9     28.9     28.3     29.4     15.3

Total Nucor stockholders’ equity

 

     7,120,070        7,390,526        7,929,204        5,112,917        4,857,351   

Per share

 

     22.55        23.47        25.25        17.75        16.14   

Shares outstanding

 

     315,791        314,856        313,977        287,993        300,949   

Employees

     20,500        20,400        21,700        18,000        11,900   

 

(1)

   Long-term debt divided by total equity plus long-term debt.


  40       

     MANAGEMENT’S REPORT

 

 

 

Management’s Report on internal control over financial reporting

 

 

Nucor’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2010. In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on its assessment, management concluded that Nucor’s internal control over financial reporting was effective as of December 31, 2010. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2010 as stated in their report which is included herein.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    

 

       41  

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Stockholders and Board of Directors

Nucor Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of Nucor Corporation and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

LOGO

PricewaterhouseCoopers LLP

Charlotte, NC

February 28, 2011


  42       

    CONSOLIDATED BALANCE SHEETS

 

 

CONSOLIDATED BALANCE SHEETS

 

    

 

(in thousands)

 

  

 

December 31,

     2010        2009   

 

ASSETS

 

      

CURRENT ASSETS:

      

 

Cash and cash equivalents (Note 15)

 

   $

 

1,325,406

 

  

 

  $

 

2,016,981

 

  

 

Short-term investments (Notes 4 and 15)

 

    

 

1,153,623

 

  

 

   

 

225,000

 

  

 

Accounts receivable, net (Note 5)

 

    

 

1,439,828

 

  

 

   

 

1,116,035

 

  

 

Inventories, net (Note 6)

 

    

 

1,557,574

 

  

 

   

 

1,312,903

 

  

 

Other current assets (Notes 9, 14, 15 and 20)

     384,744        511,329   
                

 

Total current assets

     5,861,175        5,182,248   

 

PROPERTY, PLANT AND EQUIPMENT, NET (Note 7)

     3,852,118        4,013,836   

 

RESTRICTED CASH (Notes 11 and 15)

     598,482          

 

GOODWILL (Note 8)

     1,836,294        1,803,021   

 

OTHER INTANGIBLE ASSETS, NET (Note 8)

     856,125        902,922   

 

OTHER ASSETS (Notes 9 and 11)

     917,716        669,877   
                

 

TOTAL ASSETS

   $ 13,921,910      $ 12,571,904   
                

 

LIABILITIES AND EQUITY

 

                

CURRENT LIABILITIES:

 

      

Short-term debt (Notes 11 and 15)

 

   $

 

13,328

 

  

 

  $

 

1,748

 

  

 

Long-term debt due within one year (Notes 11 and 15)

 

    

 

—  

 

  

 

   

 

6,000

 

  

 

Accounts payable (Note 10)

 

    

 

896,703

 

  

 

   

 

707,038

 

  

 

Salaries, wages and related accruals (Notes 17 and 18)

 

    

 

207,168

 

  

 

   

 

154,997

 

  

 

Accrued expenses and other current liabilities (Notes 10, 14, 15 and 16)

     387,239        357,274   
                

 

Total current liabilities

     1,504,438        1,227,057   

 

LONG-TERM DEBT DUE AFTER ONE YEAR (Notes 11 and 15)

     4,280,200        3,080,200   

 

DEFERRED CREDITS AND OTHER LIABILITIES (Notes 14, 15, 16, 17, 18 and 20)

     806,578        680,358   
                

 

 

TOTAL LIABILITIES

     6,591,216        4,987,615   
                

COMMITMENTS AND CONTINGENCIES (Notes 6 and 16)

 

      

EQUITY

 

      

NUCOR STOCKHOLDERS’ EQUITY (Notes 12, 13 and 17):

 

      

Common stock (800,000 shares authorized; 375,451 and 374,692 shares issued, respectively)

     150,181        149,877   

 

Additional paid-in capital

     1,711,518        1,675,777   

 

Retained earnings

     6,795,988        7,120,218   

 

Accumulated other comprehensive loss, net of income taxes (Notes 2 and 14)

     (27,776     (41,056

 

Treasury stock (59,660 and 59,836, respectively)

     (1,509,841     (1,514,290
                

 

Total Nucor stockholders’ equity

 

    

 

7,120,070

 

  

 

   

 

7,390,526

 

  

 

 

NONCONTROLLING INTERESTS

     210,624        193,763   
                

 

TOTAL EQUITY

     7,330,694        7,584,289   
                

 

TOTAL LIABILITIES AND EQUITY

   $ 13,921,910      $ 12,571,904   
                
                  

See notes to consolidated financial statements.


CONSOLIDATED STATEMENTS OF EARNINGS    

 

      43  

 

CONSOLIDATED STATEMENTS OF EARNINGS

 

    

 

(in thousands, except per share data)

 

  

 

 

Year Ended December 31,

     2010         2009        2008   

NET SALES

   $ 15,844,627         $11,190,296      $ 23,663,324   
                         

 

COSTS, EXPENSES AND OTHER:

           

 

Cost of products sold

     15,000,962         11,035,903        19,612,283   

 

Marketing, administrative and other expenses

     391,375         348,478        714,064   

 

Equity in losses of unconsolidated affiliates (Note 9)

     32,082         82,341        36,920   

 

Impairment of non-current assets (Note 9)

             2,800        105,183   

 

Interest expense, net (Note 19)

     153,093         134,752        90,483   
                         
     15,577,512         11,604,274        20,558,933   
                         

 

EARNINGS (LOSS) BEFORE INCOME TAXES
  AND NONCONTROLLING INTERESTS

     267,115         (413,978     3,104,391   

 

PROVISION FOR (BENEFIT FROM) INCOME TAXES (Note 20)

     60,792         (176,800     959,480   
                         

 

NET EARNINGS (LOSS)

     206,323         (237,178     2,144,911   
   

 

EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

     72,231         56,435        313,921   
                         

 

NET EARNINGS (LOSS) ATTRIBUTABLE TO NUCOR STOCKHOLDERS

   $ 134,092       $ (293,613   $ 1,830,990   
                         

 

NET EARNINGS (LOSS) PER SHARE (Note 21):

           

 

Basic

     $0.42         ($0.94     $5.99   

 

Diluted

     $0.42         ($0.94     $5.98   

See notes to consolidated financial statements.


  44       

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

  

(in thousands, except per share data)

     

TOTAL

    COMMON STOCK      ADDITIONAL
PAID-IN
CAPITAL
     RETAINED
EARNINGS
    ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
   

TREASURY STOCK

(AT COST)

   

TOTAL

NUCOR
STOCKHOLDERS'
EQUITY

    NON-
CONTROLLING
INTERESTS
 
         SHARES         AMOUNT                SHARES        AMOUNT       

BALANCES, December 31, 2007

   $ 5,400,363        373,255        $ 149,302        $ 256,406       $ 6,621,646      $ 163,362        85,262      $ (2,077,799   $ 5,112,917      $ 287,446   

Comprehensive income:

                       

Net earnings in 2008

     2,144,911                 1,830,990              1,830,990        313,921   

Net unrealized loss on hedging derivatives, net of income taxes

     (60,137                (60,137         (60,137  

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

     (9,863                (9,863         (9,863  

Foreign currency translation loss, net of income taxes

     (284,534                (284,199         (284,199     (335

Adjustment to early-retiree medical plan, net of income taxes

     575                   575            575     
                                         

Total comprehensive income

     1,790,952                         1,477,366        313,586   

Stock options exercised

     10,711        553         221         10,490                 10,711     

Issuance of stock under award plans, net of forfeitures

     53,173        261         105         46,340             (276     6,728        53,173     

Amortization of unearned compensation

     5,025              5,025                 5,025     

Issuance of stock under public equity offering

     1,985,979              1,311,720             (27,668     674,259        1,985,979     

Treasury stock acquired

     (123,960                  2,774        (123,960     (123,960  

Cash dividends ($1.91 per share)

     (592,007              (592,007           (592,007  

Distributions to noncontrolling interests

     (275,075                        (275,075

Other

     1,520                                                                           1,520   

BALANCES, December 31, 2008

     8,256,681        374,069         149,628         1,629,981         7,860,629        (190,262     60,092        (1,520,772     7,929,204        327,477   

Comprehensive income:

                       

Net earnings (loss) in 2009

     (237,178              (293,613           (293,613     56,435   

Net unrealized loss on hedging derivatives, net of income taxes

     (48,616                (48,616         (48,616  

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

     40,543                   40,543            40,543     

Foreign currency translation gain, net of income taxes

     155,285                   155,201            155,201        84   

Adjustment to early-retiree medical plan, net of income taxes

     2,078                   2,078            2,078     
                                         

Total comprehensive income (loss)

     (87,888                      (144,407     56,519   

Stock options exercised

     3,740        239         95         3,645                 3,740     

Issuance of stock under award plans, net of forfeitures

     44,883        384         154         38,247             (256     6,482        44,883     

Amortization of unearned compensation

     3,904              3,904                 3,904     

Cash dividends ($1.41 per share)

     (446,798              (446,798           (446,798  

Distributions to noncontrolling interests

     (190,233                                                                        (190,233

BALANCES, December 31, 2009

     7,584,289        374,692         149,877         1,675,777         7,120,218        (41,056     59,836        (1,514,290     7,390,526        193,763   

Comprehensive income:

                       

Net earnings in 2010

     206,323                 134,092              134,092        72,231   

Net unrealized loss on hedging derivatives, net of income taxes

     (29,957                (29,957         (29,957  

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

     35,141                   35,141            35,141     

Foreign currency translation gain, net of income taxes

     8,182                   8,172            8,172        10   

Adjustment to early-retiree medical plan, net of income taxes

     (76                (76         (76  
                                         

Total comprehensive income

     219,613                         147,372        72,241   

Stock options exercised

     4,662        319         128         4,534                 4,662     

Stock option expense

     729              729                 729     

Issuance of stock under award plans, net of forfeitures

     32,777        440         176         28,152             (176     4,449        32,777     

Amortization of unearned compensation

     2,326              2,326                 2,326     

Cash dividends ($1.4425 per share)

     (458,322              (458,322           (458,322  

Distributions to noncontrolling interests

     (55,380                                                                        (55,380

BALANCES, December 31, 2010

   $ 7,330,694        375,451       $ 150,181       $ 1,711,518       $ 6,795,988      $ (27,776     59,660      $ (1,509,841   $ 7,120,070      $ 210,624   

See notes to consolidated financial statements.


CONSOLIDATED STATEMENTS OF CASH FLOWS    

 

       45  

 

CONSOLIDATED STATEMENTS OF CASH FLOWS      (in thousands)   

 

Year Ended December 31,

     2010        2009        2008   

 

OPERATING ACTIVITIES:

          

 

Net earnings (loss)

   $ 206,323      $ (237,178   $ 2,144,911   

 

Adjustments:

          

 

Depreciation

     512,147        494,035        479,484   

 

Amortization

     70,455        72,388        69,423   

 

Stock-based compensation

     43,041        54,665        49,873   

 

Deferred income taxes

     138,262        88,546        (293,476

 

Equity in losses of unconsolidated affiliates

     32,082        82,341        36,920   

 

Impairment of non-current assets

            2,800        105,183   

 

Changes in assets and liabilities (exclusive of acquisitions):

          

 

Accounts receivable

     (310,188     141,104        855,572   

 

Inventories

     (231,913     1,117,600        (364,280

 

Accounts payable

     186,417        170,229        (861,334

 

Federal income taxes

     180,821        (422,116     278,663   

 

Salaries, wages and related accruals

     56,641        (419,800     129,927   

 

Other

     (10,684     28,580        (128,803
                        

 

Cash provided by operating activities

     873,404        1,173,194        2,502,063   

 

INVESTING ACTIVITIES:

                        

 

Capital expenditures

     (345,294     (390,500     (1,018,980

 

Investment in and advances to affiliates

     (434,006     (63,563     (720,713

Repayment of advances to affiliates

     83,885                 

 

Disposition of plant and equipment

     24,944        11,371        17,180   

 

Acquisitions (net of cash acquired)

     (64,788     (32,720     (1,826,030

 

Purchases of investments

     (1,323,264     (261,389     (289,423

 

Proceeds from the sale of investments

     394,640        36,389        499,709   

 

Proceeds from currency derivative contracts

                   1,441,862   

 

Settlement of currency derivative contracts

                   (1,424,291

Changes in restricted cash

     (598,482              
                        

Cash used in investing activities

     (2,262,365     (700,412     (3,320,686

 

FINANCING ACTIVITIES:

                        

 

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

     11,561        (6,908     (149,837

 

Repayment of long-term debt

     (6,000     (180,400       

 

Proceeds from issuance of long-term debt, net of discount

     1,198,992               989,715   

 

Debt issuance costs

     (4,050            (6,937

 

Issuance of common stock

     4,687        3,716        1,996,690   

 

Excess tax benefits from stock-based compensation

     (700     (3,100     10,600   

 

Distributions to noncontrolling interests

     (55,380     (190,233     (275,075

 

Cash dividends

     (457,282     (443,109     (658,051

 

Acquisition of treasury stock

                   (123,960
                        

Cash provided by (used in) financing activities

     691,828        (820,034     1,783,145   

Effect of exchange rate changes on cash

     5,558        9,103        (3,335
                        

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (691,575     (338,149     961,187   

 

CASH AND CASH EQUIVALENTS — BEGINNING OF YEAR

     2,016,981        2,355,130        1,393,943   
                        

 

CASH AND CASH EQUIVALENTS — END OF YEAR

   $ 1,325,406      $ 2,016,981      $ 2,355,130   
                        
                          

See notes to consolidated financial statements.


  46       

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

 

 

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Nature of Operations Nucor is principally a manufacturer of steel and steel products, as well as a scrap processor, with operating facilities and customers primarily located in North America.

Principles of Consolidation The consolidated financial statements include Nucor and its controlled subsidiaries, including Nucor-Yamato Steel Company, a limited partnership of which Nucor owns 51%. All significant intercompany transactions are eliminated.

Distributions are made to minority interest partners in Nucor-Yamato Steel Company in accordance with the limited partnership agreement by mutual agreement of the general partners. At a minimum, sufficient cash is distributed so that each partner may pay their U.S. federal and state income taxes.

Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Reclassifications Certain amounts for prior years have been reclassified to conform to the 2010 presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents Cash and cash equivalents are recorded at cost plus accrued interest, which approximates market, and have original maturities of three months or less at the date of purchase. Cash and cash equivalents are maintained primarily with a few high-credit quality financial institutions.

Short-Term Investments Short-term investments are recorded at cost plus accrued interest, which approximates market. Unrealized gains and losses on investments classified as available-for-sale are recorded as a component of accumulated other comprehensive income (loss). Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination at each balance sheet date.

Inventories Valuation Inventories are stated at the lower of cost or market. Inventories valued using the last-in, first-out (LIFO) method of accounting represent approximately 45% of total inventories as of December 31, 2010 (48% as of December 31, 2009). All inventories held by the parent company and Nucor-Yamato Steel Company are valued using the LIFO method of accounting except for supplies that are consumed indirectly in the production process, which are valued using the first-in, first-out (FIFO) method of accounting. All inventories held by other subsidiaries of the parent company are valued using the FIFO method of accounting. The Company records any amount required to reduce the carrying value of inventory to net realizable value as a charge to cost of products sold.

Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. The costs of planned major maintenance activities are capitalized and amortized over the period until the next scheduled major maintenance activity. All other repairs and maintenance activities are expensed when incurred.

Goodwill and Other Intangibles Goodwill is the excess of cost over the fair value of net assets of businesses acquired. Goodwill is not amortized but is tested annually for impairment and whenever events or circumstances change that would make it more likely than not that an impairment may have occurred. We perform our annual impairment analysis as of the first day of the fourth quarter each year. The evaluation of impairment involves comparing the current estimated fair value of each reporting unit, which is a level below the operating segment, to the recorded value, including goodwill. Nucor primarily uses a discounted cash flow model to determine the current estimated fair value of its reporting units. A number of significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including market growth and market share, sales volumes and prices, costs to produce, discount rate and estimated capital needs. Management considers historical experience and all available information at the time the fair values of its reporting units are estimated. Assumptions in estimating future cash flows are subject to a high degree of judgment and complexity. Changes in assumptions and estimates may affect the carrying value of goodwill and could result in additional impairment charges in future periods.

Finite-lived intangible assets are amortized over their useful lives.


   

  47  

 

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

Equity Method Investments Investments in joint ventures in which Nucor shares control over the financial and operating decisions but in which Nucor is not the primary beneficiary are accounted for under the equity method. Each of the Company’s equity method investments is subject to a review for impairment if, and when, circumstances indicate that a decline in value below its carrying amount may have occurred. If management considers the decline to be other than temporary, the Company would write down the investment to its estimated fair market value.

Derivative Financial Instruments 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 consolidated balance sheets at fair value. Amounts included in accumulated other comprehensive income (loss) related to cash flow hedges are reclassified into earnings when the underlying transaction is recognized in net earnings. Changes in fair value hedges are reported currently in earnings along with changes in the fair value of the hedged items. When cash flow and fair value hedges affect net earnings, they are included on the same line as the underlying transaction (cost of products sold or interest expense). If these instruments do not meet hedge accounting criteria, the change in fair value is recognized immediately in earnings in the same financial statement line item as the underlying transaction.

Revenue Recognition Nucor recognizes revenue when the customer takes title, assumes risk of loss, and when collection is reasonably assured.

Freight Costs Internal fleet and some common carrier costs are included in marketing, administrative and other expenses. These costs included in marketing, administrative and other expenses were $59.9 million in 2010 ($54.3 million in 2009 and $99.2 million in 2008). All other freight costs are included in cost of products sold.

Income Taxes Nucor utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

Nucor recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Potential accrued interest and penalties related to unrecognized tax benefits within operations are recognized as a component of earnings before taxes and noncontrolling interests.

Nucor’s intention is to permanently reinvest the earnings of certain foreign investments. Accordingly, no provisions have been made for taxes that may be payable upon remittance of such earnings.

Stock-Based Compensation The Company recognizes the cost of stock-based compensation as an expense using fair value measurement methods. The assumptions used to calculate the fair value of stock-based compensation granted are evaluated and revised, as necessary, to reflect market conditions and experience.


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Comprehensive Income (Loss) Nucor reports comprehensive income (loss) and the changes in accumulated other comprehensive income (loss) in its consolidated statements of stockholders’ equity. Accumulated other comprehensive income (loss) is comprised of the following:

 

                  (in thousands

December 31,

       2010           2009   
 

Foreign currency translation, net of income taxes when applicable

     $ 27,923         $ 19,751   
 

Early-retiree medical plan adjustments, net of income taxes

       13,190           13,266   
 

Fair market value of derivatives, net of income taxes

       (68,889        (74,073
                     
     $ (27,776      $ (41,056
                     
                       

Foreign Currency Translation For Nucor’s operations where the functional currency is other than the U.S. dollar, assets and liabilities have been translated at year-end exchange rates, and income and expenses translated using average exchange rates for the respective periods. Adjustments resulting from the process of translating an entity’s financial statements into the U.S. dollar have been recorded in accumulated other comprehensive income (loss) and are included in net earnings only upon sale or liquidation of the underlying investments. Foreign currency transaction gains and losses are included in operations in the period they occur.

Noncontrolling Interests In January 2009, Nucor adopted accounting guidance that amended previous accounting and reporting for a noncontrolling interest in a subsidiary. Upon adoption of this guidance, noncontrolling interests of $327.5 million was reclassified to equity as of December 31, 2008, and earnings attributable to noncontrolling interests of $313.9 million for the year ended Decem