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

STEEL MILLS SEGMENT

BAR MILLS

Products: Steel bars, angles and other products for automotive, construction, farm machinery, metal buildings, furniture and recreational equipment.

Darlington, South Carolina

Norfolk, Nebraska

Jewett, Texas

Plymouth, Utah

Auburn, New York (Nucor Steel Auburn, Inc.)

Birmingham, Alabama (Nucor Steel Birmingham, Inc.)

Kankakee, Illinois (Nucor Steel Kankakee, Inc.)

Jackson, Mississippi (Nucor Steel Jackson, Inc.)

Seattle, Washington (Nucor Steel Seattle, Inc.)

Marion, Ohio (Nucor Steel Marion, Inc.)

Wallingford, Connecticut (Nucor Steel Connecticut, Inc.)

Memphis, Tennessee (Nucor Steel Memphis, Inc.)

SHEET MILLS

Products: Flat-rolled steel for automotive, appliance, pipe and tube, construction and other industries.

Crawfordsville, Indiana

Hickman, Arkansas

Berkeley County, South Carolina

Decatur, Alabama (Nucor Steel Decatur, LLC)

NUCOR-YAMATO STEEL COMPANY

Products: Super-wide flange steel beams, pilings and heavy structural steel products for fabricators, construction companies, manufacturers and steel service centers.

Blytheville, Arkansas

BEAM MILL

Products: Wide flange steel beams, pilings and heavy structural steel products for fabricators, construction companies, manufacturers and steel service centers.

Berkeley County, South Carolina

PLATE MILLS

Products: Steel plate for manufacturers of heavy equipment, rail cars, ships, barges, refinery tanks, pipe and tube, pressure vessels, construction and others.

Hertford County, North Carolina

Tuscaloosa, Alabama (Nucor Steel Tuscaloosa, Inc.)

STEEL PRODUCTS SEGMENT

VULCRAFT AND VERCO

Products: Steel joists, joist girders and steel deck for non-residential building construction.

Florence, South Carolina

Norfolk, Nebraska

Fort Payne, Alabama

Grapeland, Texas

St. Joe, Indiana

Brigham City, Utah

Chemung, New York (Vulcraft of New York, Inc.)

Phoenix, Arizona (Verco Decking, Inc.)

Fontana, California (Verco Decking, Inc.)

Antioch, California (Verco Decking, Inc.)

COLD FINISH

Products: Cold finished steel bars for shafting and precision machined parts and bright basic wire for point of purchase display racks, wire shelving and miscellaneous wire forms.

Norfolk, Nebraska

Darlington, South Carolina

Brigham City, Utah

Oak Creek, Wisconsin (Nucor Cold Finish Wisconsin, Inc.)

Maryville, Missouri (Nucor LMP Steel, Inc)

BUILDINGS GROUP

Products: Metal buildings and metal building components for commercial, industrial and institutional building markets.

Waterloo, Indiana

Swansea, South Carolina

Terrell, Texas

Brigham City, Utah (Nucor Building Systems Utah, LLC)

Eufaula, Alabama (American Buildings Company South)

Carson City, Nevada (American Buildings Company West)

El Paso, Illinois (American Buildings Company Midwest)

LaCrosse, Virginia (American Buildings Company Atlantic)

Lathrop, California (CBC Steel Buildings LLC)

Portland, Tennessee (Kirby Building Systems LLC)

Starkville, Mississippi (Gulf States Manufacturers LLC)

FASTENER

Products: Steel hexhead cap screws, structural bolts and hex bolts for automotive, machine tools, farm implements, construction and military applications.

St. Joe, Indiana

HARRIS STEEL

Products: Concrete reinforcing steel and concrete post-tensioning systems.

Stoney Creek, Ontario

WIRE PRODUCTS

Products: Welded wire mesh for reinforcing concrete and mine reinforcement applications.

Wallingford, Connecticut (Nucor Steel Connecticut, Inc.)

New Salem, Pennsylvania (Nucor Wire Products Pennsylvania, Inc.)

NUCONSTEEL

Products: Load bearing light gauge steel framing systems for the commercial and residential construction markets.

Denton, Texas Dallas, Georgia

OTHER

NU-IRON UNLIMITED

Products: Direct reduced iron for use as a charge material in our steelmaking operations.

Point Lisas, Trinidad

CORPORATE OFFICE

Charlotte, North Carolina

STEEL MILLS SEGMENT

BAR MILLS, SHEET MILLS, STRUCTURAL MILLS AND PLATE MILLS

Nucor operates scrap-based steel mills in nineteen facilities. These mills utilize modern steelmaking techniques and produce steel at a cost competitive with steel manufactured anywhere in the world.

BAR MILLS

Nucor has eleven bar mills located in South Carolina, Nebraska, Texas, Utah, New York, Alabama, Illinois, Mississippi, Washington, Ohio and Connecticut that produce concrete reinforcing bars, hot rolled bars, rod, light shapes, structural angles and channel, wire mesh and guard rail in carbon and alloy steels. These products have a wide usage serving primarily the agricultural, automotive, construction, energy, furniture, machinery, metal building, railroad, recreational equipment, shipbuilding, heavy truck and trailer market segments. Four of the bar mills were constructed by Nucor between 1969 and 1981. Over the years, Nucor has completed extensive capital projects to keep these facilities modern and globally competitive. Nucor acquired the remaining seven bar mills since 2000, including the purchase of substantially all of the assets of Marion Steel Company (“Marion Steel”) in the second quarter of 2005 and substantially all of the assets of Connecticut Steel Corporation (“Connecticut Steel”) in the second quarter of 2006. Nucor Steel Marion, Inc. has the capacity to produce up to 450,000 tons annually and Nucor Steel Connecticut, Inc. has the capacity to produce up to 300,000 tons annually. With these recent acquisitions, the total capacity of our eleven bar mills is approximately 8,060,000 tons per year.

SHEET MILLS

The sheet mills produce flat-rolled steel for the automotive, appliance, pipe and tube, construction and other industries. The four sheet mills are located in Indiana, Arkansas, South Carolina and Alabama. Nucor constructed three of the sheet mills between 1989 and 1996. The constructed sheet mills utilize thin slab casters to produce hot rolled sheet. In 2002, Nucor’s wholly owned subsidiary Nucor Steel Decatur, LLC purchased substantially all the assets of Trico Steel Company, LLC. This sheet mill is located in Decatur, Alabama, and has an annual capacity of approximately 2,400,000 tons, initially expanding our sheet capacity by 30%. In 2004, Nucor Steel Decatur, LLC purchased the adjacent cold rolling mill of Worthington Industries, Inc. In 2008 Nucor plans to complete the construction of its fourth sheet steel galvanizing facility at the Decatur mill. Upon completion of this facility, all four of our sheet mills will be fully equipped with cold rolling mills and galvanizing lines for further processing of hot rolled sheet. The total capacity of the four sheet mills is approximately 10,800,000 tons per year.

STRUCTURAL MILLS

The structural mills produce wide flange steel beams, pilings and heavy structural steel products for fabricators, construction companies, manufacturers and steel service centers. In 1988, Nucor and Yamato Kogyo, one of Japan’s major producers of wide-flange beams, completed construction of a beam mill located near Blytheville, Arkansas. Nucor owns a 51% interest in Nucor-Yamato Steel Company. During 1999, Nucor started operations at its 1,000,000 tons per year steel beam mill in South Carolina. Both mills use a special continuous casting method that produces a beam blank closer in shape to that of the finished beam than traditional methods. Current annual production capacity of our two structural mills is approximately 3,700,000 tons.

PLATE MILLS

Nucor operates two plate mills. Nucor completed construction of its first plate mill, located in North Carolina, in 2000 with the competitive advantages of new, more efficient production technology. This mill produces plate for manufacturers of heavy equipment, rail cars, ships, barges, refinery tanks and others. In 2004, Nucor’s wholly owned subsidiary, Nucor Steel Tuscaloosa, Inc., purchased substantially all the assets of Corus Tuscaloosa. The Tuscaloosa mill has an annual capacity of 1,200,000 tons, and complements our product offering with thinner gauges of coiled and cut-to-length plate used in the pipe and tube, pressure vessel, transportation and construction industries. Current annual production capacity of our two plate mills is approximately 2,800,000 tons.

OPERATIONS

Nucor’s steel mills are among the most modern and efficient mills in the United States. Recycled steel scrap and other metallics are melted in electric arc furnaces and poured into continuous casting systems. Highly sophisticated rolling mills convert the billets, blooms and slabs into rebar, angles, rounds, channels, flats, sheet, beams, plate and other products.

Production in 2007 was 22,089,000 tons, a decrease of 1% from a record of 22,382,000 tons in 2006. Annual production capacity has grown from 120,000 tons in 1970 to a present total of more than 25,000,000 tons.

The operations in the rolling mills are highly automated and require fewer operating employees than older mills. All Nucor steel mills have high productivity, which results in employment costs of approximately 7% of the sales dollar. Employee turnover in Nucor mills is extremely low. All employees have a significant part of their compensation based on their productivity. Production employees work under group incentives that provide increased earnings for increased production. This additional compensation is paid weekly.

Steel mills are large consumers of electricity and gas. Total energy costs per ton remained flat from 2006 to 2007. Because of the efficiency of Nucor steel mills, these energy costs were less than 10% of the sales dollar in both years. Nucor is partially hedged against exposure to increases in energy costs.

Scrap and scrap substitutes are the most significant element in the total cost of steel production. The average cost of scrap and scrap substitutes used increased 13% to $278 per ton in 2007 from $246 per ton in 2006. A raw material surcharge implemented in 2004 has allowed Nucor to maintain operating margins and to meet our commitments to customers in spite of highly volatile scrap and scrap substitute costs.

MARKETS AND MARKETING

Approximately 92% of the nineteen steel mills’ production in 2007 was sold to outside customers and the balance was used internally by the Vulcraft, Cold Finish, Rebar Fabrication, Buildings Group and Fastener divisions. Steel shipments to outside customers decreased 2% to 20,235,000 tons in 2007 from a record 20,649,000 tons in 2006.

Our steel mill customers are primarily manufacturers, steel service centers and fabricators. The sheet mills continue to build long-term relationships with contract customers who purchase more value-added products. We enter 2008 with approximately 40% of our sheet mill volume committed to contract customers. Contract terms are typically six to twelve months in length with various renewal dates. These contracts are non-cancelable agreements with a pricing formula that varies based on raw material costs. The sheet mills will continue to pursue profitable contract business.

GOVERNMENT AFFAIRS

In 2007, Nucor aggressively supported the adoption of a China Currency Bill that would identify the mercantilist practices of currency manipulation that result in distorted trade, an insurmountable trade deficit and the loss of manufacturing jobs in the United States. Several bills were generated in the House and Senate, but none were put into law. Our effort was broad, reaching across multiple industries, and ultimately drew attention to the domestic manufacturing job loss issue. In 2008, we hope that newly proposed legislation will unite Congress in an effort to maintain and enforce laws ensuring free and fair trade.

Climate change legislation also became a paramount issue in 2007 with several bills generated in the Senate and multiple hearings held to discuss the implications on industry. The development of green house gas legislation will continue to evolve in 2008 and possibly 2009. Nucor’s carbon emissions per ton produced remain the lowest in the industry and, collectively, the steel industry in the United States has lowered its emissions by almost 30% since 1990. It is our intent that any new legislation will recognize these reductions and our recycling efforts. Finally, Nucor has worked aggressively to ensure that any legislation implemented maintains global standards so U.S. manufacturing jobs are not lost as a result of companies moving overseas to avoid the cost of climate change legislation.

We continued our grass roots push with both Town Hall Meetings and Trade and Environmental Boot Camps. These events educate voters and legislators regarding the issues manufacturers are facing domestically and globally. Nucor will continue these events in 2008. Our goal remains to help state and federal legislators recognize the importance of domestic manufacturing and the serious threat these issues have for our customer base.

We have also developed a well-embedded grass roots effort with our state legislators to help build support toward many other issues beyond trade, including currency manipulation, climate change, energy and taxes.

NEWER FACILITIES AND EXPANSIONS

As part of our long-term growth strategy, Nucor continues to invest in existing operations, make greenfield investments utilizing advantageous new technologies, pursue acquisitions that are accretive to earnings and to pursue international growth. Capital expenditures in the steel mill segment totaled $216.0 million, $195.5 million and $410.0 million in 2005, 2006 and 2007, respectively.

Nucor began operations of its 100%-owned Castrip facility in Crawfordsville, Indiana, in May 2002. This facility uses the breakthrough technology of strip casting, to which Nucor holds exclusive rights in the United States and Brazil. Strip casting involves the direct casting of molten steel into final shape and thickness without further hot or cold rolling. This process allows lower investment and operating costs, reduced energy consumption and smaller scale plants than can be economically built with existing technology. This process also reduces the overall environmental impact of producing steel by generating significantly lower emissions. Although we announced the successful commercialization of Castrip in 2004, this technology is still in its infancy, and we are making new and exciting discoveries every year. In December 2007, we achieved a new production record, continuously casting a sequence of 24 ladles of steel in a 38-hour period. In 2005, Nucor selected Blytheville, Arkansas, as the second Nucor location for a Castrip operation in the United States. The Blytheville, Arkansas, Castrip facility is expected to begin operating in the second half of 2008.

In June 2005, Nucor’s wholly owned subsidiary, Nucor Steel Marion, Inc., purchased substantially all of the assets of Marion Steel for a cash purchase price of approximately $110.7 million. The facility is a bar products mill that manufactures angles, flats, rebar, rounds and signposts. Located in Marion, Ohio, the mill is in close proximity to 60% of the steel consumption in the United States. The facility has already grown its capacity from 400,000 tons to 450,000 tons largely as a result of our incentive based compensation program.

In May 2006, Nucor’s wholly owned subsidiary, Nucor Steel Connecticut, Inc., purchased substantially all of the assets of Connecticut Steel Corporation for a cash purchase price of approximately $43.9 million. This facility produces wire rod, rebar, wire mesh and structural mesh products. Located in Wallingford, Connecticut, the bar products mill has an annual capacity of approximately 300,000 tons of wire rod and rebar and approximately 80,000 tons of wire mesh fabrication and structural mesh fabrication.

In June 2006, Nucor announced plans to construct its fourth sheet steel galvanizing facility at its sheet mill in Decatur, Alabama, with a capital budget of about $152 million. Annual capacity will be approximately 500,000 tons per year and the facility will galvanize up to 72-inch wide sheet steel. Start-up is expected in mid-2008. The addition of this facility will increase Nucor’s total galvanizing annual capacity by one-third to 2,000,000 tons.

In October 2006, Nucor announced plans to construct a special bar quality products steel mill in Memphis, Tennessee. The planned site was acquired in 2002 from the bankrupt Birmingham Steel Company and the project is utilizing some of the infrastructure existing at this location. The project is expected to cost approximately $300 million and to have an estimated annual capacity of 850,000 tons. The facility will produce high quality carbon and alloy rounds and round cornered squares from 2.25” to 9”, complementing the product offerings of Nucor’s Nebraska and South Carolina SBQ mills. Start-up is expected in the second quarter of 2008.

In January 2008, Nucor announced the signing of a Memorandum of Understanding with the Duferco Group to establish a 50/50 joint venture for the production of beams and other long products in Italy, with distribution in Europe and North Africa. This joint venture will initially consist of the beam mills of Duferdofin, a wholly owned subsidiary of the Duferco Group, with a melt shop located in San Zeno, rolling mills in Pallanzeno and Giamorro and a new merchant bar mill that is under construction at the Giamorro site. The combined annual capacity of these mills exceeds 1,000,000 tons and will be closer to 2,000,000 tons with the Giamorro expansion. The joint venture partners will consider additional growth investments. We expect this joint venture to be established in the first half of 2008, pending completion of due diligence, approval of regulatory bodies and approval of the boards of directors of both companies.

STEEL PRODUCTS SEGMENT

VULCRAFT AND VERCO are the nation’s largest producers and leading innovators of open-web steel joists, joist girders and steel deck, which are used primarily for non-residential building construction.

OPERATIONS

Steel joists and joist girders are produced and marketed nationally through seven Vulcraft facilities located in South Carolina, Nebraska, Alabama, Texas, Indiana, Utah and New York. Current annual production capacity is approximately 715,000 tons. In 2007, Vulcraft produced 542,000 tons of steel joists and joist girders, a decrease of 5% from the 570,000 tons produced in 2006.

Material costs, primarily steel, were approximately 55% of the joist sales dollar in 2007 (53% in 2006). Vulcraft obtained 99% of its steel requirements for joists and joist girders from the Nucor bar mills in both 2007 and 2006. Freight costs for joists and joist girders were less than 10% of the sales dollar in both years. Vulcraft maintains an extensive fleet of trucks to ensure on-time delivery.

Steel decking is produced and marketed nationally through nine deck plants located in South Carolina, Nebraska, Alabama, Texas, Indiana, New York, Arizona and two in California. Six of these plants were constructed by Nucor adjacent to Vulcraft joist facilities. In November 2006, Nucor’s wholly owned subsidiary, Verco Decking, Inc, purchased substantially all of the assets of Verco Manufacturing Company (“Verco”) for a cash purchase price of approximately $183.5 million. This acquisition included three deck plants located in Arizona and California, positioning Nucor to better supply the large western construction market. Current deck annual production capacity is approximately 530,000 tons. The addition of Verco contributed to record steel deck sales of 478,000 tons in 2007, an increase of 20% from 398,000 tons in 2006. Coiled sheet steel was approximately 65% of the steel deck sales dollar in 2007 (64% in 2006). In 2007, Nucor obtained 76% of its steel requirements for steel deck production from the Nucor sheet mills (99% in 2006). In 2007 and 2006, freight costs for deck were less than 10% of the sales dollar.

Production employees of Vulcraft work with a group incentive system that provides increased compensation each week for increased performance.

MARKETS AND MARKETING

Steel joists, joist girders and steel decking are used extensively as part of the roof and floor support systems in manufacturing buildings, retail stores, shopping centers, warehouses, schools, churches, hospitals and, to a lesser extent, in multi-story buildings and apartments.

The majority of steel joists and joist girder sales are obtained by competitive bidding. Vulcraft quotes on a significant percentage of the domestic buildings using steel joists and joist girders as part of the support systems. In 2007, Vulcraft supplied more than 40% of total domestic sales of steel joists. Steel deck is specified in the majority of buildings using steel joists and joist girders. Steel deck is also used as concrete floor support in high rise buildings. In 2007, Vulcraft supplied more than 30% of total domestic sales of steel deck.

Sales of steel joists, joist girders and steel deck are dependent on the non-residential building construction market.

REINFORCING PRODUCTS Harris Steel fabricates rebar for highways, bridges and other infrastructure, as well as commercial and multi-tenant residential construction markets.

OPERATIONS

In February 2004, Nucor acquired a one-half interest in Harris Steel, Inc., the U.S. reinforcing steel (“rebar”) fabrication business of Harris Steel Group, Inc. (“Harris Steel”), for a cash purchase price of approximately $21.0 million. After three successful years working together in this joint venture, in March 2007, Nucor acquired Harris Steel for a cash purchase price of approximately $1.06 billion with $68.4 million in debt assumed related to the net assets acquired. Harris Steel now operates as a subsidiary of Nucor, fabricating products in Canada and the U.S. At the acquisition date, Harris Steel had rebar fabrication annual capacity of about 770,000 tons per year. Harris Steel is operating as a growth platform within Nucor and completed the following rebar fabrication acquisitions in 2007: South Pacific Steel Corporation in June, Consolidated Rebar, Inc. in August and Rockford Fabricators in December. In November 2007, Harris Steel obtained a 90% equity interest in Barker Steel LLC, an entity created by combining the rebar operations of Barker Steel Company Inc. and Harris Steel locations in the northeastern U.S. The Harris Steel rebar fabrication business has grown by over 37% to an annual capacity of about 1,058,000 tons. Sales of fabricated rebar were 583,000 tons during the nine months that Harris Steel operated as a subsidiary of Nucor.

MARKETS AND MARKETING

Reinforcing products are essential to concrete construction. They supply tensile strength as well as additional compressive strength, and protect the concrete from cracking. Harris Steel bids on and executes a wide variety of construction work primarily classified as infrastructure, including highways, bridges, reservoirs, utilities, hospitals, schools, airports and stadiums. Harris Steel is also active in commercial office building and multi-tenant residential (high-rise) construction. In most markets, Harris Steel sells reinforcing products on an installed basis; i.e., Harris Steel fabricates the reinforcing products for a specific application and performs installation. Harris Steel operates facilities across the U.S. and Canada, with each facility serving a local market.

STEEL MESH, GRATING AND FASTENER Nucor and its subsidiaries manufacture wire products, grating and industrial bolts.

STEEL MESH

Harris Steel produces steel mesh at its Laurel Steel and Laurel-LEC Steel operations. Nucor also produces steel mesh at Nucor Steel Connecticut, Inc. In October 2007, Nucor acquired substantially all of the assets of steel mesh producer Nelson Steel, Inc. (“Nelson”) for a cash purchase price of approximately $53.2 million. Nelson currently operates as Nucor Wire Products of Pennsylvania, Inc. The combined annual production capacity of the steel mesh facilities is approximately 233,000 tons.

GRATING

With the acquisition of Harris Steel, Nucor continued to expand existing product offerings by entering into the steel grating market. Fisher & Ludlow, a division of Harris Steel, fabricates steel and aluminum bar grating, safety grating and expanded metal products in facilities located throughout North America. Fisher & Ludlow serves the new construction and maintenance-related markets with annual production capacity of approximately 90,000 tons.

FASTENER

Nucor Fastener’s state-of-the-art steel bolt-making facility in Indiana produces standard steel hexhead cap screws, hex bolts, structural bolts and custom-engineered fasteners. Fasteners are used in a broad range of markets, including automotive, machine tools, farm implements, construction and military applications. Annual capacity is more than 75,000 tons. Nucor Fastener’s dedication to quality, on-time delivery and exceptional customer service yields a competitive advantage in a very import-sensitive market. Nucor Fastener obtains much of its steel from the Nucor bar mills.

BUILDINGS GROUP AND LIGHT GAUGE STEEL FRAMING

Nucor manufactures custom-engineered and standard metal buildings and components and load bearing light gauge steel framing systems for the commercial, residential and institutional construction markets.

BUILDINGS GROUP

Nucor produces metal buildings and components throughout the U.S. Prior to 2007, Nucor had a single brand, Nucor Building Systems, which consisted of three facilities in Indiana, South Carolina and Texas. These plants have an annual capacity of 145,000 tons. In March 2008, Nucor expects to begin production at its newest Nucor Building Systems facility in Brigham City, Utah. The projected capacity at this plant is approximately 45,000 tons.

In August of 2007, Nucor completed the acquisition of Magnatrax Corporation (“Magnatrax”) via the merger of Magnatrax with a wholly owned subsidiary of Nucor, for a cash purchase price of approximately $275.2 million. Magnatrax’s seven fabricating plants located throughout the U.S. have annual capacity of approximately 290,000 tons. Magnatrax was a leading provider of custom-engineered metal buildings and components for the growing North American non-residential construction market. Although Nucor has retired the Magnatrax name, we retained Magnatrax’s four metal buildings brands: American Buildings Company, Kirby Building Systems, Gulf States Manufacturers and CBC Steel Buildings.

Once the Brigham City, Utah, plant is operational, Nucor’s newly-named Buildings Group will have eleven metal buildings plants with an annual capacity of approximately 480,000 tons. The size of the buildings that can be produced ranges from less than 1,000 square feet to more than 1,000,000 square feet. Complete metal building packages can be customized and combined with other materials such as glass, wood and masonry to produce a cost-effective, aesthetically pleasing building designed for customers’ special requirements. The buildings are sold primarily through an independent builder distribution network in order to provide fast-track, customized solutions for building owners.

The Buildings Group sales in 2007 were a record 195,000 tons (116,000 tons in 2006). The primary markets are commercial, industrial and institutional buildings, including distribution centers, automobile dealerships, retail centers, schools, warehouses and manufacturing facilities. The Buildings Group obtains a significant portion of its steel requirements from the Nucor bar and sheet mills.

LIGHT GAUGE STEEL FRAMING

NUCONSTEEL™ (“Nucon”) specializes in load bearing light gauge steel framing systems for the commercial and residential construction markets with fabrication facilities in Texas and Georgia. Nucon also sells its proprietary products through a growing network of authorized fabricators located throughout the United States.

In 2004, Nucon introduced two new low-cost automated fabrication systems for residential construction: the NUFRAME™ automated wall panel system and the NUTRUSS ^® automated truss system. Nucon uses these systems in its residential wall panel and truss fabrication facility in Texas and has formed a separate group within Nucon to sell and license the systems to third parties.

In March 2006, Nucor formed a joint venture with Lennar Corporation. NEXFRAME, LP was established to provide comprehensive light gauge steel framing solutions for residential construction markets across the nation. Nucor plans to continue to aggressively broaden Nucon’s opportunities through geographic expansion and the introduction of new products.

COLD FINISH Nucor is North America’s largest producer of cold finish products for a wide range of industrial markets.

Nucor Cold Finish is the largest producer of cold finish bars in North America and has facilities in Nebraska, South Carolina, Utah, Wisconsin, Missouri and Ontario, Canada. Three of these facilities were originally constructed by Nucor between 1978 and 1983 while the remaining facilities were purchased through acquisitions beginning in 2005. As part of the Harris Steel acquisition in March 2007, Nucor added the Laurel Cold Finish operation with annual capacity of approximately 225,000 tons. In August 2007, Nucor purchased the assets of LMP Steel & Wire Company (“LMP”) in Maryville, Missouri for a cash purchase price of approximately $27.2 million. With approximately 100,000 tons of annual capacity, LMP is a producer of cold finish bar and wire, servicing the construction and OEM markets in North America. The total capacity of the Nucor Cold Finish bar and wire facilities is approximately 860,000 tons per year.

These facilities produce cold drawn, turned, ground and polished steel bars that are used extensively for shafting and precision machined parts. Nucor Cold Finish produces rounds, hexagons, flats and squares in carbon, alloy and leaded steels. These bars, in turn, are purchased by the automotive, farm machinery, hydraulic, appliance and electric motor industries as well as by service centers. Nucor Cold Finish bars are used in tens of thousands of products. A few examples include anchor bolts, farm machinery, hydraulic cylinders and shafting for air conditioner compressors, ceiling fan motors, garage door openers, electric motors and lawn mowers.

All of Nucor’s cold finish facilities are among the most modern in the world and most use in-line electronic testing to ensure outstanding quality. Nucor Cold Finish obtains most of its steel from the Nucor bar mills. This factor, along with our facilities’ use of the latest technology, results in a highly competitive cost structure.

In 2007, sales of cold finish steel products were a record 449,000 tons, an increase of 37% from 327,000 tons in 2006. The total U.S. cold finish market is estimated to be approximately 2,000,000 tons. The 2007 acquisitions represent the continuation of our successful growth strategy to expand through strategic acquisitions, both domestically and internationally. Our market presence in the cold finish arena is larger than it has ever been, and Nucor Cold Finish anticipates opportunities for significant increases in sales and earnings during the next several years.

OTHER

Nucor is vertically integrated, controlling a growing part of its supply chain from iron production to scrap trading and distribution.

RAW MATERIALS STRATEGY

Nucor has an established raw materials strategy to control six to seven million tons per year of high quality metallics for consumption at its steel mills. In April 2002, Nucor entered a joint venture with The Rio Tinto Group, Mitsubishi Corporation and Chinese steel maker Shougang Corporation to construct a commercial HIsmelt ^® plant in Kwinana, Western Australia. The HIsmelt process converts iron ore fines and coal fines to liquid metal, eliminating the need for a blast furnace, sinter/pellet plants and coke ovens. Nucor has a 25% interest in the joint venture that owns the Hlsmelt commercial plant. Construction was completed and start-up commenced in 2005. This plant has an initial annual capacity of 800,000 metric tons and is expandable to over 1,500,000 metric tons.

In September 2004, Nucor acquired the assets of an idled direct reduced iron (“DRI”) plant located in Louisiana and subsequently moved these assets to Trinidad. Construction is complete and heat-up commenced in December 2006. In January 2007, Nucor announced the successful start-up of Nu-Iron Unlimited. We produced over 1,400,000 metric tons in our first year of operation and expect to produce 1,800,000 metric tons in 2008. The Nu-Iron team is working on plans to expand this capacity. The Trinidad site benefits from a low cost supply of natural gas and favorable logistics for receipt of Brazilian iron ore and shipment of DRI to the U.S.

The Hlsmelt and Nu-Iron projects represent the initial steps in the execution of Nucor’s raw materials strategy.

Nucor announced in February 2008 the acquisition of SHV North America Corporation, which owns 100% of The David J. Joseph Company and certain related affiliates, for a cash purchase price of approximately $1.44 billion. Since scrap is our largest single cost, this strategic investment provides an ideal growth platform for Nucor to expand its direct ownership in the steel scrap supply chain and further its raw materials strategy. DJJ operates over 30 scrap processing facilities with an annual capacity to process 3.5 million tons of ferrous scrap. Additionally, DJJ brokers over 20 million tons of ferrous scrap; internationally sources scrap, pig iron and scrap substitutes; and brokers ferro-alloys and over one half billion pounds of non-ferrous metals. The DJJ Mill and Industrial Services business provides logistics and metallurgical blending operations and offers on-site handling and trading of industrial scrap. The DJJ Rail Services business oversees the largest private fleet of rail cars dedicated to scrap movement and offers complete railcar fleet management and leases for third parties. All of these businesses have strategic value to Nucor as the most diversified North American steel producer. We expect this acquisition to be completed in the first quarter of 2008.

STEEL TRADING & DISTRIBUTION

In March, 2007, Nucor acquired a 75% interest in Novosteel S.A. (“Novosteel”), a Switzerland-based steel trading company, through its acquisition of Harris Steel. Novosteel matches buyers and sellers of steel products on a global basis and offers its customers logistics support, material handling, quality certifications and schedule management. Novosteel provides an excellent platform as Nucor continues to pursue profitable growth on a global basis.

Harris Steel also operates Harris Supply Solutions, a distributor of reinforcing products primarily serving the single family residential and light commercial construction markets in the United States.

OVERVIEW

Nucor is principally a manufacturer of steel and steel products with operating facilities and customers primarily located in North America. Additionally, Nucor is North America’s largest recycler. Nucor reports its results in two segments, steel mills and steel products.

Principal products from the steel mills segment are hot-rolled steel (angles, rounds, flats, channels, sheet, wide-flange beams, pilings, billets, blooms, beam blanks and plate) and cold-rolled steel. Principal products from the steel products segment are steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finish steel, steel fasteners, metal building systems, light gauge steel framing, steel grating and expanded metal, and wire and wire mesh. Hot-rolled steel is manufactured principally from scrap, utilizing electric arc furnaces, continuous casting and automated rolling mills. Cold-rolled steel, cold finished steel, steel joists and joist girders, fabricated concrete reinforcing steel, grating and expanded metal, cold drawn wire and steel fasteners are manufactured by further processing of hot-rolled steel. Steel deck, light gauge steel framing and wire mesh are manufactured from cold-rolled and cold drawn steel. In 2007, approximately 92% of the steel mills segment production was sold to non-affiliated customers; the remainder was used internally by the steel products segment.

During the last five years, Nucor’s sales have increased over 245% from $4.80 billion in 2002 to $16.59 billion in 2007. Average sales price per ton more than doubled from $357 in 2002 to $723 in 2007. Total tons sold to external customers have increased 71% from 13,442,000 tons in 2002 to 22,940,000 tons in 2007. This growth has been generated through acquisitions, optimizing existing operations and developing traditional greenfield projects using new technologies. For the sixth consecutive year, Nucor achieved record sales in 2007 due to historically high selling prices and shipments. Although net earnings decreased from 2006’s record high, 2007 is the second-best earnings year in Nucor’s history.

In recent years, we have strengthened Nucor’s position as North America’s most diversified steel producer. With this product line diversity, Nucor’s short-term performance is not tied to any one market. This diversity has been a significant factor in Nucor’s ability to maintain profitability every year and every quarter since 1966.

COMPARISON OF 2007 TO 2006

NET SALES

Net sales for 2007 increased 12% to $16.59 billion, compared with $14.75 billion in 2006. The average sales price per ton increased 8% from $667 in 2006 to $723 in 2007, while total shipments to outside customers increased 4%. In the steel mills segment, net sales to external customers increased 2% from $13.03 billion in 2006 to $13.31 billion in 2007. The increase in sales was due to higher average selling prices, which was slightly offset by lower volume. Net sales to external customers in the steel products segment increased 77% from $1.73 billion in 2006 to $3.05 billion in 2007. Approximately 90% of this increase was due to acquisitions made in 2007. Approximately two-thirds of the remaining increase is due to higher average selling prices, with the remaining increase due to increased volume.

Total steel shipments, including those to the steel products segment, remained flat at 22,347,000 tons in 2007, compared with 22,346,000 tons in the previous year. Steel sales to outside customers decreased 2% to 20,235,000 tons in 2007, compared with 20,649,000 tons in 2006. In the steel products segment, steel joist production for 2007 decreased to 542,000 tons, compared with 570,000 tons in the previous year. Steel deck sales increased to a record 478,000 tons in 2007, compared with 398,000 tons in 2006. Cold finish steel sales were a record 449,000 tons in 2007, compared with 327,000 tons in the previous year. With the acquisition of Harris Steel near the end of the first quarter of 2007, sales of fabricated concrete reinforcing steel were 583,000 tons in 2007 (none in 2006).

COST OF PRODUCTS SOLD

The major component of cost of products sold is raw material costs. The average volume of raw materials used increased approximately 3% from 2006 to 2007. While the volume of raw materials used remained flat in the steel mills segment, the volume used in the steel products segment almost doubled due to the magnitude of the acquisitions made during the year. The average price of raw materials increased 13% in the steel mills segment and increased 9% in the steel products segment from 2006 to 2007. The average scrap and scrap substitute cost per ton used in our steel mills segment increased 13% from $246 in 2006 to $278 in 2007.

Nucor incurred a charge to value inventories using the last-in, first-out (“LIFO”) method of accounting of $194.3 million in 2007, compared with a charge of $5.4 million in 2006.

Another significant component of cost of products sold for the steel mills segment is energy costs, since steel mills are large consumers of electricity and natural gas. Total energy costs per ton remained flat from 2006 to 2007 as decreases in natural gas prices offset increases in electricity prices. Due to the efficiency of Nucor’s steel mills, energy costs remained less than 10% of the sales dollar in 2007 and 2006. We expect that our total energy costs will remain high in 2008. Nucor is hedging a portion of its exposure to the variability of future cash flows for forecasted natural gas purchases over various time periods not exceeding three years. In 2007, the settlement of these hedging transactions increased cost of products sold by approximately $18.0 million (increased cost of products sold by $6.8 million in 2006). In addition to these hedges, Nucor has entered into natural gas purchase contracts that commit Nucor to purchase $777.3 million of natural gas through 2028. These natural gas purchase contracts primarily supply our DRI facility in Trinidad.

Environmental costs also affect cost of products sold, primarily in the steel mills segment. Nucor revises estimates for environmental reserves as additional information becomes available and projects are completed. In 2007 Nucor made approximately $4.5 million in cash payments for remedial efforts and increased reserves by approximately $1.2 million ($3.9 million in cash payments and a $2.9 million increase to reserves in 2006).

Amortization expense recorded in cost of products sold increased from $1.3 million in 2006 to $24.4 million in 2007. The increase is due to the acquisitions that occurred in 2007, which resulted in approximately $489.3 million of amortizable intangible assets.

GROSS MARGIN

Gross margins decreased from 24% in 2006 to 19% in 2007. In addition to the events and trends discussed above, gross margins are affected by pre-operating and start-up costs. 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 to be in start-up. Pre-operating and start-up costs of new facilities increased to $56.1 million in 2007, compared with $49.1 million in 2006. In 2007, these costs primarily related to the Hlsmelt project in Australia, the construction of our SBQ mill in Memphis, Tennessee, and the start-up of our Nucor Building Systems plant in Brigham City, Utah. In 2006, these costs primarily related to the refurbishment and start-up of our DRI facility in Trinidad and to the Hlsmelt project.

MARKETING, ADMINISTRATIVE AND OTHER EXPENSES

The major components of marketing, administrative and other expenses are freight and profit sharing costs. Unit freight costs increased 3% from 2006 to 2007 primarily due to higher fuel costs. Profit sharing costs, which are based upon and fluctuate with pre-tax earnings, decreased approximately 22% from 2006 to 2007. In 2007, profit sharing costs included $229.9 million for contributions to a Profit Sharing and Retirement Savings Plan for qualified employees, compared with $272.6 million in 2006. In 2006, all employees except for senior officers received a special cash bonus of $2,000 in addition to their regular profit-sharing payments. This extraordinary bonus was paid to employees for the achievement of record earnings during the year, resulting in additional profit sharing costs of approximately $23.8 million in 2006. No such extraordinary bonus was paid in 2007. 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 to other high-performing companies. Stock-based compensation included in marketing, administrative and other expenses remained flat at $17.3 million in 2007 compared with $17.1 million in 2006. Since stock-based compensation is impacted by changes in Nucor’s stock price and net earnings, the 16% decrease in Nucor’s net earnings was offset by the 8% increase in the stock price.

Gross interest expense increased approximately 27% primarily due to increased average debt outstanding, accompanied by increased average interest rates. During the fourth quarter of 2007, Nucor issued $1.3 billion in notes at rates slightly higher than the majority of the existing debt. Gross interest income decreased approximately 41% primarily due to a decrease in average investments, partially offset by an increase in the average interest rate earned on investments. Average investments decreased 50% due to the cash payments of $1.54 billion for acquisitions and $754.0 million for repurchases of common stock during the year.

MINORITY INTERESTS

Minority interests represent the income attributable to the minority partners of Nucor’s joint ventures: Nucor-Yamato Steel Company (“NYS”), Novosteel S.A. and Barker Steel Company. Income attributable to minority interests increased approximately 34% from $219.1 million in 2006 to $293.5 million in 2007. Cash distributions to minority interests increased from $174.7 million in 2006 to $263.1 million in 2007. 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 some years the amount of cash distributed to minority interests exceeds amounts allocated to minority interests based on mutual agreement of the general partners; however, the cumulative amount of cash distributed to partners is less than the cumulative net earnings of the partnership.

PROVISION FOR INCOME TAXES

Nucor had an effective tax rate of 34.68% in 2007 compared with 34.75% in 2006. In 2007, Nucor recorded refundable state income tax credits of $10.7 million ($12.6 million in 2006).

NET EARNINGS AND RETURN ON EQUITY

Net earnings and earnings per share for 2007 decreased 16% and 13%, respectively, to $1.47 billion and $4.94 per diluted share, compared with a record $1.76 billion and $5.68 per diluted share in 2006. Net earnings as a percentage of net sales were 8.9% in 2007 compared with 11.9% in 2006. The 13% decrease in earnings per share also reflects the effect of repurchasing approximately 14.1 million shares of outstanding common stock during 2007. Return on average stockholders’ equity was 29.5% and 38.3% in 2007 and 2006, respectively.

COMPARISON OF 2006 TO 2005

NET SALES

Net sales for 2006 increased 16% to $14.75 billion, compared with $12.70 billion in 2005. The average sales price per ton increased 7% from $621 in 2005 to $667 in 2006, while total shipments to outside customers increased 8%. In the steel mills segment, net sales to external customers increased 18% from $11.06 billion in 2005 to $13.03 billion in 2006. Approximately 50% of the sales increase was due to higher sales volume resulting from increased demand for our products, as well as additional production capacity obtained from acquisitions made in 2005 and 2006. The remaining 50% of the increase in sales was due to higher average selling prices. Net sales to external customers in the steel products segment increased 5% from $1.64 billion in 2005 to $1.73 billion in 2006. Approximately 70% of the increase was due to higher average selling prices and approximately 30% of the increase was due to increased volume, reflecting an improved non-residential construction market.

Nucor established annual tonnage records in the steel mills segment for total steel shipments and steel shipments to outside customers in 2006. Total steel shipments, including those to the steel products segment, increased 8% to 22,346,000 tons in 2006, compared with 20,669,000 tons in the previous year. Steel sales to outside customers increased 9% to 20,649,000 tons in 2006, compared with 19,020,000 tons in 2005. In the steel products segment, production and shipment volumes increased

over 2005 across most major product lines. Steel joist production for 2006 increased to 570,000 tons, compared with 554,000 tons in the previous year. Steel deck sales increased to a record 398,000 tons in 2006, compared with 380,000 tons in 2005. Cold finish steel sales were 327,000 tons in 2006, compared with 342,000 tons in the previous year.

COST OF PRODUCTS SOLD

The major component of cost of products sold is raw material costs. The volume of raw materials used increased approximately 8% from 2005 to 2006, consisting of an increase of 9% in the steel mills segment and a decrease of 1% in the steel products segment. The average price of raw materials remained unchanged in the steel mills segment and increased 1% in the steel products segment from 2005 to 2006. The average scrap and scrap substitute cost per ton used in our steel mills segment increased 1% from $244 in 2005 to $246 in 2006.

Nucor incurred a charge to value inventories using the last-in, first-out method of accounting of $5.4 million in 2006, compared with a credit of $151.6 million in 2005 when the costs of scrap and scrap substitutes were decreasing.

Total energy costs decreased approximately $1 per ton from 2005 to 2006 as natural gas prices decreased approximately 10% and electricity prices increased approximately 2%. Energy costs remained less than 10% of the sales dollar in 2006 and 2005. In 2006, the settlement of natural gas hedging transactions increased cost of products sold by approximately $6.8 million (reduced cost of products sold by $12.4 million in 2005).

In 2006 Nucor made approximately $3.9 million in cash payments for environmental remedial efforts and increased reserves by approximately $2.9 million ($12.2 million in cash payments and a $9.4 million decrease to reserves in 2005).

GROSS MARGIN

Gross margins increased from 20% in 2005 to 24% in 2006. In addition to the events and trends discussed above, gross margins are affected by pre-operating and start-up costs. Pre-operating and start-up costs of new facilities increased to $49.1 million in 2006, compared with $14.4 million in 2005. In 2006, these costs primarily related to the refurbishment and start-up of our DRI facility in Trinidad, and to the Hlsmelt project in Australia. In 2005, these costs primarily related to the relocation of the DRI plant and its refurbishment, and to the Hlsmelt project.

MARKETING, ADMINISTRATIVE AND OTHER EXPENSES

Unit freight costs increased 8% from 2005 to 2006 primarily due to higher fuel costs. Profit sharing costs, which are based upon and fluctuate with pre-tax earnings, increased approximately 30% from 2005 to 2006. In 2006, profit sharing costs included $272.6 million for contributions to a Profit Sharing and Retirement Savings Plan for qualified employees, compared with $206.0 million in 2005. Profit sharing costs in 2006 and 2005 included an additional $23.8 million and $22.6 million, respectively, in extraordinary bonuses paid to employees for the achievement of record earnings during the year. Stock-based compensation expense in marketing, administrative and other expenses increased from $6.7 million in 2005 to $17.1 million in 2006. Since stock based compensation is impacted by changes in Nucor’s stock price, this increase was primarily due to the 64% increase in Nucor’s stock price from 2005 to 2006, compared with an increase of 27% from 2004 to 2005. The additional stock-based compensation expense incurred in 2006 was also due to the granting of restricted stock units to key employees, officers and non-employee directors for the first time in 2006 and the expensing of stock options for the first time in 2006 due to the adoption of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment.”

INTEREST (INCOME) EXPENSE

Net interest (income) expense is detailed below:

Gross interest income more than doubled due to increases in average cash equivalents and short-term investments and, to a lesser extent, due to increases in average interest rates. Gross interest expense increased approximately 10% primarily due to increased average interest rates.

MINORITY INTERESTS

Income attributable to minority interests almost doubled from $110.7 million in 2005 to $219.1 million in 2006. Cash distributions to minority interests increased from $89.9 million in 2005 to $174.7 million in 2006.

OTHER INCOME

In 2005, Nucor received $9.2 million in settlement of claims against third parties related to environmental matters (none in 2006).

PROVISION FOR INCOME TAXES

Nucor had an effective tax rate of 34.75% in 2006 compared with 35.02% in 2005. In 2006, the Internal Revenue Service completed its examination of our 2002 through 2004 tax returns. The 2006 tax rate reflects an approximately 0.26% reduction to the federal statutory tax rate as a result of the reevaluation of our liabilities and contingencies in light of the completion of the examination. In 2006, Nucor recorded refundable state income tax credits of $12.6 million ($10.4 million in 2005).

NET EARNINGS AND RETURN ON EQUITY

Net earnings and earnings per share for 2006 increased 33% and 37%, respectively, to a record $1.76 billion and $5.68 per diluted share, compared with $1.32 billion and $4.15 per diluted share in 2005. Net earnings as a percentage of net sales were 11.9% in 2006 compared with 10.4% in 2005. The 37% increase in earnings per share also reflects the effect of repurchasing approximately 11.7 million shares of outstanding common stock during 2006. Return on average stockholders’ equity was 38.3% and 33.8% in 2006 and 2005, respectively.

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. We have earned long-term debt ratings of A+ by Standard and Poor’s and A1 by Moody’s Investors Services, the highest ratings of any metals and mining company in North America. We believe our strong financial position and our industry-high credit rating provide us with the ability to obtain additional capital on a cost-effective basis.

We anticipate that cash flows from operations and our existing borrowing capacity will be sufficient to fund expected normal operating costs, working capital, dividends and capital expenditures for our existing facilities. Any future significant acquisitions could require additional financing from external sources.

During 2007, cash and cash equivalents increased 77% to $1.39 billion, short-term investments decreased 87% to $182.5 million, and working capital increased 7% to $3.49 billion. Short-term investments consist solely of variable rate demand notes (“VRDNs”), which are variable rate bonds tied to short-term interest rates, but with stated maturities in excess of 90 days. All VRDNs in which Nucor invests are secured by direct-pay letters of credit issued by high-credit quality financial institutions. This credit enhancement provides a high degree of security and liquidity to the VRDNs. Nucor is able to receive a cash payment in the amount of its principal invested and interest accrued on the VRDNs no later than seven days after notifying the financial institution that it has elected to tender the VRDNs.

The current ratio decreased to 3.2 at December 31, 2007 compared with 3.3 at December 31, 2006. Approximately $225.3 million and $199.6 million of the cash and cash equivalents position at December 31, 2007 and December 31, 2006, respectively, was held by our 51%-owned joint venture, Nucor-Yamato Steel Company. We have a simple capital structure with no off-balance sheet financing arrangements or relationships with unconsolidated special purpose entities. Nucor uses derivative financial instruments from time-to-time primarily to manage the exposure to price risk related to natural gas purchases used in the production process, to manage exposure to changes in interest rates on outstanding debt instruments and to manage foreign currency risk.

OPERATING ACTIVITIES

Nucor generated cash provided by operating activities of $1.94 billion in 2007 compared with a record $2.25 billion in 2006, a decrease of 14%. This decrease was primarily the result of the 16% decrease in net earnings. In addition, changes in operating assets and liabilities (exclusive of acquisitions) used cash of $202.5 million in 2007 compared with $83.8 million cash used in 2006. Accounts receivable increased in 2007 due to increased sales volumes and increased average prices. Salaries, wages and related accruals decreased due to the reduction in profit sharing.

INVESTING ACTIVITIES

Our business is capital intensive; therefore, cash used in investing activities 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 decreased to $856.1 million in 2007 compared with $1.15 billion in 2006. Nucor invested $520.4 million in new facilities (exclusive of acquisitions) and expansion or upgrading of existing facilities in 2007 compared with $338.4 million in 2006, an increase of 54%.

Existing cash and cash equivalents and short-term investments of approximately $1.54 billion funded the acquisitions of Harris Steel, Magnatrax Corporation and several other companies in 2007. In 2006, Nucor acquired the assets of Connecticut Steel and Verco for $223.9 million.

In the first quarter of 2007, Nucor sold its interest in Ferro Gusa Carajás S. A., a pig iron joint venture in northern Brazil, to its partner, Companhia Vale do Rio Doce (“CVRD”). Nucor has entered into an off-take agreement with CVRD for the production of this facility.

FINANCING ACTIVITIES

Cash used in financing activities decreased to $470.9 million in 2007 compared with $1.30 billion in 2006. In November 2007, Nucor issued $300 million in 5.00% notes due in 2012, $600 million of 5.75% notes due in 2017 and $400 million of 6.40% notes due in 2037.

Also in 2007, Nucor increased its base dividend and paid a quarterly supplemental dividend, resulting in dividend payments increasing from $577.8 million in 2006 to $726.1 million in 2007.

During 2007, Nucor repurchased approximately 14.1 million shares of Nucor’s common stock at a cost of approximately $754.0 million under the stock repurchase program. In September 2007, the board of directors approved the repurchase of up to an additional 30 million shares of common stock, all of which remain available for repurchase.

The percentage of long-term debt to total capital (long-term debt plus minority interests plus stockholders’ equity) was 29% and 15% at year-end 2007 and 2006, respectively.

In 2007, Nucor amended its five-year unsecured revolving credit facility which now matures in November 2012 and provides for up to $1.0 billion in revolving loans. Up to the equivalent of $850.0 million of the credit facility will be available for foreign currency loans, and up to $500.0 million is available for the issuance of letters of credit. The credit facility may be increased by up to $300.0 million at the election of the Company in accordance with the terms set forth in the credit agreement. No borrowings were outstanding under the credit facility as of December 31, 2007.

MARKET RISK

All of Nucor’s industrial revenue bonds have variable interest rates that are adjusted weekly or annually. These industrial revenue bonds represent 19% of Nucor’s long-term debt outstanding at December 31, 2007. The remaining 81% 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, 2007, there were no such contracts outstanding. Nucor’s 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 primarily to manage its exposure to price risk related to natural gas purchases used in the production process. 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. Nucor recognizes all derivative instruments in the consolidated balance sheets at fair value.

Prior to the acquisition of Harris Steel, Nucor was principally a domestic manufacturer of steel and steel products with customers located primarily in the U.S. Nucor was exposed to currency fluctuations, however, due to its joint ventures in Brazil and Australia and the direct reduced iron facility in Trinidad. When the Company entered into the agreement to acquire Harris Steel in January 2007, Nucor became exposed to Canadian currency fluctuations and hedged a portion of the exposure associated with the closing of the transaction in March 2007. The Company continues to be exposed to foreign currency risk through its operations in Canada, Trinidad and Australia.

CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

The following table sets forth our contractual obligations and other commercial commitments as of December 31, 2007 for the periods presented.

DIVIDENDS

Nucor has increased its base cash dividend every year since it began paying dividends in 1973. In 2007, in addition to increasing the base dividend, the board of directors approved a supplemental dividend based on Nucor’s strong performance. Nucor paid dividends of $2.43 per share in 2007 compared with $1.88 per share in 2006. In February 2008, the board of directors approved a 7% increase in Nucor’s quarterly base dividend to $0.32 per share and announced a supplemental dividend of $0.20 per share, for a total quarterly dividend of $0.52 per share. The payment of any future supplemental dividends will depend upon many factors, including Nucor’s earnings, cash flows and financial position. Nucor’s dividends paid to stockholders have increased more than eleven-fold since 2003: $62 million paid in 2003, $70 million paid in 2004, $210 million paid in 2005, $578 million paid in 2006 and $726 million paid in 2007.

OUTLOOK

Our objective is to maintain a strong balance sheet while pursuing profitable growth. We expect to obtain additional capacity through optimizing existing operations, pursuing strategic acquisitions, continuing greenfield construction utilizing advantageous new technologies and growing globally with an emphasis on opportunities that leverage technologies and strategic partnerships.

Capital expenditures are currently projected to be approximately $800 million in 2008, an increase of more than 50% over our capital expenditures in 2007. Nucor continues to invest capital in our core operations to keep them state-of-the-art and globally competitive.

In the steel mills segment, total steel production is anticipated to increase over the next several years from the 22,089,000 tons produced in 2007. Our current estimated annual capacity is approximately 25,400,000 tons, and additional capacity may be obtained through upgrading existing facilities, completion of greenfield projects and through acquisitions. More than $300 million of the 2008 capital spending is allocated to our greenfield projects, including significant projects in the steel mills segment such as the SBQ steel mill in Memphis, Tennessee; the Castrip facility in Blytheville, Arkansas; and the sheet steel galvanizing facility at our mill in Decatur, Alabama. In January 2008, Nucor announced signing a Memorandum of Understanding with the Duferco group to establish a 50/50 joint venture for the production of steel beams and other long products in Italy, with distribution in Europe and North Africa. We are working toward establishing this joint venture in the first half of 2008.

We also expect our acquisition of SHV North America Corporation, which owns 100% of The David J. Joseph Company and certain related affiliates, to close in the first quarter of 2008. Since scrap is our largest single cost, this strategic investment provides an ideal growth platform for Nucor to expand its direct ownership in the steel scrap supply chain and further its raw materials strategy.

Nucor has a 25% interest in a joint venture that has constructed a commercial Hlsmelt plant in Kwinana, Western Australia. The Hlsmelt process converts iron ore fines and coal fines to liquid metal, eliminating the need for a blast furnace, sinter/pellet plants and coke ovens. Although this investment continues to make encouraging progress, the Hlsmelt process has not yet achieved commercial success.

Our growth strategy has also expanded our participation in attractive downstream steel products businesses. Our value-added steel products provide a valuable base load of volume for our steel mills and are less vulnerable to competition from imports. We anticipate that as non-residential construction markets slow in 2008 due to a weakening economy, our vertical integration and financial strength, combined with the Nucor “can-do” attitude, will allow us to continue our history of exiting weak economic cycles with a very strong competitive position.

With the 2005 purchase of our Wisconsin cold finish bar plant, Nucor became the largest U.S. producer of cold finish bars. Our acquisition of Verco has enhanced our market leadership in the steel decking market. The Magnatrax, LMP Steel & Wire and Nelson acquisitions in 2007 further diversified Nucor’s product offerings and increased Nucor’s market presence in the non-residential building, cold finish, wire and wire mesh industries. The addition of our fourth Nucor Building Systems plant in Brigham City, Utah, gives us a national presence as we execute our strategy to grow profitable market share in this industry.

Harris Steel completed four acquisitions and one joint venture during the first nine months following Nucor’s acquisition of the company, increasing our rebar fabrication capacity by more than 35% over their original capacity. Harris Steel will continue to serve as an avenue for our growth in the rebar fabrication market and to strengthen our leadership position in the cold finish bar market.

We are beginning 2008 with a reasonably strong non-residential construction backlog, but see signs of a slowing economy in our quotation and new order rates. However, we expect infrastructure construction spending to remain strong and Nucor to continue benefiting from product line diversification. We have recently announced price increases for many of our products. Inventory levels at service centers and OEM’s are currently at much lower levels than recent years due to a decreased rate of imports in the second half of 2007. We expect these lower inventory levels and lower imports to reduce the impact of a slowing economy in 2008.

We recognize that uncertainty in external factors such as the rate of increase in raw materials costs, the slowing growth rate of the economy, the level of imports and consolidation in the industry will have a significant impact on our results. In 2008, we will continue working toward our goal of controlling approximately six to seven million tons of our supply of high-quality scrap substitutes. Our raw materials strategy is driven by Nucor’s ongoing expansion of our steel product portfolio into higher quality grades. We will continue expanding our ownership of the scrap supply-chain using the DJJ acquisition as a growth platform. We will continue our defense of fair trade and to point out examples of unfair trade policies and practices until these abuses are remedied. We will continue to pursue strategic acquisitions that expand our platform for generating earnings and attractive returns on our stockholders’ capital. While we cannot control these outside forces, Nucor will continue to be at the forefront of anticipating and addressing the issues that this uncertainty in external factors raises for us and other steel producers.

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 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 property, plant and equipment; 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.

REVENUE RECOGNITION

We recognize revenue when products are shipped, which represents when title and risk of loss have passed to the customer, and when collection is reasonably assured.

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. The cost of some inventories is measured on the last in, first out method of accounting. The LIFO method allocates the most recent costs to cost of products sold, thereby recognizing into operating results fluctuations in raw material, energy and other capitalizable costs more quickly than other methods. The cost of other inventories is determined on the first-in, first-out (“FIFO”) method.

ASSET IMPAIRMENTS

We evaluate the impairment of our property, plant and equipment on an individual asset basis or by logical groupings of assets. Asset impairments are recognized whenever changes in circumstances indicate that the carrying amounts of those productive assets 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.

GOODWILL AND OTHER IN TANGIBLES

Goodwill is the excess of cost over the fair value of net assets of businesses acquired. Goodwill is not amortized but is evaluated annually for impairment or if circumstances indicate a possible impairment may exist. Intangible assets that do not have indefinite lives are amortized over their useful lives and are tested for impairment if certain circumstances indicate an impairment may exist. When it is determined that an impairment exists, the intangible assets are written down to estimated fair value.

ENVIRONMENTAL REMEDIATION

We are subject to environmental laws and regulations established by federal, state and local authorities, and 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 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 as set forth in Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” (“SFAS 109”). 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.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109.” FIN 48 provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with SFAS 109. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. We adopted FIN 48 effective January 1, 2007, and the provisions of FIN 48 have been applied to all income tax positions commencing from that date. We recognize potential accrued interest and penalties related to unrecognized tax benefits within operations as a component of income before taxes, which is consistent with the recognition of these items in prior reporting periods. The cumulative effect of applying the provisions of FIN 48 has been reported as an adjustment to retained earnings as of January 1, 2007.

Prior to 2007, we determined our tax contingencies in accordance with SFAS No. 5, “Accounting for Contingencies.” We recorded estimated tax liabilities to the extent the contingencies were probable and could be reasonably estimated.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Statement No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures. SFAS 157 will be effective for Nucor in 2008 for all financial assets and liabilities and effective for non-financial assets and liabilities in 2009. Management does not expect the initial adoption of this statement in 2008 to have a material impact on our consolidated financial statements. Management has not yet determined the impact on our consolidated financial statements from the adoption of SFAS 157 as it pertains to non-financial assets and liabilities.

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), under which companies may elect to measure certain financial instruments and certain other items at fair value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in earnings. SFAS 159 is effective for Nucor in 2008. This standard is not expected to have a material impact on Nucor’s consolidated financial position and results of operations.

In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”), and Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. SFAS 160 outlines the accounting and reporting for ownership interest in a subsidiary held by parties other than the parent. SFAS 141R and SFAS 160 are effective for Nucor in 2009. Management is currently evaluating the impact of these statements.