Exhibit 10(xv)
RETIREMENT SEPARATION WAIVER AND RELEASE AGREEMENT
This
Retirement Separation Waiver and Release Agreement
(“Agreement”) is entered into as of the
23
rd
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.
(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
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 (12
th
) 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
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.
(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
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.
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.
IN WITNESS WHEREOF, Executive and Nucor have executed this Agreement as of the date first
set forth above.
|
|
|
|
|
|
|
Executive:
|
|
|
|
|
|
D. Michael Parrish
|
|
|
|
|
Nucor Corporation:
|
|
|
|
|
|
By:
|
|
A. Rae Eagle
|
|
|
|
Its:
|
|
Secretary
|
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 (12
th
) 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
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
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
(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
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.
(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
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
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.
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,
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]
IN WITNESS WHEREOF, Executive and Nucor Corporation have executed this Agreement on the
dates specified below.
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
James R. Darsey
|
|
Date:
|
|
8/20/2010
|
|
|
|
NUCOR CORPORATION
|
|
|
|
|
|
John J. Ferriola
|
|
Chief Operating Officer of Steelmaking Operations
|
|
Date:
|
|
8/19/2010
|
Exhibit 13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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.
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.
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%.
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.
|
|
|
|
|
|
• 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.
|
|
|
|
• 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.
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.
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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.
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.
|
|
|
|
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.
|
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.
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
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.
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.
|
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
|
R
EPORT
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
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.
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.
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.
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 December 31, 2008 was presented as a reconciling item in the consolidated statements of earnings.
Recent Accounting Pronouncements
In January
2010, Nucor adopted accounting guidance regarding the consolidation of variable interest entities (“VIEs”). The new guidance requires a qualitative approach to identifying a controlling financial interest in a VIE, and requires ongoing
reassessments of whether an entity is a VIE and whether an entity is the primary beneficiary of a VIE. Adoption of this accounting standard had no impact on Nucor’s consolidated financial statements.
In January 2010, Nucor adopted accounting guidance that requires an entity to disclose separately the amounts of significant transfers in and out of Level 1 and
Level 2 fair value measurements and describe the reasons for the transfers. Adoption of this accounting standard did not have a material impact on Nucor’s consolidated financial statements.
In January 2010, the Financial Accounting Standards Board issued changes to disclosure requirements for fair value measurements. For fair value measurements using
significant unobservable inputs (Level 3), the changes require a reporting entity to present separate information about gross purchases, sales, issuances and settlements. These changes are effective for Nucor beginning January 2011. The adoption of
this guidance is not expected to have an impact on the consolidated financial statements.
3. ACQUISITIONS
2010
In April 2010, Nucor acquired a 50%
economic and voting interest in NuMit LLC for a purchase price of approximately $221.3 million. NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 23 sheet processing facilities throughout the U.S., Canada and Mexico.
Nucor accounts for the investment using the equity method (see Note 9).
2008
Nucor completed the acquisition of the
stock of SHV North America Corporation, which owns 100% of The David J. Joseph Company (“DJJ”) and related affiliates, for a purchase price of approximately $1.44 billion in February 2008. In addition to its scrap processing and brokerage
operations, DJJ owns over 2,000 scrap-related railcars and provides complete fleet management and logistics services to third parties.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed of DJJ as of the date of acquisition:
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
Current assets
|
|
$
|
758,748
|
|
|
Property, plant and equipment
|
|
|
288,440
|
|
|
Goodwill
|
|
|
837,378
|
|
|
Other intangible assets
|
|
|
449,167
|
|
|
Other assets
|
|
|
6,211
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
2,339,944
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
(696,000
|
)
|
|
Long-term debt
|
|
|
(16,300
|
)
|
|
Deferred credits and other liabilities
|
|
|
(184,037
|
)
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
(896,337
|
)
|
|
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
1,443,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The purchase price allocation to the identifiable intangible assets is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except years)
|
|
|
As of the date of acquisition
|
|
|
|
|
|
|
Weighted-
Average Life
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
389,200
|
|
|
|
|
|
20 years
|
|
|
Trade names
|
|
|
56,200
|
|
|
|
|
|
20 years
|
|
|
Other
|
|
|
3,767
|
|
|
|
|
|
18 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
449,167
|
|
|
|
|
|
20 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximately $630.9 million of the goodwill has been allocated to the raw
materials segment. The remaining $206.5 million of the goodwill has been allocated to the steel mills segment on the basis that certain cost synergies will benefit these businesses (see Note 8).
The results of DJJ have been included in the consolidated financial statements from the date of acquisition. Unaudited pro forma results for Nucor, assuming the
acquisition of DJJ occurred at the beginning of 2008 are as follows:
|
|
|
|
|
|
|
(in thousands, except per share data)
|
|
|
Year Ended December 31,
|
|
2008
|
|
|
|
|
|
Net sales
|
|
$
|
24,112,311
|
|
|
Net earnings attributable to Nucor stockholders
|
|
|
1,842,751
|
|
|
|
|
|
Net earnings per share:
|
|
|
|
|
|
Basic
|
|
$
|
6.03
|
|
|
Diluted
|
|
$
|
6.02
|
|
|
|
|
|
|
|
|
|
|
At the beginning of the second quarter of 2008, Nucor acquired substantially
all the assets of Metal Recycling Services Inc. (“MRS”) for approximately $56.6 million. Based in Monroe, North Carolina, MRS, which is managed by DJJ, operates a full-service processing facility and two feeder yards. In April 2008, DJJ
acquired substantially all the assets of Galamba Metals Group, which now operates
under the Advantage Metals Recycling, LLC (“AMR”) name, for approximately $112.6 million. AMR operates 16
full-service scrap processing facilities in Kansas, Missouri and Arkansas. The cash purchase price of these two acquisitions resulted in goodwill of approximately $29.8 million that was allocated to the raw materials segment. The purchase price also
included approximately $73.2 million of identifiable intangibles, primarily customer relationships that are being amortized over 20 years.
In August
2008, Nucor’s wholly owned subsidiary, Harris Steel, Inc., acquired all of the issued and outstanding common shares of Ambassador Steel Corporation (“Ambassador”) for a cash purchase price of approximately $185.1 million. At closing,
Harris Steel also repaid Ambassador’s bank debt of approximately $135.6 million. The purchase price was adjusted in 2009, resulting in the payment of an additional $25.7 million. Based in Auburn, Indiana, Ambassador is a fabricator and
distributor of concrete reinforcing steel and related products. The adjusted purchase price included approximately $97.4 million of goodwill that was allocated as follows: $8.2 million to the steel products segment, $60.0 million to the steel mills
segment and $29.2 million to the steel trading businesses included in the “All other” category. The purchase price also included $60.0 million of identifiable intangibles, primarily customer relationships that are being amortized over 20
years.
In the steel mills segment, in July 2008, Nucor acquired 50% of the equity interest in Duferdofin Nucor S.r.l., for the purchase price of
approximately $667.0 million. Duferdofin Nucor operates a steel melt shop with a bloom/billet caster, two rolling mills and a bar mill in Italy. Nucor accounts for this investment using the equity method (see Note 9).
All Years
Other minor acquisitions, exclusive of purchase price adjustments of acquisitions made in prior years, totaled $64.8 million in 2010 ($8.1 million in 2009 and $81.6 million in 2008). Non-cash investing and
financing activities included the assumption of $3.1 million of liabilities with the acquisitions in 2010 ($1.2 million in 2009 and $1.12 billion in 2008).
4. SHORT-TERM INVESTMENTS
Nucor’s short-term investments held as of December 31,
2010 or 2009 consisted of certificates of deposit (CDs), Federal Home Loan Bank (FHLB) obligations and variable rate demand notes (VRDNs). FHLB consolidated obligations carry the highest credit ratings from both Moody’s and Standard &
Poor’s. VRDNs are variable rate bonds tied to short-term interest rates with stated original maturities in excess of 90 days. All of the VRDNs in which Nucor invests are secured by a direct-pay letter of credit issued by a high-credit quality
financial institution. Nucor can receive the principal invested and interest accrued thereon no later than seven days after notifying the financial institution that Nucor elects to tender the VRDNs. As the interest rate on the CDs and the coupon
rate on the FHLBs are fixed at inception, and the VRDNs trade at par value, no realized or unrealized gains or losses were incurred in 2010, 2009 or 2008.
The following is a summary of the short-term investments held at December 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands
|
)
|
|
December 31,
|
|
|
2010
|
|
|
|
2009
|
|
|
|
|
|
|
Certificates of deposit
|
|
$
|
800,363
|
|
|
$
|
150,000
|
|
|
Federal home loan bank obligations
|
|
|
—
|
|
|
|
75,000
|
|
|
Variable rate demand notes
|
|
|
353,260
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,153,623
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate contractual maturities of Nucor’s short-term investments are
$800.4 million in 2011 and $353.3 million in 2031 and thereafter.
5. ACCOUNTS RECEIVABLE
An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of our customers to make required payments. Accounts receivable
are stated net of the allowance for doubtful accounts of $61.2 million at December 31, 2010 ($52.9 million at December 31, 2009 and $64.9 million at December 31, 2008).
6. INVENTORIES
Inventories consist of approximately 41% raw materials and supplies and 59%
finished and semi-finished products at December 31, 2010 (48% and 52%, respectively, at December 31, 2009). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to
customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.
If the FIFO method of accounting had been used, inventories would have been $620.4 million higher at December 31, 2010 ($456.4 million higher at
December 31, 2009). During 2010, inventory quantities at locations that value inventory using LIFO were reduced, resulting in a liquidation of LIFO inventory layers carried at lower costs that prevailed in prior years. The effect of the
liquidation was to decrease cost of products sold by $30.4 million in 2010 ($81.5 million in 2009 and there was no liquidation of LIFO inventory layers in 2008). Use of the lower of cost or market method reduced inventories by $2.9 million at
December 31, 2010 ($9.2 million at December 31, 2009).
Nucor has entered into supply agreements for certain raw materials, utilities and
other items in the ordinary course of business. These agreements extend into 2028 and total approximately $5.90 billion at December 31, 2010.
7. PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
December 31,
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
Land and improvements
|
|
$
|
431,765
|
|
|
$
|
403,281
|
|
|
Buildings and improvements
|
|
|
834,661
|
|
|
|
812,130
|
|
|
Machinery and equipment
|
|
|
7,502,203
|
|
|
|
7,212,984
|
|
|
Construction in process and equipment deposits
|
|
|
323,845
|
|
|
|
370,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,092,474
|
|
|
|
8,798,435
|
|
|
Less accumulated depreciation
|
|
|
(5,240,356
|
)
|
|
|
(4,784,599
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,852,118
|
|
|
$
|
4,013,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated useful lives range from four to 10 years for land improvements,
nine to 31.5 years for buildings and improvements, and two to 15 years for machinery and equipment.
8. GOODWILL AND OTHER INTANGIBLE
ASSETS
The change in the net carrying amount of goodwill for the years ended December 31, 2010 and 2009 by segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
Steel
Mills
|
|
|
|
Steel
Products
|
|
|
|
Raw
Materials
|
|
|
|
All Other
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
$
|
208,466
|
|
|
$
|
755,562
|
|
|
$
|
665,075
|
|
|
$
|
102,942
|
|
|
$
|
1,732,045
|
|
|
Acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Purchase price adjustments of previous acquisitions
|
|
|
60,000
|
|
|
|
(19,979
|
)
|
|
|
—
|
|
|
|
(14,090
|
)
|
|
|
25,931
|
|
|
Translation
|
|
|
—
|
|
|
|
45,045
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
268,466
|
|
|
|
780,628
|
|
|
|
665,075
|
|
|
|
88,852
|
|
|
|
1,803,021
|
|
|
Acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
14,841
|
|
|
|
—
|
|
|
|
14,841
|
|
|
Purchase price adjustments of previous acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Translation
|
|
|
—
|
|
|
|
18,432
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
$
|
268,466
|
|
|
$
|
799,060
|
|
|
$
|
679,916
|
|
|
$
|
88,852
|
|
|
$
|
1,836,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The majority of goodwill is not tax deductible. During 2009, $35.3 million of
the goodwill originally allocated to the steel products segment and $24.7 million of the goodwill originally allocated to the steel trading businesses included in the “All other” category for the 2008 acquisition of Ambassador Steel
Corporation was reallocated to the steel mills segment, for a total of $60.0 million. The reallocation was made on the basis that expected cost synergies will benefit the steel mills.
Intangible assets with estimated lives of five to 22 years are amortized on a straight-line or accelerated basis and are
comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
December 31,
|
|
2010
|
|
|
2009
|
|
|
|
|
Gross
Amount
|
|
|
Accumulated
Amortization
|
|
|
Gross
Amount
|
|
|
Accumulated
Amortization
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
944,920
|
|
|
$
|
203,969
|
|
|
$
|
922,839
|
|
|
$
|
142,886
|
|
|
Trademarks and trade names
|
|
|
123,713
|
|
|
|
19,351
|
|
|
|
122,136
|
|
|
|
13,159
|
|
|
Other
|
|
|
27,869
|
|
|
|
17,057
|
|
|
|
27,869
|
|
|
|
13,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,096,502
|
|
|
$
|
240,377
|
|
|
$
|
1,072,844
|
|
|
$
|
169,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense was $70.5 million in 2010 ($72.4 million
in 2009 and $69.4 million in 2008). Annual amortization expense is estimated to be $64.4 million in 2011; $61.4 million in 2012; $57.9 million in 2013; $55.8 million in 2014; and $54.0 million in 2015.
The Company completed its annual goodwill impairment testing as of the first day of the fourth quarter of 2010, 2009 and 2008 and concluded that there was no
impairment of goodwill for any of its reporting units. We do not believe there are currently any reporting units at risk of impairment in the near term.
9. EQUITY INVESTMENTS
The carrying value of our equity investments in domestic and foreign
companies was $797.6 million at December 31, 2010 ($582.5 million at December 31, 2009) and is recorded in other assets in the consolidated balance sheets.
In 2008, Nucor acquired a 50% economic and voting interest in Duferdofin Nucor S.r.l., an Italian steel manufacturer. Nucor accounts for the investment in Duferdofin Nucor (on a one-month lag basis) under the
equity method, as control and risk of loss are shared equally between the members.
Nucor’s investment in Duferdofin Nucor at December 31,
2010 was $531.9 million ($534.0 million at December 31, 2009). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $78.5 million at December 31, 2010, resulting in a basis difference of $453.4 million due to the step-up
to fair value of certain assets and liabilities attributable to Duferdofin Nucor as well as the identification of goodwill ($322.7 million) and finite-lived intangible assets. This basis difference, excluding the portion attributable to goodwill, is
being amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate. Amortization expense and other purchase accounting adjustments associated with the fair value step-up was $11.5 million in 2010
($15.4 million in 2009 and $32.0 million in 2008).
During the first quarter of 2010, Duferdofin Nucor repaid
€
35 million ($48.9 million as of the payment date) of notes receivable that were outstanding with Nucor as of December 31, 2009. Nucor
subsequently contributed additional capital in the form of equity of
€
45 million ($63.7 million as of the contribution date) to the
joint venture. Also, Nucor recorded two additional notes receivable from Duferdofin Nucor with a total value of
€
20 million ($26.7
million as of December 31, 2010). The notes receivable bear interest at the twelve-month Euro Interbank Offered Rate (Euribor) as of the date of the notes plus 1% per year. The interest rates were reset on September 30, 2010 to the
Euribor twelve-month rate as of that date plus 1% per year. The principal amounts are due on January 31, 2016. Accordingly, the notes receivable were classified in other assets in the consolidated balance sheets as of December 31,
2010.
In September 2010, Nucor issued a guarantee for its ownership percentage (50%) of up to
€
112.5 million of Duferdofin Nucor’s credit facilities. As of December 31, 2010, Duferdofin Nucor had
€
87.0 million outstanding under these credit facilities. The portion of the amount outstanding that was guaranteed by Nucor was
€
43.5 million ($58.1 million). Nucor has not recorded any liability associated with the guarantee.
In April 2010, Nucor acquired a 50% economic and voting interest in NuMit LLC. NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 23
sheet processing facilities located throughout the U.S., Canada and Mexico. Nucor accounts for the investment in NuMit (on a one-month lag basis) under the equity method as control and risk of loss are shared equally between the members. The
acquisition did not result in a significant amount of goodwill or intangible assets.
Nucor’s investment in NuMit at December 31, 2010 was
$229.1 million, comprised of the purchase price of approximately $221.3 million plus equity method earnings since acquisition. Nucor also has recorded a $40.0 million note receivable from Steel Technologies LLC
for a loan Nucor made at closing. Nucor has also extended an $85.0 million line of credit (of which $40.0 million was outstanding at December 31, 2010) to
Steel Technologies. The note receivable bears interest at the three-month London Interbank Offered Rate (LIBOR) plus 90 basis points and matures on October 21, 2014. As of December 31, 2010, the amount outstanding on the line of credit
bears interest at the one-month LIBOR rate plus 300 basis points and matures on March 31, 2011. The note receivable was classified in other assets and the amount outstanding on the line of credit was classified in other current assets in the
consolidated balance sheet as of December 31, 2010.
Nucor reviews its equity investments for impairment if and when circumstances indicate that a
decline in value below its carrying amount may have occurred. In the fourth quarter of 2010, the Company concluded it had a triggering event requiring assessment for impairment of its equity investment in Duferdofin Nucor due to the continued
declines in the global demand for steel. Diminished demand began to significantly impact the financial results of Duferdofin Nucor in 2009 and continued to impact the results of the equity investment through 2010. After completing its assessment,
the Company determined that there was no impairment of its investment in Duferdofin Nucor. It is reasonably possible that, based on actual performance in the near term, the estimates used in the valuation as of December 31, 2010 could change
and result in an impairment of the investment.
Nucor recorded $99.0 million of impairment charges on its equity investments in 2008 (none in 2010 or
2009). Such charges are included in impairment of non-current assets in the consolidated statements of earnings. Approximately $84.8 million of the impairment charge was incurred in the fourth quarter of 2008 for the impairment of our investment in
the HIsmelt joint venture in 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. 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 in marketing,
administrative and other expenses for the estimated closure costs.
10. CURRENT LIABILITIES
Book overdrafts, included in accounts payable in the consolidated balance sheets, were $63.0 million at December 31, 2010 ($73.7 million at December 31,
2009). Dividends payable, included in accrued expenses and other current liabilities in the consolidated balance sheets, were $115.2 million at December 31, 2010 ($114.2 million at December 31, 2009).
11. DEBT AND OTHER FINANCING ARRANGEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
December 31,
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
Industrial revenue bonds:
|
|
|
|
|
|
|
|
|
|
0.34% to 1.8%, variable,
due from 2014 to 2040
|
|
$
|
1,030,200
|
|
|
$
|
436,200
|
|
|
Notes, 4.875%, due 2012
|
|
|
350,000
|
|
|
|
350,000
|
|
|
Notes, 5.0%, due 2012
|
|
|
300,000
|
|
|
|
300,000
|
|
|
Notes, 5.0%, due 2013
|
|
|
250,000
|
|
|
|
250,000
|
|
|
Notes, 5.75%, due 2017
|
|
|
600,000
|
|
|
|
600,000
|
|
|
Notes, 5.85%, due 2018
|
|
|
500,000
|
|
|
|
500,000
|
|
|
Notes, 4.125%, due 2022
|
|
|
600,000
|
|
|
|
—
|
|
|
Notes, 6.40%, due 2037
|
|
|
650,000
|
|
|
|
650,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,280,200
|
|
|
|
3,086,200
|
|
|
Less current maturities
|
|
|
—
|
|
|
|
(6,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,280,200
|
|
|
$
|
3,080,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual aggregate long-term debt maturities are: none in 2011; $650.0 million
in 2012; $250.0 million in 2013; $3.3 million in 2014; $16.3 million in 2015; and $3.361 billion thereafter.
In November 2010, Nucor issued $600.0
million in 30-year variable rate Gulf Opportunity Zone bonds to partially fund the capital costs associated with the construction of Nucor’s direct reduced ironmaking facility in St. James Parish, Louisiana. The net proceeds from the debt
issuance are being held in a trust account pending disbursement for the construction of the facility.
At December 31, 2010, the Company had not received any funds from the trust account. Net proceeds from the debt
issuance held in the trust account were $598.5 million at December 31, 2010 and are classified as restricted cash. Since the restricted cash must be used for the construction of the facility, the entire balance has been classified as a
non-current asset.
In September 2010, Nucor issued $600.0 million of 4.125% unsecured notes due in 2022. Net proceeds of the issuance were $594.9
million. Costs of $5.1 million associated with the issuance have been capitalized and are amortized over the life of the notes.
Nucor has commitments
under an unsecured revolving credit facility to provide for up to $1.30 billion in revolving loans. The multi-year revolving credit agreement matures in November 2012 and allows up to $200.0 million in additional commitments at Nucor’s election
in accordance with the terms set forth in the credit agreement. Up to the equivalent of $850.0 million of the credit facility is available for foreign currency loans, and up to $500.0 million is available for the issuance of letters of credit. The
credit facility provides for a pricing grid based upon the credit rating of Nucor’s senior unsecured long-term debt and, alternatively, interest rates quoted by lenders in connection with competitive bidding. The credit facility includes
customary financial and other covenants, including a limit on the ratio of funded debt to capital of 60%, a limit on Nucor’s ability to pledge the Company’s assets and a limit on consolidations, mergers and sales of assets. As of
December 31, 2010, Nucor’s funded debt to total capital ratio was 37%, and Nucor was in compliance with all covenants under the credit facility. No borrowings were outstanding under the credit facility as of December 31, 2010 and
2009.
Harris Steel has credit facilities totaling approximately $51.3 million, with $1.0 million of borrowings outstanding at December 31, 2010.
In addition, the business of Nucor Trading S.A., of which Harris Steel owns 75%, is financed by trade credit arrangements totaling approximately $115.0 million with a number of Swiss-based banking institutions. These arrangements, principally trade
finance facilities, are non-recourse to Nucor and its other subsidiaries. As of December 31, 2010, Nucor Trading S.A. had outstanding borrowings of $12.3 million and outstanding guarantees of $0.7 million.
Letters of credit totaling $19.7 million were outstanding as of December 31, 2010 related to certain obligations, including workers’ compensation,
utilities deposits and credit arrangements by Nucor Trading S.A. for commitments to purchase inventories.
Nucor capitalized $0.9 million of interest
expense in 2010 ($16.4 million in 2009 and $10.0 million in 2008) related to the borrowing costs associated with various construction projects at our mills.
12. CAPITAL STOCK
The par value of Nucor’s common stock is $0.40 per share and there are
800 million shares authorized. In addition, 250,000 shares of preferred stock, par value of $4.00 per share, are authorized, with preferences, rights and restrictions as may be fixed by Nucor’s board of directors. There are no shares of
preferred stock issued or outstanding.
In May 2008, Nucor completed a public offering of approximately 27.7 million common shares at an offering
price of $74.00 per share. Net proceeds of the offering were approximately $1.99 billion, after deducting underwriting discounts and commissions and offering expenses.
13. STOCKHOLDER RIGHTS PLAN
In 2001, the board of directors adopted a Stockholder Rights Plan
(“Plan”) in which one right (“Right”) was distributed as a dividend for each Nucor common share outstanding. The Plan was amended in 2006 to adjust the purchase price of the Rights for stock splits effected since adoption of the
Plan. Each Right entitles Nucor common stockholders to purchase, under certain conditions, one five-thousandth of a share of newly authorized Series A Junior Participating Preferred Stock (“Preferred Stock”), with one five-thousandth of a
share of Preferred Stock intended to be the economic equivalent of one share of Nucor common stock. Until the occurrence of certain events, the Rights are represented by and traded in tandem with Nucor common stock. Rights will be exercisable only
if a person or group acquires beneficial ownership of 15% or more of the Nucor common shares or commences a tender or exchange offer, upon the consummation of which such person or group would beneficially own 15% or more of the common shares. Upon
such an event, the Rights enable dilution of the acquiring person’s or group’s interest by providing that other holders of Nucor common stock may purchase, at an exercise price of $150, Nucor common stock, or in the discretion of the board
of directors, Preferred Stock, having double the value of such exercise price. Nucor will be entitled to redeem the rights at $0.001 per Right under certain circumstances set forth in the Plan. The Rights themselves have no voting power and will
expire on March 8, 2011, unless earlier exercised, redeemed or exchanged. Each one five-thousandth of a share of Preferred Stock has the same voting rights as one share of Nucor common stock, and each share of Preferred Stock has 5,000 times
the voting power of one share of Nucor common stock.
14. DERIVATIVE FINANCIAL INSTRUMENTS
The
following tables summarize information regarding Nucor’s derivative instruments:
Fair Value of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Fair Value
|
|
|
December 31,
|
|
Balance Sheet Location
|
|
2010
|
|
|
2009
|
|
|
Asset derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
Other current assets
|
|
$
|
266
|
|
|
$
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
Accrued expenses and other current liabilities
|
|
$
|
(8,900
|
)
|
|
$
|
(23,000
|
)
|
|
Commodity contracts
|
|
Deferred credits and other liabilities
|
|
|
(54,800
|
)
|
|
|
(72,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liability derivatives designated as hedging instruments
|
|
|
|
|
(63,700
|
)
|
|
|
(95,900
|
)
|
|
Liability derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
Accrued expenses and other current liabilities
|
|
|
(2,961
|
)
|
|
|
(3,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liability derivatives
|
|
|
|
$
|
(66,661
|
)
|
|
$
|
(99,565
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Derivative Instruments on the Consolidated Statements of
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
Derivatives in
Cash
Flow
Hedging
Relationships
|
|
Statement of
Earnings
Location
|
|
Amount of Gain
or
(Loss) Recognized in
OCI on Derivative
(Effective Portion)
|
|
|
Amount of Gain
or
(Loss) Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
|
|
|
Amount of Gain
or
(Loss) Recognized in
Earnings on Derivative
(Ineffective Portion)
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Cost of products sold
|
|
$
|
(29,957
|
)
|
|
$
|
(48,616
|
)
|
|
$
|
(35,141
|
)
|
|
$
|
(40,543
|
)
|
|
$
|
600
|
|
|
$
|
(1,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Derivatives Not Designated
as Hedging Instruments
|
|
Statement of Earnings
Location
|
|
Amount of Gain or (Loss)
Recognized in Earnings on Derivative
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
Commodity contracts
|
|
Cost of products sold
|
|
$(1,417)
|
|
$(4,887)
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
Cost of products sold
|
|
907
|
|
(3,050)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$(510)
|
|
$(7,937)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010, natural gas swaps covering 19.1 million MMBTUs
and foreign currency contracts with a notional value of $18.6 million were outstanding.
At December 31, 2010, $35.4 million of net deferred losses on cash flow hedges on natural gas forward purchase
contracts included in accumulated other comprehensive income are expected to be reclassified into earnings, due to the settlement of forecasted transactions, during the next twelve months assuming no change in the forward commodity prices from
December 31, 2010. 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 two years.
Nucor has also entered into various natural gas purchase contracts, which effectively commit Nucor to the following purchases of natural gas to be used for
production: $95.1 million in 2011; $46.2 million in 2012; $31.2 million in 2013; $28.9 million in 2014; $28.3 million in 2015; and $401.5 million between 2016 and 2028. These natural gas purchase contracts will primarily supply our direct reduced
iron facility in Trinidad.
In the first half of 2008, the Company entered into a series of forward foreign currency contracts in order to mitigate the
risk of currency fluctuation on the anticipated acquisition of a 50% equity interest in Duferdofin Nucor. These contracts had a notional value of
€
423.5 million and matured in the second quarter of 2008 resulting in gains of $17.6 million included in marketing, administrative
and other expenses.
Nucor does not anticipate non-performance by the counterparties in any of these derivative instruments given their current credit
ratings, and no material loss is expected from non-performance by any one of such counterparties.
15. FAIR VALUE MEASUREMENTS
The following table summarizes information regarding Nucor’s financial assets and financial liabilities that are measured at fair value as of
December 31, 2010. Nucor does not currently have any non-financial assets or liabilities that are measured at fair value on a recurring basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
December 31,
|
|
Carrying
Amount in
Consolidated
Balance Sheets
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
1,156,240
|
|
|
$
|
1,156,240
|
|
|
$
|
—
|
|
|
|
|
|
|
Short-term investments
|
|
|
1,153,623
|
|
|
|
1,153,623
|
|
|
|
—
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
266
|
|
|
|
—
|
|
|
|
266
|
|
|
|
|
|
|
Restricted cash
|
|
|
598,482
|
|
|
|
598,482
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,908,611
|
|
|
$
|
2,908,345
|
|
|
$
|
266
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
$
|
(66,661
|
)
|
|
|
—
|
|
|
$
|
(66,661
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
1,907,066
|
|
|
$
|
1,907,066
|
|
|
$
|
—
|
|
|
|
|
|
|
Short-term investments
|
|
|
225,000
|
|
|
|
225,000
|
|
|
|
—
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
|
445
|
|
|
|
—
|
|
|
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,132,511
|
|
|
$
|
2,132,066
|
|
|
$
|
445
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
|
$
|
(99,565
|
)
|
|
|
—
|
|
|
$
|
(99,565
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements for Nucor’s cash equivalents, short-term
investments and restricted cash are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Fair value measurements for Nucor’s derivatives are classified under Level 2
because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices and spot and future exchange rates.
The fair value of outstanding debt, including current maturities, was approximately $4.59 billion at December 31, 2010 ($3.30 billion at December 31,
2009). The fair value estimates were based on readily available market prices of our debt at December 31, 2010 and 2009, or similar debt with the same maturities, rating and interest rates.
16. CONTINGENCIES
Nucor is subject to
environmental laws and regulations established by federal, state and local authorities, and, accordingly, makes provision for the estimated costs of compliance. Of the undiscounted total of $35.0 million of accrued environmental costs at
December 31, 2010 ($37.4 million at December 31, 2009), $13.5 million was classified in accrued expenses and other current liabilities ($15.9 million at December 31, 2009) and $21.5 million was classified in deferred credits and other
liabilities ($21.5 million at December 31, 2009). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation technology, and changing governmental regulations and legal standards.
Nucor has been named, along with other major steel producers, as a co-defendant in several related antitrust class-action complaints filed by Standard Iron Works
and other steel purchasers in the United States District Court for the Northern District of Illinois. The cases are filed as class actions. The plaintiffs allege that from January 2005 to the present, eight steel manufacturers, including Nucor,
engaged in anticompetitive activities with respect to the production and sale of steel. The plaintiffs seek monetary and other relief. Although we believe the plaintiffs’ claims are without merit and will vigorously defend against them, we
cannot at this time predict the outcome of this litigation or estimate the range of Nucor’s potential exposure.
Other contingent liabilities with
respect to product warranties, legal proceedings and other matters arise in the normal course of business. Nucor maintains liability insurance for certain risks that arise that are also subject to certain self-insurance limits. In the opinion of
management, no such matters exist which, in the event of an unfavorable outcome, would have a material effect on the consolidated financial statements.
17. STOCK-BASED COMPENSATION
Stock Options
Nucor’s stock option plans provide that common stock options may be granted to key employees, officers and non-employee directors with exercise prices at 100% of the market price on the date of the grant. The
stock options granted prior to 2006 were exercisable six months after grant date and have a term of seven years. The stock options granted in 2010 are exercisable at the end of three years and have a term of 10 years. Nucor did not grant any options
during 2009 or 2008. New shares are issued upon exercise of stock options.
A summary of activity under Nucor’s stock option plans is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Number of shares under option:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at beginning of year
|
|
|
1,060
|
|
|
$
|
21.95
|
|
|
|
1,299
|
|
|
$
|
20.80
|
|
|
|
1,852
|
|
|
$
|
20.37
|
|
|
Granted
|
|
|
242
|
|
|
$
|
41.43
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
(319
|
)
|
|
$
|
14.60
|
|
|
|
(239
|
)
|
|
$
|
15.69
|
|
|
|
(553
|
)
|
|
$
|
19.36
|
|
|
Canceled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
|
983
|
|
|
$
|
29.14
|
|
|
|
1,060
|
|
|
$
|
21.95
|
|
|
|
1,299
|
|
|
$
|
20.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at end of year
|
|
|
741
|
|
|
$
|
25.12
|
|
|
|
1,060
|
|
|
$
|
21.95
|
|
|
|
1,299
|
|
|
$
|
20.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The shares reserved for future grants as of December 31, 2010, 2009 and
2008 are reflected in the restricted stock units table below. The total intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date of exercise) that were exercised during 2010 was $8.5
million ($7.0 million in 2009 and $25.4 million in 2008).
The following table summarizes information about stock options outstanding at December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in thousands)
|
|
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
Range of Exercise Prices
|
|
Number
Outstanding
|
|
|
Weighted-
Average
Remaining
Contractual
Life
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Number
Exercisable
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
$10.00 –
$20.00
|
|
|
305
|
|
|
|
0.5 years
|
|
|
$
|
18.54
|
|
|
|
305
|
|
|
$
|
18.54
|
|
|
20.01 – 30.00
|
|
|
236
|
|
|
|
1.7 years
|
|
|
$
|
28.86
|
|
|
|
236
|
|
|
$
|
28.86
|
|
|
30.01 – 40.00
|
|
|
200
|
|
|
|
1.2 years
|
|
|
$
|
30.73
|
|
|
|
200
|
|
|
$
|
30.73
|
|
|
40.01 – 41.43
|
|
|
242
|
|
|
|
9.4 years
|
|
|
$
|
41.43
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$10.00 – $41.43
|
|
|
983
|
|
|
|
3.1 years
|
|
|
$
|
29.14
|
|
|
|
741
|
|
|
$
|
25.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2010, the total aggregate intrinsic
value of options outstanding and options exercisable was $14.4 million and $13.8 million, respectively.
For the 2010 stock option grant, the grant date
fair value of $15.50 was calculated using the Black-Scholes option-pricing model with the following assumptions:
|
|
|
|
|
|
|
|
|
2010
|
|
|
Exercise price
|
|
$
|
41.43
|
|
|
Expected dividend yield
|
|
|
3.48
|
%
|
|
Expected stock price volatility
|
|
|
50.58
|
%
|
|
Risk-free interest rate
|
|
|
2.75
|
%
|
|
Expected life (in years)
|
|
|
6.5
|
|
|
|
|
|
|
|
Compensation expense for stock options was $0.7 million in
2010 (none in 2009 and 2008). As of December 31, 2010, unrecognized compensation expense related to options was $3.0 million, which is expected to be recognized over 2.4 years.
Restricted Stock Units
Nucor grants restricted stock units (“RSUs”) to key employees,
officers and non-employee directors. The RSUs typically vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date. A portion of the RSUs awarded to senior officers vest upon the
officer’s retirement. Retirement, for purposes of vesting in these units only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of
service requirements. RSUs granted to non-employee directors are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the board of directors.
RSUs granted to employees who are eligible for retirement on the date of grant or will become retirement-eligible prior to the end of the vesting term
are expensed over the period through which the employee will become retirement-eligible since the awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who are not retirement-eligible is recognized on a
straight-line basis over the vesting period.
Cash dividend equivalents are paid to participants each quarter. Dividend equivalents paid on units
expected to vest are recognized as a reduction in retained earnings.
The fair value of the RSUs is determined based on the closing stock price of Nucor’s common stock on the day before the grant. A summary of Nucor’s
restricted stock unit activity is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Restricted stock units:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year
|
|
|
1,464
|
|
|
$
|
54.69
|
|
|
|
1,139
|
|
|
$
|
67.67
|
|
|
|
918
|
|
|
$
|
60.82
|
|
|
Granted
|
|
|
462
|
|
|
$
|
43.05
|
|
|
|
1,147
|
|
|
$
|
43.91
|
|
|
|
679
|
|
|
$
|
74.80
|
|
|
Vested
|
|
|
(709
|
)
|
|
$
|
55.24
|
|
|
|
(805
|
)
|
|
$
|
57.58
|
|
|
|
(451
|
)
|
|
$
|
64.45
|
|
|
Canceled
|
|
|
(14
|
)
|
|
$
|
49.52
|
|
|
|
(17
|
)
|
|
$
|
60.44
|
|
|
|
(7
|
)
|
|
$
|
67.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at end of year
|
|
|
1,203
|
|
|
$
|
49.96
|
|
|
|
1,464
|
|
|
$
|
54.69
|
|
|
|
1,139
|
|
|
$
|
67.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reserved for future grants (stock options and RSUs)
|
|
|
14,777
|
|
|
|
|
|
|
|
15,878
|
|
|
|
|
|
|
|
17,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense for RSUs was $37.0 million in 2010 ($47.3 million in 2009
and $39.8 million in 2008). The total fair value of shares vested during 2010 was $30.4 million ($37.2 million in 2009 and $33.3 million in 2008). As of December 31, 2010, unrecognized compensation expense related to unvested RSUs was $34.7
million, which is expected to be recognized over a weighted-average period of 1.7 years.
Restricted Stock Awards
Nucor’s Senior Officers Long-Term Incentive Plan (the “LTIP”) and Annual Incentive
Plan (the “AIP”) authorize the award of shares of common stock to officers subject to certain conditions and restrictions.
The LTIP
provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award
vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age fifty-five while employed by Nucor. Although participants are entitled to cash dividends and may vote awarded shares, the
sale or transfer of such shares is limited during the restricted period.
The AIP provides for the payment of annual cash incentive awards. An AIP
participant may elect, however, to defer payment of up to one-half of an annual incentive award. In such event, the deferred award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock
units, equal to 25% of the number of common stock units attributable to the deferred award. Common stock units attributable to deferred awards are fully vested. Common stock units credited as a deferral incentive vest upon the participant’s
attainment of age fifty-five while employed by Nucor. Vested common stock units are paid to participants in the form of shares of common stock following their termination of employment with Nucor.
A summary of Nucor’s restricted stock activity under the AIP and LTIP is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(shares in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Shares
|
|
|
Grant Date
Fair Value
|
|
|
Restricted stock awards and units:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at beginning of year
|
|
|
240
|
|
|
$
|
50.75
|
|
|
|
375
|
|
|
$
|
61.57
|
|
|
|
479
|
|
|
$
|
51.93
|
|
|
Granted
|
|
|
131
|
|
|
$
|
44.82
|
|
|
|
256
|
|
|
$
|
32.16
|
|
|
|
280
|
|
|
$
|
67.33
|
|
|
Vested
|
|
|
(230
|
)
|
|
$
|
51.13
|
|
|
|
(391
|
)
|
|
$
|
48.96
|
|
|
|
(384
|
)
|
|
$
|
53.76
|
|
|
Canceled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested at end of year
|
|
|
141
|
|
|
$
|
44.62
|
|
|
|
240
|
|
|
$
|
50.75
|
|
|
|
375
|
|
|
$
|
61.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares reserved for future grants
|
|
|
1,600
|
|
|
|
|
|
|
|
1,731
|
|
|
|
|
|
|
|
1,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense for common stock and common stock units awarded under the AIP and LTIP is recorded over the performance
measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of
amounts payable in cash, was $5.2 million in 2010 ($7.3 million in 2009 and $10.1 million in 2008). The total fair value of shares vested during 2010 was $10.2 million ($13.3 million in 2009 and $25.7 million in 2008). As of December 31, 2010,
unrecognized compensation expense related to unvested restricted stock awards was $1.5 million, which is expected to be recognized over a weighted-average period of 1.4 years.
18. EMPLOYEE BENEFIT PLANS
Nucor makes contributions to a Profit Sharing and Retirement
Savings Plan for qualified employees based on the profitability of the Company. Nucor’s expense for these benefits totaled $22.1 million in 2010 ($9.6 million in 2009 and $281.3 million in 2008). The related liability for these benefits is
included in salaries, wages and related accruals. Nucor also has a medical plan covering certain eligible early retirees. The unfunded obligation, included in deferred credits and other liabilities in the balance sheet, totaled $45.5 million at
December 31, 2010 ($44.6 million at December 31, 2009). Expense associated with this plan totaled $2.7 million in 2010 ($1.9 million in 2009 and $2.7 million in 2008). The discount rate used was 5.5% in 2010 (6.0% in 2009 and 6.4% in
2008). The health care cost increase trend rate used was 6.8% in 2010 (6.9% in 2009 and 7.5% in 2008). The health care cost increase in the trend rate is projected to decline gradually to 4.5% by 2027.
19. INTEREST EXPENSE (INCOME)
The
components of net interest expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
161,140
|
|
|
$
|
149,922
|
|
|
$
|
134,554
|
|
|
Interest income
|
|
|
(8,047
|
)
|
|
|
(15,170
|
)
|
|
|
(44,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
153,093
|
|
|
$
|
134,752
|
|
|
$
|
90,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid was $151.8 million in 2010 ($158.7 million in 2009 and $146.1
million in 2008).
20. INCOME TAXES
Components of earnings (loss) from continuing operations before income taxes and noncontrolling interests are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
United States
|
|
$
|
260,794
|
|
|
$
|
(353,463
|
)
|
|
$
|
3,082,536
|
|
|
Foreign
|
|
|
6,321
|
|
|
|
(60,515
|
)
|
|
|
21,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
267,115
|
|
|
$
|
(413,978
|
)
|
|
$
|
3,104,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The provision for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(66,462
|
)
|
|
$
|
(258,683
|
)
|
|
$
|
1,090,099
|
|
|
State
|
|
|
(19,297
|
)
|
|
|
(22,274
|
)
|
|
|
114,972
|
|
|
Foreign
|
|
|
8,289
|
|
|
|
15,611
|
|
|
|
47,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
(77,470
|
)
|
|
|
(265,346
|
)
|
|
|
1,252,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
138,662
|
|
|
|
115,630
|
|
|
|
(238,899
|
)
|
|
State
|
|
|
12,223
|
|
|
|
(10,354
|
)
|
|
|
(14,505
|
)
|
|
Foreign
|
|
|
(12,623
|
)
|
|
|
(16,730
|
)
|
|
|
(40,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
138,262
|
|
|
|
88,546
|
|
|
|
(293,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provision for income taxes
|
|
$
|
60,792
|
|
|
$
|
(176,800
|
)
|
|
$
|
959,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of the federal statutory tax rate (35%) to the total
provision is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Taxes computed at statutory rate
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
|
State income taxes, net of federal income tax benefit
|
|
|
(1.72
|
)
|
|
|
5.12
|
|
|
|
2.10
|
|
|
Federal research credit
|
|
|
(1.19
|
)
|
|
|
0.84
|
|
|
|
(0.05
|
)
|
|
Domestic manufacturing deduction
|
|
|
—
|
|
|
|
(0.13
|
)
|
|
|
(1.99
|
)
|
|
Equity in losses of foreign joint venture
|
|
|
3.09
|
|
|
|
(5.93
|
)
|
|
|
—
|
|
|
Foreign rate differential
|
|
|
(3.83
|
)
|
|
|
2.79
|
|
|
|
(0.88
|
)
|
|
Noncontrolling interests
|
|
|
(9.47
|
)
|
|
|
4.77
|
|
|
|
(3.54
|
)
|
|
Other, net
|
|
|
0.88
|
|
|
|
0.25
|
|
|
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
22.76
|
%
|
|
|
42.71
|
%
|
|
|
30.91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets and liabilities resulted from the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
December 31,
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Accrued liabilities and reserves
|
|
$
|
115,095
|
|
|
$
|
142,864
|
|
|
Allowance for doubtful accounts
|
|
|
16,809
|
|
|
|
11,807
|
|
|
Inventory
|
|
|
140,676
|
|
|
|
166,378
|
|
|
Post-retirement benefits
|
|
|
17,889
|
|
|
|
18,913
|
|
|
Natural gas hedges
|
|
|
42,469
|
|
|
|
50,204
|
|
|
Net operating loss carryforward
|
|
|
50,529
|
|
|
|
46,504
|
|
|
Cumulative translation adjustments
|
|
|
506
|
|
|
|
—
|
|
|
Tax credit carryforwards
|
|
|
24,000
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
407,973
|
|
|
|
460,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustment
|
|
|
—
|
|
|
|
(911
|
)
|
|
Holdbacks and amounts not due under contracts
|
|
|
(13,007
|
)
|
|
|
(17,276
|
)
|
|
Intangibles
|
|
|
(250,247
|
)
|
|
|
(260,578
|
)
|
|
Property, plant and equipment
|
|
|
(406,889
|
)
|
|
|
(299,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(670,143
|
)
|
|
|
(578,091
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net deferred tax liabilities
|
|
$
|
(262,170
|
)
|
|
$
|
(117,421
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current deferred tax assets were $186.0 million at December 31, 2010
($224.6 million at December 31, 2009). Non-current deferred tax liabilities were $448.2 million at December 31, 2010 ($342.0 million at December 31, 2009). Nucor received $245.0 million in net federal, state and foreign income tax
refunds in 2010 (paid $213.2 million in 2009 and $952.7 million in 2008).
Undistributed earnings of Nucor’s foreign operations amount to
approximately $129.0 million at December 31, 2010 ($100.0 million at December 31, 2009). These earnings are considered to be indefinitely reinvested and, accordingly, no provisions for U.S. federal and state income taxes are required.
State net operating loss carryforwards were $843.0 million at December 31, 2010 ($646.8 million at December 31, 2009). If unused, they will
expire between 2014 and 2030. Foreign net operating loss carryforwards were $81.2 million at December 31, 2010 ($85.2 million at December 31, 2009). If unused, they will expire between 2027 and 2029.
At December 31, 2010, Nucor had approximately $92.8 million of unrecognized tax benefits, of which $85.3 million would affect Nucor’s effective tax rate,
if recognized. At December 31, 2009, Nucor had approximately $108.6 million of unrecognized tax benefits, of which $102.0 million would affect Nucor’s effective tax rate, if recognized.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits recorded in deferred credits and other liabilities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
108,587
|
|
|
$
|
87,734
|
|
|
$
|
102,174
|
|
|
Additions based on tax positions related to current year
|
|
|
1,983
|
|
|
|
2,422
|
|
|
|
19,488
|
|
|
Reductions based on tax positions related to current year
|
|
|
(1,358
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Additions based on tax positions related to prior years
|
|
|
5,705
|
|
|
|
858
|
|
|
|
23,668
|
|
|
Reductions based on tax positions related to prior years
|
|
|
(4,046
|
)
|
|
|
(15,540
|
)
|
|
|
(48,714
|
)
|
|
Additions due to settlements with taxing authorities
|
|
|
2,363
|
|
|
|
36,317
|
|
|
|
—
|
|
|
Reductions due to settlements with taxing authorities
|
|
|
(3,246
|
)
|
|
|
(1,288
|
)
|
|
|
(73
|
)
|
|
Reductions due to statute of limitations lapse
|
|
|
(17,236
|
)
|
|
|
(1,916
|
)
|
|
|
(10,775
|
)
|
|
Additions from current year acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
1,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
92,752
|
|
|
$
|
108,587
|
|
|
$
|
87,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We estimate that in the next twelve months, our gross uncertain tax positions,
exclusive of interest, could decrease by as much as $8.9 million, as a result of the expiration of the statute of limitations.
During 2010, Nucor
recognized $5.3 million of benefit in interest and penalties ($9.9 million of expense in 2009). As of December 31, 2010, Nucor had approximately $30.6 million of accrued interest and penalties related to uncertain tax positions ($35.1 million
at December 31, 2009).
Nucor has substantially concluded U.S. federal income tax matters for years through 2006. The 2007 to 2010 tax years are
open to examination by the Internal Revenue Service. The Canada Revenue Agency is currently examining the 2006 to 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).
21. EARNINGS (LOSS) PER SHARE
The computations of basic and diluted net earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Basic net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings (loss)
|
|
$
|
134,092
|
|
|
$
|
(293,613
|
)
|
|
$
|
1,830,990
|
|
|
Earnings allocated to participating securities
|
|
|
(1,823
|
)
|
|
|
(1,946
|
)
|
|
|
(6,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) available to common stockholders
|
|
$
|
132,269
|
|
|
$
|
(295,559
|
)
|
|
$
|
1,824,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding
|
|
|
315,962
|
|
|
|
314,873
|
|
|
|
304,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings (loss) per share
|
|
$
|
0.42
|
|
|
$
|
(0.94
|
)
|
|
$
|
5.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings (loss)
|
|
$
|
134,092
|
|
|
$
|
(293,613
|
)
|
|
$
|
1,830,990
|
|
|
Earnings allocated to participating securities
|
|
|
(1,823
|
)
|
|
|
(1,946
|
)
|
|
|
(6,484
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) available to common stockholders
|
|
$
|
132,269
|
|
|
$
|
(295,559
|
)
|
|
$
|
1,824,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares outstanding
|
|
|
315,962
|
|
|
|
314,873
|
|
|
|
304,525
|
|
|
Dilutive effect of stock options and other
|
|
|
548
|
|
|
|
—
|
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
316,510
|
|
|
|
314,873
|
|
|
|
305,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings (loss) per share
|
|
$
|
0.42
|
|
|
$
|
(0.94
|
)
|
|
$
|
5.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of shares that were not included in the diluted net earnings per
share calculation, because to do so would have been antidilutive, was immaterial for all periods presented.
22. SEGMENTS
Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and
alloy steel in sheet, bars, structural and plate, and Nucor’s equity investments in Duferdofin Nucor and NuMit. The steel products segment includes 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. The raw materials segment includes DJJ, the scrap broker and processor that Nucor acquired on February 29,
2008; Nu-Iron Unlimited, a facility that produces direct reduced iron used by the steel mills; the planned direct reduced ironmaking facility; and certain equity method investments. The “All other” category primarily includes Nucor’s
steel trading businesses. The segments are consistent with the way Nucor manages its business, which is primarily based upon the similarity of the types of products produced and sold by each segment.
Net interest expense, other income, profit sharing expense, stock-based compensation, gains on foreign currency exchange contracts and changes in the LIFO reserve
are shown under Corporate/eliminations. Corporate assets primarily include cash and cash equivalents, short-term investments, allowances to eliminate intercompany profit in inventory, fair value of natural gas hedges, deferred income tax assets,
federal income taxes receivable, the LIFO reserve and investments in and advances to affiliates.
Nucor’s segment results are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
Net sales to external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
10,860,760
|
|
|
$
|
7,159,512
|
|
|
$
|
16,477,900
|
|
|
Steel products
|
|
|
2,831,209
|
|
|
|
2,691,322
|
|
|
|
4,339,524
|
|
|
Raw materials
|
|
|
1,814,329
|
|
|
|
1,076,964
|
|
|
|
2,403,075
|
|
|
All other
|
|
|
338,329
|
|
|
|
262,498
|
|
|
|
442,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,844,627
|
|
|
$
|
11,190,296
|
|
|
$
|
23,663,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
1,719,937
|
|
|
$
|
1,027,167
|
|
|
$
|
2,165,459
|
|
|
Steel products
|
|
|
43,565
|
|
|
|
27,453
|
|
|
|
45,745
|
|
|
Raw materials
|
|
|
8,052,986
|
|
|
|
3,402,084
|
|
|
|
7,584,685
|
|
|
All other
|
|
|
8,616
|
|
|
|
10,888
|
|
|
|
10,069
|
|
|
Corporate/eliminations
|
|
|
(9,825,104
|
)
|
|
|
(4,467,592
|
)
|
|
|
(9,805,958
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
370,458
|
|
|
$
|
357,722
|
|
|
$
|
360,140
|
|
|
Steel products
|
|
|
58,429
|
|
|
|
57,988
|
|
|
|
51,403
|
|
|
Raw materials
|
|
|
78,308
|
|
|
|
75,699
|
|
|
|
66,845
|
|
|
All other
|
|
|
90
|
|
|
|
105
|
|
|
|
210
|
|
|
Corporate
|
|
|
4,862
|
|
|
|
2,521
|
|
|
|
886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
512,147
|
|
|
$
|
494,035
|
|
|
$
|
479,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
262
|
|
|
$
|
400
|
|
|
$
|
400
|
|
|
Steel products
|
|
|
40,745
|
|
|
|
40,705
|
|
|
|
43,980
|
|
|
Raw materials
|
|
|
28,577
|
|
|
|
30,412
|
|
|
|
24,758
|
|
|
All other
|
|
|
871
|
|
|
|
871
|
|
|
|
285
|
|
|
Corporate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
70,455
|
|
|
$
|
72,388
|
|
|
$
|
69,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before income taxes and
noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
778,946
|
|
|
$
|
(350,372
|
)
|
|
$
|
3,604,781
|
|
|
Steel products
|
|
|
(173,433
|
)
|
|
|
(112,800
|
)
|
|
|
295,884
|
|
|
Raw materials
|
|
|
106,317
|
|
|
|
(76,965
|
)
|
|
|
161,726
|
|
|
All other
|
|
|
4,344
|
|
|
|
(14,130
|
)
|
|
|
10,207
|
|
|
Corporate/eliminations
|
|
|
(449,059
|
)
|
|
|
140,289
|
|
|
|
(968,207
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
267,115
|
|
|
$
|
(413,978
|
)
|
|
$
|
3,104,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
5,969,846
|
|
|
$
|
5,446,028
|
|
|
$
|
6,603,944
|
|
|
Steel products
|
|
|
2,835,812
|
|
|
|
2,707,678
|
|
|
|
3,207,318
|
|
|
Raw materials
|
|
|
2,710,544
|
|
|
|
2,417,649
|
|
|
|
2,324,857
|
|
|
All other
|
|
|
170,174
|
|
|
|
138,286
|
|
|
|
207,767
|
|
|
Corporate/eliminations
|
|
|
2,235,534
|
|
|
|
1,862,263
|
|
|
|
1,530,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,921,910
|
|
|
$
|
12,571,904
|
|
|
$
|
13,874,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel mills
|
|
$
|
186,236
|
|
|
$
|
217,690
|
|
|
$
|
771,220
|
|
|
Steel products
|
|
|
21,321
|
|
|
|
37,601
|
|
|
|
83,889
|
|
|
Raw materials
|
|
|
125,536
|
|
|
|
113,000
|
|
|
|
157,952
|
|
|
All other
|
|
|
24
|
|
|
|
74
|
|
|
|
132
|
|
|
Corporate
|
|
|
12,177
|
|
|
|
22,135
|
|
|
|
5,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
345,294
|
|
|
$
|
390,500
|
|
|
$
|
1,018,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by product were as follows. Further product group breakdown is impracticable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Year Ended December 31,
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Net sales to external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheet
|
|
$
|
4,952,236
|
|
|
$
|
2,877,140
|
|
|
$
|
6,503,074
|
|
|
Bar
|
|
|
2,668,706
|
|
|
|
2,042,471
|
|
|
|
4,362,420
|
|
|
Structural
|
|
|
1,633,203
|
|
|
|
1,275,795
|
|
|
|
3,085,284
|
|
|
Plate
|
|
|
1,606,615
|
|
|
|
964,106
|
|
|
|
2,527,122
|
|
|
Steel products
|
|
|
2,831,209
|
|
|
|
2,691,322
|
|
|
|
4,339,524
|
|
|
Raw materials
|
|
|
1,814,329
|
|
|
|
1,076,964
|
|
|
|
2,403,075
|
|
|
All other
|
|
|
338,329
|
|
|
|
262,498
|
|
|
|
442,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,844,627
|
|
|
$
|
11,190,296
|
|
|
$
|
23,663,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23. QUARTERLY INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data)
|
|
|
Year Ended December 31,
|
|
First Quarter
|
|
|
Second Quarter
|
|
|
Third Quarter
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
3,654,842
|
|
|
$
|
4,195,966
|
|
|
$
|
4,140,069
|
|
|
$
|
3,853,750
|
|
|
Gross margin
(1)
|
|
|
212,795
|
|
|
|
308,037
|
|
|
|
190,290
|
|
|
|
132,543
|
|
|
Net earnings
(2)
|
|
|
41,194
|
|
|
|
106,218
|
|
|
|
50,024
|
|
|
|
8,887
|
|
|
Net earnings (loss) attributable to Nucor stockholders
(2)
|
|
|
30,964
|
|
|
|
90,992
|
|
|
|
23,495
|
|
|
|
(11,359
|
)
|
|
Net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.10
|
|
|
|
0.29
|
|
|
|
0.07
|
|
|
|
(0.04
|
)
|
|
Diluted
|
|
|
0.10
|
|
|
|
0.29
|
|
|
|
0.07
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,654,319
|
|
|
$
|
2,478,028
|
|
|
$
|
3,120,005
|
|
|
$
|
2,937,944
|
|
|
Gross
margin
(3)
|
|
|
(124,005
|
)
|
|
|
(61,876
|
)
|
|
|
119,154
|
|
|
|
221,120
|
|
|
Net earnings (loss)
|
|
|
(190,525
|
)
|
|
|
(127,769
|
)
|
|
|
(5,311
|
)
|
|
|
86,427
|
|
|
Net earnings (loss) attributable to Nucor stockholders
|
|
|
(189,645
|
)
|
|
|
(133,337
|
)
|
|
|
(29,538
|
)
|
|
|
58,907
|
|
|
Net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
(0.60
|
)
|
|
|
(0.43
|
)
|
|
|
(0.10
|
)
|
|
|
0.19
|
|
|
Diluted
|
|
|
(0.60
|
)
|
|
|
(0.43
|
)
|
|
|
(0.10
|
)
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Nucor incurred LIFO charges of $24.0 million, $67.0 million, $50.0 million and $23.0 million in the first, second, third and fourth quarters, respectively.
|
|
(2)
|
The fourth quarter includes a charge of $10.0 million for Nucor’s share of the estimated closure costs of the HIsmelt plant.
|
|
(3)
|
Nucor incurred LIFO credits of $105.0 million, $125.0 million, $120.0 million and $116.9 million in the first, second, third and fourth quarters, respectively. Nucor also
incurred charges of $59.6 million in the first quarter for writing down inventory to the lower of cost or market.
|
|
|
|
|
|
|
|
|
|
|
|
70
|
|
|
|
CORPORATE AND
STOCK DATA
|
CORPORATE OFFICE
1915 Rexford Road
Charlotte, North Carolina 28211
Phone 704/366-7000
Fax 704/362-4208
STOCK TRANSFERS
DIVIDEND DISBURSING
DIVIDEND REINVESTMENT
American Stock
Transfer & Trust Company, LLC
59 Maiden Lane
New York, New York 10038
Phone 877/715-0504
Fax 718/236-2641
ANNUAL MEETING
The 2011 annual meeting of stockholders will be held at 10:00 a.m. on Thursday, May 12, 2011, at the Charlotte Marriott SouthPark, 2200 Rexford Road,
Charlotte, NC.
STOCK LISTING
Nucor’s common stock is traded on the New York Stock Exchange under the symbol NUE. As of January 31, 2011, there were approximately 19,000 stockholders
of record.
FORM 10-K
A copy of
Nucor’s 2010 annual report filed with the Securities and Exchange Commission (“SEC”) on Form 10-K is available to stockholders upon request.
INTERNET ACCESS
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 without charge through Nucor’s website, www.nucor.com, as soon as reasonably practicable after Nucor files these reports electronically with or furnishes them to
the SEC. Additional information available on our website includes our Corporate Governance Principles, Board of Directors Committee Charters, Standards of Business Conduct and Ethics, and Code of Ethics for Senior Financial Professionals as well as
various other financial and statistical data.
STOCK PRICE AND DIVIDENDS PAID
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
Second
Quarter
|
|
|
Third
Quarter
|
|
|
Fourth
Quarter
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
50.72
|
|
|
$
|
48.06
|
|
|
$
|
40.90
|
|
|
$
|
44.87
|
|
|
Low
|
|
|
38.93
|
|
|
|
37.31
|
|
|
|
35.71
|
|
|
|
37.00
|
|
|
Dividends paid
|
|
|
0.36
|
|
|
|
0.36
|
|
|
|
0.36
|
|
|
|
0.36
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
49.00
|
|
|
$
|
49.82
|
|
|
$
|
51.08
|
|
|
$
|
48.00
|
|
|
Low
|
|
|
29.84
|
|
|
|
37.40
|
|
|
|
39.20
|
|
|
|
38.27
|
|
|
Dividends paid
|
|
|
0.35
|
|
|
|
0.35
|
|
|
|
0.35
|
|
|
|
0.35
|
|
STOCK PERFORMANCE
This graphic comparison
assumes the investment of $100 in Nucor Corporation common stock, $100 in the S&P 500 Index and $100 in the S&P Steel Group Index, all at year-end 2005. The resulting cumulative total return assumes that cash dividends were reinvested. Nucor
common stock comprised 35% of the S&P Steel Group Index at year-end 2010 (55% at year-end 2005).
THIS ANNUAL REPORT HAS BEEN PRINTED ON RECYCLED PAPER.