6

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

As of April 1, 2006 and December 31, 2005, short-term investments consisted entirely of VRDN’s. VRDN’s are variable bonds tied to short-term interest rates with maturities on the face of the securities in excess of 90 days. VRDN’s have interest rate resets every one, seven or 35 days. All of the VRDN’s in which Nucor invests are backed by a letter of credit issued by high-credit quality financial institutions. Nucor is able to receive the principal invested and interest accrued thereon no later than seven days after notification to the financial institution. VRDN’s trade at par value; therefore, no realized or unrealized gains or losses were incurred. Aggregate contractual maturities of the Company’s short-term investments are $17.8 million in 2009 and $1.06 billion in 2019 and thereafter.

Inventories valued using the last-in, first-out (LIFO) method of accounting represent approximately 71%66% of total inventories as of OctoberApril 1, 2005 (78% of total inventories2006 (68% as of December 31, 2004)2005). If the first-in, first-out (FIFO) method of accounting had been used, inventories would have been $385.5$390.9 million higher at OctoberApril 1, 20052006 ($533.5381.9 million higher at December 31, 2004)2005).

In connection with the new credit facility, in June 2005, Nucor terminated (a) a $125.0 million 364-day revolver maturing in September 2005, and (b) a $300.0 million multi-currency revolver maturing in October 2007. At the date of termination, there were no borrowings under either terminated credit facility.

Dividends payable, included in accrued expenses and other current liabilities in the balance sheet, was $109.1 million at April 1, 2006 ($100.9 million at December 31, 2005).

7

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

Through 2005, Nucor accounted for stock-based compensation plans under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Accordingly, no compensation expense was recorded, other than for restricted stock grants, since the exercise price of the stock options is equal to the market price of the underlying stock on the grant date. The following presents pro forma net earnings and per share data as if a fair value based method had been used to account for stock-based compensation for the first quarter of 2005 (in thousands, except per share amounts):

STOCK OPTIONS: A summary of Nucor’s stock option plans for the first quarter ended April 1, 2006 is as follows (in thousands, except year and per share amounts):

For the quarter ended April 1, 2006, Nucor recorded $2.5 million for stock-based compensation expense related to stock option grants made in the prior year. This amount is included in marketing, administrative and other expenses.

The assumptions used8

Nucor Corporation – Notes to calculateCondensed Consolidated Financial Statements (Unaudited), continued

RESTRICTED STOCK AWARDS: A summary of Nucor’s restricted stock for the fairfirst quarter of 2006 is as follows (shares in thousands):

Compensation expense for common stock and common stock units awarded under the Annual Incentive Plan and the Long-Term Incentive Plan is recorded over the performance measurement and vesting periods based on the anticipated number and market value of options granted are evaluatedshares of common stock and revised, as necessary,common stock units to reflect changing market conditionsbe awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $5.8 million and experience.$3.5 million in the first quarter of 2006 and 2005, respectively. At April 1, 2006, unrecognized compensation expense related to unvested restricted stock was $7.7 million.

Other contingent liabilities with respect to product warranties, legal proceedings and other matters arise in the normal course of business. In the opinion of management, no such matters exist whichthat would have a material effect on the consolidated financial statements.

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

9

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

The only items of comprehensiveComprehensive income for Nucor wereincludes net unrealized cash flow hedging gains (losses) on derivatives and foreign currency translation adjustments, both of which are presented net of tax.

Interest expense, minority interests, other income, profit sharing expense and changes in the LIFO reserve and environmental accruals are shown under Corporate/eliminations/other. Corporate assets primarily include cash and cash equivalents, short-term investments, deferred income tax assets and investments in affiliates. The company’s results by segment were as follows (in thousands):

10

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

In February 2005, Nucor purchased the assets of Fort Howard Steel, Inc.’s operations in Oak Creek, Wisconsin, for a cash purchase price of approximately $44.1 million. This facility produces cold finish bar product.

In January 2005, Nucor entered into an agreement with Ambassador Steel Corporation to form Nufab Rebar LLC (“Nufab”), a rebar fabrication joint venture. Nucor owns 49% of the joint venture. At October 1, 2005, Nucor held a note receivable from Nufab in the amount of $10.8 million. This note receivable bears interest, payable quarterly, at a rate of LIBOR plus 120 basis points. The note was classified in Other Assets.

In February 2004, Nucor purchased a one-half interest in Harris Steel, Inc., a wholly owned subsidiary of Harris Steel Group, Inc., for a cash purchase priceInc.. As of approximately $21.0 million. In addition, Harris Steel Group may receive up to an additional $6.0 million upon the achievement of certain operating results of the venture through 2008. At OctoberApril 1, 2005,2006, Nucor held a note receivable from Harris Steel, Inc. in the amount of $10.0 million. This note receivable bears interest, payable upon maturity, at a rate of LIBOR plus 100 basis points. The note was classified in Other Current Assets.

Nucor Corporation – Notes to Condensed Consolidated Financial Statements (Unaudited), continued

In July 2004, Nucor’s wholly owned subsidiary, Nucor Steel Tuscaloosa, Inc., purchased substantially all of the steelmaking assets of Corus Tuscaloosa for a price of approximately $89.4 million. The facility is a coiled plate mill that manufactures pressure vessel steel coil, discrete plate and cut-to-length plate products.

In August 2004, Nucor’s wholly owned subsidiary, Nucor Steel Decatur, LLC, purchased certain assets of Worthington Industries, Inc. cold rolling mill in Decatur, Alabama, for a cash purchase price of approximately $80.3 million. The assets include all of the buildings, the pickle line, four-stand tandem cold mill, temper mill and annealing furnaces adjacent to the current Nucor Steel Decatur, LLC, steel plant.

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4,” which clarifies that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be recognized as current period charges and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. We are required to adopt the provisions of this statement in the first quarter of 2006. Management does not expect the adoption of SFAS 151 to have a material impact on its consolidated financial position and results of operations.11

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

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

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements included elsewhere in this report, as well as the audited consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Nucor’s Annual Report on Form 10-K for the year ended December 31, 2004.

2005.

Operations

Net sales for the thirdfirst quarter of 2006 increased 7% to $3.55 billion, compared with $3.32 billion in the first quarter of 2005 decreased 7% to $3.03 billion, compared with $3.24 billion in the third quarter of 2004. The decrease was primarily due to an increase in total tons shipped to outside customers partially offset by a 15% decrease in average sales price per ton from $668 in the third quarter of 2004 to $571 in the third quarter of 2005.ton. Total tons shipped to outside customers increased 9%12% from the third quarter of 2004 to the third quarter of 2005. Net sales for the first nine months of 2005 increased 15% to $9.49 billion, compared with $8.29 billion in last year’s first nine months. Average sales price per ton increased 9% from $5655,015,000 tons in the first nine monthsquarter of 20042005 to $6175,621,000 tons in the first nine monthsquarter of 2005, while total tons shipped to outside customers increased 5%.2006. Average sales price per ton decreased 8%5% from $621$663 in the secondfirst quarter of 2005 to $571$631 in the thirdfirst quarter of 2005, while total tons shipped to outside customers increased 5%.2006.

In the first quarter of 2006, Nucor established company records in the steel mills segment for steel production, total steel shipments and steel sales to outside customers. Steel production was 15,136,0005,791,000 tons in the first nine monthsquarter of 2005,2006, compared with 15,153,0005,108,000 tons produced in the first nine monthsquarter of 2004.2005, an increase of 13%. Total steel shipments were 15,504,000increased 13% to 5,721,000 tons in the first nine monthsquarter of 2005,2006, compared with 15,018,0005,043,000 tons in last year’s first nine months.quarter. Steel sales to outside customers were 14,295,000increased 12% to 5,263,000 tons, in the first nine months of 2005, compared with 13,674,0004,688,000 tons in last year’s first nine months.quarter. In the steel products segment, steel joist production during the first nine monthsquarter was 413,000139,000 tons, compared with 396,000123,000 tons in the first nine monthsquarter of 2004.2005, an increase of 13%. Steel deck sales were 285,00085,000 tons, in the first nine months of 2005, compared with 271,00080,000 tons in last year’s first nine months.quarter, an increase of 6%. Cold finished steel sales were 261,000increased 8% to a record 96,000 tons, compared with 89,000 tons in the first nine monthsquarter of 2005, compared with 211,000 tons in2005. During the first nine monthsquarter of 2004. During the third quarter and first nine months of 2005,2006, the average utilization rates of all operating facilities in the steel mills segmentand steel products segments were approximately 81%93% and 82%77%, respectively. During the third quarter and first nine months of 2005, the average utilization rates of all operating facilities in the steel products segment were approximately 82% and 78%, respectively. Capacities were revised in the third quarter to reflect continual process improvement, resulting in lower utilization rates compared to prior periods.

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

The major component of cost of products sold is raw material costs. In the thirdfirst quarter of 2005,2006, the average price of raw materials decreased approximately 10%13% from the thirdfirst quarter of 2004, and increased approximately 11% in the first nine months of 2005 compared with the first nine months of 2004. The average prices of raw materials used in the steel mills segment decreased approximately 12% and increased approximately 10% from the third quarter of 2004 and the first nine months of 2004, respectively. The average prices of raw materials used in the steel products segment increased approximately 18% and 33%, from the third quarter and first nine months of 2004, respectively.2005. The average scrap and scrap substitute cost per ton used in our steel mills segment was $217$237 in the thirdfirst quarter of 2005,2006, a decrease of 13% from $248 in the third quarter of 2004, and was $245$272 in the first nine months of 2005, an increase of 9% from $225 in the first nine months of 2004. Primarily as a result of the 12% decrease in average scrap and scrap substitute cost in the third quarter of 2005 from $246 in the second quarter of 2005,2005. Nucor incurred a credit of $52.0 million in the third quartercharge to value inventories using the last-in, first-out (LIFO) method of accounting compared with a charge of $124.1 million in the third quarter of 2004 when scrap prices were increasing. In the first nine months of 2005, the LIFO credit was $148.0 million, compared with a charge of $223.4$9.0 million in the first nine monthsquarter of 2004.2006, compared with a credit of $26.1 million in the first quarter of 2005. The LIFO charges (credits) for these interim periods are based on management’s estimates of both inventory prices and quantities at year-end. These estimates will likely differ from actual amounts, and such differences may be significant.

12

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

Total energy costs increased approximately $12 (42%) per ton from the third quarter of 2004 to the third quarter of 2005 and increased approximately $6$7 (21%) per ton from the first nine monthsquarter of 20042005 to the first nine monthsquarter of 2006 and decreased approximately $4 (10%) per ton from the fourth quarter of 2005.

Pre-operating and start-up costs of new facilities decreasedincreased to $1.3 million in the third quarter of 2005, compared with $4.5 million in the third quarter of 2004. For the first nine months of 2005, pre-operating and start-up costs decreased to $6.9 million, compared with $21.3$6.1 million in the first nine monthsquarter of 2004.2006, compared with $3.4 million in the first quarter of 2005. For the first quarter of 2006, these costs primarily related to the HIsmelt project in Kwinana, Western Australia and the refurbishment of our direct reduced iron facility in Trinidad. In the first quarter of 2005, these costs primarily related to the dismantling of the direct reduced iron plant located in Louisiana and itspreparing it for relocation to Trinidad, as well as for the modernization of rolling mill #2 at the bar mill in Darlington, South Carolina. In 2004, these costs primarily related to the start-up of the Castrip^® facility at our sheet mill in Crawfordsville, Indiana. Since the Castrip process achieved commercial viability at the end of 2004, the costs associated with this facility are no longer included in start-up costs.

Gross margins were approximately 20%22% for the thirdfirst quarter and first nine months of 20052006 compared with approximately 25% for the third quarter of 2004 and approximately 19%21% for the first nine monthsquarter of 2004.2005.

The major components of marketing, administrative and other expenses are freight and profit sharing costs. Unit freight costs increased approximately 12%15% from the third quarter of 2004 to the thirdfirst quarter of 2005 and approximately 13% from the first nine months of 2004 to the first nine monthsquarter of 2005.2006 primarily due to higher fuel costs. Profit sharing costs, which are based upon and generally fluctuate with pre-tax earnings, decreased approximately 31%increased 14% from the third quarter of 2004 to the thirdfirst quarter of 2005 and decreased approximately 2% into the first nine monthsquarter of 2005 compared with the first nine months of 2004.2006. Profit sharing costs also fluctuate based on Nucor’s achievement of certain financial performance goals, including comparisons of Nucor’s financial performance to peers in the steel industry and to other high performing companies.

Effective January 1, 2006, Nucor adopted SFAS No. 123(R), “Share-Based Payment,” which requires companies to recognize in the statement of earnings the grant-date fair value of stock awards issued to employees and directors. Nucor adopted SFAS No. 123(R) using the modified prospective method. In accordance with the modified prospective method, our Consolidated Financial Statements for prior periods have not been restated to reflect the impact of SFAS No. 123(R). For the quarter ended April 1, 2006, Nucor recorded $2.5 million for stock-based compensation expense related to stock option grants made in prior years. This amount is included in marketing, administrative and other expenses.

Interest expense,Nucor earned net of interest income decreased forin the thirdfirst quarter andof 2006 compared with net interest expense in the first nine monthsquarter of 2005 from the third quarter and first nine months of 2004 primarily due to an increase in average cash equivalents and short-term investments and thean increase in average interest rates on thesethose investments, partially offset by an increase in average long-term debt and the increase in the average interest rate on long-term debt.

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

Minority interests represent the income attributable to the minority partners of Nucor’s less than 100% owned joint venture, Nucor-Yamato Steel Company. Under the partnership agreement, the minimum amount of cash to be distributed each year to the partners of Nucor-Yamato Steel Company is the amount needed by each partner to pay applicable U.S. federal and state income taxes. In the first nine monthsquarter of 2004 and 2005,2006, the amount of cash distributed to minority interest holders exceeded amounts allocated to minority 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.

In the first nine monthsquarter of 2005, Nucor received $9.2 million in settlement of claims against third parties related to environmental matters. In the first nine months of 2004, Nucor realized a $1.6 million gain on the sale of equipment.

Nucor had an effective tax rate of 34.7% in the third quarter of 2005, compared with 34.6% in the third quarter of 2004 and had an effective tax rate of 35.2%35.5% in the first nine monthsquarter of 20052006, compared with 35.4%35.6% in the first nine monthsquarter of 2004.2005.

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

Net earnings decreased duringand earnings per share in the thirdfirst quarter of 20052006 increased 7% and 10%, respectively, to $379.2 million and $2.42 per diluted share, compared with $354.7 million and $2.20 per diluted share in 2005. Net earnings as a percentage of net sales were 10.7% in both the thirdfirst quarter of 2004 due to lower average selling prices2006 and higher energy costs partially offset by decreased LIFO charges, decreased pre-operating and start-up costs, decreased net interest expense, and decreased income taxes. Net2005. The 10% increase in earnings increased duringper share also reflects the effect of repurchasing approximately 5.7 million shares of Nucor’s common stock since the first nine monthsquarter of 2005 compared with2005. Return on average stockholders’ equity was 34.4% and 38.9% in the first nine monthsquarter of 2004 due to higher average selling prices, increased shipments, decreased LIFO charges, increased other income, decreased pre-operating2006 and start-up costs, and decreased net interest expense partially offset by higher energy costs and increased income taxes.2005, respectively.

We expect that business conditions will remain strong through the fourth quarter of 2005 into the firstsecond quarter of 2006. Approximately 55%At this time, our sheet mill volume is completely booked through the second quarter, and more than 50% of our sheet mill volume for the third and fourth quarter is committed to annual contract customers, which limitscustomers. In addition, we expect that an additional 25% of our third and fourth quarter sheet mill volume will be committed as quarterly contracts. These contracts limit our exposure during the terms of those contracts to the volatility of prices in the spot market. Additionally,Nucor continues to be well-positioned to benefit from improving non-residential construction markets, which generate demand for products manufactured by both segments of our business. In addition, Nucor continues to benefit from the breadth of our product diversity and the relatively stronger business conditions in long products and plate products. The biggest threats to our performance in the fourth quarter are pressure on steel prices from rising levels of imports, the cost and availability of energy in a tight supply environment and a slowdown in the U.S. economy.

diversity.

Liquidity and capital resources

The current ratio was 3.03.3 at the end of the first nine monthsquarter of 20052006 and 3.2 at year-end 2004.2005. The percentage of long-term debt to total capital was 18%16% and 17% at the end of the first nine monthsquarter of 20052006 and 20% at year-end 2004. Nucor has a simple capital structure with no off-balance sheet arrangements or relationships with unconsolidated special purpose entities.2005, respectively.

Capital expenditures increaseddecreased approximately 12% in2% during the first nine monthsquarter of 20052006 compared with the first nine monthsquarter of 2004.2005. Capital expenditures are projected to be approximately $310.0$396.0 million for all of 2005.2006.

During the second quarter of 2005, Nucor’s wholly owned subsidiary, Nucor Steel Marion, Inc., purchased substantially all of the assets of Marion Steel Company for a cash purchase price of approximately $110.7 million. In February 2005, Nucor purchased the assets of Fort Howard Steel, Inc.’s operations in Oak Creek, Wisconsin, for a cash purchase price of approximately $44.1 million. These acquisitions were not material to the consolidated financial statements and did not result in material goodwill or other intangible assets.

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

In September 2005,2006, Nucor’s Board of Directors declaredincreased the regular quarterly cash dividend on Nucor’s common stock offrom $0.15 per share to $0.20 per share. TheIn addition to the $0.20 per share base dividend amount, the Board of Directors also approved the payment of a supplemental dividend of $0.25$0.50 per share, for a total dividend of $0.40$0.70 per share, payable on NovemberMay 11, 20052006 to stockholders of record on September 30, 2005.March 31, 2006.

During the second quarter of 2005, Nucor reactivated the previously approved stock repurchase program. Nucor repurchased approximately 722,000 shares at a cost of approximately $39.3 million during the third quarter of 2005, and repurchased approximately 4.7 million shares at a cost of about $245.2 million during the first nine months of 2005. There were no repurchases during the third quarter and first nine months of 2004. Approximately 3.8 million shares remain authorized for repurchase under the current program.

Funds provided from operations, existing credit facilities and new borrowings are expected to be adequate to meet future capital expenditure and working capital requirements for existing operations for at least the next 24 months. Nucor has the financial ability to borrow significant additional funds to finance major acquisitions and still maintain reasonable leverage. In June 2005,

Nucor entered intorepurchased 100,000 shares of Nucor’s common stock at a new five-year unsecured revolving credit facility that providescost of approximately $10.3 million under a publicly announced stock repurchase program during the first quarter of 2006 (none in the first quarter of 2005). Approximately 12.8 million shares remain authorized for up to $700.0 million in revolving loans (nothing has been borrowed). The new revolving credit facility replaces two previous credit facilities that provided for up to an aggregate of $425.0 million in revolving loans.repurchase.

14

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, Nucor is exposed to a variety of market risks. We continually monitor these risks and develop appropriate strategies to manage them.

Interest Rate Risk– Nucor manages interest rate risk by using a combination of variable-rate and fixed-rate debt. Nucor also makes use of interest rate swaps to manage net exposure to interest rate changes. Management does not believe that Nucor’s exposure to interest rate market risk has significantly changed since December 31, 2004.2005.

Commodity Price Risk– In the ordinary course of business, Nucor is exposed to market risk for price fluctuations of raw materials and energy, principally scrap steel and natural gas. We attempt to negotiate the best prices for our raw materials and energy requirementrequirements and to obtain prices for our steel products that match market price movements in response to supply and demand. In the first quarter of 2004, Nucor initiated a raw material surcharge designed to pass through the historically high cost of scrap steel and other raw materials. Our surcharge mechanism has worked effectively to reduce the normal time lag in passing through higher raw material costs so that we can maintain our gross margins.

Nucor also uses derivative financial instruments to hedge a portion of our exposure to price risk related to natural gas purchases used in the production process when management believes it is prudent to do so. Gains and losses from the use of these instruments are deferred in accumulated other comprehensive income (loss) on the condensed consolidated balance sheets and recognized into cost of products sold in the same period as the underlying physical transaction. At OctoberApril 1, 2005,2006, accumulated other comprehensive income (loss) includes $71.1$21.1 million in unrealized net-of-tax incomegains for the fair value of these derivative instruments. A sensitivity analysis of changes in the price of hedged natural gas purchases indicates that declines of 10% and 25% in natural gas prices would reduce the fair value of our pre-tax natural gas hedge position by $27.9$15.0 million and $69.7$36.9 million, respectively. Any resulting changes in fair value would be recorded as adjustments to other comprehensive income (loss), net of tax. Because these instruments are structured and used as hedges, these hypothetical losses would be partially offset by the benefit of lower prices paid for the natural gas used in the normal production cycle.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures– As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting– There were no changes in our internal control over financial reporting during the quarter ended OctoberApril 1, 20052006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

15

PART II. OTHER INFORMATION

Item 1. Legal Proceedings1A. Risk Factors

See the disclosure that appears under Legal ProceedingsThere have been no material changes in Item 1. Part II of our ReportNucor’s risk from those included in Nucor’s annual report on Form 10-Q for the quarter ended April 2, 2005.10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our share repurchase program activity for each of the three months and the quarter ended OctoberApril 1, 20052006 was as follows (in thousands, except per share amounts):