THIRD
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QUARTER
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2001
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 29, 2001 Commission file number 1-4119
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NUCOR CORPORATION
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(Exact name as specified in charter)
Delaware 13-1860817
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2100 Rexford Road, Charlotte, North Carolina 28211
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(Address of principal executive offices) (Zip code)
Telephone number, including area code: (704) 366-7000
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Indication by check mark whether Nucor Corporation (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days: Yes X No
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77,784,646 shares of common stock were outstanding at September 29, 2001.
1
PART I - FINANCIAL INFORMATION
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Nucor Corporation - Condensed Consolidated Statements of Earnings
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Nine Months (39 Weeks) Ended Three Months (13 Weeks) Ended
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Sept. 29, 2001 Sept. 30, 2000 Sept. 29, 2001 Sept. 30, 2000
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
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Net sales .................. $3,159,680,631 $3,576,668,220 $1,053,088,039 $1,163,088,140
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Costs and expenses:
Cost of products sold .... 2,900,511,722 3,077,555,191 978,176,197 1,008,734,266
Marketing, administrative
and other expenses ..... 121,795,461 141,458,570 41,575,307 47,950,645
Interest expense (income). 4,378,332 (633,551) 1,973,258 1,208,757
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3,026,685,515 3,218,380,210 1,021,724,762 1,057,893,668
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Earnings before
federal income taxes ..... 132,995,116 358,288,010 31,363,277 105,194,472
Federal income taxes ..... 46,500,000 127,200,000 10,900,000 37,400,000
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Net earnings ........... $ 86,495,116 $ 231,088,010 $ 20,463,277 $ 67,794,472
============== ============== ============== ==============
Net earnings per share ..... $1.11 $2.78 $.26 $.85
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Dividends declared
per share .............. $.51 $.45 $.17 $.15
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Average number of
shares outstanding ... 77,679,151 83,149,261 77,774,788 79,686,001
See notes to condensed consolidated financial statements.
2
Nucor Corporation - Condensed Consolidated Balance Sheets
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September 29, December 31,
2001 2000
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(Unaudited) (Unaudited)
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Assets
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Current assets:
Cash and short-term investments ................ $ 471,141,480 $ 490,576,279
Accounts receivable ............................ 391,004,080 350,184,329
Inventories .................................... 500,297,737 461,151,913
Other current assets ........................... 80,830,513 79,534,386
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Total current assets ......................... 1,443,273,810 1,381,446,907
Property, plant and equipment .................... 2,368,604,586 2,329,420,798
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Total assets ................................. $3,811,878,396 $3,710,867,705
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Liabilities and stockholders' equity
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Current liabilities:
Accounts payable ............................... $ 260,157,484 $ 203,334,079
Federal income taxes ........................... 29,570,657 -
Salaries, wages and related accruals ........... 115,641,286 134,953,274
Accrued expenses and other current liabilities . 222,900,560 219,781,099
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Total current liabilities .................... 628,269,987 558,068,452
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Long-term debt due after one year ................ 460,450,000 460,450,000
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Deferred credits and other liabilities ........... 270,817,071 260,054,154
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Minority interests ............................... 266,136,376 301,343,459
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Stockholders' equity:
Common stock ................................... 36,119,602 36,044,855
Additional paid-in capital ..................... 79,327,476 71,494,670
Retained earnings .............................. 2,525,646,570 2,478,785,710
Treasury stock ................................. (454,888,686) (455,373,595)
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2,186,204,962 2,130,951,640
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Total liabilities and stockholders' equity ... $3,811,878,396 $3,710,867,705
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See notes to condensed consolidated financial statements.
3
Nucor Corporation - Condensed Consolidated Statements of Cash Flows
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Nine Months (39 Weeks) Ended
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Sept. 29, 2001 Sept. 30, 2000
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(Unaudited) (Unaudited)
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Operating activities:
Net earnings ....................................... $ 86,495,116 $ 231,088,010
Adjustments:
Depreciation of plant and equipment .............. 219,620,932 202,271,229
Minority interests ............................... 72,504,917 110,479,246
Changes in (exclusive of acquisition):
Current assets ................................. (38,007,895) 5,464,943
Current liabilities ............................ 62,616,584 57,325,833
Other .......................................... 10,367,380 (21,973,976)
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Cash provided by operating activities ............ 413,597,034 584,655,285
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Investing activities:
Capital expenditures (net) ......................... (194,822,436) (325,942,256)
Proceeds from sale of facility ..................... 15,724,799 --
Acquisition (net of cash acquired) ................. (114,980,402) --
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Cash used in investing activities ................ (294,078,039) (325,942,256)
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Financing activities:
Distributions to minority interests ................ (107,712,000) (104,139,700)
Issuance of common stock ........................... 8,392,462 823,946
Acquisition of treasury stock ...................... -- (386,116,035)
Cash dividends ..................................... (39,634,256) (36,590,316)
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Cash used in financing activities ................ (138,953,794) (526,022,105)
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Decrease in cash and short-term investments .......... $ (19,434,799) $(267,309,076)
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See notes to condensed consolidated financial statements.
4
Nucor Corporation - Notes to Condensed Consolidated Financial Statements -
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Unaudited
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1. BASIS OF INTERIM PRESENTATION: The information furnished in Part I
reflects all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods. The
information furnished has not been audited and is subject to year-end
adjustments. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and the
notes thereto included in Nucor's annual report for the fiscal year ended
December 31, 2000. The 2000 balance sheet has been reclassified to conform
with the 2001 presentation.
2. INVENTORIES: Inventories consisted of approximately 45% raw materials and
supplies, and 55% finished and semi-finished products, at September 29,
2001 and December 31, 2000. Inventories valued on the last-in, first-out
(LIFO) method of accounting represent approximately 85% of total
inventories as of September 29, 2001 and December 31, 2000. If the
first-in, first-out method (FIFO) of accounting had been used, inventories
would have been $24,508,398 higher at September 29, 2001 ($19,358,398
higher at December 31, 2000).
3. CONTINGENCIES: Nucor is subject to environmental laws and regulations
established by federal, state and local authorities; and makes provision
for the estimated costs related to compliance. In December 2000, Nucor
entered into a consent decree with the United States Environmental
Protection Agency and certain states in order to resolve alleged
environmental violations. Under terms of this decree, Nucor will conduct
testing at some of its facilities, perform corrective action where
necessary, and pilot certain pollution control technologies.
4. SHAREHOLDER RIGHTS PLAN: On March 8, 2001, the Board of Directors adopted
a Shareholder Rights Plan ("Plan") in which one right ("Right") was
declared as a dividend for each Nucor common share outstanding. Each Right
entitles Nucor common shareholders 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 percent (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
percent (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 $150.00, 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 $.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.
5
Nucor Corporation - Analysis of Operations and Finances
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Operations
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Although Nucor established new third quarter tonnage records for steel
shipments to outside customers in 2001, net sales dollars decreased by 9% from
the third quarter of 2000 to the third quarter of 2001, due to a 16% decrease in
composite sales price per ton. New tonnage records for steel shipments to
outside customers were also established in the first nine months of 2001;
however, net sales dollars decreased by 12% from the first nine months of 2000
to the first nine months of 2001, due to an 18% decrease in composite sales
price per ton.
The major component of cost of products sold is raw material costs. The
average price of raw materials decreased approximately 12% from the third
quarter of 2000 to the third quarter of 2001, and decreased 15% from the first
nine months of 2000 to the first nine months of 2001.
Pre-operating and start-up costs of new facilities increased to $26,800,000
in the third quarter of 2001, compared with $13,400,000 in the third quarter of
2000. For the first nine months of 2001, pre-operating and start-up costs
increased to $66,800,000, compared with $30,000,000 in the first nine months of
2000.
Gross margins were about 7% for the third quarter of 2001 and about 8% for
the first nine months of 2001, compared with about 13% for the third quarter of
2000 and about 14% for the first nine months of 2000.
Major components of marketing, administrative and other expenses are
freight and profit sharing costs. Unit freight costs increased about 5% from the
third quarter of 2000 to the third quarter of 2001 and about 6% from the first
nine months of 2000 to the first nine months of 2001. Profit sharing costs
decreased 74% from the third quarter of 2000 to the third quarter of 2001, and
decreased 68% from the first nine months of 2000 to the first nine months of
2001. Profit sharing costs are based upon and generally fluctuate with pre-tax
earnings. The decrease in profit sharing costs was partially offset by
additional costs for employment agreements entered into in the second quarter of
2001.
Interest expense, net of interest income, increased from the third quarter
of 2000 to the third quarter of 2001, due primarily to increased debt and
decreased average interest rates on short-term investments. Interest expense,
net of interest income, increased from the first nine months of 2000 to the
first nine months of 2001, as a result of increased debt, decreased short-term
investments and decreased average interest rates on short-term investments.
Federal income taxes were at a rate of approximately 35% for the third
quarter and first nine months of 2001, and approximately 35.5% for the third
quarter and first nine months of 2000.
Net earnings decreased during the third quarter and first nine months of
2001, compared with the third quarter and first nine months of 2000, due to
decreased margins and increased pre-operating and start-up costs of new
facilities, partially offset by decreased profit sharing costs and decreased
federal income taxes.
Liquidity and capital resources
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The current ratio was 2.3 at the end of the first nine months of 2001, and
2.5 at year-end 2000. The percentage of long-term debt to total capital was 16%
at the end of the first nine months of 2001 and at year-end 2000.
6
Capital expenditures decreased 40% from the first nine months of 2000 to the
first nine months of 2001. However, this decrease was partially offset by the
purchase of substantially all of the assets of Auburn Steel Company, Inc.'s
steel bar facility for approximately $115,000,000. Capital expenditures are
projected to be less than $275 million for all of 2001. Funds provided from
operations, existing credit facilities, and new borrowings are expected to be
more than adequate to meet future capital expenditure and working capital
requirements.
Nucor's directors have approved the purchase of up to 15,000,000 shares of
Nucor common stock. There were no repurchases during the third quarter and first
nine months of 2001. Since the inception of the stock repurchase program in
1998, a total of approximately 10,800,000 shares have been repurchased at a
total cost of about $445,000,000.
Forward-looking Statements
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Certain statements made in this Form 10-Q 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 other factors will not affect the accuracy of
such forward-looking information. 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) changes in the supply and cost
of raw materials, including steel scrap; (2) availability and cost of
electricity and natural gas; (3) competitive pressure on sales and pricing; (4)
uncertainties surrounding the global economy; (5) U.S. and foreign trade policy
affecting steel imports or exports; and (6) changes in significant government
regulations affecting environmental compliance.
PART II - OTHER INFORMATION
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Item 1 - Legal Proceedings
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In December 2000, the United States Environmental Protection Agency
and the Department of Justice announced an agreement with Nucor and certain
states that resolved alleged environmental violations. Under the terms of the
agreement or Consent Decree, Nucor will pilot new air pollution control
technology and will evaluate and improve, as appropriate, its water pollution
control systems. Nucor will also evaluate and remediate any contamination that
may be present on its sites. In July 2001, Nucor paid a $9,000,000 penalty and
has agreed to spend another $4,000,000 in Supplemental Environmental Projects
under this Consent Decree. As part of the Consent Decree, Nucor is implementing
an Environmental Management System throughout its operations. The agreement is
comprehensive and involves eight Nucor Steel Mills and six Vulcraft Facilities
throughout the nation. Nucor is involved in various other judicial and
administrative proceedings as both plaintiff and defendant, arising in the
ordinary course of business. Nucor does not believe that any such proceedings
(including matters relating to contracts, torts, taxes, warranties and
insurance) will have a material adverse effect on its business, operating
results, financial condition or cash flows.
7
Item 6 - Exhibits and Reports on Form 8-K
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a. List of Exhibits:
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Exhibit No. Description of Exhibit
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11 Computation of net earnings per share
b. Reports on Form 8-K:
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None filed for the quarter.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
Nucor Corporation has duly caused this report to be signed on its behalf by the
undersigned, who is (1) a duly authorized officer, and (2) the principal
accounting officer.
NUCOR CORPORATION
By:________________________________
Terry S. Lisenby
Chief Financial Officer, Treasurer
and Executive Vice President
Dated: November 9, 2001
8
NUCOR CORPORATION
List of Exhibits to Form 10-Q - September 29, 2001
Exhibit No. Description of Exhibit
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11 Computation of net earnings per share