AT A GLANCE
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7
[MAP OF THE UNITED STATES]
BAR MILL GROUP
Products: Steel bars, angles and other
products for automotive, farm machinery,
metal buildings, furniture, recreational
equipment and other categories.
Darlington, South Carolina
Norfolk, Nebraska
Jewett, Texas
Plymouth, Utah
Auburn, New York
(Nucor Steel Auburn, Inc.)
SHEET MILL GROUP
Products: Flat-rolled steel for appliances,
pipes and tubes, construction and
other industries.
Crawfordsville, Indiana
Hickman, Arkansas
Berkeley County, South Carolina
NUCOR-YAMATO
STEEL COMPANY
Products: Super-wide flange steel beams,
pilings, heavy structural steel products
for fabricators, manufacturers and steel
service centers.
Blytheville, Arkansas
BEAM MILL
Products: Wide flange steel beams,
pilings, heavy structural steel products
for fabricators, manufacturers and
steel service centers.
Berkeley County, South Carolina
PLATE MILL
Products: Steel plate for manufacturers
of rail cars, ships and barges, refinery
tanks and others.
Hertford County, North Carolina
VULCRAFT GROUP
Products: Steel joists, joist girders and
steel deck for buildings.
Florence, South Carolina
Norfolk, Nebraska
Fort Payne, Alabama
Grapeland, Texas
St. Joe, Indiana
Brigham City, Utah
Chemung, New York
(Vulcraft of New York, Inc.)
COLD FINISH GROUP
Products: Cold finished steel bars for
shafting and precision machined parts.
Norfolk, Nebraska
Darlington, South Carolina
Brigham City, Utah
BUILDING SYSTEMS GROUP
Products: Metal buildings and metal
building components for commercial,
industrial and institutional building
markets.
Waterloo, Indiana
Swansea, South Carolina
Terrell, Texas
FASTENER DIVISION
Products: Steel hexhead cap screws,
structural bolts and hex bolts for automotive,
machine tool, farm implements, construction
and military applications.
St. Joe, Indiana
LIGHT GAUGE STEEL FRAMING
ITEC STEEL, INC.
Products: Load bearing light gauge steel
framing systems for the commercial and
residential construction markets.
Denton, Texas (headquarters)
Dallas, Georgia
Lakeland, Georgia
CORPORATE OFFICE
Charlotte, North Carolina
OPERATIONS REVIEW
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8
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BAR MILL GROUP, SHEET MILL GROUP, STRUCTURAL MILLS
AND PLATE MILL Nucor operates scrap-based steel mills in eleven facilities.
These mills utilize modern steelmaking techniques and produce steel at a cost
competitive with steel manufactured anywhere in the world.
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BAR MILL GROUP
The Bar Mill Group has five mills located in South Carolina, Nebraska, Texas,
Utah and New York that produce bars, angles and light structural carbon and
alloy steels. These bar products have wide usage including automotive, farm
equipment, metal buildings, furniture and recreational equipment. In
constructing Nucor steel mills, capital cost per ton of capacity has been lower
than the capital cost generally required for other steel mills. Four of the bar
mills were constructed by Nucor between 1969 and 1981. The total capital cost
of these four bar mills averaged about $186 per ton of current annual capacity.
Over the years, Nucor has completed extensive capital projects to keep these
facilities modernized. In February 2002, Nucor announced that over $200,000,000
will be spent on bar mill capital projects over the next three years. The
projects include a modernization of the rolling mill at the Nebraska facility,
a new melt shop at the Texas facility, and a new reheat furnace and finishing
end at the South Carolina facility. On March 31, 2001, Nucor purchased
substantially all of the assets of Auburn Steel Company, Inc.'s steel bar
facility in Auburn, New York for approximately $115,000,000. This facility has
the capacity to produce up to 430,000 tons of merchant bar quality steel
shapes, special bar quality (SBQ) shapes and rebar. Total capacity of the five
bar mills is approximately 3,700,000 tons per year.
SHEET MILL GROUP
The Sheet Mill Group produces flat-rolled steel for appliances, pipes and
tubes, construction and other industries. The three sheet mills are located in
Indiana, Arkansas and South Carolina. The Nucor sheet mills were constructed
between 1989 and 1996. The total cost of these sheet mills averaged about $301
per ton of current annual capacity. The sheet mills utilize thin slab casters
to produce hot-rolled sheet which can be further processed through cold rolling
and galvanizing. Nucor's sheet mills have a lower capital cost than integrated
steel mills producing these products. Total capacity of the sheet mills is in
excess of 6,000,000 tons per year.
STRUCTURAL MILLS
The Structural Mills produce wide flange steel beams, pilings and heavy
structural steel products for construction companies. In 1988, Nucor and Yamato
Kogyo, one of Japan's major producers of wide-flange beams, completed
construction of a beam mill located near Blytheville, Arkansas. Nucor owns a
51% interest in Nucor-Yamato Steel Company. During 1999, Nucor started
operations at the 500,000 tons-per-year steel beam mill in South Carolina. Both
mills use a special continuous casting method that produces a beam blank closer
in shape to that of the finished beam than traditional methods. Current annual
production capacity of the structural mills is about 2,900,000 tons. The total
capital cost of the two structural mills averaged about $270 per ton of current
annual capacity.
PLATE MILL
Nucor's Plate Mill is located in North Carolina and produces steel plate for
manufacturers of rail cars, ships, barges, refinery tanks and others. During
2000, Nucor substantially completed construction of the 1,000,000 tons-per-year
steel plate mill. Casting and rolling began in October 2000. The start-up has
been successful and the mill is producing high quality plate. With the
competitive advantages of new, more efficient production technology and Nucor's
strong customer service orientation, we intend to build a profitable market
share position in the plate market.
OPERATIONS REVIEW
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9
OPERATIONS Nucor's steel mills are among the most modern and efficient mills in
the United States. Steel scrap is melted in electric arc furnaces and poured
into continuous casting systems. Highly sophisticated rolling mills convert the
billets and slabs into angles, rounds, channels, flats, sheet, beams, plate and
other products.
Production in 2001 was a record 12,316,000 tons, a 9% increase from 11,271,000
tons in 2000. Annual production capacity has grown from 120,000 tons in 1970 to
a present total of almost 14,000,000 tons.
The operations in the rolling mills are highly automated and require fewer
operating employees than older mills. All Nucor steel mills have high
productivity, which results in employment costs of approximately 11% of the
sales dollar. This is lower than the employment costs of integrated steel
companies producing comparable products. Employee turnover in all mills is
extremely low. All employees have a significant part of their compensation
based on their productivity. Production employees work under group incentives
that provide increased earnings for increased production. This additional
compensation is paid weekly.
Steel mills are large consumers of electricity and gas. However, because of the
high efficiency of Nucor steel mills, these energy costs were only 10% of the
sales dollar in 2001.
Scrap and scrap substitutes are the most significant element in the total cost
of steel. Their average cost decreased to $101 per ton used in 2001 from $120
per ton used in 2000.
MARKETS AND MARKETING Approximately 90% of the eleven steel mills' production
in 2001 was sold to outside customers and the balance was used internally by
the Vulcraft Group, Cold Finish Group, Building Systems Group and Fastener
Division. Steel sales to outside customers in 2001 were a record 11,032,000
tons, 13% higher than the 9,779,000 tons in 2000.
The Bar Mill and Sheet Mill Groups' customers are primarily manufacturers and
steel service centers. The Structural and Plate Mills' customers are primarily
fabricators, manufacturers and steel service centers.
Nucor uses a simple, highly competitive pricing system that is less complicated
than the traditional pricing structure in the steel industry. For the bar and
structural mills, all customers in a region are charged the same published
price. This allows customers to maintain the lowest practical inventory.
Because of the specialized requirements of many customers of the sheet mills,
pricing can vary due to the additional costs of accommodating these
requirements.
TRADE ISSUES Nucor's recent involvement in trade issues is a critical part of
our efforts to support the long-term success of our steel-making operations.
Unfairly traded, illegally dumped steel imports have devastated the U.S. steel
industry and its workers. As the largest and most open steel market in the
world, the United States has become the dumping ground for excess steel
production. The root causes of the import surges experienced in recent years
are foreign overcapacity, foreign government subsidies and foreign
anti-competitive practices.
Nucor devoted unprecedented resources to this issue in 2001 in an effort to help
the Administration and Congress craft a sensible solution to these critical
issues. Our efforts, and the efforts of others in the industry, were largely
successful. President Bush imposed a series of tariffs over a three-year period
that should stem the tide of illegal imports. The tariffs begin at 30% for many
steel products, then gradually decline in years 2 and 3. Nucor, as well as other
steel companies, had been urging the President to adopt 40% tariffs. While the
President's plan did not give us everything we asked for, it was a strong, solid
solution. We expect import levels to decline, but certainly not disappear.
There are some fundamental elements of the decision that could undermine its
effectiveness, so Nucor must remain diligent in becoming involved in its
implementation. Meanwhile, Nucor will work with Congress to put into place more
lasting solutions to trade issues.
The President's trade actions, constructive as they were, are only the beginning
of a long-term solution. U.S. trade regulators have repeatedly found producers
in other nations guilty of illegally importing steel into this country; but the
legal procedures to reach these determinations frequently take a year or longer.
Everyone in the Administration and Congress who worked on this issue is to be
commended for the expertise and commitment they brought to understanding this
issue. We will work closely with them to maximize the benefits to our
employees, our communities and the domestic steel industry.
OPERATIONS REVIEW
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10
NEWER FACILITIES AND EXPANSIONS In 1998 Nucor substantially completed
construction and started operations of a major addition to Nucor's Hickman,
Arkansas steel sheet mill. This addition includes an 800,000 tons-per-year cold
rolling facility; a 500,000 tons-per-year galvanizing facility; and associated
pickling and annealing facilities.
During 1999, Nucor completed construction and started operations of the 500,000
tons-per-year steel beam mill in South Carolina.
During 2000, Nucor started operations of the second caster addition at the steel
sheet mill in Berkeley County, South Carolina. This addition cost more than
$40,000,000 and increased this mill's hot-band capacity from 1,500,000 tons to
2,400,000 tons per year. During 2001, Nucor started operations of the second
cold rolling facility at the South Carolina sheet mill, increasing this mill's
cold rolled steel capacity from 750,000 tons to 1,500,000 tons per year, at a
cost of more than $40,000,000.
The steel plate mill in Hertford County, North Carolina started casting and
rolling in October 2000. This facility, which has an annual capacity of
1,000,000 tons, cost about $480,000,000.
At the end of the first quarter of 2001, Nucor completed the acquisition of the
assets of Auburn Steel Company, Inc.'s 430,000 tons-per-year merchant bar,
rebar and SBQ steel mill. Nucor Steel-Auburn, Inc. is an important addition to
our Bar Mill Group, as it gives Nucor a merchant bar presence in the Northeast
and is also an excellent strategic fit with our new Vulcraft facility in New
York.
In January 2002, the Delaware bankruptcy court approved Nucor's purchase of
substantially all of the assets of Trico Steel Company, LLC. The Trico sheet
mill facility, which originally began operations in 1997, is located in
Decatur, Alabama and has an annual capacity of approximately 1,900,000 tons.
Closing of the transaction is expected to occur in the third quarter of 2002,
after satisfactory resolution of various regulatory and tax matters. Start-up
of the sheet mill will commence after Nucor has completed improvements to the
facility.
Nucor has made an offer of $500,000,000 to purchase substantially all of the
assets of Birmingham Steel Corporation and is awaiting a response from the
company.
COMMERCIALIZATION OF NEW TECHNOLOGIES The Castrip/r/ facility at the
Crawfordsville, Indiana location will produce thin-strip sheet steel. This
facility uses the break-through technology of strip casting, to which Nucor
holds exclusive rights in the United States and Brazil. Strip casting involves
the direct casting of molten steel into final shape and thickness without
further hot or cold rolling. This process allows lower investment and operating
costs, reduced energy consumption and smaller scale plants than can be
economically built with current technology. This process also reduces the
overall environmental impact of producing steel through significantly lower
emissions, particularly NOx. Start-up of the Castrip facility is expected to be
in the second quarter of 2002.
Nucor continues to investigate the commercialization of the HIsmelt technology
with Rio Tinto, the leading iron ore supplier from Australia. HIsmelt utilizes
iron ore fines and coal to directly produce liquid iron. Rio Tinto has operated
a pilot plant utilizing this technology. The HIsmelt technology would offer an
alternative supply of high-quality iron units for feedstock.
OUTLOOK FOR THE FUTURE The manufacture of steel will continue to be a key
factor in Nucor's future performance. Total steel production is anticipated to
increase significantly over the next several years from the 12,316,000 tons
produced in 2001. Nucor expects to obtain additional capacity through
expansions at our existing steel mills, greenfield construction and
acquisitions. We expect to generate above-average earnings from our steelmaking
operations in the future, but recognize that uncertainty in external factors
such as the economy and the level of imports will have a significant impact on
our results. While we cannot control these outside forces, Nucor has a
long-standing tradition of emerging from cyclical downturns stronger than
before entering them. We intend to take advantage of the economic downturn to
gain market share, penetrate new markets and emphasize cost reduction and
quality improvement initiatives.
OPERATIONS REVIEW
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[CHART]
STEEL PRODUCTION
[Bar chart appears here]
[CHART]
STEEL SALES TO OUTSIDE CUSTOMERS
[Bar chart appears here]
[CHART]
TOTAL STEEL SHIPMENTS
[Bar chart appears here]
OPERATIONS REVIEW
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THE VULCRAFT GROUP is the nation's largest producer of open-web steel joists,
joist girders and steel deck, which are used for building construction.
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OPERATIONS Steel joists and joist girders are produced and marketed nationally
through seven Vulcraft facilities located in South Carolina, Nebraska, Alabama,
Texas, Indiana, Utah and New York (Vulcraft of New York, Inc.). Current annual
production capacity is more than 685,000 tons. In 2001, Vulcraft produced
532,000 tons of steel joists and joist girders, a decrease of 13% from the
613,000 tons produced in 2000.
Materials, primarily steel, were 43% of the joist sales dollar in 2001. The
Vulcraft Group obtained 92% of its steel requirements for joists and joist
girders from the Nucor Bar Mill Group. For 2001, freight costs for joists and
joist girders were less than 10% of the sales dollar. Vulcraft maintains an
extensive fleet of trucks to ensure and control on-time delivery.
The Vulcraft facilities in South Carolina, Nebraska, Alabama, Texas, Indiana and
New York produce steel deck. Current deck annual production capacity is in
excess of 400,000 tons. Vulcraft steel deck sales decreased 3% from 353,000 tons
in 2000 to 344,000 tons in 2001. Coiled sheet steel was about 62% of the steel
deck sales dollar in 2001. The Vulcraft Group obtained 89% of its steel
requirements for steel deck production from the Nucor Sheet Mill Group.
Almost all of the production employees of Vulcraft work with a group incentive
system, which provides increased compensation each week for increased
performance.
MARKETS AND MARKETING Steel joists, joist girders and steel decking are used
extensively as part of the roof and floor support systems in manufacturing
buildings, retail stores, shopping centers, warehouses, schools, churches,
hospitals and, to a lesser extent, in multi-story buildings and apartments.
Building support systems using joists, joist girders and steel deck are
frequently more economical than other systems.
Steel joists and joist girder sales are obtained by competitive bidding.
Vulcraft quotes on an estimated 80% to 90% of the domestic buildings using
steel joists and joist girders as part of the support systems. In 2001,
Vulcraft supplied more than an estimated 40% of total domestic sales of steel
joists. Steel deck is specified in the majority of buildings using steel joists
and joist girders. In 2001, Vulcraft supplied more than 30% of total domestic
sales of steel deck.
Sales of steel joists, joist girders and steel deck are dependent on the
non-residential building construction market.
NEWER FACILITIES Nucor began construction on a Vulcraft facility in Chemung,
New York (Vulcraft of New York, Inc.) in 2000. Start-up of the facility began
in the second half of 2001. This facility produces steel joists, joist girders
and steel deck and cost about $50,000,000. The majority of the raw materials
for this facility are supplied by Nucor's steel mills in Auburn, New York and
Crawfordsville, Indiana. The Chemung Vulcraft facility represents a
continuation of our successful value-added strategy, as well as expansion into
a new geographic market for Vulcraft.
OUTLOOK FOR THE FUTURE The decreased level of construction over the past year
has unfavorably impacted the volume of non-residential buildings supplied by
the Vulcraft Group. Prevailing economic projections call for continued weakness
in building construction in 2002, which will negatively affect the sales of
steel joists, joist girders and steel deck and the earnings of Vulcraft.
OPERATIONS REVIEW
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[CHART]
STEEL JOIST PRODUCTION
[Bar chart appears here]
[CHART]
STEEL DECK SALES
[BAr chart appears here]
OPERATIONS REVIEW
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COLD FINISH GROUP AND FASTENER DIVISION Nucor manufactures
a variety of products using steel from Nucor mills.
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COLD FINISH GROUP
The Cold Finish Group has facilities in Nebraska, South Carolina and Utah.
These facilities produce cold drawn and turned, ground and polished steel bars
that are used extensively for shafting and machined precision parts. The Cold
Finish Group produces rounds, hexagons, flats and squares in carbon and alloy
steels. These bars, in turn, are purchased by several industries, including
automotive, farm machinery, hydraulic, appliance, electric motor and service
centers. Nucor Cold Finish bars are used in tens of thousands of products. A
few examples include anchor bolts in basketball hoops and farm machinery,
hydraulic cylinders, and shafting for air conditioner compressors, ceiling fan
motors, garage door openers, electric motors and lawn mowers.
The total capacity of the three facilities is about 350,000 tons per year. All
three facilities are among the most modern in the world and use in-line
electronic testing to ensure outstanding quality. Nucor Cold Finish obtains
most of its steel from members of the Nucor Bar Mill Group. This factor, along
with efficient facilities using the latest technology, results in a highly
competitive cost structure.
In 2001, sales of cold finished steel products were 203,000 tons, a decrease of
19% from the 250,000 tons in 2000. The total cold finish market is estimated to
be more than 1,800,000 tons. The Cold Finish Group anticipates opportunities for
significant increases in sales and earnings during the next several years.
FASTENER DIVISION
Nucor Fastener's state-of-the-art steel bolt-making facility in Indiana
produces standard steel hexhead cap screws, hex bolts, socket head cap screws
and structural bolts. Fasteners are used in a broad range of markets, including
automotive, machine tools, farm implements, construction and military
applications.
Annual capacity is more than 75,000 tons, which is less than an estimated 20%
of the total market for these products. Our modern facility allows Nucor
Fastener to maintain highly competitive pricing in a market currently dominated
by foreign suppliers. This operation is highly automated and has fewer
employees than comparable facilities. The Fastener Division obtains much of its
steel from the Nucor Bar Mill Group.
[CHART]
COLD FINISH STEEL SALES
[Bar chart appears here]
OPERATIONS REVIEW
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BUILDING SYSTEMS GROUP AND LIGHT GAUGE STEEL FRAMING
Nucor manufactures metal buildings and steel framing systems for commercial,
industrial and residential construction markets.
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BUILDING SYSTEMS GROUP
The Building Systems Group produces pre-engineered metal building systems and
components in Indiana, South Carolina and Texas. With the start-up of the
building systems facility in Terrell, Texas during 2000, the annual capacity is
now more than 145,000 tons. The size of the buildings that can be produced
ranges from less than 500 square feet to more than 1,000,000 square feet.
Complete metal building packages can be customized and combined with other
materials such as glass, wood and masonry to produce a cost effective,
aesthetically sound building designed for customers' special requirements. The
buildings are sold through a builder distribution network in order to provide
fast-track, customized solutions for building owners.
Building systems sales in 2001 were approximately 65,000 tons, a decrease of
17% from the 78,500 tons sold in 2000. The primary markets are commercial,
industrial and institutional buildings, including distribution centers,
automobile dealerships, retail centers, schools, warehouses and manufacturing
facilities. The Building Systems Group obtains a significant portion of its
steel requirements from the Nucor Bar and Sheet Mill Groups.
LIGHT GAUGE STEEL FRAMING
In November 2001, Nucor announced the acquisition of ITEC Steel, Inc., and its
wholly-owned subsidiary, Steel Truss and Frame Corp. ITEC specializes in light
gauge steel framing systems for the commercial and residential construction
markets and has facilities in Texas and Georgia. As a leader in the emerging
load bearing light gauge steel framing industry, ITEC will provide Nucor with a
platform to enter this rapidly expanding new market. Nucor plans to
aggressively broaden ITEC's opportunities through geographic expansion and the
introduction of new products.
In January 2002, Nucor announced that the company had entered into a strategic
alliance with Truswal Systems Corporation, a leading supplier of engineered
products and state of the art software for the building components industry.
The alliance includes a software development and license agreement which will
result in development of proprietary design, engineering and layout software.
ITEC will use Truswal's software in its operations, and Truswal will market
ITEC's light gauge steel framing products through its fabricator network.
[CHART]
BUILDING SYSTEMS SALES
[Bar chart appears here]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS
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16
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OPERATIONS
Nucor's business is the manufacture and sale of steel products. During the last
five years, the sales of Nucor have increased 13% from $3,647,000,000 in 1996
to $4,139,000,000 in 2001. Total tons sold by Nucor have increased 45% from
8,459,000 tons in 1996 to 12,237,000 tons in 2001. The majority of this growth
has been internally generated.
NET SALES Net sales for 2001 decreased 10% to $4,139,000,000, compared with
$4,586,000,000 in 2000. The decrease was primarily due to an 18% decrease in
composite sales price per ton from $410 in 2000 to $338 in 2001. The continued
flood of imports and the downturn in the economy unfavorably affected sales
prices. Net sales increased 14% from 1999 to 2000, with more than 55% of the
increase due to increased volume. Additional benefit was derived from a 4%
increase in composite sales price per ton from $394 in 1999 to $410 in 2000.
The record year of sales experienced in 2000 was primarily due to the
performance in the first half of the year. In the second half of 2000, demand
decreased and import levels increased significantly -- a trend that continued in
2001.
The decrease in net sales in 2001 was mitigated to some extent by increased
volume. Nucor established new annual tonnage records for total steel shipments
and steel shipments to outside customers in 2001. Total shipments were
12,141,000 tons in 2001, compared with 10,980,000 tons in 2000 and 10,122,000
tons in 1999. Steel sales to outside customers were 11,032,000 tons in 2001,
compared with 9,779,000 tons in 2000 and 8,734,000 tons in 1999. Steel joist
production for 2001 was 532,000 tons, compared with 613,000 tons in 2000 and
616,000 tons in 1999. Steel deck sales were 344,000 tons in 2001, versus
353,000 tons in 2000 and 375,000 tons in 1999. Cold finish steel sales were
203,000 tons in 2001 compared with 250,000 tons in 2000 and 243,000 tons in
1999.
COST OF PRODUCTS SOLD The major component of cost of products sold is raw
material costs. The average price of raw materials decreased by 13% from 2000
to 2001, and increased by less than 10% from 1999 to 2000. The average scrap
and scrap substitute cost per ton used was $101 in 2001, $120 in 2000 and $111
in 1999. By the fourth quarter of 2001, the average scrap cost per ton used had
decreased to $99.
The minority interests in operations of less than 100%-owned subsidiaries are
included in cost of products sold. Minority interests were $103,000,000 in
2001, $151,300,000 in 2000 and $85,700,000 in 1999. State income taxes of
$5,500,000 in 2001, $15,200,000 in 2000 and $11,700,000 in 1999 have also been
recorded in cost of products sold.
GROSS MARGIN Gross margin decreased to 8% in 2001 from 14% in 2000 and 13% in
1999. In addition to the net sales and cost of products sold factors discussed
above, gross margins were affected by pre-operating and start-up costs at
several of the Nucor facilities. Pre-operating and start-up costs of new
facilities increased to $97,800,000 in 2001, compared with $50,900,000 in 2000
and $42,800,000 in 1999. In 2001, these costs primarily related to the start-up
of the new plate mill in Hertford County, North Carolina and the new Vulcraft
facility in Chemung, New York.
MARKETING, ADMINISTRATIVE AND OTHER EXPENSES The major components of marketing,
administrative and other expenses are freight and profit sharing costs. Unit
freight costs increased less than 5% both from 2000 to 2001 and from 1999 to
2000. Profit sharing costs decreased by 73% from 2000 to 2001, and increased by
46% from 1999 to 2000. Profit sharing costs are based upon and fluctuate with
pre-tax earnings. In 2000, profit sharing costs included over $6,200,000 for an
extraordinary bonus paid to employees for the achievement of record earnings
during the year. Every employee except for senior officers received $800. In
2001, marketing, administrative and other expenses were reduced by a gain on
the sale of Nucor Iron Carbide, Inc.
INTEREST EXPENSE (INCOME) Interest expense, net of interest income, increased
in 2001 as a result of increased average long-term debt and decreased average
interest rates on short-term investments. Interest income, net of interest
expense, decreased in 2000 primarily due to increased long-term debt and
decreased average short-term investments. The increase in interest income, net
of interest expense, in 1999 resulted from increased average short-term
investments.
FEDERAL INCOME TAXES Federal income taxes were at a rate of 35% for 2001 and
2000 and 35.5% for 1999.
NET EARNINGS The decrease in 2001 earnings resulted primarily from 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. Nucor's net earnings were also favorably affected in the fourth quarter
of 2001 by a gain of $20,200,000 related to the sale of Nucor Iron Carbide, Inc.
($11,900,000 after tax and profit sharing, or $.15 per share). The increase in
2000 earnings resulted primarily from increased margins and increased volume.
Earnings were 5% of average equity in 2001, compared with 14% in 2000 and 11%
in 1999.
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LIQUIDITY AND CAPITAL RESOURCES
In 2001, working capital increased 8% from $821,500,000 to $889,500,000, due
primarily to decreased accrued profit sharing costs. The current ratio was 2.8
in 2001, 2.5 in 2000 and 2.9 in 1999. During 2000, Nucor negotiated a
comprehensive agreement with the United States Environmental Protection Agency.
In July 2001, Nucor paid a $9,000,000 penalty and has agreed to spend another
$4,000,000 in Supplemental Environmental Projects under the agreement. The cost
of complying with the terms of this decree will not impact liquidity.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS
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17
We have a simple capital structure with no off-balance sheet financing
arrangements or relationships with special purpose entities. Nucor sometimes
uses natural gas purchase contracts to partially manage its exposure to price
risk of natural gas which is used during the manufacturing process. The use of
these contracts is immaterial for all periods presented.
OPERATING ACTIVITIES Cash provided by operating activities decreased to
$495,100,000 in 2001, compared with $820,800,000 in 2000 and $604,800,000 in
1999. Gross margins deteriorated in 2001 due to lower average selling prices
and increased pre-operating and start-up costs of new facilities. Additionally,
in 2001, changes in operating assets and liabilities (exclusive of acquisitions
and dispositions) used cash of $724,000, compared with changes in operating
assets and liabilities providing cash of $79,800,000 in 2000 and $7,400,000 in
1999.
INVESTING ACTIVITIES Cash used in investing activities decreased to
$360,400,000 in 2001, compared with $410,300,000 in 2000 and $374,300,000 in
1999. Capital expenditures for new facilities and expansion of existing
facilities decreased to $261,100,000 in 2001, compared with $415,400,000 in
2000 and $374,700,000 in 1999.
During 2001, Nucor sold Nucor Iron Carbide, Inc. and sold the assets of the
Nucor Bearing Products facility. Total proceeds from these two sales as well as
the sale of other equipment at existing facilities were $22,700,000 in 2001.
Also in 2001, Nucor purchased substantially all of the assets of Auburn Steel
Company, Inc.'s steel bar facility in Auburn, New York for approximately
$115,000,000 and acquired ITEC Steel, Inc. for approximately $7,000,000
(excluding liabilities assumed).
FINANCING ACTIVITIES Cash used in financing activities was $162,900,000 in
2001, compared with $492,100,000 in 2000 and cash provided by financing
activities of $32,900,000 in 1999. No additional long-term debt was incurred in
2001. Net long-term debt borrowings were $70,000,000 in 2000 and $175,000,000
in 1999. The acquisitions of the bar mill in Auburn, New York and of ITEC
Steel, Inc. in 2001 were funded by Nucor's existing cash and short-term
investments. Unused long-term credit facilities total $248,000,000 at the end
of 2001 and expire from 2003 through 2007. The percentage of long-term debt to
total capital (long-term debt plus minority interests plus stockholders'
equity) was 16% in 2001, 16% in 2000 and 13% in 1999.
Nucor's directors have approved the purchase of up to 15,000,000 shares of
Nucor common stock. There were no repurchases during 2001. Since the inception
of the stock repurchase program in 1998, a total of approximately 10,800,000
shares have been repurchased at a cost of about $444,500,000.
OUTLOOK Nucor's objective is to maintain a strong balance sheet. Capital
expenditures are currently projected to be less than $200,000,000 in 2002.
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 on both a short and long-term
basis. Nucor has the financial ability to borrow significant additional funds
and still maintain reasonable leverage in order to finance major acquisitions.
In January 2002, the Delaware bankruptcy court approved Nucor's purchase of
substantially all of the assets of Trico Steel Company, LLC. The Trico sheet
mill facility, which originally began operations in 1997, is located in
Decatur, Alabama and has an annual capacity of approximately 1,900,000 tons.
Closing of the transaction is expected to occur in the third quarter of 2002,
after satisfactory resolution of various regulatory and tax matters. Start-up
of the sheet mill will commence after Nucor has completed improvements to the
facility.
Nucor has made an offer of $500,000,000 to purchase substantially all of the
assets of Birmingham Steel Corporation and is awaiting a response from the
company.
The past year was one of the toughest that the steel industry has experienced
in decades. Nucor's earnings in 2002 will be impacted by the state of the
economy, specifically the construction industry, and the remedy implemented for
relief from illegally dumped steel imports.
- -------------------------------------------------------------------------------
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Nucor's discussion and analysis of its financial condition and results of
operations are based upon Nucor's 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 Nucor to make estimates and assumptions that affect the amounts
reported in the financial statements. On an ongoing basis, Nucor evaluates its
estimates, including those related to contracts, torts, environment, taxes,
warranties and insurance. Actual costs could differ from these estimates under
different assumptions or conditions.
Nucor believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements. Nucor maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers to make required
payments. If the financial condition of Nucor's customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required. Nucor reviews long-lived assets for impairment
whenever changes in circumstances indicate that the carrying amount of the
assets may not be recoverable, and records an impairment charge if necessary.
Future changes in circumstances could also result in impairment charges. 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. If the environmental laws and regulations or the company's
underlying assumptions change, adjustments to the reserves may be necessary.
SIX-YEAR FINANCIAL REVIEW
-------------------------
21
----------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR
Net sales $4,139,248,578 $4,586,145,981 $4,009,346,082 $4,151,232,283 $4,184,497,854 $3,647,030,387
Costs and expenses:
Cost of products sold 3,820,303,026 3,925,478,540 3,480,478,687 3,591,782,838 3,578,941,039 3,139,157,919
Marketing, administrative
and other expenses 138,559,488 183,175,557 154,773,600 147,973,101 145,409,693 120,387,357
Interest expense (income) 6,525,057 (816,104) (5,095,299) (3,832,252) (35,318) (283,837)
-------------- -------------- -------------- -------------- -------------- --------------
3,965,387,571 4,107,837,993 3,630,156,988 3,735,923,687 3,724,315,414 3,259,261,439
Earnings before
federal income taxes 173,861,007 478,307,988 379,189,094 415,308,596 460,182,440 387,768,948
Federal income taxes 60,900,000 167,400,000 134,600,000 151,600,000 165,700,000 139,600,000
-------------- -------------- -------------- -------------- -------------- --------------
Net earnings 112,961,007 310,907,988 244,589,094 263,708,596 294,482,440 248,168,948
Net earnings per share 1.45 3.80 2.80 3.00 3.35 2.83
Dividends declared
per share .68 .60 .52 .48 .40 .32
Percentage of
earnings to sales 2.7% 6.8% 6.1% 6.4% 7.0% 6.8%
Return on average equity 5.2% 14.2% 11.3% 13.4% 16.9% 16.6%
Capital expenditures 261,145,658 415,404,602 374,717,759 502,910,263 306,749,422 537,438,406
Depreciation 289,063,213 259,365,173 256,637,460 264,038,622 218,764,101 182,232,851
Sales per employee 507,137 597,193 547,762 591,596 622,554 572,038
===========================================================================================================================
AT YEAR END
Current assets $1,373,665,916 $1,379,529,050 $1,538,508,511 $1,129,467,383 $1,125,508,464 $ 828,380,585
Current liabilities 484,158,726 558,068,452 531,030,898 486,897,157 524,453,610 465,652,755
-------------- -------------- -------------- -------------- -------------- --------------
Working capital 889,507,190 821,460,598 1,007,477,613 642,570,226 601,054,854 362,727,830
Current ratio 2.8 2.5 2.9 2.3 2.1 1.8
Property, plant and
equipment 2,365,655,061 2,329,420,798 2,180,419,463 2,086,158,459 1,858,874,894 1,791,152,821
Total assets 3,759,348,176 3,710,867,705 3,718,927,974 3,215,625,842 2,984,383,358 2,619,533,406
Long-term debt 460,450,000 460,450,000 390,450,000 215,450,000 167,950,000 152,600,000
Percentage of debt
to capital 15.6% 15.9% 13.4% 8.4% 7.2% 7.5%
Stockholders' equity 2,201,460,329 2,130,951,640 2,262,247,906 2,072,551,781 1,876,425,866 1,609,290,193
Per share 28.29 27.47 25.96 23.73 21.32 18.33
Shares outstanding 77,814,511 77,582,948 87,133,737 87,352,906 87,996,583 87,795,947
Stockholders 47,000 51,000 55,000 62,000 50,000 39,000
Employees 8,400 7,900 7,500 7,200 6,900 6,600
===========================================================================================================================
In November 2001, Nucor sold Nucor Iron Carbide, Inc. in Trinidad, resulting in
a pre-tax gain of $20,200,000, included primarily in marketing, administrative
and other expenses.
CONSOLIDATED STATEMENTS OF EARNINGS AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------
22
CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------------------------
Year Ended December 31, 2001 2000 1999
- -------------------------------------------------------------------------------------------------
NET SALES $4,139,248,578 $4,586,145,981 $4,009,346,082
COSTS AND EXPENSES:
Cost of products sold 3,820,303,026 3,925,478,540 3,480,478,687
Marketing, administrative and other expenses 138,559,488 183,175,557 154,773,600
Interest expense (income) (Note 10) 6,525,057 (816,104) (5,095,299)
-------------- -------------- --------------
3,965,387,571 4,107,837,993 3,630,156,988
-------------- -------------- --------------
EARNINGS BEFORE FEDERAL INCOME TAXES 173,861,007 478,307,988 379,189,094
FEDERAL INCOME TAXES (Note 11) 60,900,000 167,400,000 134,600,000
-------------- -------------- --------------
NET EARNINGS $ 112,961,007 $ 310,907,988 $ 244,589,094
============== ============== ==============
NET EARNINGS PER SHARE (Note 6) $1.45 $3.80 $2.80
===== ===== =====
=================================================================================================
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK
ADDITIONAL RETAINED (at cost)
Shares Amount PAID-IN CAPITAL EARNINGS Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
BALANCES, December 31, 1998 90,051,785 $36,020,714 $67,252,936 $2,016,856,168 2,698,879 $ 47,578,037
- --------------------------------------------------------------------------------------------------------------------------
Net earnings in 1999 244,589,094
Employee stock options 50,733 20,293 2,347,053
Employee stock compensation
and service awards 1,785,220 (53,396) (1,070,449)
Treasury stock acquired (478,642) 323,298 14,283,103
Cash dividends ($.52 per share) (45,354,239)
- --------------------------------------------------------------------------------------------------------------------------
BALANCES, December 31, 1999 90,102,518 36,041,007 70,906,567 2,216,091,023 2,968,781 60,790,691
- --------------------------------------------------------------------------------------------------------------------------
Net earnings in 2000 310,907,988
Employee stock options 9,620 3,848 409,508
Employee stock compensation
and service awards 401,879 (108,647) (3,921,444)
Treasury stock acquired (223,284) 9,669,056 398,504,348
Cash dividends ($.60 per share) (48,213,301)
- --------------------------------------------------------------------------------------------------------------------------
BALANCES, December 31, 2000 90,112,138 36,044,855 71,494,670 2,478,785,710 12,529,190 455,373,595
- --------------------------------------------------------------------------------------------------------------------------
Net earnings in 2001 112,961,007
Employee stock options 214,253 85,701 8,830,541
Employee stock compensation
and service awards 864,944 (17,310) (629,219)
Cash dividends ($.68 per share) (52,862,723)
- --------------------------------------------------------------------------------------------------------------------------
BALANCES, December 31, 2001 90,326,391 $36,130,556 $81,190,155 $2,538,883,994 12,511,880 $454,744,376
- --------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
---------------------------
23
------------------------------------
December 31, 2001 2000
- -------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and short-term investments $ 462,348,547 $ 490,576,279
Accounts receivable (Note 2) 330,855,074 350,184,329
Inventories (Note 3) 466,690,217 461,151,913
Other current assets (Note 11) 113,772,078 77,616,529
-------------- --------------
TOTAL CURRENT ASSETS 1,373,665,916 1,379,529,050
PROPERTY, PLANT AND EQUIPMENT (Note 4) 2,365,655,061 2,329,420,798
OTHER ASSETS 20,027,199 1,917,857
-------------- --------------
$3,759,348,176 $3,710,867,705
============== ==============
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 189,235,046 $ 203,334,079
Salaries, wages and related accruals 92,769,688 134,953,274
Accrued expenses and other current
liabilities (Note 8) 202,153,992 219,781,099
-------------- --------------
TOTAL CURRENT LIABILITIES 484,158,726 558,068,452
-------------- --------------
LONG-TERM DEBT DUE AFTER ONE YEAR (Note 5) 460,450,000 460,450,000
-------------- --------------
DEFERRED CREDITS AND OTHER LIABILITIES
(Notes 8, 9 and 11) 329,392,145 260,054,154
-------------- --------------
MINORITY INTERESTS 283,886,976 301,343,459
-------------- --------------
STOCKHOLDERS' EQUITY (Note 6):
Common stock 36,130,556 36,044,855
Additional paid-in capital 81,190,155 71,494,670
Retained earnings 2,538,883,994 2,478,785,710
-------------- --------------
2,656,204,705 2,586,325,235
Treasury stock (454,744,376) (455,373,595)
-------------- --------------
2,201,460,329 2,130,951,640
-------------- --------------
$3,759,348,176 $3,710,867,705
============== ==============
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------
24
-----------------------------------------------
Year Ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $112,961,007 $310,907,988 $244,589,094
Adjustments:
Depreciation 289,063,213 259,365,173 256,637,460
Gain on sale of facility (20,219,224) -- --
Deferred federal income taxes 11,000,000 19,400,000 10,600,000
Minority interests 103,034,717 151,275,438 85,651,646
Changes in (exclusive of acquisitions and dispositions):
Accounts receivable 33,788,641 43,579,322 (94,518,857)
Inventories 26,302,845 3,831,738 (29,098,813)
Accounts payable (20,991,631) (51,895,123) 56,899,431
Accrued environmental costs (25,187,000) 30,932,000 24,825,000
Other (14,637,243) 53,358,131 49,249,388
------------ ------------ ------------
Cash provided by operating activities 495,115,325 820,754,667 604,834,349
- -----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (261,145,658) (415,404,602) (374,717,759)
Disposition of plant and equipment 22,650,119 5,128,217 442,250
Acquisitions (net of cash acquired) (121,904,000) -- --
------------ ------------ ------------
Cash used in investing activities (360,399,539) (410,276,385) (374,275,509)
- -----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in long-term debt -- 70,000,000 175,000,000
Issuance of common stock 10,410,405 4,736,679 5,223,015
Distributions to minority interests (120,491,200) (119,883,200) (87,176,880)
Cash dividends (52,862,723) (48,213,301) (45,354,239)
Acquisition of treasury stock -- (398,727,632) (14,761,745)
------------ ------------ ------------
Cash provided by (used in) financing activities (162,943,518) (492,087,454) 32,930,151
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS (28,227,732) (81,609,172) 263,488,991
CASH AND SHORT-TERM INVESTMENTS -BEGINNING OF YEAR 490,576,279 572,185,451 308,696,460
------------ ------------ ------------
CASH AND SHORT-TERM INVESTMENTS -END OF YEAR $462,348,547 $490,576,279 $572,185,451
============ ============ ============
- -----------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
25
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Nucor is a domestic manufacturer
of steel products whose customers are located primarily in the United States of
America. Nucor reports in one segment. Revenue is recognized at the time
products are shipped to customers.
The consolidated financial statements include Nucor and all of its
subsidiaries. The minority interests in operations of less than 100%-owned
subsidiaries are included in cost of products sold. All significant
intercompany transactions are eliminated. Investments in joint ventures with
ownership of 50% or less are accounted for under the equity method.
Short-term investments are recorded at cost plus accrued interest, which
approximates market, and will be converted into cash within three months from
date of purchase. Cash and short-term investments are maintained primarily with
a few high-credit quality financial institutions.
Inventories are stated at the lower of cost or market. Cost is determined
principally using the last-in, first-out (LIFO) method of accounting.
Property, plant and equipment are stated at cost. Depreciation is provided on a
straight-line basis over the estimated useful lives of the assets. Repairs and
maintenance are expensed on a pro-rata basis throughout the year. Long-lived
assets are reviewed for impairment whenever changes in circumstances indicate
that the carrying amount of the assets may not be recoverable.
Nucor sometimes uses natural gas purchase contracts to partially manage its
exposure to price risk of natural gas that is used during the manufacturing
process. The use of these contracts is immaterial for all periods presented.
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. These estimates include
liabilities recorded for the costs of complying with various regulations and
involvement in judicial and administrative proceedings, including matters
related to contracts, torts, environment, taxes, warranties and insurance.
Actual costs could differ from these estimates.
Certain amounts for prior years have been reclassified to conform with the 2001
presentation.
2. ACCOUNTS RECEIVABLE: Accounts receivable are stated net of the allowance for
doubtful accounts of $20,182,830 in 2001 ($27,573,485 in 2000 and $21,093,233
in 1999).
3. INVENTORIES: Inventories consist of approximately 40% raw materials and
supplies, and 60% finished and semi-finished products in 2001 (45% and 55% in
2000). Inventories valued using the last-in, first-out (LIFO) method of
accounting represent approximately 85% of total inventories in 2001 and 2000.
If the first-in, first-out (FIFO) method of accounting had been used,
inventories would have been $8,291,126 higher in 2001 ($19,358,398 higher in
2000). Use of the lower of cost or market reduced inventories by $6,319,664 in
2001 ($2,498,447 in 2000).
4. PROPERTY, PLANT AND EQUIPMENT:
--------------------------------
December 31, 2001 2000
- -------------------------------------------------------------------------------
Land and improvements $ 99,960,257 $ 94,537,956
Buildings and improvements 387,104,084 357,440,801
Machinery and equipment 3,605,131,629 3,482,931,960
Construction in process and equipment deposits 134,370,438 89,925,106
-------------- --------------
4,226,566,408 4,024,835,823
Less accumulated depreciation 1,860,911,347 1,695,415,025
-------------- --------------
$2,365,655,061 $2,329,420,798
============== ==============
- -------------------------------------------------------------------------------
The estimated useful lives range from 10 to 20 years for buildings and land
improvements and range from 3 to 12 years for machinery and equipment.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
- -----------------------------------------------------
26
5. LONG-TERM DEBT AND FINANCING ARRANGEMENTS: Seven banks are committed to lend
Nucor a total of $248,000,000 (nothing has been borrowed), with borrowings, if
any, repayable in 2003 ($20,000,000), 2004 ($20,000,000), 2005 ($10,000,000),
2006 ($90,000,000) and 2007 ($108,000,000). These commitments cannot be
withdrawn unless there is non-compliance under the loan agreements. Annual
aggregate long-term debt maturities are: $300,000 in 2003; $300,000 in 2004;
$300,000 in 2005; and $1,550,000 in 2006. The fair value of Nucor's long-term
debt approximates the carrying value.
----------------------------
December 31, 2001 2000
- ------------------------------------------------------------------------------
Industrial revenue bonds:
1.68% to 4.5%, variable, due from 2014 to 2033 $206,300,000 $206,300,000
5.75% to 8%, fixed, due from 2003 to 2023 79,150,000 79,150,000
Notes payable, 6%, due 2009 175,000,000 175,000,000
------------ ------------
$460,450,000 $460,450,000
============ ============
- ------------------------------------------------------------------------------
6. CAPITAL STOCK: The par value of Nucor's common stock is $.40 per share and
there are 200,000,000 shares authorized.
Nucor's Key Employees' Incentive Stock Option Plans provide that common stock
options may be granted to key employees and officers with exercise prices at
100% of the market value on the date of the grant. Outstanding options are
exercisable six months after grant date and have a term of five to seven years.
During 2001, options were granted for 465,169 shares (482,431 in 2000 and
209,459 in 1999); and options for 90,993 shares (167,498 in 2000 and 111,407 in
1999) expired or were canceled. At December 31, 2001, options for 1,150,553
shares (990,630 in 2000 and 685,317 in 1999) were outstanding at an aggregate
exercise price of $52,318,796 ($44,185,270 in 2000 and $33,137,733 in 1999);
options for 922,457 shares (710,386 in 2000 and 583,619 in 1999) were
exercisable; and 1,737,789 shares (2,180,737 in 2000 and 2,607,413 in 1999)
were reserved for future grants. Exercise prices of the outstanding options
range from $36.16 to $57.38 at December 31, 2001.
Effective January 1, 2001, Nucor established a Non-Employee Director Equity
Plan that provides that common stock options may be granted to members of the
Board of Directors of Nucor who are not employees of Nucor. The Plan grants
options to purchase Nucor's common stock with exercise prices at 100% of the
market value on the date of the grant. Outstanding options are exercisable six
months after grant date and have a term of seven years. During 2001, options
were granted for 5,169 shares, and options for 858 shares expired or were
canceled. At December 31, 2001, options for 4,311 shares were outstanding at an
aggregate exercise price of $199,762; options for 2,475 shares were
exercisable; and 295,689 shares were reserved for future grants. Exercise
prices of the outstanding options range from $44.40 to $48.95 at December 31,
2001.
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. No shares of preferred stock have been issued since
their authorization in 1964.
Nucor's basic earnings per share of common stock are based on 77,707,832
average shares outstanding in 2001 (81,762,429 in 2000 and 87,247,160 in 1999).
If all stock options were exercised, diluted earnings per share would not be
different than basic earnings per share. The pro-forma income effect of fair
value accounting for stock options is immaterial for all periods presented.
7. 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
-----------------------------------------------------
27
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.
8. 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. Of the undiscounted total
$104,960,000 of accrued environmental costs at December 31, 2001 ($130,147,000
in 2000 and $99,215,000 in 1999), $49,210,000 was classified in accrued
expenses and other current liabilities ($63,097,000 in 2000 and $21,681,000 in
1999) and $55,750,000 was classified in deferred credits and other liabilities
($67,050,000 in 2000 and $77,534,000 in 1999). 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.
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 which would have a material effect
on the consolidated financial statements.
9. EMPLOYEE BENEFIT PLANS: Nucor has a Profit Sharing and Retirement Savings
Plan for qualified employees. Nucor's expense for these benefits was
$18,998,950 in 2001 ($49,280,977 in 2000 and $39,195,491 in 1999). 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 $33,256,696 in 2001 ($32,347,105 in 2000). Expense associated
with this plan was $1,085,758 in 2001 ($3,038,714 in 2000 and $4,117,480 in
1999). The discount rate used was 7% in 2001 (7.5% in 2000 and 1999). The
health care cost trend rate used was 13% in 2001 (9.5% in 2000 and 10% in
1999). The health care cost trend rate is projected to decline gradually to
4.5% by 2012.
10. INTEREST EXPENSE (INCOME): Interest expense is stated net of interest
income of $15,476,840 in 2001 ($23,264,824 in 2000 and $25,610,881 in 1999).
Interest paid was $22,028,671 in 2001 ($21,625,267 in 2000 and $14,692,106 in
1999).
11. FEDERAL INCOME TAXES:
---------------------------------------------
December 31, 2001 2000 1999
- -------------------------------------------------------------------
Currently payable $49,900,000 $148,000,000 $124,000,000
Deferred 11,000,000 19,400,000 10,600,000
----------- ------------ ------------
$60,900,000 $167,400,000 $134,600,000
=========== ============ ============
===================================================================
Current deferred federal income tax assets of approximately $103,000,000 in
2001 ($75,000,000 in 2000) relate primarily to differences between financial
and tax reporting of inventories and accrued expenses. Non-current deferred
federal income tax liabilities of approximately $144,000,000 in 2001
($105,000,000 in 2000) relate primarily to differences between financial and
tax reporting of depreciation, offset by accrued environmental costs. Federal
income taxes paid were $20,416,000 in 2001 ($152,400,000 in 2000 and
$147,400,000 in 1999). State income taxes of $5,508,000 in 2001 ($15,210,000 in
2000 and $11,746,000 in 1999) have been recorded in cost of products sold.
12. ACQUISITIONS AND DISPOSITIONS: On March 31, 2001, Nucor purchased
substantially all of the assets of Auburn Steel Company, Inc.'s steel bar
facility in Auburn, New York for approximately $115,000,000. This facility has
the capacity to produce up to 430,000 tons of merchant bar quality steel
shapes, SBQ and rebar. On November 19, 2001, Nucor acquired ITEC Steel, Inc.
and its wholly-owned subsidiary, Steel Truss and Frame Corp., with facilities
in Texas and Georgia, for approximately $11,000,000, including liabilities
assumed. The ITEC facilities produce light gauge steel framing. The
acquisitions were not material to the consolidated financial statements and did
not result in material goodwill or other intangible assets.
In February 2001, Nucor finalized the sale of the Bearing Products operation in
North Carolina. In November 2001, Nucor sold Nucor Iron Carbide, Inc. in
Trinidad, resulting in a pre-tax gain of $20,200,000, included primarily in
marketing, administrative and other expenses. Both operations accounted for
small percentages of Nucor's sales.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
- -----------------------------------------------------
28
13. QUARTERLY INFORMATION (UNAUDITED):
----------------------------------------------------------------
December 31, First Quarter Second Quarter Third Quarter Fourth Quarter
- --------------------------------------------------------------------------------------
2001
Net sales $1,028,017,720 $1,078,574,872 $1,053,088,039 $ 979,567,947
Gross margin 84,245,334 100,011,733 74,911,842 59,776,643
Net earnings 32,738,976 33,292,863 20,463,277 26,465,891
Net earnings per share .42 .43 .26 .34
======================================================================================
2000
Net sales $1,199,634,778 $1,213,945,302 $1,163,088,140 $1,009,477,761
Gross margin 167,884,777 176,874,378 154,353,874 161,554,412
Net earnings 81,489,845 81,803,693 67,794,472 79,819,978
Net earnings per share .94 .98 .85 1.03
======================================================================================
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REPORT OF INDEPENDENT ACCOUNTANTS
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PricewaterhouseCoopers LLP
January 31, 2002
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 subsidiaries as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of Nucor's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes 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. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ PricewaterhouseCoopers LLP.
Charlotte, North Carolina
BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT
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29
BOARD OF DIRECTORS JEFFREY M. KEMP MICHAEL S. GURLEY
General Manager of Business General Manager
PETER C. BROWNING Development and Strategic Bar Mill Divison,Cold Finish Division
Non-Executive Chairman, Planning Darlington, South Carolina
Nucor Corporation
Dean, McColl School of Business NORMAN L. MAERO LADO R. HALL
General Manager of Construction Vice President, General Manager
CLAYTON C. DALEY, JR. Sheet Mill Division, Beam Mill Division
Chief Financial Officer, STEVEN J. ROWLAN Berkeley County, South Carolina
The Procter & Gamble Company General Manager of
Environmental Affairs DONALD N. HOLLOWAY
DANIEL R. DIMICCO Vice President, General Manager
Vice Chairman, President and A. RAE EAGLE Vulcraft Division, Cold Finish Division
Chief Executive Officer, Corporate Secretary Norfolk, Nebraska
Nucor Corporation
OPERATIONS JAMES R. LANDRUM
Harvey B. Gantt Vice President, General Manager
Partner, Gantt Huberman Architects JAMES R. BEARD Vulcraft Division
Vice President, General Manager Grapeland, Texas
VICTORIA F. HAYNES Vulcraft Division, Cold Finish Division
President, Brigham City, Utah MICHAEL D. LEE
Research Triangle Institute General Manager
A. JAY BOWCUTT Bar Mill Division
JAMES D. HLAVACEK Vice President, General Manager Norfolk, Nebraska
Managing Director, Bar Mill Division
Market Driven Management Plymouth, Utah HARRY R. LOWE
Vice President
EXECUTIVE MANAGEMENT JAMES E. CAMPBELL Building Systems Group
Vice President, General Manager
EXECUTIVE OFFICES Vulcraft Division DONALD R. MOODY
Fort Payne, Alabama General Manager
DANIEL R. DIMICCO Light Gauge Steel Framing
Vice Chairman, President and JEFF B. CARMEAN
Chief Executive Officer General Manager RAYMOND NAPOLITAN, JR.
Building Systems Division General Manager
TERRY S. LISENBY Swansea, South Carolina Building Systems Group
Chief Financial Officer, Treasurer Terell, Texas
and Executive Vice President DAVID L. CHASE
Vice President, General Manager ROBERT M. PROIA
JOHN J. FERRIOLA Sheet Mill Division General Manager
Executive Vice President Vulcraft of New York, Inc.
SAMUEL E. COMMELLA, JR. Chemung, New York
HAMILITON LOTT, JR. General Manager
Executive Vice President Sheet Mill Division K. REX QUERY
Hickman, Arkansas General Manager
D. MICHAEL PARRISH Nucor Steel Auburn, Inc.
Executive Vice President JAMES R. DARSEY Auburn, New York
Vice President, General Manager
JOSEPH A. RUTKOWSKI Bar Mill Division JAMES W. RONNER
Executive Vice President Jewett, Texas Vice President, General Manager
Vulcraft Division
JAMES M. COBLIN GIFFIN F. DAUGHTRIDGE St. Joe, Indiana
Vice President, Human Resources General Manager
Plate Mill Division R. JOSEPH STRATMAN
ELIZABETH W. BOWERS Hertford County, North Carolina Vice President, General Manager
General Manager of Taxes Nucor-Yamato Steel Company
JERRY V. DEMARS Blytheville, Arkansas
JAMES D. FRIAS Vice President, General Manager
General Manager and Fastener Division LYNN E. STROCK
Corporate Controller St. Joe, Indiana Vice President, General Manager
Vulcraft Division
ROBERT W. JOHNS RONALD L. DICKERSON Florence, South Carolina
Director of Marketing, General Manager
Sheet Mill Group Sheet Mill Division G. WAYNE STUDEBAKER
Crawfordsville, Indiana General Manager
Research and Development
Norfolk, Nebraska
CORPORATE AND STOCK DATA
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30
EXECUTIVE OFFICES
2100 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
59 Maiden Lane
New York, New York 10038
Phone 800/937-5449
Fax 718/92l-833 1
ANNUAL MEETING
Place -
The Park Hotel
2200 Rexford Road
Morrison A & B
Charlotte, North Carolina
Time/Date -
IO:00 A.M., Thursday
May 9,2002
STOCK LISTING
New York Stock Exchange
Trading Symbol - NUE
STOCK PRICE AND DIVIDENDS PAID
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First Second Third Fourth
Quarter Quarter Quarter Quarter
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2001
Stock Price:
High $47.55 $56.20 $53.15 $54.15
Low 37.50 38.48 33.45 35.80
Dividends Paid .15 .17 .17 .17
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2000
Stock Price:
High $56.44 $51.25 $39.75 $41.19
Low 45.06 33.00 29.94 29.50
Dividends Paid .13 .15 .15 .15
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10-K AND 1l-YEAR DATA
Copies of (1) Form 1O-K for 2001 filed with the Securities and Exchange
Commission, and (2) various financial and statistical data for the years 1991 to
2001, are available on request.
INTERNET DATA
Various data is available on www.nucor.com.