FIRST
QUARTER
2002
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 March 30, 2002 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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78,031,870 shares of common stock were outstanding at March 30, 2002.
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PART I - FINANCIAL INFORMATION
Nucor Corporation - Condensed Consolidated Statements of Earnings
Three Months (13 Weeks) Ended
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March 30, 2002 March 31, 2001
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(Unaudited) (Unaudited)
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Net sales $1,028,164,467 $1,028,017,720
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Costs and expenses:
Cost of products sold 957,016,353 943,772,386
Marketing, administrative and other expenses 37,273,774 34,679,902
Interest expense (income) 2,912,045 (773,544)
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997,202,172 977,678,744
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Earnings before federal income taxes 30,962,295 50,338,976
Federal income taxes 10,700,000 17,600,000
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Net earnings $ 20,262,295 $ 32,738,976
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Net earnings per share $.26 $.42
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Dividends declared per share $.19 $.17
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Average number of shares outstanding 77,917,864 77,586,843
See notes to condensed consolidated financial statements.
2
Nucor Corporation - Condensed Consolidated Balance Sheets
March 30, December 31,
2002 2001
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Assets (Unaudited) (Audited)
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Current assets:
Cash and short-term investments $ 456,216,914 $ 462,348,547
Accounts receivable 360,466,468 330,855,074
Inventories 469,952,379 466,690,217
Other current assets 108,794,130 113,772,078
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Total current assets 1,395,429,891 1,373,665,916
Property, plant and equipment 2,338,032,543 2,365,655,061
Other assets 22,343,430 20,027,199
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Total assets $3,755,805,864 $3,759,348,176
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Liabilities and stockholders' equity
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Current liabilities:
Accounts payable $ 250,909,703 $ 189,235,046
Federal income taxes 7,572,670 -
Salaries, wages and related accruals 82,002,427 92,769,688
Accrued expenses and other current liabilities 209,521,231 202,153,992
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Total current liabilities 550,006,031 484,158,726
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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 323,923,838 329,392,145
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Minority interests 204,563,228 283,886,976
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Stockholders' equity:
Common stock 36,216,304 36,130,556
Additional paid-in capital 90,961,920 81,190,155
Retained earnings 2,544,320,233 2,538,883,994
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2,671,498,457 2,656,204,705
Treasury stock (454,635,690) (454,744,376)
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2,216,862,767 2,201,460,329
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Total liabilities and stockholders' equity $3,755,805,864 $3,759,348,176
============== ==============
See notes to condensed consolidated financial statements.
3
Nucor Corporation - Condensed Consolidated Statements of Cash Flows
Three Months (13 Weeks) Ended
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March 30, 2002 March 31, 2001
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(Unaudited) (Unaudited)
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Operating activities:
Net earnings $ 20,262,295 $ 32,738,976
Adjustments:
Depreciation 75,715,271 69,087,812
Minority interests 29,750,252 31,143,402
Changes in (exclusive of acquisition):
Current assets (27,895,608) (30,985,420)
Current liabilities 65,847,305 (20,504,244)
Other (7,779,982) 8,344,269
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Cash provided by operating activities 155,899,533 89,824,795
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Investing activities:
Capital expenditures (net) (48,097,309) (62,013,064)
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 (48,097,309) (161,268,667)
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Financing activities:
Distributions to minority interests (109,074,000) (74,391,800)
Issuance of common stock 9,966,199 443,531
Cash dividends (14,826,056) (13,191,069)
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Cash used in financing activities (113,933,857) (87,139,338)
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Decrease in cash and short-term investments $ (6,131,633) $(158,583,210)
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See notes to condensed consolidated financial statements.
4
Nucor Corporation - Notes to Condensed Consolidated Financial Statements
- 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. 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, 2001.
2. Inventories: Inventories consist of approximately 45% raw materials and
supplies, and 55% finished and semi-finished products, at March 30, 2002
(40% and 60% at December 31, 2001). Inventories valued using the last-in,
first-out (LIFO) method of accounting represent approximately 85% of total
inventories as of March 30, 2002 and as of December 31, 2001. If the
first-in, first-out method (FIFO) of accounting had been used, inventories
would have been $13,571,126 higher at March 30, 2002 ($8,291,126 at
December 31, 2001). Use of the lower of cost or market reduced inventories
by $6,089,725 at March 30, 2002 ($6,319,664 at December 31, 2001).
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. Of the undiscounted total
$98,065,000 of accrued environmental costs at March 30, 2002 ($104,960,000
at December 31, 2001), $50,315,000 was classified in accrued expenses and
other current liabilities ($49,210,000 at December 31, 2001) and
$47,750,000 was classified in deferred credits and other liabilities
($55,750,000 at December 31, 2001). 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.
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.
5
Nucor Corporation - Analysis of Operations and Finances
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Operations
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Net sales for the first quarter of 2002 remained unchanged at
$1,028,000,000, compared with the first quarter of 2001. Although Nucor
established a new tonnage record for steel sales to outside customers in the
first quarter of 2002, net sales dollars remained unchanged compared with the
first quarter of 2001, due to an 8% decrease in composite sales price per ton
from $345 per ton to $316 per ton. Total steel shipments were 3,272,000 tons,
compared with 2,980,000 tons in last year's first quarter. Steel sales to
outside customers were 3,023,000 tons, compared with 2,678,000 tons in the
year-earlier quarter. Steel joist production during the first quarter was 94,000
tons, compared with 127,000 tons in the first quarter of 2001. Steel deck sales
were 61,000 tons, compared with 76,000 tons in last year's first quarter. Cold
finished steel sales were 51,000 tons, compared with 58,000 tons in the first
quarter of 2001.
The major component of cost of products sold is raw material costs. The
average price of raw materials decreased about 6% from the first quarter of
2001. The average scrap and scrap substitute cost per ton used was $96 in the
first quarter of 2002, compared with $103 in the first quarter of 2001.
Margins were approximately 7% for the first quarter of 2002 and
approximately 8% for the first quarter of 2001.
Major components of marketing, administrative and other expenses are freight
and profit sharing costs. Unit freight costs increased about 1% from the first
quarter of 2001 to the first quarter of 2002, and profit sharing costs decreased
by 39% compared with the 2001 first quarter. Profit sharing costs are based upon
and generally fluctuate with pre-tax earnings. The decrease in profit sharing
costs was offset by additional costs for employment agreements entered into in
the first quarter of 2002.
Interest expense, net of interest income, increased for the first quarter of
2002 from the first quarter of 2001, primarily due to decreased average interest
rates on short-term investments and decreased short-term investments.
Federal income taxes were at a rate of 34.5% for the first quarter of 2002
and 35% for the first quarter of 2001.
Net earnings decreased approximately 38% from the first quarter of 2001 to
the first quarter of 2002, due to decreased margins, increased interest expense
and increased marketing, administrative and other expenses.
Unfairly traded, illegally dumped steel imports have devastated the U.S.
steel industry and its workers. 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. The Section 201 tariffs announced in March 2002 by the
Bush Administration and the reduction in domestic steel capacity in recent
months have had a positive effect on the markets for our products.
6
Nucor Corporation - Analysis of Operations and Finances, continued
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Liquidity and capital resources
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The current ratio was 2.5 at the end of the 2002 first quarter, and 2.8 at
year-end 2001. The percentage of long-term debt to total capital was about 16%
at the end of the first quarter of 2002 and at year-end 2001. Nucor has a simple
capital structure with no off-balance sheet financing arrangements or
relationships with special purpose entities.
Capital expenditures decreased approximately 22% during the first quarter of
2002 compared with the first quarter of 2001. In addition, at the end of the
first quarter of 2001, Nucor purchased substantially all of the assets of Auburn
Steel Company, Inc.'s steel bar facility for approximately $115,000,000. The
acquisition was not material to the consolidated financial statements and did
not result in material goodwill or other intangible assets. Capital expenditures
are projected to be less than $200,000,000 for all of 2002. 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 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 for less than
$120,000,000. 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.
Nucor's directors have approved the purchase of up to 15,000,000 shares of
Nucor common stock. There were no repurchases during the first quarter of 2002.
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
$445,000,000.
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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.
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: /s/ Terry S. Lisenby
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Terry S. Lisenby
Chief Financial Officer, Treasurer
and Executive Vice President
Dated: May 7, 2002
8