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NUCOR CORPORATION (NUE)

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NUCOR CORP. : Nucor Reports Results for Second Quarter and First Half of 2010

07/22/2010 | 09:05am US/Eastern
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CHARLOTTE, N.C., July 22 /PRNewswire-FirstCall/ -- Nucor Corporation (NYSE: NUE) announced today consolidated net earnings of $91.0 million, or $0.29 per diluted share, for the second quarter of 2010. By comparison, Nucor reported net earnings of $31.0 million, or $0.10 per diluted share, in the first quarter of 2010 and a net loss of $133.3 million, or $0.43 per diluted share, in the second quarter of 2009.

In the first half of 2010, Nucor reported consolidated net earnings of $122.0 million, or $0.38 per diluted share, compared with a net loss of $323.0 million, or $1.03 per diluted share, in the first half of last year.

In the second quarter of 2010, Nucor's consolidated net sales increased 15% to $4.20 billion compared with $3.65 billion in the first quarter of 2010 and increased 69% compared with $2.48 billion in the second quarter of 2009. Average sales price per ton increased 14% from the first quarter of 2010 and increased 25% from the second quarter of 2009. Total tons shipped to outside customers were 5,555,000 tons in the second quarter of 2010, an increase of 1% over the first quarter of 2010 and an increase of 35% over the second quarter of 2009. Total second quarter steel mill shipments increased 53% over 2009's second quarter and were down 2% from the first quarter of 2010. Second quarter downstream steel products shipments to outside customers increased 19% over the second quarter of 2009 and 25% over the first quarter of 2010.

In the first half of 2010, Nucor's consolidated net sales increased 53% to $7.85 billion, compared with $5.13 billion in last year's first half. Average sales price per ton increased 8% while total tons shipped to outside customers increased 41% over the first half of 2009.

The average scrap and scrap substitute cost per ton used in the second quarter of 2010 was $373, an increase of 17% compared with $318 in the first quarter of 2010 and an increase of 20% over $312 in the second quarter of 2009. The average scrap and scrap substitute cost per ton used in the first half of 2010 was $345, an increase of 7% over $322 in the first half of 2009.

Nucor recorded a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $67.0 million in the second quarter of 2010, compared with a charge of $24.0 million in the first quarter of 2010 and a credit of $125.0 million in the second quarter of 2009. The LIFO charge in the first half of 2010 was $91.0 million, compared with a credit of $230.0 million in the first half of 2009. The second quarter LIFO charge was higher than anticipated at the time we gave both our qualitative and quantitative guidance due to increasing scrap prices.

Overall operating rates at our steel mills in the second quarter (71%) were down slightly from the first quarter (73%), with some improvements at the beam and plate mills offset by declines at the sheet mills. Steel mill utilization significantly increased from 46% in last year's second quarter, and increased from 46% in the first half of 2009 to 72% in the first half of 2010.

Total energy costs decreased approximately $2 per ton from the first quarter of 2010 primarily due to decreased energy costs driven by lower natural gas prices. Total energy costs decreased approximately $8 per ton from the second quarter of 2009 to the second quarter of 2010 and decreased $9 per ton from the first half of 2009 to the first half of 2010 mainly as a result of increased production.

Pre-operating and start-up costs of new facilities were $43.4 million in the second quarter of 2010 compared to $50.5 million in the first quarter of 2010 and $31.6 million in the second quarter of 2009. For the six-month period, pre-operating and start-up costs increased from $64.8 million in 2009 to $93.9 million in 2010. In 2010, these costs primarily related to the SBQ mill in Memphis, Tennessee, and the galvanizing line in Decatur, Alabama.

Our liquidity position remains strong with $1.14 billion in cash and cash equivalents and short-term investments and an untapped $1.3 billion revolving credit facility that matures in November 2012.

In April, Nucor acquired a 50% interest in NuMit LLC, which invests in various steel and steel related activities, both in North America and globally. As part of the agreement, Mitsui and Co. (U.S.A.), Inc., a wholly owned subsidiary of Mitsui and Co., Ltd., contributed 100% of Steel Technologies Inc. Steel Technologies operates 23 sheet steel processing facilities throughout the U.S., Canada and Mexico. The purchase price of Nucor's 50% interest was approximately $221.3 million and did not result in a significant amount of goodwill. At closing, Nucor extended a $40.0 million loan and a $60.0 million line of credit (of which $54.0 million was drawn down immediately) to Steel Technologies.

In May, Nucor's board of directors declared a cash dividend of $0.36 per share payable on August 11, 2010 to stockholders of record on June 30, 2010. This dividend is Nucor's 149th consecutive quarterly cash dividend, a record we expect to continue.

Operating results excluding LIFO improved significantly over the first quarter, primarily due to increased margins; however, the continuation of the upward trend experienced through the first half of the year is by no means clear at present. There is a general slowdown taking place across all product lines as the overall economy has entered into a new period of uncertainty. This is the case both in the U.S. and globally. The most challenging markets for our products continue to be those associated with residential and non-residential construction, which continue to show little, if any, strength. This is particularly true for our downstream businesses. We will provide additional and more quantitative earnings guidance after the midpoint between our quarterly earnings releases.

Nucor and affiliates are manufacturers of steel products, with operating facilities primarily in the U.S. and Canada. Products produced include: carbon and alloy steel -- in bars, beams, sheet and plate; steel joists and joist girders; steel deck; fabricated concrete reinforcing steel; cold finished steel; steel fasteners; metal building systems; light gauge steel framing; steel grating and expanded metal; and wire and wire mesh. Nucor, through The David J. Joseph Company, also brokers ferrous and nonferrous metals, pig iron and HBI/DRI; supplies ferro-alloys; and processes ferrous and nonferrous scrap. Nucor is North America's largest recycler.

Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. The words "believe," "expect," "project," "will," "should" and similar expressions are intended to identify those forward-looking statements. Factors that might cause the Company's actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: (1) the sensitivity of the results of our operations to prevailing steel prices and the changes in the supply and cost of raw materials, including scrap steel; (2) market demand for steel products; (3) energy costs and availability; (4) competitive pressure on sales and pricing, including competition from imports and substitute materials; and (5) capital investments and their impact on our performance. These and other factors are outlined in Nucor's regulatory filings with the Securities and Exchange Commission, including those in Nucor's December 31, 2009 Annual Report on Form 10-K. The forward-looking statements contained in this news release speak only as of this date, and Nucor does not assume any obligation to update them.

You are invited to listen to the live broadcast of Nucor's conference call in which management will discuss Nucor's second quarter results on July 22, 2010 at 2:00 p.m. eastern time. The conference call will be available over the Internet at www.nucor.com, under Investor Relations.

                                             TONNAGE DATA
                                             ------------
                                            (in thousands)

                                          Three Months (13 Weeks) Ended
                                          -----------------------------
                                     July 3,        July 4,        Percentage
                                       2010           2009           Change
                                    --------       --------        ----------
    Steel mills production              4,648          2,964               57%
    Steel mills total
     shipments                          4,597          2,999               53%

    Sales tons to outside
     customers:
        Steel mills                     3,922          2,569               53%
        Joist                              72             65               11%
        Deck                               81             73               11%
        Cold finished                     117             76               54%
        Fabricated concrete
           reinforcing steel              266            255                4%
        Other                           1,097          1,078                2%
                                        5,555          4,116               35%
                                        =====          =====



                                            Six Months (26 Weeks) Ended
                                           ---------------------------
                                     July 3,        July 4,        Percentage
                                       2010           2009           Change
                                    --------       --------        ----------
    Steel mills production              9,360          5,843               60%
    Steel mills total
     shipments                          9,303          5,807               60%

    Sales tons to outside
     customers:
        Steel mills                     7,988          5,002               60%
        Joist                             131            125                5%
        Deck                              149            148                1%
        Cold finished                     228            156               46%
        Fabricated concrete
           reinforcing steel              460            463               -1%
        Other                           2,096          1,930                9%
                                       11,052          7,824               41%
                                       ======          =====

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
                 ---------------------------------------------------------
                           (In thousands, except per share data)

                                               Three Months (13 Weeks)
                                                        Ended
                                               -----------------------

                                            July 3,
                                              2010        July 4, 2009
                                           --------       ------------

    Net sales                             $4,195,966        $2,478,028
                                          ----------        ----------

    Costs, expenses and other:
      Cost of products sold                3,887,929         2,539,904
      Marketing, administrative and
       other expenses                        107,770            85,124
      Equity in losses of unconsolidated
       affiliates                              7,372            21,801
      Interest expense, net                   37,322            31,957
                                              ------            ------
                                           4,040,393         2,678,786
                                           ---------         ---------
    Earnings (loss) before income
     taxes and
      noncontrolling interests               155,573          (200,758)
    Provision for (benefit from)
     income taxes                             49,355           (72,989)
                                              ------           -------
    Net earnings (loss)                      106,218          (127,769)
    Earnings attributable to
      noncontrolling interests                15,226             5,568
                                              ------             -----
    Net earnings (loss) attributable
     to
      Nucor stockholders                     $90,992         $(133,337)
                                             =======         =========

    Net earnings (loss) per share:
      Basic                                    $0.29            ($0.43)
      Diluted                                  $0.29            ($0.43)

    Average shares outstanding:
      Basic                                  315,849           314,752
      Diluted                                316,472           314,752



                                               Six Months (26 Weeks)
                                                       Ended
                                               ---------------------

                                            July 3,         July 4,
                                              2010            2009
                                           --------        --------

    Net sales                             $7,850,808      $5,132,347
                                          ----------      ----------

    Costs, expenses and other:
      Cost of products sold                7,329,976       5,318,228
      Marketing, administrative and
       other expenses                        200,364         172,503
      Equity in losses of unconsolidated
       affiliates                             25,749          59,798
      Interest expense, net                   75,110          64,322
                                              ------          ------
                                           7,631,199       5,614,851
                                           ---------       ---------
    Earnings (loss) before income
     taxes and
      noncontrolling interests               219,609        (482,504)
    Provision for (benefit from)
     income taxes                             72,197        (164,210)
                                              ------        --------
    Net earnings (loss)                      147,412        (318,294)
    Earnings attributable to
      noncontrolling interests                25,456           4,688
                                              ------           -----
    Net earnings (loss) attributable
     to
      Nucor stockholders                    $121,956       $(322,982)
                                            ========       =========

    Net earnings (loss) per share:
      Basic                                    $0.38          ($1.03)
      Diluted                                  $0.38          ($1.03)

    Average shares outstanding:
      Basic                                  315,653         314,532
      Diluted                                316,349         314,532

    CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
    -------------------------------------------------
                       (In thousands)

                                               July 3,         Dec. 31,
                                                 2010             2009
     ASSETS
     Current assets:
       Cash and cash equivalents                $801,504       $2,016,981
       Short-term investments                    340,495          225,000
       Accounts receivable, net                1,420,731        1,116,035
       Inventories, net                        1,951,732        1,312,903
       Other current assets                      672,471          511,329
                                                 -------          -------

                         Total current
                          assets               5,186,933        5,182,248

     Property, plant and
      equipment, net                           3,903,903        4,013,836

     Goodwill                                  1,828,058        1,803,021

     Other intangible assets,
      net                                        886,164          902,922

     Other assets                                883,122          669,877
                                                 -------          -------

                         Total assets        $12,688,180      $12,571,904


     LIABILITIES
     Current liabilities:
       Short-term debt                            $2,599           $1,748
       Long-term debt due
        within one year                                -            6,000
       Accounts payable                          887,086          707,038
       Salaries, wages and
        related accruals                         222,904          154,997
       Accrued expenses and
        other current
        liabilities                              399,368          357,274
                                                 -------          -------

                         Total current
                          liabilities          1,511,957        1,227,057

     Long-term debt due after
      one year                                 3,080,200        3,080,200

     Deferred credits and
      other liabilities                          640,916          680,358
                                                 -------          -------

                         Total
                          liabilities          5,233,073        4,987,615


     EQUITY
     Nucor stockholders'
      equity:
       Common stock                              150,094          149,877
       Additional paid-in
        capital                                1,691,303        1,675,777
       Retained earnings                       7,013,528        7,120,218
       Accumulated other
        comprehensive loss,
                         net of income
                          taxes                  (98,346)         (41,056)
       Treasury stock                         (1,510,186)      (1,514,290)
                                              ----------       ----------
                         Total Nucor
                          stockholders'
                          equity               7,246,393        7,390,526

     Noncontrolling interests                    208,714          193,763
                                                 -------          -------

                         Total equity          7,455,107        7,584,289


                         Total
                          liabilities
                          and equity         $12,688,180      $12,571,904


        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
        -----------------------------------------------------------
                               (In thousands)

                                                 Six Months (26 Weeks)
                                                         Ended
                                                 ---------------------

                                                July 3,         July 4,
                                                  2010            2009
                                               --------        --------

    Operating activities:
      Net earnings (loss)                        $147,412      $(318,294)
      Adjustments:
        Depreciation                              255,262        242,475
        Amortization                               35,855         36,001
        Stock-based compensation                   25,246         31,660
        Deferred income taxes                       4,178        (31,659)
        Equity in losses of unconsolidated
         affiliates                                25,749         59,798
        Changes in assets and liabilities
         (exclusive of acquisitions):
          Accounts receivable                    (290,542)       278,055
          Inventories                            (628,941)     1,147,421
          Accounts payable                        178,286       (121,847)
          Federal income taxes                    (19,886)      (285,735)
          Salaries, wages and related accruals     72,791       (392,276)
          Other                                   (99,169)       (12,647)
                                                  -------        -------

    Cash provided by (used in) operating
     activities                                  (293,759)       632,952
                                                 --------        -------

    Investing activities:
      Capital expenditures                       (163,219)      (240,428)
      Investment in and advances to
       affiliates                                (402,391)       (57,904)
      Repayment of advances to affiliates          48,885              -
      Disposition of plant and equipment           15,522          8,610
      Acquisitions (net of cash acquired)         (63,722)       (24,714)
      Purchases of investments                   (240,495)      (136,389)
      Proceeds from the sale of
       investments                                125,000              -
                                                  -------            ---

    Cash used in investing activities            (680,420)      (450,825)
                                                 --------       --------

    Financing activities:
      Net change in short-term debt                   852         (2,694)
      Repayment of long-term debt                  (6,000)      (175,000)
      Issuance of common stock                      1,777          1,518
      Excess tax benefits from stock-
       based compensation                          (2,200)          (700)
      Distributions to noncontrolling
       interests                                  (10,511)       (83,223)
      Cash dividends                             (228,465)      (221,127)
                                                 --------       --------

    Cash used in financing activities            (244,547)      (481,226)
                                                 --------       --------

    Effect of exchange rate changes on
     cash                                           3,249          4,172
                                                    -----          -----

    Decrease in cash and cash
     equivalents                               (1,215,477)      (294,927)

    Cash and cash equivalents -
     beginning of year                          2,016,981      2,355,130
                                                ---------      ---------

    Cash and cash equivalents -end of
     six months (1)                              $801,504     $2,060,203
                                                 ========     ==========


    (1)  Cash and cash equivalents balance at April 3, 2010 was
    $1,659,589.

SOURCE Nucor Corporation

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