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Nucor Reports Record Results for First Half and Second Quarter of 2006

Posted on: Friday, 21 July 2006, 09:00 CDT

CHARLOTTE, N.C., July 21 /PRNewswire-FirstCall/ -- Nucor Corporation announced today record consolidated net earnings and sales for the first half and second quarter of 2006. Net earnings per share and average shares outstanding for all periods reflect a two-for-one stock split effective in May 2006.

Nucor's consolidated net earnings for the first half of 2006 were $831.9 million ($2.65 per diluted share), an increase of 23% over net earnings of $677.4 million ($2.11 per diluted share) in last year's first half. Consolidated net earnings of $452.8 million ($1.45 per diluted share) in this year's second quarter were an increase of 40% over $322.7 million ($1.01 per diluted share) earned in the second quarter of 2005 and an increase of 19% from the $379.2 million ($1.21 per diluted share) earned in the first quarter of 2006.

In the first half of 2006, Nucor's consolidated net sales increased 14% to $7.35 billion, compared with $6.47 billion in last year's first half. Average sales price per ton was flat while total tons shipped to outside customers increased 14% from the first half of 2005. In the second quarter of 2006, Nucor's consolidated net sales increased 21% to $3.81 billion, compared with $3.15 billion in the second quarter of 2005 and increased 7% compared with $3.55 billion in the first quarter of 2006. Average sales price per ton increased 5% from the second quarter of 2005 and increased 4% from the first quarter of 2006. Total tons shipped to outside customers were a record 5,819,000 tons in the second quarter of 2006, an increase of 15% over the second quarter of 2005 and an increase of 4% over the first quarter of 2006.

The average scrap and scrap substitute cost per ton used in the first half of 2006 was $242, a decrease of 7% compared with $259 in the first half of 2005. The average scrap and scrap substitute cost per ton used in the second quarter of 2006 was $247, flat compared with $246 in the second quarter of 2005 and an increase of 4% compared with $237 in the first quarter of 2006. Total energy costs increased approximately $3 per ton from the first half of 2005 to the first half of 2006, decreased $1 per ton from the second quarter of 2005 to the second quarter of 2006, and decreased $4 per ton from the first quarter of 2006 to the second quarter of 2006.

Nucor incurred a charge to value inventories using the last-in, first-out (LIFO) method of accounting of $24.5 million in the first half of 2006, compared with a credit of $96.0 million in the first half of 2005. In the second quarter of 2006, the LIFO charge was $15.5 million, compared with a credit of $69.9 million in the second quarter of 2005.

In the steel mills segment, steel production increased 15% to 11,519,000 tons in the first half of 2006, compared with 10,051,000 tons produced in the first half of 2005. Total steel shipments increased 14% to 11,616,000 tons in the first half of 2006, compared with 10,146,000 tons in last year's first half. Steel shipments to outside customers increased 14% to 10,713,000 tons in the first half of 2006, compared with 9,381,000 tons in last year's first half. In the steel products segment, steel joist production during the first half of 2006 increased to 281,000 tons, compared with 262,000 tons in the first half of 2005. Steel deck sales decreased to 179,000 tons in the first half of 2006, compared with 181,000 tons in last year's first half. Cold finished steel sales increased to 187,000 tons, compared with 176,000 tons in the first half of 2005.

Starting with the August 11, 2006 dividend payment, Nucor is increasing the supplemental dividend rate from $0.25 per share to $0.50 per share. This supplemental dividend is in addition to the $0.10 per share base dividend, for a total dividend of $0.60 per share.

Nucor repurchased approximately 3.6 million shares of Nucor's common stock at a cost of approximately $186.4 million under a publicly announced stock repurchase program during the second quarter of 2006, and repurchased approximately 3.8 million shares at a cost of about $196.7 million during the first half of 2006. Approximately 22.0 million shares remain authorized for repurchase under the current program. Since the first quarter of 2005, Nucor has purchased approximately 15.0 million shares of Nucor's common stock.

In May 2006, Nucor's wholly owned subsidiary, Nucor Steel Connecticut, Inc., purchased substantially all of the assets of Connecticut Steel Corporation for a cash purchase price of approximately $43.9 million. Located in Wallingford, Connecticut, this bar products mill has an annual capacity of approximately 300,000 tons of wire rod and rebar and approximately 85,000 tons of wire mesh fabrication and structural mesh fabrication.

Also in May 2006, Nucor announced plans to construct its fourth facility to produce metal building systems and components. The facility will be located in the western United States and will have an annual capacity of approximately 45,000 tons. It is expected to cost approximately $27 million and to employ more than 200 people.

In June 2006, Nucor announced plans to construct its fourth sheet steel galvanizing facility which will be located at Nucor's sheet mill in Decatur, Alabama. Annual capacity will be approximately 500,000 tons, and the facility will have the ability to produce 72-inch wide sheet. Total cost is estimated to be approximately $150 million.

In July 2006, Nucor announced plans to construct a steel mill in the southern United States that will produce special bar quality products. The facility will have a capacity of approximately 850,000 tons and will produce high quality carbon and alloy rounds and round cornered squares from 3" to 9" for the automotive, heavy equipment and service center markets. Several locations are currently under consideration.

For all three recently announced projects, construction is expected to begin after satisfactory resolution of site location, regulatory approvals, tax matters and various contracts.

Current orders and backlogs are healthy across all product lines. The strong business conditions experienced in the second quarter should continue through the third quarter and well into the fourth quarter. We expect that earnings for the third quarter will continue to be very strong.

Nucor and affiliates are manufacturers of steel products, with operating facilities in seventeen states. Products produced are: carbon and alloy steel - in bars, beams, sheet and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor is the nation's largest recycler.

Certain statements contained in this news release are "forward-looking statements" that involve risks and uncertainties. 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 pressure 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, 2005 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 21, 2006 at 2:00 pm eastern time. The conference call will be available over the Internet at http://www.nucor.com/, under Investor Relations.

Unaudited figures are as follows: CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share data) Six Months (26 Weeks) Three Months (13 Weeks) Ended Ended July 1, July 2, July 1, July 2, 2006 2005 2006 2005 NET SALES $7,351,447 $6,467,624 $3,806,350 $3,145,003 COSTS, EXPENSES AND OTHER: Cost of products sold 5,705,017 5,153,320 2,925,975 2,524,892 Marketing, administrative and other expenses 289,802 215,448 146,602 97,819 Interest (income) expense, net (15,320) 6,474 (9,588) 2,341 Minority interests 88,932 51,680 48,606 20,515 Other income - (9,200) - - 6,068,431 5,417,722 3,111,595 2,645,567 EARNINGS BEFORE INCOME TAXES 1,283,016 1,049,902 694,755 499,436 Provision for income taxes 451,072 372,529 241,972 176,729 NET EARNINGS $831,944 $677,373 $452,783 $322,707 NET EARNINGS PER SHARE: Basic $2.68 $2.13 $1.46 $1.02 Diluted $2.65 $2.11 $1.45 $1.01 AVERAGE SHARES OUTSTANDING: Basic 310,435 317,751 310,243 316,000 Diluted 313,352 320,607 312,955 318,634 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) July 1, 2006 Dec. 31, 2005 Assets CURRENT ASSETS: Cash and cash equivalents $883,321 $980,150 Short-term investments 1,270,808 857,360 Accounts receivable, net 1,224,390 1,000,629 Inventories 1,050,485 945,054 Other current assets 268,451 288,360 Total current assets 4,697,455 4,071,553 PROPERTY, PLANT AND EQUIPMENT, NET 2,825,107 2,855,717 OTHER ASSETS 223,191 211,517 TOTAL ASSETS $7,745,753 $7,138,787 Liabilities and stockholders' equity CURRENT LIABILITIES: Long-term debt due within one year $1,250 $1,250 Accounts payable 712,999 501,624 Salaries, wages and related accruals 325,925 368,568 Accrued expenses and other current liabilities 474,535 384,257 Total current liabilities 1,514,709 1,255,699 LONG-TERM DEBT DUE AFTER ONE YEAR 922,300 922,300 DEFERRED CREDITS AND OTHER LIABILITIES 456,580 486,910 MINORITY INTERESTS 201,331 194,090 STOCKHOLDERS' EQUITY: Common stock 148,798 74,120 Additional paid-in capital 166,586 191,850 Retained earnings 5,246,265 4,709,111 Unearned compensation - (3,287) Accumulated other comprehensive income, net of income taxes 18,370 46,600 5,580,019 5,018,394 Treasury stock (929,186) (738,606) Total stockholders' equity 4,650,833 4,279,788 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,745,753 $7,138,787 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months (26 Weeks) Ended July 1, 2006 July 2, 2005 Operating activities: Net earnings $831,944 $677,373 Adjustments: Depreciation 182,488 185,271 Deferred income taxes (45,900) (33,071) Minority interests 88,919 51,669 Settlement of natural gas hedges (3,868) - Changes in (exclusive of acquisitions): Current assets (267,462) 146,258 Current liabilities 147,752 (67,945) Other 6,636 (10,163) Cash provided by operating activities 940,509 949,392 Investing activities: Capital expenditures (137,316) (147,098) Investment in affiliates (26,756) (32,523) Disposition of plant and equipment 1,674 611 Acquisitions (net of cash acquired) (43,879) (152,864) Purchases of short-term investments (594,633) - Proceeds from sales of short-term investments 181,185 - Cash used in investing activities (619,725) (331,874) Financing activities: Issuance of common stock 44,240 26,400 Excess tax benefits from stock- based compensation 10,500 - Distributions to minority interests (81,678) (29,772) Cash dividends (210,019) (126,602) Acquisition of treasury stock (180,656) (205,838) Cash used in financing activities (417,613) (335,812) Increase (decrease) in cash and cash equivalents (96,829) 281,706 Cash and cash equivalents - beginning of year 980,150 779,049 Cash and cash equivalents - end of six months $883,321 $1,060,755

Nucor Corporation

CONTACT: Nucor Executive Offices, +1-704-366-7000, or fax,+1-704-362-4208

Web site: http://www.nucor.com/

Source: PRNewswire-FirstCall

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