01—Abstract
Summary
Summary of the 10-K filed March 23, 2000. Cited figures are marked; the original filing is the authoritative source.
Nucor Corporation's 10-K for fiscal year 1999 reports net sales of $4.01 billiona, down from $4.15 billion in 1998, and net earnings of $244.6 million, or $2.80 per share, versus $263.7 million, or $3.00 per share, a year earlier.
The filing attributes the decline in sales and earnings primarily to decreased sales prices, which followed a period of significantly increased steel imports, many at dumping prices, during 1998 and the first half of 1999. Raw material costs fell 20%b in 1999, and the company reports a record production of 10,376,000 tons, up 8% from 1998. Return on average equity was 11.3%, compared with 13.4% in 1998.
Nucor's balance sheet strengthened during the year. Working capital rose 57% to $1.01 billionc, the current ratio reached 2.9, and cash and short-term investments increased to $572.2 million, largely from a $175 million notes issuance due 2009. Long-term debt to total capital rose to 13.3% from 8.4%.
Capital expenditures were $374.7 milliond in 1999, and the company expects more than $400 million in 2000. Major projects under construction include a 1,000,000-ton steel plate mill in Hertford County, North Carolina, costing over $350 million, with start-up expected in the third quarter of 2000, and a second caster at the Berkeley County, South Carolina sheet mill.
The company's management states that it expects to continue generating above-average earnings from steelmaking and anticipates steel production to increase significantly over the next several years, with potential capacity exceeding 13,000,000 tons per year. Nucor reports only one business segment, steel products, and the filing discloses no material pending legal proceedings beyond a $340,000 air emissions penalty paid in the fourth quarter of 1999.
02—Key points
Key Highlights
- Net sales declined to $4,009,346,082 in 1999 from $4,151,232,283 in 1998, attributed to decreased sales prices.
- Net earnings were $244,589,094, or $2.80 per share, compared with $263,708,596, or $3.00 per share, in 1998.
- Record steel production of 10,376,000 tons in 1999, up 8% from 9,642,000 tons in 1998.
- Cash provided by operating activities was $604,834,349, and cash and short-term investments ended the year at $572,185,451.
- Long-term debt rose to $390,450,000 after a $175 million 6% notes issuance due 2009; long-term debt to total capital was 13.3%, versus 8.4% in 1998.
- Capital expenditures were $374,717,759 in 1999 and are expected to exceed $400 million in 2000, with a $350 million plate mill in North Carolina slated to start in Q3 2000.
- Backlog of orders was about $1,033,000,000 at December 31, 1999, up from about $710,000,000 at December 31, 1998.
03—Questions
Frequently Asked Questions
Why did Nucor's sales and earnings decline in 1999?
The filing states that the decrease in 1999 sales resulted from decreased sales prices, and the decrease in earnings resulted primarily from decreased sales prices. It notes that imports of steel increased significantly during 1998 and the first two quarters of 1999, much of it at dumping prices, and that the effects of dumped imports decreased in the latter part of 1999. Raw material costs fell 20% in 1999.
How strong is Nucor's financial position?
Working capital increased 57% to $1.01 billion, and the current ratio was 2.9 in 1999, up from 2.3 in 1998. Stockholders' equity was $2,262,247,906 at year end. The filing states that Nucor has the financial ability to borrow significant additional funds and still maintain reasonable leverage, and that unused long-term credit facilities total $248 million.
What are Nucor's plans for growth and capital spending?
Capital expenditures are projected to exceed $400 million in 2000. Projects include a 1,000,000-ton steel plate mill in Hertford County, North Carolina, costing over $350 million, a second caster at the Berkeley County, South Carolina sheet mill costing more than $40 million, and a second cold rolling facility there costing about $40 million. Nucor also anticipates additional steel mill expansions and new mills that could raise annual capacity to more than 13,000,000 tons.
Does Nucor face material legal or environmental liabilities?
The filing states that involvement in judicial and administrative proceedings is considered immaterial. In the fourth quarter of 1999, Nucor paid $340,000 for violating air emissions standards at its Blytheville, Arkansas facility. Nucor states that it cannot estimate the costs to comply with any regulatory findings but does not believe there will be a material effect on its financial condition.
What does Nucor's management expect for future performance?
Management states that steel will continue to be a key factor in Nucor's future performance and that total steel production is anticipated to increase significantly over the next several years from the 10,376,000 tons produced in 1999. The company expects to continue generating above-average earnings from its steelmaking operations.
04—Continue