2004 ANNUAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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In the steel mills segment, total steel shipments increased 31% to 17,656,000 tons in 2003, compared with 13,438,000 tons in
the previous year. Steel sales to outside customers increased 32% to 16,263,000 tons in 2003, compared with 12,314,000 tons
in 2002. In the steel products segment, steel joist production for 2003 was 503,000 tons, compared with 462,000 tons in the
previous year. Steel deck sales were 353,000 tons, compared with 330,000 tons in 2002. Cold finished steel sales were 237,000
tons in 2003, compared with 226,000 tons in the previous year.
COST OF PRODUCTS SOLD
The average volume of raw materials used increased 24% from 2002 to 2003, consisting of an increase of 27% in the steel mills
segment and an increase of 5% in the steel products segment. The average price of raw materials increased 19% from 2002 to
2003. The average price of raw materials in the steel mills segment and the steel products segment increased 21% and 5%,
respectively, from 2002 to 2003. The average scrap and scrap substitute cost per ton used in our steel mills segment was $137
in 2003, an increase of 25% from $110 in 2002.
Nucor incurred a charge to value inventories using the LIFO method of accounting of $115.0 million in 2003 (including a LIFO
charge of $17.6 million for Nucor-Yamato Steel Company, of which Nucor owns 51%), compared with a charge of $34.3 million
in 2002 (including a LIFO charge of $50,000 for Nucor-Yamato Steel Company).
Total energy costs increased approximately $4 per ton from 2002 to 2003; however, because of the high efficiency of Nucor steel
mills, these energy costs were less than 10% of the sales dollar in 2003 and 2002.
Nucor made approximately $6.0 million in cash payments for environmental remedial efforts during 2002 and made approximately
$22.9 million in net reductions to environmental reserves. In 2003, Nucor made approximately $19.0 million in cash payments
for remedial efforts and reduced reserves by approximately $8.3 million. The most significant components of the decreases in
environmental reserves in 2002 and 2003 related to an agreement with the USEPA that certain technologies identified in the
consent decree are not feasible and a favorable court ruling that implicated additional potentially responsible parties for the
cleanup of an off-site waste-recycling facility.
GROSS MARGIN
Gross margins decreased from 10% in 2002 to 4% in 2003. 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 Nucor facilities. Pre-operating and start-up costs
of new facilities increased 39% to $117.5 million in 2003, compared with $84.4 million in 2002. In 2003, these costs primarily
related to the start-up of the sheet mill in Decatur, Alabama, and the Castrip facility at our sheet mill in Crawfordsville, Indiana.
In 2002, these costs were attributable to the start-up of the Castrip facility, the Vulcraft facility in Chemung, New York, and Nucor
Steel Decatur, LLC.
MARKETING, ADMINISTRATIVE AND OTHER EXPENSES
Unit freight costs decreased 1% from 2002 to 2003. Profit sharing costs, which are based upon and fluctuate with pre-tax
earnings, decreased 40% from 2002 to 2003.
INTEREST EXPENSE
Net interest expense is detailed below (in thousands):
Year Ended December 31, 2003 2002
Interest expense $27,152 $22,918
Interest income (2,525) (8,632)
Interest expense, net $24,627 $14,286
Interest expense, net of interest income, increased from 2002 to 2003 primarily due to an increase in average long-term debt and
a decrease in average short-term investments. In 2003, Nucor redeemed $61.3 million aggregate principal amount of fixed rate
industrial revenue bonds and reissued debt in the form of new variable rate industrial revenue bonds in like principal amount. The
variable rates of these reissued bonds are currently several percentage points lower than the fixed rates of the redeemed bonds.
MINORITY INTERESTS
Income attributable to minority interests decreased from $79.5 million in 2002 to $23.9 million in 2003. Cash distributions to
minority interests decreased from $146.7 million in 2002 to $63.3 million in 2003.