Question

In the last decade dozens of steel companies went into bankruptcy. This included such firms as Bethlehem Steel who had significant investor losses while workers lost their pension and health care benefits. Meanwhile, Nucor has shown consistent growth and profit. Examine the corporation’s Web site, annual report and 10-K. Pay particular attention to the company’s cash flow statement.

1. Go to the SEC Web site
2. Go to the Filings tab: Company Filings Search.
3. In the company name box enter “Nucor Corp” and search.
4. In the Form Type box enter “10-K” and search.
5. Select the 10-K for 2005 filing date.
6. Select: d10k.htm.

Nucor 2004 Annual Report

Company Web site: Nucor

1. Discuss financial and non-financial reasons why Nucor is able to remain profitable compared to its competitors. Cite your sources in parenthesis for others.
2. Comment on:
   • Financial reasons
   • Non-financial reasons:

Answer 1

There are several reasons for Nucor's success in the metal industry. Below are the key financial and non-financial reasons:

#	Financial reasons	Non-financial reasons
1	Nucor has consistently achieved strong cash generation throughout its operating cycle	Nucor commands the market leadership position in almost all products it sells. This leads to customers paying a premium for its brand value and promise.
2	It has low financial leverage (borrowings), which is also responsible for Nucor having the strongest credit ratings in the sector (A-/Baa1).	Nucor has invested strategically in areas and companies to enable it to move up the value chain and achieve higher control on its business.
3	Nucor has maintains a flexible capital structure; avoiding the risk of over dependence on any one source.	Nucor invests to expand channels to market to increase its market penetration.

Above reasons have enabled Nucor to reward its shareholders regularly. It has returned more than $5.9 billion to its shareholders since the year 2009.