73309--3/7/2006--NUCOR

related topics

{cost, regulation, environmental}

{operation, international, foreign}

{operation, natural, condition}

{gas, price, oil}

{acquisition, growth, future}

{competitive, industry, competition}

{condition, economic, financial}

{regulation, change, law}

{property, intellectual, protect}

{financial, litigation, operation}

{cost, contract, operation}

Many of the factors that affect our business and operations involve risk and uncertainty. The factors described below are some of the risks that could materially negatively affect our business, financial condition and results of operations. Our industry is cyclical and prolonged economic declines could have a material adverse effect on our business. Overcapacity in the steel industry could increase the level of steel imports which may negatively affect our business, results of operations and cash flows. Global steel-making capacity exceeds global consumption of steel products. This excess capacity results in manufacturers in certain countries exporting significant amounts of steel at prices below their cost of production. These imports, which are also affected by demand in the domestic market, international currency conversion rates and domestic and international government actions, can result in downward pressure on steel prices, which could materially adversely affect our business, results of operations, financial condition and cash flows. Overcapacity in China, the world s largest producer and consumer of steel, has the potential to cause steel dumping in U.S. markets. A significant decrease in China s rate of economic expansion could reduce demand for steel products in that country, resulting in China increasing steel exports. The results of our operations are sensitive to volatility in steel prices and changes in the cost of raw materials, particularly scrap steel. We rely to a substantial extent on outside vendors to supply us with raw materials that are critical to the manufacture of our products. We acquire our primary raw material, steel scrap, from numerous sources throughout the country. Although we believe that the supply of scrap is adequate to operate our facilities, purchase prices of these critical raw materials are subject to volatility. At any given time, we may be unable to obtain an adequate supply of these critical raw materials with price and other terms acceptable to us. Changes in the availability and cost of electricity and natural gas are subject to volatile market conditions that could adversely affect our business. We plan to continue to implement acquisition strategies and may encounter difficulties in integrating these businesses. We plan to continue to seek attractive opportunities to acquire businesses, enter into joint ventures and make other investments that are complementary to our existing strengths. Realization of the anticipated benefits of acquisitions or other transactions will depend on our ability to integrate these transactions with our operations and to cooperate with our strategic partners. Our business, results of operations, financial condition and cash flows could be materially and adversely affected if we are unable to successfully integrate these businesses. In addition, we may enter into joint ventures or acquisitions located outside the U.S., which may be adversely affected by foreign currency fluctuations, changes in economic conditions and changes in local government regulations and policies. Some of our competitors who have emerged from bankruptcy have lowered their operating costs, which could negatively impact our competitive position. Competition from other materials may materially adversely affect our business. In many applications, steel competes with other materials, such as aluminum, cement, composites, glass, plastic and wood. Increased use of these materials in substitution for steel products could materially adversely affect prices and demand for our steel products. Our operations are subject to business interruptions and casualty losses. The steel-making business is subject to numerous inherent risks, particularly unplanned events such as explosions, fires, other accidents, inclement weather and transportation interruptions. While our insurance coverage could offset losses relating to some of those types of events, our results of operations and cash flows could be adversely impacted to the extent any such losses are not covered by our insurance. Our business requires substantial capital investment and maintenance expenditures, and our capital resources may not be adequate to provide for all of our cash requirements. Environmental compliance and remediation could result in substantially increased costs and materially adversely impact our competitive position. Our operations are subject to numerous federal, state and local laws and regulations relating to protection of the environment, and we, accordingly, make provision for the estimated costs of compliance. These laws are evolving and becoming increasingly stringent, resulting in inherent uncertainties in these estimates. We have agreed to a comprehensive consent decree with the United States Environmental Protection Agency and certain states in order to resolve alleged past environmental violations. Under the terms of the consent decree, we are conducting tests at some of our facilities, performing corrective action where necessary, and piloting certain pollution control technologies. The accrued environmental costs include the expenses that we expect to incur as a result of the consent decree. We believe our competitors are subject to similar environmental laws and regulations. The specific impact on each competitor may vary, however, depending upon a number of factors, including the age and location of operating facilities, production processes (such as a mini-mill versus an integrated producer) and the specific products and services it provides. To the extent that competitors, particularly foreign steel producers and manufacturers of competitive products, are not required to incur equivalent costs, our competitive position could be materially adversely impacted.

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73309--3/7/2006--NUCOR_CORP