Nucor 2011 Annual Report Download - page 27

26
EARNINGS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Earnings before income taxes and noncontrolling interests by segment for 2011 and 2010 are as follows:
(in thousands)
Year Ended December 31, 2011 2010
Steel mills $1,703,933 $778,946
Steel products (60,282) (173,433)
Raw materials 150,029 106,317
All other 4,296 4,344
Corporate/eliminations (546,164) (449,059)
Earnings before income taxes and
noncontrolling interests $1,251,812 $267,115
Earnings before income taxes and noncontrolling interests in the steel mills segment for 2011 more than doubled over 2010 because
of increased utilization rates, increased sales prices and metal margins, decreased pre-operating and start-up costs and decreased
losses from unconsolidated affiliates. Nucor benefited from our diversified product mix in 2011, in which our sheet, bar, plate and
beam mills all improved their profitability compared to 2010. Our plate and bar mills had the largest increases in profitability, while
our sheet and beam mills also contributed solid profitability growth.
Loss before income taxes and noncontrolling interests in the steel products segment in 2011 decreased from 2010. The strongest
performer in the steel products segment continues to be the cold finished business due to improved demand in the heavy equipment
and transportation markets. Our downstream fabricated construction products continued to operate in very depressed markets;
however, we are seeing small but encouraging signs of improvement in our construction products business.
The profitability of our raw materials segment, particularly DJJ, increased over 2010 as higher selling prices in the scrap market
allowed for margin enhancement.
NONCONTROLLING INTERESTS
Noncontrolling interests represent the income attributable to the minority interest partners of Nucor’s joint ventures, primarily Nucor-
Yamato Steel Company (NYS) and Barker Steel Company, Inc., of which Nucor owns 51% and 90%, respectively. The 15% increase
in earnings attributable to noncontrolling interests was primarily attributable to the increased earnings of NYS, which were due to
improvements in the structural steel market. Under the NYS limited partnership agreement, the minimum amount of cash to be
distributed each year to the partners is the amount needed by each partner to pay applicable U.S. federal and state income taxes.
PROVISION FOR INCOME TAXES
The effective tax rate in 2011 was 31.2% compared with 22.8% in 2010. The change in the rate between 2010 and 2011 was
primarily due to the changes in relative proportions of net earnings attributable to noncontrolling interests, state income tax benefit
and foreign tax benefit to total pre-tax earnings. Nucor has concluded U.S. federal income tax matters for years through 2006. The
2008 through 2011 tax years are open to examination by the Internal Revenue Service. The years 2004 and 2007 are open to the
extent net operating losses were carried back. The Canada Revenue Agency has completed an audit examination for the periods
2006 to 2008 for Harris Steel Group Inc. and subsidiaries with immaterial adjustments to the income tax returns. The tax years 2008
through 2011 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other
state and local jurisdictions).