Derivatives

6 Months Ended

Jul. 02, 2011

Derivatives

Derivatives

8. DERIVATIVES: Nucor uses derivative financial instruments from time-to-time primarily to partially manage its exposure to price risk related to natural gas purchases used in the production process as well as copper and aluminum purchased for resale to its customers. In addition, Nucor uses derivatives from time-to-time to partially manage its exposure to changes in interest rates on outstanding debt instruments and uses forward foreign exchange contracts to hedge cash flows associated with certain assets and liabilities, firm commitments and anticipated transactions.

Nucor recognizes all derivative instruments in the condensed consolidated balance sheets at fair value. Any resulting changes in fair value are recorded as adjustments to other comprehensive income (loss), net of tax, or recognized in net earnings, as appropriate.

At July 2, 2011, natural gas swaps covering 12.6 million MMBTUs (extending through December 2012) and foreign currency contracts with a notional value of $11.3 million (extending through August 2011) were outstanding.

The following tables summarize information regarding Nucor's derivative instruments (in thousands):

Fair Values of Derivative Instruments

		Fair Value at
	Balance Sheet Location	July 2, 2011		Dec. 31, 2010
Asset derivatives not designated as hedging instruments:
Commodity contracts	Other current assets	$	2,522	$	—
Foreign exchange contracts	Other current assets		88		266
Total asset derivatives		$	2,610	$	266
Liability derivatives designated as hedging instruments:
Commodity contracts	Accrued expenses and other current liabilities	$	(31,600)	$	(8,900)
Commodity contracts	Deferred credits and other liabilities		(22,700)		(54,800)
Total liability derivatives designated as hedging instruments			(54,300)		(63,700)
Liability derivatives not designated as hedging instruments:
Commodity contracts	Accrued expenses and other current liabilities		—		(2,961)
Total liability derivatives		$	(54,300)	$	(66,661)

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Earnings

Derivatives Designated as Hedging Instruments

Derivatives in Cash Flow Hedging Relationships	Statement of Earnings Location	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)				Amount of Gain or (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion)				Amount of Gain or (Loss) Recognized in Earnings on Derivatives (Ineffective Portion)
		Three Months (13 weeks) Ended				Three Months (13 weeks) Ended				Three Months (13 weeks) Ended
		July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Commodity contracts	Cost of products sold	$	(1,613)	$	(617)	$	(9,199)	$	(9,408)	$	—	$	1,000
Derivatives in Cash Flow Hedging Relationships	Statement of Earnings Location	Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion)				Amount of Gain or (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion)				Amount of Gain or (Loss) Recognized in Earnings on Derivatives (Ineffective Portion)
		Six Months (26 weeks) Ended				Six Months (26 weeks) Ended				Six Months (26 weeks) Ended
		July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010		July 2, 2011		July 3, 2010
Commodity contracts	Cost of products sold	$	(2,699)	$	(23,265)	$	(18,259)	$	(16,199)	$	—	$	1,100

Derivatives Not Designated as Hedging Instruments

Derivatives Not Designated as Hedging Instruments	Statement of Earnings Location	Amount of Gain or (Loss) Recognized in Earnings on  Derivatives
		Three Months (13 weeks) Ended					Six Months (26 weeks) Ended
		July 2, 2011			July 3, 2010		July 2, 2011			July 3, 2010
Commodity contracts	Cost of products sold	$	3,277		$	9,429	$	1,977		$	9,534
Foreign exchange contracts	Cost of products sold		(152	)		71		(592	)		156
Total		$	3,125		$	9,500	$	1,385		$	9,690

At July 2, 2011, $36.6 million of net deferred losses on cash flow hedges on natural gas forward purchase contracts included in accumulated other comprehensive income are expected to be reclassified into earnings upon maturity of the derivatives within the next 12 months at the prevailing values, which may be different from those at July 2, 2011.