| DERIVATIVES |
| 9. |
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 to scrap,
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.
The
following tables summarize information regarding Nucor’s
derivative instruments (in thousands):
Fair
Value of Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Fair Value
at |
|
| |
|
Balance
Sheet Location
|
|
Sept. 29, 2012 |
|
|
Dec. 31, 2011 |
|
|
Asset derivatives not
designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Other current
assets
|
|
$ |
— |
|
|
$ |
5,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability derivatives
designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Accrued expenses and
other current liabilities
|
|
$ |
— |
|
|
$ |
(21,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Accrued expenses and
other current liabilities
|
|
|
(1,277 |
) |
|
|
— |
|
|
Foreign exchange
contracts
|
|
Accrued expenses and
other current liabilities
|
|
|
(63 |
) |
|
|
(334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total liability
derivatives not designated as hedging instruments
|
|
|
|
|
(1,340 |
) |
|
|
(334 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liability
derivatives
|
|
|
|
$ |
(1,340 |
) |
|
$ |
(21,434 |
) |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
| |
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Cost of products
sold
|
|
$ |
— |
|
|
$ |
(4,531 |
) |
|
$ |
(10,554 |
) |
|
$ |
(9,023 |
) |
|
$ |
— |
|
|
$ |
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
| |
|
Nine Months (39 weeks) Ended |
|
|
Nine Months (39 weeks) Ended |
|
|
Nine Months (39 weeks) Ended |
|
| |
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Cost of products
sold
|
|
$ |
(2,264 |
) |
|
$ |
(7,230 |
) |
|
$ |
(31,961 |
) |
|
$ |
(27,282 |
) |
|
$ |
500 |
|
|
$ |
600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
Nine Months (39 weeks) Ended |
|
| |
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
Sept. 29, 2012 |
|
|
Oct. 1, 2011 |
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Cost of products sold |
|
$ |
(1,454 |
) |
|
$ |
7,485 |
|
|
$ |
(231 |
) |
|
$ |
9,462 |
|
|
|
|
|
|
|
|
Foreign exchange
contracts
|
|
Cost of products sold |
|
|
(25 |
) |
|
|
721 |
|
|
|
146 |
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$ |
(1,479 |
) |
|
$ |
8,206 |
|
|
$ |
(85 |
) |
|
$ |
9,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
first quarter of 2012, Nucor settled all of its open natural gas
forward purchase contracts that were previously in place. These
settlements will affect earnings over the periods specified in the
original agreements, none of which expire beyond December 31,
2012. At September 29, 2012, $10.6 million of net deferred
losses on cash flow hedges on these contracts included in
accumulated other comprehensive income will be reclassified into
earnings during the next three months.
|