DERIVATIVES |
9. |
DERIVATIVES: Nucor
periodically uses derivative financial instruments 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 periodically uses derivatives 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
October 4, 2014, natural gas swaps covering approximately
16.0 million MMBTUs (extending through February 2017) were
outstanding.
The
following tables summarize information regarding Nucor’s
derivative instruments (in thousands):
Fair
Value of Derivative Instruments
|
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|
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|
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Fair Value
at |
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Balance Sheet Location
|
|
Oct. 4,
2014 |
|
|
Dec. 31,
2013 |
|
Asset derivatives not
designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Other current assets |
|
$ |
1,384 |
|
|
$ |
— |
|
Foreign exchange
contracts
|
|
Other current assets |
|
|
57 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Total asset
derivatives
|
|
|
|
$ |
1,441 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Liability derivatives
designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Accrued expenses and other current
liabilities |
|
|
(1,700 |
) |
|
|
— |
|
Commodity
contracts
|
|
Deferred credits and other liabilities |
|
|
(100 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liability
derivatives designated as hedging instruments
|
|
|
|
|
(1,800 |
) |
|
|
— |
|
Liability derivatives
not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
Commodity
contracts
|
|
Accrued expenses and other current
liabilities |
|
|
— |
|
|
|
(553 |
) |
Foreign exchange
contracts
|
|
Accrued expenses and other current
liabilities |
|
|
— |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total liability
derivatives not designated as hedging instruments
|
|
|
|
|
— |
|
|
|
(555 |
) |
Total liability
derivatives
|
|
|
|
$ |
(1,800 |
) |
|
$ |
(555 |
) |
|
|
|
|
|
|
|
|
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The
Effect of Derivative Instruments on the Condensed Consolidated
Statements of Earnings
Derivatives Designated as Hedging
Instruments
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|
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Derivatives in Cash Flow Hedging
Relationships
|
|
Statement of
Earnings Location
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Recognized in OCI
on Derivatives
(Effective Portion) |
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Reclassified from
Accumulated OCI into
Earnings
(Effective Portion) |
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Recognized
in
Earnings
on
Derivatives
(Ineffective Portion) |
|
|
|
Three Months
(13 weeks) Ended |
|
|
Three Months
(13 weeks) Ended |
|
|
Three Months
(13 weeks) Ended |
|
|
|
Oct. 4,
2014 |
|
|
Sept. 28, 2013 |
|
|
Oct. 4,
2014 |
|
|
Sept. 28, 2013 |
|
|
Oct. 4,
2014 |
|
|
Sept. 28, 2013 |
|
Commodity
contracts
|
|
Cost of products sold |
|
$ |
103 |
|
|
$ |
— |
|
|
$ |
(197 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in Cash Flow Hedging
Relationships
|
|
Statement
of
Earnings Location
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Recognized
in OCI
on Derivatives
(Effective
Portion) |
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Reclassified from
Accumulated OCI into
Earnings
(Effective
Portion) |
|
|
Amount of
Gain
or
(Loss),
net of
tax,
Recognized
in
Earnings
on
Derivatives
(Ineffective Portion) |
|
|
|
Nine Months
(39 weeks) Ended |
|
|
Nine Months
(39 weeks) Ended |
|
|
Nine Months
(39 weeks) Ended |
|
|
|
Oct. 4, 2014 |
|
|
Sept. 28, 2013 |
|
|
Oct. 4, 2014 |
|
|
Sept. 28, 2013 |
|
|
Oct. 4, 2014 |
|
|
Sept. 28, 2013 |
|
Commodity
contracts
|
|
Cost of products sold |
|
$ |
(1,530 |
) |
|
$ |
— |
|
|
$ |
(430 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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 |
|
|
|
Oct. 4,
2014 |
|
|
Sept. 28,
2013 |
|
|
Oct. 4,
2014 |
|
|
Sept. 28,
2013 |
|
Commodity
contracts
|
|
Cost of products sold |
|
$ |
844 |
|
|
$ |
(789 |
) |
|
$ |
1,282 |
|
|
$ |
4,193 |
|
Foreign exchange
contracts
|
|
Cost of products sold |
|
|
314 |
|
|
|
134 |
|
|
|
266 |
|
|
|
253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$ |
1,158 |
|
|
$ |
(655 |
) |
|
$ |
1,548 |
|
|
$ |
4,446 |
|