Nucor 2011 Annual Report Download - page 55

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54
Derivatives Not Designated as Hedging Instruments
(in thousands)
Derivatives Not Designated
as Hedging Instruments
Statement of Earnings
Location
Amount of Gain or (Loss) Recognized
in Earnings on Derivative
2011 2010 2009
Commodity contracts Cost of products sold $11,757 $(1,417) $(4,887)
Foreign exchange contracts Cost of products sold (665) 907 (3,050)
Total $11,092 $ (510) $(7,937)
At December 31, 2011, natural gas swaps covering 3.6 million MMBTUs and foreign currency contracts with a notional value of $9.2 million
were outstanding.
At December 31, 2011, $40.7 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, due to the settlement of forecasted transactions,
during the next twelve months assuming no change in the forward commodity prices from December 31, 2011. As of December 31, 2011,
Nucor is hedging a portion of its exposure to the variability of future cash flows for forecasted natural gas purchases over the next year.
Nucor has also entered into various natural gas purchase contracts, which effectively commit Nucor to the following purchases of natural gas to
be used for production: $91.4 million in 2012; $38.6 million in 2013; $29.2 million in 2014; $28.3 million in 2015; $27.9 million in 2016; and
$373.6 million between 2017 and 2028. These natural gas purchase contracts will primarily supply our direct reduced iron facility in Trinidad.
Nucor does not anticipate non-performance by the counterparties in any of these derivative instruments given their current credit ratings, and
no material loss is expected from non-performance by any one of such counterparties.
15. FAIR VALUE MEASUREMENTS
The following table summarizes information regarding Nucor’s financial assets and financial liabilities that are measured at fair value as of
December 31, 2011. Nucor doe s not currently have any non-financial asset s or liabilities that are me asure d at fair value on a recurring basis.
(in thousands)
Fair Value Measurements at Reporting Date Using
December 31,
Carrying
Amount in
Consolidated
Balance Sheets
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
Significant
Other Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
2011
Assets:
Cash equivalents $1,012,122 $1,012,122 $ —
Short-term investments 1,362,641 1,362,641 —
Commodity contracts 5,071 — 5,071
Restricted cash and investments 585,833 585,833 —
Total assets $2,965,667 $2,960,596 $ 5,071 —
Liabilities:
Foreign exchange and
commodity contracts $ (21,434) — $(21,434) —
2010
Assets:
Cash equivalents $1,156,240 $1,156,240 $ —
Short-term investments 1,153,623 1,153,623 —
Foreign exchange contracts 266 — 266
Restricted cash 598,482 598,482 —
Total assets $2,908,611 $2,908,345 $ 266 —
Liabilities:
Commodity contracts $ (66,661) — $(66,661) —