Nucor 2011 Annual Report Download - page 56

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Fair value measurements for Nucor’s cash equivalents, short-term investments and restricted cash and investments are classified under
Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Fair value measurements
for Nucor’s derivatives are classified under Level 2 because such measurements are based on published market prices for similar assets
or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices and spot
and future exchange rates.
The fair value of short-term and long-term debt, including current maturities, was approximately $4.76 billion at December 31, 2011
($4.59 billion at December 31, 2010). The fair value estimates were based on readily available market prices of our debt at December 31,
2011 and 2010, or similar debt with the same maturities, rating and interest rates.
16. CONTINGENCIES
Nucor is subject to environmental laws and regulations established by federal, state and local authorities, and, accordingly, makes
provision for the estimated costs of compliance. Of the undiscounted total of $31.4 million of accrued environmental costs at
December 31, 2011 ($35.0 million at December 31, 2010), $14.4 million was classified in accrued expenses and other current
liabilities ($13.5 million at December 31, 2010) and $17.0 million was classified in deferred credits and other liabilities ($21.5 million
at December 31, 2010). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation
technology, and changing governmental regulations and legal standards.
Nucor has been named, along with other major steel producers, as a co-defendant in several related antitrust class-action complaints
filed by Standard Iron Works and other steel purchasers in the United States District Court for the Northern District of Illinois. The
plaintiffs allege that from January 2005 through 2008, eight steel manufacturers, including Nucor, engaged in anticompetitive
activities with respect to the production and sale of steel. The plaintiffs seek monetary and other relief. Although we believe the
plaintiffs’ claims are without merit and will vigorously defend against them, we cannot at this time predict the outcome of this litigation
or estimate the range of Nucor’s potential exposure.
Other contingent liabilities with respect to product warranties, legal proceedings and other matters arise in the normal course of
business. Nucor maintains liability insurance for certain risks that arise that are also subject to certain self-insurance limits. Although
the outcome of the claims and proceedings against us cannot be predicted with certainty, management believes that there are no
existing claims or proceedings that are likely to have a material adverse effect on the consolidated financial statements.
17. STOCK-BASED COMPENSATION
Stock Options Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at
100% of the market value on the date of the grant. The stock options granted prior to 2006 were exercisable six months after grant
date and have a term of seven years. The stock options granted in 2010 and 2011 are exercisable at the end of three years and have
a term of ten years. Nucor did not grant any options during 2009. New shares are issued upon exercise of stock options.
A summary of activity under Nucor’s stock option plans is as follows:
(shares in thousands)
Year Ended December 31, 2011 2010 2009
Shares
Weighted-
Average
Exercise
Price Shares
Weighted-
Average
Exercise
Price Shares
Weighted-
Average
Exercise
Price
Number of shares under option:
Outstanding at beginning of year 983 $29.14 1,060 $21.95 1,299 $20.80
Granted 560 $42.34 242 $41.43 — —
Exercised (387) $20.96 (319) $14.60 (239) $15.69
Canceled — — — — — —
Outstanding at end of year 1,156 $38.26 983 $29.14 1,060 $21.95
Options exercisable at end of year 354 $29.67 741 $25.12 1,060 $21.95