Nucor 2013 Annual Report Download - page 33

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MARKETING, ADMINISTRATIVE AND OTHER EXPENSES
Profit sharing costs decreased from 2011 to 2012. In 2012, profit sharing costs consisted of $77.7 million of contributions, including
the Company’s matching contribution, made to the Company’s Profit Sharing and Retirement Savings Plan for qualified employees
($117.7 million in 2011). Stock-based compensation included in marketing, administrative and other expenses increased 1% to $25.0
million in 2012 compared with $24.7 million in 2011 and includes costs associated with vesting of stock awards granted in prior years.
In 2012, marketing, administrative and other expenses included a charge of $17.6 million for the loss on the sale of the assets of
Nucor Wire Products Pennsylvania, Inc. Also contributing to the increase in marketing, administrative and other expenses in 2012
was the inclusion of Skyline’s results since the acquisition date and a general increase in the steel products segment related to
increased shipments to outside customers.
EQUITY IN LOSSES OF UNCONSOLIDATED AFFILIATES
Nucor incurred equity method investment losses of $13.3 million and $10.0 million in 2012 and 2011, respectively. The increase
in the equity method investment losses is primarily attributable to an increase in losses generated by Duferdofin Nucor S.r.l.
IMPAIRMENT OF NON-CURRENT ASSETS
In 2012, Nucor recorded $30.0 million in charges for impairment of non-current assets compared with $13.9 million in 2011.
In the second quarter of 2012, Nucor incurred a $30.0 million charge related to its equity method investment in Duferdofin Nucor.
The entire impairment charge recorded in 2011 relates to the impairment of Nucor’s investment in a dust recycling joint venture
that has since been terminated (see Note 10 to the Consolidated Financial Statements).
INTEREST EXPENSE (INCOME)
Net interest expense is detailed below:
(in thousands)
Year Ended December 31, 2012 2011
Interest expense $173,503 $178,812
Interest income (11,128) (12,718)
Interest expense, net $162,375 $166,094
The 3% decrease in gross interest expense from 2011 is primarily attributable to a 3% decrease in average debt outstanding and a
slight decrease in the average interest rate. Gross interest income decreased 13% due primarily to a decrease in average investments.
EARNINGS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Earnings before income taxes and noncontrolling interests by segment for 2012 and 2011 are as follows:
(in thousands)
Year Ended December 31, 2012 2011
Steel mills $1,162,270 $1,813,155
Steel products (17,140) (60,282)
Raw materials 55,264 156,180
Corporate/eliminations (347,454) (657,241)
Earnings before income taxes
and noncontrolling interests $ 852,940 $1,251,812
Earnings before income taxes and noncontrolling interests in the steel mills segment for 2012 decreased 36% from 2011. A major
factor behind the decrease is that metal margin dollars decreased from 2011 resulting from the factors described above. Other
factors impacting the profitability of the steel mills segment in 2012 were the $30.0 million impairment charge related to Duferdofin
Nucor and the $48.8 million of inventory-related purchase accounting adjustments related to Skyline. The market conditions that
impacted the steel mills segment include an import surge across most products that began late in 2011 and continued through 2012.
In addition, U.S. sheet steel markets were negatively impacted by new domestic supply that began ramping up production in 2011.
The strongest end markets were manufactured goods, including automotive, energy and heavy equipment.