Nucor 2013 Annual Report Download - page 34

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33
Losses before income taxes and noncontrolling interests in the steel products segment in 2012 decreased from 2011. The 2012
loss was impacted by the $17.6 million loss on the sale of assets of Nucor Wire Products Pennsylvania, Inc. At our rebar fabrication
businesses, 2012 shipments to outside customers increased 10% over 2011, which led to improved profitability within the segment.
Although the segment experienced market share gains, improved pricing and effective management of costs, the profitability of this
segment was weak due to the continued challenging conditions in the nonresidential construction market.
The profitability of our raw materials segment, particularly DJJ, decreased significantly from 2011 primarily due to margin
compression at the scrap processing operations resulting from falling scrap selling prices and excess shredding capacity.
The improvements in results in Corporate/eliminations in 2012 were primarily due to the change in LIFO from a charge to a credit
and lower profit sharing and incentive compensation costs.
NONCONTROLLING INTERESTS
The 7% increase in noncontrolling interests from 2011 to 2012 was primarily attributable to the increased earnings of NYS, which
were primarily due to increases in volumes and changes in product mix.
PROVISION FOR INCOME TAXES
The effective tax rate in 2012 was 30.5% compared with 31.2% in 2011. The change in the rate between 2011 and 2012 was
primarily due to the change in relative proportions of net earnings attributable to noncontrolling interests to total pre-tax earnings,
a greater benefit in 2012 from the domestic manufacturing deduction and the recognition of a deferred tax asset related to state
tax credit carryforwards and the adjustment of tax expense to previously filed returns.
NET EARNINGS AND RETURN ON EQUITY
Nucor reported net earnings of $504.6 million, or $1.58 per diluted share, in 2012 compared to net earnings of $778.2 million,
or $2.45 per diluted share, in 2011. Net earnings attributable to Nucor stockholders as a percentage of net sales were 3% in 2012
and 4% in 2011. Return on average stockholders’ equity was 7% and 11% in 2012 and 2011, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operating activities provide us with a significant source of liquidity. When needed, we also have external short-
term financing sources available, including the issuance of commercial paper and borrowings under our bank credit facilities. We also
issue long-term debt from time to time.
In 2013, Nucor’s $1.5 billion revolving credit facility was amended and restated to extend the maturity date to August 2018. The
revolving credit facility was undrawn and Nucor had no commercial paper outstanding at December 31, 2013. We believe our financial
strength is a key strategic advantage among domestic steel producers, particularly during recessionary business cycles. We currently
carry the highest credit ratings of any metals and mining company in North America with an A rating from Standard & Poor’s and a Baa1
rating from Moody’s. Based upon these factors, we expect to continue to have adequate access to the capital markets at a reasonable
cost of funds for liquidity purposes when needed. Our credit ratings are dependent, however, upon a number of factors, both qualitative
and quantitative, and are subject to change at any time. The disclosure of our credit ratings is made in order to enhance investors’
understanding of our sources of liquidity and the impact of our credit ratings on our cost of funds.
Nucor’s cash and cash equivalents and short-term investments position remains robust at $1.51 billion as of December 31, 2013.
Approximately $173.2 million and $186.2 million of the cash and cash equivalents position at December 31, 2013 and December 31,
2012, respectively, was held by our majority-owned joint ventures.
Selected Measures of Liquidity
(dollars in thousands)
December 31, 2013 2012
Cash and cash equivalents $1,483,252 $1,052,862
Short-term investments 28,191 104,167
Restricted cash and investments — 275,163
Working capital 4,449,830 3,631,796
Current ratio 3.3 2.8