Nucor 2013 Annual Report Download - page 52

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Operations Nucor is principally a manufacturer of steel and steel products, as well as a scrap broker and processor, with
operating facilities and customers primarily located in North America.
Principles of Consolidation The consolidated financial statements include Nucor and its controlled subsidiaries, including Nucor-
Yamato Steel Company, a limited partnership of which Nucor owns 51%. All significant intercompany transactions are eliminated.
Distributions are made to noncontrolling interest partners in Nucor-Yamato Steel Company in accordance with the limited partnership
agreement by mutual agreement of the general partners. At a minimum, sufficient cash is distributed so that each partner may pay
their U.S. federal and state income taxes.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these estimates.
Reclassifications In the first quarter of 2013, we began reporting the results of Nucor’s steel trading businesses and rebar distribution
businesses in the steel mills segment. Previously, these businesses were reported in an “All other” category. These businesses were
reclassified to the steel mills segment as part of a realignment of Nucor’s reportable segments to better reflect the way in which they
are managed. The segment data for the comparable periods has also been reclassified into the steel mills segment in order to conform
to the current year presentation. The steel mills, steel products and raw materials segments are consistent with the way Nucor
manages its business, which is based primarily upon the similarity of the types of products produced and sold by each segment.
Additionally, the composition of assets by segment at December 31, 2012 and December 31, 2011 was reclassified to conform with
the current presentation. This reclassification between segments did not have any impact on the consolidated asset balances.
In 2012, we began classifying internal fleet and some common carrier costs in cost of products sold in the consolidated statements
of earnings. We made this change so that all freight costs will be recorded within the same financial statement line item to allow users
of our financial statements to better understand our expense structure. This change resulted in the reclassification of $67.2 million
of these costs from marketing, administrative and other expenses to cost of products sold for the year ended December 31, 2011 in
order to conform to the 2012 presentation.
Additionally, certain other prior period amounts have been reclassified to conform to current period presentation. These
reclassifications did not have an impact on net earnings for the current or any prior periods.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents Cash equivalents are recorded at cost plus accrued interest, which approximates market, and have original
maturities of three months or less at the date of purchase. Cash and cash equivalents are maintained primarily with a few high-credit
quality financial institutions.
Short-term Investments Short-term investments are recorded at cost plus accrued interest, which approximates market. Unrealized
gains and losses on investments classified as available-for-sale are recorded as a component of accumulated other comprehensive
income (loss). Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such
determination at each balance sheet date.
Inventories Valuation Inventories are stated at the lower of cost or market. Inventories valued using the last-in, first-out (LIFO) method
of accounting represent approximately 45% of total inventories as of December 31, 2013 (45% as of December 31, 2012). All inventories
held by the parent company and Nucor-Yamato Steel Company are valued using the LIFO method of accounting except for supplies
that are consumed indirectly in the production process, which are valued using the first-in, first-out (FIFO) method of accounting. All
inventories held by other subsidiaries of the parent company are valued using the FIFO method of accounting. The Company records
any amount required to reduce the carrying value of inventory to net realizable value as a charge to cost of products sold.
Property, Plant and Equipment Property, plant and equipment are stated at cost, except for property, plant and equipment acquired
through acquisitions which are recorded at acquisition date fair value. With the exception of our natural gas wells, depreciation is provided
on a straight-line basis over the estimated useful lives of the assets. Depletion of all capitalized costs associated with our natural gas
producing properties is expensed on a unit-of-production basis by individual field as the gas from the proved developed reserves is
produced. The costs of planned major maintenance activities are capitalized as part of other current assets and amortized over the
period until the next scheduled major maintenance activity. All other repairs and maintenance activities are expensed when incurred.