Nucor 2013 Annual Report Download - page 58

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10. EQUITY INVESTMENTS
The carrying value of our equity investments in domestic and foreign companies was $936.0 million at December 31, 2013
($855.9 million at December 31, 2012) and is recorded in other assets in the consolidated balance sheets.
Duferdofin Nucor Nucor owns a 50% economic and voting interest in Duferdofin Nucor S.r.l. (Duferdofin Nucor), an Italian steel
manufacturer, and accounts for the investment (on a one-month lag basis) under the equity method, as control and risk of loss are
shared equally between the members.
Nucor’s investment in Duferdofin Nucor at December 31, 2013 was $465.4 million ($454.1 million at December 31, 2012). Nucor’s
50% share of the total net assets of Duferdofin Nucor was $55.4 million at December 31, 2013, resulting in a basis difference of
$410.0 million due to the step-up to fair value of certain assets and liabilities attributable to Duferdofin Nucor as well as the identification
of goodwill ($332.9 million) and finite-lived intangible assets. This basis difference, excluding the portion attributable to goodwill, is being
amortized based on the remaining estimated useful lives of the various underlying net assets, as appropriate. Amortization expense and
other purchase accounting adjustments associated with the fair value step-up were $11.2 million in 2013 ($11.1 million in 2012 and
$11.5 million in 2011).
As of December 31, 2013, Nucor had outstanding notes receivable of €35.0 million ($48.2 million) from Duferdofin Nucor (€35.0 million
as of December 31, 2012). The notes receivable bear interest at 1.539% and will reset annually on September 30 to the twelve-month
Euro Interbank Offered Rate (Euribor) plus 1% per year. The principal amounts are due on January 31, 2016. As of December 31, 2013
and December 31, 2012, the note receivable was classified in other assets.
Nucor has issued a guarantee for its ownership percentage (50%) of Duferdofin Nucor’s borrowings under Facility A of a Structured
Trade Finance Facilities Agreement that matures on April 26, 2016. In the second quarter of 2013, Duferdofin Nucor amended the
loan agreement, increasing the maximum amount that it can borrow under Facility A to €122.5 million ($168.9 million) as of
December 31, 2013. As of December 31, 2013, it had €112.0 million ($154.4 million) outstanding under that facility (€102.0 million,
or $134.8 million, at December 31, 2012). If Duferdofin Nucor fails to pay when due any amounts for which it is obligated under
Facility A, Nucor could be required to pay 50% of such amounts pursuant to and in accordance with the terms of its guarantee. Any
indebtedness of Duferdofin Nucor to Nucor is effectively subordinated to the indebtedness of Duferdofin Nucor under the Structured
Trade Finance Facilities Agreement. Nucor has not recorded any liability associated with the guarantee.
NuMit Nucor has a 50% economic and voting interest in NuMit LLC (NuMit). NuMit owns 100% of the equity interest in Steel
Technologies LLC, an operator of 24 sheet processing facilities located throughout the U.S., Canada and Mexico. Nucor accounts
for the investment in NuMit (on a one-month lag basis) under the equity method as control and risk of loss are shared equally
between NuMit’s members.
Nucor’s investment in NuMit at December 31, 2013 was $318.4 million ($288.4 million as of December 31, 2012). The value of
the investment is comprised of the purchase price of approximately $221.3 million plus subsequent additional capital contributions
and equity method earnings less distributions since acquisition. Nucor also has recorded a $40.0 million note receivable from Steel
Technologies LLC that bears interest at 1.15% and resets quarterly to the three-month London Interbank Offered Rate (LIBOR) plus
90 basis points. The principal amount is due on October 21, 2014. In addition, Nucor has extended a $100.0 million line of credit
(of which $17.0 million was outstanding at December 31, 2013) to Steel Technologies LLC. As of December 31, 2013, the amounts
outstanding on the line of credit bear interest at 1.37% and mature on April 1, 2014. As of December 31, 2013 and December 31,
2012, the amount outstanding on the line of credit was classified in other current assets in the consolidated balance sheet. The note
receivable was classified in other current assets as of December 31, 2013, but it was classified in other assets as of December 31, 2012.
Hunter Ridge In November 2012, Nucor acquired a 50% economic and voting interest in Hunter Ridge. Hunter Ridge provides services
for the gathering, separation and compression of energy products including natural gas produced by Nucor’s working interest drilling
program. Nucor accounts for the investment (on a one-month lag basis) under the equity method, as control and risk of loss are shared
equally between Hunter Ridge’s members. Nucor’s investment in Hunter Ridge at December 31, 2013 was $134.5 million ($95.4 million
at December 31, 2012). The acquisition did not result in a significant amount of goodwill or intangible assets.
All Equity Investments Nucor reviews its equity investments for impairment if and when circumstances indicate that a decline in value
below their carrying amounts may have occurred. In the second quarter of 2012, Nucor concluded that a triggering event occurred
requiring assessment for impairment of its equity investment in Duferdofin Nucor due to the continued declines in the global demand for
steel, the escalated economic and political turmoil in Europe and continued operating performance well below budgeted levels through
the first half of 2012. Another contributing factor was that Duferdofin Nucor had a recently updated unfavorable forecast of future
operating performance. The diminished demand combined with the continued lower than budgeted levels of operating performance