Nucor 2015 Annual Report Download - page 31

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29
Also during the fourth quarter of 2015, Nucor determined that certain assets, the majority of which were engineering and
equipment related to a blast furnace project at our St. James Parish, Louisiana site, will not be utilized, resulting in an $84.1
million impairment charge (see Note 7 to the Consolidated Financial Statements). Additionally, one of three iron ore storage domes
collapsed at Nucor Steel Louisiana in 2013. During 2015, Nucor finalized its assessment process related to the utility of the two
remaining storage domes and determined that those domes would no longer be utilized. The Company recorded an associated
net write-down of property, plant and equipment of $7.7 million on the two domes (see Note 7 to the Consolidated Financial
Statements). These charges are included in the raw materials segment.
The $25.4 million of expense recorded in 2014 primarily relates to a $9.0 million charge on the disposal of assets and a
$12.5 million charge related to the partial write-down of assets, both in the steel mills segment.
INTEREST EXPENSE (INCOME)
Net interest expense is detailed below:
(in thousands)
Year Ended December 31, 2015 2014
Interest expense $ 177,543 $174,142
Interest income (4,012) (4,886)
Interest expense, net $173,531 $169,256
Gross interest expense increased in 2015 as compared to 2014 due primarily to lower capitalized interest in the current year.
The decrease in 2015 as compared to 2014 in gross interest income is attributable to lower interest income received on credit
facilities that Nucor extended to a joint venture as the joint venture fully repaid its credit facilities in 2014.
EARNINGS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS
Earnings before income taxes and noncontrolling interests by segment for 2015 and 2014 are as follows:
(in thousands)
Year Ended December 31, 2015 2014
Steel mills $ 629,793 $ 1,59 4,352
Steel products 276,048 166,323
Raw materials (283,938) (29,053)
Corporate/eliminations 87,335 (527,045)
Earnings before income taxes and
noncontrolling interests $ 709,238 $1,204,577
Earnings before income taxes and noncontrolling interests in the steel mills segment for 2015 decreased significantly from 2014 due
to lower sales volume and lower average sales prices resulting from factors discussed above. The $153.0 million impairment charge
related to Duferdofin Nucor significantly impacted the steel mills segment and caused the segment to report a loss before income
taxes and noncontrolling interests in the fourth quarter of 2015. The steel mills segment’s profitability in 2014 was impacted by the
$9.0 million charge on the disposal of assets and a $12.5 million charge related to the partial write-down of assets within the segment.
Historically high levels of imports caused by global excess capacity continue to be the greatest challenge the steel mills segment faces.
Energy, heavy equipment and agricultural markets remain weak. The automotive market remains strong. Demand in nonresidential
construction markets decreased slightly in 2015 compared to 2014.
In the steel products segment, earnings before income taxes and noncontrolling interests increased significantly in 2015 compared to
2014. Nonresidential construction markets experienced a slight decrease in demand as nonresidential building construction starts were
lower in 2015 as compared to 2014. Despite this slight decrease in demand and only modest increases in volumes for our joist, deck,
rebar fabrication and building systems operations, the steel products segment was able to expand its margins in 2015 due to lower
steel costs. The biggest factor driving the growth in profitability of the segment is the effective execution of our strategically important
five drivers to profitable growth. These include market leadership, being an effective channel to market for our steel mills, lowering our
costs, expanding our offerings of value-added products, services and technologies and our focus on commercial excellence to better
take care of our customers’ needs.