Nucor 2015 Annual Report Download - page 39

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CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
The following table sets forth our contractual obligations and other commercial commitments as of December 31, 2015 for the
periods presented:
(in thousands)
Payments Due By Period
Contractual Obligations Total 2016 2017 - 2018 2019 - 2020 2021 and thereafter
Long-term debt $ 4,360,600 $ — $ 1,100,000 $ 20,000 $ 3,240,600
Estimated interest on long-term debt(1) 2,157,793 179,564 304,691 231,604 1,441,934
Capital leases 24,576 3,072 6,144 6,144 9,216
Operating leases 92,871 23,674 34,558 17,625 17,014
Raw material purchase commitments(2) 1,369,789 550,902 582,514 106,201 130,172
Utility purchase commitments(2) 953,330 223,923 200,529 132,867 396,011
Natural gas drilling commitments 4,853,807 — 679,755 724,860 3,449,192
Other unconditional purchase obligations(3) 140,320 112,815 14,703 4,412 8,390
Other long-term obligations(4) 471,494 311,930 41,571 20,461 97,532
Total contractual obligations $14,424,580 $1,405,880 $ 2,964,465 $1,264,174 $ 8,790,061
(1) Interest is estimated using applicable rates at December 31, 2015 for Nucor’s outstanding fixed and variable rate debt.
(2) Nucor enters into contracts for the purchase of scrap and scrap substitutes, iron ore, electricity, natural gas and other raw materials and related services. These contracts include
multi-year commitments and minimum annual purchase requirements and are valued at prices in effect on December 31, 2015, or according to the contract language. These
contracts are part of normal operations and are reflected in historical operating cash flow trends. We do not believe such commitments will adversely affect our liquidity position.
(3) Purchase obligations include commitments for capital expenditures on operating machinery and equipment.
(4) Other long-term obligations include amounts associated with Nucor’s early-retiree medical benefits, management compensation and guarantees.
Note: In addition to the amounts shown in the table above, $50.5 million of unrecognized tax benefits have been recorded as liabilities, and we are uncertain as to if or when such
amounts may be settled. Related to these unrecognized tax benefits, we have also recorded a liability for potential penalties and interest of $21.2 million at December 31, 2015.
DIVIDENDS
Nucor has increased its base cash dividend every year since it began paying dividends in 1973. Nucor paid dividends of $1.49 per
share in 2015, compared with $1.48 per share in 2014. In December 2015, the Board of Directors increased the base quarterly
dividend to $0.375 per share. The base quarterly dividend has increased five-fold over the past ten years. In February 2016, the Board
of Directors declared Nucor’s 172nd consecutive quarterly cash dividend of $0.375 per share payable on May 11, 2016 to stockholders
of record on March 31, 2016.
OUTLOOK
In 2016, we expect to take advantage of our position of strength to grow Nucor’s long-term earnings power and shareholder value
despite a U.S. economy burdened by a challenging regulatory and overall business environment. We have invested significant capital
into our business since the last cyclical peak in 2008. We have done so over a broad range of strategic investments that will further
enhance our ability to grow Nucor’s long-term earnings power by expanding our product portfolios into higher value-added offerings
that are less vulnerable to imports, improving our highly variable low-cost structure and building upon our market leadership positions.
With many of these capital projects completed and ready to yield results, we will focus on execution in order to generate strong
returns on these investments. We will also utilize our strong liquidity position to seek investment opportunities to further grow our
long-term earnings capacity.
Although macro-level uncertainties in world markets will almost certainly affect both global and domestic growth, we anticipate sales
and profitability on par with 2015, excluding the LIFO credit and the Duferdofin Nucor and blast furnace assets impairment charges
that we recorded in the fourth quarter of 2015. Utilization rates, which fell significantly in 2015 compared to 2014, have remained
depressed in early 2016. Due to lower industry output, reduced inventory levels at our service center customers and slight decreases
in import volumes, we have been able to realize modest price increases for certain products within our steel segment early in 2016.
We expect that our downstream steel products segment will continue to build on their positive results after the typical seasonal
slow-down in construction that the winter season brings. We anticipate some slight improvement in the performance of the raw
materials segment due to the anticipated absence of lengthy outages at Nucor Steel Louisiana and improved margins at our scrap
recycling businesses. However, market conditions within that segment will continue to be extremely challenging because of
depressed and volatile pricing of raw materials.