Nucor 2015 Annual Report Download - page 60

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that those domes would no longer be utilized. The Company recorded an associated write-down of property, plant and equipment of
$19.4 million, offset by an $11.7 million insurance receivable that was based on management’s best estimate of probable insurance
recoveries. As of December 31, 2015, the insurance receivable related to the three iron ore storage domes totaled $15.4 million. The
net charge of $7.7 million associated with the write-down of the two remaining domes in 2015 and the net charge of $14.0 million
related to the write-down of the first dome and inventory in 2013 are included in impairments and losses on assets in the consolidated
statements of earnings.
In the fourth quarter of 2015, we determined that certain assets, the majority of which are engineering and equipment related to
the current blast furnace project at our St. James Parish, Louisiana site, will not be utilized. As a result of this determination, Nucor
recorded an $84.1 million impairment charge for the entire balance of those assets, which are included in the raw materials segment.
The impairment charge is included in impairments and losses on assets in the consolidated statements of earnings. The assets that
were impaired, the majority of which were acquired in 2008, were a viable option that were anticipated to be utilized up until the
decision was made that such assets would not be utilized. The decision about whether or not to move forward with construction
of the blast furnace utilizing these assets was delayed to focus on the construction of the DRI plant at the site. The decision was
further delayed because of challenging conditions in domestic and global steel industries, particularly increased excess capacity,
both domestically and globally. In the meantime, technology advances and supply and demand in the raw materials market led
management to reconsider its plans for the previously proposed blast furnace. If we decide to proceed with a blast furnace at the site
in the future, the project design will be evaluated at that time utilizing new equipment and engineering.
Due to the current natural gas pricing environment, Nucor performed an impairment assessment of its producing natural gas well
assets in December 2015. One of the main assumptions that most significantly affects the undiscounted cash flows determination is
management’s estimate of future natural gas prices. The pricing used in this impairment assessment was developed by management
based on natural gas market supply and demand dynamics, in conjunction with a review of projections by numerous sources of market
data. This analysis was performed on each of Nucor’s three groups of wells, with each group defined by common geographic location.
Each of Nucor’s three groups of wells passed the impairment test. One of the groups of wells had estimated undiscounted cash flows
that were noticeably closer to its carrying value of $87.2 million as of December 31, 2015. Changes in the natural gas industry or
a prolonged low price environment beyond what had already been assumed in the analysis could cause management to revise the
natural gas price assumption, which could possibly result in an impairment of a portion or all of the groups of wells assets.
Nucor capitalized $0.3 million of interest expense in 2015 ($2.9 million in 2014 and $10.9 million in 2013) related to the borrowing
costs associated with various construction projects.
8. RESTRICTED CASH AND INVESTMENTS
There were no restricted cash or investments as of December 31, 2015 or December 31, 2014. In November 2010, Nucor issued
$600.0 million in 30-year Gulf Opportunity Zone bonds, the net proceeds of which were accounted for as restricted cash and
investments. The restricted cash and investments were held in a trust account and were used to partially fund the capital costs
associated with the construction of Nucor’s DRI facility in St. James Parish, Louisiana. Funds were disbursed as qualified expenditures
for the construction of the facility were made ($275.3 million in 2013).