Nucor 2015 Annual Report Download - page 62

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10. EQUITY INVESTMENTS
The carrying value of our equity investments in domestic and foreign companies was $746.6 million at December 31, 2015
($872.5 million at December 31, 2014), 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, 2015, was $258.2 million ($412.9 million at December 31, 2014). Nucor’s
50% share of the total net assets of Duferdofin Nucor was $93.0 million at December 31, 2015, resulting in a basis difference of
$165.2 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 ($84.1 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 associated with the fair value step-up was $8.8 million in 2015 ($10.5 million in 2014 and $11.2 million in 2013).
As of December 31, 2015, Nucor had outstanding notes receivable of €35.0 million ($38.2 million) from Duferdofin Nucor
(€35.0 million, or $42.5 million, as of December 31, 2014). The notes receivable bear interest at 1.14% 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, 2019. As of December 31, 2015, and December 31, 2014, the note receivable was classified in other assets in the
consolidated balance sheets.
Nucor has issued a guarantee, the fair value of which is immaterial, for its ownership percentage (50%) of Duferdofin Nucor’s
borrowings under Facility A of a Structured Trade Finance Facilities Agreement. The maximum amount Duferdofin Nucor could borrow
under Facility A was €122.5 million ($133.6 million) at December 31, 2015. As of December 31, 2015, there was €119.0 million
($129.8 million) outstanding under that facility (€107.0 million, or $129.9 million, at December 31, 2014). Facility A was recently
amended to extend the maturity date to October 12, 2018. Nucor previously had also issued a guarantee for its ownership percentage
(50%) of Duferdofin Nucor’s borrowing under the Standby Medium Long Term Loan Credit Facility. During the fourth quarter of
2015, Nucor and its joint-venture partner provided capital contributions to Duferdofin Nucor that were used to pay the outstanding
balance of the Standby Medium Long Term Loan Credit Facility, which was terminated. Duferdofin Nucor had the maximum borrowing
amount outstanding under the facility of €60.0 million ($72.8 million) at December 31, 2014. The fair value of the guarantee related
to the Standby Medium Long Term Loan Credit Facility was immaterial at December 31, 2014. 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 Facility A. Nucor has not recorded any liability associated with this 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 25 sheet processing facilities located throughout the United States, 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 the members. Nucor’s investment in NuMit at December 31, 2015, was $314.5 million ($301.5 million as of
December 31, 2014). Nucor received distributions of $13.1 million, $52.7 million, and $6.7 million from NuMit during 2015, 2014,
and 2013, respectively.
Hunter Ridge Nucor has a 50% economic and voting interest in Hunter Ridge Energy Services LLC (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 programs. 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 the members. Nucor’s investment in Hunter Ridge at December 31, 2015, was $135.9 million
($138.6 million at December 31, 2014).
Recent declines in natural gas pricing have led to reduced natural gas drilling activity. Sustained or further reductions in natural gas
production activity could lead to reduced utilization of the Hunter Ridge assets. We will continue to monitor for potential triggering
events that could affect the carrying value of our investment in Hunter Ridge as a result of future market conditions and any changes
in business strategy.