Item 8. Financial Statements and Supplementary Data

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Index to Financial Statements

				Management’s Report on Internal Control Over Financial Reporting			42
				Report of Independent Registered Public Accounting Firm			43
				Consolidated Balance Sheets			46
				Consolidated Statements of Earnings			47
				Consolidated Statements of Comprehensive Income			48
				Consolidated Statements of Stockholders’ Equity			49
				Consolidated Statements of Cash Flows			50
				Notes to Consolidated Financial Statements			51

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Nucor’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2019. In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).

Based on its assessment, management concluded that Nucor’s internal control over financial reporting was effective as of December 31, 2019. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2019 as stated in their report which is included herein.

Report of Independent Re****gistered Public Accounting Firm

To the Stockholders and Board of Directors of Nucor Corporation:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Nucor Corporation and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal

control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Analysis - Rebar Fabrication Reporting Unit

As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $2.2 billion as of December 31, 2019, and total goodwill associated with the Rebar Fabrication reporting unit was $356.6 million. Goodwill is tested annually for impairment and whenever events or circumstances change that would make it more likely than not that an impairment may have occurred. Management completed its 2019 goodwill impairment analysis as of the first day of the fourth quarter of 2019. The evaluation of impairment involves comparing the current estimated fair value of each reporting unit to the recorded value, including goodwill. For certain reporting units, it is necessary to perform a quantitative analysis. In these instances, a discounted cash flow model is used to determine the current estimated fair value of these reporting units. As disclosed by management, significant assumptions used to determine the fair value of each reporting unit as part of management’s annual testing (and any required interim testing) include (i) expected cash flow for the five-year period following the testing date (including market share, sales volumes and prices, costs to produce and estimated capital needs); (ii) an estimated terminal value using a terminal year growth rate determined based on the growth prospects of the reporting unit; (iii) a discount rate based on management’s best estimate of the after-tax weighted-average cost of capital; and (iv) a probability-weighted scenario approach by which varying cash flows are assigned to certain scenarios based on the likelihood of occurrence.

The principal considerations for our determination that performing procedures relating to the goodwill impairment analysis for the Rebar Fabrication reporting unit is a critical audit matter are there was significant judgment by management when developing the fair value of the reporting unit, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence relating to management’s expected cash flow and significant assumptions, including sales volumes and prices, costs to produce and the terminal year growth rate assumption.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the underlying assumptions related to the fair value of the reporting unit. These procedures also included, among others, testing management’s process for developing the fair value estimate of the Rebar Fabrication reporting unit; evaluating the appropriateness of the discounted cash flow model;

testing the completeness, accuracy, and relevance of underlying data used in the model; and evaluating the significant assumptions used by management, including the sales volumes and prices, costs to produce and terminal year growth rate. Evaluating management’s assumptions related to sales volumes and prices, costs to produce and the terminal year growth rate involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 28, 2020

We have served as the Company’s auditor since 1989

CONSOLIDATED BALANCE SHEETS

(In thousands)

		December 31,
		2019				2018
ASSETS
Current assets:
Cash and cash equivalents (Note 15)		$	1,534,605			$	1,398,886
Short-term investments (Notes 4 and 15)			300,040				—
Accounts receivable, net (Note 5)			2,160,102				2,505,568
Inventories, net (Note 6)			3,842,095				4,553,500
Other current assets (Notes 14, 15 and 20)			389,528				178,311
Total current assets			8,226,370				8,636,265
Property, plant and equipment, net (Notes 7 and 8)			6,178,555				5,334,748
Goodwill (Notes 3 and 9)			2,201,063				2,184,336
Other intangible assets, net (Notes 3 and 9)			742,186				828,504
Other assets (Notes 7 and 10)			996,492				936,735
Total assets		$	18,344,666			$	17,920,588
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt (Notes 12 and 15)		$	62,444			$	57,870
Current portion of long-term debt and finance lease obligations (Notes 7, 12 and 15)			29,264				—
Accounts payable (Note 11)			1,201,698				1,428,191
Salaries, wages and related accruals (Note 18)			510,844				709,397
Accrued expenses and other current liabilities (Notes 7, 11, 14, 16 and 17)			659,524				610,842
Total current liabilities			2,463,774				2,806,300
Long-term debt and finance lease obligations due after one year (Notes 7, 12 and 15)			4,291,301				4,233,276
Deferred credits and other liabilities (Notes 7, 14, 16, 18 and 20)			798,415				679,044
Total liabilities			7,553,490				7,718,620
Commitments and contingencies (Notes 14, 16 and 17)
Equity
Nucor stockholders’ equity (Notes 13, 17 and 21):
Common stock (800,000 shares authorized; 380,154 and 380,154 shares issued, respectively)			152,061				152,061
Additional paid-in capital			2,107,646				2,073,715
Retained earnings			11,115,056				10,337,445
Accumulated other comprehensive loss, net of income taxes (Notes 14 and 21)			(302,966	)			(304,133	)
Treasury stock (78,342 and 74,562 shares, respectively)			(2,713,931	)			(2,467,010	)
Total Nucor stockholders’ equity			10,357,866				9,792,078
Noncontrolling interests			433,310				409,890
Total equity			10,791,176				10,201,968
Total liabilities and equity		$	18,344,666			$	17,920,588

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

		Year Ended December 31,
		2019				2018				2017
Net sales (Notes 24 and 25)		$	22,588,858			$	25,067,279			$	20,252,393
Costs, expenses and other:
Cost of products sold (Notes 7, 14 and 21)			19,909,773				20,771,871				17,682,986
Marketing, administrative and other expenses (Note 7)			711,248				860,722				687,531
Equity in earnings of unconsolidated subsidiaries			(3,311	)			(40,240	)			(41,661	)
Impairment of assets (Notes 8, 9 and 25)			66,916				110,000				—
Interest expense, net (Notes 7, 19 and 20)			121,425				135,535				173,580
			20,806,051				21,837,888				18,502,436
Earnings before income taxes and noncontrolling interests			1,782,807				3,229,391				1,749,957
Provision for income taxes (Notes 20 and 25)			411,897				748,307				369,386
Net earnings			1,370,910				2,481,084				1,380,571
Earnings attributable to noncontrolling interests			99,767				120,317				61,883
Net earnings attributable to Nucor stockholders		$	1,271,143			$	2,360,767			$	1,318,688
Net earnings per share (Note 22):
Basic		$	4.14			$	7.44			$	4.11
Diluted		$	4.14			$	7.42			$	4.10

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

		Year Ended December 31,
		2019				2018				2017
Net earnings		$	1,370,910			$	2,481,084			$	1,380,571
Other comprehensive income (loss):
Net unrealized (loss) income on hedging derivatives, net of income taxes of ($3,100), ($300) and $(2,600) for 2019, 2018 and 2017, respectively			(9,833	)			(3,568	)			(4,523	)
Reclassification adjustment for (gain) loss on settlement of hedging derivatives included in net earnings, net of income taxes of $700, $0 and $400 for 2019, 2018 and 2017, respectively			2,333				(132	)			973
Foreign currency translation (loss) gain, net of income taxes of $0 for 2019, 2018 and 2017			7,873				(47,133	)			68,657
Adjustment to early retiree medical plan, net of income taxes of ($485), $514 and ($767) for 2019, 2018 and 2017, respectively			(1,148	)			1,731				(1,530	)
Reclassification adjustment for (gain) loss on early retiree medical plan included in net earnings, net of income taxes of $49, ($108) and ($279) for 2019, 2018 and 2017, respectively			57				(350	)			(415	)
			(718	)			(49,452	)			63,162
Comprehensive income			1,370,192				2,431,632				1,443,733
Comprehensive income attributable to noncontrolling interests			(99,767	)			(120,317	)			(61,883	)
Comprehensive income attributable to Nucor stockholders		$	1,270,425			$	2,311,315			$	1,381,850

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

						Nucor Stockholders
																						Accumulated												Total
														Additional								Other				Treasury Stock								Nucor
						Common Stock								Paid-in				Retained				Comprehensive				(at cost)								Stockholders'				Noncontrolling
		Total				Shares				Amount				Capital				Earnings				Loss				Shares				Amount				Equity				Interests
BALANCES, December 31, 2016		$	8,254,708				379,334			$	151,734			$	1,974,672			$	7,630,916			$	(317,843	)			60,597			$	(1,559,614	)		$	7,879,865			$	374,843
Net earnings in 2017			1,380,571				—				—				—				1,318,688				—				—				—				1,318,688				61,883
Other comprehensive income (loss)			63,162				—				—				—				—				63,162				—				—				63,162				—
Stock options exercised			7,069				183				73				6,996				—				—				—				—				7,069				—
Stock option expense			8,233												8,233				—																8,233				—
Issuance of stock under award plans, net of forfeitures			37,018				383				153				30,238				—				—				(257	)			6,627				37,018				—
Amortization of unearned compensation			1,200				—				—				1,200				—				—				—				—				1,200				—
Treasury stock acquired			(90,304	)			—				—				—				—				—				1,591				(90,304	)			(90,304	)			—
Cash dividends declared ($1.5125 per share)			(485,895	)			—				—				—				(485,895	)			—				—				—				(485,895	)			—
Distributions to noncontrolling interests			(90,974	)			—				—				—				—				—				—				—				—				(90,974	)
BALANCES, December 31, 2017		$	9,084,788				379,900			$	151,960			$	2,021,339			$	8,463,709			$	(254,681	)			61,931			$	(1,643,291	)		$	8,739,036			$	345,752
Net earnings in 2018			2,481,084				—				—				—				2,360,767				—				—				—				2,360,767				120,317
Other comprehensive income (loss)			(49,452	)			—				—				—				—				(49,452	)			—				—				(49,452	)			—
Stock options exercised			24,102				210				84				14,675				—				—				(333	)			9,343				24,102				—
Stock option expense			4,563				—				—				4,563				—				—				—				—				4,563				—
Issuance of stock under award plans, net of forfeitures			52,313				44				17				31,361				—				—				(762	)			20,935				52,313				—
Amortization of unearned compensation			1,777				—				—				1,777				—				—				—				—				1,777				—
Treasury stock acquired			(853,997	)			—				—				—				—				—				13,726				(853,997	)			(853,997	)			—
Cash dividends declared ($1.5400 per share)			(487,031	)			—				—				—				(487,031	)			—				—				—				(487,031	)			—
Distributions to noncontrolling interests			(56,179	)			—				—				—				—				—				—				—				—				(56,179	)
BALANCES, December 31, 2018		$	10,201,968				380,154			$	152,061			$	2,073,715			$	10,337,445			$	(304,133	)			74,562			$	(2,467,010	)		$	9,792,078			$	409,890
Net earnings in 2019			1,370,910				—				—				—				1,271,143				—				—				—				1,271,143				99,767
Other comprehensive income (loss)			(718	)			—				—				—				—				(718	)			—				—				(718	)			—
Stock options exercised			16,146				—				—				1,624				—				—				(425	)			14,522				16,146				—
Stock option expense			4,662				—				—				4,662				—				—				—				—				4,662				—
Issuance of stock under award plans, net of forfeitures			62,735				—				—				25,637				—				—				(1,095	)			37,098				62,735				—
Amortization of unearned compensation			2,008				—				—				2,008				—				—				—				—				2,008				—
Treasury stock acquired			(298,541	)			—				—				—				—				—				5,300				(298,541	)			(298,541	)			—
Cash dividends declared ($1.6025 per share)			(491,647	)			—				—				—				(491,647	)			—				—				—				(491,647	)			—
Distributions to noncontrolling interests			(76,347	)			—				—				—				—				—				—				—				—				(76,347	)
Other			—				—				—				—				(1,885	)			1,885				—				—				—				—
BALANCES, December 31, 2019		$	10,791,176				380,154			$	152,061			$	2,107,646			$	11,115,056			$	(302,966	)			78,342			$	(2,713,931	)		$	10,357,866			$	433,310

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Year Ended December 31,
		2019				2018				2017
Operating activities:
Net earnings		$	1,370,910			$	2,481,084			$	1,380,571
Adjustments:
Depreciation			648,911				630,879				635,833
Amortization			85,742				88,758				91,228
Stock-based compensation			90,359				73,422				64,176
Deferred income taxes			99,157				3,017				(221,173	)
Distributions from affiliates			37,459				30,196				49,295
Equity in earnings of unconsolidated affiliates			(3,311	)			(40,240	)			(41,661	)
Impairment of assets			66,916				110,000				—
Changes in assets and liabilities (exclusive of acquisitions and dispositions):
Accounts receivable			361,340				(485,433	)			(329,501	)
Inventories			712,645				(1,092,101	)			(900,946	)
Accounts payable			(253,457	)			235,572				314,817
Federal income taxes			(180,325	)			163,743				(107,577	)
Salaries, wages and related accruals			(186,755	)			204,796				87,700
Other operating activities			(40,178	)			(9,741	)			32,576
Cash provided by operating activities			2,809,413				2,393,952				1,055,338
Investing activities:
Capital expenditures			(1,477,293	)			(982,531	)			(448,555	)
Investment in and advances to affiliates			(45,834	)			(121,412	)			(59,000	)
Divestiture of affiliates			67,591				—				—
Disposition of plant and equipment			41,618				31,589				25,315
Acquisitions (net of cash acquired)			(83,106	)			(33,063	)			(544,041	)
Purchases of investments			(367,741	)			—				(50,000	)
Proceeds from the sale of investments			67,701				50,000				150,000
Other investing activities			2,873				25,348				7,389
Cash used in investing activities			(1,794,191	)			(1,030,069	)			(918,892	)
Financing activities:
Net change in short-term debt			4,574				5,037				34,872
Proceeds from long-term debt, net of discount			—				995,710				—
Repayment of long-term debt			—				(500,000	)			(600,000	)
Bond issuance related costs			—				(7,625	)			—
Issuance of common stock			16,145				24,101				7,070
Payment of tax withholdings on certain stock-based compensation			(25,047	)			(22,123	)			(14,408	)
Distributions to noncontrolling interests			(76,347	)			(56,179	)			(90,974	)
Cash dividends			(492,062	)			(485,376	)			(485,321	)
Acquisition of treasury stock			(298,541	)			(853,997	)			(90,304	)
Other financing activities			(9,132	)			(7,725	)			(3,241	)
Cash used in financing activities			(880,410	)			(908,177	)			(1,242,306	)
Effect of exchange rate changes on cash			907				(5,924	)			9,003
Increase (decrease) in cash and cash equivalents			135,719				449,782				(1,096,857	)
Cash and cash equivalents - beginning of year			1,398,886				949,104				2,045,961
Cash and cash equivalents - end of year		$	1,534,605			$	1,398,886			$	949,104
Non-cash investing activity:
Change in accrued plant and equipment purchases		$	34,777			$	14,725			$	58,519

See notes to consolidated financial statements.

NUCOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017

1. Nature of Operations and Basis of Presentation

Nature of Operations

Nucor is principally a manufacturer of steel and steel products, as well as a scrap broker and processor, with operating facilities and customers primarily located in North America.

Principles of Consolidation

The consolidated financial statements include Nucor and its controlled subsidiaries, including Nucor-Yamato Steel Company (Limited Partnership), of which Nucor owns 51%. All intercompany transactions are eliminated.

Distributions are made to noncontrolling interest partners in Nucor-Yamato Steel Company (Limited Partnership) in accordance with the limited partnership agreement by mutual agreement of the general partners. At a minimum, sufficient cash is distributed so that each partner may pay its U.S. federal and state income taxes.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash equivalents are recorded at cost plus accrued interest, which approximates fair value, and have original maturities of three months or less at the date of purchase. Cash and cash equivalents are maintained primarily with a few high-credit quality financial institutions.

Short-term Investments

Short-term investments are recorded at cost plus accrued interest, which approximates fair value. Unrealized gains and losses on investments classified as available-for-sale are recorded as a component of accumulated other comprehensive income (loss). Management determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination at each balance sheet date.

Inventories

Inventories are stated at the lower of cost or market. The Company records any amount required to reduce the carrying value of inventory to net realizable value as a charge to cost of products sold. Scrap and scrap substitute costs are a very significant component of the raw material, semi-finished and finished product inventory balances. The vast majority of the Company’s inventory is recorded on the first-in, first-out method. Production costs are applied to semi-finished and finished product inventory from the approximate period in which they are produced.

Property, Plant and Equipment

Property, plant and equipment is stated at cost, except for property, plant and equipment acquired through acquisitions which is recorded at acquisition date fair value. With the exception of our natural gas wells, depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Depletion of all capitalized costs associated with our natural gas producing properties is expensed on a unit-of-production basis by individual field as the gas from the proved developed reserves is produced. The costs of acquiring unproved natural gas leasehold acreage are capitalized. When proved reserves are found on unproved properties, the associated leasehold cost is transferred to proved properties. Unproved leases are reviewed periodically for any impairment triggering event, and a valuation allowance is provided for any estimated decline in value. The costs of planned major maintenance activities are capitalized as part of other current assets and amortized over the period until the next scheduled major maintenance activity. All other repairs and maintenance activities are expensed when incurred.

Goodwill and Other Intangibles

Goodwill is the excess of cost over the fair value of net assets of businesses acquired. Goodwill is not amortized but is tested annually for impairment and whenever events or circumstances change that would make it more likely than not that an impairment may have occurred. We perform our annual impairment analysis as of the first day of the fourth quarter each year. The evaluation of impairment involves comparing the current estimated fair value of each reporting unit, which is a level below the reportable segment, to the recorded value, including goodwill. When appropriate, Nucor performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. For certain reporting units, it is necessary to perform a quantitative analysis. In these instances, a discounted cash flow model is used to determine the current estimated fair value of these reporting units. A number of significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, which could include market growth and market share, sales volumes and prices, costs to produce, discount rate and estimated capital needs. Management considers historical experience and all available information at the time the fair values of its reporting units are estimated. Assumptions in estimating future cash flows are subject to a high degree of judgment and complexity. Changes in assumptions and estimates may affect the fair value of goodwill and could result in impairment charges in future periods.

Finite-lived intangible assets are amortized over their estimated useful lives on a straight-line or accelerated basis.

Long-Lived Asset Impairments

We evaluate our property, plant and equipment and finite-lived intangible assets for potential impairment on an individual asset basis or at the lowest level asset grouping for which independent cash flows can be separately identified. Asset impairments are assessed whenever circumstances indicate that the carrying amounts of those productive assets could exceed their projected undiscounted cash flows. When it is determined that impairment exists, the related assets are written down to their estimated fair market value.

Equity Method Investments

Investments in joint ventures in which Nucor shares control over the financial and operating decisions but in which Nucor is not the primary beneficiary are accounted for under the equity method. Each of the Company’s equity method investments is subject to a review for impairment if, and when, circumstances indicate that a decline in value below its carrying amount may have occurred. Examples of such circumstances include, but are not limited to, a significant deterioration in the earnings performance or business prospects of the investee; missed financial projections; a significant adverse change in the regulatory, tax, economic or technological environment of the investee; a significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates;

and recurring negative cash flows from operations. When management considers the decline to be other than temporary, the Company would write down the related investment to its estimated fair market value.

Derivative Financial Instruments

Nucor periodically uses derivative financial instruments primarily to partially manage its exposure to price risk related to natural gas purchases used in the production process as well as its exposure to scrap, copper and aluminum purchased for resale to its customers. In addition, Nucor periodically uses derivatives to partially manage its exposure to changes in interest rates on outstanding debt instruments and uses forward foreign exchange contracts to hedge cash flows associated with certain assets and liabilities, firm commitments and anticipated transactions.

Nucor recognizes all derivative instruments in the consolidated balance sheets at fair value. Amounts included in accumulated other comprehensive income (loss) related to cash flow hedges are reclassified into earnings when the underlying transaction is recognized in net earnings. Changes in fair value hedges are reported in earnings along with changes in the fair value of the hedged items. When cash flow and fair value hedges affect net earnings, they are included on the same financial statement line as the underlying transaction (cost of products sold or interest expense). If these instruments do not meet hedge accounting criteria, the change in fair value (or a portion thereof) is recognized immediately in earnings in the same financial statement line as the underlying transaction.

Revenue Recognition

Nucor recognizes revenue when obligations under the terms of contracts with our customers are satisfied; generally, this occurs upon shipment or when control is transferred. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods. In addition, revenue is deferred when cash payments are received or due in advance of performance. See Note 24 for further information.

Income Taxes

Nucor utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized.

Nucor recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Potential accrued interest and penalties related to unrecognized tax benefits are recognized as a component of interest expense and other expenses.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation as an expense using fair value measurement methods. The assumptions used to calculate the fair value of stock-based compensation granted are evaluated and revised for new grants, as necessary, to reflect market conditions and experience.

Foreign Currency Translation

For Nucor’s operations where the functional currency is other than the U.S. dollar, assets and liabilities have been translated at year-end exchange rates, and income and expenses have been translated using average exchange rates for the respective periods. Adjustments resulting from the process of translating an entity’s financial statements into the U.S. dollar have been recorded in accumulated other comprehensive income (loss) and are included in net earnings only upon sale or

liquidation of the underlying investments. Foreign currency transaction gains and losses are included in net earnings in the period they occur.

Recently Adopted Accounting Pronouncements

In the first quarter of 2019, Nucor adopted new guidance related to lease accounting using the modified retrospective approach, which permits companies to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjusting the comparative periods prior to adoption. The new lease guidance requires all lessees to recognize on the balance sheet right-of-use assets and lease liabilities for the rights and obligations created by lease arrangements with terms greater than 12 months, including operating leases. Expenses are recognized in the statement of earnings in a manner similar to previous accounting guidance.

We elected the package of practical expedients permitted under the transition guidance within the new lease standard, which, among other things, allowed us to carry forward the historical lease classification. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements, and the short-term lease exemption policy such that the new lease guidance was applied to leases greater than one year in duration. The adoption of the new lease standard did not have a material impact on our consolidated financial statements as it resulted in an increase of 0.5% and 1.2% to our total assets and total liabilities, respectively, on our consolidated balance sheet as of January 1, 2019. The new lease standard did not materially impact our consolidated net earnings and had no impact on our cash flows. Finance lease right-of-use assets and liabilities are presented separately from operating lease right-of-use assets and liabilities in the consolidated balance sheet as of January 1, 2019 in accordance with the new lease standard. See Note 7 for further information.

In the first quarter of 2019, we also adopted new accounting guidance related to tax effects of the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”). As a result of the adoption of the new guidance, we elected to reclassify stranded tax effects from accumulated other comprehensive income to retained earnings, effective January 1, 2019. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.

3. Acquisitions and Dispositions

On January 20, 2017, Nucor used cash on hand to acquire Republic Conduit (“Republic”) for a purchase price of $331.6 million. Republic produces steel electrical conduit primarily used to protect and route electrical wiring in various nonresidential structures such as hospitals, office buildings and stadiums. Republic has two facilities, one located in Kentucky and the other in Georgia. This acquisition not only further expands Nucor’s product portfolio to include steel electrical conduit, but it is also an important, value-added channel to market for Nucor’s sheet mills. Republic’s financial results are included as part of the steel products segment (see Note 23).

We have allocated the purchase price for Republic to its individual assets acquired and liabilities assumed.

The following table summarizes the fair values of the assets acquired and liabilities assumed of Republic as of the date of acquisition (in thousands):

Cash		$	206
Accounts receivable			39,177
Inventory			33,561
Other current assets			1,101
Property, plant and equipment			67,412
Goodwill			115,562
Other intangible assets			89,200
Other assets			3,118
Total assets acquired			349,337
Current liabilities			17,743
Total liabilities assumed			17,743
Net assets acquired		$	331,594

The following table summarizes the purchase price allocation to the identifiable intangible assets of Republic as of the date of acquisition (in thousands, except years):

						Weighted-
						Average Life
Customer relationships		$	80,800			12 years
Trademarks and trade names			8,400			13 years
		$	89,200

The goodwill of approximately $115.6 million is primarily attributed to the synergies expected to arise after the acquisition. The goodwill is calculated as the excess of the purchase price over the fair values of the assets acquired and liabilities assumed and has been allocated to the steel products segment (see Note 9). Goodwill recognized for tax purposes was $118.6 million, all of which is deductible for such purposes.

Other smaller acquisitions, exclusive of purchase price adjustments of acquisitions made and net of cash acquired, totaled $83.1 million in 2019, $33.1 million in 2018 and $212.7 million in 2017. Included in the 2017 amount is the January 9, 2017 acquisition of Southland Tube, Inc. (“Southland”) and the September 1, 2017 acquisition of St. Louis Cold Drawn, Inc. (“St. Louis Cold Drawn”). Nucor used cash on hand to acquire Southland and St. Louis Cold Drawn for purchase prices of approximately $130 million and $60 million, respectively. Southland is a manufacturer of HSS steel tubing, which is primarily used in nonresidential construction markets. Southland has one manufacturing facility in Birmingham, Alabama. St. Louis Cold Drawn is a manufacturer of cold drawn rounds, hexagons, squares and special sections that mainly serves the U.S. and Mexican automotive and industrial markets. St. Louis Cold Drawn has two manufacturing locations, one in St. Louis, Missouri and the other in Monterrey, Mexico, that have a combined annual capacity of approximately 200,000 tons. The financial results of Southland and St. Louis Cold Drawn are included as part of the steel products segment (see Note 23).

4. Short-term Investments

Nucor held $300.0 million of short-term investments as of December 31, 2019 (none at December 31, 2018). The investments held as of December 31, 2019 consisted of several certificates of deposit (“CD’s”), and corporate bonds, which were classified as available-for-sale. Interest income on the CD’s and corporate bonds was recorded as earned.

No realized or unrealized gains or losses were incurred in 2019, 2018 or 2017.

5. Accounts Receivable

An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of our customers to make required payments. Accounts receivable are stated net of the allowance for doubtful accounts of $59.9 million at December 31, 2019 ($62.1 million at December 31, 2018 and $49.0 million at December 31, 2017).

6. Inventories

Inventories consisted of approximately 42% raw materials and supplies and 58% finished and semi-finished products at December 31, 2019 (43% and 57%, respectively, at December 31, 2018). Nucor’s manufacturing process consists of a continuous, vertically integrated process from which products are sold to customers at various stages throughout the process. Since most steel products can be classified as either finished or semi-finished products, these two categories of inventory are combined.

7. Leases

We lease certain equipment, office space and land. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion and we consider these options in determining the lease term used to establish our right-of-use assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or a purchase option reasonably certain of exercise.

We determine that a contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In evaluating whether we have the right to control the use of an identified asset, we assess whether or not we have the right to control the use of the identified asset and to obtain substantially all of the economic benefit from the use of the identified asset.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Certain of our lease agreements include payments that adjust periodically for consumption of goods provided by the right-of-use asset in excess of contractually determined minimum amounts and for inflation. These variable lease payments are not significant. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental statement of earnings information related to our leases is as follows (in thousands):

				Year Ended
		Statement of Earnings Classification		December 31, 2019
Operating lease cost		Cost of products sold		$	21,275
Operating lease cost		Marketing, administrative and other expenses			2,196
Total operating lease cost				$	23,471
Finance lease cost:
Amortization of leased assets		Cost of products sold		$	9,810
Interest on lease liabilities		Interest expense, net			11,335
Total finance lease cost				$	21,145
Total lease cost				$	44,616

Supplemental cash flow information related to our leases is as follows (in thousands):

		Year Ended
		December 31, 2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases		$	23,155
Operating cash flows from finance leases		$	11,335
Financing cash flows from finance leases		$	9,134
Non-cash investing and financing activities:
Additions to right-of-use assets obtained from
Operating lease liabilities		$	11,941
Finance lease liabilities		$	11,406

Supplemental balance sheet information related to our leases is as follows (in thousands):

		Balance Sheet Classification		December 31, 2019
Assets:
Operating lease		Other assets		$	91,123
Finance lease		Property, plant and equipment, net			72,364
Total leased				$	163,487
Liabilities:
Current operating		Accrued expenses and other current liabilities		$	17,647
Current finance		Current portion of long-term debt and finance lease obligations			9,264
Non-current operating		Deferred credits and other liabilities			74,877
Non-current finance		Long-term debt and finance lease obligations due after one year			75,960
Total leased				$	177,748

Weighted-average remaining lease term and discount rate for our leases are as follows:

		December 31, 2019
Weighted-average remaining lease term - operating leases		9.1 Years
Weighted-average remaining lease term - finance leases		10.8 Years
Weighted-average discount rate - operating leases		3.8%
Weighted-average discount rate - finance leases		29.4%

The reason for the substantial weighted-average discount rate – finance leases, of 29.4%, is due to Nucor’s past accounting for the respective finance leases under the former accounting guidance for capital leases. Pursuant to the former lease accounting guidance, the recognition of a capital lease asset and associated capital lease liability could not exceed the fair market value of the leased asset at the lease commencement. Accordingly, the incremental borrowing rate was adjusted upward so that the present value of the minimum lease payments would equal the fair value of the asset.

Maturities of lease liabilities by year for our leases were as follows as of December 31, 2019 (in thousands):

		Operating Leases				Finance Leases
Maturities of lease liabilities, year ending December 31,
2020		$	20,382			$	19,802
2021			17,961				19,334
2022			15,797				18,466
2023			12,652				16,554
2024			9,988				11,922
Thereafter			35,149				73,742
Total lease payments		$	111,929			$	159,820
Less imputed interest			(19,405	)			(74,596	)
Present value of lease liabilities		$	92,524			$	85,224

Prior Period Disclosures - As a result of adopting the new lease accounting guidance on January 1, 2019 under the modified retrospective approach, the Company is required to present future minimum lease commitments for capital leases and operating leases having initial or noncancellable lease terms in excess of one year that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 and accounted for under the former lease guidance.

Total future minimum lease payments related to capital leases at December 31, 2018 were $154.8 million, with the timing of those payments estimated at that date to be made as follows: $17.7 million in 2019; a total of $33.6 million to be paid between 2020 and 2021; a total of $30.0 million to be paid between 2022 and 2023; and $73.4 million to be paid thereafter.

Total future minimum lease payments related to operating leases having initial or noncancellable lease terms in excess of one year at December 31, 2018 were $128.6 million, with the timing of those payments estimated at that date to be made as follows: $31.8 million in 2019; a total of $45.0 million to be paid between 2020 and 2021; a total of $28.4 million to be paid between 2022 and 2023; and $23.5 million to be paid thereafter.

The gross amount of assets recorded under capital leases was $89.4 million as of December 31, 2018, which primarily consisted of buildings and improvements or machinery and equipment.

8. Property, Plant and Equipment

		(in thousands)
December 31,		2019				2018
Land and improvements, net		$	719,736			$	654,786
Buildings and improvements			1,413,690				1,283,182
Machinery and equipment			11,630,179				11,101,840
Proved oil and gas properties			558,123				557,383
Leasehold interest in unproved oil and gas properties			165,000				165,000
Construction in process and equipment deposits			1,108,054				762,884
			15,594,782				14,525,075
Less accumulated depreciation			(9,416,227	)			(9,190,327	)
		$	6,178,555			$	5,334,748

The estimated useful lives primarily range from five to 25 years for land improvements, four to 40 years for buildings and improvements and two to 15 years for machinery and equipment. The useful life for proved oil and gas properties is based on the unit-of-production method and varies by well.

In the third quarter of 2018, due to the deteriorating natural gas pricing environment at our sales point in the Piceance Basin, Nucor determined a triggering event had occurred and performed an impairment analysis that resulted in a $110.0 million non-cash impairment charge relating to two of its three groups (“fields”) of wells. One of the main assumptions that most significantly affects the undiscounted cash flows determination is management’s estimate of future pricing of natural gas and natural gas liquids. The pricing used in the impairment assessment was developed by management based on projected natural gas market supply and demand dynamics, in conjunction with a review of projections by market analysts. Management also makes key estimates on the expected reserve levels and on the expected lease operating costs. The impairment assessment was performed on each of Nucor’s three fields of wells, with each field defined by common geographic location.

The natural gas pricing environment continued to decline in 2019 and the resulting decrease in performance of the natural gas well assets reached such a point in the fourth quarter of 2019 that Nucor determined a triggering event had occurred. Nucor performed an impairment analysis on all three fields. The field of wells that was not impaired as a result of the 2018 analysis did not pass the 2019 undiscounted cash flow impairment analysis. An after-tax discounted cash flow analysis was performed for this field to determine the amount of impairment, which was $35.0 million. An increase in the estimated lease operating cost projections was the primary factor in causing this field of wells to be impaired. The non-cash impairment charges are included in the raw materials segment and in impairment of assets in the consolidated statements of earnings for the years ended December 31, 2019 and 2018, respectively. The post-impairment carrying value of this field was $12.3 million at December 31, 2019 ($51.8 million at December 31, 2018). The two previously impaired fields had a combined carrying value of $66.6 million at December 31, 2019 ($71.0 million at December 31, 2018). Changes in the natural gas industry or a prolonged low-price environment beyond what had already been assumed in the assessments could cause management to revise the natural gas and natural gas liquids price assumptions, the estimated reserves or the estimated lease operating costs. Unfavorable revisions to these assumptions or estimates could possibly result in further impairment of some or all of the fields of proved well assets.

In the steel mills segment, Nucor recorded a non-cash impairment charge of $20.0 million related to certain property, plant and equipment at our plate mill in Texas. This charge is included in impairment of assets in the consolidated statement of earnings for the year ended December 31, 2019.

9. Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill for the years ended December 31, 2019 and 2018 by segment is as follows:

		(in thousands)
		Steel				Steel				Raw
		Mills				Products				Materials				Total
Balance, December 31, 2017		$	745,484			$	720,997			$	729,577			$	2,196,058
Reclassifications			(153,498	)			153,498				—				—
Translation			—				(11,722	)			—				(11,722	)
Balance, December 31, 2018			591,986				862,773				729,577				2,184,336
Acquisitions			—				12,623				—				12,623
Translation			—				4,104				—				4,104
Balance, December 31, 2019		$	591,986			$	879,500			$	729,577			$	2,201,063

The majority of goodwill is not tax deductible.

Intangible assets with estimated useful lives of five to 22 years are amortized on a straight-line or accelerated basis and are comprised of the following:

		(in thousands)
		December 31, 2019								December 31, 2018
		Gross				Accumulated				Gross				Accumulated
		Amount				Amortization				Amount				Amortization
Customer relationships		$	1,412,954			$	767,532			$	1,418,250			$	713,656
Trademarks and trade names			162,183				92,258				176,046				87,680
Other			63,807				36,968				67,820				32,276
		$	1,638,944			$	896,758			$	1,662,116			$	833,612

Intangible asset amortization expense was $85.7 million in 2019 ($88.8 million in 2018 and $91.2 million in 2017). Annual amortization expense is estimated to be $83.5 million in 2020, $82.3 million in 2021, $80.7 million in 2022, $79.1 million in 2023 and $79.2 million in 2024.

The Company completed its annual goodwill impairment testing as of the first day of the fourth quarters of 2019, 2018 and 2017 and concluded that as of such dates there was no impairment of goodwill for any of its reporting units. The annual evaluation performed in 2019 used forward-looking projections and included expected improvements in the future cash flows of one of the Company’s reporting units, Rebar Fabrication. The fair value of this reporting unit exceeded its carrying value by approximately 56% in the most recent evaluation. As the reporting unit worked through its more expensive inventory and stabilized its backlog pricing for new projects, the operating results for the reporting unit significantly improved in the second half of 2019. We expect the 2020 operating results of this reporting unit will continue to improve as compared to 2019. If our assessment of the relevant facts and circumstances changes, or the actual performance in this reporting unit falls short of expected results, non-cash impairment charges may be required. Total goodwill associated with the Rebar Fabrication reporting unit as of December 31, 2019 was $356.6 million. An impairment of goodwill may also lead us to record an impairment of other intangible assets. Total finite-lived intangible assets associated with the Rebar Fabrication reporting unit as of December 31, 2019 was $67.2 million.

The Company has monitored one of its reporting units, Grating, for potential triggering events since the impairment assessment performed in the fourth quarter of 2018. Due to lower than expected operating results and anticipated changes to the reporting unit’s business strategy and structure, the Company determined a triggering event occurred in the third quarter of 2019 and performed an impairment assessment. The fair value of the Grating reporting unit exceeded its carrying value by approximately 17% in the most recent assessment. If our assessment of the relevant facts and circumstances changes, or the actual performance of this reporting unit falls short of expected results, non-cash impairment charges may be required. As of December 31, 2019, total goodwill associated with the Grating reporting unit was $36.8 million. As a result of management’s changes to the Grating

reporting unit’s business strategy and structure, the remaining balance of its intangible assets of $3.3 million was written off in the fourth quarter of 2019.

Additionally, a non-cash impairment charge of $8.6 million was taken in the fourth quarter of 2019 on the finite-lived intangible assets, specifically trade names, as they were no longer being utilized.

There are no significant historical accumulated impairment charges, by segment or in the aggregate, related to goodwill.

10. Equity Investments

The carrying value of our equity investments in domestic and foreign companies was $793.2 million at December 31, 2019 ($869.9 million at December 31, 2018), and is recorded in other assets in the consolidated balance sheets.

NUMIT

Nucor owns a 50% economic and voting interest in NuMit LLC (“NuMit”). NuMit owns 100% of the equity interest in Steel Technologies LLC, an operator of 26 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 was $319.8 million at December 31, 2019 ($337.2 million at December 31, 2018). Nucor received distributions of $36.5 million, $29.2 million and $48.3 million from NuMit during 2019, 2018 and 2017, respectively.

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 was $263.0 million at December 31, 2019 ($269.1 million at December 31, 2018). Nucor’s 50% share of the total net assets of Duferdofin Nucor was $115.8 million at December 31, 2019, resulting in a basis difference of $147.2 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 ($86.5 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 $8.9 million, $9.3 million and $8.9 million in 2019, 2018 and 2017, respectively.

As of December 31, 2019, Nucor had outstanding notes receivable of €35.0 million ($39.3 million) from Duferdofin Nucor (€35.0 million, or $40.2 million, as of December 31, 2018). The notes receivable bear interest at a rate that resets annually on September 30 to the 12-month Euro Interbank Offered Rate plus 0.75% per year. The maturity date of the principal amounts was extended to January 31, 2022 during the first quarter of 2018. As of December 31, 2019 and 2018, the notes receivable were classified in other assets in the consolidated balance sheets.

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 (“Facility A”). The fair value of the guarantee is immaterial. In April 2018, Duferdofin Nucor amended and extended Facility A to mature on April 16, 2021. The maximum amount Duferdofin Nucor could borrow under Facility A was €160.0 million ($179.5 million) at December 31, 2019. As of December 31, 2019, there was €147.0 million ($164.9 million) outstanding under that facility (€155.0 million, or $178.0 million, as of December 31, 2018). 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.

NUCOR-JFE

Nucor owns a 50% economic and voting interest in Nucor-JFE Steel Mexico, S. de R.L. de C.V. (“Nucor-JFE”), a 50-50 joint venture with JFE Steel Corporation of Japan, to build and operate a galvanized sheet steel plant in central Mexico. Nucor-JFE plant construction is substantially complete and operations are expected to begin in the first half of 2020. Nucor accounts for the investment in Nucor-JFE (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 Nucor-JFE was $163.2 million at December 31, 2019 ($135.7 million at December 31, 2018).

On January 16, 2019, Nucor entered into an agreement to guarantee a percentage, equal to its ownership percentage (50%), of Nucor-JFE’s borrowings under the General Financing Agreement and Promissory Note (the “Facility”). The fair value of the guarantee is immaterial. Nucor’s guarantee expires on April 30, 2020. Under the Facility, the maximum amount Nucor-JFE could borrow was $65.0 million as of December 31, 2019. The Facility is uncommitted. As of December 31, 2019, there was no outstanding balance under the Facility. If Nucor-JFE fails to pay when due any amounts for which it is obligated under the Facility, Nucor could be required to pay 50% of such amounts pursuant to and in accordance with the terms of its guarantee. Nucor has not recorded any liability associated with this guarantee.

Nucor-JFE has other credit facilities that Nucor has agreed to guarantee. The principal amount subject to guarantee by Nucor for these other credit facilities was $25.0 million at December 31, 2019. The fair value of the guarantees is immaterial. If Nucor-JFE fails to pay when due any amounts for which it is obligated, Nucor could be required to pay such amounts pursuant to and in accordance with the terms of its guarantee. Nucor has not recorded any liability associated with these guarantees.

ALL EQUITY INVESTMENTS

Nucor reviews its equity investments for impairment if and when circumstances indicate that a decline in fair value below their carrying amounts may have occurred. Nucor last assessed its equity investment in Duferdofin Nucor for impairment during the fourth quarter of 2019 due to the protracted challenging steel market conditions in Europe. After completing its assessment, the Company determined that the estimated fair value exceeded its carrying amount by a sufficient amount and that there was no need to record an impairment charge. The assumptions that most significantly affect the fair value determination include projected cash flows and the discount rate. It is reasonably possible that material deviation of future performance from the estimates used in our most recent valuation could result in impairment of our investment in Duferdofin Nucor. We will continue to monitor for potential triggering events that could affect the carrying value of our investment in Duferdofin Nucor as a result of future market conditions and any changes in our business strategy.

11. Current Liabilities

Book overdrafts, included in accounts payable in the consolidated balance sheets, were $116.4 million at December 31, 2019 ($89.8 million at December 31, 2018). Dividends payable, included in accrued expenses and other current liabilities in the consolidated balance sheets, were $122.9 million at December 31, 2019 ($123.4 million at December 31, 2018).

12. Debt and Other Financing Arrangements

		(in thousands)
December 31,		2019				2018
Industrial revenue bonds due from 2020 to 2040*		$	1,010,600			$	1,010,600
Notes, 4.125%, due 2022			600,000				600,000
Notes, 4.0%, due 2023			500,000				500,000
Notes, 3.95%, due 2028			500,000				500,000
Notes, 6.40%, due 2037			650,000				650,000
Notes, 5.20%, due 2043			500,000				500,000
Notes, 4.40%, due 2048			500,000				500,000
Finance lease obligations			85,224				—
Total long-term debt and finance lease obligations			4,345,824				4,260,600
Less debt issuance costs			25,259				27,324
Total amounts outstanding			4,320,565				4,233,276
Less current maturities of long-term debt			20,000				—
Less current portion of finance lease obligations			9,264				—
Total long-term debt and finance lease obligations due after one year		$	4,291,301			$	4,233,276

*	The industrial revenue bonds had variable rates ranging from 1.61% to 1.82% at December 31, 2019 and 1.88% to 2.03% at December 31, 2018.

Annual aggregate long-term debt maturities are: $20.0 million in 2020, none in 2021, $601.0 million in 2022, $500.0 million in 2023, none in 2024 and $3.14 billion thereafter.

In April 2018, Nucor issued $500.0 million of 3.95% notes due 2028 and $500.0 million of 4.40% notes due 2048. Net proceeds of the issuances were $986.1 million, of which $500.0 million was used to repay the $500.0 million of 5.85% notes that matured June 1, 2018. Costs of $11.9 million associated with the issuances have been capitalized and will be amortized over the lives of the notes.

During the second quarter of 2018, Nucor amended its $1.50 billion unsecured revolving credit facility to extend the maturity date from April 2021 to April 2023. Costs associated with the amendment were immaterial. The unsecured revolving credit facility provides up to $1.50 billion in revolving loans and allows up to $500.0 million in additional commitments at Nucor’s election in accordance with the terms set forth in the credit agreement. Up to the equivalent of $850.0 million of the credit facility is available for foreign currency loans, up to $100.0 million is available for the issuance of letters of credit and up to $500.0 million is available for the issuance of revolving loans for Nucor subsidiaries in accordance with the terms set forth in the credit agreement. The credit facility provides for a pricing grid based upon the credit rating of Nucor’s senior unsecured long-term debt and, alternatively, interest rates quoted by lenders in connection with competitive bidding. The credit facility includes customary financial and other covenants, including a limit on the ratio of funded debt to total capital of 60%, a limit on Nucor’s ability to pledge the Company’s assets and a limit on consolidations, mergers and sales of assets. As of December 31, 2019, Nucor’s funded debt to total capital ratio was 29%, and Nucor was in compliance with all covenants under the credit facility. No borrowings were outstanding under the credit facility as of December 31, 2019 and 2018.

Harris Steel has credit facilities totaling approximately $19.0 million, with no outstanding borrowings at December 31, 2019 ($7.5 million at December 31, 2018). In addition, the business of Nucor Trading S.A. is financed by uncommitted trade credit arrangements with a number of European banking institutions. As of December 31, 2019, Nucor Trading S.A. had outstanding borrowings of $62.4 million, which is presented in short-term debt in the consolidated balance sheet ($57.9 million at December 31, 2018).

Letters of credit totaling $28.0 million were outstanding as of December 31, 2019 ($56.2 million as of December 31, 2018), related to certain obligations, including workers’ compensation, utilities deposits and credit arrangements by Nucor Trading S.A. for commitments to purchase inventories.

13. Capital Stock

The par value of Nucor’s common stock is $0.40 per share and there are 800 million shares authorized. In addition, 250,000 shares of preferred stock, par value of $4.00 per share, are authorized, with preferences, rights and restrictions as may be fixed by the Board of Directors. There are no shares of preferred stock issued or outstanding.

Dividends declared per share were $1.6025 in 2019 ($1.5400 per share in 2018 and $1.5125 per share in 2017).

The Company repurchased $298.5 million of its common stock in 2019 ($854.0 million in 2018 and $90.3 million in 2017).

On September 6, 2018, the Company announced that the Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $2.0 billion of the Company’s common stock and terminated any previously authorized share repurchase programs. Share repurchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. At December 31, 2019, the Company had approximately $1.2 billion available for share repurchases under the program.

14. Derivative Financial Instruments

The following tables summarize information regarding Nucor’s derivative instruments (in thousands):

				Fair Value at
				December 31,
Fair Value of Derivative Instruments		Consolidated Balance Sheet Location		2019				2018
Asset derivatives designated as hedging instruments:
Commodity contracts		Other current assets		$	—			$	100
Asset derivatives not designated as hedging instruments:
Commodity contracts		Other current assets			—				2,617
Foreign exchange contracts		Other current assets			—				2,055
Total asset derivatives not designated as hedging instruments					—				4,672
Total asset derivatives				$	—			$	4,772
Liability derivatives designated as hedging instruments:
Commodity contracts		Accrued expenses and other current liabilities		$	(7,200	)		$	—
Commodity contracts		Deferred credits and other liabilities			(11,200	)			(8,600	)
Total liability derivatives designated as hedging instruments					(18,400	)			(8,600	)
Liability derivatives not designated as hedging instruments:
Commodity contracts		Accrued expenses and other current liabilities			(1,118	)			—
Foreign exchange contracts		Accrued expenses and other current liabilities			(81	)			—
Total liability derivatives not designated as hedging instruments					(1,199	)			—
Total liability derivatives				$	(19,599	)		$	(8,600	)

The Effect of Derivatives Instruments on the Consolidated Statements of Earnings

Derivatives Designated as Hedging Instruments for the Year Ended December 31, (in thousands)
																Amount of Gain or
																(Loss), net of tax,
				Amount of Gain or (Loss),												Reclassified from												Amount of Gain or (Loss),
		Statement of		net of tax, Recognized												Accumulated OCI into												net of tax, Recognized
Derivatives in Cash Flow		Earnings		in OCI on Derivatives												Earnings on Derivatives												in Earnings on Derivatives
Hedging Relationships		Location		(Effective Portion)												(Effective Portion)												(Ineffective Portion)
				2019				2018				2017				2019				2018				2017				2019				2018				2017
Commodity contracts		Cost of products sold		$	(9,833	)		$	(3,568	)		$	(4,523	)		$	(2,333	)		$	132			$	(973	)		$	—			$	—			$	—

Derivatives Not Designated as Hedging Instruments for the Year Ended December 31, (in thousands)
				Amount of Gain or (Loss)
Derivatives Not Designated		Statement of Earnings		Recognized in Earnings on
as Hedging Instruments		Location		Derivatives
				2019				2018				2017
Commodity contracts		Cost of products sold		$	2,269			$	14,572			$	(11,973	)
Foreign exchange contracts		Cost of products sold			(59	)			3,609				(3,344	)
Total				$	2,210			$	18,181			$	(15,317	)

At December 31, 2019, natural gas swaps covering approximately 35.1 million MMBTUs (extending through December 2022) were outstanding.

15. Fair Value Measurements

The following table summarizes information regarding Nucor’s financial assets and liabilities that are measured at fair value as of December 31, 2019 and 2018. Nucor does not have any non-financial assets or liabilities that are measured at fair value on a recurring basis.

						(in thousands)
						Fair Value Measurements at Reporting Date Using
						Quoted Prices
						in Active				Significant
		Carrying				Markets for				Other				Significant
		Amount in				Identical				Observable				Unobservable
		Consolidated				Assets				Inputs				Inputs
Description		Balance Sheets				(Level 1)				(Level 2)				(Level 3)
As of December 31, 2019
Assets:
Cash equivalents		$	1,229,000			$	1,229,000			$	—			$	—
Short-term investments		$	300,040			$	300,040			$	—			$	—
Total assets		$	1,529,040			$	1,529,040			$	—			$	—
Liabilities:
Derivative contracts		$	(19,599	)		$	—			$	(19,599	)		$	—
As of December 31, 2018
Assets:
Cash equivalents		$	1,084,319			$	1,084,319			$	—			$	—
Derivative contracts			4,772				—				4,772				—
Total assets		$	1,089,091			$	1,084,319			$	4,772			$	—
Liabilities:
Derivative contracts		$	(8,600	)		$	—			$	(8,600	)		$	—

Fair value measurements for Nucor’s cash equivalents and short-term investments are classified under Level 1 because such measurements are based on quoted market prices in active markets for identical assets. Fair value measurements for Nucor’s derivatives, which are typically commodity or foreign exchange contracts, are classified under Level 2 because such measurements are based on published market prices for similar assets or are estimated based on observable inputs such as interest rates, yield curves, credit risks, spot and future commodity prices, and spot and future exchange rates. There were no transfers between levels in the fair value hierarchy for the periods presented.

The fair value of short-term and long-term debt, including current maturities, was approximately $4.81 billion at December 31, 2019 (approximately $4.45 billion at December 31, 2018). The debt fair value estimates are classified under Level 2 because such estimates are based on readily available market prices of our debt at December 31, 2019 and 2018, or similar debt with the same maturities, ratings and interest rates.

16. Contingencies

Nucor is subject to environmental laws and regulations established by federal, state and local authorities and, accordingly, makes provisions for the estimated costs of compliance. Of the undiscounted total of $16.4 million of accrued environmental costs at December 31, 2019 ($18.4 million at December 31, 2018), $4.1 million was classified in accrued expenses and other current liabilities ($7.0 million at December 31, 2018) and $12.3 million was classified in deferred credits and other liabilities ($11.4 million at December 31, 2018). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation technology and changing governmental regulations and legal standards.

We are from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position or cash flows. Nucor maintains liability insurance with self-insurance limits for certain risks.

17. Stock-Based Compensation

Overview

The Company maintains the Nucor Corporation 2014 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) under which the Company may award stock-based compensation to key employees, officers and non-employee directors. The Company’s stockholders approved the Omnibus Plan on May 8, 2014. The Omnibus Plan permits the award of stock options, restricted stock units, restricted shares and other stock-based awards for up to 13.0 million shares of the Company’s common stock. As of December 31, 2019, 3.6 million shares remained available for award under the Omnibus Plan.

The Company also maintains a number of inactive plans under which stock-based awards remain outstanding but no further awards may be made. As of December 31, 2019, 1.2 million shares were reserved for issuance upon the future settlement of outstanding awards under such inactive plans.

Stock Options

Stock options may be granted to Nucor’s key employees, officers and non-employee directors with exercise prices at 100% of the market value on the date of the grant. The stock options granted are generally exercisable at the end of three years and have a term of 10 years.

A summary of activity under Nucor’s stock option plans is as follows (shares in thousands):

		2019								2018								2017
						Weighted-								Weighted-								Weighted-
						Average								Average								Average
						Exercise								Exercise								Exercise
Year Ended December 31,		Shares				Price				Shares				Price				Shares				Price
Number of shares under stock options:
Outstanding at beginning of year			3,828			$	49.71				4,106			$	47.96				3,591			$	45.32
Granted			489			$	48.00				265			$	65.80				698			$	59.07
Exercised			(425	)		$	37.97				(543	)		$	44.33				(183	)		$	38.56
Canceled			—				—				—				—				—				—
Outstanding at end of year			3,892			$	50.78				3,828			$	49.71				4,106			$	47.96
Stock options exercisable at end of year			3,276			$	49.79				2,112			$	45.41				1,809			$	43.39

The total intrinsic value of stock options (the amount by which the stock price exceeded the exercise price of the stock option on the date of exercise) that were exercised during 2019 was $7.7 million ($12.6 million in 2018 and $4.5 million in 2017).

The following table summarizes information about stock options outstanding at December 31, 2019 (shares in thousands):

		Options Outstanding										Options Exercisable
						Weighted-
						Average		Weighted-								Weighted-
Range of		Number				Remaining Contractual		Average Exercise				Number				Average Exercise
Exercise Prices		Outstanding				Life		Price				Exercisable				Price
$35.00 - $45.00			576			2.9 years		$	42.65				576			$	42.65
$45.01 - $55.00			2,352			6.0 years		$	48.61				2,122			$	48.68
$55.01 - $65.00			698			6.9 years		$	59.07				412			$	59.07
$65.01 - $75.00			266			7.9 years		$	65.80				166			$	65.80
$35.00 - $75.00			3,892			5.8 years		$	50.78				3,276			$	49.79

As of December 31, 2019, the total aggregate intrinsic value of stock options outstanding and stock options exercisable was $25.9 million and $24.0 million, respectively.

The grant date fair value of stock options granted was $8.69 per share in 2019 ($15.07 per share in 2018 and $12.61 per share in 2017). The fair value was estimated using the Black-Scholes option-pricing model with the following assumptions:

		2019		2018		2017
Exercise price		$48.00		$65.80		$59.07
Expected dividend yield		3.33%		2.31%		2.56%
Expected stock price volatility		25.57%		25.28%		26.53%
Risk-free interest rate		2.03%		2.85%		2.02%
Expected life (in years)		6.5		6.5		6.5

Stock options granted to employees who are eligible for retirement on the date of grant are expensed immediately since these awards vest upon retirement from the Company. Retirement, for purposes of vesting in these stock options, means termination of employment after satisfying age and years of service requirements. Similarly, stock options granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible. Compensation expense for stock options granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over

the vesting period. Compensation expense for stock options was $4.7 million in 2019 ($4.6 million in 2018 and $8.2 million in 2017). As of December 31, 2019, unrecognized compensation expense related to stock options was $1.2 million, which is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units

Nucor annually grants restricted stock units (“RSUs”) to key employees, officers and non-employee directors. The RSUs granted to key employees and officers vest and are converted to common stock in three equal installments on each of the first three anniversaries of the grant date provided that a portion of the RSUs awarded to an officer prior to 2018 vest only upon the officer’s retirement. Retirement, for purposes of vesting in these RSUs only, means termination of employment with approval of the Compensation and Executive Development Committee of the Board of Directors after satisfying age and years of service requirements. RSUs granted to a non-employee director are fully vested on the grant date and are payable to the non-employee director in the form of common stock after the termination of the director’s service on the Board of Directors.

RSUs granted to employees who are eligible for retirement on the date of grant are expensed immediately, and RSUs granted to employees who will become retirement-eligible prior to the end of the vesting term are expensed over the period through which the employee will become retirement-eligible since these awards vest upon retirement from the Company. Compensation expense for RSUs granted to employees who will not become retirement-eligible prior to the end of the vesting term is recognized on a straight-line basis over the vesting period.

Cash dividend equivalents are paid to holders of RSUs each quarter. Dividend equivalents paid on RSUs expected to vest are recognized as a reduction in retained earnings.

The fair value of an RSU is determined based on the closing price of Nucor’s common stock on the date of the grant.

A summary of Nucor’s RSU activity is as follows (shares in thousands):

		2019								2018								2017
						Grant Date								Grant Date								Grant Date
Year Ended December 31,		Shares				Fair Value				Shares				Fair Value				Shares				Fair Value
Restricted stock units:
Unvested at beginning of year			1,246			$	59.09				1,071			$	52.62				1,040			$	48.47
Granted			1,770			$	48.00				1,013			$	65.80				721			$	59.07
Vested			(1,207	)		$	52.43				(827	)		$	58.98				(677	)		$	53.17
Canceled			(33	)		$	57.09				(11	)		$	55.02				(13	)		$	50.21
Unvested at end of year			1,776			$	52.60				1,246			$	59.09				1,071			$	52.62

Compensation expense for RSUs was $69.1 million in 2019 ($54.3 million in 2018 and $38.0 million in 2017). The total fair value of shares vested during 2019 was $58.8 million ($54.4 million in 2018 and $39.9 million in 2017). As of December 31, 2019, unrecognized compensation expense related to unvested RSUs was $60.5 million, which is expected to be recognized over a weighted-average period of 1.5 years.

Restricted Stock Awards

Prior to their expiration effective December 31, 2017, the Nucor Corporation Senior Officers Long-Term Incentive Plan and the Nucor Corporation Senior Officers Annual Incentive Plan authorized the award of shares of common stock to officers subject to certain conditions and restrictions. Effective January 1, 2018, the Company adopted supplements to the Omnibus Plan with terms that permit the award of shares of common stock to officers subject to the conditions and restrictions described below,

which are substantially similar to those of the expired Senior Officers Long-Term Incentive Plan and Senior Officers Annual Incentive Plan. The expired Senior Officers Long-Term Incentive Plan, together with the applicable supplement, is referred to below as the “LTIP,” and the expired Senior Officers Annual Incentive Plan, together with the applicable supplement, is referred to below as the “AIP.”

The LTIP provides for the award of shares of restricted common stock at the end of each LTIP performance measurement period at no cost to officers if certain financial performance goals are met during the period. One-third of the LTIP restricted stock award vests upon each of the first three anniversaries of the award date or, if earlier, upon the officer’s attainment of age 55 while employed by Nucor. Although participants are entitled to cash dividends and may vote such awarded shares, the sale or transfer of such shares is limited during the restricted period.

The AIP provides for the payment of annual cash incentive awards. An AIP participant may elect, however, to defer payment of up to one-half of an AIP award. In such event, the deferred AIP award is converted into common stock units and credited with a deferral incentive, in the form of additional common stock units, equal to 25% of the number of common stock units attributable to the deferred AIP award. Common stock units attributable to deferred AIP awards are fully vested. Common stock units credited as a deferral incentive vest upon the AIP participant’s attainment of age 55 while employed by Nucor. Vested common stock units are paid to AIP participants in the form of shares of common stock following their termination of employment with Nucor.

A summary of Nucor’s restricted stock activity under the AIP and the LTIP is as follows (shares in thousands):

		2019								2018								2017
						Grant Date								Grant Date								Grant Date
Year Ended December 31,		Shares				Fair Value				Shares				Fair Value				Shares				Fair Value
Restricted stock units and restricted stock awards:
Unvested at beginning of year			130			$	62.97				91			$	54.50				67			$	45.77
Granted			316			$	58.04				256			$	67.68				172			$	60.62
Vested			(299	)		$	58.82				(217	)		$	64.95				(148	)		$	51.72
Canceled			—			$	—				—			$	—				—			$	—
Unvested at end of year			147			$	60.81				130			$	62.97				91			$	54.50

Compensation expense for common stock and common stock units awarded under the AIP and the LTIP is recorded over the performance measurement and vesting periods based on the anticipated number and market value of shares of common stock and common stock units to be awarded. Compensation expense for anticipated awards based upon Nucor’s financial performance, exclusive of amounts payable in cash, was $16.6 million in 2019 ($14.6 million in 2018 and $17.9 million in 2017). The total fair value of shares vested during 2019 was $17.3 million ($14.7 million in 2018 and $9.0 million in 2017). As of December 31, 2019, unrecognized compensation expense related to unvested restricted stock awards was $1.6 million, which is expected to be recognized over a weighted-average period of 1.6 years.

18. Employee Benefit Plans

Nucor makes contributions to a Profit Sharing and Retirement Savings Plan for qualified employees based on the profitability of the Company. Nucor’s expense for these benefits totaled $181.4 million in 2019 ($307.9 million in 2018 and $169.4 million in 2017). The related liability for these benefits is included in salaries, wages and related accruals in the consolidated balance sheets.

Nucor also has a medical plan covering certain eligible early retirees. The unfunded obligation, included in deferred credits and other liabilities in the consolidated balance sheets, totaled $27.0 million at December 31, 2019 ($25.5 million at December 31, 2018). The expense associated with this early retiree medical plan totaled $2.0 million in 2019 ($2.1 million in 2018 and $2.2 million in 2017). The discount rate

used by Nucor in determining its benefit obligation was 3.23% in 2019 (4.24% in 2018 and 3.6% in 2017). The health care cost increase trend rate used was 6.0% in 2019 (6.3% in 2018 and 6.6% in 2017). The health care cost increase trend rate is projected to decline gradually to 4.5% by 2037.

19. Interest Expense (Income)

The components of net interest expense are as follows (in thousands):

		Year Ended December 31,
		2019				2018				2017
Interest expense		$	157,358			$	161,256			$	187,282
Interest income			(35,933	)			(25,721	)			(13,702	)
Interest expense, net		$	121,425			$	135,535			$	173,580

Interest paid was $172.6 million in 2019 ($165.7 million in 2018 and $186.8 million in 2017). Interest expense for 2019 decreased compared to 2018 in part due to an increase in capitalized interest related to an increase in spending associated with capital projects in 2019. Included in interest expense in 2018 was the benefit received from the settlement of a treasury lock instrument that was entered into in anticipation of the Company’s debt issuance that occurred in 2018. The Company did not elect hedge accounting for this instrument.

20. Income Taxes

Components of earnings before income taxes and noncontrolling interests are as follows (in thousands):

		Year Ended December 31,
		2019				2018				2017
United States		$	1,806,704			$	3,160,111			$	1,610,652
Foreign			(23,897	)			69,280				139,305
		$	1,782,807			$	3,229,391			$	1,749,957

The provision for income taxes consists of the following (in thousands):

		Year Ended December 31,
		2019				2018				2017
Current:
Federal		$	241,074			$	633,868			$	504,865
State			62,685				96,622				37,308
Foreign			8,981				14,800				48,386
Total current			312,740				745,290				590,559
Deferred:
Federal			101,946				4,953				(207,006	)
State			8,013				6,847				(4,533	)
Foreign			(10,802	)			(8,783	)			(9,634	)
Total deferred			99,157				3,017				(221,173	)
Total provision for income taxes		$	411,897			$	748,307			$	369,386

A reconciliation of the federal statutory tax rate (21% in 2019 and 2018, and 35% in 2017) to the total provision is as follows:

		Year Ended December 31,
		2019		2018		2017
Taxes computed at statutory rate		21.00%		21.00%		35.00%
State income taxes, net of federal income tax benefit		3.16%		2.52%		1.22%
Federal research credit		-0.34%		-0.14%		-0.24%
Domestic manufacturing deduction		—		—		-2.58%
Equity in losses of foreign joint venture		0.19%		0.08%		0.13%
Foreign rate differential		—		-0.07%		-0.62%
Noncontrolling interests		-1.18%		-0.78%		-1.24%
Tax Reform Act		—		0.18%		-10.01%
Other, net		0.27%		0.38%		-0.55%
Provision for income taxes		23.10%		23.17%		21.11%

For the year ended December 31, 2019, the effective tax rate on continuing operations decreased 0.07% versus the prior year to 23.10%. The 2018 effective tax rate included the write-off of $21.3 million (0.66%, included in the Other, net line for 2018) of deferred tax assets due to the change in the tax status of a subsidiary in 2018.

The Tax Reform Act impacted the effective tax rates in both 2018 and 2017. The impacts on the 2018 effective tax rate included the lower federal income tax rate of 21% (35% in 2017), the loss of the domestic manufacturing deduction (-2.58% in 2017) and two SAB 118 adjustments totaling $5.8 million. These SAB 118 adjustments had an impact of 0.18% on the 2018 effective tax rate and are included in the Tax Reform Act line for 2018. The 2017 effective tax rate included a provisional net benefit of $175.2 million (-10.01%) mainly driven by the revaluation of the Company's net U.S. deferred tax assets and liabilities due to the enactment of the Tax Reform Act.

Deferred tax assets and liabilities resulted from the following (in thousands):

		December 31,
		2019				2018
Deferred tax assets:
Accrued liabilities and reserves		$	146,658			$	128,553
Allowance for doubtful accounts			18,479				20,134
Inventory			79,363				63,950
Post-retirement benefits			10,288				8,746
Commodity hedges			5,164				1,393
Net operating loss carryforward			59,083				27,131
Tax credit carryforwards			164,132				16,792
Other deferred tax assets			8,508				779
Valuation allowance			(192,295	)			(30,104	)
Total deferred tax assets			299,380				237,374
Deferred tax liabilities:
Holdbacks and amounts not due under contracts			(12,930	)			(10,731	)
Intangibles			(171,531	)			(167,374	)
Property, plant and equipment			(545,890	)			(390,575	)
Total deferred tax liabilities			(730,351	)			(568,680	)
Total net deferred tax liabilities		$	(430,971	)		$	(331,306	)

Tax credit carryforwards were $164.1 million at December 31, 2019 ($16.8 million at December 31, 2018). The increase in the balance was primarily due to state tax credits in the amount of $147.3 million that were awarded in 2019. Nucor believes utilization of these credits is unlikely. For this reason, the

Company has also established a corresponding valuation allowance for $147.3 million. The remaining movement in valuation allowance is primarily driven by state and foreign net operating losses generated in the current year for which Nucor believes utilization is unlikely.

Non-current deferred tax assets included in other assets were $0.0 million at December 31, 2019 ($0.7 million at December 31, 2018). Non-current deferred tax liabilities included in deferred credits and other liabilities were $431.0 million at December 31, 2019 ($332.0 million at December 31, 2018). Current federal and state income taxes receivable included in other current assets were $240.8 million at December 31, 2019 ($26.2 million at December 31, 2018). Nucor paid $525.2 million in net federal, state and foreign income taxes in 2019 ($561.1 million in 2018 and $699.8 million in 2017).

Nucor has not recognized deferred tax liabilities on its investment in foreign subsidiaries with undistributed earnings that satisfy the permanent reinvestment requirements (the deferred tax liabilities on the investments not permanently reinvested are immaterial). While Nucor considers future earnings to be permanently reinvested, it is expected that potential future distributions will likely be of a nontaxable manner. If this assertion of permanent reinvestment were to change there may be deferred tax liabilities related to the withholding tax impacts on the actual distribution of certain cumulative undistributed foreign earnings, but the Company believes this amount to be immaterial.

State net operating loss carryforwards were $681.8 million at December 31, 2019 ($483.0 million at December 31, 2018). If unused, they will expire between 2020 and 2039. Foreign net operating loss carryforwards were $149.8 million at December 31, 2019 ($58.6 million at December 31, 2018), of which $19.5 million have no expiration. If unused, the remaining $130.3 million of foreign loss carryforwards will expire between 2025 and 2039.

At December 31, 2019, Nucor had approximately $50.9 million of unrecognized tax benefits, of which $50.2 million would affect Nucor's effective tax rate, if recognized. At December 31, 2018, Nucor had approximately $48.6 million of unrecognized tax benefits, of which $48.0 million would affect Nucor's effective tax rate, if recognized.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits recorded in deferred credits and other liabilities is as follows (in thousands):

		December 31,
		2019				2018				2017
Balance at beginning of year		$	48,605			$	48,845			$	44,088
Additions based on tax positions related to current year			9,272				16,424				11,154
Reductions based on tax positions related to current year			—				—				—
Additions based on tax positions related to prior years			2,106				199				2,556
Reductions based on tax positions related to prior years			(2,863	)			(8,198	)			(5,461	)
Reductions due to settlements with taxing authorities			(1,514	)			(2,160	)			—
Reductions due to statute of limitations lapse			(4,686	)			(6,505	)			(3,492	)
Balance at end of year		$	50,920			$	48,605			$	48,845

We estimate that in the next 12 months, our gross uncertain tax positions, exclusive of interest, could decrease by as much as $7.3 million, as a result of the expiration of the statute of limitations.

During 2019, Nucor recognized $0.7 million of expense in interest and penalties ($4.0 million of benefit in 2018 and $2.2 million of benefit in 2017). The interest and penalties are included in interest expense, net and marketing, administrative and other expenses, respectively, in the consolidated statements of earnings. As of December 31, 2019, Nucor had approximately $11.9 million of accrued interest and penalties related to uncertain tax positions (approximately $11.2 million at December 31,

2018). The accrued interest and penalties are included in accrued expenses and other current liabilities and deferred credits and other liabilities, respectively, on the consolidated balance sheets.

Nucor has concluded U.S. federal income tax matters for years through 2014. The tax years 2015 through 2018 remain open to examination by the Internal Revenue Service. The Canada Revenue Agency has concluded its examination of the 2012 and 2013 Canadian returns for Harris Steel Group Inc. and certain related affiliates. The 2015 tax year is currently under examination by the Canada Revenue Agency. The Trinidad and Tobago Inland Revenue Division has concluded its examination of the Nu-Iron Unlimited 2013 corporate income tax return. The tax years 2013 through 2018 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

21. Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive income (loss) by component (in thousands):

		Gains and (Losses) on				Foreign Currency				Adjustment to Early
		Hedging Derivatives				Gains (Losses)				Retiree Medical Plan				Total
December 31, 2018		$	(6,500	)		$	(304,646	)		$	7,013			$	(304,133	)
Other comprehensive income (loss) before reclassifications			(9,833	)			7,873				(1,148	)			(3,108	)
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1)			2,333				—				57				2,390
Net current-period other comprehensive income (loss)			(7,500	)			7,873				(1,091	)			(718	)
Other											1,885				1,885
December 31, 2019		$	(14,000	)		$	(296,773	)		$	7,807			$	(302,966	)

(1)	Includes $2,333 and 57 net-of-tax impact of accumulated other comprehensive income reclassifications into cost of products sold for net losses on commodity contracts and adjustment to early retiree medical plan, respectively. The tax impacts of these reclassifications were $700 and $49, respectively.

		Gains and (Losses) on				Foreign Currency				Adjustment to Early
		Hedging Derivatives				Gains (Losses)				Retiree Medical Plan				Total
December 31, 2017		$	(2,800	)		$	(257,513	)		$	5,632			$	(254,681	)
Other comprehensive income (loss) before reclassifications			(3,568	)			(47,133	)			1,731				(48,970	)
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (2)			(132	)			—				(350	)			(482	)
Net current-period other comprehensive income (loss)			(3,700	)			(47,133	)			1,381				(49,452	)
December 31, 2018		$	(6,500	)		$	(304,646	)		$	7,013			$	(304,133	)

(2)	Includes ($132) and ($350) net-of-tax impact of accumulated other comprehensive income reclassifications into cost of products sold for net losses on commodity contracts and adjustment to early retiree medical plan, respectively. The tax impacts of these reclassifications were $0 and ($108), respectively.

Included in the $296.8 million foreign currency losses at December 31, 2019 are $182.0 million of losses related to our equity method investment in Duferdofin Nucor and $114.8 million of losses related primarily to our Canadian operations.

22. Earnings Per Share

The computations of basic and diluted net earnings per share are as follows (in thousands, except per share data):

Year Ended December 31,		2019				2018				2017
Basic net earnings per share:
Basic net earnings		$	1,271,143			$	2,360,767			$	1,318,688
Earnings allocated to participating securities			(7,035	)			(9,344	)			(4,549	)
Net earnings available to common stockholders		$	1,264,108			$	2,351,423			$	1,314,139
Average shares outstanding			305,040				315,858				319,990
Basic net earnings per share		$	4.14			$	7.44			$	4.11
Diluted net earnings per share:
Diluted net earnings		$	1,271,143			$	2,360,767			$	1,318,688
Earnings allocated to participating securities			(7,034	)			(9,317	)			(4,539	)
Net earnings available to common stockholders		$	1,264,109			$	2,351,450			$	1,314,149
Diluted average shares outstanding:
Basic shares outstanding			305,040				315,858				319,990
Dilutive effect of stock options and other			463				875				783
			305,503				316,733				320,773
Diluted net earnings per share		$	4.14			$	7.42			$	4.10

The following stock options were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive (shares in thousands):

Year Ended December 31,		2019				2018				2017
Anti-dilutive stock options:
Weighted-average shares		963				156				407
Weighted-average exercise price		$	60.92			$	65.80			$	59.07

23. Segments

Nucor reports its results in the following segments: steel mills, steel products and raw materials. The steel mills segment includes carbon and alloy steel in sheet, bars, structural and plate; steel trading businesses; rebar distribution businesses; and Nucor’s equity method investments in Duferdofin Nucor, NuMit and Nucor-JFE. The steel products segment includes steel joists and joist girders, steel deck, fabricated concrete reinforcing steel, cold finished steel, precision castings, steel fasteners, metal building systems, steel grating, tubular products businesses, piling products business, and wire and wire mesh. The raw materials segment includes The David J. Joseph Company and its affiliates, primarily a scrap broker and processor; Nu-Iron Unlimited and Nucor Steel Louisiana, two facilities that produce direct reduced iron used by the steel mills; and our natural gas production operations. The steel mills, steel products and raw materials segments are consistent with the way Nucor manages its business, which is primarily based upon the similarity of the types of products produced and sold by each segment.

Net interest expense on long-term debt, charges and credits associated with changes in allowances to eliminate intercompany profit in inventory, profit sharing expense and stock-based compensation are shown under Corporate/eliminations. Corporate assets primarily include cash and cash equivalents, short-term investments, allowances to eliminate intercompany profit in inventory, deferred income tax assets, federal and state income taxes receivable and investments in and advances to affiliates.

Nucor’s results by segment are as follows (in thousands):

		Year Ended December 31,
		2019				2018				2017
Net sales to external customers:
Steel mills		$	13,933,950			$	16,245,218			$	12,929,709
Steel products			6,990,064				6,796,501				5,579,744
Raw materials			1,664,844				2,025,560				1,742,940
		$	22,588,858			$	25,067,279			$	20,252,393
Intercompany sales:
Steel mills		$	3,304,437			$	3,924,160			$	2,916,017
Steel products			233,728				207,003				118,249
Raw materials			8,784,397				11,460,645				9,191,081
Corporate/eliminations			(12,322,562	)			(15,591,808	)			(12,225,347	)
		$	—			$	—			$	—
Depreciation expense:
Steel mills		$	401,609			$	378,146			$	377,210
Steel products			85,276				80,681				76,992
Raw materials			151,124				161,666				172,699
Corporate			10,902				10,386				8,932
		$	648,911			$	630,879			$	635,833
Amortization expense:
Steel mills		$	8,624			$	9,400			$	9,706
Steel products			49,914				51,997				52,597
Raw materials			27,204				27,361				28,925
		$	85,742			$	88,758			$	91,228
Earnings (loss) before income taxes and noncontrolling interests:
Steel mills		$	1,790,694			$	3,500,085			$	1,953,075
Steel products			511,145				467,105				337,978
Raw materials			(28,244	)			236,241				129,296
Corporate/eliminations			(490,788	)			(974,040	)			(670,392	)
		$	1,782,807			$	3,229,391			$	1,749,957
Segment assets:
Steel mills		$	9,283,216			$	9,244,086			$	7,671,217
Steel products			4,610,628				4,734,636				4,323,907
Raw materials			3,316,479				3,492,126				3,396,110
Corporate/eliminations			1,134,343				449,740				450,024
		$	18,344,666			$	17,920,588			$	15,841,258
Capital expenditures:
Steel mills		$	1,133,089			$	720,310			$	336,760
Steel products			93,848				88,585				90,952
Raw materials			244,818				169,926				59,036
Corporate			40,315				18,435				20,326
		$	1,512,070			$	997,256			$	507,074

Net sales by product were as follows (in thousands). Further product group breakdown is impracticable.

		Year Ended December 31,
		2019				2018				2017
Net sales to external customers:
Sheet		$	6,450,506			$	7,571,765			$	6,407,974
Bar			4,106,640				4,709,292				3,558,806
Structural			1,573,248				1,830,476				1,317,995
Plate			1,803,556				2,133,685				1,644,934
Tubular Products			1,207,398				1,347,577				917,235
Rebar Fabrication			1,666,445				1,496,194				1,306,418
Other Steel Products			4,116,221				3,952,730				3,356,091
Raw Materials			1,664,844				2,025,560				1,742,940
		$	22,588,858			$	25,067,279			$	20,252,393

24. Revenue

Revenue is recognized when obligations under the terms of contracts with our customers are satisfied; generally, this occurs upon shipment or when control is transferred. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the goods. In addition, revenue is deferred when cash payments are received or due in advance of performance.

The durations of Nucor’s contracts with customers are generally one year or less. Customer payment terms are generally 30 days.

Contract liabilities are primarily related to deferred revenue resulting from cash payments received in advance from customers to protect against credit risk. Contract liabilities totaled $108.6 million as of December 31, 2019 ($91.2 million as of December 31, 2018), and are included in accrued expenses and other current liabilities in the consolidated balance sheets. The amount of revenue reclassified from the December 31, 2018 contract liabilities balance during 2019 was approximately $79.4 million.

Nucor disaggregates its revenues by major source in the same manner as presented in the net sales by product table in the segment footnote (see Note 23).

STEEL MILLS SEGMENT

Sheet – For the majority of sheet products, we transfer control and recognize a sale when we ship the product from the sheet mill to our customer. The amount of consideration we receive and revenue we recognize for spot market sales are based upon prevailing prices at the time of sale. The amount of consideration we receive and revenue we recognize for contract customers are based primarily on pricing formulas that incorporate monthly or quarterly price adjustments which reflect changes in the current market-based indices and/or raw material costs near the time of shipment.

The amount of tons sold to contract customers at any given time depends on a variety of factors, including our consideration of current and future market conditions, our strategy to appropriately balance spot and contract tons in a manner to meet our customers’ requirements while considering the expected profitability, our desire to sustain a diversified customer base and our end-use customers’ perceptions about future market conditions. These contracts are typically one year or less. Contract sales within the steel mills segment are most notable in our sheet operations, as it is common for contract sales to account for the majority of sheet sales in a given year.

Bar, Structural and Plate – For the majority of bar, structural and plate products, we transfer control and recognize a sale when we ship the product from the mill to our customer. The significant majority of

bar, structural and plate product sales are spot market sales, and the amount of consideration we receive and revenue we recognize for those sales are based upon prevailing prices at the time of sale.

STEEL PRODUCTS SEGMENT

Tubular Products – The tubular products businesses transfer control and recognize a sale when the products are shipped from our operating locations to our customers. The significant majority of tubular product sales are spot market sales, and the amount of consideration we receive and revenue we recognize for those sales are based upon prevailing prices at the time of sale.

Rebar Fabrication – The majority of revenue for our rebar fabrication businesses relates to revenue from contracts with customers for the supply of fabricated rebar. For the majority of these transactions, we transfer control and recognize a sale when the products are shipped from our operating locations and collection is reasonably assured. Provisions for losses on incomplete contracts are made in the period in which such losses are determined.

Our rebar fabrication businesses also generate a significant amount of revenue from contracts with customers in which they supply fabricated rebar and install it at the customer’s job site. There are two performance obligations for these types of contracts: the supply of the fabricated rebar and the installation of the supplied rebar at the customer’s job site. For the supply of fabricated rebar performance obligation, we transfer control and recognize a sale when the product is delivered to our customer’s job site. The transaction price allocated to this performance obligation is determined at the start of the contract, based on the then current market price for supplied fabricated rebar. For the installation of supplied rebar performance obligation, we transfer control and recognize a sale when the delivered material is installed. The transaction price allocated to this performance obligation is determined at the start of the contract, based on the then current market price for the installation of fabricated rebar.

Variable consideration occurring from change orders and price escalations caused by changes in underlying material costs for previously satisfied performance obligations is recognized cumulatively in the period in which management believes that the amount of consideration is changed and collection is reasonably assured. Management reviews these situations on a case-by-case basis and considers a variety of factors, including relevant experience with similar types of performance obligations, our experience with the customer and collectability considerations.

Other Steel Products – Other steel products include our joist, deck, cold finish, metal building systems, piling and the other remaining businesses that comprise the steel products segment. Generally, for these businesses, we transfer control and recognize a sale when we ship the product from our operating locations to our customers. The amount of consideration we receive and revenue we recognize for those sales are agreed upon with the customers before the product is shipped.

RAW MATERIALS SEGMENT

The majority of the raw materials segment revenue from outside customers is generated by The David J. Joseph Company and its affiliates. We transfer control and recognize a sale based on the terms of the agreement with the customer, which is generally when the product has met the delivery requirements. The amount of consideration we receive and revenue we recognize for those sales is based on the contract with the customer, which generally reflects current market prices at the time the contract is entered into.

25. Quarterly Information (Unaudited)

		(in thousands, except per share data)
		Year Ended December 31, 2019
		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Net sales		$	6,096,624			$	5,895,986			$	5,464,502			$	5,131,746
Gross margin			895,892				775,494				572,511				435,188
Net earnings (1)			530,793				412,277				293,587				134,253
Net earnings attributable to Nucor stockholders (1)			501,806				386,483				275,031				107,823
Net earnings per share:
Basic		$	1.63			$	1.26			$	0.90			$	0.35
Diluted		$	1.63			$	1.26			$	0.90			$	0.35

		(in thousands, except per share data)
		Year Ended December 31, 2018
		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Net sales		$	5,568,419			$	6,460,774			$	6,742,202			$	6,295,884
Gross margin (2)			726,406				1,166,590				1,290,150				1,112,262
Net earnings (3)			380,112				713,615				706,287				681,070
Net earnings attributable to Nucor stockholders (3)			354,179				683,153				676,656				646,779
Net earnings per share:
Basic		$	1.11			$	2.14			$	2.13			$	2.08
Diluted		$	1.10			$	2.13			$	2.13			$	2.07

(1)

First quarter results include a benefit of $33.7 million related to the gain on the sale of an equity method investment in the raw materials segment. Fourth quarter results include non-cash impairment charges totaling $66.9 million related to an impairment of our proved producing natural gas well assets in the raw materials segment ($35.0 million), certain property, plant and equipment in the steel mills segment ($20.0 million) and the write-down of certain intangible assets in the steel products segment ($11.9 million).

(2)	Second quarter results include a benefit of $9.6 million related to insurance recoveries. Third quarter results include a benefit of $18.0 million related to insurance recoveries.

(3)

First quarter results include the write-off of deferred tax assets of $21.8 million due to the change in the tax status of a subsidiary. Second quarter results include a benefit of $23.3 million (which includes the amount in gross margin) related to insurance recoveries. Third quarter results include a non-cash impairment charge of $110.0 million related to our proved producing natural gas well assets, as well as a benefit of $24.8 million (which includes the amount in gross margin) related to insurance recoveries.