Item 8. Financial Statements and Supplementary Data

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Index to Financial Statements

				Management’s Report on Internal Control Over Financial Reporting			46
				Report of Independent Registered Public Accounting Firm			47
				Consolidated Balance Sheets			50
				Consolidated Statements of Earnings			51
				Consolidated Statements of Comprehensive Income			52
				Consolidated Statements of Stockholders’ Equity			53
				Consolidated Statements of Cash Flows			54
				Notes to Consolidated Financial Statements			55

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, 2020. 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, 2020. PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of Nucor’s internal control over financial reporting as of December 31, 2020 as stated in their report which is included herein.

Report of Independent Registered 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, 2020 and 2019, and the related consolidated statements of earnings, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, 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, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 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, 2020, 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 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $2.2 billion as of December 31, 2020, and total goodwill associated with the Rebar Fabrication reporting unit was $364.3 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 2020 goodwill impairment analysis as of the first day of the fourth quarter of 2020. 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, raw material costs and other 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 the significant judgment by management when determining the fair value of the reporting unit, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to sales prices, raw material costs, the terminal year growth rate and the discount 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 related to the sales prices, raw material costs, terminal year growth rate and discount rate. Evaluating management’s assumptions related to sales prices, raw material costs 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. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

February 26, 2021

We have served as the Company’s auditor since 1989.

CONSOLIDATED BALANCE SHEETS

(In thousands)

		December 31,
		2020				2019
ASSETS
Current assets:
Cash and cash equivalents (Note 14)		$	2,639,671			$	1,534,605
Short-term investments (Notes 3 and 14)			408,004				300,040
Accounts receivable, net (Note 4)			2,298,850				2,160,102
Inventories, net (Note 5)			3,569,089				3,842,095
Other current assets (Note 19)			573,048				389,528
Total current assets			9,488,662				8,226,370
Property, plant and equipment, net (Notes 6 and 7)			6,899,110				6,178,555
Restricted cash and cash equivalents (Notes 14 and 24)			115,258				—
Goodwill (Note 8)			2,229,672				2,201,063
Other intangible assets, net (Note 8)			668,021				742,186
Other assets (Notes 6 and 9)			724,671				996,492
Total assets		$	20,125,394			$	18,344,666
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt (Notes 11 and 14)		$	57,906			$	62,444
Current portion of long-term debt and finance lease obligations (Notes 6, 11 and 14)			10,885				29,264
Accounts payable (Note 10)			1,432,159				1,201,698
Salaries, wages and related accruals (Note 17)			462,727				510,844
Accrued expenses and other current liabilities (Notes 6, 10, 13, 15, 16 and 23)			664,183				659,524
Total current liabilities			2,627,860				2,463,774
Long-term debt and finance lease obligations due after one year (Notes 6, 11 and 14)			5,271,789				4,291,301
Deferred credits and other liabilities (Notes 6, 13, 15, 17 and 19)			993,884				798,415
Total liabilities			8,893,533				7,553,490
Commitments and contingencies (Notes 13, 15 and 16)
Equity
Nucor stockholders’ equity (Notes 12, 16 and 20):
Common stock (800,000 shares authorized; 380,154 and 380,154 shares issued, respectively)			152,061				152,061
Additional paid-in capital			2,121,288				2,107,646
Retained earnings			11,343,852				11,115,056
Accumulated other comprehensive loss, net of income taxes (Notes 13 and 20)			(118,861	)			(302,966	)
Treasury stock (77,909 and 78,342 shares, respectively)			(2,709,675	)			(2,713,931	)
Total Nucor stockholders’ equity			10,788,665				10,357,866
Noncontrolling interests			443,196				433,310
Total equity			11,231,861				10,791,176
Total liabilities and equity		$	20,125,394			$	18,344,666

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

		Year Ended December 31,
		2020				2019				2018
Net sales (Notes 23 and 25)		$	20,139,658			$	22,588,858			$	25,067,279
Costs, expenses and other:
Cost of products sold (Notes 6, 13 and 20)			17,911,708				19,909,773				20,771,871
Marketing, administrative and other expenses (Note 6)			615,041				711,248				860,722
Equity in losses (earnings) of unconsolidated subsidiaries			10,533				(3,311	)			(40,240	)
Losses and impairments of assets (Notes 7, 8, 9, 14, 19, 20 and 25)			613,640				66,916				110,000
Interest expense, net (Notes 6, 18 and 19)			153,198				121,425				135,535
			19,304,120				20,806,051				21,837,888
Earnings before income taxes and noncontrolling interests			835,538				1,782,807				3,229,391
Provision for income taxes (Notes 19 and 25)			(490	)			411,897				748,307
Net earnings			836,028				1,370,910				2,481,084
Earnings attributable to noncontrolling interests			114,558				99,767				120,317
Net earnings attributable to Nucor stockholders		$	721,470			$	1,271,143			$	2,360,767
Net earnings per share (Note 21):
Basic		$	2.37			$	4.14			$	7.44
Diluted		$	2.36			$	4.14			$	7.42

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

		Year Ended December 31,
		2020				2019				2018
Net earnings		$	836,028			$	1,370,910			$	2,481,084
Other comprehensive income (loss):
Net unrealized (loss) income on hedging derivatives, net of income taxes of $400, ($3,100) and ($300) for 2020, 2019 and 2018, respectively			2,084				(9,833	)			(3,568	)
Reclassification adjustment for (gain) loss on settlement of hedging derivatives included in net earnings, net of income taxes of $2,500, $700 and $0 for 2020, 2019 and 2018, respectively			7,216				2,333				(132	)
Foreign currency translation (loss) gain, net of income taxes of $0 for 2020, 2019 and 2018			17,306				7,873				(47,133	)
Adjustment to early retiree medical plan, net of income taxes of ($339), ($485) and $514 for 2020, 2019 and 2018, respectively			(1,213	)			(1,148	)			1,731
Reclassification adjustment for (gain) loss on early retiree medical plan included in net earnings, net of income taxes of $17, $49 and ($108) for 2020, 2019 and 2018, respectively			72				57				(350	)
Liquidation of equity method investment in foreign joint venture, net of income taxes of $0 in 2020			158,640				—				—
			184,105				(718	)			(49,452	)
Comprehensive income			1,020,133				1,370,192				2,431,632
Comprehensive income attributable to noncontrolling interests			(114,558	)			(99,767	)			(120,317	)
Comprehensive income attributable to Nucor stockholders		$	905,575			$	1,270,425			$	2,311,315

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, 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
Net earnings in 2020			836,028				—				—				—				721,470				—				—				—				721,470				114,558
Other comprehensive income (loss)			184,105				—				—				—				—				184,105				—				—				184,105				—
Stock options exercised			11,846				—				—				2,590				—				—				(266	)			9,256				11,846				—
Stock option expense			2,736				—				—				2,736				—				—				—				—				2,736				—
Issuance of stock under award plans, net of forfeitures			51,898				—				—				17,399				—				—				(992	)			34,499				51,898				—
Amortization of unearned compensation			1,753				—				—				1,753				—				—				—				—				1,753				—
Treasury stock acquired			(39,499	)			—				—				—				—				—				825				(39,499	)			(39,499	)			—
Cash dividends declared ($1.6125 per share)			(492,674	)			—				—				—				(492,674	)			—				—				—				(492,674	)			—
Distributions to noncontrolling interests			(115,508	)			—				—				—				—				—				—				—				—				(115,508	)
Other			—				—				—				(10,836	)			—				—				—				—				(10,836	)			10,836
BALANCES, December 31, 2020		$	11,231,861				380,154			$	152,061			$	2,121,288			$	11,343,852			$	(118,861	)			77,909			$	(2,709,675	)		$	10,788,665			$	443,196

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Year Ended December 31,
		2020				2019				2018
Operating activities:
Net earnings		$	836,028			$	1,370,910			$	2,481,084
Adjustments:
Depreciation			702,110				648,911				630,879
Amortization			83,356				85,742				88,758
Stock-based compensation			73,853				90,359				73,422
Deferred income taxes			162,836				99,157				3,017
Distributions from affiliates			10,521				37,459				30,196
Equity in losses (earnings) of unconsolidated affiliates			10,533				(3,311	)			(40,240	)
Losses and impairments of assets			613,640				66,916				110,000
Changes in assets and liabilities (exclusive of acquisitions and dispositions):
Accounts receivable			(129,290	)			361,340				(485,433	)
Inventories			284,081				712,645				(1,092,101	)
Accounts payable			250,561				(253,457	)			235,572
Federal income taxes			(197,275	)			(180,325	)			163,743
Salaries, wages and related accruals			(41,169	)			(186,755	)			204,796
Other operating activities			37,092				(40,178	)			(9,741	)
Cash provided by operating activities			2,696,877				2,809,413				2,393,952
Investing activities:
Capital expenditures			(1,543,219	)			(1,477,293	)			(982,531	)
Investment in and advances to affiliates			(44,427	)			(45,834	)			(121,412	)
Divestiture of affiliates			—				67,591				—
Disposition of plant and equipment			40,933				41,618				31,589
Acquisitions (net of cash acquired)			(88,071	)			(83,106	)			(33,063	)
Purchases of investments			(488,517	)			(367,741	)			—
Proceeds from the sale of investments			392,178				67,701				50,000
Other investing activities			(33,171	)			2,873				25,348
Cash used in investing activities			(1,764,294	)			(1,794,191	)			(1,030,069	)
Financing activities:
Net change in short-term debt			(4,538	)			4,574				5,037
Proceeds from long-term debt, net of discount			1,237,635				—				995,710
Repayment of long-term debt			(97,150	)			—				(500,000	)
Premium on debt exchange			(180,383	)			—				—
Bond issuance related costs			(6,250	)			—				(7,625	)
Issuance of common stock			11,846				16,145				24,101
Payment of tax withholdings on certain stock-based compensation			(19,102	)			(25,047	)			(22,123	)
Distributions to noncontrolling interests			(115,508	)			(76,347	)			(56,179	)
Cash dividends			(491,655	)			(492,062	)			(485,376	)
Acquisition of treasury stock			(39,499	)			(298,541	)			(853,997	)
Other financing activities			(9,542	)			(9,132	)			(7,725	)
Cash provided by (used in) financing activities			285,854				(880,410	)			(908,177	)
Effect of exchange rate changes on cash			1,887				907				(5,924	)
Increase in cash and cash equivalents and restricted cash and cash equivalents			1,220,324				135,719				449,782
Cash and cash equivalents - beginning of year			1,534,605				1,398,886				949,104
Cash and cash equivalents and restricted cash and cash equivalents - end of year		$	2,754,929			$	1,534,605			$	1,398,886
Non-cash investing activity:
Change in accrued plant and equipment purchases		$	(16,103	)		$	34,777			$	14,725

See notes to consolidated financial statements.

NUCOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018

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 primarily 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, raw materials and other 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 fair 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 financial 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 in 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 23 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.

3. Short-term Investments

Nucor held $408.0 million of short-term investments as of December 31, 2020 ($300.0 million as of December 31, 2019). The investments held as of December 31, 2020 and December 31, 2019 consisted mainly of several certificates of deposit (“CD’s”), commercial paper 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 2020, 2019 or 2018.

4. 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 $51.3 million at December 31, 2020 ($59.9 million at December 31, 2019 and $62.1 million at December 31, 2018).

5. Inventories

Inventories consisted of approximately 42% raw materials and supplies and 58% finished and semi-finished products at December 31, 2020 and 2019. 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.

6. 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 December 31,
		Statement of Earnings Classification		2020				2019
Operating lease cost		Cost of products sold		$	20,959			$	21,275
Operating lease cost		Marketing, administrative and other expenses			3,060				2,196
Total operating lease cost				$	24,019			$	23,471
Finance lease cost:
Amortization of leased assets		Cost of products sold		$	9,735			$	9,810
Interest on lease liabilities		Interest expense, net			10,551				11,335
Total finance lease cost				$	20,286			$	21,145
Total lease cost				$	44,305			$	44,616

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

		Year Ended December 31,
		2020				2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases		$	23,836			$	23,155
Operating cash flows from finance leases		$	10,551			$	11,335
Financing cash flows from finance leases		$	9,541			$	9,134
Non-cash investing and financing activities:
Additions to right-of-use assets obtained from
Operating lease liabilities		$	21,539			$	11,941
Finance lease liabilities		$	14,373			$	11,406

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

				December 31,
		Balance Sheet Classification		2020				2019
Assets:
Operating lease		Other assets		$	93,888			$	91,123
Finance lease		Property, plant and equipment, net			76,231				72,364
Total leased				$	170,119			$	163,487
Liabilities:
Current operating		Accrued expenses and other current liabilities		$	19,986			$	17,647
Current finance		Current portion of long-term debt and finance lease obligations			10,885				9,264
Non-current operating		Deferred credits and other liabilities			75,736				74,877
Non-current finance		Long-term debt and finance lease obligations due after one year			79,453				75,960
Total leased				$	186,060			$	177,748

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

		December 31, 2020
Weighted-average remaining lease term - operating leases		8.6 Years
Weighted-average remaining lease term - finance leases		10.9 Years
Weighted-average discount rate - operating leases		3.5%
Weighted-average discount rate - finance leases		26.0%

The reason for the substantial weighted-average discount rate – finance leases, of 26.0%, 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, 2020 (in thousands):

		Operating Leases				Finance Leases
Maturities of lease liabilities, year ending December 31,
2021		$	22,731			$	20,476
2022			19,536				19,918
2023			16,019				17,957
2024			13,244				13,040
2025			9,495				11,086
Thereafter			33,039				74,362
Total lease payments		$	114,064			$	156,839
Less imputed interest			(18,342	)			(66,501	)
Present value of lease liabilities		$	95,722			$	90,338

7. Property, Plant and Equipment

		(in thousands)
December 31,		2020				2019
Land and improvements, net		$	744,305			$	719,736
Buildings and improvements			1,505,913				1,413,690
Machinery and equipment			12,204,738				11,630,179
Proved oil and gas properties			558,231				558,123
Leasehold interest in unproved oil and gas properties			138,000				165,000
Construction in process and equipment deposits			1,603,416				1,108,054
			16,754,603				15,594,782
Less accumulated depreciation			(9,855,493	)			(9,416,227	)
		$	6,899,110			$	6,178,555

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.

Steel Mills Segment Asset Impairments

In 2019, 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 losses and impairments of assets in the consolidated statement of earnings for the year ended December 31, 2019.

In 2020, Nucor recorded non-cash impairment charges totaling $103.2 million related to certain inventory and long-lived assets, which primarily related to our Castrip sheet mill operations. Due to the advancements in the capabilities at our new cold mill and galvanizing line we have under construction at Nucor Steel Arkansas, we believe the value of the technology and process has diminished for Nucor. As such, the existing Castrip assets are not expected to be materially utilized going forward. These charges are included in losses and impairments of assets in the consolidated statement of earnings for the year ended December 31, 2020.

Raw Materials Segment Asset Impairments

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 $110.0 million of non-cash impairment charges relating to two of its three groups (“fields”) of wells. In the fourth quarter of 2019, due to the deteriorating natural gas pricing environment at our sales point in the Piceance Basin as well as the decreased performance of the natural gas well assets, Nucor determined a triggering event had occurred and performed an impairment analysis on all three fields of wells. As a result of the fourth quarter of 2019 analysis, a $35.0 million non-cash impairment charge was recorded on the field of wells that was not previously impaired in the third quarter of 2018. 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 losses and impairments of assets in the consolidated statements of earnings for the years ended December 31, 2019 and 2018.

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 assessments 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 assessments were performed on each of Nucor’s three fields of wells, with each field defined by common geographic location. The combined carrying value of the three fields of wells was $71.7 million at December 31, 2020 ($78.9 million at December 31, 2019).

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 2020, regulatory authorities in Colorado adopted new rules that became effective January 2021. One of these rules increases drilling setback distances. In the fourth quarter of 2020, Nucor determined a triggering event had occurred, as we do not expect to be able to access the full extent of the resources in the ground, and performed an impairment analysis. As a result, Nucor recorded a $27.0 million non-cash impairment charge related to the write-down of our leasehold interest in unproved oil and gas properties. This charge is included in losses and impairments of assets in the consolidated statement of earnings for the year ended December 31, 2020.

8. Goodwill and Other Intangible Assets

The change in the net carrying amount of goodwill for the years ended December 31, 2020 and 2019 by segment is as follows:

		(in thousands)
		Steel				Steel				Raw
		Mills				Products				Materials				Total
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
Acquisitions			20,484				(821	)			—				19,663
Translation			—				8,946				—				8,946
Balance, December 31, 2020		$	612,470			$	887,625			$	729,577			$	2,229,672

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, 2020								December 31, 2019
		Gross				Accumulated				Gross				Accumulated
		Amount				Amortization				Amount				Amortization
Customer relationships		$	1,421,962			$	838,443			$	1,412,954			$	767,532
Trademarks and trade names			162,365				100,000				162,183				92,258
Other			63,822				41,685				63,807				36,968
		$	1,648,149			$	980,128			$	1,638,944			$	896,758

Intangible asset amortization expense was $83.4 million in 2020 ($85.7 million in 2019 and $88.8 million in 2018). Annual amortization expense is estimated to be $82.7 million in 2021, $81.1 million in 2022, $80.4 million in 2023, $79.6 million in 2024 and $78.6 million in 2025.

The Company completed its annual goodwill impairment testing as of the first day of the fourth quarter of each of 2020, 2019 and 2018 and concluded that as of each such date there was no impairment of goodwill for any of its reporting units.

The annual assessment performed in 2020 for one of the Company’s reporting units, Rebar Fabrication, used forward-looking projections and included continued positive future cash flows. The fair value of this reporting unit exceeded its carrying value by approximately 99% in the most recent assessment. The reporting unit’s profitability in 2020 significantly increased from 2019, and we currently expect the reporting unit to be profitable in 2021. 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. Total goodwill associated with the Rebar Fabrication reporting unit as of December 31, 2020 was $364.3 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, 2020 was $58.8 million.

The Company has continued to monitor one of its reporting units, Grating, for potential triggering events since the impairment assessment performed in the third quarter of 2019. No triggering events occurred, so the Company completed its annual goodwill impairment testing as of the first day of the fourth quarter of 2020. The fair value of the Grating reporting unit exceeded its carrying value by approximately 88% 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, 2020, total goodwill associated with the Grating reporting unit was $37.0 million.

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

9. Equity Investments

The carrying value of our equity investments in domestic and foreign companies was $520.0 million at December 31, 2020 ($793.2 million at December 31, 2019), 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 its 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 of NuMit. Nucor’s investment in NuMit was $323.6 million at December 31, 2020 ($319.8 million at December 31, 2019). Nucor received distributions of $9.5 million, $36.5 million and $29.2 million from NuMit during 2020, 2019 and 2018, respectively.

Duferdofin Nucor

Nucor previously owned a 50% interest in Duferdofin Nucor S.r.l. (“Duferdofin Nucor”), an Italian steel manufacturer, and accounted for its investment (on a one-month lag basis) under the equity method, as control and risk of loss were shared equally between the members of Duferdofin Nucor. In December 2020, Nucor closed on an agreement (the “Duferdofin Agreement”) to transfer its 50% interest in Duferdofin Nucor to the owner of the remaining 50% interest, making Nucor’s investment in Duferdofin Nucor $0 at December 31, 2020 ($263.0 million at December 31, 2019).

In conjunction with the consummation of the Duferdofin Agreement, Nucor forgave the previously fully reserved, outstanding note receivable of €35.0 million ($37.8 million) from Duferdofin Nucor (€35.0 million, or $39.3 million, as of December 31, 2019), and Nucor was released from the guarantee it previously provided with respect to Duferdofin Nucor’s borrowings under Facility A of the Structured Trade Finance Facilities Agreement. The fair value of the guarantee was immaterial, and Nucor did not have a liability recorded 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. After delays caused by the COVID-19 pandemic, Nucor- JFE resumed hot commissioning in early December 2020. Nucor accounts for its 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 of Nucor-JFE. Nucor’s investment in Nucor-JFE was $147.1 million at December 31, 2020 ($163.2 million at December 31, 2019).

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 “JFE Facility”). The fair value of the guarantee is immaterial. Nucor’s guarantee expires on April 30, 2021. The maximum amount Nucor-JFE could borrow under the JFE Facility was amended on December 15, 2020 to $90.0 million. The JFE Facility is uncommitted. As of December 31, 2020, there was $50.0 million outstanding under the JFE Facility (none as of December 31, 2019). If Nucor-JFE fails to pay when due any amounts for which it is obligated under the JFE 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 as of December 31, 2020 ($25.0 million as of 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 under the other credit facilities, Nucor could be required to pay such amounts pursuant to and in accordance with the terms of its guarantees. 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 determined that a triggering event occurred in the first quarter of 2020 with respect to its equity method investment in Duferdofin Nucor due to adverse developments in the joint venture’s commercial outlook, which were exacerbated by the COVID-19 pandemic, all of which negatively impacted the joint venture’s strategic direction. After completing its impairment assessment, Nucor determined that the carrying amount exceeded its estimated fair value and the impairment condition was considered to be other than temporary. Therefore, Nucor recorded a $250.0 million impairment charge in the first quarter of 2020. The assumptions that most significantly affected the fair value determination included projected cash flows and the discount rate. The Company-specific inputs for measuring fair value are considered “Level 3” or unobservable inputs that are not corroborated by market data under applicable fair value authoritative guidance, as quoted market prices are not available.

Throughout 2020, additional capital contributions were made by the Company to Duferdofin Nucor that were immediately impaired. These additional capital contributions resulted in $5.0 million, $6.6 million and $25.4 million impairment charges against our investment in Duferdofin Nucor in the second, third and fourth quarters of 2020, respectively. Also, in the fourth quarter of 2020, Nucor reclassified into earnings, $158.6 million of cumulative foreign currency translation losses on our investment in Duferdofin Nucor. In 2020, total impairment charges, including the aforementioned note receivable, related to our investment in Duferdofin Nucor were approximately $483.5 million. These non-cash impairment charges are included in the steel mills segment and in losses and impairments of assets in the consolidated statement of earnings for the year ended December 31, 2020.

10. Current Liabilities

Book overdrafts, included in accounts payable in the consolidated balance sheets, were $210.5 million at December 31, 2020 ($116.4 million at December 31, 2019). Dividends payable, included in accrued expenses and other current liabilities in the consolidated balance sheets, were $123.9 million at December 31, 2020 ($122.9 million at December 31, 2019).

11. Debt and Other Financing Arrangements

		(in thousands)
December 31,		2020				2019
Industrial revenue bonds due from 2022 to 2040*		$	1,153,240			$	1,010,600
Notes, 4.125%, due 2022			600,000				600,000
Notes, 4.000%, due 2023			500,000				500,000
Notes, 2.000%, due 2025			500,000				—
Notes, 3.950%, due 2028			500,000				500,000
Notes, 2.700%, due 2030			500,000				—
Notes, 6.400%, due 2037			543,331				650,000
Notes, 5.200%, due 2043			338,133				500,000
Notes, 4.400%, due 2048			329,219				500,000
Notes, 2.979%, due 2055			439,317				—
Finance lease obligations			90,338				85,224
Total long-term debt and finance lease obligations			5,493,578				4,345,824
Less premium on debt exchange			180,045				—
Less debt issuance costs			30,859				25,259
Total amounts outstanding			5,282,674				4,320,565
Less current maturities of long-term debt			—				20,000
Less current portion of finance lease obligations			10,885				9,264
Total long-term debt and finance lease obligations due after one year		$	5,271,789			$	4,291,301

*	The industrial revenue bonds had variable rates ranging from 0.16% to 0.19% at December 31, 2020 and 1.61% to 1.82% at December 31, 2019.

Annual aggregate long-term debt maturities are: none in 2021, $601.0 million in 2022, $500.0 million in 2023, none in 2024, $500.0 million in 2025 and $3.80 billion thereafter.

In April 2018, Nucor issued $500.0 million of 3.950% Notes due 2028 and $500.0 million of 4.400% 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, 2020, Nucor’s funded debt to total capital ratio was 32%, and Nucor was in compliance with all covenants under the credit facility. No borrowings were outstanding under the credit facility as of December 31, 2020 and 2019.

In May 2020, Nucor issued $500.0 million of 2.000% Notes due 2025 and $500.0 million of 2.700% Notes due 2030. Net proceeds of the issuances were $989.4 million. Costs of $8.4 million associated with the issuances have been capitalized and will be amortized over the life of the notes.

In July 2020, Nucor became an obligor with respect to $162.6 million in 40-year variable-rate Green Bonds to partially fund the capital costs, in particular the expenditures associated with pollution

prevention and control including waste recycling, associated with the construction of Nucor’s plate mill located in Brandenburg, Kentucky. The net proceeds from the debt issuance are being held in a trust account pending disbursement for the construction of the facility.

In December 2020, Nucor exchanged $106.7 million of its 6.400% Notes due 2037, $161.9 million of its 5.200% Notes due 2043 and $170.8 million of its 4.400% Notes due 2048 with holders of the existing notes for $439.3 million of its 2.979% Notes due 2055 and a cash component of $180.3 million. This exchange transaction has been accounted for as a modification and, as such, the cash component of $180.3 million has been capitalized as a reduction of long-term debt and is being amortized into interest expense over the life of the new notes.

Harris Steel has credit facilities totaling approximately $19.6 million, with no outstanding borrowings at December 31, 2020 and 2019. 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, 2020, Nucor Trading S.A. had outstanding borrowings of $57.9 million, which are presented in short-term debt in the consolidated balance sheet ($62.4 million as of December 31, 2019).

Letters of credit totaling $63.3 million were outstanding as of December 31, 2020 ($28.0 million as of December 31, 2019), related to certain obligations, including workers’ compensation, utilities deposits and credit arrangements by Nucor Trading S.A. for commitments to purchase inventories.

12. 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 $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 $1.6125 in 2020 ($1.6025 per share in 2019 and $1.5400 per share in 2018).

The Company repurchased $39.5 million of its common stock in 2020 ($298.5 million in 2019 and $854.0 million in 2018).

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 $2.00 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, 2020, the Company had approximately $1.16 billion available for share repurchases under the program.

13. Derivative Financial Instruments

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

				Fair Value at
				December 31,
Fair Value of Derivative Financial Instruments		Consolidated Balance Sheet Location		2020				2019
Liability derivatives designated as hedging instruments:
Commodity contracts		Accrued expenses and other current liabilities		$	(2,400	)		$	(7,200	)
Commodity contracts		Deferred credits and other liabilities			(3,800	)			(11,200	)
Total liability derivatives designated as hedging instruments					(6,200	)			(18,400	)
Liability derivatives not designated as hedging instruments:
Commodity contracts		Accrued expenses and other current liabilities			(5,685	)			(1,118	)
Foreign exchange contracts		Accrued expenses and other current liabilities			(2,476	)			(81	)
Total liability derivatives not designated as hedging instruments					(8,161	)			(1,199	)
Total liability derivatives				$	(14,361	)		$	(19,599	)

The Effect of Derivative Financial 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)
				2020				2019				2018				2020				2019				2018				2020				2019				2018
Commodity contracts		Cost of products sold		$	2,084			$	(9,833	)		$	(3,568	)		$	(7,216	)		$	(2,333	)		$	132			$	—			$	—			$	—

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
				2020				2019				2018
Commodity contracts		Cost of products sold		$	(8,829	)		$	2,269			$	14,572
Foreign exchange contracts		Cost of products sold			(3,035	)			(59	)			3,609
Total				$	(11,864	)		$	2,210			$	18,181

At December 31, 2020, natural gas swaps covering approximately 22.4 million MMBTUs (extending through December 2022) were outstanding.

14. Fair Value Measurements

The following table summarizes information regarding Nucor’s financial assets and liabilities that are measured at fair value. 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, 2020
Assets:
Cash equivalents		$	2,186,820			$	2,186,820			$	—			$	—
Short-term investments			408,004				408,004				—				—
Restricted cash and cash equivalents			115,258				115,258				—				—
Total assets		$	2,710,082			$	2,710,082			$	—			$	—
Liabilities:
Derivative contracts		$	(14,361	)		$	—			$	(14,361	)		$	—
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	)		$	—

Fair value measurements for Nucor’s cash equivalents, short-term investments and restricted cash and cash equivalents 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 $6.05 billion at December 31, 2020 (approximately $4.81 billion at December 31, 2019). 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, 2020 and 2019, or similar debt with the same maturities, ratings and interest rates.

Disclosures are required for certain assets and liabilities that are measured at fair value, but are recognized and disclosed on a nonrecurring basis in periods subsequent to initial recognition. For Nucor, our equity investment in Duferdofin Nucor was measured at fair value as a result of the impairment charges recorded in 2020 (see Note 9).

15. 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 $16.0 million of accrued environmental costs at December 31, 2020 ($16.4 million at December 31, 2019), $5.6 million was classified in accrued expenses and other current liabilities ($4.1 million at December 31, 2019) and $10.4 million was classified in deferred credits and other liabilities ($12.3 million at December 31, 2019). Inherent uncertainties exist in these estimates primarily due to unknown conditions, evolving remediation technology and changing governmental regulations, legal standards and enforcement priorities.

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.

16. 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 an amendment and restatement of the Omnibus Plan on May 14, 2020. The Omnibus Plan, as amended and restated, permits the award of stock options, restricted stock units, restricted shares and other stock-based awards for up to 19.0 million shares of the Company’s common stock. As of December 31, 2020, 7.8 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, 2020, 0.7 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):

		2020								2019								2018
						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			3,892			$	50.78				3,828			$	49.71				4,106			$	47.96
Granted			529			$	42.46				489			$	48.00				265			$	65.80
Exercised			(266	)		$	44.51				(425	)		$	37.97				(543	)		$	44.33
Canceled			(239	)		$	51.58				—			$	—				—			$	—
Outstanding at end of year			3,916			$	50.03				3,892			$	50.78				3,828			$	49.71
Stock options exercisable at end of year			3,168			$	50.85				3,276			$	49.79				2,112			$	45.41

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 2020 was $3.3 million ($7.7 million in 2019 and $12.6 million in 2018).

The following table summarizes information about stock options outstanding at December 31, 2020 (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			839			6.5 years		$	41.94				376			$	41.30
$45.01 - $55.00			2,178			5.4 years		$	48.65				1,976			$	48.71
$55.01 - $65.00			650			6.4 years		$	59.07				650			$	59.07
$65.01 - $75.00			249			7.4 years		$	65.80				166			$	65.80
$35.00 - $75.00			3,916			5.9 years		$	50.03				3,168			$	50.85

As of December 31, 2020, the total aggregate intrinsic value of stock options outstanding and stock options exercisable was $19.3 million and $13.3 million, respectively.

The grant date fair value of stock options granted was $7.56 per share in 2020 ($8.69 per share in 2019 and $15.07 per share in 2018). The fair value was estimated using the Black-Scholes options pricing model with the following assumptions:

		2020		2019		2018
Exercise price		$42.46		$48.00		$65.80
Expected dividend yield		3.79%		3.33%		2.31%
Expected stock price volatility		30.12%		25.57%		25.28%
Risk-free interest rate		0.50%		2.03%		2.85%
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 $2.7 million in 2020 ($4.7 million in 2019 and $4.6 million in 2018). As of December 31, 2020, unrecognized compensation expense related to stock options was $2.5 million, which is expected to be recognized over a weighted-average period of 2.2 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):

		2020				2019				2018
				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		1,776		$52.60		1,246		$59.09		1,071		$52.62
Granted		1,246		$42.46		1,770		$48.00		1,013		$65.80
Vested		(1,166)		$50.10		(1,207)		$52.43		(827)		$58.98
Canceled		(26)		$49.75		(33)		$57.09		(11)		$55.02
Unvested at end of year		1,830		$47.33		1,776		$52.60		1,246		$59.09

Compensation expense for RSUs was $58.6 million in 2020 ($69.1 million in 2019 and $54.3 million in 2018). The total fair value of shares vested during 2020 was $49.8 million ($58.8 million in 2019 and $54.4 million in 2018). As of December 31, 2020, unrecognized compensation expense related to unvested RSUs was $53.7 million, which is expected to be recognized over a weighted-average period of 1.3 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):

		2020								2019								2018
						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			147			$	60.81				130			$	62.97				91			$	54.50
Granted			348			$	36.15				316			$	58.04				256			$	67.68
Vested			(368	)		$	41.22				(299	)		$	58.82				(217	)		$	64.95
Canceled			—			$	—				—			$	—				—			$	—
Unvested at end of year			127			$	49.94				147			$	60.81				130			$	62.97

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 $12.5 million in 2020 ($16.6 million in 2019 and $14.6 million in 2018). The total fair value of shares vested during 2020 was $13.5 million ($17.3 million in 2019 and $14.7 million in 2018). As of December 31, 2020, unrecognized compensation expense related to unvested restricted stock awards was $1.2 million, which is expected to be recognized over a weighted-average period of 1.5 years.

17. 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 $86.6 million in 2020 ($181.4 million in 2019 and $307.9 million in 2018). 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 $28.2 million at December 31, 2020 ($27.0 million at December 31, 2019). The expense associated with this early retiree medical plan totaled $2.5 million in 2020 ($2.0 million in 2019 and $2.1 million in 2018). The discount rate used by Nucor in determining its benefit obligation was 2.40% in 2020 (3.23% in 2019 and 4.24% in 2018). The health care cost increase trend rate used was 5.7% in 2020 (6.0% in 2019 and 6.3% in 2018). The health care cost increase trend rate is projected to decline gradually to 4.5% by 2037.

18. Interest Expense (Income)

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

		Year Ended December 31,
		2020				2019				2018
Interest expense		$	166,613			$	157,358			$	161,256
Interest income			(13,415	)			(35,933	)			(25,721	)
Interest expense, net		$	153,198			$	121,425			$	135,535

Interest paid was $181.2 million in 2020 ($172.6 million in 2019 and $165.7 million in 2018).

19. Income Taxes

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

		Year Ended December 31,
		2020				2019				2018
United States		$	1,215,909			$	1,806,704			$	3,160,111
Foreign			(380,371	)			(23,897	)			69,280
		$	835,538			$	1,782,807			$	3,229,391

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

		Year Ended December 31,
		2020				2019				2018
Current:
Federal		$	(177,159	)		$	241,074			$	633,868
State			(4,298	)			62,685				96,622
Foreign			18,131				8,981				14,800
Total current			(163,326	)			312,740				745,290
Deferred:
Federal			177,035				101,946				4,953
State			(25,500	)			8,013				6,847
Foreign			11,301				(10,802	)			(8,783	)
Total deferred			162,836				99,157				3,017
Total provision for income taxes		$	(490	)		$	411,897			$	748,307

A reconciliation of the federal statutory tax rate (21%) to the total provision is as follows:

		Year Ended December 31,
		2020		2019		2018
Taxes computed at statutory rate		21.00%		21.00%		21.00%
State income taxes, net of federal income tax benefit		-3.36%		3.16%		2.52%
Federal research credit		-0.79%		-0.34%		-0.14%
Equity in losses of foreign joint venture		0.64%		0.19%		0.08%
Impairment on investment in foreign joint venture		11.20%		—		—
Tax loss on investment in foreign joint venture		-22.73%		—		—
Foreign rate differential		1.15%		—		-0.07%
Noncontrolling interests		-2.88%		-1.18%		-0.78%
Tax Reform Act		—		—		0.18%
CARES Act NOL carryback		-5.77%		—		—
Other, net		1.49%		0.27%		0.38%
Provision for income taxes		-0.06%		23.10%		23.17%

For the year ended December 31, 2020, the effective tax rate on continuing operations decreased 23.16% versus the prior year to -0.06%. The decrease in the effective tax rate was primarily due to a net tax benefit of $201.9 million (-24.16%) for a tax loss on our investment in Duferdofin Nucor, a net tax benefit of $45.2 million (-5.41%, included in the State income taxes, net of federal income tax benefit line) for state tax credits, and a federal tax benefit of $48.2 million (-5.77%, included in the CARES Act NOL carryback line) for the carryback of a federal tax net operating loss (an “NOL”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). These benefits were all recognized in 2020 and were somewhat offset by the rate impact (11.2%) of financial statement impairments of $445.6 million which did not affect the provision for income taxes. The total benefit for the tax loss on our investment in Duferdofin Nucor is reflected on the Tax loss on investment in foreign joint venture line (-22.73%) and the State income taxes, net of federal income tax benefit line (-1.43%). The CARES Act allows for an NOL generated in 2020 to be carried back to taxable years where the federal income tax rate was 35%. The difference in the tax rate in 2020 and tax years before the enactment of the Tax Cuts and Jobs Act of 2017 is the main driver of the federal tax NOL benefit in 2020, but this is somewhat offset by the partial loss of the domestic manufacturing deduction in the carryback year.

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.

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

		December 31,
		2020				2019
Deferred tax assets:
Accrued liabilities and reserves		$	171,998			$	146,658
Allowance for doubtful accounts			16,434				18,479
Inventory			62,755				79,363
Post-retirement benefits			12,714				10,288
Commodity hedges			4,033				5,164
Net operating loss carryforward			63,952				59,083
Tax credit carryforwards			187,267				164,132
Other deferred tax assets			10,674				8,508
Valuation allowance			(207,653	)			(192,295	)
Total deferred tax assets			322,174				299,380
Deferred tax liabilities:
Holdbacks and amounts not due under contracts			(14,051	)			(12,930	)
Intangibles			(177,061	)			(171,531	)
Property, plant and equipment			(680,688	)			(545,890	)
Book/Tax differences on debt modifications			(46,813	)			-
Total deferred tax liabilities			(918,613	)			(730,351	)
Total net deferred tax liabilities		$	(596,439	)		$	(430,971	)

Non-current deferred tax liabilities included in deferred credits and other liabilities in the consolidated balance sheets were $596.4 million at December 31, 2020 ($431.0 million at December 31, 2019). Current federal and state income taxes receivable included in other current assets in the consolidated balance sheets were $456.1 million at December 31, 2020 ($240.8 million at December 31, 2019). Nucor paid $50.3 million in net federal, state and foreign income taxes in 2020 ($525.2 million and $561.1 million in 2019 and 2018, respectively).

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 NOL carryforwards were $1.41 billion at December 31, 2020 ($681.8 million at December 31, 2019). If unused, they will expire between 2021 and 2040. Foreign NOL carryforwards were $142.3 million at December 31, 2020 ($149.8 million at December 31, 2019). If unused, the foreign NOL carryforwards will expire between 2021 and 2040.

At December 31, 2020, Nucor had approximately $48.0 million of unrecognized tax benefits, of which $47.3 million would affect Nucor's effective tax rate, if recognized. 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.

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

		December 31,
		2020				2019				2018
Balance at beginning of year		$	50,920			$	48,605			$	48,845
Additions based on tax positions related to current year			4,138				9,272				16,424
Reductions based on tax positions related to current year			—				—				—
Additions based on tax positions related to prior years			223				2,106				199
Reductions based on tax positions related to prior years			—				(2,863	)			(8,198	)
Reductions due to settlements with taxing authorities			—				(1,514	)			(2,160	)
Reductions due to statute of limitations lapse			(7,316	)			(4,686	)			(6,505	)
Balance at end of year		$	47,965			$	50,920			$	48,605

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 applicable statute of limitations.

During 2020, Nucor recognized $0.1 million of expense in interest and penalties ($0.7 million of expense in 2019 and $4.0 million of benefit in 2018). 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, 2020, Nucor had approximately $12.0 million of accrued interest and penalties related to uncertain tax positions (approximately $11.9 million at December 31, 2019). The accrued interest and penalties are included in accrued expenses and other current liabilities and deferred credits and other liabilities, respectively, in the consolidated balance sheets.

Nucor has concluded U.S. federal income tax matters for tax years through 2014 and for tax year 2016. The tax years 2015 and 2017 through 2019 remain open to examination by the Internal Revenue Service. The 2015 Canadian income tax returns for Harris Steel Group Inc. and certain related affiliates are currently under examination by the Canada Revenue Agency. The tax years 2014 through 2019 remain open to examination by other major taxing jurisdictions to which Nucor is subject (primarily Canada and other state and local jurisdictions).

20. 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, 2019		$	(14,000	)		$	(296,773	)		$	7,807			$	(302,966	)
Other comprehensive income (loss) before reclassifications			2,084				17,306				(1,213	)			18,177
Amounts reclassified from accumulated other comprehensive income (loss) into earnings (1)			7,216				158,640				72				165,928
Net current-period other comprehensive income (loss)			9,300				175,946				(1,141	)			184,105
December 31, 2020		$	(4,700	)		$	(120,827	)		$	6,666			$	(118,861	)

(1)

Includes $7,216 and $72 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 $2,500 and $17, respectively. Also includes a $158.6 million reclassification of cumulative foreign currency translation losses into losses and impairments of assets, of which there was no tax impact.

		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 (2)			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	)

(2)	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.

In December 2020, Nucor closed on an agreement to transfer its 50% interest in Duferdofin Nucor to the owner of the remaining 50% interest. As a result, $158.6 million of cumulative foreign currency translation losses related to our investment was reclassified into earnings in the fourth quarter. The non-cash charge is included in the steel mills segment and in losses and impairments of assets in the consolidated statement of earnings for the year ended December 31, 2020.

21. 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,		2020				2019				2018
Basic net earnings per share:
Basic net earnings		$	721,470			$	1,271,143			$	2,360,767
Earnings allocated to participating securities			(4,356	)			(7,035	)			(9,344	)
Net earnings available to common stockholders		$	717,114			$	1,264,108			$	2,351,423
Basic average shares outstanding			303,168				305,040				315,858
Basic net earnings per share		$	2.37			$	4.14			$	7.44
Diluted net earnings per share:
Diluted net earnings		$	721,470			$	1,271,143			$	2,360,767
Earnings allocated to participating securities			(4,359	)			(7,034	)			(9,317	)
Net earnings available to common stockholders		$	717,111			$	1,264,109			$	2,351,450
Diluted average shares outstanding:
Basic average shares outstanding			303,168				305,040				315,858
Dilutive effect of stock options and other			103				463				875
			303,271				305,503				316,733
Diluted net earnings per share		$	2.36			$	4.14			$	7.42

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,		2020				2019				2018
Anti-dilutive stock options:
Weighted-average shares			2,972			963				156
Weighted-average exercise price		$	51.87			$	60.92			$	65.80

22. 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 (which was exited in the fourth quarter of 2020), 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 LLC, two facilities that produce direct reduced iron used by the steel mills; and our natural gas production operations.

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, restricted cash and cash equivalents, 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,
		2020				2019				2018
Net sales to external customers:
Steel mills		$	12,109,307			$	13,933,950			$	16,245,218
Steel products			6,623,068				6,990,064				6,796,501
Raw materials			1,407,283				1,664,844				2,025,560
		$	20,139,658			$	22,588,858			$	25,067,279
Intercompany sales:
Steel mills		$	3,036,790			$	3,304,437			$	3,924,160
Steel products			248,477				233,728				207,003
Raw materials			8,153,841				8,784,397				11,460,645
Corporate/eliminations			(11,439,108	)			(12,322,562	)			(15,591,808	)
		$	—			$	—			$	—
Depreciation expense:
Steel mills		$	449,290			$	401,609			$	378,146
Steel products			93,184				85,276				80,681
Raw materials			150,474				151,124				161,666
Corporate			9,163				10,902				10,386
		$	702,110			$	648,911			$	630,879
Amortization expense:
Steel mills		$	7,334			$	8,624			$	9,400
Steel products			47,773				49,914				51,997
Raw materials			28,249				27,204				27,361
		$	83,356			$	85,742			$	88,758
Earnings (loss) before income taxes and noncontrolling interests:
Steel mills		$	720,151			$	1,790,694			$	3,500,085
Steel products			690,547				511,145				467,105
Raw materials			23,621				(28,244	)			236,241
Corporate/eliminations			(598,781	)			(490,788	)			(974,040	)
		$	835,538			$	1,782,807			$	3,229,391
Segment assets:
Steel mills		$	9,708,260			$	9,283,216			$	9,244,086
Steel products			4,461,042				4,610,628				4,734,636
Raw materials			3,324,489				3,316,479				3,492,126
Corporate/eliminations			2,631,603				1,134,343				449,740
		$	20,125,394			$	18,344,666			$	17,920,588
Capital expenditures:
Steel mills		$	1,238,132			$	1,133,089			$	720,310
Steel products			135,511				93,848				88,585
Raw materials			125,213				244,818				169,926
Corporate			28,259				40,315				18,435
		$	1,527,116			$	1,512,070			$	997,256

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

		Year Ended December 31,
		2020				2019				2018
Net sales to external customers:
Sheet		$	5,450,507			$	6,450,506			$	7,571,765
Bar			3,821,158				4,106,640				4,709,292
Structural			1,526,283				1,573,248				1,830,476
Plate			1,311,360				1,803,556				2,133,685
Tubular Products			1,113,582				1,207,398				1,347,577
Rebar Fabrication			1,708,442				1,666,445				1,496,194
Other Steel Products			3,801,045				4,116,221				3,952,730
Raw Materials			1,407,283				1,664,844				2,025,560
		$	20,139,658			$	22,588,858			$	25,067,279

23. 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 $120.2 million as of December 31, 2020 ($108.6 million as of December 31, 2019), and are included in accrued expenses and other current liabilities in the consolidated balance sheets. The amount of revenue reclassified from the December 31, 2019 contract liabilities balance during 2020 was approximately $80.5 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 22).

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 relates to revenue from contracts with customers for the supply of fabricated rebar. As the majority of contracts with customers are fixed price contracts to complete a job, control transfers over time and revenue is recognized (if collection is reasonably assured) over time using an input method, based on the amount of rebar shipped from the Company’s operating locations relative to the total expected amount of rebar required to complete the job.

For contracts to supply fabricated rebar and install it at the customer’s job site, there are two performance obligations: (1) the supply of the fabricated rebar and (2) the installation of the supplied rebar at the customer’s job site. For the supply of fabricated rebar performance obligation, the transaction price allocated to this performance obligation is determined at the start of the contract, based on the awarded contract price for the supplied fabricated rebar and revenue is recognized over time based on the amount of rebar shipped from the Company’s operating locations relative to the total expected amount of rebar required to complete the job. For the installation of supplied rebar performance obligation, the transaction price allocated to this performance obligation is determined at the start of the contract, based on the awarded contract price for the installation of fabricated rebar and revenue is recognized over time based on the amount of rebar installed relative to the total expected amount of rebar required to be installed to complete the job.

While a majority of the contracts with customers are fixed price contracts to complete a job, variable consideration can occur from contract modifications relating to change orders and price escalations caused by changes in underlying material costs. In these situations, the additional variable consideration is recognized cumulatively in the period in which the contract modification is approved, and collection is reasonably assured unless the change order relates to additional distinct goods or services at standalone selling prices in which case they are accounted for prospectively. 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, the Company’s 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.

24. Restricted Cash and Cash Equivalents

As of December 31, 2020, restricted cash and cash equivalents totaled $115.3 million, and primarily consisted of net proceeds from the issuance of $162.6 million in 40-year variable-rate Green Bonds in July 2020. The restricted cash and cash equivalents related to the debt issuance are held in a trust account and are to be used to partially fund the capital costs, in particular the expenditures associated with pollution prevention and control including waste recycling, associated with the construction of Nucor’s new plate mill located in Brandenburg, Kentucky. Funds are disbursed from the trust account as qualified expenditures for the construction of the Brandenburg facility are made ($47.3 million during 2020). Interest earned on funds held in the trust account is subject to the same usage requirements as the bond proceeds principle. Since the restricted cash and interest and dividends must be used for the construction of the Brandenburg facility and relate to a long-term liability, the entire balance has been classified as a non-current asset.

25. Quarterly Information (Unaudited)

		(in thousands, except per share data)
		Year Ended December 31, 2020
		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Net sales		$	5,624,337			$	4,327,306			$	4,927,960			$	5,260,055
Gross margin			629,268				377,959				502,195				718,528
Net earnings (1)			54,379				133,153				222,630				425,866
Net earnings attributable to Nucor stockholders (1)			20,331				108,881				193,415				398,843
Net earnings per share:
Basic		$	0.07			$	0.36			$	0.63			$	1.31
Diluted		$	0.07			$	0.36			$	0.63			$	1.30

		(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 (2)			895,892				775,494				572,511				435,188
Net earnings (2)			530,793				412,277				293,587				134,253
Net earnings attributable to Nucor stockholders (2)			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

(1)

First quarter results include losses on assets of $287.8 million related to our investment in Duferdofin Nucor. Third quarter results include a restructuring charge of $16.4 million related to the realignment of Nucor’s metal buildings business. Fourth quarter results include non-cash impairment charges totaling $130.2 million related to impairments of certain inventory and long-lived assets in the steel mills segment ($103.2 million) and the write-down of our unproved natural gas well assets in the raw materials segment ($27.0 million). Also included in fourth quarter results were losses on assets of $184.0 million related to the Duferdofin Agreement, a $201.9 million tax benefit related to our investment in Duferdofin Nucor, a $39.7 million net benefit related to state tax credits and a net benefit of $48.2 million for the CARES Act carryback provision.

(2)

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).