SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2012
OR
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period
from to
Commission File Number 1-12744
MARTIN MARIETTA
MATERIALS, INC.
(Exact name of registrant as specified in its charter)
|
|
|
North Carolina
|
|
56-1848578
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
|
2710 Wycliff Road, Raleigh, NC
|
|
27607-3033
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrants telephone number, including area code 919-781-4550
Former name: None
Former name, former address and former fiscal year, if changes since last report.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
Large accelerated filer
|
|
x
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes
¨
No
x
Indicate the number of shares outstanding of each of the issuers classes of Common Stock, as of the latest practicable date.
|
|
|
Class
|
|
Outstanding as of October 23, 2012
|
Common Stock, $0.01 par value
|
|
45,909,373
|
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2012
Page 2 of 21
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
|
December 31,
2011
|
|
|
September 30,
2011
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
(Unaudited)
|
|
|
|
(Dollars in Thousands, Except Per Share Data)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
35,421
|
|
|
$
|
26,022
|
|
|
$
|
56,840
|
|
Accounts receivable, net
|
|
|
296,947
|
|
|
|
203,748
|
|
|
|
259,773
|
|
Inventories, net
|
|
|
335,092
|
|
|
|
322,607
|
|
|
|
337,730
|
|
Current deferred income tax benefits
|
|
|
79,758
|
|
|
|
80,674
|
|
|
|
92,959
|
|
Costs in excess of billings
|
|
|
7,608
|
|
|
|
1,437
|
|
|
|
967
|
|
Other current assets
|
|
|
30,281
|
|
|
|
23,362
|
|
|
|
19,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
785,107
|
|
|
|
657,850
|
|
|
|
767,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
3,775,320
|
|
|
|
3,688,692
|
|
|
|
3,662,446
|
|
Allowances for depreciation, depletion and amortization
|
|
|
(2,024,379
|
)
|
|
|
(1,914,401
|
)
|
|
|
(1,975,805
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net property, plant and equipment
|
|
|
1,750,941
|
|
|
|
1,774,291
|
|
|
|
1,686,641
|
|
|
|
|
|
Goodwill
|
|
|
615,986
|
|
|
|
616,671
|
|
|
|
639,039
|
|
Other intangibles, net
|
|
|
51,330
|
|
|
|
54,133
|
|
|
|
18,211
|
|
Other noncurrent assets
|
|
|
39,840
|
|
|
|
44,877
|
|
|
|
47,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
3,243,204
|
|
|
$
|
3,147,822
|
|
|
$
|
3,158,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
$
|
102
|
|
|
$
|
|
|
|
$
|
|
|
Accounts payable
|
|
|
99,628
|
|
|
|
92,210
|
|
|
|
86,322
|
|
Accrued salaries, benefits and payroll taxes
|
|
|
17,436
|
|
|
|
16,732
|
|
|
|
16,867
|
|
Pension and postretirement benefits
|
|
|
6,442
|
|
|
|
5,250
|
|
|
|
4,420
|
|
Accrued insurance and other taxes
|
|
|
34,175
|
|
|
|
26,408
|
|
|
|
31,902
|
|
Income taxes
|
|
|
13,291
|
|
|
|
1,871
|
|
|
|
16,256
|
|
Current maturities of long-term debt and short-term facilities
|
|
|
6,671
|
|
|
|
7,182
|
|
|
|
7,150
|
|
Accrued interest
|
|
|
18,209
|
|
|
|
7,669
|
|
|
|
18,709
|
|
Other current liabilities
|
|
|
21,155
|
|
|
|
16,390
|
|
|
|
16,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
217,109
|
|
|
|
173,712
|
|
|
|
197,746
|
|
|
|
|
|
Long-term debt
|
|
|
1,092,117
|
|
|
|
1,052,902
|
|
|
|
1,038,335
|
|
Pension, postretirement and postemployment benefits
|
|
|
135,761
|
|
|
|
158,101
|
|
|
|
102,787
|
|
Noncurrent deferred income taxes
|
|
|
243,759
|
|
|
|
222,064
|
|
|
|
249,572
|
|
Other noncurrent liabilities
|
|
|
84,437
|
|
|
|
92,179
|
|
|
|
84,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,773,183
|
|
|
|
1,698,958
|
|
|
|
1,673,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share
|
|
|
458
|
|
|
|
456
|
|
|
|
456
|
|
Preferred stock, par value $0.01 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
408,898
|
|
|
|
401,864
|
|
|
|
400,855
|
|
Accumulated other comprehensive loss
|
|
|
(77,480
|
)
|
|
|
(83,890
|
)
|
|
|
(49,560
|
)
|
Retained earnings
|
|
|
1,098,529
|
|
|
|
1,090,891
|
|
|
|
1,094,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
1,430,405
|
|
|
|
1,409,321
|
|
|
|
1,446,220
|
|
Noncontrolling interests
|
|
|
39,616
|
|
|
|
39,543
|
|
|
|
39,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
1,470,021
|
|
|
|
1,448,864
|
|
|
|
1,485,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
|
$
|
3,243,204
|
|
|
$
|
3,147,822
|
|
|
$
|
3,158,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying condensed notes to consolidated financial statements.
Page 3 of 21
MARTIN MARIETTA MATERIALS, INC. AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(In Thousands, Except Per Share Data)
(Unaudited)
|
|
Net Sales
|
|
$
|
539,140
|
|
|
$
|
445,003
|
|
|
$
|
1,380,897
|
|
|
$
|
1,145,204
|
|
Freight and delivery revenues
|
|
|
54,761
|
|
|
|
57,383
|
|
|
|
152,699
|
|
|
|
147,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
593,901
|
|
|
|
502,386
|
|
|
|
1,533,596
|
|
|
|
1,292,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
415,556
|
|
|
|
333,110
|
|
|
|
1,131,395
|
|
|
|
913,112
|
|
Freight and delivery costs
|
|
|
54,761
|
|
|
|
57,383
|
|
|
|
152,699
|
|
|
|
147,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
470,317
|
|
|
|
390,493
|
|
|
|
1,284,094
|
|
|
|
1,060,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
123,584
|
|
|
|
111,893
|
|
|
|
249,502
|
|
|
|
232,092
|
|
|
|
|
|
|
Selling, general & administrative expenses
|
|
|
32,095
|
|
|
|
32,774
|
|
|
|
100,398
|
|
|
|
92,415
|
|
Business development costs
|
|
|
|
|
|
|
733
|
|
|
|
35,140
|
|
|
|
3,441
|
|
Other operating expenses and (income), net
|
|
|
394
|
|
|
|
(1,625
|
)
|
|
|
(1,070
|
)
|
|
|
(4,028
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Operations
|
|
|
91,095
|
|
|
|
80,011
|
|
|
|
115,034
|
|
|
|
140,264
|
|
|
|
|
|
|
Interest expense
|
|
|
13,224
|
|
|
|
13,398
|
|
|
|
39,967
|
|
|
|
45,288
|
|
Other nonoperating expenses and (income), net
|
|
|
620
|
|
|
|
2,147
|
|
|
|
(1,277
|
)
|
|
|
2,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before taxes on income
|
|
|
77,251
|
|
|
|
64,466
|
|
|
|
76,344
|
|
|
|
92,755
|
|
Income tax expense
|
|
|
13,464
|
|
|
|
14,130
|
|
|
|
12,146
|
|
|
|
21,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Continuing Operations
|
|
|
63,787
|
|
|
|
50,336
|
|
|
|
64,198
|
|
|
|
70,902
|
|
Loss on discontinued operations, net of related tax benefit of $134, $618, $209 and $1,652, respectively
|
|
|
(118
|
)
|
|
|
(4
|
)
|
|
|
(395
|
)
|
|
|
(2,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net earnings
|
|
|
63,669
|
|
|
|
50,332
|
|
|
|
63,803
|
|
|
|
68,490
|
|
Less: Net earnings attributable to noncontrolling interests
|
|
|
747
|
|
|
|
1,176
|
|
|
|
863
|
|
|
|
949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings Attributable to Martin Marietta Materials, Inc.
|
|
$
|
62,922
|
|
|
$
|
49,156
|
|
|
$
|
62,940
|
|
|
$
|
67,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings (Loss) Attributable to Martin Marietta Materials, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations
|
|
$
|
63,040
|
|
|
$
|
49,160
|
|
|
$
|
63,335
|
|
|
$
|
69,953
|
|
Loss from discontinued operations
|
|
|
(118
|
)
|
|
|
(4
|
)
|
|
|
(395
|
)
|
|
|
(2,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
62,922
|
|
|
$
|
49,156
|
|
|
$
|
62,940
|
|
|
$
|
67,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Comprehensive Earnings (See Note 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to Martin Marietta Materials, Inc.
|
|
$
|
66,082
|
|
|
$
|
48,916
|
|
|
$
|
69,350
|
|
|
$
|
71,641
|
|
Earnings attributable to noncontrolling interests
|
|
|
750
|
|
|
|
1,177
|
|
|
|
873
|
|
|
|
952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
66,832
|
|
|
$
|
50,093
|
|
|
$
|
70,223
|
|
|
$
|
72,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings (Loss) Attributable to Martin Marietta Materials, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic from continuing operations attributable to common shareholders
|
|
$
|
1.36
|
|
|
$
|
1.07
|
|
|
$
|
1.38
|
|
|
$
|
1.52
|
|
Discontinued operations attributable to common shareholders
|
|
|
|
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.36
|
|
|
$
|
1.07
|
|
|
$
|
1.37
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted from continuing operations attributable to common shareholders
|
|
$
|
1.36
|
|
|
$
|
1.07
|
|
|
$
|
1.37
|
|
|
$
|
1.51
|
|
Discontinued operations attributable to common shareholders
|
|
|
|
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.36
|
|
|
$
|
1.07
|
|
|
$
|
1.36
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
45,860
|
|
|
|
45,690
|
|
|
|
45,792
|
|
|
|
45,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
45,992
|
|
|
|
45,799
|
|
|
|
45,929
|
|
|
|
45,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Dividends Per Common Share
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying condensed notes to consolidated financial statements.
Page 4 of 21
MARTIN MARIETTA MATERIALS, INC. AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
(Unaudited)
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Consolidated net earnings
|
|
$
|
63,803
|
|
|
$
|
68,490
|
|
Adjustments to reconcile consolidated net earnings to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
132,985
|
|
|
|
129,673
|
|
Stock-based compensation expense
|
|
|
5,947
|
|
|
|
9,317
|
|
Gains on divestitures and sales of assets
|
|
|
(858
|
)
|
|
|
(3,890
|
)
|
Deferred income taxes
|
|
|
11,577
|
|
|
|
6,358
|
|
Other items, net
|
|
|
2,314
|
|
|
|
1,370
|
|
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(93,198
|
)
|
|
|
(77,971
|
)
|
Inventories, net
|
|
|
(12,486
|
)
|
|
|
(4,431
|
)
|
Accounts payable
|
|
|
7,077
|
|
|
|
25,975
|
|
Other assets and liabilities, net
|
|
|
4,883
|
|
|
|
24,979
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
122,044
|
|
|
|
179,870
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
(105,941
|
)
|
|
|
(93,518
|
)
|
Acquisitions, net
|
|
|
(132
|
)
|
|
|
(49,930
|
)
|
Proceeds from divestitures and sales of assets
|
|
|
7,871
|
|
|
|
6,178
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used for Investing Activities
|
|
|
(98,202
|
)
|
|
|
(137,270
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Borrowings of long-term debt
|
|
|
181,000
|
|
|
|
460,000
|
|
Repayments of long-term debt
|
|
|
(142,651
|
)
|
|
|
(445,471
|
)
|
Debt issuance costs
|
|
|
(300
|
)
|
|
|
(3,328
|
)
|
Change in bank overdraft
|
|
|
102
|
|
|
|
(2,123
|
)
|
Dividends paid
|
|
|
(55,302
|
)
|
|
|
(55,232
|
)
|
Distributions to owners of noncontrolling interests
|
|
|
(800
|
)
|
|
|
(1,000
|
)
|
Purchase of remaining interest in existing subsidiaries
|
|
|
|
|
|
|
(10,394
|
)
|
Issuances of common stock
|
|
|
3,508
|
|
|
|
1,465
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used for Financing Activities
|
|
|
(14,443
|
)
|
|
|
(56,083
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
9,399
|
|
|
|
(13,483
|
)
|
Cash and Cash Equivalents, beginning of period
|
|
|
26,022
|
|
|
|
70,323
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, end of period
|
|
$
|
35,421
|
|
|
$
|
56,840
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
29,255
|
|
|
$
|
36,649
|
|
Cash refunds for income taxes
|
|
$
|
3,170
|
|
|
$
|
7,831
|
|
See accompanying condensed notes to consolidated financial statements.
Page 5 of 21
MARTIN MARIETTA MATERIALS, INC. AND
CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF TOTAL EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
Shares of
Common
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in Capital
|
|
|
Accumulated Other
Comprehensive Loss
|
|
|
Retained
Earnings
|
|
|
Total
Shareholders
Equity
|
|
|
Noncontrolling
Interests
|
|
|
Total
Equity
|
|
Balance at December 31, 2011
|
|
|
45,726
|
|
|
$
|
456
|
|
|
$
|
401,864
|
|
|
$
|
(83,890
|
)
|
|
$
|
1,090,891
|
|
|
$
|
1,409,321
|
|
|
$
|
39,543
|
|
|
$
|
1,448,864
|
|
Consolidated net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,940
|
|
|
|
62,940
|
|
|
|
863
|
|
|
|
63,803
|
|
Other comprehensive earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,410
|
|
|
|
|
|
|
|
6,410
|
|
|
|
10
|
|
|
|
6,420
|
|
Dividends declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,302
|
)
|
|
|
(55,302
|
)
|
|
|
|
|
|
|
(55,302
|
)
|
Issuances of common stock for stock award plans
|
|
|
182
|
|
|
|
2
|
|
|
|
1,087
|
|
|
|
|
|
|
|
|
|
|
|
1,089
|
|
|
|
|
|
|
|
1,089
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
5,947
|
|
|
|
|
|
|
|
|
|
|
|
5,947
|
|
|
|
|
|
|
|
5,947
|
|
Distributions to owners of noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(800
|
)
|
|
|
(800
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2012
|
|
|
45,908
|
|
|
$
|
458
|
|
|
$
|
408,898
|
|
|
$
|
(77,480
|
)
|
|
$
|
1,098,529
|
|
|
$
|
1,430,405
|
|
|
$
|
39,616
|
|
|
$
|
1,470,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying condensed notes to consolidated financial statements.
Page 6 of 21
MARTIN MARIETTA MATERIALS, INC. AND
CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
|
Significant Accounting Policies
|
Basis of Presentation
The accompanying unaudited consolidated financial statements of Martin Marietta Materials, Inc. (the Corporation) have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X. The Corporation has continued to follow the accounting policies set forth in the audited consolidated financial
statements and related notes thereto included in the Corporations Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012. In the opinion of management,
the interim financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods. The
results of operations for the quarter and nine months ended September 30, 2012 are not indicative of the results expected for other interim periods or the full year. The balance sheet at December 31, 2011 has been derived from the audited
financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Corporations Annual Report on Form 10-K for the year ended December 31, 2011.
Warranties
The Corporations construction contracts contain warranty
provisions covering defects in equipment, materials, design or workmanship that generally run from nine months to one year after project completion. Because of the nature of its projects, including contract owner inspections of the work both during
construction and prior to acceptance, the Corporation has not experienced material warranty costs for these short-term warranties and therefore does not believe an accrual for these costs is necessary. Certain construction contracts carry longer
warranty periods, ranging from two to ten years for which the Corporation has accrued an estimate of warranty cost. The warranty cost is estimated based on experience with the type of work and any known risks relative to the project and was not
material for the three or nine months ended September 30, 2012 and 2011.
Consolidated Comprehensive Earnings/Loss and
Accumulated Other Comprehensive Loss
Consolidated comprehensive earnings/loss for the Corporation consist of consolidated net
earnings or loss; adjustments for the funded status of pension and postretirement benefit plans; foreign currency translation adjustments; and the amortization of the value of terminated forward starting interest rate swap agreements into interest
expense.
Page 7 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
Effective January 1, 2012, as required by recent accounting guidance, the Corporation
changed its presentation of consolidated comprehensive earnings/loss. The Corporation no longer reports total consolidated comprehensive earnings/loss and related components of other comprehensive earnings/loss in its consolidated statement of total
equity. Rather, the Corporation presents total consolidated comprehensive earnings/loss in its consolidated statements of earnings and comprehensive earnings for interim periods and in separate but consecutive consolidated statements of
comprehensive earnings for annual periods. Prior-year information has been recast to conform to this presentation approach.
Comprehensive earnings attributable to Martin Marietta Materials, Inc. consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Net earnings attributable to Martin Marietta Materials, Inc.
|
|
$
|
62,922
|
|
|
$
|
49,156
|
|
|
$
|
62,940
|
|
|
$
|
67,541
|
|
Other comprehensive earnings (loss), net of tax
|
|
|
3,160
|
|
|
|
(240
|
)
|
|
|
6,410
|
|
|
|
4,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated comprehensive earnings attributable to Martin Marietta Materials, Inc.
|
|
$
|
66,082
|
|
|
$
|
48,916
|
|
|
$
|
69,350
|
|
|
$
|
71,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in accumulated other comprehensive loss, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Foreign
Currency
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest
Rate Swap
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balance at beginning of period
|
|
$
|
(81,407
|
)
|
|
$
|
5,222
|
|
|
$
|
(4,455
|
)
|
|
$
|
(80,640
|
)
|
Other comprehensive earnings, net of tax
|
|
|
1,568
|
|
|
|
1,435
|
|
|
|
157
|
|
|
|
3,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(79,839
|
)
|
|
$
|
6,657
|
|
|
$
|
(4,298
|
)
|
|
$
|
(77,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 8 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Foreign
Currency
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest
Rate Swap
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Balance at beginning of period
|
|
$
|
(84,204
|
)
|
|
$
|
5,076
|
|
|
$
|
(4,762
|
)
|
|
$
|
(83,890
|
)
|
Other comprehensive earnings, net of tax
|
|
|
4,365
|
|
|
|
1,581
|
|
|
|
464
|
|
|
|
6,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(79,839
|
)
|
|
$
|
6,657
|
|
|
$
|
(4,298
|
)
|
|
$
|
(77,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive loss are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest
Rate Swap
|
|
|
Net Noncurrent
Deferred Tax
Assets
|
|
Balance at beginning of period
|
|
$
|
53,328
|
|
|
$
|
2,915
|
|
|
$
|
56,243
|
|
Tax effect of other comprehensive earnings
|
|
|
(1,026
|
)
|
|
|
(103
|
)
|
|
|
(1,129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
52,302
|
|
|
$
|
2,812
|
|
|
$
|
55,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 9 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest
Rate Swap
|
|
|
Net Noncurrent
Deferred Tax
Assets
|
|
Balance at beginning of period
|
|
$
|
55,161
|
|
|
$
|
3,116
|
|
|
$
|
58,277
|
|
Tax effect of other comprehensive earnings
|
|
|
(2,859
|
)
|
|
|
(304
|
)
|
|
|
(3,163
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
52,302
|
|
|
$
|
2,812
|
|
|
$
|
55,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings attributable to noncontrolling interests consist of net earnings and adjustments for
the funding status of pension and postretirement benefit plans as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Net earnings attributable to noncontrolling interests
|
|
$
|
747
|
|
|
$
|
1,176
|
|
|
$
|
863
|
|
|
$
|
949
|
|
Other comprehensive earnings, net of tax
|
|
|
3
|
|
|
|
1
|
|
|
|
10
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated comprehensive earnings attributable to noncontrolling interests
|
|
$
|
750
|
|
|
$
|
1,177
|
|
|
$
|
873
|
|
|
$
|
952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 10 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Earnings per Common Share
The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta Materials, Inc., reduced by
dividends and undistributed earnings attributable to the Corporations unvested restricted stock awards and incentive stock awards. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding
during the period. Diluted earnings per common share are computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members
of the Corporations Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. The diluted per-share computations reflect a change in the number of common shares outstanding to include the number of
additional shares that would have been outstanding if the potentially dilutive common shares had been issued.
The following
table reconciles the numerator and denominator for basic and diluted earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(In Thousands)
|
|
Net earnings from continuing operations attributable to Martin Marietta Materials, Inc.
|
|
$
|
63,040
|
|
|
$
|
49,160
|
|
|
$
|
63,335
|
|
|
$
|
69,953
|
|
Less: Distributed and undistributed earnings attributable to unvested awards
|
|
|
336
|
|
|
|
378
|
|
|
|
386
|
|
|
|
557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings available to common shareholders from continuing operations attributable to Martin Marietta
Materials, Inc.
|
|
|
62,704
|
|
|
|
48,782
|
|
|
|
62,949
|
|
|
|
69,396
|
|
Basic and diluted net loss available to common shareholders from discontinued operations
|
|
|
(118
|
)
|
|
|
(4
|
)
|
|
|
(395
|
)
|
|
|
(2,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc.
|
|
$
|
62,586
|
|
|
$
|
48,778
|
|
|
$
|
62,554
|
|
|
$
|
66,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding
|
|
|
45,860
|
|
|
|
45,690
|
|
|
|
45,792
|
|
|
|
45,634
|
|
Effect of dilutive employee and director awards
|
|
|
132
|
|
|
|
109
|
|
|
|
137
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average common shares outstanding
|
|
|
45,992
|
|
|
|
45,799
|
|
|
|
45,929
|
|
|
|
45,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 11 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2.
|
Discontinued Operations
|
Divestitures and Permanent Closures
Operations that are disposed of or permanently shut down represent discontinued operations, and, therefore, the results of their operations through the dates of disposal and any gain or loss on disposals are
included in discontinued operations in the consolidated statements of earnings and comprehensive earnings. The results of operations for divestitures do not include Corporate overhead that was allocated during the periods the Corporation owned these
operations.
All discontinued operations relate to the Aggregates business. Discontinued operations consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Net sales
|
|
$
|
|
|
|
$
|
19,009
|
|
|
$
|
|
|
|
$
|
51,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax loss on operations
|
|
$
|
(252
|
)
|
|
$
|
(623
|
)
|
|
$
|
(250
|
)
|
|
$
|
(4,065
|
)
|
Pretax gain (loss) on disposals
|
|
|
|
|
|
|
1
|
|
|
|
(354
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax loss
|
|
|
(252
|
)
|
|
|
(622
|
)
|
|
|
(604
|
)
|
|
|
(4,064
|
)
|
Income tax benefit
|
|
|
(134
|
)
|
|
|
(618
|
)
|
|
|
(209
|
)
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(118
|
)
|
|
$
|
(4
|
)
|
|
$
|
(395
|
)
|
|
$
|
(2,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
|
December 31,
2011
|
|
|
September 30,
2011
|
|
|
|
(Dollars in Thousands)
|
|
Finished products
|
|
$
|
356,849
|
|
|
$
|
350,685
|
|
|
$
|
362,924
|
|
Products in process and raw materials
|
|
|
18,918
|
|
|
|
11,116
|
|
|
|
9,483
|
|
Supplies and expendable parts
|
|
|
56,420
|
|
|
|
53,287
|
|
|
|
53,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
432,187
|
|
|
|
415,088
|
|
|
|
426,031
|
|
Less allowances
|
|
|
(97,095
|
)
|
|
|
(92,481
|
)
|
|
|
(88,301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
335,092
|
|
|
$
|
322,607
|
|
|
$
|
337,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 12 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.
|
Goodwill and Intangible Assets
|
Changes in goodwill, all of which relate to the Aggregates business, by reportable segment and in total are as follows
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
Mideast
Group
|
|
|
Southeast
Group
|
|
|
West
Group
|
|
|
Total
|
|
Balance at beginning of period
|
|
$
|
112,823
|
|
|
$
|
81,302
|
|
|
$
|
424,749
|
|
|
$
|
618,874
|
|
Adjustments to purchase price allocations
|
|
|
|
|
|
|
|
|
|
|
(2,888
|
)
|
|
|
(2,888
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
112,823
|
|
|
$
|
81,302
|
|
|
$
|
421,861
|
|
|
$
|
615,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
Mideast
Group
|
|
|
Southeast
Group
|
|
|
West
Group
|
|
|
Total
|
|
Balance at beginning of period
|
|
$
|
122,052
|
|
|
$
|
72,073
|
|
|
$
|
422,546
|
|
|
$
|
616,671
|
|
Adjustments to purchase price allocations
|
|
|
|
|
|
|
|
|
|
|
(685
|
)
|
|
|
(685
|
)
|
District reorganization
|
|
|
(9,229
|
)
|
|
|
9,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
112,823
|
|
|
$
|
81,302
|
|
|
$
|
421,861
|
|
|
$
|
615,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012
|
|
|
December 31,
2011
|
|
|
September 30,
2011
|
|
|
|
(Dollars in Thousands)
|
|
6.6% Senior Notes, due 2018
|
|
$
|
298,626
|
|
|
$
|
298,476
|
|
|
$
|
298,428
|
|
7% Debentures, due 2025
|
|
|
124,437
|
|
|
|
124,417
|
|
|
|
124,411
|
|
6.25% Senior Notes, due 2037
|
|
|
228,105
|
|
|
|
247,915
|
|
|
|
247,906
|
|
Term Loan Facility, due 2015, interest rate of 2.22% at September 30, 2012; 2.20% at December 31, 2011; and 1.99% at
September 30, 2011
|
|
|
245,000
|
|
|
|
250,000
|
|
|
|
250,000
|
|
Revolving Facility, interest rate of 1.92% at September 30, 2012; 2.64% at December 31, 2011; and 1.61% at
September 30, 2011
|
|
|
100,000
|
|
|
|
35,000
|
|
|
|
20,000
|
|
AR Credit Facility, interest rate of 1.00% at September 30, 2012; 1.66% at December 31, 2011; and 1.60% at
September 30, 2011
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
100,000
|
|
Other notes
|
|
|
2,620
|
|
|
|
4,276
|
|
|
|
4,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
1,098,788
|
|
|
|
1,060,084
|
|
|
|
1,045,485
|
|
Less current maturities
|
|
|
(6,671
|
)
|
|
|
(7,182
|
)
|
|
|
(7,150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
1,092,117
|
|
|
$
|
1,052,902
|
|
|
$
|
1,038,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 13 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5.
|
Long-Term Debt (continued)
|
On January 23, 2012, the Corporation repurchased $20,000,000 par value of its
outstanding 6.25% Senior Notes due 2037 at 90.75. This repurchase was financed with borrowings of $18,200,000 under the Corporations Revolving Facility.
On April 13, 2012, the Corporation renewed its AR Credit Facility for a one-year term ending April 20, 2013.
The Credit Agreement (which consists of the Term Loan Facility and a $350,000,000 Revolving Facility) and the AR Credit Facility require the Corporations ratio of consolidated debt to consolidated
earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve month period (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Corporation may
exclude from the Ratio debt incurred in connection with certain acquisitions for a period of 180 days so long as the Corporation maintains specified ratings on its long-term unsecured debt and the Ratio calculated without such exclusion does not
exceed 3.75x. Additionally, if no amounts are outstanding under both the Revolving Facility and the AR Credit Facility, consolidated debt, including debt guaranteed by the Corporation, may be reduced by the Corporations unrestricted cash and
cash equivalents in excess of $50,000,000, such reduction not to exceed $200,000,000, for purposes of the covenant calculation.
During the first quarter of 2012, the Corporation amended the Ratio to ensure that the impact of business development costs and the seasonal
working capital requirements of the Corporations acquired Colorado operations did not impair liquidity available under the Corporations Credit Agreement and AR Credit Facility. The amendment temporarily increased the maximum Ratio to
3.75x at September 30, 2012. The Corporation was in compliance with this Ratio at September 30, 2012.
In order to
provide incremental liquidity cushion, on October 17, 2012, the Corporation amended the Ratio to maintain the maximum Ratio of 3.75x for the December 31, 2012, March 31, 2013 and June 30, 2013 calculation dates. The Ratio
returns to the pre-amendment maximum of 3.50x for the September 30, 2013 calculation date.
Available borrowings under the
Revolving Facility are reduced by any outstanding letters of credit issued by the Corporation under the Revolving Facility. At September 30, 2012, the Corporation had $2,507,000 of outstanding letters of credit issued under the Revolving
Facility.
Page 14 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5.
|
Long-Term Debt (continued)
|
Accumulated other comprehensive loss includes the unamortized value of terminated forward
starting interest rate swap agreements. For the three and nine months ended September 30, 2012, the Corporation recognized $260,000 and $768,000, respectively, as additional interest expense. For the three and nine months ended
September 30, 2011, the Corporation recognized $242,000 and $715,000, respectively, as additional interest expense. The ongoing amortization of the terminated value of the forward starting interest rate swap agreements will increase annual
interest expense by approximately $1,000,000 until the maturity of the 6.6% Senior Notes in 2018.
The
Corporations financial instruments include temporary cash investments, accounts receivable, notes receivable, bank overdraft, publicly-registered long-term notes, debentures and other long-term debt.
Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposits with
the following financial institutions: Bank of America, N.A., Branch Banking and Trust Company, JPMorgan Chase Bank, N.A., Regions Bank, Fifth Third Bank, and Wells Fargo Bank, N.A. The Corporations cash equivalents have maturities of less than
three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.
Customer receivables are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions. However, customer receivables are more
heavily concentrated in certain states (namely, Texas, North Carolina, Iowa, Colorado and Georgia). The estimated fair values of customer receivables approximate their carrying amounts.
Notes receivable are primarily related to divestitures and are not publicly traded. However, using current market interest rates, but
excluding adjustments for credit worthiness, if any, management estimates that the fair value of notes receivable approximates the carrying amount.
The bank overdraft represents the float of outstanding checks. The estimated fair value of the bank overdraft approximates its carrying value.
Page 15 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6.
|
Financial Instruments (continued)
|
The carrying values and fair values of the Corporations long-term debt were
$1,098,788,000 and $1,156,820,000, respectively, at September 30, 2012; $1,060,084,000 and $1,087,726,000, respectively, at December 31, 2011; and $1,045,485,000 and $1,072,235,000, respectively, at September 30, 2011. The estimated
fair value of the Corporations publicly-registered long-term notes was estimated based on level 1 of the fair value hierarchy, quoted market prices. The estimated fair value of other borrowings, which primarily represent variable-rate debt,
approximates its carrying amount.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
Estimated effective income tax rate:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
15.9
|
%
|
|
|
23.6
|
%
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
34.6
|
%
|
|
|
40.6
|
%
|
|
|
|
|
|
|
|
|
|
Consolidated overall
|
|
|
15.8
|
%
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|
The Corporations effective income tax rate reflects the effect of federal and state income taxes and
the impact of differences in book and tax accounting arising from the net permanent benefits associated with the statutory depletion deduction for mineral reserves, the impact of foreign losses for which no tax benefit was realized and the domestic
production deduction. The effective income tax rates for discontinued operations reflect the tax effects of individual operations transactions and are not indicative of the Corporations overall effective income tax rate.
The consolidated overall estimated effective income tax rate for the nine months ended September 30, 2012 included the following
discrete events: a refund of federal tax and interest of $1,626,000 related to the 2006 tax year and the estimated effects of an agreement between the taxing authorities of the United States and Canada regarding the transfer price of products for
intercompany shipments during the years 2007 to 2011. The effects of the agreement allow the Corporation to utilize certain net operating loss and tax credit carryforwards for which a valuation allowance was previously established. Accordingly, the
Corporation reversed a $3,644,000 valuation allowance during the quarter ended September 30, 2012. These discrete events drove a decrease in the consolidated overall estimated effective income tax rate for the nine months ended
September 30, 2012. The consolidated overall estimated effective income tax rate for the nine months ended September 30, 2012 would have been 22.7% without these discrete events; a rate more reflective of the expected annual tax rate of
23%.
Page 16 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7.
|
Income Taxes (continued)
|
The consolidated overall estimated effective income tax rate for the nine months ended
September 30, 2011 included the following discrete events: the favorable effective settlement of the Internal Revenue Service audit for the 2008 tax year; resolution of a federal tax and interest overpayment of $1,730,000 related to the 2006
tax year and an agreed-upon refund of $1,060,000 for the double taxation of the Corporations wholly-owned Canadian subsidiary for the 2001 and 2002 tax years.
On December 23, 2011, the U.S. Treasury Department issued comprehensive temporary and proposed regulations addressing the treatment of expenditures related to tangible property for tax purposes. On
March 7, 2012, the Internal Revenue Service (IRS) issued two revenue procedures containing administrative guidance related to the adoption of the new rules. Although the regulations are generally effective for tax years beginning
January 1, 2012, the IRS has granted taxpayers administrative relief and audit protection for a two-year period as long as the taxpayer adopts the regulations retroactively within two years of the effective date. Management has begun to
evaluate the changes necessary to comply with the regulations and the related administrative procedures and is not currently aware of any adjustments that would be material to the Corporations consolidated financial position and results of
operations. As part of its compliance with these regulations, the Corporation reversed its unrecognized tax benefits related to repairs and maintenance as of March 31, 2012.
The Corporations unrecognized tax benefits, excluding interest, correlative effects and indirect benefits, are as follows:
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2012
|
|
|
|
(Dollars in Thousands)
|
|
Unrecognized tax benefits at beginning of period
|
|
$
|
9,288
|
|
Gross increases tax positions in prior years
|
|
|
19,527
|
|
Gross decreases tax positions in prior years
|
|
|
(13,876
|
)
|
Gross increases tax positions in current year
|
|
|
1,409
|
|
Settlements with taxing authorities
|
|
|
(555
|
)
|
|
|
|
|
|
Unrecognized tax benefits at end of period
|
|
$
|
15,793
|
|
|
|
|
|
|
For the nine months ended September 30, 2012, gross increases in tax positions in prior years included
the estimated effect of the agreement with the taxing authority of Canada that increased the sales price charged for intercompany shipments during the years 2007 through 2011. Upon final settlement, the Corporation will be allowed a corresponding
refund of tax in the United States for the years 2007 through 2011 which is not included in the unrecognized tax benefits at September 30, 2012. Accordingly, the Corporation anticipates that it is reasonably possible that unrecognized tax
benefits may significantly change up to $9,007,000, excluding indirect benefits, during the twelve months ending September 30, 2013.
Page 17 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7.
|
Income Taxes (continued)
|
At September 30, 2012, unrecognized tax benefits of $6,546,000, net of federal tax
benefits and related to interest accruals and permanent income tax differences, would have favorably affected the Corporations effective income tax rate if recognized.
8.
|
Pension and Postretirement Benefits
|
The estimated components of the recorded net periodic benefit cost for pension and postretirement benefits are as follows
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Pension
|
|
|
Postretirement Benefits
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Service cost
|
|
$
|
3,074
|
|
|
$
|
2,815
|
|
|
$
|
57
|
|
|
$
|
88
|
|
Interest cost
|
|
|
5,561
|
|
|
|
5,808
|
|
|
|
309
|
|
|
|
556
|
|
Expected return on assets
|
|
|
(5,617
|
)
|
|
|
(6,121
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit)
|
|
|
110
|
|
|
|
133
|
|
|
|
(814
|
)
|
|
|
(435
|
)
|
Actuarial loss (gain)
|
|
|
2,920
|
|
|
|
1,581
|
|
|
|
(71
|
)
|
|
|
(21
|
)
|
Settlement charge
|
|
|
255
|
|
|
|
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (credit)
|
|
$
|
6,303
|
|
|
$
|
4,548
|
|
|
$
|
(519
|
)
|
|
$
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
Pension
|
|
|
Postretirement Benefits
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Service cost
|
|
$
|
9,813
|
|
|
$
|
8,446
|
|
|
$
|
171
|
|
|
$
|
263
|
|
Interest cost
|
|
|
17,754
|
|
|
|
17,425
|
|
|
|
926
|
|
|
|
1,669
|
|
Expected return on assets
|
|
|
(17,935
|
)
|
|
|
(18,364
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit)
|
|
|
350
|
|
|
|
400
|
|
|
|
(2,442
|
)
|
|
|
(1,306
|
)
|
Actuarial loss (gain)
|
|
|
9,323
|
|
|
|
4,743
|
|
|
|
(212
|
)
|
|
|
(64
|
)
|
Settlement charge
|
|
|
779
|
|
|
|
346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (credit)
|
|
$
|
20,084
|
|
|
$
|
12,996
|
|
|
$
|
(1,557
|
)
|
|
$
|
562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 18 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9.
|
Commitments and Contingencies
|
Legal and Administrative Proceedings
The Corporation is engaged in certain legal and administrative proceedings incidental to its normal business activities. In the opinion of management and counsel, based upon currently-available facts, it is
remote that the ultimate outcome of any litigation and other proceedings, including those pertaining to environmental matters, relating to the Corporation and its subsidiaries, will have a material adverse effect on the overall results of the
Corporations operations, its cash flows or its financial position.
Environmental and Governmental Regulations
In 2010, the United States Environmental Protection Agency (USEPA) included the lime industry as a national
enforcement priority under the federal Clean Air Act (CAA). As part of the industry wide effort, the USEPA issued Notices of Violation/Findings of Violation (NOVs) to the Corporation in 2010 and 2011 regarding the
Corporations compliance with the CAA New Source Review (NSR) program at its Specialty Products dolomitic lime manufacturing plant in Woodville, Ohio. The Corporation has been providing information to the USEPA in response
to these NOVs and has had several meetings with the USEPA. The Corporation believes it is in substantial compliance with the NSR program. Because the enforcement proceeding is in its initial stage, at this time the Corporation cannot reasonably
estimate what likely penalties or required upgrades to equipment might ultimately be required. The Corporation believes that any costs related to any required upgrades will be spread over time and will not have a material adverse effect on the
Corporations operations or its financial condition, but can give no assurance that the ultimate resolution of this matter will not have a material adverse effect on the financial condition or results of operations of the Specialty
Products segment of the business.
Guarantee of Affiliate
The Corporation has an unconditional guaranty of payment agreement with Fifth Third Bank (Fifth Third) to guarantee the repayment
of amounts borrowed by an affiliate under a $24,000,000 revolving line of credit provided by Fifth Third that expires in July 2013 and a guaranty agreement with Bank of America, N.A., to guarantee a $6,200,000 amortizing loan due April 2016. The
affiliate has agreed to reimburse and indemnify the Corporation for any payments and expenses the Corporation may incur from these agreements. The Corporation holds a subordinate lien of the affiliates assets as collateral for potential
payments under the agreements.
Page 19 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Corporation conducts its aggregates operations through three reportable business segments: Mideast Group, Southeast
Group and West Group. The Corporation also has a Specialty Products segment that includes magnesia-based chemicals products and dolomitic lime. These segments are consistent with the Corporations current management reporting structure.
The following tables display selected financial data for continuing operations for the Corporations reportable business
segments. Corporate loss from operations primarily includes depreciation on capitalized interest, expenses for corporate administrative functions, unallocated corporate expenses and other nonrecurring and/or non-operational adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Total revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
130,111
|
|
|
$
|
128,342
|
|
|
$
|
334,322
|
|
|
$
|
320,464
|
|
Southeast Group
|
|
|
77,424
|
|
|
|
83,797
|
|
|
|
230,324
|
|
|
|
236,052
|
|
West Group
|
|
|
332,293
|
|
|
|
235,046
|
|
|
|
803,325
|
|
|
|
573,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
539,828
|
|
|
|
447,185
|
|
|
|
1,367,971
|
|
|
|
1,129,730
|
|
Specialty Products
|
|
|
54,073
|
|
|
|
55,201
|
|
|
|
165,625
|
|
|
|
162,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
593,901
|
|
|
$
|
502,386
|
|
|
$
|
1,533,596
|
|
|
$
|
1,292,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
118,140
|
|
|
$
|
116,637
|
|
|
$
|
304,986
|
|
|
$
|
295,306
|
|
Southeast Group
|
|
|
71,828
|
|
|
|
76,685
|
|
|
|
213,101
|
|
|
|
217,360
|
|
West Group
|
|
|
299,725
|
|
|
|
201,339
|
|
|
|
711,184
|
|
|
|
483,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
489,693
|
|
|
|
394,661
|
|
|
|
1,229,271
|
|
|
|
996,120
|
|
Specialty Products
|
|
|
49,447
|
|
|
|
50,342
|
|
|
|
151,626
|
|
|
|
149,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
539,140
|
|
|
$
|
445,003
|
|
|
$
|
1,380,897
|
|
|
$
|
1,145,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
31,365
|
|
|
$
|
28,070
|
|
|
$
|
54,284
|
|
|
$
|
53,222
|
|
Southeast Group
|
|
|
482
|
|
|
|
2,796
|
|
|
|
(5,508
|
)
|
|
|
(2,039
|
)
|
West Group
|
|
|
44,286
|
|
|
|
39,484
|
|
|
|
59,476
|
|
|
|
53,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
76,133
|
|
|
|
70,350
|
|
|
|
108,252
|
|
|
|
104,351
|
|
Specialty Products
|
|
|
17,034
|
|
|
|
15,573
|
|
|
|
52,706
|
|
|
|
49,984
|
|
Corporate
|
|
|
(2,072
|
)
|
|
|
(5,912
|
)
|
|
|
(45,924
|
)
|
|
|
(14,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
91,095
|
|
|
$
|
80,011
|
|
|
$
|
115,034
|
|
|
$
|
140,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 20 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10.
|
Business Segments (continued)
|
The asphalt, ready mixed concrete and road paving product lines are considered internal
customers of the core aggregates business. Product lines for the Specialty Products segment consist of magnesia-based chemicals, dolomitic lime and other. Net sales by product line are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Aggregates
|
|
$
|
371,102
|
|
|
$
|
362,618
|
|
|
$
|
985,361
|
|
|
$
|
916,875
|
|
Asphalt
|
|
|
29,198
|
|
|
|
12,297
|
|
|
|
61,921
|
|
|
|
37,554
|
|
Ready Mixed Concrete
|
|
|
33,143
|
|
|
|
9,729
|
|
|
|
82,634
|
|
|
|
22,266
|
|
Road Paving
|
|
|
56,250
|
|
|
|
10,017
|
|
|
|
99,355
|
|
|
|
19,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
489,693
|
|
|
|
394,661
|
|
|
|
1,229,271
|
|
|
|
996,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Magnesia-Based Chemicals
|
|
|
32,487
|
|
|
|
32,794
|
|
|
|
96,694
|
|
|
|
94,799
|
|
Dolomitic Lime
|
|
|
16,460
|
|
|
|
17,131
|
|
|
|
53,591
|
|
|
|
53,314
|
|
Other
|
|
|
500
|
|
|
|
417
|
|
|
|
1,341
|
|
|
|
971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Specialty Products
|
|
|
49,447
|
|
|
|
50,342
|
|
|
|
151,626
|
|
|
|
149,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
539,140
|
|
|
$
|
445,003
|
|
|
$
|
1,380,897
|
|
|
$
|
1,145,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Supplemental Cash Flow Information
|
The components of the change in other assets and liabilities, net, are as follows:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Other current and noncurrent assets
|
|
$
|
(9,694
|
)
|
|
$
|
2,325
|
|
Accrued salaries, benefits and payroll taxes
|
|
|
(1,270
|
)
|
|
|
(2,324
|
)
|
Accrued insurance and other taxes
|
|
|
7,767
|
|
|
|
8,366
|
|
Accrued income taxes
|
|
|
7,817
|
|
|
|
22,208
|
|
Accrued pension, postretirement and postemployment benefits
|
|
|
(14,693
|
)
|
|
|
(16,046
|
)
|
Other current and noncurrent liabilities
|
|
|
14,956
|
|
|
|
10,450
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,883
|
|
|
$
|
24,979
|
|
|
|
|
|
|
|
|
|
|
The change in accrued income taxes for the nine months ended September 30, 2012 relates to a decrease
in current estimated taxable income and the difference in net tax payments for the period. The change in other current and noncurrent assets for the nine months ended September 30, 2012 relates to an increase in costs in excess of billings for
the Corporations road paving business. The road paving business typically has a longer cash collection cycle compared with the Aggregates business other product lines.
Page 21 of 21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW Martin Marietta Materials, Inc. (the Corporation), conducts its operations through four reportable business
segments: Mideast Group, Southeast Group, West Group (collectively, the Aggregates business) and Specialty Products. The Corporations annual net sales and earnings are predominately derived from its Aggregates business, which
processes and sells granite, limestone, and other aggregates products, including asphalt, ready mixed concrete and road paving materials, from a network of 307 quarries, distribution facilities and plants to customers in 31 states, Canada, the
Bahamas and the Caribbean Islands. The Aggregates business products are used primarily by commercial customers principally in domestic construction of highways and other infrastructure projects and for nonresidential and residential building
development. Aggregates products are also used in the railroad, environmental, utility and agricultural industries. The Specialty Products segment produces magnesia-based chemicals products used in industrial, agricultural and environmental
applications and dolomitic lime sold primarily to customers in the steel industry.
CRITICAL ACCOUNTING POLICIES The
Corporation outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (SEC) on February 29, 2012. There were no changes
to the Corporations critical accounting policies during the nine months ended September 30, 2012.
RESULTS OF OPERATIONS
Except as indicated, the following comparative analysis in the Results of Operations section of this Managements Discussion and Analysis of Financial
Condition and Results of Operations reflects results from continuing operations and is based on net sales and cost of sales. The Corporations heritage aggregates product line excludes volume and pricing data for acquisitions that have not been
included in prior-year operations for the comparable period and divestitures.
Page 22 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Gross margin as a percentage of net sales and operating margin as a percentage of net sales represent
non-GAAP measures. The Corporation presents these ratios calculated based on net sales, as it is consistent with the basis by which management reviews the Corporations operating results. Further, management believes it is consistent with the
basis by which investors analyze the Corporations operating results given that freight and delivery revenues and costs represent pass-throughs and have no profit mark-up. Gross margin and operating margin calculated as percentages of total
revenues represent the most directly comparable financial measures calculated in accordance with generally accepted accounting principles (GAAP). The following tables present the calculations of gross margin and operating margin for the three and
nine months ended September 30, 2012 and 2011 in accordance with GAAP and reconciliations of the ratios as percentages of total revenues to percentages of net sales (dollars in thousands):
Gross Margin in Accordance with GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Gross profit
|
|
$
|
123,584
|
|
|
$
|
111,893
|
|
|
$
|
249,502
|
|
|
$
|
232,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
593,901
|
|
|
$
|
502,386
|
|
|
$
|
1,533,596
|
|
|
$
|
1,292,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
20.8
|
%
|
|
|
22.3
|
%
|
|
|
16.3
|
%
|
|
|
18.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin Excluding Freight and Delivery Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Gross profit
|
|
$
|
123,584
|
|
|
$
|
111,893
|
|
|
$249,502
|
|
|
$
|
232,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
593,901
|
|
|
$
|
502,386
|
|
|
$1,533,596
|
|
|
$
|
1,292,720
|
|
Less: Freight and delivery revenues
|
|
|
(54,761
|
)
|
|
|
(57,383
|
)
|
|
|
|
|
(152,699
|
)
|
|
|
(147,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
539,140
|
|
|
$
|
445,003
|
|
|
|
|
$
|
1,380,897
|
|
|
$
|
1,145,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin excluding freight and delivery revenues
|
|
|
22.9
|
%
|
|
|
25.1
|
%
|
|
|
|
|
18.1
|
%
|
|
|
20.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Margin in Accordance with GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Earnings from operations
|
|
$
|
91,095
|
|
|
$
|
80,011
|
|
|
$
|
115,034
|
|
|
$
|
140,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
593,901
|
|
|
$
|
502,386
|
|
|
$
|
1,533,596
|
|
|
$
|
1,292,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
|
|
|
15.3
|
%
|
|
|
15.9
|
%
|
|
|
7.5
|
%
|
|
|
10.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 23 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Operating Margin Excluding Freight and Delivery Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Earnings from operations
|
|
$
|
91,095
|
|
|
$
|
80,011
|
|
|
$
|
115,034
|
|
|
$
|
140,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
593,901
|
|
|
$
|
502,386
|
|
|
$
|
1,533,596
|
|
|
$
|
1,292,720
|
|
Less: Freight and delivery
revenues
|
|
|
(54,761
|
)
|
|
|
(57,383
|
)
|
|
|
(152,699
|
)
|
|
|
(147,516
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
539,140
|
|
|
$
|
445,003
|
|
|
$
|
1,380,897
|
|
|
$
|
1,145,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin excluding freight and delivery revenues
|
|
|
16.9
|
%
|
|
|
18.0
|
%
|
|
|
8.3
|
%
|
|
|
12.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin Excluding Freight and Delivery Revenues and Excluding the Effect of the Acquired Colorado Operations
Gross margin excluding freight and delivery revenues and excluding the effect of the acquired Colorado operations represents a non-GAAP
measure. Management presents this measure to provide more consistent information for investors and analysts to use when comparing gross margin (excluding freight and delivery revenues) for the three months ended September 30, 2012 with the
respective prior-year quarter. The following reconciles gross margin excluding freight and delivery revenues and excluding the effect of the acquired Colorado operations to gross margin excluding freight and delivery revenues (in thousands):
|
|
|
|
|
|
|
Three Months Ended
September 30, 2012
|
|
Gross profit
|
|
$
|
123,584
|
|
Less: Gross profit from the acquired Colorado operations
|
|
|
(9,085
|
)
|
|
|
|
|
|
Gross profit excluding the effect of the acquired Colorado operations
|
|
$
|
114,499
|
|
|
|
|
|
|
Total revenues
|
|
$
|
593,901
|
|
Less: Freight and delivery revenues
|
|
|
(54,761
|
)
|
Less: Net sales from the acquired Colorado operations
|
|
|
(91,696
|
)
|
|
|
|
|
|
Net sales excluding the effect of the acquired Colorado operations
|
|
$
|
447,444
|
|
|
|
|
|
|
Gross margin excluding freight and delivery revenues and excluding the effect of the acquired Colorado operations
|
|
|
25.6
|
%
|
|
|
|
|
|
Page 24 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Impact of Business Development Expenses
The impact of business development expenses on earnings per diluted share, adjusted earnings per diluted share and net cash provided by operating activities excluding the impact of business development
expenses each represent non-GAAP financial measures. Management presents these measures to provide more consistent information for investors and analysts to use when comparing operating results and cash flows for the nine months ended
September 30, 2012 with the respective prior-year periods (in thousands, except per share data).
The following shows the calculation of the
earnings per diluted share impact of business development expenses:
|
|
|
|
|
|
|
Nine Months Ended
September 30,
2012
|
|
Business development expenses
|
|
$
|
35,140
|
|
Income tax benefit
|
|
|
(13,898
|
)
|
|
|
|
|
|
After-tax impact of business development expenses
|
|
$
|
21,242
|
|
|
|
|
|
|
Diluted average number of common shares outstanding
|
|
|
45,757
|
|
|
|
|
|
|
Earnings per diluted share impact of business development expenses
|
|
$
|
(0.46
|
)
|
|
|
|
|
|
The following reconciles earnings per diluted share in accordance with generally accepted accounting principles to adjusted
earnings per diluted share, excluding business development expenses:
|
|
|
|
|
|
|
Nine Months Ended
September 30,
2012
|
|
Earnings per diluted share in accordance with generally accepted accounting principles
|
|
$
|
1.36
|
|
Add back: Impact of business development expenses
|
|
|
0.46
|
|
|
|
|
|
|
Adjusted earnings per diluted share, excluding business development expenses
|
|
$
|
1.82
|
|
|
|
|
|
|
The following reconciles net cash provided by operating activities in accordance with generally accepted accounting
principles to net cash provided by operating activities, excluding business development expenses:
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2012
|
|
Net cash provided by operating activities in accordance with generally accepted accounting principles
|
|
$
|
122,044
|
|
Add back: Impact of business development expenses on operating cash flow
|
|
|
37,956
|
|
|
|
|
|
|
Net cash provided by operating activities, excluding business development expenses
|
|
$
|
160,000
|
|
|
|
|
|
|
Page 25 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Quarter Ended September 30
Significant items for the quarter ended September 30, 2012 (unless noted, all comparisons are versus the prior-year third quarter):
|
|
|
Earnings per diluted share of $1.36 compared with $1.07
|
|
|
|
Consolidated net sales of $539.1 million, up 21.2%, compared with $445.0 million
|
|
|
|
Heritage aggregates product line pricing increased 4.1%
|
|
|
|
Heritage aggregates product line volume decreased 3.8%
|
|
|
|
Specialty Products net sales of $49.4 million and record third-quarter earnings from operations of $17.0 million
|
|
|
|
Consolidated selling, general and administrative expenses (SG&A) decreased 140 basis points as a percentage of net sales
|
|
|
|
Consolidated earnings from operations of $91.1 million compared with $80.0 million
|
The following table presents net sales, gross profit, selling, general and administrative expenses and earnings from operations data for the Corporation and
its reportable segments for the three months ended September 30, 2012 and 2011. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
|
(Dollars in Thousands)
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
118,140
|
|
|
|
|
|
|
$
|
116,637
|
|
|
|
|
|
Southeast Group
|
|
|
71,828
|
|
|
|
|
|
|
|
76,685
|
|
|
|
|
|
West Group
|
|
|
299,725
|
|
|
|
|
|
|
|
201,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
489,693
|
|
|
|
100.0
|
|
|
|
394,661
|
|
|
|
100.0
|
|
Specialty Products
|
|
|
49,447
|
|
|
|
100.0
|
|
|
|
50,342
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
539,140
|
|
|
|
100.0
|
|
|
$
|
445,003
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
39,811
|
|
|
|
33.7
|
|
|
$
|
37,226
|
|
|
|
31.9
|
|
Southeast Group
|
|
|
6,135
|
|
|
|
8.5
|
|
|
|
8,034
|
|
|
|
10.5
|
|
West Group
|
|
|
57,264
|
|
|
|
19.1
|
|
|
|
49,332
|
|
|
|
24.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
103,210
|
|
|
|
21.1
|
|
|
|
94,592
|
|
|
|
24.0
|
|
Specialty Products
|
|
|
19,744
|
|
|
|
39.9
|
|
|
|
17,804
|
|
|
|
35.4
|
|
Corporate
|
|
|
630
|
|
|
|
|
|
|
|
(503
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
123,584
|
|
|
|
22.9
|
|
|
$
|
111,893
|
|
|
|
25.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 26 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
|
(Dollars in Thousands)
|
|
Selling, general & administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
8,921
|
|
|
|
|
|
|
$
|
9,314
|
|
|
|
|
|
Southeast Group
|
|
|
5,411
|
|
|
|
|
|
|
|
6,779
|
|
|
|
|
|
West Group
|
|
|
14,110
|
|
|
|
|
|
|
|
10,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
28,442
|
|
|
|
5.8
|
|
|
|
26,823
|
|
|
|
6.8
|
|
Specialty Products
|
|
|
2,175
|
|
|
|
4.4
|
|
|
|
2,235
|
|
|
|
4.4
|
|
Corporate
|
|
|
1,478
|
|
|
|
|
|
|
|
3,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
32,095
|
|
|
|
6.0
|
|
|
$
|
32,774
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
31,365
|
|
|
|
|
|
|
$
|
28,070
|
|
|
|
|
|
Southeast Group
|
|
|
482
|
|
|
|
|
|
|
|
2,796
|
|
|
|
|
|
West Group
|
|
|
44,286
|
|
|
|
|
|
|
|
39,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
76,133
|
|
|
|
15.5
|
|
|
|
70,350
|
|
|
|
17.8
|
|
Specialty Products
|
|
|
17,034
|
|
|
|
34.4
|
|
|
|
15,573
|
|
|
|
30.9
|
|
Corporate
|
|
|
(2,072
|
)
|
|
|
|
|
|
|
(5,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
91,095
|
|
|
|
16.9
|
|
|
$
|
80,011
|
|
|
|
18.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Corporations strong third-quarter results reflect both revenue and profit growth that demonstrate the underlying
strength of its legacy operations as well as the contribution from its recent acquisitions in the Denver, Colorado market. In terms of the Corporations overall performance, the heritage Aggregates business benefitted from both continued strong
pricing trends and increased productivity, and the Specialty Products business generated record earnings from operations. The Corporations bottom line continued to reflect the diligent manner in which it controls costs. As a result, earnings
per diluted share of $1.36, a 27% increase over the prior-year quarter, is especially noteworthy given that the Corporations team achieved this in an uncertain economic climate that has been marked by a reluctance on governmental bodies and
private industry to commit to long-range capital projects.
Page 27 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The Corporation sees several positive trends in construction activity. First, the
Aggregates business continues to benefit from recovery and growth in the residential sector end-use market, which reported a 14% increase in heritage aggregates product line shipments over the prior-year quarter. Second, with the passage of the
Moving Ahead for Progress in the 21
st
Century Act
, or MAP-21, a twenty-seven-month Federal surface transportation bill intended to expedite project approvals and limit spending for programs unrelated to core transportation needs, the level of federal
highway funds obligated is increasing. Consequently, many of the Aggregates business key states are taking steps to utilize various funding alternatives to support important infrastructure projects. Finally, it seems a backlog of construction
work is awaiting, what management believes to be, a general restoration of confidence in the current economic and political environment. The Corporation anticipates these positive trends will continue and provide the prospect for increasing volume
momentum as it moves forward into 2013.
Consolidated net sales increased over 20%, with the recently acquired Denver, Colorado area
businesses contributing $92 million in the quarter. These operations once again exceeded expectations, reflecting positive construction trends in that market where the rate of growth in highway contract awards ranks among the highest in the country,
and, importantly, construction-related employment is well above the national average. Nonresidential construction activity also continues to improve in the market with commercial real estate realizing increased lease rates and decreasing vacancies.
Year-to-date housing permits in Colorado increased more than 60%, outpacing the national average, while single-family home sales have increased significantly over the prior-year period.
Heritage aggregates product line pricing increased 4.1% in the quarter over the prior-year period. Pricing growth was led by the Southeast Group, with an overall increase of 5.1% over the prior-year quarter,
driven by improvement in all of its markets along with favorable product mix. The West Group reported a heritage aggregates product line price increase of 4.8%, with shipments to the energy sector being a significant driver of this improvement. The
Mideast Group had a 3.5% increase in its heritage aggregates product line average selling price, led by growth in the North Carolina, Virginia and West Virginia markets.
Volume trends noted in June continued throughout the third quarter, resulting in a 3.8% decline in heritage aggregates product line shipments versus the comparable prior-year period. Shipments to the
infrastructure end-use market, which comprised more than half of heritage aggregates product line volumes, declined 6% compared with the prior-year quarter. Much of the volume decline is attributable to the fact that for nearly three years federal
highway spending operated under a series of short-term, continuing resolutions. This extended circumstance made it difficult, and at times impossible, for state departments of transportation to obligate traditional long-term expenditures. This
created a chilling effect on various states ability to advertise and award significant new highway construction activity.
Page 28 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
On July 6, 2012, the President signed into law MAP-21, which maintains highway expenditures at current
levels, $40 billion per year, with modest increases to reflect projected inflation and reform provisions. The bills passage nine months into the Federal fiscal year ended September 30, 2012 meant that a disproportionately large percentage
of federal highway funds were obligated during the last two months of the fiscal year. This delayed timing affected highway construction activity during the quarter and will likely result in many of these projects starting in 2013. However, certain
states, namely Texas, Iowa and Florida, have initiated state-level programs that demonstrate the importance of infrastructure investment. In fact, the Texas department of transportation anticipates its spending during fiscal year 2013, which began
September 1, to be more than double the amount spent in fiscal year 2012. Additionally, Texas and North Carolina were two of the first states to apply for funding assistance under the Transportation Infrastructure Finance and Innovation Act
(TIFIA). Texas submitted requests for TIFIA projects with a cumulative investment of more than $6 billion while North Carolinas proposed projects total more than $1 billion. TIFIA provides $1.75 billion of federal credit assistance over the
next two years for nationally or regionally significant surface transportation projects. Each dollar of federal funds can provide up to $10 in TIFIA credit assistance and leverage up to $30 in transportation infrastructure investment. TIFIA and
other state-sponsored programs coupled with MAP-21 should provide an impetus for increased infrastructure spending into 2013 and beyond.
The
nonresidential market is the second largest aggregates end use. During the third quarter, this market continued to benefit, as it has for the past couple of years, from a significant level of aggregates product line shipments to the energy sector
and other heavy industrial uses. Nonetheless, the nonresidential market also saw more traditional non-energy-related projects delayed during the third quarter. In general, many developers were hesitant to begin new projects due to an inability to
accurately estimate their investment returns, including the cost of capital and changes in tax policy, in light of uncertainty surrounding the United States fiscal position. As a result, overall heritage shipments to this end-use market were
relatively flat compared with the prior year. The residential end-use market growth reflects an approximate 25% increase in year-to-date housing starts over the prior-year period and, as previously mentioned, heritage aggregates shipments increased
14% in the quarter. Finally, the ChemRock/Rail end-use market experienced a 14% decline in heritage shipments compared with the prior-year quarter. The reduction was principally due to the comparison with an unusually strong third quarter for
ballast shipments in 2011, as well as a decline in coal traffic on the railroads.
Page 29 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
As previously indicated, economic growth was inconsistent across the Corporations markets. Aggregates
shipment levels varied by geographic area, with notable strength in Texas, West Virginia and Charlotte, North Carolina. This relative robustness was offset by weakness in Ohio, where construction activity on major projects declined, and the West
Group, which experienced reduced rail ballast shipments. This weakness led to declines of 2.6% and 2.3% in heritage aggregates product line shipments in the Mideast and West Groups, respectively. The Southeast Group reported a 10.7% decline in
heritage aggregates shipments, as economic growth in this region continues to lag national trends, principally due to weak job growth and continued high foreclosure rates.
The following tables present volume and pricing data and shipments data for the aggregates product line. Heritage aggregates operations exclude volume and pricing data for acquisitions that were not included
in prior-year operations for the comparable period and divestitures.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
2012
|
|
|
|
Volume
|
|
|
Pricing
|
|
Volume/Pricing Variance
(1)
|
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line
(2)
:
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
|
(2.6
|
%)
|
|
|
3.5
|
%
|
Southeast Group
|
|
|
(10.7
|
%)
|
|
|
5.1
|
%
|
West Group
|
|
|
(2.3
|
%)
|
|
|
4.8
|
%
|
Heritage Aggregates Operations
|
|
|
(3.8
|
%)
|
|
|
4.1
|
%
|
Aggregates Product Line
(3)
|
|
|
(2.9
|
%)
|
|
|
1.8
|
%
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(tons in thousands)
|
|
Shipments
|
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line
(2)
:
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
|
10,694
|
|
|
|
10,977
|
|
Southeast Group
|
|
|
5,495
|
|
|
|
6,154
|
|
West Group
|
|
|
18,416
|
|
|
|
18,840
|
|
|
|
|
|
|
|
|
|
|
Heritage Aggregates Operations
|
|
|
34,605
|
|
|
|
35,971
|
|
Acquisitions
|
|
|
2,068
|
|
|
|
|
|
Divestitures
(4)
|
|
|
1
|
|
|
|
1,785
|
|
|
|
|
|
|
|
|
|
|
Aggregates Product Line
(3)
|
|
|
36,674
|
|
|
|
37,756
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.
|
(2)
|
Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and
divestitures.
|
(3)
|
Aggregates Product Line includes all acquisitions from the date of acquisition and divestitures through the date of disposal.
|
(4)
|
Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture.
|
Page 30 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The Aggregates business is significantly affected by erratic weather patterns, seasonal changes and other
weather-related conditions. Aggregates production and shipment levels coincide with general construction activity levels, most of which occurs in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations
concentrated in the northern and midwestern United States generally experience more severe winter weather conditions than operations in the Southeast and Southwest. Operations in the Denver, Colorado area increase the Corporations exposure to
winter weather and the risk of losses in the first and fourth quarters. Excessive rainfall, and conversely excessive drought, can also jeopardize shipments, production and profitability. Because of the potentially significant impact of weather on
the Corporations operations, third-quarter results are not indicative of expected performance for other interim periods or the full year.
Specialty Products continued its strong performance in both the chemicals and dolomitic lime product lines. For the quarter, net sales were $49.4 million
and record third-quarter earnings from operations were $17.0 million, or 34.4% of net sales, an improvement of 350 basis points. The new dolomitic lime kiln recently completed at the Woodville, Ohio, facility will begin generating sales in the
fourth quarter. The new kiln is expected to provide incremental annual net sales ranging from $22 million to $25 million with margins comparable to existing operations.
Consolidated gross margin (excluding freight and delivery revenues) for the quarter was 22.9%, a 220-basis-point decline compared with the prior-year quarter. The decline was primarily attributable to the
increased impact of newly acquired Colorado businesses, which is more vertically integrated (i.e., with more ready mixed concrete, hot mixed asphalt and related paving operations) than the Corporations traditional heritage business. In fact,
excluding the effect of these recently acquired businesses, consolidated gross margin (excluding freight and delivery revenues) would have been 25.6%, an improvement of 50 basis points over the prior-year quarter. Notably, the Mideast Group
benefitted during the quarter from pricing growth to increase net sales, and coupled this sales growth with reduced personnel costs to increase its gross margin (excluding freight and delivery revenues) by 180 basis points to 33.7%.
Page 31 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The following presents a rollforward of the Corporations gross profit (dollars in thousands):
|
|
|
|
|
Consolidated gross profit, quarter ended September 30, 2011
|
|
$
|
111,893
|
|
|
|
|
|
|
Heritage Aggregates Product Line:
|
|
|
|
|
Pricing strength
|
|
|
14,002
|
|
Volume weakness
|
|
|
(13,871
|
)
|
Decrease in production costs
|
|
|
6,269
|
|
Increase in nonproduction costs
|
|
|
(5,976
|
)
|
Inventory change
|
|
|
331
|
|
|
|
|
|
|
Increase in Heritage Aggregates Product Line gross profit
|
|
|
755
|
|
Aggregates Business acquired locations
|
|
|
9,085
|
|
Specialty Products
|
|
|
1,940
|
|
Corporate
|
|
|
1,133
|
|
Other
|
|
|
(1,222
|
)
|
|
|
|
|
|
Increase in consolidated gross profit
|
|
|
11,691
|
|
|
|
|
|
|
Consolidated gross profit, quarter ended September 30, 2012
|
|
$
|
123,584
|
|
|
|
|
|
|
Direct production costs for the heritage aggregates product line fell $6.3 million, or 2.7%, as production levels were
reduced to better match shipment activity. Operations personnel prudently managed costs and limited the increase in cost per ton to 1.0%, despite this decline.
Nonproduction costs for the heritage aggregates product line include freight expenses to transport materials from a producing quarry to a distribution yard and resale material. During the quarter, internal
rail freight costs increased due to additional volumes being shipped to materials yards, particularly in the West Group.
Consolidated SG&A
expenses were 6.0% of net sales, an improvement of 140 basis points compared with the prior-year quarter. On an absolute basis, SG&A decreased $0.7 million despite absorbing overhead incurred at the Corporations Denver operations as well
as costs related to an information systems upgrade expected to be completed by the fall of 2013. Included in third-quarter 2011 SG&A expenses were $2.8 million of nonrecurring early retirement benefits.
Among other items, other operating income and expenses, net, includes gains and losses on the sale of assets; gains and losses related to customer accounts
receivable; rental, royalty and services income; and the accretion and depreciation expenses related to asset retirement obligations. For the third quarter, consolidated other operating income and expenses, net, was an expense of $0.4 million in
2012 compared with income of $1.6 million in 2011, primarily as a result of higher gains on the sale of assets in during the third quarter of 2011.
Page 32 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Nine months ended September 30
Significant items for the nine months ended September 30, 2012 (all comparisons are versus the prior-year nine-month period):
|
|
|
Adjusted earnings per diluted share of $1.82, excluding business development expenses; including these charges, earnings per diluted share of $1.36
compared with $1.46
|
|
|
|
Consolidated net sales of $1.381 billion, up 20.6%, compared with $1.145 billion
|
|
|
|
Heritage aggregates product line volume increased 2.2%
|
|
|
|
Heritage aggregates product line pricing increased 3.0%
|
|
|
|
Specialty Products net sales of $151.6 million and earnings from operations of $52.7 million, representing a 130-basis-point improvement in operating
margin (excluding freight and delivery revenues)
|
|
|
|
Consolidated SG&A decreased 80 basis points as a percentage of net sales
|
|
|
|
Consolidated earnings from operations of $115.0 million, inclusive of $35.1 million of business development costs, compared with $140.3 million
|
The following table presents net sales, gross profit, selling, general and administrative expenses and earnings from
operations data for the Corporation and its reportable segments for the nine months ended September 30, 2012 and 2011. In each case, the data is stated as a percentage of net sales of the Corporation or the relevant segment, as the case may be.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
|
(Dollars in Thousands)
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
304,986
|
|
|
|
|
|
|
$
|
295,306
|
|
|
|
|
|
Southeast Group
|
|
|
213,101
|
|
|
|
|
|
|
|
217,360
|
|
|
|
|
|
West Group
|
|
|
711,184
|
|
|
|
|
|
|
|
483,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
1,229,271
|
|
|
|
100.0
|
|
|
|
996,120
|
|
|
|
100.0
|
|
Specialty Products
|
|
|
151,626
|
|
|
|
100.0
|
|
|
|
149,084
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,380,897
|
|
|
|
100.0
|
|
|
$
|
1,145,204
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
80,089
|
|
|
|
|
|
|
$
|
77,492
|
|
|
|
|
|
Southeast Group
|
|
|
13,221
|
|
|
|
|
|
|
|
17,126
|
|
|
|
|
|
West Group
|
|
|
98,357
|
|
|
|
|
|
|
|
82,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
191,667
|
|
|
|
15.6
|
|
|
|
177,255
|
|
|
|
17.8
|
|
Specialty Products
|
|
|
59,057
|
|
|
|
38.9
|
|
|
|
56,763
|
|
|
|
38.1
|
|
Corporate
|
|
|
(1,222
|
)
|
|
|
|
|
|
|
(1,926
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
249,502
|
|
|
|
18.1
|
|
|
$
|
232,092
|
|
|
|
20.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 33 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
Amount
|
|
|
% of
Net Sales
|
|
|
|
(Dollars in Thousands)
|
|
Selling, general & administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
28,041
|
|
|
|
|
|
|
$
|
27,834
|
|
|
|
|
|
Southeast Group
|
|
|
17,074
|
|
|
|
|
|
|
|
20,391
|
|
|
|
|
|
West Group
|
|
|
41,966
|
|
|
|
|
|
|
|
32,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
87,081
|
|
|
|
7.1
|
|
|
|
80,233
|
|
|
|
8.1
|
|
Specialty Products
|
|
|
6,900
|
|
|
|
4.6
|
|
|
|
6,926
|
|
|
|
4.6
|
|
Corporate
|
|
|
6,417
|
|
|
|
|
|
|
|
5,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
100,398
|
|
|
|
7.3
|
|
|
$
|
92,415
|
|
|
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
$
|
54,284
|
|
|
|
|
|
|
$
|
53,222
|
|
|
|
|
|
Southeast Group
|
|
|
(5,508
|
)
|
|
|
|
|
|
|
(2,039
|
)
|
|
|
|
|
West Group
|
|
|
59,476
|
|
|
|
|
|
|
|
53,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
108,252
|
|
|
|
8.8
|
|
|
|
104,351
|
|
|
|
10.5
|
|
Specialty Products
|
|
|
52,706
|
|
|
|
34.8
|
|
|
|
49,984
|
|
|
|
33.5
|
|
Corporate
|
|
|
(45,924
|
)
|
|
|
|
|
|
|
(14,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
115,034
|
|
|
|
8.3
|
|
|
$
|
140,264
|
|
|
|
12.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months, net sales for the Aggregates business were $1.229 billion in 2012 versus $996.1 million in 2011,
primarily due to the acquisition of operations in Denver, Colorado, and growth in the Corporations nonresidential and residential end-use markets. Shipments to the heritage nonresidential end-use market increased 9% as energy-sector activity
continues to grow. The residential end-use market continues to recover from the depressed levels of the past few years, reflecting the increase in national year-to-date housing permits. For the nine-month period ended September 30, 2012,
heritage aggregates volume increased 2.2%, while pricing increased 3.0%.
Page 34 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The following tables present volume and pricing data and shipments data for the aggregates product line.
Heritage aggregates operations exclude volume and pricing data for acquisitions that were not included in prior-year operations for the comparable period and divestitures.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2012
|
|
|
|
Volume
|
|
|
Pricing
|
|
Volume/Pricing Variance
(1)
|
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line
(2)
:
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
|
2.1
|
%
|
|
|
0.7
|
%
|
Southeast Group
|
|
|
(6.0
|
%)
|
|
|
4.0
|
%
|
West Group
|
|
|
5.4
|
%
|
|
|
5.2
|
%
|
Heritage Aggregates Operations
|
|
|
2.2
|
%
|
|
|
3.0
|
%
|
Aggregates Product Line
(3)
|
|
|
1.7
|
%
|
|
|
1.2
|
%
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(tons in thousands)
|
|
Shipments
|
|
|
|
|
|
|
|
|
Heritage Aggregates Product Line
(2)
:
|
|
|
|
|
|
|
|
|
Mideast Group
|
|
|
26,961
|
|
|
|
26,416
|
|
Southeast Group
|
|
|
16,413
|
|
|
|
17,454
|
|
West Group
|
|
|
48,874
|
|
|
|
46,366
|
|
|
|
|
|
|
|
|
|
|
Heritage Aggregates Operations
|
|
|
92,248
|
|
|
|
90,236
|
|
Acquisitions
|
|
|
4,497
|
|
|
|
|
|
Divestitures
(4)
|
|
|
24
|
|
|
|
4,898
|
|
|
|
|
|
|
|
|
|
|
Aggregates Product Line
(3)
|
|
|
96,769
|
|
|
|
95,134
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Volume/pricing variances reflect the percentage increase/(decrease) from the comparable period in the prior year.
|
(2)
|
Heritage Aggregates Product Line excludes volume and pricing data for acquisitions that have not been included in prior-year operations for the comparable period and
divestitures.
|
(3)
|
Aggregates Product Line includes all acquisitions from the date of acquisition and divestitures through the date of disposal.
|
(4)
|
Divestitures include the tons related to divested aggregates product line operations up to the date of divestiture.
|
Specialty Products net sales increased 1.7% to $151.6 million, reflecting growth in both chemicals and dolomitic lime product lines. Earnings from
operations were $52.7 million, a 130-basis-point improvement in operating margin (excluding freight and delivery revenues) over the prior-year period.
Page 35 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Increased direct production costs and nonproduction costs for the heritage aggregates product line, coupled
with the Corporations increased exposure to vertically-integrated businesses, reduced the Corporations gross margin (excluding freight and delivery revenues) for the nine months ended September 30 by 220 basis points to 18.1% in
2012. The following presents a rollforward of the Corporations gross profit (dollars in thousands):
|
|
|
|
|
Consolidated gross profit, nine months ended September 30, 2011
|
|
$
|
232,092
|
|
|
|
|
|
|
Heritage Aggregates Product Line:
|
|
|
|
|
Volume strength
|
|
|
20,583
|
|
Pricing strength
|
|
|
28,026
|
|
Increase in noncontrollable energy costs
|
|
|
(4,494
|
)
|
Increase in other production costs
|
|
|
(8,938
|
)
|
Increase in nonproduction costs
|
|
|
(23,122
|
)
|
Inventory change
|
|
|
(1,304
|
)
|
|
|
|
|
|
Increase in Heritage Aggregates Product Line gross profit
|
|
|
10,751
|
|
Aggregates Business acquired locations
|
|
|
3,926
|
|
Specialty Products
|
|
|
2,294
|
|
Corporate
|
|
|
704
|
|
Other
|
|
|
(265
|
)
|
|
|
|
|
|
Increase in consolidated gross profit
|
|
|
17,410
|
|
|
|
|
|
|
Consolidated gross profit, nine months ended September 30, 2012
|
|
$
|
249,502
|
|
|
|
|
|
|
The heritage aggregates product line continues to absorb the significant financial impact of higher energy expenses,
particularly diesel fuel, which represents the single largest component of its energy costs. For the first nine months, the Aggregates business paid an average of $3.12 per gallon in 2012 compared with $2.96 in the prior-year period.
For the nine months ended September 30, 2012, other production costs for the heritage aggregates product line increased $8.9 million over the
prior-year period due to higher costs for labor, repairs, supplies and royalty expenses. Direct production costs per ton increased 1.2% over the comparable prior-year period.
Nonproduction costs for the heritage aggregates product line increased $23.1 million compared with the prior-year period. Internal freight costs for the heritage aggregates operations increased $12.9 million
compared with the prior-year period. While higher diesel fuel costs experienced during the first nine months contributed to the increase in internal freight costs, the rail component increased due to increased shipments to materials yards,
particularly in the West Group. Additionally, resale material costs increased significantly during the first half of 2012 as the Corporation was unable to produce enough material to support well drilling for the oil and gas industry, particularly in
the Mideast Group, and purchased the products for its customers.
Page 36 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Consolidated SG&A expenses were 7.3% of net sales, an 80-basis-point improvement compared with the
prior-year period. On an absolute basis, SG&A expenses increased $8.0 million, as expected, primarily related to the acquired operations in the Denver, Colorado market and costs related to an information systems upgrade expected to be completed
by the fall of 2013.
During the nine months ended September 30, 2012, the Corporation incurred $35.1 million of business development costs.
For the nine months ended September 30, consolidated other operating income and expenses, net, was income of $1.1 million in 2012 compared
with income of $4.0 million in 2011, primarily as a result of higher gains on the sale of assets in 2011.
Interest expense was $40.0 million for
the nine months ended September 30, 2012 compared with $45.3 million for the prior-year period. The decrease in 2012 was due to a higher mix of variable-rate debt which currently bears a lower interest rate than the Corporations
fixed-rate debt.
In addition to other offsetting amounts, other nonoperating income and expenses, net, are comprised generally of interest
income and net equity earnings from nonconsolidated investments. Consolidated other nonoperating income and expenses, net, for the nine months ended September 30, was income of $1.3 million in 2012 compared with an expense of $2.2 million in
2011, primarily due to the gain resulting from a bond repurchased at a discount in 2012.
Since 2007, the Corporation has been pursuing a
bilateral advanced pricing agreement between the Internal Revenue Service and the Canada Revenue Agency for the transfer price of products for intercompany shipments. In September 2012, the Corporation was informally notified that the two
parties reached an agreement on an adjustment to the amount charged for the covered tax years of 2007 through 2011, but have not yet agreed on a method to be used to calculate the transfer price going forward. The financial statements reflect
an estimate of the impact of agreement, including the reversal of a valuation allowance on net operating loss and tax credit carryforwards that are expected to be utilized to offset the increase in the Corporations wholly-owned Canadian
subsidiarys taxable income for the tax years 2007 through 2011. Discrete events drove a decrease in the consolidated overall estimated effective income tax rate for the nine months ended September 30, 2012. The consolidated overall
estimated effective income tax rate for the nine months ended September 30, 2012 would have been 22.7% without these discrete events; a rate more reflective of the expected annual tax rate of 23%.
Page 37 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the nine months ended September 30, 2012 was $122.0 million. Excluding the impact of business development expenses, cash provided by operating activities for
the nine months ended September 30, 2012 was $160.0 million compared with $179.9 million for the same period in 2011. Operating cash flow is primarily derived from consolidated net earnings or loss, before deducting depreciation, depletion and
amortization, and offset by working capital requirements. Depreciation, depletion and amortization were as follows:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
(Dollars in Thousands)
|
|
Depreciation
|
|
$
|
125,534
|
|
|
$
|
124,676
|
|
Depletion
|
|
|
3,446
|
|
|
|
2,592
|
|
Amortization
|
|
|
4,005
|
|
|
|
2,405
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
132,985
|
|
|
$
|
129,673
|
|
|
|
|
|
|
|
|
|
|
Additionally, the Corporations December 2011 asset exchange changed the timing of cash flows throughout the year, with
increased cash flows generated by the Denver operations expected to be realized in the second half of the year. Cash used for operating activities by the Denver operations was approximately $52 million during the first nine months of 2012. Days
sales outstanding was 44.7 days, down from 45.2 days in 2011.
The seasonal nature of the construction aggregates business impacts quarterly
operating cash flow when compared with the full year. Full year 2011 net cash provided by operating activities was $259.1 million compared with $179.9 million for the first nine months of 2011.
During the nine months ended September 30, 2012, the Corporation invested $105.9 million of capital into its business, including $32 million related to
the new kiln at its Specialty Products location in Woodville, Ohio. The new kiln, which became functional on November 1, 2012, will begin to generate sales in the fourth quarter. On an annual basis, the new kiln is expected to provide net sales
ranging from $22 million to $25 million. Full-year capital spending, exclusive of acquisitions, if any, is expected to be approximately $155 million in 2012. Comparable full-year capital expenditures were $155.4 million in 2011.
On January 23, 2012, the Corporation repurchased $20.0 million par value of its outstanding 6.25% Senior Notes due 2037 at 90.75. This repurchase was
financed with borrowings of $18.2 million under the Corporations Revolving Facility.
Page 38 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The Corporation can repurchase its common stock through open-market purchases pursuant to authority granted
by its Board of Directors. The Corporation did not repurchase any shares of common stock during the nine months ended September 30, 2012 and 2011. Management currently has no intent to repurchase any shares of the Corporations common
stock. At September 30, 2012, 5,042,000 shares of common stock were remaining under the Corporations repurchase authorization.
The
Credit Agreement (which consists of the Term Loan Facility and a $350 million Revolving Facility) and the AR Credit Facility require the Corporations ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation,
depletion and amortization (EBITDA), as defined, for the trailing twelve month period (the Ratio) to not exceed 3.50x as of the end of any fiscal quarter, provided that the Corporation may exclude from the Ratio debt incurred in
connection with certain acquisitions for a period of 180 days so long as the Corporation, as a consequence of such specified acquisition, does not have its ratings on long-term unsecured debt fall below BBB by Standard & Poors or Baa2
by Moodys and the Ratio calculated without such exclusion does not exceed 3.75x. Additionally, if there are no amounts outstanding under both the Revolving Facility and the AR Credit Facility, consolidated debt, including debt guaranteed by
the Corporation, will be reduced for purposes of the covenant calculation by the Corporations unrestricted cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million (hereinafter, net debt).
In order to increase the cushion between the Ratio and the covenant limit, on October 17, 2012, the Corporation amended the Ratio to
maintain the maximum Ratio of 3.75x for the December 31, 2012, March 31, 2013 and June 30, 2013 calculation dates. The calculation returns to the pre-amended maximum of 3.50x for the September 30, 2013 calculation date.
Management anticipates the Ratio will stay below the unadjusted 3.50x level for the periods when the amendment increases the maximum Ratio to 3.75x.
The Ratio is calculated as debt, including debt guaranteed by the Corporation, divided by consolidated EBITDA, as defined, for the trailing twelve months. Consolidated EBITDA is generally defined as earnings
before interest expense, income tax expense, and depreciation, depletion and amortization expense for continuing operations. Additionally, stock-based compensation expense is added back and interest income is deducted in the calculation of
consolidated EBITDA. Certain other nonrecurring noncash items, if they occur, can affect the calculation of consolidated EBITDA.
Page 39 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
At September 30, 2012, the Corporations ratio of consolidated debt to consolidated EBITDA, as
defined, for the trailing twelve months EBITDA was 3.58 times and was calculated as follows (dollars in thousands):
|
|
|
|
|
|
|
Twelve Month Period
October 1, 2011 to
September 30, 2012
|
|
Earnings from continuing operations attributable to Martin Marietta Materials, Inc.
|
|
$
|
72,339
|
|
Add back:
|
|
|
|
|
Interest expense
|
|
|
53,265
|
|
Income tax expense
|
|
|
11,137
|
|
Depreciation, depletion and amortization expense
|
|
|
170,481
|
|
Stock-based compensation expense
|
|
|
8,152
|
|
Deduct:
|
|
|
|
|
Interest income
|
|
|
(453
|
)
|
|
|
|
|
|
Consolidated EBITDA, as defined
|
|
$
|
314,921
|
|
|
|
|
|
|
Consolidated debt, including debt guaranteed by the Corporation, at September 30, 2012
|
|
$
|
1,126,524
|
|
Deduct:
|
|
|
|
|
Unrestricted cash and cash equivalents in excess of $50,000 at September 30, 2012
|
|
|
|
|
|
|
|
|
|
Consolidated net debt, as defined, at September 30, 2012
|
|
$
|
1,126,524
|
|
|
|
|
|
|
Consolidated debt to consolidated EBITDA, as defined, at September 30, 2012 for the trailing twelve months
EBITDA
|
|
|
3.58 X
|
|
|
|
|
|
|
In the event of a default on the Ratio, the lenders can terminate the Credit Agreement and AR Credit Facility and declare
any outstanding balances as immediately due.
Cash on hand, along with the Corporations projected internal cash flows and availability of
financing resources, including its access to debt and equity capital markets, are expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, meet capital
expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise and allow for payment of dividends for the foreseeable future. At September 30, 2012, the Corporation had $250 million of unused borrowing
capacity under its Revolving Facility, subject to complying with the related leverage covenant, and no available borrowings under its AR Credit Facility. The Credit Agreement expires on March 31, 2015 and the AR Credit Facility, as amended,
terminates on April 20, 2013.
Page 40 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The Corporation may be required to obtain financing to fund certain strategic acquisitions, if any such
opportunities arise, or to refinance outstanding debt. A strategic acquisition of size for cash would likely require an appropriate balance of newly-issued equity with debt in order to maintain a composite investment-grade credit rating.
Furthermore, the Corporation is exposed to the credit markets, through the interest cost related to its variable-rate debt, which includes borrowings under its Revolving Facility, Term Loan Facility and AR Credit Facility, and the interest cost
related to its commercial paper program, to the extent that it is available to the Corporation. The Corporation is currently rated by three credit rating agencies, and while two of those agencies credit ratings are investment-grade level, on
July 12, 2012, the third agency reduced its rating to one level below investment grade. The Corporations composite credit rating remains at investment-grade level, which facilitates obtaining financing at lower rates than
noninvestment-grade ratings. While management believes its composite credit ratings will remain at an investment-grade level, no assurance can be given that these ratings will remain at current levels.
TRENDS AND RISKS The Corporation outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31,
2011, filed with the Securities and Exchange Commission on February 29, 2012. Management continues to evaluate its exposure to all operating risks on an ongoing basis.
OUTLOOK
As discussed, management is encouraged by various positive trends in the Corporations
markets. For full year 2012, management anticipates high-single-digit volume growth in the nonresidential end-use market, driven primarily by increased energy shipments; some energy-sector activity will continue to be affected by natural gas prices,
the timing of lease commitments for oil and natural gas companies, geographic transitions and weather conditions. Management expects the rate of improvement in the Corporations residential end-use market to accelerate over the rate of
improvement in 2011. The infrastructure end-use market volume is expected to be down slightly and ChemRock/Rail shipments are expected to be down in the high-single digits.
As such, management anticipates that heritage aggregates product line shipments for the full year will increase from 1% to 2%, and pricing will increase 2% to 4%. A variety of factors beyond the
Corporations direct control may continue to exert pressure on volumes and forecasted pricing increase is not expected to be uniform across the company. Heritage aggregates product line direct production costs per ton are expected to be up
slightly compared with 2011.
Page 41 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
Earnings for the Specialty Products segment should be approximately $68 million to $70 million. Steel
utilization and natural gas prices are two key factors for this segment.
SG&A expenses, excluding the incremental expense related to the
Denver operations and costs related to the information systems upgrade, are expected to decline slightly. Management expects improvement in SG&A expenses related to the Denver operations as the Corporation fully completes their integration.
Interest expense should decrease approximately $5 million compared with 2011. The Corporations effective tax rate is expected to approximate 23%, excluding discrete events. Capital expenditures are forecast at $155 million.
Management has started framing a preliminary 2013 outlook for the Corporations end-use markets. Management currently expects shipments to
the infrastructure end-use market to increase in the mid-single digits, driven by the impact of MAP-21, TIFIA and state-sponsored programs. Management anticipates the nonresidential end-use market to increase in the high-single digits. Management
believes the recent positive trend in housing starts will continue and the residential end-use market will experience double-digit volume growth. Finally, management expects the ChemRock/Rail end-use market to be flat compared with 2012. Management
will provide further guidance on the Corporations 2013 outlook in its year-end earnings release.
The full-year 2012 outlook and
preliminary 2013 outlook for the Corporations end-use markets include managements assessment of the likelihood of certain risk factors that will affect performance. The most significant risk to 2012 performance will be the United States
economy and its impact on construction activity. The resolution of the fiscal cliff and whether tax increases and spending cuts take effect may have a significant impact on the economy and, consequently, construction activity. Other risks related to
the Corporations future performance include, but are not limited to, both price and volume and include a recurrence of widespread decline in aggregates volume negatively affecting aggregates price; the termination, capping and/or reduction of
the federal and/or state gasoline tax(es) or other revenue related to infrastructure construction; a significant change in the funding patterns for traditional federal, state and/or local infrastructure projects; a reduction in defense spending, and
the subsequent impact on construction activity on or near military bases, particularly if sequestration of budget programs occurs; a decline in nonresidential construction, a decline in energy-related drilling activity resulting from certain
regulatory or economic factors, a slowdown in the residential construction recovery, or some combination thereof; and a continued reduction in ChemRock/Rail shipments resulting from declining coal traffic on the railroads. Further, increased
highway construction funding pressures resulting from either federal or state issues can affect profitability. Currently, nearly all states have general fund budget issues driven by lower tax revenues. If these negatively affect transportation
budgets more than in the past, construction spending could be reduced. North Carolina and Texas, states disproportionately affecting the Corporations revenue and profitability, are among the states experiencing these fiscal pressures, although
recent statistics indicate that transportation budgets and tax revenues are increasing.
Page 42 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
The Corporations principal business serves customers in aggregates-related construction markets. This
concentration could increase the risk of potential losses on customer receivables; however, payment bonds normally posted on public projects, together with lien rights on private projects, help to mitigate the risk of uncollectible receivables. The
level of aggregates demand in the Corporations end-use markets, production levels and the management of production costs will affect the operating leverage of the Aggregates business and, therefore, profitability. Production costs in the
Aggregates business are also sensitive to energy prices, both directly and indirectly. Diesel fuel and other consumables change production costs directly through consumption or indirectly by increased energy-related input costs, such as, steel,
explosives, tires and conveyor belts. Fluctuating diesel fuel pricing also affects transportation costs, primarily through fuel surcharges in the Corporations long-haul distribution network. The Specialty Products business is sensitive to
changes in domestic steel capacity utilization and the absolute price and fluctuations in the cost of natural gas. However, due to recent technology developments allowing the harvesting of abundant natural gas supplies in the U.S., natural gas
prices have stabilized.
Transportation in the Corporations long-haul network, particularly rail cars and locomotive power to move trains,
affects its ability to efficiently transport material into certain markets, most notably Texas, Florida and the Gulf Coast. The availability of trucks to transport the Corporations product, particularly in markets experiencing increased demand
due to energy sector activity, is also a risk. The Aggregates business is also subject to weather-related risks that can significantly affect production schedules and profitability. The first and fourth quarters are most adversely affected by winter
weather, and the acquisitions of operations in the Denver, Colorado, market increased the Corporations exposure to winter weather. Hurricane activity in the Atlantic Ocean and Gulf Coast generally is most active during the third and fourth
quarters.
Risks to the full-year outlook include shipment declines as a result of economic events beyond the Corporations control. In
addition to the impact on nonresidential and residential construction, the Corporation is exposed to risk in its estimated outlook from credit markets and the availability of and interest cost related to its debt.
The Corporations future performance is also exposed to risk from tax reform at the federal and state levels.
Page 43 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
OTHER MATTERS If you are interested in Martin Marietta Materials, Inc. stock,
management recommends that, at a minimum, you read the Corporations current Annual Report and Forms 10-K, 10-Q and 8-K reports to the SEC over the past year. The Corporations recent proxy statement for the annual meeting of shareholders
also contains important information. These and other materials that have been filed with the SEC are accessible through the Corporations website at
www.martinmarietta.com
and are also available at the SECs website at
www.sec.gov
. You may also write or call the Corporations Corporate Secretary, who will provide copies of such reports.
Investors
are cautioned that all statements in this Quarterly Report that relate to the future involve risks and uncertainties, and are based on assumptions that the Corporation believes in good faith are reasonable but which may be materially different from
actual results. Forward-looking statements give the investor the Corporations expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use
words such as anticipate, estimate, expect, project, intend, plan, believe, and other words of similar meaning in connection with future events or future operating
or financial performance. Any or all of the Corporations forward-looking statements here and in other publications may turn out to be wrong.
Factors that the Corporation currently believes could cause actual results to differ materially from the forward-looking statements in this Quarterly Report
on Form 10-Q include, but are not limited to, the performance of the United States economy and the resolution of the fiscal cliff; widespread decline in aggregates pricing; the discontinuance of the federal gasoline tax or other revenue related to
infrastructure construction; the level and timing of federal and state transportation funding, including federal stimulus projects and most particularly in North Carolina, one of the Corporations largest and most profitable states, and Texas,
Iowa, Colorado and Georgia; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Corporation serves; a decline in
defense spending, and the subsequent impact on construction activity on or near military bases, particularly if sequestration of budget programs occurs; a decline in the commercial component of the nonresidential construction market, notably office
and retail space; a slowdown in residential construction recovery; unfavorable weather conditions, particularly Atlantic Ocean hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive
rainfall in the markets served by the Corporation; the volatility of fuel costs, particularly diesel fuel, and the impact on the cost of other consumables, namely steel, explosives, tires, conveyor belts, and with respect to the Specialty Products
segment, natural gas; continued increases in the cost of other repair and supply parts; transportation availability, notably the availability of railcars and locomotive power to move trains to supply the Corporations Texas, Florida and Gulf
Coast markets; increased transportation costs, including increases from higher passed-through energy and other costs to comply with tightening regulations as well as higher volumes of rail and water shipments; availability and cost of construction
equipment in the United States; weakening in the steel
Page 44 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter Ended September 30, 2012
(Continued)
industry markets served by the Corporations dolomitic lime products; inflation and its effect on both production and interest costs; ability to successfully integrate acquisitions quickly
and in a cost-effective manner and achieve anticipated profitability to maintain compliance with the Corporations leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices that would
increase the Corporations tax rate; violation of the Corporations debt covenant if price and/or volumes returns to previous levels of instability; downward pressure on the Corporations common stock price and its impact on goodwill
impairment evaluations; and other risk factors listed from time to time found in the Corporations filings with the SEC.
Other factors
besides those listed here may also adversely affect the Corporation, and may be material to the Corporation. The Corporation assumes no obligation to update any such forward-looking statements.
INVESTOR ACCESS TO COMPANY FILINGS Shareholders may obtain, without charge, a copy of Martin Marietta Materials, Inc.s Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2011, by writing to:
Martin
Marietta Materials, Inc.
Attn: Corporate Secretary
2710 Wycliff Road
Raleigh, North Carolina 27607-3033
Additionally, Martin Marietta Materials, Inc.s Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms
10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Corporations website. Filings with the Securities and Exchange Commission accessed via the website are available through a link with the Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:
Telephone: (919) 788-4367
Website address: www.martinmarietta.com
Information included on the Corporations website is not
incorporated into, or otherwise create a part of, this report.
Page 45 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Corporations operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently,
these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.
Management
has considered the current economic environment and its potential impact to the Corporations business. Demand for aggregates products, particularly in the nonresidential and residential construction markets, could decline if companies and
consumers are unable to obtain financing for construction projects or if an economic recession causes delays or cancellations to capital projects. Additionally, declining tax revenues and state budget deficits have negatively affected states
abilities to finance infrastructure construction projects.
Demand in the residential construction market is affected by interest rates. The
Federal Reserve kept the federal funds rate at zero percent during the quarter ended September 30, 2012. The residential construction market accounted for approximately 8% of the Corporations heritage aggregates product line shipments in
2011.
Aside from these inherent risks from within its operations, the Corporations earnings are affected also by changes in short-term
interest rates as a result of any temporary cash investments, including money market funds and Eurodollar time deposit accounts; any outstanding variable-rate borrowing facilities; and defined benefit pension plans. Additionally, the
Corporations earnings are affected by energy costs. The Corporation has no material counterparty risk.
Variable-Rate Borrowing
Facilities.
The Corporation has a $600 million Credit Agreement, comprised of a $350 million Revolving Facility and $250 million Term Loan Facility, and a $100 million AR Credit Facility. Borrowings under these facilities
bear interest at a variable interest rate. A hypothetical 100-basis-point increase in interest rates on borrowings of $445 million, which is the collective outstanding balance at September 30, 2012, would increase interest expense by $4.5
million on an annual basis.
Pension Expense.
The Corporations results of operations are affected by its
pension expense. Assumptions that affect pension expense include the discount rate and, for the defined benefit pension plans only, the expected long-term rate of return on assets. Therefore, the Corporation has interest rate risk associated with
these factors. The impact of hypothetical changes in these assumptions on the Corporations annual pension expense is discussed in the Corporations Annual Report on Form 10-K for the year ended December 31, 2011, filed with the
Securities and Exchange Commission on February 29, 2012.
Page 46 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
Energy Costs
. Energy costs, including diesel fuel, natural gas and liquid
asphalt, represent significant production costs for the Corporation. A hypothetical 10% change in the Corporations energy prices in 2012 as compared with 2011, assuming constant volumes, would impact annual 2012 pretax earnings by
approximately $16.8 million.
Aggregate Risk for Interest Rates and Energy Costs.
Pension expense for 2012 is
calculated based on assumptions selected at December 31, 2011. Therefore, interest rate risk in 2012 is limited to the potential effect related to the Corporations borrowings under variable-rate facilities. The effect of a hypothetical
increase in interest rates of 1% on $445 million of variable-rate borrowings outstanding at September 30, 2012 would increase interest expense on an annual basis by $4.5 million. Additionally, a 10% change in energy prices compared with 2011
would impact annual pretax earnings by $16.8 million.
Item 4. Controls and Procedures
As of September 30, 2012, an evaluation was performed under the supervision and with the participation of the Corporations management, including
the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Corporations disclosure controls and procedures. Based on that evaluation, the Corporations management, including the
Chief Executive Officer and Chief Financial Officer, concluded that the Corporations disclosure controls and procedures were effective as of September 30, 2012. As permitted by the Securities and Exchange Commission, the
Corporations management excluded its newly-acquired Denver operations from its internal control over financial reporting as of September 30, 2012. These Denver operations accounted for approximately 7% of the Companys consolidated
total assets at December 31, 2011. There were no changes in the Corporations internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially
affect, the Corporations internal control over financial reporting.
Page 47 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
PART II-OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to
Part I
.
Item 3. Legal Proceedings
of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2011.
Item 1A. Risk Factors
.
Reference is made to
Part I. Item 1A. Risk Factors and Forward-Looking Statements
of the Martin Marietta Materials, Inc. Annual Report on Form 10-K for the year ended December 31, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
.
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number of
Shares Purchased
|
|
|
Average Price
Paid per Share
|
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or
Programs
|
|
|
Maximum Number of
Shares that May Yet
be Purchased
Under
the Plans or Programs
|
|
July 1, 2012 July 31, 2012
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
5,041,871
|
|
August 1, 2012 August 31, 2012
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
5,041,871
|
|
September 1, 2012 September 30, 2012
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
5,041,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
5,041,871
|
|
The Corporations initial stock repurchase program, which authorized the repurchase of 2.5 million shares of
common stock, was announced in a press release dated May 6, 1994, and has been updated as appropriate. The program does not have an expiration date.
Item 4. Mine Safety Disclosures.
The information concerning mine
safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report
on Form 10-Q.
Page 48 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
PART II-OTHER INFORMATION
(Continued)
Item 6. Exhibits.
|
|
|
Exhibit No.
|
|
Document
|
|
|
10.01
|
|
Amendment No. 2 to Credit dated as of October 17, 2012 to Credit Agreement dated as of March 31, 2011 among Martin Marietta Materials, Inc., the Lenders listed on the
signatures pages thereof and JPMorgan Chase Bank, N.A., as Administrative Agent, and Wells Fargo Bank, N.A., Branch Banking and Trust Company, SunTrust Bank, and Bank of America, N.A., as Co-Syndication Agents
|
|
|
31.01
|
|
Certification dated November 6, 2012 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
31.02
|
|
Certification dated November 6, 2012 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
32.01
|
|
Written Statement dated November 6, 2012 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
32.02
|
|
Written Statement dated November 6, 2012 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
95
|
|
Mine Safety Disclosures
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
Page 49 of 51
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
MARTIN MARIETTA MATERIALS, INC.
(Registrant)
|
|
|
|
|
Date: November 6, 2012
|
|
|
|
By:
|
|
/s/ Anne H. Lloyd
|
|
|
|
|
|
|
Anne H. Lloyd
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Page 50 of 51
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the
Quarter Ended September 30, 2012
EXHIBIT INDEX
|
|
|
Exhibit No.
|
|
Document
|
|
|
10.01
|
|
Amendment No. 2 to Credit dated as of October 17, 2012 to Credit Agreement dated as of March 31, 2011 among Martin Marietta Materials, Inc., the Lenders listed on the signatures pages
thereof and JPMorgan Chase Bank, N.A., as Administrative Agent, and Wells Fargo Bank, N.A., Branch Banking and Trust Company, SunTrust Bank, and Bank of America, N.A., as Co-Syndication Agents
|
|
|
31.01
|
|
Certification dated November 6, 2012 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
|
31.02
|
|
Certification dated November 6, 2012 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|
|
|
32.01
|
|
Written Statement dated November 6, 2012 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.02
|
|
Written Statement dated November 6, 2012 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
95
|
|
Mine Safety Disclosures
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
Page 51 of 51
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