Notes to Financial Statements
December 31, 2012 and 2011
1. Significant Accounting Policies
Basis of Accounting
The financial statements of the Martin Marietta Materials, Inc. Performance Sharing Plan (the Plan) are prepared on the accrual basis of accounting in conformity with accounting principles
generally accepted in the United States of America (GAAP).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain
reported amounts, changes therein and related disclosures. Accordingly, actual results could differ from those estimates and assumptions.
Investment Valuation and Income Recognition
Investments are reported at fair value. Fair value, as defined under GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. See Note 4 for discussion of fair value measurements.
In accordance with GAAP, a stable
value fund held by a defined contribution plan is required to be reported at fair value. A fully benefit-responsive investment contract provides a liquidity guarantee by a financially responsible third party, of principal and previously accrued
interest for liquidations, transfers, loans or withdrawals initiated by plan participants exercising their rights to withdraw, borrow or transfer funds under the terms of the plan. However, contract value is the relevant measurement attribute for
that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted
transactions under the terms of the plan. The statements of net assets available for benefits present the fair value of the stable value fund as well as the adjustment to the fully benefit-responsive stable value fund from fair value to contract
value. The statement of changes in net assets available for benefits is prepared on a contract value basis.
Purchases and
sales of securities are recorded on a trade-date basis. Interest income is recognized on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plans gains and losses on investments bought and sold as
well as held during the year.
Page
7
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
1. Accounting Policies (continued)
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent
participant loans are reclassified as distributions based upon the terms of the Plan.
Payments of Benefits
Benefits are recorded upon distribution. Therefore, no liability is recorded for distributions to participants who terminated during the
year but have chosen to defer payments to the following year.
Administrative Expenses
Administrative expenses are paid by either the Plan or Martin Marietta Materials, Inc. (the Corporation), as provided by the
Plan document. Certain administrative functions are performed by employees of the Corporation, the Plans sponsor and administrator. No such employees receive compensation from the Plan. Expenses relating to specific participant transactions
(i.e., notes receivable from participants and distributions) are charged directly to the participants account.
Transfers
Along with the Plan, the Corporation also sponsors the Martin Marietta Materials, Inc. Savings and Investment Plan, a
defined contribution plan for hourly employees. If participants change their employment status between salaried and hourly during the year, their account balances are transferred into the corresponding Plan. For the year ended December 31,
2012, approximately $100,000 was transferred from the Plan to the hourly plan.
Subsequent Events
The Plan has evaluated subsequent events through June 24, 2013, the date the financial statements were available to be issued.
Page
8
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
2. Description of the Plan
The following description of the Plan provides only general information. Participants should refer to the summary plan description for a
more complete description of the Plans provisions.
General
The Plan is a defined contribution plan providing eligible salaried employees of the Corporation an opportunity to participate in an
individual savings and investment program providing tax deferred savings. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Wells Fargo Bank, N.A. (Wells Fargo) serves as the Plans trustee and recordkeeper.
Contributions
Employees are eligible to enroll in the Plan as soon as administratively possible upon hire. Participants may elect to contribute basic
contributions of 1% to 7% of base salary (as defined in the Plan document and subject to applicable Internal Revenue Code (the Code) limitations on allowable compensation). Certain participants may also elect to make additional
supplemental contributions, which are not considered for purposes of computing the employer match. A participants before-tax combined basic and supplemental contributions may not exceed 25% of that participants base pay. Participants age
50 or older may make additional before-tax contributions that are not subject to the 25% Plan limit.
Unless an affirmative
election not to participate in the Plan is made, employees hired on or after March 1, 2006 are automatically enrolled in the Plan and deemed to have elected to contribute 2% of base salary. The 2% contribution increases by 1% on each
anniversary date of the participants automatic enrollment until the before-tax contribution reaches 7% of base salary. Participants may make an affirmative election at any time to contribute a different amount.
Contributions are automatically invested in a target date fund that is closest to the date the participant attains age 65, unless
otherwise designated by the participant. The target date funds seek to provide investors with an appropriate level of risk and return by investing in a mix of stocks, bonds and cash. The allocation is adjusted to become more conservative (investing
more in bonds and cash) as the target date approaches and the participant begins to use the funds on or around the target date. At target date some exposure to equities is retained to continue to provide investment returns during retirement.
Page
9
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Contributions (continued)
Certain participants also have the option of making after-tax contributions up to 17% of
base pay to the Plan, in addition to, or in lieu of, before-tax contributions. However, the combined amount of after-tax and before-tax contributions cannot exceed a total of 25% of base pay, subject to certain restrictions for highly compensated
employees.
The Plan also provides for Roth 401(k) contributions. Under this option, a participant pays the federal and state
income taxes on the amount contributed at the time of contribution. Any earnings on Roth 401(k) contributions are not taxed as long as the participants distribution is a qualified distribution. A participants Roth 401(k) contributions
are subject to the same limits as regular before-tax basic and supplemental contributions. Additionally, the combined amount of before-tax, after-tax and Roth 401(k) contributions cannot exceed a total of 25% of base pay, subject to certain
restrictions for highly compensated employees.
The Corporation matches the participants annual basic contributions (the
first 7% of base pay) starting the first of the month following six months of employment. The Corporation also matches eligible participants Roth 401(k) and after-tax contributions if the participants contribute less than 7% on a before-tax
basis. The amount of the Corporations match is equal to 50% of the basic contributions and is credited to participant accounts semi-monthly.
Participants may change the overall percentage of their contributions in 1% increments and may change investment elections for future before-tax, after-tax, Roth 401(k) and matching contributions. In
addition, participants may change the investment mix of the accumulated value of prior contributions among the investment options daily. The Plan also allows for spot transfers in which a specific dollar amount may be transferred from one investment
option to another.
Investment Options
Participants direct the investment of their accounts into the following investment options offered by the Plan: BlackRock LifePath
®
Portfolios, Wells Fargo Stable Return Fund N15, Wells Fargo Advantage Total Return Bond Fund, Class I, Wells Fargo S&P 500 Index Fund N, Vanguard International
Growth Fund, Admiral Shares, Harbor Capital Appreciation Fund, Loomis Sayles Value Fund Y, Vanguard Explorer Fund and Martin Marietta Materials, Inc. Common Stock Fund.
Page
10
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Participant Accounts
Each participants account is credited with the participants and employers contributions and allocations of earnings. The participants account is charged with benefit payments,
transaction fees related to notes receivable from participants and distributions, and an allocation of losses and administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the participants vested account.
Vesting
Participants are immediately 100% vested in the value of their accounts plus actual earnings thereon, including employer contributions.
Notes Receivable from Participants
The Plan provides for certain participants to borrow from their own investment accounts. All loans must meet specific terms and conditions of the Plan and are subject to applicable regulations of the
Code. The minimum loan amount is $1,000. The maximum loan is the lesser of 50% of the total account balance or $50,000 minus the highest outstanding loan balance from the past 12 months. Personal loans are available to participants in terms of up to
5 years, and primary residence loans are available for terms of up to 15 years. Such loans bear interest at a fixed rate, established upon loan request, which is equal to the Wells Fargo prime rate plus 1%. All loans are due in full immediately upon
termination of employment. In addition, the Plan provides for in-service withdrawals to participants that meet specific conditions of financial hardship, as defined in the Plan and in accordance with current specific regulations under the Code.
Participants who are still working at the age of 59
1
/
2
may qualify for special withdrawal rights and privileges as defined in the Plan. At December 31, 2012, interest rates
on participant loans outstanding ranged from 4.25% to 10.5%. Principal and interest is paid ratably through payroll deductions.
Page
11
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
Payment of Benefits
Upon separation from the Corporation due to death, disability, termination or retirement, participants may receive
the full current value of their contributions and the matching employer contributions in either a lump-sum payment or various installment options as provided by the Plan. Amounts contributed on a before-tax basis may be withdrawn, without penalty,
only upon demonstration of financial hardship, disability, or after the participants reach age 59
1
/
2
years. Participants eligible to receive a distribution from the Plan may elect a lump-sum payment or annual, semi-annual,
quarterly or monthly installments over a period elected by the participants (subject to the Codes required minimum distribution rules). Effective December 1, 2011, installment payments may be distributed from Roth 401(k) account balances;
prior to this date, they were distributed only in the form of a single lump-sum payment. The accounts of participants who receive installment payments remain invested in the funds indicated by the participant.
Plan Termination
Although the Corporation expects to continue the Plan indefinitely, the Board of Directors of the Corporation may terminate the Plan for
any reason at any time. If the Plan is terminated, each participant or former participant shall receive a payment equal to the value of the participants account.
Page
12
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
3. Investments
The following table presents investments that represent 5% or more of the Plans net assets at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
(In Thousands)
|
|
|
|
Investments at Contract Value:
|
|
|
|
|
|
|
|
|
*
|
|
Wells Fargo Stable Return Fund N15
|
|
$
|
28,393
|
|
|
$
|
29,441
|
|
|
|
|
|
|
|
Investments at Fair Value:
|
|
|
|
|
|
|
|
|
*
|
|
Martin Marietta Materials, Inc. Common Stock Fund
|
|
$
|
23,549
|
|
|
$
|
19,889
|
|
*
|
|
Wells Fargo S&P 500 Index Fund N
|
|
$
|
21,921
|
|
|
$
|
21,140
|
|
|
|
Vanguard International Growth Fund, Admiral Shares
|
|
$
|
12,700
|
|
|
$
|
12,351
|
|
*
|
|
Wells Fargo Advantage Total Return Bond Fund, Class I
|
|
$
|
12,298
|
|
|
$
|
10,057
|
|
|
|
Loomis Sayles Value Fund Y
|
|
$
|
11,417
|
|
|
$
|
10,529
|
|
|
|
Vanguard Explorer Fund, Admiral Shares
|
|
$
|
9,565
|
|
|
$
|
9,636
|
|
|
|
Harbor Capital Appreciation Fund
|
|
$
|
9,552
|
|
|
$
|
9,197
|
|
|
|
|
|
*
|
|
Indicates party-in-interest to the Plan.
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2012, the Plans investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in fair value as follows (in thousands):
|
|
|
|
|
Common and collective funds
|
|
$
|
5,159
|
|
Martin Marietta Materials, Inc. Common Stock Fund
|
|
|
4,973
|
|
Mutual funds
|
|
|
7,060
|
|
|
|
|
|
|
|
|
$
|
17,192
|
|
|
|
|
|
|
Page
13
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
4. Fair Value Measurements
Fair value, as defined under GAAP, is an exit price, representing the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
|
|
|
Level 1: Observable inputs such as quoted prices in active markets.
|
|
|
|
Level 2: Inputs other than quoted prices in active markets that are either directly or indirectly observable.
|
|
|
|
Level 3: Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions.
|
Assets and liabilities are classified in their entirety based on the lowest level of input that is
significant to the fair value measurement. The Plans assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement
within the fair value hierarchy levels.
When quoted prices are available in active markets for identical instruments,
investment securities are classified within Level 1 of the fair value hierarchy. Level 1 investments include mutual funds.
Level 2 investment securities include common and collective funds and the Martin Marietta Materials, Inc. Common Stock Fund for which
quoted prices are not available in active markets for identical instruments. The Plan utilizes a third party pricing service to determine the fair value of each of these investment securities. Because quoted prices in active markets for identical
assets are not available, these prices are determined using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of
future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of these assets could result
in a different fair value measurement at the reporting date.
Page
14
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
4. Fair Value Measurements (continued)
The Plan did not have any significant transfers between Level 1 and Level 2 during the
year ended December 31, 2012. The following table sets forth by level, within the fair value hierarchy, the Plans assets at fair value as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Common and collective funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
$
|
|
|
|
$
|
36,940
|
|
|
$
|
36,940
|
|
Stable value
|
|
|
|
|
|
|
29,216
|
|
|
|
29,216
|
|
Martin Marietta Materials, Inc. Common Stock Fund
|
|
|
|
|
|
|
23,549
|
|
|
|
23,549
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
|
43,234
|
|
|
|
|
|
|
|
43,234
|
|
Fixed income
|
|
|
12,298
|
|
|
|
|
|
|
|
12,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
55,532
|
|
|
$
|
89,705
|
|
|
$
|
145,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Common and collective funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
$
|
|
|
|
$
|
32,275
|
|
|
$
|
32,275
|
|
Stable value
|
|
|
|
|
|
|
30,207
|
|
|
|
30,207
|
|
Martin Marietta Materials, Inc. Common Stock Fund
|
|
|
|
|
|
|
19,889
|
|
|
|
19,889
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth
|
|
|
41,713
|
|
|
|
|
|
|
|
41,713
|
|
Fixed income
|
|
|
10,057
|
|
|
|
|
|
|
|
10,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
51,770
|
|
|
$
|
82,371
|
|
|
$
|
134,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
15
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
4. Fair Value Measurements (continued)
The following table sets forth a summary of the Plans investment funds with a
reported estimated fair value using net asset value per share at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value*
|
|
|
Unfunded
Commitment
|
|
Redemption
Frequency
|
|
Other
Redemption
Restrictions
|
|
Redemption
Notice
Period
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
Wells Fargo Stable Return Fund N15 (a)
|
|
$
|
29,216
|
|
|
$
|
30,207
|
|
|
None
|
|
Immediate
|
|
90-day wait
to transfer to competing fund
|
|
12 months
|
Wells Fargo S&P 500 Index Fund N (b)
|
|
|
21,921
|
|
|
|
21,140
|
|
|
None
|
|
Immediate
|
|
None
|
|
None
|
BlackRock LifePath
®
Portfolios (c)
|
|
|
15,019
|
|
|
|
11,135
|
|
|
None
|
|
Immediate
|
|
None
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and collective funds
|
|
|
66,156
|
|
|
|
62,482
|
|
|
|
|
|
|
|
|
|
Martin Marietta Materials, Inc. Common Stock Fund (d)
|
|
|
23,549
|
|
|
|
19,889
|
|
|
None
|
|
Immediate
|
|
None
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
89,705
|
|
|
$
|
82,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The fair values of the investments have been estimated using the net asset value of the investment.
|
(a)
|
Seeks to provide a moderate level of stable income without principal volatility while maintaining adequate liquidity and returns superior to shorter
maturity instruments by investing in a variety of investment contracts and instruments issued by selected high-quality insurance companies and financial institutions.
|
(b)
|
Seeks to approximate the total return of the Standard and Poors (S&P) 500 Index by investing in the same stocks and in the approximately
same percentages as the stocks that make up the index.
|
(c)
|
Seeks to provide income and moderate long-term growth of capital. Portfolios are comprised of a mix of stocks, bonds, commodities and cash and
gradually become more conservative as the target year approaches.
|
(d)
|
Seeks to invest in shares of the Corporations common stock and cash equivalent reserves. Growth comes through dividends and appreciation in
the Corporations stock value. See also Note 7.
|
Page
16
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
5. Common and Collective Investment Funds
The Wells Fargo Stable Return Fund N15 (Stable Return Fund), Wells Fargo S&P 500 Index Fund N
(S&P Fund) and BlackRock LifePath
®
Portfolio Funds (BlackRock Funds) (collectively,
the Funds) are common and collective funds. The Stable Return Fund and S&P Fund are sponsored by Wells Fargo. The BlackRock Funds are sponsored by BlackRock Institutional Trust Company, N.A. The Funds unit values are calculated
by dividing the Funds net asset values on the calculation date by the number of units of such fund that are outstanding on the calculation date. The number of units of the Funds that are outstanding on the calculation date is derived from
observable purchase and redemption activity of the Funds. The beneficial interest of each Plan participant is represented by units. Distribution to the Funds unit holders is declared daily from the net investment income and automatically
reinvested in the Funds on a monthly basis, when paid. It is the policy of the Funds to use their best efforts to maintain a stable net asset value; although, there is no guarantee that the Funds will be able to do so.
Participants ordinarily may direct the withdrawal or transfer of all or a portion of their investment at contract value. Contract value
represents contributions made to the Funds, plus earnings, less participant withdrawals and administrative expenses. The Funds impose certain restrictions on the Plan, and the Funds themselves may be subject to circumstances that impact their
ability to transact at contract value, as described in the following paragraph. Plan management believes that the occurrence of events that would cause the Funds to transact at less than contract value is not probable.
Restrictions on the Plan
Participant-initiated transactions are those transactions allowed by the Plan, including withdrawals for benefits, loans, or transfers to
noncompeting funds within a plan, but excluding withdrawals that are deemed to be caused by the actions of the Corporation. The following employer-initiated events may limit the ability of the Funds to transact at contract value:
|
|
|
A failure of the Plan or its trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA.
|
|
|
|
Any communication given to Plan participants designed to influence a participant not to invest in the Funds or to transfer assets out of the Funds.
|
|
|
|
Any transfer of assets from the Funds directly into a competing investment option.
|
|
|
|
The establishment of a defined contribution plan that competes with the Plan for employee contributions.
|
|
|
|
Complete or partial termination of the Plan or its merger with another plan.
|
Page
17
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
5. Common and Collective Investment Funds (continued)
Circumstances that Impact the Stable Return Fund
The Stable Return Fund invests in assets, typically investment contracts and security-backed contracts. An investment contract is a
contract issued by a financial institution to provide a stated rate of return to a buyer of the contract for a specified period of time. A security-backed contract has similar characteristics as a traditional investment contract and is comprised of
two parts. The first part is a fixed-income security or portfolio of fixed-income securities. The second part is a contract value guarantee (wrap) provided by a third party. A wrap contract is an agreement by another party, such as a bank or
insurance company to make payments to the Stable Return Fund in certain circumstances. Wrap contracts are designed to allow a stable value portfolio to maintain a constant net asset value and protect a portfolio in extreme circumstances. In a
typical wrap contract, the wrap issuer agrees to pay the difference between the contract value and the market value of the underlying assets if the market value falls below the contract value.
The wrap contracts generally contain provisions that limit the ability of the Stable Return Fund to transact at contract value upon the
occurrence of certain events. These events include:
|
|
|
Any substantive modifications of the Stable Return Fund or the administration of the Stable Return Fund that is not consented to by the wrap issuer.
|
|
|
|
Any change in law, regulation, or administrative ruling applicable to a plan that could have a material adverse effect on the Stable Return
Funds cash flow.
|
|
|
|
Employer-initiated transactions by participant plans as described above.
|
In the event that wrap contracts fail to perform as intended, the Stable Return Funds net asset value may decline if the market
value of its assets decline. The Stable Return Funds ability to receive amounts due pursuant to these wrap contracts is dependent on the third-party issuers ability to meet its financial obligations. The wrap issuers ability to
meet its contractual obligations under the wrap contracts may be affected by future economic and regulatory developments.
The
Stable Return Fund is unlikely to maintain a stable net asset value if, for any reason, it cannot obtain or maintain wrap contracts covering all of its underlying assets. This could result from the Stable Return Funds inability to promptly
find a replacement wrap contract following termination of a wrap contract. Wrap contracts are not transferable and have no trading market. There is a limited number of wrap issuers. The Stable Return Fund may lose the benefit of a wrap contract on
any portion of its assets in default in excess of a certain percentage of portfolio assets.
Page
18
of
23
Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
5. Common and Collective Investment Funds (continued)
The Stable Return Fund has certain withdrawal restrictions for liquidity reasons. The
provisions of the trust provide that withdrawals for other than normal benefit payments and participant directed transfers may require up to twelve months advance notice.
6. Income Tax Status
The Internal Revenue Service has
determined and informed the Corporation by letter dated April 29, 2010, that the Plan and related trust are designed in accordance with the applicable sections of the Code. The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code.
GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be
sustained upon examination by a taxing authority. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2012, there are no uncertain positions taken or expected to be taken that would
require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes the
Plan is no longer subject to income tax examinations for years prior to 2009.
7. Exempt Party-in-Interest Transactions
Certain Plan investments are shares of mutual funds and common and collective funds managed by Wells Fargo. Wells Fargo
is the trustee, as defined by the Plan, and, therefore, these transactions qualify as exempt party-in-interest transactions. Fees paid to the trustee by the Plan for administrative services were $206,000 for the year ended December 31, 2012.
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Martin Marietta Materials, Inc. Performance Sharing Plan
Notes to Financial Statements (continued)
7. Exempt Party-in-Interest Transactions (continued)
The Martin Marietta Materials, Inc. Common Stock Fund (MMMI Fund) is managed
by the Corporations Benefit Plan Committee. The MMMI Fund invests in shares of the Corporations common stock and in cash equivalent reserves for liquidity purposes. As the MMMI Fund holds approximately 97% to 99% common stock
shares, its return closely mirrors the return on the underlying stock. The MMMI Fund utilizes unitized accounting, which allows the MMMI Fund to operate like a mutual fund in that it holds a combination of two investments that are priced each day
and totaled to give the MMMI Fund a single unit value. The MMMI Funds net asset value differs from the Corporations publicly-reported stock price. Participants accounts hold equivalent shares of the Corporations common stock.
At December 31, 2012 and 2011, the Plan held, at the participants discretion, approximately 246,000 shares and 256,000 shares, respectively, of the Corporations common stock. At December 31, 2012 and 2011, the MMMI Fund had a
historical cost basis of approximately $19,100,000 and $19,900,000, respectively. During the year ended December 31, 2012 the Plan recorded dividend income of approximately $415,000 related to these shares.
8. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities, in general, are exposed to various risks such as interest rate, credit and overall market volatility. Due to the level of risk
associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants account balances and
the amounts reported in the statements of net assets available for benefits.
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Martin Marietta Materials, Inc. Performance Sharing Plan
EIN: 56-1848578 Plan Number: 005
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
December 31, 2012