NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
|
Significant Accounting Policies
|
Organization
Martin Marietta Materials, Inc., (the Corporation) is engaged principally in the construction aggregates business. The
Corporations aggregates product line accounted for 69% of consolidated 2013 net sales and includes crushed stone, sand and gravel, and is used for construction of highways and other infrastructure projects, and in the nonresidential and
residential construction industries. Aggregates products are also used in the railroad, agricultural, utility and environmental industries. These aggregates products, along with the Corporations vertically-integrated operations, which include
asphalt products, ready mixed concrete and road paving construction services (and which accounted for 19% of consolidated 2013 net sales), are sold and shipped from a network of nearly 300 quarries, distribution facilities and plants to customers in
30 states, Canada, the Bahamas and the Caribbean Islands. The aggregates and vertically-integrated operations are reported collectively as the Corporations Aggregates business.
Effective January 1, 2014, the Corporation made minor changes to the operations and management reporting structure of its Aggregates
business, resulting in an immaterial change to its reportable segments. The Corporation currently conducts its Aggregates business through three reportable segments as follows:
AGGREGATES BUSINESS
|
|
|
|
|
|
|
Reportable Segments
|
|
Mid-America Group
|
|
Southeast Group
|
|
West Group
|
Operating Locations
|
|
Indiana, Iowa,
northern Kansas,
Kentucky,
Maryland,
Minnesota,
eastern Nebraska,
North
Carolina,
Ohio,
South
Carolina,
Virginia,
Washington
and
West Virginia
|
|
Alabama, Florida,
Georgia,
Mississippi,
Tennessee, Nova
Scotia and the
Bahamas
|
|
Arkansas,
Colorado,
southern Kansas,
Louisiana,
Missouri,
western Nebraska,
Nevada,
Oklahoma, Texas,
Utah and
Wyoming
|
Page 7 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
In addition to the Aggregates business, the Corporation has a Specialty Products segment,
which accounted for 12% of consolidated 2013 net sales, that produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel industry.
Basis of Presentation
The accompanying unaudited consolidated financial statements of 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 in 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, 2013. In the opinion of management, the interim consolidated 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 consolidated results of operations for
the three and six months ended June 30, 2014 are not indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated
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 consolidated 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, 2013. These consolidated financial statements do not reflect the
Corporations acquisition of Texas Industries, Inc. (TXI) on July 1, 2014, which is discussed further in Note 11.
Early Adoption of New Accounting Standard
Effective January 1, 2014, the Corporation early adopted the Financial Accounting Standard Boards (the FASB) final
guidance on reporting discontinued operations. The guidance is to be applied prospectively and redefines discontinued operations to be either 1) a component of an entity or group of components that has been disposed of or is classified as held
for sale that represents a strategic shift that has or will have a major effect on an entitys operations and financial results or 2) a business that, upon acquisition, meets the criteria to be classified as held for sale. The adoption of
the accounting standard did not have any effect on the Corporations financial position or results of operations.
Page 8 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Revenue Recognition Standard
The FASB issued an accounting standard update that amends the accounting guidance on revenue recognition. The amendments in this accounting
standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The amendments are to be applied on a full retrospective or
modified retrospective approach. The amendments in this accounting standard update are effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation is currently evaluating the impact of the provisions of
the accounting standard update, and at this time does not expect the impact to be material to its results of operations.
Reclassifications
Prior-year segment information for the Aggregates business presented in Note 9 has been reclassified to conform to the presentation of the
Corporations current reportable segments.
Page 9 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
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, and are presented in the Corporations
consolidated statements of earnings and comprehensive earnings.
Comprehensive earnings attributable to Martin Marietta Materials, Inc. is
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Net earnings attributable to Martin Marietta Materials, Inc.
|
|
$
|
59,521
|
|
|
$
|
41,308
|
|
|
$
|
37,904
|
|
|
$
|
13,468
|
|
Other comprehensive earnings (loss), net of tax
|
|
|
603
|
|
|
|
(1,309
|
)
|
|
|
1,973
|
|
|
|
(88
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings attributable to Martin Marietta Materials, Inc.
|
|
$
|
60,124
|
|
|
$
|
39,999
|
|
|
$
|
39,877
|
|
|
$
|
13,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings (loss) attributable to noncontrolling interests, consisting of net earnings or loss and
adjustments for the funded status of pension and postretirement benefit plans, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Net earnings (loss) attributable to noncontrolling interests
|
|
$
|
103
|
|
|
$
|
259
|
|
|
$
|
(1,432
|
)
|
|
$
|
(1,230
|
)
|
Other comprehensive earnings, net of tax
|
|
|
1
|
|
|
|
3
|
|
|
|
2
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive earnings (loss) attributable to noncontrolling interests
|
|
$
|
104
|
|
|
$
|
262
|
|
|
$
|
(1,430
|
)
|
|
$
|
(1,225
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 10 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss
(continued)
Accumulated other comprehensive loss consists of unrealized gains and losses related to the
funded status of pension and postretirement benefit plans; foreign currency translation; and the unamortized value of terminated forward starting interest rate swap agreements, and is presented on the Corporations consolidated balance sheets.
Changes in accumulated other comprehensive loss, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Foreign
Currency
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest Rate
Swap
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
Three Months Ended June 30, 2014
|
|
Balance at beginning of period
|
|
$
|
(44,267
|
)
|
|
$
|
4,816
|
|
|
$
|
(3,293
|
)
|
|
$
|
(42,744
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive earnings before reclassifications, net of tax
|
|
|
(426
|
)
|
|
|
842
|
|
|
|
|
|
|
|
416
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
|
8
|
|
|
|
|
|
|
|
179
|
|
|
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive earnings, net of tax
|
|
|
(418
|
)
|
|
|
842
|
|
|
|
179
|
|
|
|
603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(44,685
|
)
|
|
$
|
5,658
|
|
|
$
|
(3,114
|
)
|
|
$
|
(42,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2013
|
|
Balance at beginning of period
|
|
$
|
(106,296
|
)
|
|
$
|
5,323
|
|
|
$
|
(3,975
|
)
|
|
$
|
(104,948
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss before reclassifications, net of tax
|
|
|
(2,278
|
)
|
|
|
(1,169
|
)
|
|
|
|
|
|
|
(3,447
|
)
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
|
1,971
|
|
|
|
|
|
|
|
167
|
|
|
|
2,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive earnings, net of tax
|
|
|
(307
|
)
|
|
|
(1,169
|
)
|
|
|
167
|
|
|
|
(1,309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(106,603
|
)
|
|
$
|
4,154
|
|
|
$
|
(3,808
|
)
|
|
$
|
(106,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The other comprehensive loss before reclassifications for pension and postretirement benefit plans is net of
tax of $276,000 and $1,490,000 for the three months ended June 30, 2014 and 2013, respectively.
Page 11 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Foreign
Currency
|
|
|
Unamortized
Value of
Terminated
Forward
Starting
Interest Rate
Swap
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
|
Six Months Ended June 30, 2014
|
|
Balance at beginning of period
|
|
$
|
(44,549
|
)
|
|
$
|
3,902
|
|
|
$
|
(3,467
|
)
|
|
$
|
(44,114
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss ) earnings before reclassifications, net of tax
|
|
|
(430
|
)
|
|
|
1,756
|
|
|
|
|
|
|
|
1,326
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
|
294
|
|
|
|
|
|
|
|
353
|
|
|
|
647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive earnings, net of tax
|
|
|
(136
|
)
|
|
|
1,756
|
|
|
|
353
|
|
|
|
1,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(44,685
|
)
|
|
$
|
5,658
|
|
|
$
|
(3,114
|
)
|
|
$
|
(42,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2013
|
|
Balance at beginning of period
|
|
$
|
(108,189
|
)
|
|
$
|
6,157
|
|
|
$
|
(4,137
|
)
|
|
$
|
(106,169
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss earnings before reclassifications, net of tax
|
|
|
(2,312
|
)
|
|
|
(2,003
|
)
|
|
|
|
|
|
|
(4,315
|
)
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
|
|
3,898
|
|
|
|
|
|
|
|
329
|
|
|
|
4,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive earnings, net of tax
|
|
|
1,586
|
|
|
|
(2,003
|
)
|
|
|
329
|
|
|
|
(88
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
(106,603
|
)
|
|
$
|
4,154
|
|
|
$
|
(3,808
|
)
|
|
$
|
(106,257
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The other comprehensive loss before reclassifications for pension and postretirement benefit plans is net of
tax of $280,000 and $1,512,000 for the six months ended June 30, 2014 and 2013, respectively.
Page 12 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss
(continued)
Changes in net noncurrent deferred tax assets recorded in accumulated other comprehensive
loss are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and
Postretirement
Benefit Plans
|
|
|
Unamortized Value
of Terminated
Forward Starting
Interest Rate Swap
|
|
|
Net Noncurrent
Deferred Tax
Assets
|
|
|
|
Three Months Ended June 30, 2014
|
|
Balance at beginning of period
|
|
$
|
29,016
|
|
|
$
|
2,155
|
|
|
$
|
31,171
|
|
Tax effect of other comprehensive earnings
|
|
|
271
|
|
|
|
(116
|
)
|
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
29,287
|
|
|
$
|
2,039
|
|
|
$
|
31,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2013
|
|
Balance at beginning of period
|
|
$
|
69,641
|
|
|
$
|
2,600
|
|
|
$
|
72,241
|
|
Tax effect of other comprehensive earnings
|
|
|
201
|
|
|
|
(108
|
)
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
69,842
|
|
|
$
|
2,492
|
|
|
$
|
72,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2014
|
|
Balance at beginning of period
|
|
$
|
29,198
|
|
|
$
|
2,269
|
|
|
$
|
31,467
|
|
Tax effect of other comprehensive earnings
|
|
|
89
|
|
|
|
(230
|
)
|
|
|
(141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
29,287
|
|
|
$
|
2,039
|
|
|
$
|
31,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2013
|
|
Balance at beginning of period
|
|
$
|
70,881
|
|
|
$
|
2,707
|
|
|
$
|
73,588
|
|
Tax effect of other comprehensive earnings
|
|
|
(1,039
|
)
|
|
|
(215
|
)
|
|
|
(1,254
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
69,842
|
|
|
$
|
2,492
|
|
|
$
|
72,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 13 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
1.
|
Significant Accounting Policies (continued)
|
Consolidated Comprehensive Earnings/Loss and Accumulated Other Comprehensive Loss
(continued)
Reclassifications out of accumulated other comprehensive loss are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
Affected line items in
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
the consolidated
financial statements
|
|
|
(Dollars in Thousands)
|
|
|
|
Pension and postretirement benefit plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service credit
|
|
$
|
(791
|
)
|
|
$
|
(695
|
)
|
|
$
|
(1,404
|
)
|
|
$
|
(1,403
|
)
|
|
|
Actuarial loss
|
|
|
804
|
|
|
|
3,955
|
|
|
|
1,889
|
|
|
|
7,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
|
|
3,260
|
|
|
|
485
|
|
|
|
6,449
|
|
|
Cost of sales;
Selling, general & administrative expenses
|
Tax effect
|
|
|
(5
|
)
|
|
|
(1,289
|
)
|
|
|
(191
|
)
|
|
|
(2,551
|
)
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8
|
|
|
$
|
1,971
|
|
|
$
|
294
|
|
|
$
|
3,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized value of terminated forward starting interest rate swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional interest expense
|
|
$
|
295
|
|
|
$
|
275
|
|
|
$
|
583
|
|
|
$
|
544
|
|
|
Interest expense
|
Tax effect
|
|
|
(116
|
)
|
|
|
(108
|
)
|
|
|
(230
|
)
|
|
|
(215
|
)
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
179
|
|
|
$
|
167
|
|
|
$
|
353
|
|
|
$
|
329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 14 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
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/loss attributable to Martin Marietta Materials, Inc., reduced by
dividends and undistributed earnings attributable to the Corporations unvested restricted stock awards and incentive stock awards. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities.
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. For the
three and six months ended June 30, 2014 and 2013, 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
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(In Thousands)
|
|
Net earnings from continuing operations attributable to Martin Marietta Materials, Inc.
|
|
$
|
59,577
|
|
|
$
|
41,203
|
|
|
$
|
37,974
|
|
|
$
|
13,651
|
|
Less: Distributed and undistributed earnings attributable to unvested awards
|
|
|
246
|
|
|
|
197
|
|
|
|
154
|
|
|
|
182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings available to common shareholders from continuing operations attributable to Martin Marietta Materials,
Inc.
|
|
|
59,331
|
|
|
|
41,006
|
|
|
|
37,820
|
|
|
|
13,469
|
|
Basic and diluted net (loss) earnings available to common shareholders from discontinued operations
|
|
|
(56
|
)
|
|
|
105
|
|
|
|
(70
|
)
|
|
|
(183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net earnings available to common shareholders attributable to Martin Marietta Materials, Inc.
|
|
$
|
59,275
|
|
|
$
|
41,111
|
|
|
$
|
37,750
|
|
|
$
|
13,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding
|
|
|
46,395
|
|
|
|
46,129
|
|
|
|
46,355
|
|
|
|
46,079
|
|
Effect of dilutive employee and director awards
|
|
|
134
|
|
|
|
131
|
|
|
|
122
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average common shares outstanding
|
|
|
46,529
|
|
|
|
46,260
|
|
|
|
46,477
|
|
|
|
46,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 15 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2.
|
Purchase of Noncontrolling Interest in Joint Venture
|
On April 2, 2014, the Corporation paid $19,604,000 for the remaining 50% interest in a joint venture.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
June 30,
2013
|
|
|
|
(Dollars in Thousands)
|
|
Finished products
|
|
$
|
358,759
|
|
|
$
|
368,334
|
|
|
$
|
366,320
|
|
Products in process and raw materials
|
|
|
20,732
|
|
|
|
16,077
|
|
|
|
18,701
|
|
Supplies and expendable parts
|
|
|
65,287
|
|
|
|
61,922
|
|
|
|
59,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
444,778
|
|
|
|
446,333
|
|
|
|
444,458
|
|
Less: Allowances
|
|
|
96,610
|
|
|
|
99,026
|
|
|
|
95,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
348,168
|
|
|
$
|
347,307
|
|
|
$
|
348,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 16 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
June 30,
2013
|
|
|
|
(Dollars in Thousands)
|
|
6.6% Senior Notes, due 2018
|
|
$
|
299,006
|
|
|
$
|
298,893
|
|
|
$
|
298,783
|
|
7% Debentures, due 2025
|
|
|
124,485
|
|
|
|
124,471
|
|
|
|
124,457
|
|
6.25% Senior Notes, due 2037
|
|
|
228,165
|
|
|
|
228,148
|
|
|
|
228,130
|
|
Term Loan Facility, due 2018, interest rate of 1.65% at June 30, 2014; 1.67% at December 31, 2013; and 2.20% at June 30,
2013
|
|
|
242,350
|
|
|
|
248,441
|
|
|
|
240,000
|
|
Revolving Facility, interest rate of 1.40% at June 30, 2014 and 1.89% at June 30, 2013
|
|
|
40,000
|
|
|
|
|
|
|
|
50,000
|
|
Trade Receivable Facility, interest rate of 0.75% at June 30, 2014; 0.77% at December 31, 2013; and 0.79% at June 30,
2013
|
|
|
150,000
|
|
|
|
130,000
|
|
|
|
150,000
|
|
Other notes
|
|
|
795
|
|
|
|
968
|
|
|
|
1,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
1,084,801
|
|
|
|
1,030,921
|
|
|
|
1,093,319
|
|
Less: Current maturities
|
|
|
12,404
|
|
|
|
12,403
|
|
|
|
6,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
1,072,397
|
|
|
$
|
1,018,518
|
|
|
$
|
1,087,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On June 23, 2014, the Corporation priced its offering of $300,000,000 aggregate principal amount of its
Floating Rate Senior Notes due 2017 (the Floating Rate Notes) and $400,000,000 of its 4.25% Senior Notes due 2024 (the 4.25% Senior Notes and together with the Floating Rate Notes, the Notes). The bond transaction
closed and settlement occurred on July 2, 2014. The proceeds from the offering were used to redeem $650,000,000 of 9.25% notes due in 2020 assumed with TXI plus a make-whole premium and accrued interest. In connection with the issuance of the
Notes, the Corporation entered into an indenture, dated as of July 2, 2014, between the Corporation and Regions Bank, as trustee, and a Registration Rights Agreement, dated as of July 2, 2014, with respect to the Notes, among the
Corporation, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the several initial purchasers named in Schedule I to the purchase agreement entered into on June 23, 2014 with respect to the Notes. The Floating
Rate Senior Notes bear interest at a rate equal to the three-month LIBOR plus 1.10% and may not be redeemed prior to maturity. The 4.25% Senior Notes may be redeemed in whole or in part prior to their maturity at a make-whole redemption price.
Page 17 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.
|
Long-Term Debt (continued)
|
The Corporation, through a wholly-owned special purpose subsidiary, has a trade receivable
securitization facility with SunTrust Bank and certain other lenders that may become a party to the facility from time to time (the Trade Receivable Facility). The Trade Receivable Facility is backed by eligible, as defined, trade
receivables of $311,792,000, $213,386,000 and $253,020,000 at June 30, 2014, December 31, 2013 and June 30, 2013, respectively, which are originated by the Corporation and then sold to the wholly-owned special purpose subsidiary
by the Corporation. The Corporation continues to be responsible for the servicing and administration of the receivables purchased by the wholly-owned special purpose subsidiary. At June 30, 2014, December 31, 2013 and June 30,
2013, outstanding borrowings under the Trade Receivable Facility were classified as long-term on the consolidated balance sheet as the Corporation has the intent and ability to refinance amounts outstanding using other long-term credit facilities.
The Trade Receivable Facility contains a cross-default provision to the Corporations other debt agreements. On April 18, 2014, the Corporation extended the maturity of the Trade Receivable Facility to September 30, 2014. On
July 1, 2014, the Trade Receivable Facility was amended to increase the borrowing capacity from $150,000,000 to $250,000,000.
The
Corporations Credit Agreement, which provides a $250,000,000 senior unsecured term loan (the Term Loan Facility) and a $350,000,000 five-year senior unsecured revolving facility (the Revolving Facility), requires the
Corporations ratio of consolidated debt to consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined, for the trailing twelve months (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
rating 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 no amounts are outstanding under both the Revolving
Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Corporation is a co-borrower, 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. The Corporation was in compliance with this Ratio at June 30, 2014.
Page 18 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4.
|
Long-Term Debt (continued)
|
Effective June 23, 2014, the Corporation amended the Credit Agreement to ensure the
impact of the business combination with TXI does not impair liquidity available under the Term Loan Facility and the Revolving Facility. The amendment adjusts consolidated EBITDA to add back fees, costs or expenses relating to the TXI business
combination incurred on or prior to the closing of the combination not to exceed $95,000,000; any integration or similar costs or expenses related to the TXI business combination incurred in any period prior to the second anniversary of the closing
of the TXI business combination not to exceed $70,000,000; and any make-whole fees incurred in connection with the redemption of TXIs 9.25% senior notes due 2020. The amendment also temporarily increases the maximum Ratio to 3.75x at
September 30, 2014. The Ratio returns to the
pre-amendment
maximum of 3.50x for the December 31, 2014 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 June 30, 2014, December 31, 2013 and June 30, 2013, the Corporation had $2,507,000 of outstanding letters of credit issued under the Revolving Facility.
Accumulated other comprehensive loss includes the unamortized value of terminated forward starting interest rate swap agreements. For the three
and six months ended June 30, 2014, the Corporation recognized $295,000 and $583,000, respectively, as additional interest expense. For the three and six months ended June 30, 2013, the Corporation recognized $275,000 and $544,000,
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 $1,200,000 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, accounts payable, 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: Branch Banking and Trust Company, Comerica Bank, Fifth Third Bank, JPMorgan Chase Bank, N.A.,
Regions 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.
Page 19 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5.
|
Financial Instruments (continued)
|
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, Colorado, Iowa and Georgia). The estimated fair values of customer
receivables approximate their carrying amounts due to the short-term nature of the receivables.
Notes receivable are primarily promissory
notes with customers and are not publicly traded. Management estimates that the fair value of notes receivable approximates the carrying amount.
The bank overdraft represents amounts to be funded to financial institutions for checks that have cleared the bank. The estimated fair value of
the bank overdraft approximates its carrying value.
Accounts payable represent amounts owed to suppliers and vendors. The estimated fair
value of accounts payable approximates its carrying amounts due to the short-term nature of the payables.
The carrying values and fair
values of the Corporations long-term debt were $1,084,801,000 and $1,168,302,000, respectively, at June 30, 2014; $1,030,921,000 and $1,068,324,000, respectively, at December 31, 2013; and $1,093,319,000 and $1,141,592,000,
respectively, at June 30, 2013. The estimated fair value of the Corporations publicly-registered long-term notes was estimated based on Level 1 of the fair value hierarchy using quoted market prices. The estimated fair value of other
borrowings, which primarily represents variable-rate debt, approximates its carrying amount as the interest rates reset periodically.
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2014
|
|
|
2013
|
|
Estimated effective income tax rate:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
29.8
|
%
|
|
|
35.0
|
%
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
26.4
|
%
|
|
|
26.2
|
%
|
|
|
|
|
|
|
|
|
|
Consolidated overall
|
|
|
29.8
|
%
|
|
|
35.2
|
%
|
|
|
|
|
|
|
|
|
|
Page 20 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6.
|
Income Taxes (continued)
|
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.
On September 13, 2013, the U.S. Treasury Department and Internal Revenue Service issued final regulations addressing costs incurred
in acquiring, producing or improving tangible property (the tangible property regulations). The tangible property regulations required the Corporation to make additional tax accounting method changes as of January 1, 2014. As of
December 31, 2013, the Corporation estimated the tax impact of the regulatory change and recorded an increase in noncurrent deferred tax liabilities in the amount of $1,334,000, with a corresponding reduction in current taxes payable.
The Corporations unrecognized tax benefits, excluding interest, correlative effects and indirect benefits, are as follows:
|
|
|
|
|
|
|
Six Months Ended
June 30, 2014
|
|
|
|
(Dollars in Thousands)
|
|
Unrecognized tax benefits at beginning of period
|
|
$
|
11,826
|
|
Gross increases tax positions in prior years
|
|
|
1,898
|
|
Gross decreases tax positions in prior years
|
|
|
(173
|
)
|
Gross increases tax positions in current year
|
|
|
961
|
|
|
|
|
|
|
Unrecognized tax benefits at end of period
|
|
$
|
14,512
|
|
|
|
|
|
|
The Corporation records interest accrued in relation to unrecognized tax benefits as income tax expense.
Penalties, if incurred, are recorded as operating expenses in the consolidated statements of earnings.
The Corporation anticipates that it
is reasonably possible that unrecognized tax benefits may decrease up to $7,123,000, excluding indirect benefits, during the twelve months ending June 30, 2015 as a result of expected settlements with taxing authorities and the expiration of
the foreign and domestic statute of limitations for the 2009 and 2010 tax years, respectively.
Page 21 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6.
|
Income Taxes (continued)
|
At June 30, 2014, unrecognized tax benefits of $7,939,000 related to interest accruals
and permanent income tax differences, net of federal tax benefits, would have favorably affected the Corporations effective income tax rate if recognized.
The Corporations open tax years subject to federal, foreign or state examinations are 2009 through 2013.
7.
|
Pension and Postretirement Benefits
|
The estimated components of the recorded net periodic benefit cost (credit) for pension and postretirement benefits are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Pension
|
|
|
Postretirement Benefits
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Service cost
|
|
$
|
3,092
|
|
|
$
|
4,060
|
|
|
$
|
51
|
|
|
$
|
56
|
|
Interest cost
|
|
|
5,624
|
|
|
|
5,799
|
|
|
|
305
|
|
|
|
251
|
|
Expected return on assets
|
|
|
(6,677
|
)
|
|
|
(6,717
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit)
|
|
|
96
|
|
|
|
113
|
|
|
|
(887
|
)
|
|
|
(808
|
)
|
Actuarial loss (gain)
|
|
|
877
|
|
|
|
3,949
|
|
|
|
(73
|
)
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (credit)
|
|
$
|
3,012
|
|
|
$
|
7,204
|
|
|
$
|
(604
|
)
|
|
$
|
(495
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Pension
|
|
|
Postretirement Benefits
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Service cost
|
|
$
|
7,131
|
|
|
$
|
8,060
|
|
|
$
|
93
|
|
|
$
|
113
|
|
Interest cost
|
|
|
12,971
|
|
|
|
11,512
|
|
|
|
559
|
|
|
|
506
|
|
Expected return on assets
|
|
|
(15,400
|
)
|
|
|
(13,335
|
)
|
|
|
|
|
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost (credit)
|
|
|
223
|
|
|
|
224
|
|
|
|
(1,627
|
)
|
|
|
(1,627
|
)
|
Actuarial loss (gain)
|
|
|
2,022
|
|
|
|
7,840
|
|
|
|
(133
|
)
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (credit)
|
|
$
|
6,947
|
|
|
$
|
14,301
|
|
|
$
|
(1,108
|
)
|
|
$
|
(996
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 22 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8.
|
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
The United States Environmental Protection Agency (EPA) includes the lime industry as a national enforcement priority under the
federal Clean Air Act (CAA). As part of the industry wide effort, the EPA 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 EPA in response to these NOVs and has had several
meetings with the EPA. The Corporation believes it is in substantial compliance with the NSR program. At this time, the Corporation cannot reasonably estimate what likely penalties or upgrades to equipment might ultimately be required. The
Corporation believes that any costs related to any upgrades to capital equipment will be spread over time and will not have a material adverse effect on the Corporations results of 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.
Borrowing Arrangements with Affiliate
The Corporation is a co-borrower with an unconsolidated affiliate for a $24,000,000 revolving line of credit agreement with Fifth Third Bank.
The line of credit expires in August 2014. The affiliate has agreed to reimburse and indemnify the Corporation for any payments and expenses the Corporation may incur from this agreement. The Corporation holds a lien on the affiliates
membership interest in a joint venture as collateral for payment under the revolving line of credit.
In September 2013, the Corporation
loaned $3,402,000 to this unconsolidated affiliate to repay in full the outstanding balance of the affiliates loan with Bank of America, N.A. and entered into a loan agreement with the affiliate for monthly repayment of principal and interest
of that loan amount through May 2016. The Corporation holds a lien on the affiliates property as collateral for payment under the loan and security agreement. As of June 30, 2014 and December 31, 2013, the amount due from the
affiliate related to this loan was $2,455,000 and $2,984,000, respectively.
In addition, the Corporation has a $6,000,000 outstanding loan
due from this unconsolidated affiliate as of June 30, 2014 and December 31, 2013.
Page 23 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Aggregates business contains three reportable business segments: Mid-America Group, Southeast Group and West Group. The
Corporation also has a Specialty Products segment.
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, business development expenses, unallocated corporate expenses
and other nonrecurring and/or non-operational adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Total revenues:
|
|
|
|
|
Mid-America Group
|
|
$
|
240,526
|
|
|
$
|
217,516
|
|
|
$
|
356,235
|
|
|
$
|
337,056
|
|
Southeast Group
|
|
|
75,168
|
|
|
|
60,442
|
|
|
|
134,988
|
|
|
|
116,184
|
|
West Group
|
|
|
286,811
|
|
|
|
222,024
|
|
|
|
477,598
|
|
|
|
370,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
602,505
|
|
|
|
499,982
|
|
|
|
968,821
|
|
|
|
823,660
|
|
Specialty Products
|
|
|
66,720
|
|
|
|
61,344
|
|
|
|
129,034
|
|
|
|
121,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
669,225
|
|
|
$
|
561,326
|
|
|
$
|
1,097,855
|
|
|
$
|
945,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-America Group
|
|
$
|
218,703
|
|
|
$
|
198,215
|
|
|
$
|
325,236
|
|
|
$
|
308,402
|
|
Southeast Group
|
|
|
70,725
|
|
|
|
55,261
|
|
|
|
126,106
|
|
|
|
106,584
|
|
West Group
|
|
|
250,589
|
|
|
|
197,224
|
|
|
|
411,004
|
|
|
|
324,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
540,017
|
|
|
|
450,700
|
|
|
|
862,346
|
|
|
|
739,589
|
|
Specialty Products
|
|
|
61,920
|
|
|
|
56,632
|
|
|
|
119,269
|
|
|
|
111,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
601,937
|
|
|
$
|
507,332
|
|
|
$
|
981,615
|
|
|
$
|
851,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-America Group
|
|
$
|
57,283
|
|
|
$
|
47,717
|
|
|
$
|
45,517
|
|
|
$
|
33,753
|
|
Southeast Group
|
|
|
(1,302
|
)
|
|
|
(5,176
|
)
|
|
|
(7,413
|
)
|
|
|
(13,563
|
)
|
West Group
|
|
|
30,873
|
|
|
|
16,395
|
|
|
|
32,954
|
|
|
|
8,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
86,854
|
|
|
|
58,936
|
|
|
|
71,058
|
|
|
|
28,460
|
|
Specialty Products
|
|
|
20,995
|
|
|
|
18,726
|
|
|
|
37,280
|
|
|
|
35,804
|
|
Corporate
|
|
|
(11,608
|
)
|
|
|
(8,027
|
)
|
|
|
(27,994
|
)
|
|
|
(17,950
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
96,241
|
|
|
$
|
69,635
|
|
|
$
|
80,344
|
|
|
$
|
46,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 24 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
9.
|
Business Segments (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
|
December 31,
2013
|
|
|
June 30,
2013
|
|
|
|
(Dollars in Thousands)
|
|
Assets employed:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-America Group
|
|
$
|
1,311,860
|
|
|
$
|
1,242,394
|
|
|
$
|
1,185,684
|
|
Southeast Group
|
|
|
606,933
|
|
|
|
611,906
|
|
|
|
588,094
|
|
West Group
|
|
|
1,084,291
|
|
|
|
1,030,599
|
|
|
|
1,077,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
3,003,084
|
|
|
|
2,884,899
|
|
|
|
2,851,255
|
|
Specialty Products
|
|
|
151,129
|
|
|
|
154,024
|
|
|
|
153,542
|
|
Corporate
|
|
|
201,830
|
|
|
|
220,903
|
|
|
|
226,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,356,043
|
|
|
$
|
3,259,826
|
|
|
$
|
3,231,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Aggregates business includes the aggregates product line and vertically-integrated operations, which
include asphalt, ready mixed concrete and road paving product lines. All vertically-integrated operations reside in the West Group. The following tables provide net sales and gross profit by product line for the Aggregates business, which are
reconciled to consolidated amounts, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Net sales:
|
|
|
|
|
|
|
|
|
Aggregates
|
|
$
|
421,974
|
|
|
$
|
357,241
|
|
|
$
|
685,858
|
|
|
$
|
605,031
|
|
Asphalt
|
|
|
22,627
|
|
|
|
18,811
|
|
|
|
33,125
|
|
|
|
28,445
|
|
Ready Mixed Concrete
|
|
|
52,379
|
|
|
|
35,305
|
|
|
|
90,388
|
|
|
|
61,582
|
|
Road Paving
|
|
|
43,037
|
|
|
|
39,343
|
|
|
|
52,975
|
|
|
|
44,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
540,017
|
|
|
|
450,700
|
|
|
|
862,346
|
|
|
|
739,589
|
|
Specialty Products
|
|
|
61,920
|
|
|
|
56,632
|
|
|
|
119,269
|
|
|
|
111,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
601,937
|
|
|
$
|
507,332
|
|
|
$
|
981,615
|
|
|
$
|
851,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss):
|
|
|
|
|
|
|
|
|
Aggregates
|
|
$
|
100,142
|
|
|
$
|
78,942
|
|
|
$
|
110,194
|
|
|
$
|
81,003
|
|
Asphalt
|
|
|
4,869
|
|
|
|
4,903
|
|
|
|
3,443
|
|
|
|
2,448
|
|
Ready Mixed Concrete
|
|
|
6,982
|
|
|
|
1,869
|
|
|
|
9,926
|
|
|
|
1,788
|
|
Road Paving
|
|
|
(249
|
)
|
|
|
(284
|
)
|
|
|
(4,231
|
)
|
|
|
(4,571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregates Business
|
|
|
111,744
|
|
|
|
85,430
|
|
|
|
119,332
|
|
|
|
80,668
|
|
Specialty Products
|
|
|
23,394
|
|
|
|
21,284
|
|
|
|
42,149
|
|
|
|
40,866
|
|
Corporate
|
|
|
464
|
|
|
|
282
|
|
|
|
(43
|
)
|
|
|
(1,717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
135,602
|
|
|
$
|
106,996
|
|
|
$
|
161,438
|
|
|
$
|
119,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 25 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10.
|
Supplemental Cash Flow Information
|
The components of the change in other assets and liabilities, net, are as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Other current and noncurrent assets
|
|
$
|
(6,139
|
)
|
|
$
|
(3,729
|
)
|
Accrued salaries, benefits and payroll taxes
|
|
|
(755
|
)
|
|
|
(5,366
|
)
|
Accrued insurance and other taxes
|
|
|
3,911
|
|
|
|
1,996
|
|
Accrued income taxes
|
|
|
16,678
|
|
|
|
(430
|
)
|
Accrued pension, postretirement and postemployment benefits
|
|
|
4,281
|
|
|
|
2,122
|
|
Other current and noncurrent liabilities
|
|
|
(389
|
)
|
|
|
10,171
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,587
|
|
|
$
|
4,764
|
|
|
|
|
|
|
|
|
|
|
The change in accrued income taxes is primarily driven by an increase in the estimated tax provision for 2014.
The change in other current and noncurrent liabilities is primarily attributable to estimated settlements with taxing authorities recorded in 2013.
Noncash investing and financing activities are as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
(Dollars in Thousands)
|
|
Noncash investing and financing activities:
|
|
|
|
|
|
|
|
|
Acquisition of assets through capital lease
|
|
$
|
6,333
|
|
|
$
|
|
|
Page 26 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11.
|
Business Developments
|
TXI Business Combination
On July 1, 2014, subsequent to the end of the Corporations second quarter and pursuant to the merger agreement (the Merger
Agreement) dated as of January 27, 2014 by and among the Corporation, Project Holdings, Inc., a wholly-owned subsidiary of the Corporation (Merger Sub), and TXI, Merger Sub merged with and into TXI, with TXI surviving as a
wholly-owned subsidiary of the Corporation (the Merger). As a result of the Merger, each outstanding share of TXI common stock (other than shares owned by TXI, the Corporation or Merger Sub, which were cancelled) was converted into the
right to receive 0.70 shares of the Corporations common stock, with cash paid in lieu of fractional shares. The Corporation issued approximately 20,300,000 shares of its common stock to former TXI stockholders in connection with the Merger.
Based on the Corporations closing stock price on July 1, 2014 of $132.00, the aggregate value of the Corporations common stock delivered to former TXI stockholders was approximately $2,680,000,000. Additionally, the fair value of
outstanding TXI stock options and stock appreciation rights that were converted to the Corporations stock awards at the acquisition date will be a component of the total purchase price.
TXI is the largest producer of cement in Texas and a major cement producer in California. TXI is also a major supplier of construction
aggregate, ready mixed concrete and concrete products. The combination expands the Corporations geographic footprint and positions the Corporation to benefit from the strength of the combined aggregates platform.
The Corporation is in the process of fair valuing assets acquired and liabilities assumed, and as of August 4, 2014, the initial
accounting for the business combination has not been completed pending the determination of these values. However, the assets included are cash and cash equivalents; trade receivables; inventories (including finished goods, parts and supplies);
deferred income tax assets and liabilities; real property; investments; property, plant and equipment; and intangibles. Liabilities to be assumed are accounts payable; workers compensation and property liability accruals; notes payables;
defined benefit plans; and litigation accruals.
For the six months ended June 30, 2014, the Corporation incurred $12,781,000 of
business development expenses and $2,210,000 of acquisition integration expenses related to this business combination.
Page 27 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
11.
|
Business Developments (continued)
|
Assets Held for Sale
On June 27, 2014, the Corporation announced that the U.S. Department of Justice (DOJ) completed its review of the
Corporations business transaction with TXI and the Corporation reached an agreement with the DOJ. Under the terms of the agreement, the Corporation will divest an aggregates quarry in Oklahoma and two rail yards in Texas. Assets held for sale
are inventory and property, plant and equipment. Liabilities to be transferred with the sale are asset retirement obligations. At June 30, 2014, these assets and liabilities are included with other current assets and other current liabilities,
respectively, on the consolidated balance sheet.
Page 28 of 62
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended
June 30, 2014